Startup DNA: the formula behind successful startups in Silicon Valley (updated May 5, 2017)
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[Updated May 5, 2017] "Successful startups are all alike; every unsuccessful startup is unsuccessful in its own way." These are my personal observations on a few traits that make startups successful. You can find a video of the talk at https://www.youtube.com/watch?v=z_D9oXCK2lM and the book at http://www.hello-startup.net/.
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Startup DNA: the formula behind successful startups in Silicon Valley (updated May 5, 2017)
- 1. STARTUP DNA The formula behind successful startups in Silicon Valley
- 2. STARTUP DNA The formula behind successful startups in Silicon Valley
- 5. Why?
- 6. “Successful startups are all alike; every unsuccessful startup is unsuccessful in its own way.” Leo Tolstoy, probably
- 7. This talk is about a few traits that make startups successful
- 10. PAST LIVES
- 12. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
- 13. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
- 14. The road to startup success is paved with failure
- 15. Failed projects
- 19. Pivots
- 20. Initial idea: Game Neverending (MMO). Pivoted to focus on photo sharing. Acquired by Yahoo for $35M in 2005.
- 21. Initial idea: burbn (social network). Pivoted to focus on photo sharing. Acquired by Facebook for $1B in 2012.
- 22. Initial idea: Odeo (podcasting). Pivoted to focus on microblogging. IPO in 2013.
- 23. Failed companies
- 24. Reid Hoffman’s first startup was socialnet.com, a social network for dating. Never heard of it? Exactly.
- 25. Went on to become COO of PayPal and co-founder of LinkedIn.
- 26. “Startups are like jumping off a cliff and building a plane on the way down.” Reid Hoffman LinkedIn co-founder
- 27. Virgin Clothes Virgin Cola Virgin Vision Virgin Vodka Virgin Wine Virgin Jeans Virgin Cars … all failed
- 28. But several hundred of Richard Branson’s other companies succeeded!
- 29. “I have not failed. I've just found 10,000 ways that won't work.” Thomas Edison
- 30. These were not failures. These were experiments.
- 31. The goal of an experiment is learning.
- 32. “I've come to believe that learning is the essential unit of progress for startups.” Eric Ries
- 34. #1 cause of startup failure: “No Market Need.”
- 35. The biggest risk is building the wrong thing.
- 36. The only way to find the right thing is through experiments.
- 37. The experiments can’t take too long, or you run out of money.
- 38. That’s why you need to fail fast.
- 39. That’s why you need to fail fast.
- 40. That’s why speed wins.
- 41. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
- 42. “Speed Wins.” Steve Kaufer TripAdvisor co-founder
- 43. Boyd’s law: speed of iteration beats quality of iteration.
- 47. In a trial and error world, the one who finds errors faster, wins.
- 51. Key idea behind Agile, Lean:
- 52. Some of your assumptions are wrong.
- 53. The problem is, you don’t know which ones.
- 54. “Winners recognize their startup ‘vision’ as a series of untested hypotheses in need of ‘customer proof’.” Steve Blank Bob Dorf
- 57. 1. Identify your riskiest, most central assumption. 2. Perform the smallest possible experiment to test the assumption. 3. Repeat.
- 58. Minimum Viable Product (MVP)
- 61. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
- 62. Some of your assumptions are wrong.
- 63. Data can be a good way to find out which ones.
- 64. “Anything you need to quantify can be measured in some way that is superior to not measuring it at all.” Douglas W. Hubbard
- 65. Server and client metrics
- 66. User and site metrics
- 67. Code and bug metrics
- 68. Use feature toggles and A/B testing
- 69. Wrap new features in if- statements. Default is “off”. Group users into buckets. Toggle features for some buckets: A/B testing, ramping (1%, 10%, 100%).
- 70. Measure the impact of new features!
- 72. With A/B testing
- 73. Example: same page, different stock photo.
- 75. Which one should we use?
- 76. Using A/B testing to pick the right image significantly increased clickthroughs
- 77. Note: use data to inform your decision-making process, not replace it.
- 78. “If we can’t identify a decision that could be affected by a proposed measurement and how it could change those decisions, then the measurement simply has no value.” Douglas W. Hubbard
- 79. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
- 80. If you build it, they will come.
- 81. If you build it, they will come.
- 82. If you build distribution into the product, they will come.
- 83. The best product doesn’t always win
- 84. How many customers do you need to be successful?
- 85. (From the Stanford Startup Engineering Course) Company Product Price Customers Coca-Cola Soda $1 1,000,000,000 Unilever Household goods $10 100,000,000 Blizzard Games $100 10,000,000 Leonovo Laptops $1,000 1,000,000 Toyota Cars $10,000 100,000 Oracle Enterprise software $100,000 10,000 Countrywide High-end mortgages $1,000,000 1,000 To make $1 billion in revenue:
- 86. Company Product Price Customers Coca-Cola Soda $1 1,000,000,000 Unilever Household goods $10 100,000,000 Blizzard Games $100 10,000,000 Leonovo Laptops $1,000 1,000,000 Toyota Cars $10,000 100,000 Oracle Enterprise software $100,000 10,000 Countrywide High-end mortgages $1,000,000 1,000 Note the “customers” column:
- 87. The number of customers you need to reach determines your distribution strategy
- 88. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
- 89. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
- 90. Print ads, online ads, newspaper ads, billboards, etc.
- 91. Potential to reach millions, but you’re battling for attention.
- 92. “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” John Wanamaker
- 93. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
- 94. Newspapers, TV, magazines, radio, etc.
- 95. Massive reach. Can be positive or negative.
- 96. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
- 97. Email, Twitter, Facebook, LinkedIn, Pinterest, etc.
- 98. Reach depends on the size of your audience.
- 99. Personalized content can be very powerful
- 100. (My CTR on “you’ve been tagged” emails is 100%.)
- 101. LinkedIn’s “Year in Review” email also had a CTR of > 100%.
- 103. Note: viral loops must be built into the product
- 104. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
- 105. Attract users with content: blog posts, open source, videos.
- 106. The goal is to teach and to build a following
- 107. Medium reach, but high conversion rate and low cost
- 108. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
- 109. SEO = Search Engine Optimization
- 110. Google handles 2 trillion searches per year
- 111. You can build a massive business on just a tiny slice of that
- 112. TripAdvisor is built around being the top result for most hotels
- 113. Need lots of (user generated) content to be successful
- 114. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
- 115. Hire a sales team to sell the product
- 116. Inside sales: sell in a store or over the phone.
- 117. Outside sales: travel to customer site to do a deal.
- 118. Small reach, but essential for expensive products.
- 119. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
- 120. Silicon Valley companies share (almost) everything
- 122. Open source: Kafka (LinkedIn)
- 124. Companies: Mozilla
- 125. Why?
- 126. Quality: you do better work when others are looking.
- 127. Free labor: free QA, free docs, free bug fixes...
- 128. Happiness: something you keep with you your entire career.
- 129. Branding: you become an expert by sharing your expertise.
- 130. Mastery: the best way to learn is to teach.
- 131. That’s why I’m here today:
- 132. To share what I’ve learned with all of you.
- 134. Questions?
- 135. Rocket: manhhai Leo Tolstoy: Wikimedia Biz Stone: Joi Ito Richard Branson: Chatham House Thomas Edison: Louis Bachrach Reid Hoffman: startupofyou Dogfight: Alan Wilson MVP car: Henrik Kinberg Crowd of people: Scott Cresswell Picadilly Circus Ads: Sebastian Bertalan John Wanamaker: Bain News Service Social media: Ibrahim.ID Man using laptop: Negative Space Laptop with Google: Pixabay Handshake: Flazingo Photos Woman coding: Hamza Butt Resume: Flazingo Photos References & image credits