7 Months Into My 2nd Stint as a Startup CEO

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One of the first things I did when getting started on socialmedian 7 months ago was to write out a list of many of the lessons I learned in my first turn as a startup CEO at Jobster from 2004 to 2007.  Trust me, there were plenty of them.  You can read them here.

As I set out to apply these lessons the 2nd time around, I promised myself that I would periodically stop to write an update.  I had meant to do the first update after 6 months at socialmedian but we got so busy with our recent beta launch that I'm just now getting around to it about a month late.

Starting a second company reminds me of a valuable lesson from my first day of undergraduate studies at Emory University years back.  The dean of something-or-other walks into a room full of about 500 nervous yet confident know-it-alls and says:  "You are going to learn a lot of lessons the next 4 years.  But let me be the one to tell you the most important lesson of all right now, and it's not anything you are going to read in a textbook.  Go home tonight and take out a picture of your parents and study that picture and remember their ways.  Because I promise you that you are going to spend a good part of the rest of your life both running from your parents and becoming them.
 
That's a bit like what starting your second company is like:  A whole lot of running from (the mistakes of) your first startup while reverting back to your strengths that first drove you to be an entrepreneur.   Finding that right blend between the two is the key.

The point of this post though isn't to do a critique of what I've done differently this time vs. the last time around. 

The point of this post is to provide some fresh insights into act 2.

When we set out to start with socialmedian back in January of 2008, we purposely set out to start a different type of startup.  At least, very different than most these days.

As most startups do, we began with a problem we wanted to solve.  In our case it was the information overload problem.  We observed that the recent technological advances that had made content creation faster, easier and cheaper than ever (all positives), had also resulted in a low signal-to-noise ratio (negative), and that consumers often struggled to wade through all that noise and get to the most personally relevant information.  This is an interesting problem to tackle because on the one hand the consumer theoretically wants access to everything, yet (as is typically the case) the consumer also wants to do as little work as possible to hone in on just the info they really need.  It's almost like the consumer wants the comfort of feeling like the volume is all the way up - i.e. they are searching exhaustively - while at the same time they want a system smart enough to turn the volume way down to their personal interests.

From that problem we came up with a theory on how to solve it.  Our hunch was that people who share topical interests could help filter information for each other at the topical level.  The idea was that whether you're interested in a specific topic like iphone, campaign 2008, online marketing, SEO, the Olympics, Tuscany travel, Spanish wines, or raising twins, etc., there are other people out there who share your topical interests and that collectively you could highlight and filter to each other what is worth checking out on a given day.  That's not all that dissimilar to what editors at publications have been doing for their readers for years, except that our model would enable citizens anywhere to do that for each other.  We also envisioned a new sort of "editor" evolving through our service, "newsmakers," who would highlight and lead discussions on topics of interest with their followers or readers.

Ok, so we had a problem to solve and an idea on how to go about solving it.  That's not all that different from the norm.

Here's where the diversion began.

Foremost, we decided to give ourselves just one year to prove we could make a dent in this problem.  The thinking here was along the lines of "If you are going to fail, fail fast," or as I prefer, "Prove it fast or move on to proving something else."  The notion being that with software development being cheaper and faster than ever, and user-feedback loops even faster, teams should figure out that they are on to something fast, or move on to solving something else.  Why waste time and money on something that's not working when there are ample interesting problems out there waiting to be solved.

So, within that 1 year time horizon to "figure it out" we have set up and run socialmedian the company in a different way.  Here are some key notes and reflections 7 months into it...

  1. First, we decided not to take VC money.  As I know from experience, VC money should only be taken when you are certain that you are poised for a homerun. The only thing we knew for certain 7 months ago was that we were poised for trying to figure out if we could make a dent in solving an interesting problem in 1 year.  So, rather than put the company on a path of lofty expectations from day 1 (with the constraints and preferences that go along with such a shoot-the-moon path), we instead raised just a little bit of angel financing and got on our way.  Different from my experience at Jobster (and the experience of many companies I see these days), we decided with socialmedian to first (try to) build a solid product and then worry about how to finance it, vs. the other way around which has too often recently become the norm. 

  2. Second, and related to #1, we decided to build on a tight budget.  Now, don't get me wrong, I'm not talking cheap as in 1 guy in a dorm room.  I'm talking low budget as in constraining the company to <$40k/month of burn in the first 4 months and then only taking it beyond that to about $60k/month once we had shown some early initial traction.  The notion here was that spending our cash is the same as spending our equity.  The more we spend early on, the less the company will be worth in the long run.

  3. Maintaining a burn like that forced us to think outside the box when it came to staffing the company.  To put a $40k/month burn in perspective, that would get you about 3 employees at most fully loaded with office space in New York (if you're lucky).  I remember interviewing a total rock star CTO-type in January in NYC and walking away thinking there went all my initial funding and that's just for 1 guy.  Instead, we have run the company out of my apartment in New York and from our development center in Pune, India.  I'm the only U.S. based socialmedian employee (besides our awesome intern Scott who joined us for the summer from Syracuse and who has been a god-send).  The rest of our team is based in Pune, India. We started with 6 fulltime socialmedian employees in Pune and have since grown the socialmedian development team to 11 fulltime employees in Pune.

  4. I am the product manager.  The CEO should be the product manager for at least the first year of the company ... better yet, until the product is mature and accepted into the market.  I made this mistake at my last company where I thought the CEO should be more of a general manager.  No!  At an early stage startup the CEO is and must be the product manager.  If you are thinking of starting a technology company and you are not able nor capable nor ready nor willing to be a product manager, I strongly advise you to rethink starting your company.  I would much sooner hire someone to run the business side of socialmedian now vs. hand someone else responsibility for the product.  The company IS the product in the early days.  I didn't realize this last time around.  It is not just ok to be a micro-manager product manager in the early days, it's the way you should be.  Design every experience and approve every pixel.  Your product is your company.

  5. A few notes about working with an offshore team.  If you're gonna do it, do it right.  What I mean by that is that I've seen it done wrong so many times it's sickening.  Folks in the U.S. all too often have this mistaken belief that there are these inexpensive coders outside the U.S. who are just on call and ready to write code based on specs.  That's a recipe for disaster.  In order for software to be developed well, it takes a team that is adept at planning and strategizing and problem solving together.  It takes a team that feels like a team and who is passionate about the product they are creating.  It takes a team who truly feels like they are building their product not someone else's. 

    So, we decided to set up things differently at socialmedian.  First, our decision to go offshore was certainly based on costs, but it was equally based on abilities and mutual respect.  I had worked with the future socialmedian team in Pune before socialmedian on other projects and only chose to work with them on socialmedian because I was impressed with their thought process as much as their work product.  We chose to work with them because they know how to solve problems and how to figure out how to respond to customer/user needs.  And, they passed the most important test of all, an earnest early interest in the problem we are trying to solve at socialmedian and fantastic ideas on how to tackle the problem.  

    Second, I personally committed to travel to Pune, India nearly monthly for the first year of socialmedian (I've been there 6 times thus far in 2008 and am headed back in a couple of weeks).   The logic here was that if the team was there, I, as the lead product manager, should be there too.  As per our hunch, we learned early on that in-person time was critical for planning.  As such, we have evolved into this regular cadence wherein for 1 week out of every month we plan together in person, and then for 3 weeks we are more tactical as our interactions are over skype.  Sure, all that travel is tough (ask my spouse who hates me for it), but it has proven to be very effective for us at socialmedian. 

    Third, we have made our Indian team shareholders in socialmedian, so we are one company building one product.  It's an offshore situation, not an outsourcing relationship.

    Of course, this model is not for everyone, but it has worked well for us thus far.  Mostly because we have an awesome team joined together working on socialmedian and we've created an environment where it's all about our users and the product, and the fact that we are thousands of miles away from each other is just a fact of life, not a problem.  If I had to start over today I'd choose the same team 10 out of 10 times to work with.

  6. In case you were wondering, here's the process and tools/services we use at socialmedian to mange our New York - India operations.  As noted, I travel to Pune for at least 1 work-week out of every 5 work -weeks.  We ship code 3x per week within 3-4 week development milestones.  We use TRAC (open source bug tracking tool) to manage bugs and feature requests.  We use basecamp to share files.  We talk on Skype when I'm not in Pune pretty much 6x per week from 8am Eastern Time to around 11am. 

  7. Our biggest experiment of all was to truly commit to the new paradigm of "ship fast and iterate faster" and to involve our users in building our product.  This is perhaps the aspect of socialmedian thus far that I am most proud of.  We wrote our first line of code in mid-February and then shipped our first "dogfood" version of socialmedian just 3 weeks later.  It was just ok.  But, it was a foundation that we could build from and we put it in front of 50 people and they gave us feedback and then we built new stuff from their feedback and then we put it in front of 100 people, then 200, then 500, and kept living and iterating off their feedback, etc.  All the way to 4200 alpha users.  We put buttons on the site for our early users to submit bugs and feature suggestions.  We did regular surveys of our users and then actually rapidly built stuff based on the surveys.  Even if socialmedian is never successful, this is a model I am so proud of and will repeat again and again in the future.

  8. We got into the conversation.  This was a tough one as it is time consuming and can be distracting, but I decided early on that if socialmedian was going to be a social media company, we had to be 100% committed to and involved in social media, and thus participate in the discussion on Twitter, FriendFeed, Facebook, etc.  I personally committed to Tweet regularly and found ways to use Twitter to communicate to our users.  We gave out more than 2000 alpha invites over 3 months to Twitter users via a weekly Tuesday Tweet.  I got in the habit of responding to EVERY tweet about socialmedian and to every FriendFeed discussion on socialmedian.  Again, tough to do but we think has been a tremendous asset for the company.  Today, if someone has a problem with or question about socialmedian, the best way to let us know continues to be via Twitter, where I promise to respond within a few hours unless I'm on an airplane or something.
Above are the top 8 reflections after 7 months.  Here are some other must do's I've picked up and committed to this 2nd time around:

9.  Try to keep perspective.  Most of us will never create the next YouTube or Facebook homerun.  If we're smart, listen well, learn a bit along the way, and follow our users, we just might create a solid single or even stretch it to a double.  Think Ichiro or Boggs vs. Manny.  What have we accomplished thus far at socialmedian?  Not much.  We've got a solid early website up that some early users seem to really appreciate.  Ok, we can build from that.

10. Do your own QA & your own customer service.  If you can't use your product no one else will be able to either.  Accordingly, don't leave it someone else to figure out your bugs or shortcomings.  And, there is no job more important than customer service.  Don't pawn it off.  Embrace it.
11.  Get a personal trainer.  I didn't realize it before but being in good physical shape is critical to being in good mental shape and to having the energy to withstand this startup stuff.
That's all for now.  Reflecting like this takes time from product managing, QA'ing, customer servicing, twittering, friendfeeding, and socialmedianing.  I'll try to do another post like this around the turn of the year.

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5 Comments

You write that "We observed th... (Below threshold)
jgn Author Profile Page said:

You write that "We observed that the recent technological advances that had made content creation faster, easier and cheaper than ever (all positives), had also resulted in a high signal-to-noise ratio (negative)."

But a high signal-to-noise ratio is highly desirable. How did you pitch the company if you get this wrong? Sheesh.

http://en.wikipedia.org/wiki/Signal-to-noise

"In less technical terms, signal-to-noise ratio compares the level of a desired signal (such as music) to the level of background noise. The higher the ratio, the less obtrusive the background noise is."

Thanks, was a typo. ... (Below threshold)

Thanks, was a typo.

One of our investors , Gordon ... (Below threshold)

One of our investors , Gordon Crovitz, former publisher of the WSJ, correctly points out to me that everyone needs an editor

This is excellent stuff and th... (Below threshold)
Mrinal Author Profile Page said:

This is excellent stuff and thanks for sharing Jason to help others fail even faster!
This is a "keeper"

This post (and the 'learnings'... (Below threshold)

This post (and the 'learnings') post are great!

I think the way you are attacking offshore development is really interesting/innovative... And seems like it's working.

I would say that the idea of 11 full-time employees seems pretty over-the-top, though. Much much too big a team for SocialMedian IMO.

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About this Entry

This page contains a single entry by Jason Goldberg published on August 11, 2008 11:29 PM.

Democracy Prevails: The rules have changed (for the better) re: socialmedian iphone app design contest was the previous entry in this blog.

What is socialmedian up to this week? 8/14/08 -- Bug fixes and some new features is the next entry in this blog.

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