Hello, my name is Neil Joglekar and I started ReelSurfer (YC S12) with Christian Yang. Last Thursday, Christian and I were asked to give a guest lecture at the Entertainment Technology Center at Carnegie Mellon. We were asked to describe 3 things we have done right for our startup and three things we did very wrong. (Why is it always easier to come up with the list of things we did wrong?) I thought it might be helpful to share what we presented.
Welcome to part two, where I want to share some advice based on what we have done wrong. If you missed it, here is part one where I described what we have done right as a startup.
1. Build the team carefully
The quality of the team is probably the number one reason a startup will succeed or fail and that starts with your co-founder. I got lucky here – Christian and I were friends in college and had worked on a few class projects together. We knew we had complementary skills and also could perform under pressure.
The next step is hiring non-founders. Luckily for you, I think we made just about every mistake possible. I have these pieces of advice for you:
- Don’t hire friends or family: This is hit or miss because in some cases we hired friends and it worked out great. The other times it didn’t but it was hard to fire them since there were implications outside of just the workplace. “You can’t fire me I thought we were friends.” The best way to avoid that is to set clear expectations beforehand and then have objective conversations about their performance. Gray areas are a problem.
- Attitude matters: People say you should hire the smartest people you know. While that is mostly true, you have to make sure that their attitude matches their intelligence. For example, if you hire someone who is the most brilliant AI programmer alive but doesn’t want to get his hands dirty and make a rounded rectangle a different shade of blue you are going to have a problem. Screen for culture fit / hunger and take it very seriously.
2. Don’t raise money too early
Right after we graduated from college, Christian and I decided that we needed to raise money. We didn’t have a (fully-baked) product, a plan or any sales but thought that for a “company” at our stage we should have some investors. Looking back, it seems as ridiculous as it sounds writing it. We probably sounded like this.
Though we had the approximately $500k committed, we ended up backing out of the deal. I could not be happier that we did, looking back here were the problems:
- We didn’t know what we were doing. Back then we were committed to the idea of building a consumer website for helping movie lovers find their favorite quotes – licensing and copyright be damned. If we had taken the $500k we would have blown through it for the wrong idea and be working elsewhere right now.
- The terms were not favorable. Investors saw us as fresh-faced college kids who may develop something interesting and they preyed on that. When you start to give up significant control of the company at the seed stage it puts a strain on a company forever. To be fair we did not know how to really negotiate with investors or which terms really mattered.
The truth is raising money is sexy. TechCrunch and other blogs cover funding stories and it’s something that you can send to your mom. But try and hold off – raising money when you are not ready can effectively destroy your opportunity to run a startup at all.
3. Listen to feedback
Make something people want is the Y Combinator motto for a reason – I don’t think anything is more important for a startup. At the end of the day, nobody really cares about your startup except for you, your team and your family. You are constantly fighting other companies of all shapes and sizes for people’s time and attention. Winning this battle is hard once you have product / market fit, but if you are not starting by building something people want you are definitely going to lose.
When we first started ReelSurfer we thought we knew what people wanted but quickly realized that people will tell you what they really want. You need to constantly ask people for feedback on the product. It’s actually pretty simple – people love to give their opinions. If you are building something they are pretty open about telling you what is right and wrong. Here are a few things we do to try and build what people want:
- Run usability studies. Invite someone into a room for 30 minutes and watch them use your product. Ask them what their background is, why they would use your product, and what would make them come back every day. All of their answers may not be helpful but you will start to see trends.
- Run A/B tests. If people won’t give you feedback in person remember that data never lies. What people are clicking on is the clearest indicator of what is working and what is not.
- Build something that a few people really love. Even if this is not a scalable action remember that each person represents a group of people like them. So as YC says, if you can get 100 people to LOVE your product then you have a chance at tapping into a larger audience.
I would love to hear what things you are doing wrong in the comments and maybe I’ll be able to help.
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