What They Don't Teach in Business School about Entrepreneurship

1. 0:00 – 0:06

   Intro

   1. SPSpeaker0:00

      [gentle music]

2. 0:06 – 0:53

   Session setup and panelist introductions begin

   1. SPSpeaker0:06

      Uh, the session on, um, what they don't teach at business school about entrepreneurship. Uh, having taught entrepreneurship at the Stanford Business School for something like 13 years, I can tell you there's a lot. Some of it we know we don't teach, and some of it we probably should teach if we knew a little more about the subject. So I think it's a very pertinent, um, subject today. So Mike, why don't you introduce yourself and tell us a little bit about what you did. Uh, just remember, I've got a little bio here.

   2. SPSpeaker0:37

      Okay.

   3. SPSpeaker0:37

      So if you don't include things, I can include it, and if you, if you do include things that, that aren't in here, I may question you on it.

   4. SPSpeaker0:45

      Okay.

   5. SPSpeaker0:45

      [laughs]

   6. SPSpeaker0:45

      So it's like the Senate, uh, Investigation Committee.

   7. SPSpeaker0:47

      Exactly.

   8. SPSpeaker0:48

      Um-

   9. SPSpeaker0:49

      Except you're not sitting out there.

   10. SPSpeaker0:51

       But I do get lights flashing at me.

   11. SPSpeaker0:52

       Oh, that's true.

3. 0:53 – 3:41

   Mike’s startup track record and early pivots

   1. SPSpeaker0:53

      Um, so I've been the CEO and co-founder of four startups. Um, I was very lucky with the first three. Um, one was, uh, the first one was, I started with $500 of myself, and each of my two partners put in $500. We had $1,500. We started it in my second year of business school at the, um, the business, the Stanford of the East Coast, uh, in Boston. Um-

   2. SPSpeaker1:15

      You're very kind.

   3. SPSpeaker1:16

      [laughs] We, uh, we never raised venture capital. Uh, this-- it started as a company called Dial-A-Fish. It was when you could order groceries from home. Um, it was insane. Uh, it was before the internet and everything. Um, we eventually sold it for thir... We had to change direction, because that was not gonna work, uh, w- into a computer telephony tool. Uh, we sold it for $13 million, um, a few years later, which was tiny for Silicon Valley standards, but, you know, a fair New England return on the $1,500 investment. Uh, the second company was Direct Hit, which was an internet, um, search engine. Nobody ever heard of inter- of Direct Hit, but we were providing search results to Microsoft, AOL, Lycos. Um, we're kind of a behind-the-scenes provider, and it was the right time. Uh, we grew to a market value of $500 million 500 days after we launched it, and we sold it, uh, in January of 2000. And then the third company was, uh, Xfire, which was an instant messenger for, uh, PC video gamers. It spread virally. Um, we s- um, got to about three million users, uh, two years after launching, and we sold it for $100 million to MTV, and now there's 15 million users, uh, using it. And, um, I'm now working on my fourth one, which, uh, could end up being... I wanna be 4-0, but I could be three and one, 'cause we haven't sort of found the formula for success on Roovo. Roovo's a travel site. Um, so that's sort of my background.

   4. SPSpeaker2:41

      And when did you graduate from, um, Harvard?

   5. SPSpeaker2:43

      Oh, a long, long time ago.

   6. SPSpeaker2:45

      Well-

   7. SPSpeaker2:45

      Do we have to get into numbers?

   8. SPSpeaker2:47

      No, yeah, the re- [laughs] Yeah.

   9. SPSpeaker2:48

      [laughs]

   10. SPSpeaker2:48

       Well, the reason why is it's sort of interesting to know the timing of your first venture, right? Because, um, uh, that was, you said, prior to the internet.

   11. SPSpeaker2:58

       Yes.

   12. SPSpeaker2:59

       But, uh, so you were, you were actually a leader in that. Others came after you, also didn't do very well, right?

   13. SPSpeaker3:05

       Uh, so I would s-

   14. SPSpeaker3:07

       But you may have been the, the, the biggest winner in that whole space of ordering food from home.

   15. SPSpeaker3:11

       Uh, if we'd started a different time.

   16. SPSpeaker3:13

       Well, um, you, you sold it for $13 million.

   17. SPSpeaker3:18

       Yeah.

   18. SPSpeaker3:19

       Um, most of the other companies I know lost money, right?

   19. SPSpeaker3:21

       [laughs] So a win by default.

   20. SPSpeaker3:23

       Yeah.

   21. SPSpeaker3:23

       Um, sure. So, um, I decided I was gonna stop, uh, aging at, at age 31. So I graduated Harvard from 1991, so I must have graduated around age 11. So you can just-

   22. SPSpeaker3:37

       11.

   23. SPSpeaker3:37

       [laughs]

   24. SPSpeaker3:37

       You can figure out from...

   25. SPSpeaker3:38

       Good. All right. Thank you. Nazila.

4. 3:41 – 6:57

   Nazila’s path: engineering roots, corporate lessons, and founding Junors

   1. SPSpeaker3:41

      So, um, I'm Nazila Alasti, and, um, I started life as an engineer. I'm Iranian originally, and in my country, if you're a good student, you either become a doctor or an engineer. So there was-- that was the choice, and I was scared of blood [laughs] so off I went into engineering school. But it was actually, um, a really great, uh, background, I thought, for, um, Silicon Valley. I didn't know I would end up here, but I did, and I was thankful for my parents for having pushed me into engineering. Um, fast-forward five years of working, um, at a technology company, Advanced Micro Devices. Um, I became a project designer, project lead, um, went to business school and learned that people can actually, uh, make money selling pencils, and that it doesn't have to be semiconductors. That was my big, uh, learning from, from business school. Um, entrepreneurial activities at the time were not as hot as they are now.

   2. SPSpeaker4:41

      What was, when did you graduate?

   3. SPSpeaker4:42

      Uh, I graduated in '88.

   4. SPSpeaker4:44

      '88.

   5. SPSpeaker4:44

      So I also stopped aging at 30.

   6. SPSpeaker4:46

      [laughs]

   7. SPSpeaker4:47

      Um, a few years earlier than you.

   8. SPSpeaker4:49

      Than me.

   9. SPSpeaker4:49

      Yeah. Um, and, and I have to say that my experience at business school, um, uh, was really eye-opening, broadening, uh, but I wouldn't say that I was focused on necessarily becoming an entrepreneur. It seemed very risky at the time. Um, however, after I got out and, um, experienced the venture capital world for a couple of years and then went on to work at Apple, uh, which I consider really, uh, my formative years at Apple, and worked on a big failure of a project called Newton, which was the original handheld device, um, I came to understand that I really needed more freedom in my life and that the corporate structure wasn't providing that. And I was stupid enough or naive enough, uh, to say that I could do things on my own. So I started a long line of all sorts of startups, failures as well as successes, um, and ended up now running Junors, which is my first, uh, from PowerPoint to funding to product startup, uh, where I am CEO founder and, um, growing that business. So that's a little bit about me.

   10. SPSpeaker5:58

       Nazila's also the mother of two daughters.

   11. SPSpeaker6:00

       Yes, I am.

   12. SPSpeaker6:02

       And, um- Someone who is, uh, passionate about trying to help those of you who, um, are thinking about entrepreneurship learn more about it, so that's why she's here today. Um-

   13. SPSpeaker6:12

       Yeah, let me add to that, Chuck.

   14. SPSpeaker6:14

       Sure.

   15. SPSpeaker6:14

       Thank you for bringing it up. Um, uh, I also wanna talk to the women in, in the group, if you're interested afterwards, about why I believe entrepreneurship is actually a very valid choice and, and, and compatible with being a mother. So anyone who's interested in discussing that, I'm open to doing that. Um, the world will tell you, "No, it's 24/7," et cetera. "Unless you burn the midnight oil, you won't be successful." I happen to have a different story, so if anyone is interested, I'm happy to share that.

   16. SPSpeaker6:46

       Great. Thank you. So we, we talked to, we've heard from two people who actually had technical backgrounds. Uh, Will, um, give us your background and, and, uh, what you're doing now.

5. 6:57 – 9:53

   Will’s perspective: from venture capital to CEO at a funded startup

   1. SPSpeaker6:57

      Thanks, Chuck. So I graduated in 1999 from Kellogg, and I've been in the Valley since then. I've done a combination of both startups and venture capital activity. So currently I'm the CEO of a Sequoia and Hummer Winblad funded company, uh, called Widgetbox, and, um, I joined Widgetbox two years ago, and before that I was a managing director at Hummer Winblad and spent six years in the venture capital business. So since I got out of business school, I've had, um, kind of the opportunity to see both, uh, entrepreneurs in action as a venture backer and thinking through business models and deciding who to finance and who not to finance. And then, um, also d- having decided that, uh, to become an entrepreneur myself, and, uh, it's only recently I even consider myself one [laughs] quite honestly. But the last couple years of running a small startup that's not profitable makes you one, I think. Uh, it's been a, it's been a very interesting time-

   2. SPSpeaker7:50

      Yeah

   3. SPSpeaker7:50

      ... to run a, run a company. So, uh, no, I'm definitely excited to be here today and kind of share my thoughts, um, about what business school taught me, what it didn't taught me, to teach me about, um, you know, how to, to, to lead a company, bring products to market, sell, et cetera. And, uh, Chuck's right. Like, in terms of backgrounds, I went to Harvard, studied East Asian studies and finance and started my career actually in, in Asia. So I worked in Hong Kong and Singapore, spoke Mandarin Chinese, and thought I was gonna be part of the Asian miracle and, um, [laughs] uh, but, uh, so, so I've done, uh... I'm not coming at it from an engineering background, in other words. And so part of, you know, one of the questions today, I think, is how do MBAs and finance people fit into a culture that's really driven by in- by, uh, engineers as opposed to business types and kind of the MBA being a joke as opposed to something good. Um, so, uh, uh, you know, I'm happy to be here and, and look forward to a good discussion.

   4. SPSpeaker8:43

      And one of the things, uh, Will, if I'm r- if I'm correct in reading this and listening to you, you s- you formed, uh, you affe- you joined Widgetbox after it had actually been founded.

   5. SPSpeaker8:53

      That's correct. So there were three technical founders. Uh, they'd actually raised $10 million before I got there.

   6. SPSpeaker8:58

      Some from you.

   7. SPSpeaker8:59

      Some from me. I was the seed fin- financer, and then Sequoia did the A round, and then, um, Frank Jones and Tommy Vardell at Northgate did the B round. And, uh, at that point they were looking for a CEO and, uh, th- they, they did a nine-month search, and the last guy that we made the offer to, I tell- told myself at the dinner, "If this guy doesn't take the job, I'm doing it." He didn't take the job [laughs] . So yeah.

   8. SPSpeaker9:23

      So, so, so some different paths here. I mean, starting their own company, going out and trying to, to find, uh, the idea, put the team together, uh, versus joining a startup after it's had the, the initial founders. The, the way we wanna start this is to, is to ask them a little bit about what led them to decide to follow an entrepreneurial path, um, because many of you are in business school or are not in business school. You're thinking about this, and you've got a s- set of ideas in

6. 9:53 – 20:23

   Why they chose entrepreneurship—and the first big surprises

   1. SPSpeaker9:53

      your head as to what it's gonna be like to be an entrepreneur. Um, and then what has been the biggest surprise for them as they joined the entrepreneurial world? So you've got a vision, what led you to, to, to, to do this, and then what's been the biggest surprise once you, once you jumped in? Let's start with Nazila.

   2. SPSpeaker10:15

      Um, so I, I think I touched on that. Uh, for me, the, my job was such a big part of my life that unless I was very creative and had the freedom to do what I wanted to do and didn't have to explain myself too much, um, I was unhappy. Uh, so I thought that a smaller environment, less bureaucratic environment, would, would afford that. I wanted to be my own boss, um, uh, and, um, kind of live and die by the decisions that, uh, I made. I also like adrenaline. I like living on the edge. Um, I like being pushed to make decisions. I, um, felt that I had too much cushion at Apple, frankly. Um, my decisions really didn't make a difference. The juggernaut was going on, and I was doing my best, but, you know, um, w- where was my contribution really? So those were some of the reasons, um, that I decided to jump into the entrepreneurial pool. Um, the biggest surprise, though, and this, probably you all are smarter than I was. I, I am an immigrant, so I always thought of myself as someone who can do anything. Just, just give the problem to me. I'll do it. I'll take care of it. I really never put too much, um, emphasis or attention on partners, and I learned the lesson the hard way, that, um, in a startup environment, the biggest surprise for me was how much you needed partners. Just like you can't have a... Well, you can have a baby on your own, I suppose. You could go [laughs] adopt one, and maybe that's what you did, um, coming in late as a CEO. I, I don't know. You know, the analogy stops there. Um, but [laughs] but, but, uh, you know, I cannot emphasize the importance of partners, and I cannot emphasize how much I was lacking in that dimension, um, and how much I wish- Had I done things a different way, to go back and make ideas, joint ideas, as opposed to my idea. So that was the biggest surprise for me.

   3. SPSpeaker12:13

      Are you thinking about a, a partner in the sense of a founding partner, or are you thinking about a partner in terms of somebody in the supply ch- chain or the, the-

   4. SPSpeaker12:22

      Oh-

   5. SPSpeaker12:22

      ... distribution channel, or-

   6. SPSpeaker12:23

      ... uh, a founding partner more

   7. SPSpeaker12:24

      ... founding partner.

   8. SPSpeaker12:25

      Yeah, and, and, um, I also, just let me briefly say that I, I think, um, my experience in business school told me what I was good at-

   9. SPSpeaker12:34

      Mm-hmm

   10. SPSpeaker12:34

       ... not what I was lacking.

   11. SPSpeaker12:36

       Mm-hmm. [laughs]

   12. SPSpeaker12:37

       And, um, so I, if I were to do it again, I would emphasize a lot what I'm lacking so that that defines the type of partner you'll be looking for. Um, so more on that-

   13. SPSpeaker12:48

       Okay

   14. SPSpeaker12:48

       ... if, if the discussion goes that way.

   15. SPSpeaker12:50

       Okay. Will?

   16. SPSpeaker12:52

       Yeah, for me, I think it was just, uh, a, a combination of a lot of different variables. But if you, if you think about where we live today, right now in this valley, it's almost like how could you not do it? Uh, you know, if not now, when? You know, and this is a, the whole ecosystem here is geared towards risk-taking, testing yourself. There's a whole, you know, obviously a huge base of institutional venture capital support. Legal systems are here. And it, really, it came down to, I remember doing an investment when I was in, uh, in the investment side about how to test semiconductors, and at the time, there was, the state of the art was testing a quarter of the wafer.

   17. SPSpeaker13:23

       Hmm.

   18. SPSpeaker13:24

       And then it was half the wafer, and then finally this breakthrough to test the full wafer. And I feel like entrepreneurship is a full wafer test. It's ev- it's testing every part of who you are. It's testing your passion, your endurance, your perseverance, your leadership skills, your sales ability. Uh, you know, it, it, it, it, and, uh, I just felt that if I was 65 looking back on my career, I would never forgive myself for living in this environment at this time and not testing the whole wafer. You know, and so venture capital's a great job, but it's li- it's literally a, it's a, it's a research job, you know, where, and it, it's a job where you make, uh, investment decisions. And I always felt when I met with the entrepreneurs, I'm like, God, these guys, you know, I admire them so much, and, uh, they just got to the cen- point where I, I couldn't imagine not doing it.

   19. SPSpeaker14:13

       And once you jumped in, what was the biggest surprise?

   20. SPSpeaker14:17

       The biggest surprise was, um, it being okay that you don't have all the answers and trusting in process to help you get to an answer. Like, I really thought, 'cause as an investor, you're hypothesis driven. You believe that you're making an investment based on the following characterization, A, B, and C, therefore D, and as soon as you start running a company, you realize, none of those hypotheses [laughs] actually work. And, and you're, 'cause a venture guy, you're paid to have an opinion. When they say, "Will, what's your opinion on this deal?" You have an opinion. And all of a sudden I realized, like, shit, I don't even ha- I don't even know what to do now. Like, and, and realizing that that was a very unnatural feeling because I, I'd prided myself on always knowing the view, and realizing now I don't know. I don't, I... And we, we basically, the, in the context of this is we had no idea how to make money, none. And like dealing with that and accepting that and then realizing like, well, how are we gonna get out of this problem? And just deciding that, okay, this is... I'm reminded when Nick Saban won the national championship, he said that, "Hey, we believe in process, not results at Alabama." And what did that mean? What he meant was that if you know how to block, you know how to play defense, you know how to do these things, you just play the game, and then you trust the process to help you get to the result that you want. But so rather than a random act of heroism where you're gonna have this flash of genius that's gonna make you rich, just deciding to slowly, steadily plod your way in a predictable way where you're going and then trusting that that's gonna d- uh, help you arrive at the right answer, as opposed to a priori saying, "I have the answer. Now we'll just make that happen." That was a really hard transition, uh, from, you know, being a investment hypothesis driven thinker to a process driven thinker.

   21. SPSpeaker15:59

       Hmm.

   22. SPSpeaker16:01

       Mike?

   23. SPSpeaker16:02

       Um, [clears throat] I w- out, out of engineering school, I went, worked at a place called Hughes Air- Hughes Aircraft Company, and one of the projects I got to work on was a solar powered race car, and it was a totally cool job. Uh, we raced across Australia from Darwin to Adelaide.

   24. SPSpeaker16:17

       Wow.

   25. SPSpeaker16:18

       And, um, this car, before we built this car, the fastest, again, this was a long time ago, the fastest solar powered cars were going maybe 20 miles an hour, maybe 22 miles an hour. Um, and, um, we built a car that could go 55 miles an hour forever just on sunlight, which is from an engineering perspective, like this amazing accomplishment. Uh, and we won the race. And we came back, and I remember just clear as ever my boss saying, "That's amazing. You know, I just want to let you know the average raise at Hughes Aircraft Company is 6%. You're gonna get 6.5% this year."

   26. SPSpeaker16:52

       [laughs]

   27. SPSpeaker16:52

       And just the feeling at that moment of, you know, your fate being in your own hands was just like, okay, this is not gonna work. Um-

   28. SPSpeaker16:59

       [laughs]

   29. SPSpeaker17:00

       ... I, I was also fired, um, uh, between y- between first and second year at, at business school, I went and worked at a consulting company. Uh, and at the end of the summer, everyone got an offer to come back except for me, and they fired me because I scowled at people senior to me in the firm. And I, they told me that. I, I admire them for at least telling me that. But, um, you know, talk about wanting to be in control. These were all sort of strong influences. Um-

   30. SPSpeaker17:25

       [laughs]
7. 20:23 – 24:48

   Lesson set #1: course-correcting fast, and managing the investor relationship

   1. SPSpeaker20:23

      let's get started with, uh, let's, let's start with Will.

   2. SPSpeaker20:27

      Hmm. [laughs] Um, I, I would say, uh, the, uh, kinda... I don't wanna repeat myself a little bit, but I think what Mike said is also really important, too. Like, you know, Andy Komisar wrote the book Plan B, and, uh, it basically is the same point Chuck made about tacking back and forth. It's, uh, it's, it's being, having a smart, high-energy team that, um, learns really rapidly what the signals the market are giving it. And, you know, we, we had a thesis about our business, and now we're on, like, thesis four, I think, probably. Um, and, um, recognizing that, uh... Yeah, like another... I'm, remember Chuck used to be on the board of Kana, and the founder of Kana told me once when I was thinking about s- starting a company, he said, "Hey, listen, the first step's the hardest, but once you start, you're just on a journey and a process, and then..." Um, y- and I think that's right. Like, so just beginning this work, be very, very aggressive about it, but at the same time, be very flexible as a team about how to tack based on what you're hearing. So theses around revenue or monetization or customer acquisition, s- market segment, um, positioning, all that, um, y- it should be, uh, taken with, th- with a degree of flexibility so that you can re- reconstitute yourself. And then being able to work with investors is really critical around that because investors, again, going back to my original premise about difference between startups and investing, investors are thesis-driven. So if you say, "We're gonna go do this, and we're, I'm raising money for this purpose, and we're gonna attack this market this way, and we're gonna characterize revenue model this way," and then the first board meeting, you're like, "Well, [laughs] that's not what... That didn't work," you know? Y- having the ability to have that conversation with them so, um, they're with you through the journey as opposed to being surprised by the tack. And so I would say being able to work down with your team and try to attack the market and then learn. And then the other challenge has been: How do you work back up with your investor group to basically say, "Okay, well, here's what we're seeing in the market. Here's the data points. Here's how I'd characterize those. Here's why I think we need to move direction a little bit"? And then making that an open conversation so they become part of the solution as opposed to, like, critically observing your problem. So I don't know if that makes any sense, but-

   3. SPSpeaker22:55

      So, so the lesson is, uh, be ready for changes of course and embrace them.

   4. SPSpeaker23:01

      Yeah.

   5. SPSpeaker23:01

      And also have the courage to go back to your investor group and explain to them this is not, th- this company's not doing what they invested in.

   6. SPSpeaker23:10

      Yeah.

   7. SPSpeaker23:10

      And your, your point, your point about, as an investor, you've got a thesis and you're investing in a market, and, uh, if at the first board meeting you come back and say, "Oops, sorry, guys, I just took your $10 million, but-

   8. SPSpeaker23:24

      Right

   9. SPSpeaker23:24

      ... we're not going there."

   10. SPSpeaker23:25

       Right.

   11. SPSpeaker23:26

       Somewhere else.

   12. SPSpeaker23:26

       And the other thing I've, I've, I really learned, I think, and I say this with all due respect, is, like, investors are extremely opinionated, ma- you know, like, alpha male-type people, um, typically. And they, and they have lots of opinions. Um, the other thing I learned was to acknowledge and be respectful and listen to all of them without being overly reactive to responding [laughs] to any particular one of them. Like, uh, uh, what I mean by that is they're gonna say, you know, "You should do this, this, this, and this." And at first, I'd be like, I'd be, you know, I'd go back and be like, "Okay, well, that doesn't make sense. Why would I do that?" And, um, but I was... I over, I, I... So there's a fine line, I guess, between having an open conversation with investors, being extremely respectful of their opinion because CEOs who don't listen to their board get fired relatively quickly, in my experience. So you listen, but then you still are in charge. And so you have to decide how you incorporate their feedback, make them feel like they've been heard without making decisions that you go against your own gut feel or what you think the business should really do. That's something that's also hard to learn, I think.

   13. SPSpeaker24:30

       I just-- So you were, he was an investor with a firm called Hummer Winblad. [sneezing] Uh, one of those two was Ann Winblad. Uh, so let me change a little bit the alpha male to very determined and, and opinionated.

   14. SPSpeaker24:43

       Yes.

   15. SPSpeaker24:43

       How is that?

   16. SPSpeaker24:44

       That's very, [sneezing] very fair.

   17. SPSpeaker24:46

       All right. Mike.

8. 24:48 – 29:15

   Lesson set #2: speed as a competitive weapon—and how to create momentum

   1. SPSpeaker24:48

      Uh, so for me, one of the, um, golden rules is speed is the ultimate weapon. Um, and I've learned that in a, in a good way and a bad way. Uh, I have all these little [sneezing] sayings. I, I think the, the probability of any business development deal ever happening declines by ten percent every day it doesn't close. Um, and I really believe that. Um, so, you know, the Mic- We, we closed the Microsoft deal with Direct Hit, where our results were shown on the Microsoft search result pa-page, and that deal was done in, in less than ten days. And I think if it stretched on to, you know, six weeks or something, it never would've gotten done. Same with AOL deal. Um, I've just seen through my, you know, history which ones close and which ones don't. Same thing with, with raising money. Um, I think I've raised seven rounds of financing, and six out of the seven had a signed term sheet the same day I pitched. Um, and I think if you stretch it out longer, all these questions and second thoughts and more market research and whatever comes up and, and even closing employees. Uh, I-- Someone comes in for an interview, we'll do, uh, due diligence checks while they're still interviewing other people in the company, and before they leave the building, we'll give them an offer if we like them, and we'll say, "Are you ready to accept?" And they're, like, floored. They went, "Right now?" We say, you know, "Yeah." [laughing] And then we say, "Okay, I understand. We don't wanna rush you. Uh, sleep on it, let us know nine o'clock tomorrow morning." But we get [laughing] a lot of those people, and if we don't, I've seen people y-y-you've spread out, and then you, you know, you lose them. Also launching products. All my companies, we've launched, we've launched a product within three months, three and a half months of, of, of starting the company. And then you, it's not a very full-featured product, but you get the feedback from the market and everything. So speed, for me, is far and away the, the most important lesson I've learned.

   2. SPSpeaker26:33

      So, um, s- one of the points you made there w- had to do with the, with raising money and, and signing the, the, uh, the deal the same day you, you pitched it.

   3. SPSpeaker26:43

      Yes.

   4. SPSpeaker26:44

      To-- Were you able to do that the first time out? Let's assume that, that, that, that these people are all gonna be the first time out. So-

   5. SPSpeaker26:50

      Yeah. So, um, people always ask that. And, um, so let me just say part of the, part of the, part of the reason all of us, I think, here are doing this is for aspirational, to sort of get you guys, you know, motivated and excited. So, um, [clears throat] some of these things may seem like, "Oh, I can't believe that." Um, but it's sort of a goal to go after. But actually, Drea-Draper Fisher Jurvetson, my second company, um... So I, I had one under my belt, thirteen million dollar one. We pitched them at eight fifteen on a, on a Tuesday morning in April of nineteen ninety-eight, and we got a signed term sheet from them by four thirty. And the way you do that, y- anyone in this room can do that. I think some of the techniques are, um, you come into that meeting with what I call an if/then contract. An if/then contract, I go get a customer for the, for the product and, and make these amazing claims. Like, if we can provide search results in fifty milliseconds that eighty percent of your users think our results are better than your current results, would you buy them for a dollar per thousand? And almost anyone will say, "Yeah, okay." So they sign a letter or whatever, and, and then I walk into Draper Fisher Jurvetson with this letter. Now, there's all sorts of caveats and clauses and no legal contract, but at least Draper Fisher says, "Okay." The, you know, market risk has been eliminated. He's got a customer. And also, you walk into that meeting with, uh, sort of how you're gonna build a product. Here's the Gantt chart. Here's the people. Here's the three people I'm gonna hire. I've already talked to them. They've already committed to join. Here's the, you know, the database schema. DFJ doesn't know whether the scheme is right or not right, or it's really gonna take six people. At least they think, "Okay, this person seems to know where they're going." And so it's much easier for them to say, "Okay, yeah." And of course, you also play competitive pressure. I always do my meetings, I'm meeting with s- you know, Will's been on the receiving side of this probably. W- I meet with three VCs in the same day, and I say, "It's moving fast, and I'm actually expecting a term sheet by five o'clock today." And sometimes they'll call me back the next day and say, "We're in." And I say, "It's gone." And they're like, "What do you mean it's gone?" And I say, "I told you five o'clock." And they say, "But all entrepreneurs say that." And I say, "Well, sometimes it is gone." So I think if you just project this, if you project this, you can get it done. And a lot of times, you know, the venture capitalists will sense this, and they'll say, "Wow, this is, this is moving."

   6. SPSpeaker28:54

      Who were you dealing with at Draper?

   7. SPSpeaker28:56

      Uh, at, on that day?

   8. SPSpeaker28:57

      Yeah.

   9. SPSpeaker28:58

      I had Tim, uh, Steve, and, uh, John all in the room at eight fifteen.

   10. SPSpeaker29:03

       Yeah. Well, th-they are a group that can and does and do make-

   11. SPSpeaker29:08

       Yeah

   12. SPSpeaker29:08

       ... make quick decisions, so that was, that was, that was pretty good.

   13. SPSpeaker29:11

       Oh, yeah.

   14. SPSpeaker29:11

       Yeah. Uh, let's see, who are we g- Sundorzola.

9. 29:15 – 35:04

   Nazila’s counterpoint: persistence, communication style, and founder confidence under pressure

   1. SPSpeaker29:15

      Yeah, um, wow, I'm floored. [laughing] I want you on my board. [laughing] Um, my experience has been very different. Um, the small sailboat analogy, uh, I think corresponds to our journey definitely with, uh, Junors, the company I'm leading right now. Um, it was different with eCircles. Uh, this was late nineties, you know, ninety-eight, uh, ninety-nine. We raised twenty-seven million dollars, and it was very much of this quick, uh, you know, now or never. Um, but I guess my biggest lesson is that you shouldn't give up. And if nine o'clock at night on Sunday, you still feel that you have the passion, it's an, uh, iit's an affair that's not finished, if you're still coming up with good ideas, then keep on at it, even if you don't have the term sheet, right? Um, uh, so, so persistence, uh, always pays, and it's kind of what Will was saying about the process. Be very, um, focused on what you're doing, where you are in the process, and don't give it up. Don't let people derail you, because they will try to. The other lesson I learned is that maybe I'm too much of an engineer. Um, I, I really don't have it in me to go and bluff like that.

   2. SPSpeaker30:34

      Yes, you do. [laughs]

   3. SPSpeaker30:35

      Uh, yeah, exactly. So I need you as a coach. Um, I, I, I, I will urge all of you to find a Mike and learn from, seriously. There have been, uh, board members in my company that have told me, "You did this, and this is how you spoke about it?" I think it's also, perhaps, not to put too fine a point on it, a female characteristic. We, you know, y- yeah, you were expecting me to do this, right? Why should I even brag about it? As opposed to, because you're dealing most of the time with these alpha males that are-

   4. SPSpeaker31:07

      [laughs]

   5. SPSpeaker31:08

      I characterize them as lions, right? The, uh, I am an ant, you know, I build.

   6. SPSpeaker31:12

      [laughs]

   7. SPSpeaker31:14

      And then I face the lion, and the lion just basically all he does all day long is sit under the shade-

   8. SPSpeaker31:20

      [laughs]

   9. SPSpeaker31:21

      ... and watch. Ooh, that looks like a good prey over there. Attack. And then when the lion is attacking Mike, Mike is like, "Whoa, I've got three other lions coming, quick."

   10. SPSpeaker31:31

       [laughs]

   11. SPSpeaker31:32

       Whereas me, I'm-

   12. SPSpeaker31:32

       [laughs]

   13. SPSpeaker31:33

       Okay, so we're laughing about this, but this is a serious point. Find out if you're an a- an ant, get yourself a lion partner somewhere.

   14. SPSpeaker31:42

       [laughs]

   15. SPSpeaker31:43

       If you're a lion, get yourself an ant partner.

   16. SPSpeaker31:45

       [laughs]

   17. SPSpeaker31:46

       Right? Because both are necessary, and that's, the combo is really unbeatable. The combo is what lets you do the speed, right? And the ant and the lion better trust each other. You don't look like me.

   18. SPSpeaker31:59

       [laughs]

   19. SPSpeaker32:00

       Yeah, yeah, yeah, I know. You wear lipstick. Yeah, I know. But I have, I have a brain. I can help, you know. Um, let me also share, since I've got the audience laughing, I think I have permission here.

   20. SPSpeaker32:11

       [laughs]

   21. SPSpeaker32:11

       Um, I was six months pregnant with my second daughter. Amazon made an offer for the company I was at, um, eCircles, uh, at the time, for two hundred and fifty million dollars. Two hundred and forty-five million dollars, to be very precise. Imagine, second child, belly comes out much faster. I am this big, and I'm literally jumping up and down on the table saying to the CEO, "Take it. Take it. Take it." And he looks at me and he says, "You're not an entrepreneur. You really don't have the balls."

   22. SPSpeaker32:45

       [laughs]

   23. SPSpeaker32:46

       An entrepreneur will say no to them. I'm like, "No, this is two hundred and forty-five million dollars. Don't say no." We sold that company for thirteen million dollars to classmates.com six months from that point, right after, you know, whatever, February of 2000, April of 2000, right? So at that point, I really felt this small. I'm like, "Oh yeah, that's right, you know, I'm pregnant and my hormones have gotten the better of me."

   24. SPSpeaker33:11

       [laughs]

   25. SPSpeaker33:11

       "And I'm definitely not an entrepreneur. That's why I'm working for this guy as a VP of marketing. I may have all these ideas. I may know where I'm going, but yep, I'm not an entrepreneur." Don't let ever the world tell you that, even if you're six months pregnant.

   26. SPSpeaker33:25

       [laughs]

   27. SPSpeaker33:26

       Right? Seriously. Stick to it. Go to the board. Do whatever you need, you know, because sometimes... Right. People come in different packages, and don't let the world tell you that you need to look different. Um, anyway, I stop.

   28. SPSpeaker33:42

       [laughs]

   29. SPSpeaker33:43

       Well, and there's a, there's a, uh, a female intuition in some of these things, I think, that's very important. I'll tell you one other story. Uh, Hotmail, Sabeer Bhatia-

   30. SPSpeaker33:52

       Yeah
10. 35:04 – 40:52

    What business school didn’t teach: relative risk, irrational organizations, and the sales blind spot

    1. SPSpeaker35:04

       Okay. I thought about this quite a bit. I, I guess I have three, uh, comments, uh, that I thought about. This is more about what I didn't learn. Um, the first is that risk is really relative. People think that doing startups is risky. My, a lot of the guys, when I look back, I went to my 10th this, this past year, went to Merrill Lynch, Morgan Stanley, BCG, McKinsey. They all got fired, all of them. And, uh, fired in two different waves, the first in 2002 and then again in the last year. There's no such thing as a safe haven in this economy. Uh, people will cut jobs as soon as they decide. And by the way, you're like a number in some budgeting exercise. The CFO says, "We gotta cut heads, you know, 15%." And they're just like, "All right, take this whole department out." Uh, so just first thing I think is just there's no such thing as a safe place, so if you're gonna take risk, which you are, whether you realize it or not, you might as well be in control of your own destiny. That's the first thing that, that I think a lot of my classmates got wrong. And by the way, when you're a 10-year Merrill Lynch vet and you get whacked in New York City in the meltdown of a financial market, what are you gonna do then? You're screwed. If you're an entrepreneur in Silicon Valley and it doesn't work out, there'll be plenty of things to do, I guarantee you. Se- uh, second thing is I really think business schools over teach how rational organizations are.

    2. SPSpeaker36:21

       [laughs]

    3. SPSpeaker36:23

       Uh, they basically, basically make up this thing that bus- every business is some DCF model or some rational exercise, and then everyone gets around and they make a logic-based decision about how, what to do. When I first got out of the business school, I remember going into meetings and going, "What the fuck just happened?" Like, how did that decision just get made? It makes no sense whatsoever, and I literally was like, "This is so weird." I, I was, like, disoriented for, like, weeks and just, like, I don't understand how anyone's making their decisions. Like, no one's even doing any analysis. They don't understand what they're talking about. And then I read this book, and it was kind of a cliche, but it basically said there's two types of companies. There's companies that are idea driven, where they're flat, they're merit based, and people-- they're generally engineering companies in a lot of ways, and they make decisions based on rational logic. And then there's people driven companies that are driven by politics and personal affiliations, and logic has nothing to do with it. There may be this kind of pretend that there's a process, but basically there's some decision that gets made based on who knows who or this or that, and all of a sudden it gets announced to the company. And generally, if you work in those companies, everyone goes, "Whoa, what is going on?" And I worked in a lot of people pol-political based organizations and, uh, and as a b- MBA, a business person, I just was completely dumbfounded by how companies were working. And I, I think that there's, you know, they, there's like OB and people talk about that, but really, I think one of the challenges about business in general is, or ec-economics or finance, is people presume logic is the basis for how large companies make decisions. And all we have to do is look at Washington, D.C. to realize that's not true. [laughing] Um, the last thing I would say, uh, is some-- for some reason, business schools are prejudiced against sales.

    4. SPSpeaker38:09

       Mm.

    5. SPSpeaker38:10

       And like they're-- I guarantee you, when you graduate, none of your classmates will become salespeople. And yet John Thompson, John Chambers, Sam Palmisano, the guys who run-

    6. SPSpeaker38:24

       Siebel.

    7. SPSpeaker38:25

       Siebel, uh-

    8. SPSpeaker38:25

       John Mortgage.

    9. SPSpeaker38:26

       Yeah, John Mortgage. Uh, Steve Ballmer ran sales for Microsoft. Salespeople run the world [laughs] you know? Like, they, they are the guys that go in like-- And there's-- it's very rare that a marketing person's gonna run Cisco or IBM. You know, it's salespeople. So why is it that business schools don't, don't embrace sales and sales cultures and variable based compensation? Like, all right, we're gonna pay you a hundred, but you can make three hundred if you knock it out.

    10. SPSpeaker38:54

        Mm-hmm.

    11. SPSpeaker38:54

        Most MBAs are like, "No, I just want a one twenty-five and little bit of variable." But it's like, why? Like, if you're good and you can sell, then you should go and sell. And certainly, whether you're selling to raise money or selling your product, like sales is the heart of everything we do. And I just wish that someone had said to me like, "Go become a sales guy," you know? Or like, learn sales or sales management or like-- And it's kind of like this dirty thing like, "Yeah, we'll do product management. We'll do business strategy. Oh, and then there's someone's gonna sell it." Well, who? [laughs] You know? If-- and, and if you're gonna manage salespeople, it'd be, it'd probably be good to do that. So I, I, I just don't get that part of it. Um, and then one last thing and then I'm done really quickly. Uh, MBAs all have the same mental framework for how they make decisions. And when you go into a company, you have to, you get almost challenged a little bit. Like, so like when you work with a visual designer, they're very creative, and they think in terms of pictures and, and, and, and design. And then engineers are very logic and architectural driven. They want to understand scale and all the other things. And, um, when you do a lot of group work at business school, everyone's kind of sharing a common framework because they're teaching you a, a frame, a method of decision making. And then you get into a company, and you realize there's a lot of this communication problem. You're like, "This person, I don't understand how they think" or, "This makes no sense what they're saying to me." Well, that's because they, they're looking at the problem completely differently than you. And I, I would say the other thing I wish I'd done more in business school is do cross discipline work like with other people not in my school. And I think the D School here is a great example of that, where you can go work with some creative designers and some engineers and, and you can really realize that to solve a problem with people from different disciplines requires a degree of flexibility in how you communicate and how you think about it. And that was a real shock to me, too, when you end up-- Like I, I have a couple of people who work for me who are designers, and when I, whenever I talk to them, I realize like, wow, I don't even-- They're like thinking in, from this problem from such a different vantage point than me. But yet it's very valuable the way they're thinking, and they're better at it than I am. So, um, those are all things that, uh, I wish I'd learned more of, I suppose.

11. 40:52 – 49:13

    Sales as core craft: learning by doing and making the ask

    1. SPSpeaker40:52

       Um, [clears throat] so a, a while ago, I had this, this dream, this fantasy like, gosh, I wish I had this magical power that I could, to get my company to work, I could control the brain of someone I'm trying to get a business development deal with. [laughing] You know, get inside, get Google to do this, get Google to up, you know, change my page rank or whatever. Um, and, uh, I'm trying to get around to supporting Will's point that, um, and then I realized you actually can. Um, and that's through this, this persuasion, this charisma, this sales technique that I think is the most important thing CEOs do. Um, one way that I got a lot of experience was, um, in my first company, we were selling this software product, five hundred dollar software product over the telephone. And there were three people in the company, and, uh, we'd just gotten this article in this magazine, and sure enough, three hundred people called [laughs] in the next two days saying, "Yeah, we wanna get the product." We didn't even have it finished yet. We were a little bit-- jumped the gun. And so we cr-- you know, we created this database, and we started to put everyone's name down and call them back. And then more people would call in about the product. So in the beginning, out of every hundred calls, you know, I would take their information down. I would send them a brochure, and I would, you know, I'd say, "Okay, I'll follow up," or something like that. I basically was closing nothing. In ten weeks later, um, out of every hundred calls, I could get thirty-three of them to give me their credit card number by the end of the call. And you just learn to say, "Well, look, you know, we have a thirty-day money back guarantee, so why don't you just give me your credit card? I'll send it to you, and you can just do the tutorial if you don't like it." Why do you, why do you wanna spend time reading the brochure? Why don't we just have the product in your hand? And you can try different techniques and different approaches, um, and learn which ones work. Um, and the other thing I think that happens, um, that's very powerful- ... is when you ask for something huge, something you think is maybe a little bit outrageous, and someone gives it to you. Um, it's a very eye-opening experience when you say to AOL, you know, "Why don't you put our search results right here, and, uh, s- split the revenue 50/50 with us?" And when they say, "Okay," you're like, "Oh, my goodness."

    2. SPSpeaker43:03

       [laughs]

    3. SPSpeaker43:04

       You know? Um, there are some other analogies I could give, maybe probably not appropriate, uh, in this environment, but where if you go for something you think is maybe unattainable and sometimes they say yes-

    4. SPSpeaker43:12

       [laughs]

    5. SPSpeaker43:12

       ... um, it's a very powerful experience, and it makes you try more often, so.

    6. SPSpeaker43:18

       Good.

    7. SPSpeaker43:19

       Okay, so I, I say that business school should require every student, before graduating, to sell $10 worth of goods. $10. I second your point, and I'm gonna move on.

    8. SPSpeaker43:34

       Good.

    9. SPSpeaker43:35

       Selling is underestimated, and it is hard to get $10 out of a person, believe me. It doesn't matter the age, doesn't matter the size, doesn't... So, um, in our company at Junors, we started as a free service. We debugged it, and then realized that we have a long way to go for this market to realize, and we better have some money coming in. So we turned it into a subscription service, and the amount of effort and thinking that went into this exercise, I can write books about. But the net result of it is that we became the, the, the masters of our own universe, if you will. It's a very small business, but it is self-sustaining, right? So importance of sales, I can't, I can't highlight it enough. Um, similarly, I thought that in business school, um, my biggest learning was on organizational behavior, just because I love to learn more about people and how minds work, um, and accounting because I knew nothing about it, right? So it, those were the courses that attracted me the most and I learned the most from. Um, uh, uh, I think there is an overemphasis, at least in my years, uh, I'm sure things have changed, on, uh, maximizing, uh, revenues and profits as opposed to maximizing value, and that's a critical question. That... And the reason for it, I think, goes a little bit to the fact that, um, all of us living in US, um, uh, capitalist society and so forth, I d- I don't know what the reason is, but we always think bigger is better, and, um, I'm not sure if that's the case for everyone. So understanding on the spectrum of s- very, very, very small to very, very, very large, where your idea, product, mentality, personality, wish for life, you know, what- whatever, where that fits, I think we'll start with the question: What am I maximizing? Um, certainly you can't create Cisco just maximizing value, although some would argue that if value wasn't maximized in some form or fashion, Cisco wouldn't be created. We can have a debate about which one comes first. But at the end of the day, the question that I face as a CEO in my company right now is, what am I maximizing, right? Certainly, I'm not maximizing number of people coming to the site and registered members because I'm putting in front of them a 1995 barrier, right? Subscriptions, give me money, otherwise you can't use the product. But I'm maximizing the fact that I know the people that I have are going to pay this money because there is a pain that I solve for them. That's, that's what I'm maximizing right now. So, so, so on that. Uh, another point, um, scale. When I was at Apple, I was so ignorant. I would look around and say, "Oh, this is so stupid. This is so big, and they don't really see the value of my great ideas. You know, what, what is going on?" I, I was like you. I was like, "I am, I'm an MBA. Use me," you know? [laughs]

    10. SPSpeaker46:48

        [laughs]

    11. SPSpeaker46:49

        "I'm smart. I can do," et cetera. Um, but if you end up in a big company, please do me a favor. Take the time to learn about scale. You know, just watch it. Just watch how organizations are built, watch how products are shipped. Just watch it, 'cause there are a lot of lessons that you'll learn that you don't know where they- when and where they are going to come handy, but they will, I guarantee you. Um, so, so scale, it's kind of, if you don't understand it, like I was when I was at Apple, it's easy to poo-poo it and just say, "Ugh, I'm just gonna go be an entrepreneur." But if you pay attention and learn from scale, then you can be a better entrepreneur, I think. Um, and I will harp once more again, learn where you are weak. I think in business school, because it's such a selective program at Stanford, people that come in, we all felt we were the chosen, and the school does nothing to diminish that, right?

    12. SPSpeaker47:51

        [laughs]

    13. SPSpeaker47:52

        We're, we're continuously pumped. At the very same time that I was going through business school, my husband, my now-husband, then-boyfriend, was going through a PhD program at Stanford, and every day he was told how stupid he is.

    14. SPSpeaker48:05

        [laughs]

    15. SPSpeaker48:06

        Seriously. He was writing a thesis. He was doing cutting-edge work. He was doing modeling like you wouldn't believe. Uh, and every day they were telling him, "Uh, yep, you came short. You came short. You..." And every day I was just, for sitting in these great chairs, I was being told I'm wonderful.

    16. SPSpeaker48:20

        [laughs]

    17. SPSpeaker48:21

        And, um, and, and so what happens is that you really, I think, gravitate towards what you're strong at, as opposed to finding out what you're weak at. And, you know, you may, you may be fine. You know, I, I, I'm good at talking, so I'm just gonna keep on talking.

    18. SPSpeaker48:38

        [laughs]

    19. SPSpeaker48:39

        I may not be very good at thinking or understanding people's feelings, so I'm just gonna let another person do that. That's certainly a strategy. Nothing wrong with that. But if you want to be a more, um, holistic manager and, and more well-rounded entrepreneur, I would definitely pay attention to the negative space and what it is that you don't do well and why and how can you, how can you beef it up?

    20. SPSpeaker49:04

        Thank you. So we've got a couple other questions that we can throw out here to the panel, but, uh, let's, let's open it up here for, see if there are any questions from the audience. Sure.

12. 49:13 – 50:44

    Audience Q&A: bootstrapping vs. venture funding tradeoffs

    1. SPSpeaker49:13

       Um, Bill just mentioned, um, uh, financing, uh, on your, on your own, uh, uh, growing organically. A- and I actually have started a number of businesses, one of which we had 30 partners who each mortgaged their house for half a million dollars, and the company is now the biggest company in, in the United States in this particular field. Um, could anybody comment on that? I've never taken on any debt to, to finance anything in any business.

    2. SPSpeaker49:44

       Anybody want to? If not, we, we'll-

    3. SPSpeaker49:46

       I can-

    4. SPSpeaker49:47

       Yeah, I can start too. Go ahead.

    5. SPSpeaker49:49

       Go ahead, Mike.

    6. SPSpeaker49:49

       Uh, so my first one was, was self-financed with, uh, $1,500. We never raised debt or equity from investors. Um, it's quite painful, uh, to run a company with $1,500 in invested capital. Um, it reduces your flexibility about having any computers, for example, in the company. [laughing] Um, so, uh, I don't think you have to raise venture money, but it's a sort of an optimization decision. You know, the fastest way to get there a lot of times is to raise venture money. Now, I actually haven't raised a lot of venture money. Direct Hit started with $1.4 million and XFire started with $1 million. Um, so I think you can do just fine with first, with... See, I'm even, I even jinxed the cool in, in Silicon Valley. Even small amounts like a million dollars. [laughing] I mean, you can, you can do quite fine with that.

    7. SPSpeaker50:42

       Another question right here.

13. 50:44 – 54:20

    Audience Q&A: handling personal biases while executing

    1. SPSpeaker50:44

       Yeah, I just-- Thank you, by the way. My name is Erica, and I'm a first year at GSB. And we have an ethics class and an OB class. In both of those classes, we've been talking a lot about biases recently and just how we're inherently biased and s- kind of like self-fulfilling nature. And I'm, I'm constantly struggling with that and then also looking at entrepreneurial spirit and just like head down, get it done. Like, how do you-- There's a little bit of ta- of talk about attacking and reacting to the market, but how do you reconcile your own biases with also just moving straightforward ahead?

    2. SPSpeaker51:21

       By biases, you mean in terms of, of, uh, thinking about what, what consequences might be of a particular action? Or, uh, are you thinking about biases against entrepreneurship or for entrepreneurship?

    3. SPSpeaker51:34

       No, just, uh, uh, the, the prior.

    4. SPSpeaker51:36

       How do you deal with your personal, your, your, your, your, your personal-

    5. SPSpeaker51:40

       Yeah

    6. SPSpeaker51:40

       ... you might call it prior priors in terms of how the world works?

    7. SPSpeaker51:44

       Mm-hmm.

    8. SPSpeaker51:44

       Yeah. Anybody want to?

    9. SPSpeaker51:47

       I'll take that. Um, so I came in with my biases about where the direction of the product should be. And it was fortunate that I had team members that helped me see how the market was reacting, what was good and bad, and we switched that. But I had very strong bias, and I, I'm of the school that says, you know, "If you don't believe it, nobody else will believe it." Right? So in that, I drove really hard, and then people kept on presenting me with data, here's how it's not going to work. Um, other times I haven't done so well, so it's a continuous struggle. Um, but you know, one of the things I do at the end of every day, I allow ten minutes to just sit. And it's amazing the things that occur to you in the, to me, uh, in those ten minutes. I would highly recommend you doing that because those types of answers don't come by sitting and, and thinking about it. Y- y- you know what I mean? You j- you just need to let them percolate a little bit, and then the answer will be self-evident. Um, but if you don't believe as an entrepreneur, nobody else will believe, so.

    10. SPSpeaker52:53

        Will, any-

    11. SPSpeaker52:54

        Yeah, the only thing I found is, uh, uh, that's really been helping me through that is being very authentic with people. And, um, you know, you think of entrepreneurs maybe, uh, y- you know, uh, there's a fine line between being, being like constant salesman optimism and being authentic [laughs] . You know, and if you've all met plenty of people, you go, "This guy is such a snake oil salesman." It's, you don't believe it. And so what I found that's been really helpful is having access to people where I can just be completely honest with and let my guard down and say, "Here's, I'm really struggling with this." And, um, I have, you know, y- y- you know, obviously, if you're a leader of-- you know, you don't wanna, uh, panic people by making it seem like it's hopeless or anything. But if you can have access to people who can, who you can gen- just generally lay out your concerns and get feedback, you rec- you really find out that, um, it happened to me recently. I went to David Hornik's conference, the Lobby in Hawaii, and it was just great for almost like just, uh, people sharing pain, [laughs] basically. It was really... Uh, but in a way, that was very cathartic in the sense that you realize, like, everyone goes through this. Even people who are super confident, super accomplishers have gone through very dark moments and, and they've, and e- e- e- even though you're going through that and you're concerned, y- you can find, you can get recharged by just, you know, having that kind of conversation, then being able to go back and get stronger to deal with, you know, your issues.

    12. SPSpeaker54:14

        Mike, anything to add on this?

    13. SPSpeaker54:16

        No, that's okay.

    14. SPSpeaker54:17

        Okay. Any other questions? Uh, right here.

14. 54:20 – 1:00:21

    Audience Q&A: what big companies teach—and what to avoid

    1. SPSpeaker54:20

       Nazul, you mentioned that there were things you learned from the large company that you could apply in entrepreneurship. I'd be interested to hear some of those lessons and takeaways. And if Mike too, if you learned anything at that aeronautics, uh, engineering company that you could apply, that you applied later.

    2. SPSpeaker54:35

       Well, Mike already told you, you learned that you get, uh, you get a six percent raise, right? [laughing]

    3. SPSpeaker54:39

       Six and a half.

    4. SPSpeaker54:40

       Six and a half for me.

    5. SPSpeaker54:41

       Well, but that's only the average. So, um, Mike, so what do you think?

    6. SPSpeaker54:48

       Uh-

    7. SPSpeaker54:49

       Other than the fact you, you, you learned you wanted to be an entrepreneur.

    8. SPSpeaker54:52

       [sighs] I mean, Will's point just made me think about, you know, the why some decisions are made. I mean, I was at, let's just say, an unnamed big company where, um- All day long, people would go into meetings, there'd be no agenda. People would talk for an hour, there'd be no action items taken. People would walk out of the meeting, and it, it's, it's as if the meeting didn't happen. [laughs] It's kind of like, why?

    9. SPSpeaker55:15

       [laughs]

    10. SPSpeaker55:16

        Um, so we don't have very many meetings at my companies. We have a, a 12-minute weekly all-hands meeting on Monday, and we have one-on-ones, you know, about 30 minutes between me and each of the direct reports, and that's about it. [laughs]

    11. SPSpeaker55:34

        So, so Nazila, you, you gave some examples of, uh, the problems that, that you saw-

    12. SPSpeaker55:41

        Right

    13. SPSpeaker55:41

        ... in large companies. But were there any things you took away from that that were valuable to you-

    14. SPSpeaker55:45

        Uh, absolutely

    15. SPSpeaker55:45

        ... in your entrepreneurial career? I think that's-

    16. SPSpeaker55:47

        Yes

    17. SPSpeaker55:47

        ... part of the question.

    18. SPSpeaker55:48

        Yeah. Um, so one thing to do is watch executives. Um, how they run meetings, what they do, what they are paying attention to. Um, and the best way to do that is to get to know their admin. If the admin knows and likes you, you've got access to the executive. So, uh, and don't be shy, you know. Go and ask them all your dumb questions. How do you run meetings and why? What kind of me- So those types of access to people that when you come out of, uh, that company, you will not have access to. The other thing I learned was the decision-making process in a big company. So if you're searching, um, for a partnership with an AOL, what you wanna do is understand how AOL works inside, so that if you have a notion of what a VP looks like and what type of decisions in this size company they concern themselves with, what a director looks like, what a manager looks like, then when you're facing them, you speak to their concerns. You're not speaking out of context, if you will. Their context. Um, lots of lessons about, you know, effective meetings, um, as well as non-effective meetings, again, depending on the executive, defen- depending on how, uh, the meeting was run. Um, and then the whole idea that, y- you know, how do you make a ship move when there are thousands of people involved? And are there any lessons that can be taken from that to apply to a small company? Um, so yeah, I think it was a really rich environment. Oh, one last thing. Lots of training classes and so forth available in large companies. Come to a small company, there is none of that. You have to beg your boss, you know, "Can I please go for this $200, you know, Entrepreneurship Conference or whatever?" The answer is, in my company, no. [laughs] And so, so, you know, benefit from those because larger companies are more accommodating.

    19. SPSpeaker57:45

        Anything on this, Cole?

    20. SPSpeaker57:46

        Yeah, I started my career at Morgan Stanley, and, um, I went through the analyst training program there, and I learned excellence of work product and how to just get stuff done. And-

    21. SPSpeaker57:57

        Mm

    22. SPSpeaker57:57

        ... uh, it was just, you're, you're like, okay, Friday 4:00, MD calls and says, "All right, we're gonna go see a client on Monday. We need to build this gigantic model and run these 50 different scenarios. And by the way, there better not be any mistakes, and have it printed, bound, and at my off- my, at my home in Westchester [laughs] by 7:00 AM Monday." And, um, a- and, uh, I just remember there at Morgan Stanley, they taught me once, like, "Hey, the difference between good and great is 10 minutes." And, uh, I said, "What do you mean by that?" He said, "Okay, so you, you do something and you're gonna go give it to a senior guy at Morgan Stanley. Print it out, put it on your desk, go walk around the block, go get a cup of coffee, come back and then read it again and you'll find four mistakes. If you print it out and take it to him and put it on his desk, he'll find them for you, a- or she will find them for you." And, um, big companies that are, that maintain a culture of excellence and execution can really teach you how to be very personally effective and to learn to functionally execute very quickly. Like, build this DCF now and do this or do that. And so Morgan Stanley, Goldman Sachs, those are companies that are big companies, but they're high-performance companies where they, a lot of good work gets done. I remember joking, like, you know those Army commercials, we do more by 6:00 AM than most people all do all day. I used to say that, you know, I'd go down to the lobby of Morgan Stanley in New York at 5:00 PM and everyone would be going home and be like, "All right, shift two is about to start. Let's go back up and crank some more [laughs] stuff out." You're like, you know how to, you learn to work. And that, that, that, uh, I take, I took that away for sure.

    23. SPSpeaker59:24

        So some of you have probably worked for or are working for large companies. I think, I think one of the things you should do is take from that, uh, that there's things to learn and that can be important to you as an entrepreneur. Uh, 15 years ago, certainly 20 years ago, but even 15 years ago, if you asked a venture capitalist in, um, Silicon Valley what was the right profile for an entrepreneur they wanted to back, it would be, you know, five or 10 years at Hewlett-Packard or some other company to learn these life lessons. Um, if you ask them now, they don't say the same thing, and the reason why is because you have people like these three people here. You can go to work for an entrepreneurial company, and you can learn these lessons, uh, because you have a, a, a set of managers in there who really are really excellent and can teach you that. Um, other, other, um, questions? Right here.

15. 1:00:21 – 1:14:03

    Audience Q&A: learning sales as an engineer + time horizons, fatigue, and today’s venture environment

    1. SPSpeaker1:00:21

       Um, I'm an engineer, and I don't know how to learn sales. I didn't go to business school. How do I learn sales?

    2. SPSpeaker1:00:28

       Well, you could try selling. [laughs]

    3. SPSpeaker1:00:30

       [laughs]

    4. SPSpeaker1:00:30

       I mean, like, I'm

    5. SPSpeaker1:00:31

       How do you get in there?

    6. SPSpeaker1:00:32

       So-

    7. SPSpeaker1:00:33

       Well, for, for, on, on sales, let, let me just, uh, reinforce what, uh, your panel has said here. Uh, you think about this. So you, you, you have a company and you're generating revenue, and, um, it comes time for, uh, a vacation. Um, so who do you wanna go on vacation? Let's say you're gonna take a month vacation. Could you get by with the marketing people gone for a month? Could you get by with the finance people gone for a month? The only people you couldn't let go for a month- ... are sales and operations. You gotta ship the product, and you gotta have someone to sell it, s- to sell it, right? So it is, it is really important. Now, your question is, how do you get a chance to do that? Is that right?

    8. SPSpeaker1:01:20

       Yeah, I mean, how do I get a chance, but also I've, I never had an opportunity to... I'm not hoping I'm ever gonna get an opportunity to go work at, like, a telemarketing firm or something like that where you get to, like, really learn your-

    9. SPSpeaker1:01:31

       That's only one kind of sales.

    10. SPSpeaker1:01:32

        Right.

    11. SPSpeaker1:01:32

        Yeah. Right. So let's get the panel here.

    12. SPSpeaker1:01:34

        Okay.

    13. SPSpeaker1:01:35

        Yeah.

    14. SPSpeaker1:01:35

        I ha- I have the answer for you. [laughs] I, I, I think any company you work for as an engineer would welcome an opportunity for you to sit on help desk. In my company, I am on help desk at least one- once a week, at least, for a couple of hours. Um, you'll answer emails and technical problems or issues people are having using your product and so forth, and then through answering those, you will learn how you can shift their perception of the product. That's like step number one in sales. You don't have to necessarily get dollars in exchange, but you help the company maintain that customer, right? So if you're an engineer, best place for you would be to sit on help desk. And do it and offer yourself, and I know wherever you're working, people will jump at the opportunity because, you know, you have the technical know-how. You'll learn a lot that way. Then tag along to the salespeople as a, as the expert, right? They always know how to sell, but they may not have as much in-depth knowledge of the product as you do. So just ask them, you know, "Hey, take me with you next time you go on a sales call. I promise not to open my mouth." Or if this is a really hard customer that has technical problems, "Tell me what they are, and I'll come prepared to answer those." Um, I, so I think the, the first step is just observation. Um, I'll also say that when I was an engineer, um, I wanted more money, and so I looked around at AMD and I saw salespeople making a lot of money. So I said, "I wanna go be a salesperson." So I went and applied, and they told me, "What? You're an engineer. Go back to your corner. What, what do you mean you wanna be a salesperson? You're an engineer. Sit there." And that was the reason why I applied to business school because [laughs] I thought, okay, in my limited worldview, if you wanted to sell, you had to go to business school, only to learn that there's really no selling happening in business school, right?

    15. SPSpeaker1:03:25

        [laughs]

    16. SPSpeaker1:03:26

        But, so anyway, there are avenues.

    17. SPSpeaker1:03:29

        We do, we now have a sales course.

    18. SPSpeaker1:03:31

        Yeah. Oh, okay. Okay, great.

    19. SPSpeaker1:03:32

        Yeah. Yeah. Now, this, this course was created because, uh, uh, I was teaching a, a class on, um, Netflix. And Reed Hastings, the founder, was in the class, and John Morgridge was there. And, um, uh, so John asked the question, he says, "How many..." Well, and also there were Frank Quattrone, who was the guy who took them public, and the lawyer who took them public. So John asked the question, he says, "How many people in th- in this room have been in sales?" And so one person raised his hand, John. None of the students raised their hand. So he looks at Frank Quattrone and says, um, "What are you doing these days, Frank?" And Frank sort of looks at him and says, "Oh, I get it," and raises his hand, okay? And then of course, uh, Reed Hastings, the CEO, raises his hand. The only person that doesn't raise his hand is the lawyer sitting over there taking notes.

    20. SPSpeaker1:04:28

        [laughs]

    21. SPSpeaker1:04:29

        You know. So John walks over and says, "So what are you doing these days?" And he looks at him and says, "Oh," raises his hand.

    22. SPSpeaker1:04:38

        [laughs]

    23. SPSpeaker1:04:39

        So we went, we left that meeting and went to, went out and decided, or to that class, and decided we needed a sales course. So we have it now. I don't know how many of you students have taken it or are thinking about taking it, and it's, it's something that, that I think, um, a lot of students are taking advantage of. I think we have four sections this year.

    24. SPSpeaker1:04:56

        That's great.

    25. SPSpeaker1:04:57

        So-

    26. SPSpeaker1:04:58

        That's great

    27. SPSpeaker1:04:58

        ... um, anything else, uh, on th- this, this question? Uh, right here.

    28. SPSpeaker1:05:02

        Yes. My name is Terrence. I'm from UV, um, Singapore. And, uh, question for, for, for you guys 'cause so far I've been hearing two years, three years cycles and you sell your company. So I've been running my company for about nine years now. Uh, have you guys had any experience or heard of people that, you know, they've been in a startup and they are at a small, medium size, they're about 50 plus, 60 people. Uh, you know, around nine, 10 years, do you, do you have problems with founders or key employees getting tired or impatient and stuff like that? And, and how do you handle that?

    29. SPSpeaker1:05:38

        Mike, why don't you start?

    30. SPSpeaker1:05:40

        Uh, that's one of the reasons why I like to sell my companies in two years.

Episode duration: 1:14:08