I am very excited to be here. The entrepreneurial energy at this conference and in London right now is mind blowing. For those of you who don’t know me, Zynga is the first highly successful start-up (by most objective measures) that I have worked for. I have worked on half a dozen start-ups in different capacities and seen over a dozen more up close through friends and colleagues. I have experienced the highs and lows of entrepreneurship and today I am going to share some of the very practical lessons I have learned.First let’s talk about the last four years of my life. The Zynga era! This will lend credibility to my good advice – and hopefully encourage all of you to join Zynga or tell your friends too. In all seriousness,Zynga’s mission is to connect the world thru games. This is the principle the company was founded on and we stuck to it. Having a firm mission made it possible to focus on the right opportunities and it made our value proposition clear to potential investors and employees. Focus is very important in the first few years. In other start-ups I was involved with we sometimes lost course. When I look back and do post-mortems it’s always because we decided to chase deals that seemed like easy wins but ended up pulling us away from our core mission. We are a young company but we are focused. We intend to make “play” a foundation of the internet experience
We feel we can become an internet treasure and equal play to brands and consumers the same way that Google=search, Amazon=shop, and Facebook=share. Becoming an Internet treasure to us means consumers couldn’t imagine life before us. Thinking big from the beginning helps you to identify key strategic and operational challenges early on. It also helps you to hone your pitch. I am hopeful that the advice I provide today can help those of you who are on an entrepreneurial path to find your way to success – both professionally and personally.
And we are on our way there – how many people in the audience have played Words with Friends? Try Scramble With Friends guys. Trust me
Here are some more stats – that once again will give instant credibility to all of the advice I have for the entrepreneurs in the audience. I promise, this advice is coming . . .
Remember when you were a little kid? Your parents and grand parents played games with you. Then for some reason all kids get a bit too cool for their parents and then that kind of fun stopped didn’t it? Zynga is expanding to support our goal of bringing play back all over the world. We are connecting parents, grand parents, aunt’s, uncles, 5th cousins twice removed, old friends and new friends in play. Play has no borders and our round the world footprint supports it
OK let’s talk about raising money
Will your idea solve a great problem or do something way better than it has ever been done before? Is the timing right? Will I have 5 or 10X return in 5 years for my investors? OK those are basic qualifiers. But you can get all of those answers right and still fail. So the bigger question is “Is this idea something that you are willing to commit your life to – blood, sweat and tears – for the next 5 or so years? Is it your passion? I can tell you from experience that if you don’t feel an emotional connection to a start-up – as a founder or as an early employee – you will regret taking the job. The sacrifices are too great
These stats come from an old book still very much worth reading called “High Tech Start Up: The Complete Handbook For Creating Successful New High Tech Companies” by John NesheimWow – these stats make me feel a lot better about my career so far. The common mistake that I see entrepreneurs making is that they think a good “product” idea is also a good idea for a “company.”
You do? That’s fantastic. Me too. The highs and the lows, the agony and the ecstasy. Yes – start-up life!!!! it is perfectly normal to feel like you are rearranging the deck chairs on the Titanic and preparing to join the ranks of the privileged in the SAME DAY!!! Make no mistake, choosing to work on a start-up is like getting on a roller coaster ride that lasts for years (if you’re lucky). It’s a lifestyle choice. You will think of little else while you are getting it going. Many of your old friends will find you boring and you will not be able to spend as much time with your loved ones as before. Vacation? Better do it before you launch!Now that I have told you this PLEASE make every effort to maintain some semblance of balance in your life. I really want to hammer this point home – take advice from the 40 year old unmarried guy with a cat!!!
Fred Wilson has invested in Facebook, Twitter, FourSquare, Zynga and dozens of other “winners” and a few losers over the years. He has a lot of material on the web that you should take the time to check out.
Friends and Family Round -- How many of you have done it? I have. It can be daunting. When I did it I told my loved ones about my idea and then I told them that statistically the odds say my start-up probably won’t succeed. And guess what – many still backed me because they believed in my passion, had total distrust of the stock market or just wanted to play along and ride the roller coaster with me. Raising money from Friends and Family is a great focus factor! If you can’t get your friends and family into your idea then it’s probably not worth going after. If you can find one hundred friends to put in 1k Pounds you’re on to somethingAs much as you can! Just kidding. If you are early stage, assume that your plan is 20% too conservative and/or that it will take you a bit longer to hire or get to beta than you thought. If you are further along and have a CFO or head of Finance, assume that your CEO is not conservative enough (he or she wouldn’t be a CEO if they were not a total Pollyanna).Angel Networks can be terrific. Just don’t give away the store! Tap into your local Community of entrepreneurs to find a great attorney to help guide you through the process. I encourage all of you to utilize the Community of entrepreneurs as much as you can. You guys should be sharing office space, office managers, receptionists, pints, etc..
I showed you guys the stats. VC’s are very busy. And they always seem to be about to go on vacation. Maybe I should have been a VC! My advice with Angels. Interview them as well. Ask them who they backed that succeeded and also who failed. It’s an interview for both sides.With VC’s -- Always be honest about where you are. They can tell when you’re not. Talking up your start-up is one thing but know that they have heard it all before. Your hockey stick of a revenue model? They’ve seen it. Your ground breaking technology? They have probably heard a similar presentation in the last few weeks. Major NO-NO – Do not try to will a bidding war into existence. You don’t have a term sheet until you actually have one in hand. Also, remember that your VC is your business partner. They are people you’re going to be working with for years. Present your business plan as if planting a seed. Sprinkle a little fertilizer on there but not too much.OK so the VC seemed super interested but now they are not calling or emailing you back. What’s the deal? Well that depends – what time of year is it? Holiday season? In my experience, the holiday slowdown starts in Mid-November and does not pick up again until mid-January. My rule – if you haven’t heard back after a ten days send a follow up email with some news in it “we’ve landed Client X and our round is still open. Any interest in a follow up meeting”. If that doesn’t work you’ve just got to move on. Desperation is an ugly cologne and He/She just might not be that into you. Find the right VC. If you decide to move forward with one ask for references and intros to other CEO’s they work with. Also, not getting funded is not the end of the conversation. Feel free to ask for intro’s to any of the companies they are backing that could be a potential customer or connection.
Brad Feld is the Managing Director of The Foundry Group – he has been funding start-ups for 20 years and has created a mentorship program call “Tech Stars” that is really terrific. I encourage all of you to read his book “Do More Faster: Tech Stars Lessons to Accelerate Your Start-Up”
- When you are first getting going you want to hire Swiss Army knife people. Look for candidates with multiple skills but a strong core in a key discipline. A Finance person with some experience in Facilities or Human Resources, full-stack developers, Marketing with some PR sprinkled in is key. Later on you need to bring in scalpels – professionals skilled in a particular area. I know that bringing Colleen McCreary on at Zynga as our Chief People Officer was essential to our success.- Avoid title inflation – I know you want to give everybody a great title in the beginning but you’re just creating headaches for yourself later. You are better off setting titles appropriately and giving a clear path to “level up” to your employees – even if there are only a dozen of them. If you are hiring someone away from a big company try and hire the “guy behind the guy” – the person just below the executive that is doing all of the work. You need people that will roll up their sleeves and work.Remember that candidates are interviewing you and your company as well. Make sure you have highly qualified people interviewing a prospect. If you are hiring for a role you don’t feel qualified to evaluate than ask for help from your Board. They are there to help.Avoid title inflation – I know you want to give everybody a great title in the beginning but you’re just creating headaches for yourself later. You are better off setting titles appropriately and giving a clear path to “level up” to your employees – even if there are only a dozen of them.Our Chief People Officer initiated a great process early on at Zynga. All hires must have an executive sponsor. This means that I have interviewed every single hire I have made into any of my orgs over the last 3.5 years. Back of the envelope I would guess that this is over well 500 people. And that’s a good thing. When you hire somebody you’re entering into a personal contract as well. My job as manager is to say “I will help you to reach your potential and become whatever you want to become at work.” My employees job is to deliver and be ready to take on new challenges.
Maslow – psychologist in the 50’s and 60’s who focused on successful people rather than people who were suffering. Chip Conley wrote a book called “Peak: How Great Companies Get Their Mojo from Maslow” to teach all of us how to apply it at workMaslow identified a “needs” pyramid which identifies the core needs of human beings. D-Needs and B-Needs. Can’t worry about B-Needs until D-Needs are satisfiedBottom line? Compensate your people – financially and intrinsically. A team is a start-up within a start-up. It needs a purpose and a vision that inspires. I have helped to build or managed 18 departments and game teams over the last four years and in each instance I strived to imbue each team with a vision and passion. My managers recognize the top employees on each team and Zynga does a great job of rewarding them.
Office space – sublet some space that is cheap and close to food. Buy cheap desks but very nice office chairs. Try and find sublet space to avoid long term leases. Outsource HR management activities like payroll and benefit management.When should you launch? Now. Seriously – there is nothing like direct user input. Get those friends and family you raised money from to start to bang on your site a bit. Don’t spend any money on marketing until you’ve ironed things out. And Localize if applicable. It’s way easier to do before you launch then after.Time Management – people ask me about this all the time. It’s simple really. Audit your time. All human beings have one thing in common – we each have 168 hours in a week
Crazy right? I’m working 60 hours a week, sleeping 8 hours a day, playing video games for 3 hours a day and working out and I still have plenty of time left over. If you are feeling overwhelmed, just do a time audit.
Lessons fromStart-Up VilleBy Marcus SegalMarch 19th 2012
Zynga Fun Facts•FarmVille has 29 million farmers, compared to 2 million real-life farmers in the U.S.•During 2011, more than 125 million apple trees were planted, 13 billionstrawberries plants tended, and 230 million foals born in FarmVille.•More than 1.3 million virtual businesses, 3.1 million houses, 8.6 million sidewalks and 1.7 million community buildings are built in CityVille each day.•Words With Friends currently processes approximately 1,300 moves per second.•More than 800,000 people are playing Zynga Poker at any given moment•Zynga.org has raised over $10M USD for disaster relief, educational programs and environmental causes
zynga 240 million monthly active players 54 million daily active players 450 million social interactions per day
Let’s Get Down to Basics• Raising Money• Hiring Great People & Building Great Teams• Other Important Things to Consider
Raising Money• Do I have a great idea?• Should I raise money from Friends and Family?• How much should you raise?• What about Angel networks?• Why won’t the VC call me back?
Some Sobering Stats• The average VC funds 6 out of every 1,000 business plans received each year• Around 60% of funded high-tech start-ups go bankrupt• Around 30% get acquired by other companies or never “hit it big”• Less than 10% go public
Blood, Sweat and Tears (of Joy)There are benefits a family gets from a parent who is anentrepreneur other than the wealth that he or she may beaccumulating.They also get a role model. A parent who is doing whatthey love, who is creating value, employingpeople, making a difference in the world. All of that isvery good.But it is only good if you make the time to have ameaningful relationship with your spouse and your kids.Fred Wilson, Union Square Ventures
Back to Raising Money• Do I have a great idea?• Should I raise money from Friends and Family? – How much should you raise? – What about Angel networks?• Why won’t the VC call me back?
VC’s – What You Need to Know• Desperation is an ugly cologne• He or She just “Might not be that into you”• It’s worth the wait for the right VC
Inside the Mind of One of MyFavorite VC’s:“So many of the business plans that I see (andoften don’t read) have endless vague generalitiesand extremely optimistic assertions about what thecompany will accomplish. Keep it short, simple,and direct. Don’t be afraid to have a big vision, butmake sure it’s a clear one.”Brad Feld, The Foundry Group
Let’s Get Down to Basics• Raising Money• Hiring Great People & Building Great Teams• Other Important Things to Consider
Hiring Great People• Swiss Army Knives and Scalpels• Have senior leaders participate in the interview process• Avoid Title Inflation• Be Transparent in the interview process
Resources• Books & Magazines – “Getting to Plan B” by Randy Kommissar – “Do More Faster” by Brad Feld – “Peak” by Chip Conley – “High Tech Start-Up” by Brad Neshiem – “Delivering Happiness” by Tony Hsieh – “The No Asshole Rule” by Robert Sutton