This article is available at http://CultureCode.com -- the slides and content will be updated periodically. I'm working on a really big project on the topic of culture. Follow me on twitter (@dharmesh) to get an update on March 20th when it comes out in public beta.
This article represents the notes and slides related to a talk I'm about to give (in less than 60 minutes) at the #LeanStartup event at #SxSW 2013.
Here are my notes on the talk. Note: I'm writing these roughly 90 minutes before I go on stage, so they're a bit rough.
1. Posted the historical recurring revenue numbers of HubSpot. Rationale: Transparency is one of our core cultural values at HubSpot. So, every year, we post our financial deck with details
2. Entrepreneurs don't spend many calories thinking about or working on culture. There are several common reasons for this:
a) Culture? We don't need no stinkin' culture! We're putting a dent in the universe. That's our f*!#ing culture!
b) Culture? Relax. We got this one covered. We have free beer and a ping poing table.
c) Culture? You can't really create that. It has to be built organically. It just comes from the behaviors and example of the founders.
All of those are reasonable positions to take. They're misguided, but they're reasonable.
a) Most of the startups that did end up putting a dent in the universe didn't really know that they were going to succeed at it. And, one of the few common characteristics of super-successful companies is that they have a distinct culture. Google. Facebook. Zapps. Netflix. The list goes on and one.
b) Maybe you can't create a culture -- but you can certainly destroy it through neglect. The 2nd Law of Thermodynamics applies here. Left alone, most things degrade to crap. In the early days, it's OK to rely on the behavior of the founders and early team to set the culture. That works great. The problem with this model is that as you start to grow, there's a fair amount lost in translation.
3. Convention over Configuration. Yes, you could just let people make decisions organically based on their best interpretation of whatever they think the right model/framework is. But, I generally favor convention over configuration. Why not just have a convention (i.e. culture) that makes a large body of easy decisions and a small body of hard decisions easier? The result is more efficient and more consistent decision-making.
4. product:marketing :: culture : recruiting
product is to marketing as culture is to recruiting. Yes, you might be able to do amazing marketing -- but it's not going to matter if the product isn't amazing. It's a tough slog. Similarly, if you're looking to recruit amazing people (who isn't), you're going to need to a great culture. The kind of culture that will appeal to the right kinds of people and get them to self-select.
5. The interest on culture debt is really high.
You've heard about technology debt. That's when you take short-cuts today, because you *need* to get something out the door. You willingly take these short-cuts, because time is suer-valuable (just like cash is valuable when you take on financial debt). But, you understand that there will be a time to pay off that debt. And, the debt carries an interest rate. Culture debt is when you take a short-cut -- hire someone now because they have the skills you need and you're *hurting* for people -- but they're not a good culture fit. You let the "culture bar" down. You might do this for logical reasons. For the same reason you might incur technology debt or financial debt.
I'm going to posit that the effective interest rate on the culture debt you take on is often higher than that of technology debt. That is, when it comes time to pay off the debt -- a lot of damage is done. There are a couple of reasons for this: 1) When you incur technology debt (like not adding sharding to your database), you generally will start feeling pain at some point, and you'll then decide to pay off that debt. It's a *known* problem and when you solve it, you'll sort of know you did. That's not the case with cultural debt. Culture debt is insidious. It creeps in slowly. It's hard to measure. 2) Technology debt is often "forgiven". This happens when a short-cut you took ends up not being a bad thing anyways. An example might be that you hacked together an MVF (minimum viable feature) for something in the app. The code is crap. You're not proud of it. Then later, you decide to abandon that particular feature. Guess what, your tech debt on that feature was just forgiven. That almost never happens in cultural debt. If you bring on people that aren't a fit, they'll infect other parts of the organization, and will be really hard to get back to where you want to be.
6. Create the culture you want, not the one you think you should have.
There's a lot of content out there regarding "winning" startup cultures. Some will advocate for an open/transparent culture. Some for a design-focused culture. Some for a service and customer-centric culture. Fact is, any of these will likely work. The key is to understand what it is that defines your culture (and importantly, what makes it differetn from other companies) -- and to build alignment around that culture. And, in order for the culture to survive long-term, you need to love it. You need to believe in it. If you simply try to tweak the culture based on what you think the right answer is, you'll lose steam and lose conviction. Game over.
Summary: You can nudge your culture. It's worth it. You're going to have a culture anyways -- might as well build one you want.
The following are some hypothetical classes that I'm thankful they don't teach at places like Y Combinator, TechStars and 500 Startups.
11 Classes They Should't Teach Founders
1. Dress To Impress VCs: The Art of Wearing A Tie
2. Click, Drag, Extrapolate: How to Use Excel For Startup Financial Projections
3. How to Win Friends and Influence People by Writing a Business Plan.
4. My Parking Spot: A Founder's Guide To Executive Benefits
5. The Care and Feeding Of a Tradeshow Booth Babe(*)
6. How To Design Software Systems For Infinite Scale on Day Zero
7. You Win, They Lose: Brass-Knuckled Tactics To Use Against Your Team
8. Ego Marketing: How To Buy A Superbowl Ad
10. How To Be a Patent Troll For Fun and Profit
11. Selling On Stage: Hocking Your Wares To An Unsuspecting Conference Audience
* For the record, I completely detest the whole idea of a booth babe. Reprehensible.
What are some of the classes you're thankful they don't teach? Please share in the comments.
In a few weeks, I'm going to write a $25,000 check to invest in a company that currently does not exist. There is no company. There's no team. And I have no idea what the company will do or hopes to do. I'm investing almost completely blind. More on this craziness a little later in this article.
To understand why I would do something so crazy, let me first catch you up a bit on my angel investment history and “strategy” (and I use the word strategy very loosely). It's not your typical story.
I first started angel investing while I was a graduate student at MIT. I had recently sold my last company, made some money and went back to graduate school to figure out what I wanted to do next. I had promised my wife it wouldn't be another startup (startups are hard) so my plan was to do angel investing. It was a way for me to scratch my entrepreneurial itch by vicariously living through other entrepreneurs. Lots of fun, and almost no pain. Seemed like a great idea. And it was.
The first entrepreneur I invested in (not counting myself) was Brian Shin — his company was Visible Measures. He was a classmate of mine in “New Enterprises” at MIT. Brian was literally one of the smartest people I met during my time at MIT. And, he could hustle like nobody's business. So, I invested $50,000 despite not really knowing Brian and not really liking the original idea (they have since pivoted). And, not really knowing what the heck I was doing It turns out, to be an angel investor there is only one requirement: You have to have to be accredited (i.e. have the money to be able to afford the risk). You don't have to go to angel investment school, take any tests or otherwise prove your mette. You just need cash and be willing to write checks.
I continued making investments all through graduate school and then post-graduation, as I was building my own startup, HubSpot. I've now made 35+ investments. You can see most of my AngelList profile. What makes my approach unconventional is that I have a few “rules”:
All of the rules are based on one simple constraint: I have no time. I have no time to spend on/with startups because I'm maniacally committed and focused on my own company (HubSpot), which is doing very well. That's where all available time goes. If I didn't have these rules in place, I wouldn't be able to angel invest at all.
So here are my rules:
1. No due diligence. Seriously, almost none. In over half the deals I've done, I've never met the entrepreneurs or talked to them on the phone. Generally just exchanged an email or two. My rationale here is two-fold: I'm optimizing for my time (my biggest constraint) not magnitude of outcome. Also, I think at the very early stages, most diligence that typical investors spend time on is “undue”. There's just not that much that's knowable. Either you like the people, or you don't. You like the idea, or you don't (which is irrelevant, because the idea's likely going to change anyways).
2. No follow-on investments. This one's controversial. Many would argue that it's economically stupid for me not to “double down” on the deals that I have a right to maintain my pro-rata investment. They might be right (but I don't think they are). The reason I don't do follow-ons is that it requires spending time (which I don't have) and for the deals that I don't invest in, I might create a signaling problem for the entrepreneur. By unilaterally not doing any follow-on investments, all signaling issues go away. This has worked brilliantly for me so far. I take the money that I would have invested in deals I'm already in, and just channel it to new startups. In the grand scheme of things, I think this works out well for everyone.
3. No advisory board positions or official involvement. Once again, this goes back to the lack of time. I don't have time to commit, so I don't commit it. Occasionally, I'll make an email introduction, or see entrepreneurs in my portfolio for a nice dinner — but other than that, they almost never see me or hear from me.
Overall, my unconventional approach seems to be working OK. I'd put my angel investment portfolio up against any early-stage investor (angel or VC). After all is done, I'm going to make a fair amount of money. If you don't think so, just check out my portfolio.
And, to those that might criticize my unconventional approach and classify me as "part of the problem" (the problem being, the "Series A Crunch"), I have a simple response/position: There's no such thing as too many companies starting up. But, there is such a thing as not enough companies shutting down...but that's a different problem.
Important Note: If you are seeking angel investment, just about all of my investments these days are through AngelList (Disclosure: I'm not just a member of AngelList, I'm also an investor). And, I focus exclusively on Internet/software companies.
So, back to my crazy $25,000 investment. A few weeks ago, I heard about the upcoming LAUNCH Festival hosted by Jason Calacanis. Jason sent an email out announcing that as part of LAUNCH, he was putting together the best hackathon in history. Jason was going to angel invest $25,000 into the winning team. When I saw that email, I thouht “that's a pretty good idea, and I've done stupider things”. So, I volunteered to match Jason's $25k with $25k of my own. Secretly, I'm a major, major believer in hackepreneurs. If I can buy into someone that manages to get in to the LAUNCH hackathon and then wins -- I think it's a pretty good bet.
Hope you get a chance to attend LAUNCH. It promises to be an amazing event. And, if you're the hackepreneur type, hope you'll participate in the hackathon and take my money.
Cheers.
Anyone can have a killer startup idea, but in order to make that idea succeed you’ll need an unbeatable team. Crafting the perfect team is an art -- one we're constantly trying to refine at my startup, Boundless.
We’ve found that a structured process yields the best new hires. This starts with first understanding the skills we need to fill. But we don’t just try to fit anyone with the right experience into a role - we go further and search for the right personality for the position as well. Throughout the entire hiring process, we’re constantly looking for signs of the four most important startup personalities: The Beast, Lara Croft, The Architect, and The Most Interesting Man in the World.
Our initial process is probably quite similar to many other startups. First, Boundless job candidates need to have a presence online. If we can’t find you online, you don’t exist, which means we’re not going to start the interview process. Next, candidates go through a phone screen to determine basic experience and qualifications. Those that survive the phone call visit with multiple team members on-site, where they’re assessed on skill and personality.
However, the final step is a little different. Before securing a job at Boundless everyone gives a 20 minute presentation on your personal or professional passion. We like to give the entire team a chance to see the candidate, and give the candidate an opportunity to impress the team with anything they want. We’ve seen people present on Tai Chi, cupcakes, coffee, how to build an art collection on a budget - all kinds of interesting, quirky and funny topics. And, of course, by this point in the process we have a strong idea of the type of a person the candidate is.
The Four Critical Startup Personality Types
The Beast, Lara Croft, The Architect, and The Most Interesting Man in the World. When filling a role at your startup, you need to find a candidate that embodies characteristics from each of these personalities if you are going to create a culture that changes the world. I firmly believe that a large part of my company’s success is driven by employees with characteristics strongly matching these personalities.
Here’s how to identify these four startup personalities:
The Beast
The startup Beast, modeled after the X-men character, possesses a “get shit done” mentality. A Beast’s raw animal output ensures they get more done in a day than even the most caffeinated worker bee. These people strive to be the very best in their profession, and doing more than seems humanly possible helps them get there. Look for people with high levels of productivity at their last positions and ridiculous amounts of drive and energy.
Lara Croft
When hiring, look for adventurers with an entrepreneurial spirit. These Lara Croft types create goals and projects for themselves to enhance the company values or goals. People who are self starters, self motivated, who have built things on their own time to scratch their own itch are Croft. Their adventurous minds dream big to help inspire the team.
The Architect
The Architect, inspired by the character from The Matrix, understands the big picture and can still focus on the details. These are the people who have a productivity hack for nearly all aspects of their life. Being productive and organized with the details helps The Architect keep the big picture in mind. You can spot Architects as people who have taken pride in a craft or know the intricate details of their previous position plus can clearly articulate the high-level strategy.
The Most Interesting Man in the World
At any fast-growing startup, you’ll spend a lot of time collaborating and hanging out with your colleagues. To make your office lunches or happy hours more enjoyable for all involved, hire people with character and charm for your team. The Most Interesting Man in the World, seen in the Dos Equis commercials, adds depth to your company culture. And in tough times, the Interesting Man (or woman) is the person you want fighting on your team and who help keep you going during the tough time. Don’t just look for goofballs - find people who have overcome difficult challenges and kept a positive attitude.
By hiring based on these four personalities, Boundless has built a team that not only has the capacity to build the best learning platform possible, but a team that continues to attract other top-notch people to share the journey with us.
We recently had the pleasure of welcoming Healy Jones to Boundless as our new Vice President of Marketing. The Beast in Healy helped our open textbooks initiative get written up in TechCrunch, and his wine tasting team presentation won him a nod in the Most Interesting Man in the World category. He joins Boundless from OfficeDrop where he was VP of Marketing, where he helped grow the user base 120 times in two years.
Whether you’re hiring a new team member as a VP or entry-level, remember that killer personalities help make the journey from idea to strong startup possible.
This is a guest post from Ariel Diaz. Ariel is the CEO and co-founder of Boundless, which creates free textbooks for college students.
A few minutes ago, I came across this tweet from my friend and co-founder at HubSpot, Brian Halligan.
This got me to thinking (which is often a dangerous thing), am I taking enough risks? Am I being daring enough? Am I being a hero? Answer: Not often enough.
So, here's advice to my future self and all of you: *DO* be a hero.
1. Be a hero. Go after that big, powerful incumbent that doesn't delight its customers enough.
2. Be a hero. Hire that awesome, amazing person -- even though they don't fit any of the roles you're currently looking for.
3. Be a hero. Make that sacrifice that will negatively impact your profits but completely aligns with your passions.
4. Be a hero. Make that really, really hard decision that even the smartest people you know can't seem to agree on.
5. Be a hero. Say no to that accomplished, super-successful person that your team interviewed, loved and convinced to join -- but doesn't fit your culture.
6. Be a hero. Kill that stupid company policy that nobody can recall the rationale for, but you suspect was because someone (maybe you) had a friend who knew a guy that had read about a startup that didn't have that policy and that company failed.
7. Be a hero. Launch that super-secret project you've been working on even though it's more likely to fail than succeed.
8. Be a hero. Admit that you've changed your mind on the decision you so passionately advocated for a few months ago
9. Be a hero. Confess to your team that sometimes you take the safer path out of fear and rationalize that you're doing it for the good of the company.
The Lean Startup method strongly advocates experiments -- and for good reason. It's critically important for a startup to acquire validated learning as quickly as possible. How quickly can you get through a learning cycle? How efficiently can you get to the answers to crucial questions?
You might run experiments that will answer some of your most pressing questions:
1. Will adding this feature cause more people to start paying for the product?
2. If we increase our prices, will our overall revenue increase or decrease?
3. If we make this feature that was previously free part of our premium offering, will users be upset?
Experiments are great -- but one word of warning. Be mindful of how much data you need and how "clean" your experiment needs to be in order to yield the learning you are seeking. A mistake we often make is looking at the "early evidence" from a particular experiment -- and then, in the interests of time and/or money (both of which are in short supply), use that early evidence to make an "educated guess" and move on.
This "educated guess" based on some early evidence is often "good enough". There are lots of questions for which you don't need perfect answers. All you need is something reasonably better than random -- or something that validates a strong "instinct" you already had.
But, be careful. The rigor of your experiment should match the importance of the issue at hand. If it's a big, important decision that will shape your company for a long time, don't just rely on the "early evidence" and use it to rationalize whatever it is that you wanted to do in the first place. Take the time to let the experiment run its course. For big, important, critical issues -- the extra rigor is worth it.
Example: You want to know whether taking a particular feature *out* of your product is going to have a major impact on your users. The feature didn't work out as well as you had hoped, and it ended up being very expensive to maintain. So, you send a survey out to your 5,000 users. Of the first 500 responses that come back, 80% of the people ranked the feature as "Super-duper important, if you take it out, I'll use another product". So, you could just take this early evidence, extrapolate and say -- "Hey, if 80% of our users really want this feature, we should just keep it in." In reality, what might be happening here is that the users that were most passionate about the feature, and thought that you might cut it are the ones that first responded to the survey. Users that were kind of "meh" (or didn't even know the feature was there) might take a while to respond, if it all. Basically, the early responses are not representative of your overall user-base. If you let more of the evidence come in, you might find that the actual number of users that care is much smaller than the "early evidence" showed.
The Danger of the Self-Fulfilling Prophecy
Another thing to be careful of when it comes to "early evidence". If this early evidence leaks into the organization, you often will trigger a self-fulfilling prophecy and wind up with a potentially misguided decision.
Example: You ask your sales team to start selling a new offer (could be a feature/product/promotion). Understandably, the first few attempts don't work out very well -- the sales team hasn't quite figured out yet how to position the offering. It will likely take a few weeks. In the meantime, word starts to spread that this "new thing" isn't selling all that well. As a result, the team pulls back a bit and reverts to selling the "old thing" (change is hard). This of course, causes even fewer sales of the new thing -- and it ultimately gets abandoned. Now, that might have been the right decision. Perhaps the early evidence was right -- but you don't know for sure. What if just a couple of weeks of training and tweaking would have fixed the issue. Perhaps it would have been awesome.
In summary: Don't confuse early evidence with compelling evidence. Avoid letting early results of an experiment taint the rest of the experiment. And, match the rigor of your experiment to the importance of the decision on hand.
Any examples you can think of when early evidence is misleading?
There are great lessons to be learned from many exceptional companies like Google, Apple and Amazon. But, can you just copy the best practices from these amazing companies and use them to succeed at your own business? I doubt it.
There is risk of pulling out the wrong lessons from these outliers. To be exceptional, they have to be the exception -- not the rule. Often, what worked brilliantly for them might be a blunder for you.
If you or one of your colleagues ever make arguments that sound similar to these, take a step back and question your assumptions:
"This worked for Apple and Steve Jobs..."
"But, Google does it this way, and they've done really well..."
"That didn't seem to stop Amazon..."
Here are the types of mistakes we make when looking to learn from leaders:
1. Then vs. Now
When you are looking to learn from great companies, be mindful that you undestand the history of the strategy or tactic you are looking to learn from.
Example: Google makes deep investments in technology and infrastructure. Rather than taking "off the shelf" tools and technologies, Google uses custom-built servers and operating systems. Though this makes great sense for Google, given their scale -- does that level of customization make sense for your startup? What did Google do when they were your size?
2. Loss Leaders are a Luxury
Big, well capitalized companies can often make big bets and investments that most startups simply can't afford. They can often use these "loss leader" strategies because they have a diversified revenue base and can gain an advantage by losing money in one project with the hopes of making it up in another -- often after many years.
Example: When Amazon sells the Kindle, it intentionally does it at razor thin margins (the actual razor, not the blade). The reason Jeff Bezos provides for this strategy is simple: "We want to make money when people use our device...not when they buy it." That works great for Amazon, because in the long run, they will make money. But, unless you're Amazon and can afford to give something away at low or no margin, it might not be the right strategy for you.
3. Great companies don't always make great decisions
When we look at successful companies, we automatically assume that every strategy or tactic they used contributed to that success. That's unlikely. Sometimes companies are successful despite some missteps along the way -- not because of them. If you're making a big decision based on whether or not it worked for someone else, dig into the details. Try and figure out the context of that particular strategy. Talk to the people involved. Did they think it was a great strategy? What were the tradeoffs? What surprised them? If they could do it over again, would they?
Example: When Apple decides for a more closed and proprietary system, do they win in the long-term because of those decisions -- or despite them, because they are so good at everything else? Could other companies succeed with a similar strategy?
It is a weak argument to say you should be doing [x] just because some super-successful company did [x] and it worked for them. They were a different company at a different time -- and in many cases, even the teams that made some of those decisions are likely not certain as to whether they were the right ones.
When you're faced with big, company-changing decisions don't use outliers as a way to rationalize what you want to do. Dig deeper. Do some additional research. Analyze the tradeoffs and make the right decision given your context.
What are your thoughts? Any other common mistakes you've seen people make when trying to learn from the leaders?
We were convinced from the very beginning that strong PR would be the answer to our market entry prayers. This is the story of how our reality turned into something of the opposite effect.
The Familiar Doubt
Many friends, fellow founders and business professionals told us along the way that creating a B2B interactive business platform would be a difficult project. (Hey, we knew that.)
People later told us that the most difficult aspect would be market entry. (Again, no surprise there.) The consensus among those critical of our venture was consistent, and usually along the lines of, “Don’t you want to do something more glamorous than a B2B platform? Maybe something B2C?”
(Actually, we believe our concept is glamorous and quite frankly, exactly what we believe the B2B market calls for.)
Any way you thought about it, the task at hand was going to be tough. The start was the most challenging, with an idea and an empty platform. But we were not the first facing this issue; surely there would be ways to maneuver our way into our key markets?
We knew some companies who successfully bought profiles or created fake ones, but decided that if we really believed in our concept, we would need real people behind genuine profiles and articles. And that we would need press coverage.
How did we solve the first problem of filling the platform?
We first talked face-to-face with various professionals we knew to get them interested and excited enough to participate on the platform, even though the it was new. It was hard, but we did it. Twice. Once on the German site, and again, when we went international with the English platform.
We were ready to move onto the next stage.
Growth.
How do you go about growing something like a self-publishing platform for B2B professionals? How do you create public awareness? Would press coverage do the trick? High-profile technology publications, with all of their reach, would be a nice start…wouldn’t they?
Indeed, we tried various forms of press outreach. After making a bad choice with a PR company for the German market, we chose the PR Company for our international venture with care. After months of consideration, research and negotiation, we made a deal with high hopes that we would see the benefits of this lucrative investment. While it would be wrong to say we gained nothing from this several month contract, it would be an exaggeration to say that it was worth the time, energy and money to do it again.
Maybe we chose the wrong firm or worked with people not experienced enough with an international, startup market. Regardless of the reason, we only barely inched along.
Eventually, we were forced to go out on our own to create brand awareness and ignite public interest.
The Big Guys
This time, we aimed for the big guys and landed one on our own. Coverage on GigaOM inspired positive feedback surrounding our concept and functionality. But as it turns out, getting highly coveted coverage is not enough. What happens is this: you get a spike of traffic, a couple of hundred or even thousands of visits for a day, but only a fraction of the traffic persists.
PR can work if you manage to stay continually on the radar of journalists. We did not succeed in getting enough “coverable” news out over and over again and thus faced the problem of limited exposure.
After personal and fired efforts, what did we learn?
Our PR still stank.
Without a celebrity investor or seven-figure financial round each month, we were forced to do what startups do best: build something from nothing, by using what we had.
Looking back, this hardship turned out to be a great thing for our business development. Without being able to rely on press coverage, we were forced to learn and engage in a marketing strategy - to find other ways to generate traffic and convert our target audience.
Essentially, our lukewarm PR made us better entrepreneurs.
How, exactly, did we manage to grow?
As a social publishing and content marketing platform we decided to do exactly what we had been advising our target group to do: run a content-based, social media campaign. The steps were as follows:
1. Research our target group: This involved getting to know the habits and motivations of our target group within each social media and online channel. It also required us to understand the conversations that were talking place about issues relevant to our service and knowing what our industry influencers were saying. Specific to our success, were analyzing Twitter and LinkedIn.
2. Connect with influencers: Connecting with influencers allowed us to learn the language of our industry and lay the foundation for future interaction. When we later began to produce content, we could guest post on these influencers’ blogs/websites and involve them in a series of interviews. In both cases, we found ways to expose ourselves to their followers.
3. Create content of utility: We knew that content had to be informative and engaging. Yet, the content that really made a difference for us was that which offered our platform and social media communities a sense of utility. If our content could be used to better understand the industry or tackle a common problem, it was more likely to be shared and discussed.
4. Publish content: This was when we had the opportunity to do what we had been advising our target group to do the whole time: publish on exploreB2B. Not only did we publish articles on our platform, we guest posted on active and relevant sites and blogs.
5. Distribute content: Publishing content was only one step of the battle. Distributing the totality of our content through our social communities served to create leads to our platform and, in turn, grow these subsidiary networks.
6. Continue to grow online communities: This was one of the largest factors in our spike in traffic and referrals. Once we grew our Twitter accounts and initiated daily interaction in LinkedIn groups, whole communities of like-minded people were exposed to – and became familiar with – our brand name. Growing our Twitter account from miniscule numbers to five-figure followers became a powerful increase in our visibility. Even though we are B2B, this kind of “social branding” played a large role in our growth.
Through a campaign of trial and error, we learned that social media and content marketing success is not immediate – and that it is not the result of one magical post. The persistence of our actions and the combination of the different measures resulted in a social media following, trust in our content, visibility, and stable platform growth.
What were our end results with PR?
1. A spike in traffic during April 2012.
Yes, that’s it. And it was smaller than our current (steady) growth rates.
What were our end results with content marketing?
1. Brand awareness.
2. Connection to key, industry influencers.
3. Large and active social media followings on more than one network.
4. Trust in our useful and engaging content.
5. An increase in weekly visits by a factor of ten.
6. An increase in registrations by a factor of ten.
In the few months we have spent content marketing, we have achieved something that gives much more value to our company than traffic spikes created by media coverage. We have an ongoing dialogue with our users, a network base that constantly returns to our site, and consistently grow our traffic.
Results from our content marketing campaign far outweigh any benefits we gained from being covered in the press.
We have survived by making ourselves the leaders of our own movement, utilizing the platform we created, employing the marketing strategy we recommend and connecting to thought leaders in our field.
Weekly traffic of exploreB2B from March 2012 to November 2012
Though our content marketing results were not instant, we were able to use this time to build trust and establish a reputation in “social business.”
With positive user feedback and a steady increase in their own article production, we now sense real stability in our social media and platform interactions.
At this point in time, our PR still sucks.
But, maybe that is just the point. It is due to the fact that our PR was not successful that we attained something that has proven more valuable in the end: steady, self-achieved, and sustainable growth.
The Fate of Your Brand
My advice for startup growth is to not rely on press to determine your market reputation. Instead, formulate a connection to your target group members by telling your own stories and sharing knowledge that defines your industry leadership. This provides a foundation for your own means of security and growth.
Using methods such as social media and content marketing, figure out where you can reach your target group and pursue them in helpful and entertaining ways. It’s not the tech journalists, bloggers and authors covering your competitors who protect and ensure the bottom line of your company.
In the end, it comes down to the people who trust you and find value in your ideas to decide the fate of your brand.
This was a guest post by Susanna Gebauer. She is one of the founders of the social publishing and content marketing platform, exploreB2B. You can also find Susanna on Twitter.
tl;dr Woo hoo! There is a brand-spankin' new OnStartups book available. All royalties that I make will be donated to Kiva to help entrepreneurship worldwide.
As many of you regular readers know, the OnStartups blog (what you're reading now) has been a fixture of the startup ecosystem for over 7 years. Over that time, I think there's been some great content posted -- and I've even written some of it. But a lot came from brilliant guest authors like Jason Cohen (@asmartbear), Mike Volpe (@mvolpe), Paul DeJoe (@pdejoe), Rob Walling (@robwalling), Leo Wildrich (@leowid), Brian Halligan (@bhalligan), Brian Balfour (@bbalfour) and many others.
So, when the nice folks at Hyperink Press volunteered to pull together some of the best articles, organize them and package them up into a convenient, awesome digital package (known as an ebook) I was like "sure, why not?". 
In keeping with my "doing it for passion, not for profit", I'm going to take any royalties I make from the book and donate them to Kiva.org
And here are some of my favorite snippets from the book. The more avid fans among you might even know which articles these came from. Thanks in advance for buying the book and all of your support over the years. Special thanks to some of the great guest authors -- you folks have produced some of the best content on the site.
21 Quick Quotes From The OnStartups Book
1. A startup lives and dies by its customers. Not some marketer's initial conception of who the customer should be and what the customer should want.
2. Coca-Cola needs people to have a warm-fuzzy when staring at a shelfful of sugar water; you just need sales.
3. If it requires a spreadsheet to figure out the sales commission, it’s too hard.
4. Sales people will generally act in mostly rational (but often surprising) ways based on incentives.
5. ALWAYS connect incentives somehow to ultimate customer happiness.
6. If the value of the education you're getting from the startup does not exceed the value of the salary, you’re doing something wrong, or you're at the wrong place.
7. You learn the hard way that if you lose your cool, you lose.
8. The exponential productivity from great people will always amaze you.
9. Sometimes you can tell more about a company by how it treats customers on their way out, than on their way in.
10. VCs invest in the companies that win over their hearts and their minds, usually in that order.
11. It’s a one-time cost to come up with great name for your startup — but the benefit is forever.
12. Having a diversity of distribution channels actually increases your risk that you never find a scalable channel at all.
13. It's not the news-outlets that write about you, it's individual writers that do.
14. That is the life of an entrepreneur: It’s a steady stream of hard work, occasionally punctuated by some really hard decisions.
15. It doesn’t matter how much “real” (objective) value you have baked into your product if your customers don’t perceive that value.
16. It turns out, people do sometimes buy drills (not holes).
17. I don't think business plans are completely useless, just mostly so. And sometimes, they're dangerous.
18. You should be committed to your business, not your business plan.
19. More startups die from idea gluttony than starvation.
20. If you're trying to disrupt the status quo and beat bigger competitors, you're not going to do it by playing their game.
21. When recruiting for a startup, you're looking for the future stars—because you likely can't afford or convince the current stars.
Thanks so much for your support over the years. It's been awesome having you as a reader of the blog. Any favorites articles? Any particular topics you're interested in hearing about in the future?
It was 6:30pm on a random Tuesday evening in Cambridge. There I was, carefully counting a wad of crisp $100 bills in an unmarked white envelope. I was parked in my car on Main Street, a block from the MIT campus. The bills were new enough that they sort of stuck together. The first time I counted them, I counted only 28 and had a brief moment of panic. There were supposed to be 30. But, two more recounts, and I was fairly certain that there was $3,000 in the envelope. This was the closest I think I've come to feeling like I was doing something illicit. I was just waiting for a police officer to walk up to the car and tap on my window.
I was scheduled to hand this cash over to people I had never met. At 7pm. In a classroom at MIT's Stata Center (it's the building that Frank Gehry designed that looks like it came out of a Dr. Seuss book)
The $3,001 was payment for what was intended to be an inbound marketing contest. The funny thing is, I inadvertently ended up running a hacker contest. But, looking on the bright side, the payment could have gone as high as $50,000 (which would have maybe required a black briefcase and sunglasses). So in some sense, I got off easy. "This could have been much, much worse," I told myself.
Here's the story of how I ended up handing an envelope full of $100 bills to two complete strangers.
The Founder's Journey Class at MIT
Back when I was a grad student at MIT (this is back in the 2005/2006 timeframe), I took a class called “New Enterprises” with Ken Zolot and Howard Anderson. It was the class to take if you were a student at MIT and had entrepreneurial leanings. It's where I wrote the original business plan for HubSpot (the only business plan I've ever written).
Ken Zolot went on to teach a new class called “Founder's Journey” (6.933) . Students were primarily undergrad computer science majors. Ken invited me in as a guest speaker, and I've been a regular guest lecturer ever since.
My topic at this guest lecture has generally been inbound marketing. To make things fun and interesting, I often hold a small contest/exercise during class (I've done this in other classes I teach as well). The cash prize was generally between $20 and $100 (usually based on how much cash I had in my pocket at the time, and the nature of the exercise). It often involved some sort of inbound marketing task: Write a title for this blog post, figure out some SEO keywords for this company, etc.
“Hey, why don't we make this more interesting…”
A week before I was scheduled to speak to the current Fall term class of “Founder's Journey”, Ken reached out to me and suggested we might want to try a more “in-depth” exercise. Something the students would have a few days to complete, instead of a few minutes in class. I thought that was a good idea, and noodled on the idea a bit. I then sent Ken this fateful email.
I will summarize the rules for you: Each student first sets a goal for themselves in terms of how many retweets they're trying to get. They then try to post a tweet that gets that many (or more) retweets. Simple enough, right?
Now, the astute among you will immediately recognize a couple of issues with this proposal:
1. I don't specify a maximum payout.
At the time, what I had in my head was: “It's kinda hard to get people to retweet something that much. I have 160,000+ followers on twitter, and even one of my popular tweets might get 100–200 retweets.” None of these students is going to have that kind of following, ergo, the likely payout will be $20 – $50. And, if someone's really good and gets a couple of hundred retweets, so be it.
2. I'm not explicit about what methods are considered legitimate/fair to acquire the retweets.
My topic was inbound marketing, and part of what I was hoping to teach/convey is that a) it's hard to get people to retweet. b) it helps to experiment with different kinds of tweets (humorous, useful, controversial, social good, etc.)
What ended up happening was this “perfect storm” of mistakes in structuring this exercise/contest.
“I thought to myself: Self, we have a problem…”
So, on Thursday night (t minus 6 days to the class), tweets with the #foundersjourney starting showing up on my radar. Not surprising. That's the evening the class is held, so Ken had clearly given the students their assignment and the game was on.
Several of the tweets were amusing, like this one:
But, when I saw this tweet, I knew I had a potential problem.
Uh oh. Exactly 300 retweets (as stated in the tweet) — all of them looking like bots. That's when I thought to myself, “Self, we have a problem…” I realized that I had not explicitly stated that one couldn't set up a robot army to do the re-tweeting (that kind of defeats the whole purpose of the exercise, which was meant to be about inbound marketing). But, the rules are the rules. I had set myself up, and was prepared to pay the price.
Now, I just needed to figure out what that price was going to be. So, I sent an email to Ken to ask the simple question: What were the top 5 retweet bids/projections? (Remember, per the rules, I wouldn't have to pay out any more than what someone had bid).
"The top bids are: 50,000, 11,000, 10,000, 5,000, and 3,000", he said. “Holy crap!”, I thought. This is going to get interesting.
Later, I saw this tweet.
The tweet didn't have 3,259 retweets at the time — but it was climbing steadily. The contest ran for 3 days, and as you might expect, I watched intently as the story unfolded.
Once the contest ended, I knew I was likely going to be out a fair amount of money. I didn't know how much, because I didn't know what Paul's bid was. But, I had a sneaking suspicion it was going to be relatively close to the 3,259 bid.
So, I figured, what the hell — let me just reach out to this guy and get the skinny. It's also when I had the idea to write this blog article. I figured “Hey, maybe we can turn this into somewhat of a happy inbound marketing ending. ” I later learned that Paul and Tim (a classmate) had agreed to join forces and attack the challenge together.
30, Fresh, Crisp, $100 Bills
So, last night (Tuesday, December 5th), I went in to teach the Founder's Journey class (as scheduled). I met Paul and Tim for the first time, handed them an envelope with 30, crisp $100 bills, while their classmates looked on with a combination of admiration and envy, and then went about my business of convincing a bunch of undergrad computer science students that marketing was usually necessary, and that inbound marketing was the way to go about it.
Paul tweeted a picture of the cash later that night. Here's that picture.
Here's a video of them hacking away (don't worry, there's no sound, so it's safe for work -- or classrooms
CAPTCHAs, consoles and cash, Oh my!
I went ahead did an email interview (this is all before I actually met the guys). Here are the questions I asked, and their responses. Only minor editing..and I've added some of my thoughts in italics.
1. How did you pick 3,000 as your bid/projection?
Paul: First of all, my bid is 3,001. I wanted to be able to say that I won "over $3000." Secondly, I wanted something worth doing. I realized that I got to set how successful this could be, so I didn't want to limit myself. I thought was about the most I could get away with in 3 days.
Tim: So I picked 460, knowing I could probably get comfortably to that amount without raising any red flags. Once Paul mentioned he picked 3,000, the choice was between solving 2,500 captchas for no benefit… or getting a piece of the action. (Paul, of course, was nice enough to collaborate.)
2. At the time you submitted your bid, had you already thought about some sort of semi-automated approach?
Paul: My first idea was that some service must already exist to turn money into retweets, and I could just buy them for less than a dollar each. I tried one of them with the ten free retweets, and they took about a day and a half to roll in. Too slow, I would need to make my own solution.
Tim: I was stoked when the contest rules were proposed. I wasn't sure if we were going to automate it at first; but I knew it was feasible, and intentionally asked no questions so that nothing would be off the table. (This was smart. No upside to asking a bunch of questions about the rules -Dharmesh)
3. How much software was involved in the process? What did the software actually do?
Paul: The software did everything except solve the captcha. It scrapes the twitter mobile signup page for the captcha picture, saves that after running edge detection to make it even easier, and displays that on a constantly refreshing page. Type 6 numbers in the console, press enter, repeat. One twitter account after another.
Tim: After our setup, had a script which would access mobile Twitter, generate a random First + Last name from dictionary words ("Rumply Nectarines"), pick the first Twitter-suggested username (@rumply) and then download a captcha. To us, this was just a page which showed a number, we'd type six numbers, [enter], and the next image pops up. The new account credentials are saved, so five hours later, we just had to run "retweet_this.py [tweet id]" once and slowly refresh our browser as the number ticked up. At about 3am we got our networks blocked, and we started tickling out retweets over my phone connection, slowly inching past 2500 and hoping not to get blocked again... (My guess is that if their network continued to get blocked, they would have found a proxy server somewhere to get around it. -Dharmesh)
4. What was the software developed in? Did you use any third-party libraries for some of the low-level stuff?
Paul: We used Node.js which we've both used for a lot of personal projects. We used a really cool library called scrapi which did all the heavy lifting for us (and which Tim authored :D).
Tim: Just Node.js for scraping, and Imagemagick to resize and highlight the edges of the captcha. (Paul disagreed this made it easier. We had about five hours to micro-optimize the whole process). I think it's amazing what you can accomplish with just an HTTP client and no rate limiting.
5. How do you and Tim know each other?
Paul: We go way back, since we were first-years at Olin. We made a lua-running operating system together, made a product designed for LARPers, and we share a provisional patent for a physical identity device as part of Lifegraph Labs that we are running this year with 4 other students. I wanted someone to help make this a reality, and I couldn't think of anyone more qualified than my friend Tim who is also in #foundersjourney. It really worked out for both of us.
Tim: We both attend Olin College, and not only is Olin small, but Paul and I have known and worked with each other on a ton of projects over the past four years, a large number of them gags and things we're terribly embarrassed to talk about. Our shining moment may have been an OS we coded from scratch, just to display pictures of ASCII cats.
6. Had you worked on something similar before?
Paul: I've never had to make 3000+ Twitterbots, but I have scraped twitter for data for AI research projects and I think we've both had our lion's share of Stay Late And Code projects.
Tim: Paul and I have done hacks like this before, but the timing was funny. I'm currently researching easy and flexible ways to consume APIs and websites. This scraper was built on a library I'd been working on for a few months [1]. Hacker News had a heated discussion last month around Marco's article "What Happens When a Twitter Client Hits the Token Limit" (
http://news.ycombinator.com/item?id=4795052). Scraping as a panacea for Twitter API restrictions was brought up in the comments, and as a proof-of-concept I thought I would bang out something to parse Twitter's mobile client, just to test how easy it would be to use Twitter without an API. Not long after, this contest was announced. Good timing, I guess! [2]
7. Did you consider something like Mechanical Turk to automate the last step (the CAPTCHA)?
Paul: We sure did. Even better would be adding a fully automated captcha solver that someone else wrote that works most or some of the time. That's a great step 2 for this project, and next time we won't be doing this manually.
Tim: Mechanical Turk's turnaround would be too slow, plus, better not violate Amazon's TOS and Twitter's. There are captcha solvers available online for cheap ($5 for 1000) but by this point we had paid no money and automated most of the work. It felt slightly less dishonest if we did all the grueling work ourselves.
8. You don't know me from Adam, how did you know I was going to make good on the offer?
Paul: I figured that since you proposed the challenge in the first place, you would be a good sport about it. I figured it would be great for your reputation if you paid out, and maybe not so good if you didn't. In the end, we weren't going lose more than a day programming and typing captchas, and the promise of a story this exciting was too good to pass up.
Tim: Can 3,000 Twitter bots get #dharmeshisaliar trending on Twitter? ;) Questioning the payout didn't even come up. More worrisome was that someone would honestly (or dishonestly) beat us. We did the math; we solved 15 captchas a minute, so that's $900/hr, for five hours, with the risk we might get zero payout. That's a better lottery ticket than I've ever bought. It'll be fun Christmas shopping.
For the record, I was going to make the pay out regardless of what the outcome was. A deal's a deal. I'm just glad I didn't have to pay out $50,000. That would have stung a bit (because I could have angel invested that kind of money in two up-and-coming startups!) – Dharmesh
Closing thoughts and lessons learned
1. If you ever hold a contest with a bunch of MIT undergrad computer science students, assume that it's ultimately going to become a hacking contest. Hackers hack.
2. Remember that any game that can be gamed will be gamed. All part of the fun.
3. It's wise to actually state in the contest guidelines what the intent of the exercise is. This will likely increase the chances that you get what you set out to get. In this case, the irony was that I care immensely about inbound marketing, and I was worried that the students would walk away with the exact wrong lesson. But, I think by the time my class was done, they "got it".
4. I'm not going to lose too much sleep over this because although there were twiter bots involved, at least it wasn't spammy. The solution did not involve picking some popular meme, following a bunch of real people or otherwise annoying folks that were outside the scope of the contest.
5. I paid for this out of my own pocket. No HubSpot shareholders were harmed.
6. I'm glad I was able to at least capture the story and tell it. It's a fun little story, and had a happy ending.
And, if you want to help make it an even happier ending, help me find a great Python/Django developer. This is to work with me on some cool HubSpot Labs projects. But, you need to be really, really good -- like working over email, and have the ability to create things that are not fugly. If this is you, or someone you know, email me at dshah {at} onstartups {dot-com}. Thanks!