Table Of ContentSecrets of the Fastest-Growing Startups
from Their Founding Entrepreneurs
David S. Kidder
New York Times Bestselling Author
With Hanny Hindi
Foreword by LinkedIn founder Reid Hoffman
TEXT COPYRIGHT © 2012 BY DAVID S. KIDDER.
FOREWORD COPYRIGHT © 2012 BY REID HOFFMAN.
ILLUSTRATIONS COPYRIGHT © 2012 BY MARON RESUR.
ALL RIGHTS RESERVED. NO PART OF THIS BOOK MAY BE REPRODUCED IN ANY FORM
WITHOUT WRITTEN PERMISSION FROM THE PUBLISHER.
LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA AVAILABLE.:
ISBN 978-1-4521-2404-9
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DEDICATION
This book is for my most important “startup” and the center of my life and heart,
my family: Johanna and my three sons, Jack, Stephen, and Lucas.
I hope this book inspires and serves you as it has me in living out the purpose of
our family; to utilize our God-given gifts to make an extraordinary, positive
impact on people and the world.
CONTENTS
FOREWORD
REID HOFFMAN
INTRODUCTION
CHRIS ANDERSON
FUTURE PUBLISHING
CHARLES BEST
DONORSCHOOSE.ORG
SARA BLAKELY
SPANX
STEVE BLANK
E.PIPHANY
MATT BLUMBERG
RETURN PATH
RODNEY BROOKS
IROBOT, HEARTLAND ROBOTICS
JEFF BUSSGANG
OPEN MARKET, UPROMISE, FLYBRIDGE CAPITAL PARTNERS
STEVE CASE
AMERICA ONLINE (AOL)
MARC CENEDELLA
THELADDERS
ROBIN CHASE
ZIPCAR
CHIP CONLEY
JOIE DE VIVRE HOSPITALITY
JEFF DACHIS
RAZORFISH, THE DACHIS GROUP
MICHAEL & ELLEN DIAMANT
SKIP HOP
CHRIS DIXON
SITEADVISOR, FOUNDER COLLECTIVE, HUNCH
MARC ECKŌ
MARK ECKŌ ENTERPRISES
KEVIN EFRUSY
IRONPLANET, CORIO
CATERINA FAKE
FLICKR, HUNCH, FINDERY
MITCH FREE
MFG.COM
LISA GANSKY
OFOTO
TOM GARDNER
THE MOTLEY FOOL
EILEEN GITTINS
BLURB
SETH GOLDMAN
HONEST TEA
JOE GREEN
CAUSES
SCOTT HARRISON
CHARITY: WATER
SCOTT HEIFERMAN
I-TRAFFIC, FOTOLOG, MEETUP
REID HOFFMAN
LINKEDIN
JEFFREY HOLLENDER
SEVENTH GENERATION, AMERICAN SUSTAINABLE BUSINESS COUNCIL
BEN HOROWITZ
OPSWARE
TONY HSIEH
LINKEXCHANGE, VENTURE FROGS
CYRUS MASSOUMI
ZOCDOC
JIM MCCANN
1-800-FLOWERS.COM
STEPHEN & HEIDI MESSER
LINKSHARE
ELON MUSK
PAYPAL, SPACEX, TESLA MOTORS
JACQUELINE NOVOGRATZ
ACUMEN FUND
HOSAIN RAHMAN
JAWBONE
ADEO RESSI
THEFUNDED.COM, THE FOUNDER INSTITUTE
LINDA ROTTENBERG
ENDEAVOR GLOBAL
KEVIN RYAN
ALLEYCORP
KIRILL SHEYNKMAN
STANFORD TECHNOLOGY GROUP, PLUMTREE SOFTWARE, ELASTRA CORPORATION
JEFF STEWART
MIMEO, URGENT CAREER, LENDDO
JAY WALKER
WALKER DIGITAL, PRICELINE
THE BEST ADVICE
INDEX
ACKNOWLEDGMENTS
FOREWORD
REID HOFFMAN
Entrepreneurs are pioneers. In creating new businesses, they venture out across
the market-scape to discover and build new products and services. Like pioneers,
these journeys are frequently long, lonely, and risky. But, also like pioneers,
these journeys are essential for the growth of our society—to build new
economies, new ecosystems of work and life.
This book offers lessons in pioneering from key entrepreneurs. Pioneers needed
to know locations, weather, supply logistics, travel, and various technologies like
maps, navigation, and transport. Entrepreneurs need to understand markets,
industry transformations, finance, business operations, and various technologies
involved in products, services, and modern business. Pioneers and entrepreneurs
have to assemble networks of support: teams, finance, and expertise. When
successful, both set up new lives and work opportunities for people. Pioneers
establish towns and territories; entrepreneurs establish companies and other
institutions.
Both leave the established order to build something new. They have many
reasons: a vision, a mission, love of a product, or are simply compelled. But
leaving the established order is hard. You leave significant infrastructure and
support behind. And, you take real risks journeying into the unknown.
We are all familiar with heroic stories of entrepreneurs. These stories tell of
easy, quick, or inevitable success. In reality, there are almost always massive
challenges, delays, setbacks, risks, and uncertainties. Indeed, entrepreneurs and
pioneers have to believe that their journeys will be successful; they would never
have set out without that belief. But the journey is almost always hard. Here,
entrepreneurs share key lessons—in the hope that those who set out on their own
will make new mistakes rather than their old ones. They also hope to make the
journey somewhat less lonely by sharing their experiences. I frequently describe
entrepreneurship as jumping off a cliff and assembling an airplane on the way
down. This book is about airplane assembly, weather patterns, and flying
intelligently.
Good Luck.
INTRODUCTION
Starting a company is a staggering journey into the unknown. It is
simultaneously thrilling and terrifying. You are setting yourself up for a
spectacular challenge and the likelihood of failure is high. It is essential to
prepare, and to have a sober respect for the experience. In Outliers, Malcom
Gladwell estimates that it takes over 10,000 hours of dedicated training to
develop expertise in any field. This is the commitment you are making when you
start a company; become an expert startup founder.
Developing one’s company-creation thesis requires a never-ending and
humbling commitment. The simple mission is to truthfully reflect and
understand, persistenty press on, and perfect. “It’s the shift from defining
ourselves as who we think we are to who we are becoming.” This book is the
latest chapter in my own journey of becoming the best entrepreneur I am capable
of being.
In building my last two companies, I created what I’ve come to define as a
“startup playbook”: an evolving collection of the core ideologies, beliefs, tools,
and methods that reveal a model of building companies, from concept to—
hopefully—thriving reality. I promise all my team members that they will have
the chance to become complete startup executives; that they will know and
experience the successes and failures of the entire startup journey; and that our
startup playbook will remain the company’s operating system and the foundation
that we will all build on year after year. However, these past few years, I realized
that I needed to upgrade my playbook, largely because my most recent company
was rapidly scaling in complexity, people, partners, products, culture, and many
other dimensions. The playbook I began with simply wasn’t robust enough to
capture all the extremes of taking a company from its fledgling roots, when you
are solving five to ten challenges at a time, to a much larger company, where
you are suddenly required to juggle hundreds of problems simultaneously, often
instantaneously. I decided it was time to hit the reset button and pull in as much
knowledge as quickly as I could. I reached out to my most admired friends and
contacts, many of whom are considered among the best entrepreneurs in their
fields. Some I have known for most of my career, while others I was meeting for
the first time. I wanted their startup playbooks in order to rebuild mine. Now, I
am sharing their playbooks with you.
“Building a startup will be the homeownership of the
next century.”
The entrepreneurs I turned to have experience in as many varied sectors as I
could gain access to in both the nonprofit and for-profit worlds—from
technology and finance to flowers, drinks, shoes, spaceships, and pantyhose. All
of them are game-changers; many are billionaires, whether in the realm of ideas,
publishing, media, or philanthropy. When we spoke, I tried to get them to
answer two central, burning questions:
1. What are your most vital theses for creating successful, scaling startups?
2. What are the key practices, behaviors, and ideas that power a startup’s growth
in its first five years?
These questions were designed to be tight enough to focus the conversations into
straightforward, iconic ideas, while also being loose enough to let the interviews
touch on topics ranging from product development to team building and HR;
from investors to culture, design, marketing, finance, crisis management, and
more. I sought to discover the critical competitive behaviors that helped these
respected (often legendary) founders and visionaries create the leading
companies in their markets.
In the end, for the purposes of the book, we focused on some forty of the nearly
fifty interviews we completed either in person or via remote video. In each
interview, we followed a scripted set of questions devised to tease out the
entrepreneurs’ guiding theses. Throughout the interviews, I took detailed notes
and probed for the living ideas that their playbooks comprise, highlighting their
best advice across a broad set of startup challenges and personal journeys. We
wanted these entrepreneurs to tell us “how it really is”; boy, did they deliver.
In the process, we came upon too many remarkable ideas to summarize here, but
there were several that stood out. One in particular came from my friend,
talented technology entrepreneur and blogger Chris Dixon, who observed:
“Building a startup will be the homeownership of the next century.” He’s exactly
right. The idea of the American Dream is rooted in our national ethos, in the
belief that we have the freedom and self-directed power to create prosperity. But
in the past, we have been led to believe that our single biggest asset is equity in
our homes, when in fact, our best asset is ourselves: our gifts, our goals, our
efforts. You are your best investment. The new American Dream is creating and
building your own startup. The equity is you.
DEFINING A STARTUP
What is a startup? Most define it as any company with a limited operating
history, new, and usually in a phase of product and market discovery. During
this phase, founders are typically roaming around in the darkness, looking for
intellectual light switches to illuminate how their ideas stand up to customer
needs and competitive offerings. The actual term startup became popular during
the dot-com boom as a way of describing venture-backed technology companies.
But for the purposes of this book, I’m expanding the definition to include any
original new business initiative by a founding team that is focused on a high-
growth, risk/reward profile, scalability, and market leadership. These startups
often attract seed-stage, or angel, investor interest, then graduate to venture
capital, though not all require or seek outside capital. The startup phase often
ends when a company crosses certain growth milestones, most often when it hits
profitability, is publicly traded, or is acquired.
While the failure rates are very high, the ones that survive and thrive often
produce outsized economic returns. One of the main goals of this book is to reset
or optimize the focus of entrepreneurs’ efforts so they choose the right idea to
build on from the beginning. We hope that by learning about the “prisms” the
founders use to focus their ideas you will be able to select or refine your
business idea and strategy to capture the qualities and attributes of other high-
growth companies. In many cases, it’s as important to choose what to focus on
as what to quit, and when. If your startup idea does not have credible parallels to
those offered in The Startup Playbook, you might consider retuning your
business thesis, pivoting (changing the direction of your goal), or even deciding
to stop altogether, as the opportunity costs and risks may outweigh the
commercial potential.
Determining if you are right for the startup experience can involve a complex
personal evaluation. The good news is that entrepreneurship can be taught. It’s a
journey, not an outcome, and you simply need to be doggedly committed to
personally growing until you unlock your playbook, and pursue and execute on
your greatest idea.
CUT TO THE CHASE!
By now, I hope you are saying to yourself, “Just give me the answers!” And I
will. But first it’s important that I point out that for some, the ideas provided
here will seem obvious, self-evident. In fact, they may already be part of your
own company’s lexicon—the company you started that failed; the one that’s
already succeeded, but for which you are seeking a refresher course; or the one
you intend to start someday. But as you read the origin of these ideas in the
stories of the founders that forged and shaped them, you’ll realize they are
actually very deeply rooted concepts. In most cases, the entire outcome of your
ambitions rests on your ability to process the art and science of these ideas—that
is, to execute a vision. These are not box-checking ideas; they are the ones that
the market will value your company against, so it’s important to take time to test
your business in a profoundly unbiased way against them. I personally believe
it’s fatal not to do so.
Here are the biggest and most critical ideas from The Startup Playbook:
1. Know Thyself
One of the most fundamental conclusions I came to after spending time with the
entrepreneurial royalty whose advice formulates this book is that nearly all of the
founders know how to play to their own strengths—they rarely, if ever, chase
market “whitespaces.” Few, if any, revealed a desire to work in an area where
they did not hold an unfair advantage, from a giftedness or passion perspective.
Moreover, their companies fully reflected these strengths. A company’s market
reputation is anchored in its founder’s—often in a very public way. If you
