12 Learnings From My First Turn As Startup CEO
Back in December 2003 I had no reasonable idea of what was ahead ... what i did have was passion for the idea of Jobster and for the pursuit of starting and growing a business.
I learned many valuable lessons at Jobster which I will take with me as I start my next company and my next and my next.
Here are some of the key learnings that I hope will benefit many an entrepreneur:
- The CEO's job is to create value. Determine early on what the keys to value creation are in your industry and map a path for value creation for your business. Return often to measure how you are or are not creating value. Weigh business decisions based on whether they contribute to value creation or not. Avoid paths that do not contribute to value creation regardless of how sexy or fun they might be. Narrow the focus as much as possible. Get one thing right then move on to the next.
- Try to ride some powerful existing waves vs. just creating new waves. Find some big and important industry trends and ride on top of them. It is very very hard to create your own industry trends. Be careful about getting out too far ahead of any wave.
- Technology companies are all about the product. Getting the product right is critical before aggressively going to market. We went to market too fast in Jobster's early days. Ultimately your technology company will be judged based on how good your product is and how your target users take to it.
- Related to #3, the rapid iteration model (ship early, learn from usage, adjust) works well for consumer services but works not as well for B2B services. Consumers will let you learn with them over time. Paying business customers, however, have less patience for your learning on their dime.
- Hire people who are passionate about the specific problems you are trying to solve. We raised money for Jobster in 2004 when few startups were being capitalized. We were early to social networking. We signed up 150 customers in the first 90 days of going to market. As such, we quickly became the cutest kid on the playground for startup enthusiasts and everyone in town wanted to work at Jobster. A problem, looking back at it, was that many people (not all) joined Jobster because they wanted to work at Jobster, but not because they were passionate about the specific business problems we were trying to solve. Getting this right is very hard but so important.
- You must get close to your users and customers and live their personas. We often struggled with this at Jobster as not many of our product developers related to recruiters and had trouble walking in their shoes. Likewise, we often had trouble relating to jobseekers and truly understanding their pain, as many of our employees had never really looked for a job. It is critical that you live, sleep, eat, and breathe the personas of your target users. That's one reason for Facebook's success -- their employees use their product all day everyday. It's awesome to be able to build products for yourself. That's what I'm doing in my next company where I am the target persona.
- The value of your company is directly related to your capital efficiency. Spend every dollar like it is equity. Preserve cash! Preserve cash! Preserve cash! Yes, you need to spend money to build a company and to make money, but every dollar misspent erodes your valuation. We overspent going to market at Jobster in the early days and while we thankfully were able to recognize this and adjust, we are still working at overcoming it. One of the things I'm most proud of at Jobster was our financial discipline in 2007 which enabled us to grow revenues by 50% while cutting our expense base by 50%. That's hard to do but is smart business and drives value creation. That discipline also forced us to (and enabled us to) develop lower cost product development models, and develop a lower cost model for traffic acquisition based on technology and seo instead of spending to acquire users.
- In the early days, I highly recommend that you force your startup to be resource constrained. Spend as little money as possible until you get some significant product traction. In the early days, if you think you need $1M, take $500k and force yourself to make it work. Our first capital infusion at Jobster was a $2.5M seed round. That was too much and enticed us even in the very earliest of days to go too fast. Within 6 months we had 15 people. For my new company in the early days 3-5 people and at most $750k will do just fine for a long long time until we prove out the product.
- Don't listen to outsiders who tell you to go faster and ramp sales and marketing. Instead, listen to your current customers and users. The best sign that you are truly ready to ramp the business is customer/user satisfaction. Understand customer/user satisfaction drivers and gaps before ramping sales and marketing.
- Avoid field sales in favor of telesales. At Jobster we quickly learned that field sales cost twice as much to sell (longer sales cycle, higher salary reps), and that you could sell the exact same product over the phone faster, cheaper, and with a much lower expectation for after sale support.
- Once you are in the market and have established some measurable and repeatable levels of success, #11 negates #8 on this list: Raise more money than you need when you are in the market and the terms are favorable. We raised $18M at Jobster in mid 2006 at good terms and that fundraising was absolutely key to our being able to make critical adjustments which have Jobster on solid footing today. In hindsight, I should have and would have raised $30M then. Businesses take time to develop and are bound to have rough patches. Having the capital to learn, adjust, and get through to the other side is critical.
- Have fun. Everyone looks to the CEO everyday to set their own moods and expectations. Being CEO can be lonely -- someone once said to me that CEO is the loneliest job in the world as there are days that your board hates you, your employees hate you, your customers hate you, and your family hates you -- true. That's why you need to make sure to have fun every step along the way. If you are having fun, people will see that and they will follow your energy. Remember, behind every wrong turn is a better path. And remember, that the beauty of startups is that you get to try, try, try again and again and learn a ton along the way.
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Posted by Denny K Miu | January 16, 2008 9:47 AM | Score: 0
There are more comments on YC News.
http://news.ycombinator.com/item?id=99306
Posted by Mark Newman | January 16, 2008 10:20 AM | Score: 0
Beautiful Jason, simply beautiful.
Your thoughts are great and really helpful. You have obviously learned a lot. I do hope all is well for you.
We should connect again soon -
Mark Newman
CEO, HireVue
Posted by John Zachary | January 16, 2008 11:33 AM | Score: 0
Excellent article! Especially for someone like me who is making their first run at a startup. Thanks for sharing your experience.
John Zachary
Posted by Joe Stubblebine | January 16, 2008 12:14 PM | Score: 2
Jason,
Excellent article. Great insight. Every new CEO should read and memorize your points before getting started - there are valuable lessions in each point you've made.
Good luck in your new endeavor!
Regards,
Joe Stubblebine
JobCircle.com
http://www.jobcircle.com
Posted by Warren Bare | January 16, 2008 12:40 PM | Score: 1
Straight from the heart! Great article.
Warren Bare
Founder, Headhunter.net (now CareerBuilder)
Founder, Jobkabob
Posted by wheels | January 16, 2008 7:08 PM | Score: 1
great post, especially "The value of your company is directly related to your capital efficiency." I can see too many companies wasting money because of inefficiency..
Posted by Mostoa | January 16, 2008 11:21 PM | Score: 0
What is it with "learning" as a buzzword? "Lesson" makes much more sense ie:
12 "Lessons" From My First Turn As Startup CEO
Must be time to touch base and grow the business while we take away more learnings from this!
Posted by Keith Duarte | January 17, 2008 2:34 PM | Score: 0
Good article, Jason. Many of us watched you enter the industry and were impressed with your marketing. Nice to see you've taken a lot away from your experience. Good luck with your next venture...Keith
Keith Duarte
President
www.GadBall.com
www.DataFrenzy.com
Posted by manishhada | February 3, 2008 10:17 AM | Score: 0
jason, indeed a very insightful post. kudos!
manish hada
www.coveman.com
Posted by jesse | February 13, 2008 5:11 PM | Score: 0
Jason's "learned" lessons are interesting because they also relate well to everyday living: pursuing passion in a manner that produces "fun" is an important and significant catalyst to producing revenue.
"That's what I'm doing in my next company where I am the target persona." Jason understands being in another's shoes...something too many of us capitalist-driven Americans choose to ignore. For this alone, he earns some praise.
I offer three more points to consider when choosing a path to success:
1. A successful, high net worth person has to retain diversity in their (mental and financial) portfolio. I'm in real estate and philanthropy. I want retail and/or service sector as well.
2. The most important factor in any business initiative is the team behind it.
3. I see income potential and opportunity where others often fail to look. I have a demonstrated knack for combining need and use and turning it into enterprise.
jesse:
terraverse+gmail.com
Posted by Beth C. | April 23, 2008 8:59 PM | Score: 0
Great article, Jason.
I strongly agree on:
- Tech companies are all about the products
- Hire people who are passionate about the problems that you solve
- Get close to your customers. (Best if tied into the prior point -- hire people who ARE close to your customers.) (Which should be tied into the first one about making products that are meaningful to your customers.)
Not sure about:
- Raising $30M. Investor money is expensive money. Too much money makes you sloppy. This strategy is best if you are building to flip. Otherwise, grow with your revenue.
- Days when everyone hates you. If you find yourself with more than a couple of these days per year -- you must have done something wrong along the way; accepted money from the wrong investors, brought in the wrong board members, hired the wrong people, entered the wrong market, etc. If you find yourself in this situation, take solace in your Customers because they better love you all year round!