MBAs creating their First Startup (Advice)


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For new MBAs who are thinking about creating a startup company

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MBAs creating their First Startup (Advice)

  1. 1. MBA to StartupFounder & CEO
  2. 2. Before StartupYour Company
  3. 3. My BackgroundMy Personal Background: Computer Science degree First 5 years of my career – focusing on mastering Software Engineering Second 5 years: Focusing on getting good at managing teams Third 5 years: Building a startup from beginning to end Microsoft for first 10 years. Shipped ~15 product versions Managed up to 3 teams. Was a manager of managers I don’t have an MBA degree, but… I read a stack of books of the MBA curriculum when at Microsoft to help my education I spent a SIGNIFICANT amount of time doing entrepreneurial planning during my 10 years at Microsoft BLOG:
  4. 4. Lessons from my First Startup
  5. 5. What I did WELL with Startup #1Did I DID do well: Wrote FULL business plans before startup the company Did FULL Due Diligence on the idea to make sure it was worthy “Taking the big leap” I threw away ~15 business ideas after finding problems in due diligence, until I found the one to create Startup Idea #1 I recommend this to everyone In hindsight, the business model was solid I focused on a business model that had strong valid economics to monetize Selected RoR Open Source as my platform I am a closer (Needed to raise capital, hire, close sales, etc.) Master the ability to raise capital Keep spending VERY LOW BLOG:
  6. 6. What I did WELL with Startup #1Continued…Did I DID do well: Talked to a TON of target customers pre-launch 2-month Dev ship cycles (after launch) I talked a LOT to startup people. Learning beyond BigCo/MBA/Theory was absolutely critical Worked in one of the big startup markets (Bay Area, Seattle, NYC, etc.) Focused on METRICS an ANALYTICAL analysis when managing executives during growth The Strategy (and strategic analysis guiding everything) was VERY STRONG (saving us many times) Built a great board of directors Closed the acquisition BLOG:
  7. 7. Learning PAINS during Startup #1Mistakes MADE: (and then Corrected) Should have done MORE and STRUCTURED validation talking to customers Started with a non-Microsoft co-founder (since I also didn’t have startup experience) I wasn’t great at designing web product UI. (My strength had been at Desktop App UI design) I should not have worked at Microsoft 10 years. I should have worked there 4 years. I should have worked at a Startup before creating my own BLOG:
  8. 8. Once the Venture was Going
  9. 9. Painful when Running the CompanyWhat I would change, if I know then what I know now: I didn’t know the “Newest Cutting Edge Marketing” It would have saved us ~8 months to 12 months and possibly our one pivot Focus on a deliberate company culture Learned how to filter executives Many small things during Sales-Learning-Curve Great advances in UI design needed Patents are often not needed in startups Don’t start a company when a huge recession will start when launching and ready to start selling Don’t sell recruiting (hiring) services when companies stop hiring, lay off and have massive unemployment BLOG:
  10. 10. Advice for MBAEntrepreneurs
  11. 11. Advice to MBAs looking at Startups (1 of 10) Startups are probably the MOST FUN and REWARDING career (for the right kind of person) Being a TOP PERFORMER is required to join a startup Having the same Job Title for more than 4 years can be a problem Only applicable to top performers This frequently happens at big companies A startup can enable greatly accelerating your career ALL top performers can move to “VP of XXXX” by being aggressive, moving companies, spending 70% of your career at sub-200 person companies and keeping a startup aggressiveness BLOG:
  12. 12. Advice to MBAs looking at Startups (2 of 10) A great career should probably look like this: BigCo 2 years Startup Employee 3 years Medium-Co (100 to 200 employees) as a “Director” for 2 years If starting this with an MBA at age 26, reaching “VP of XXX” for a 20 to 60 person company by age 36 to 39. Or as a startup CEO of a funded company Staying at BigCo 4+ years builds a fear of making changes like this BLOG:
  13. 13. Advice to MBAs looking at Startups (3 of 10) Creating Pitch Decks, Business Plans and being in Entrepreneurship competitions in the MBA program can be very helpful MBA programs are GREAT at: Learning finance General knowledge of building a mature company Marketing fundamentals (Great theory and historic tactics) Writing a Pitch Deck, Business Plan and competing in a competition on those ideas BLOG:
  14. 14. Advice to MBAs looking at Startups (4 of 10) MBA Programs have you learn AFTER graduating: Cutting edge new Startup Marketing Startups need a more automated, mass scale, LOWER COST of Acquisition and using new channels that didn’t exist 2 years ago “Balancing” areas of a company when managing a company or product unit Product building (but can easily be learned building product elsewhere) BLOG:
  15. 15. Advice to MBAs looking at Startups (5 of 10) BigCo can make employees RISK ADVERSE Happens at year #4 and beyond There is NO RISK in joining a startup right after college. If you have to leave it, it won’t cause a huge problem People can build a dependence on requiring a $120k to $200k household income Moving to a different company every 3 years can start to appear scary (when it shouldn’t, if that is the right career decision) MBA Programs tell you how to build an Organization In a startup, you do most of those jobs for the first few years BLOG:
  16. 16. Advice to MBAs looking at Startups (6 of 10) Don’t fall into the trap of multiple MBA founders Internet startups almost always SHOULD look like this: 1 Founder to be CEO (can have MBA) 3 Co-founder or employees are all Software Engineering types This is the first team of 4 FTE Multiple MBA founders magnifies blind spots Be careful of the company using the Microsoft tech stack (.net). Ensure you know why 90% of valley startups don’t use it, before making an informed decision on your startup BLOG:
  17. 17. Advice to MBAs looking at Startups (7 of 10) Channel Strategy: Internet B2C Channel strategy is VERY NEW Old Generation #1 Channels: Wholesale, Retailers, Shelf-Space Old Generation #2 Channels: OEMs, VAR Resellers New Internet Channels: Absolutely nothing like the above New Channels for B2C Companies: Some companies generate lots of traffic and are hard to monetize. Some monetize well but can’t get traffic. You should partner with your opposite Affiliate deals BLOG:
  18. 18. Advice to MBAs looking at Startups (8 of 10) New Channels for B2C Companies: (Continued) Acquire traffic from a partner company Thinking strategically shows traffic flows behave like channels: SEO, SEM, CPA, etc. Facebook: Via Apps, API to create posts, etc. Viral: Facebook, Linked-In, etc. Much more… STRATEGIC NOTE on CHANNELS: Think of micro-channels and then assess each for either: a) Marketing to, or b) using Channel techniques against. All internet traffic is a micro-channel or originates from one, so start strategic analysis there. BLOG:
  19. 19. Advice to MBAs looking at Startups (9 of 10) Be careful of Out-sourcing Software Engineering: It fails for startups 95% of the time It fails even more often for MBAs who aren’t Software Engineers or Program Managers For almost all startups and investors: Out-sourcing results in failing and is unfixable Validation from Customers This is absolutely critical. Far more critical than non-startup people realize Read the LEAN STARTUPS book. It is an absolute must read. This is the BIGGEST mistake first time entrepreneurs can make BLOG:
  20. 20. Advice to MBAs looking at Startups (10 of 10) Seriously consider cycling between: BigCo ($1 billion+ revenue), MediumCo (100 to 300 employees), and in a Startup Each will remove a blind spot Each enables advancing career wise vs. learning from people who master in deep discipline BONUS: The earn-out period after an acquisition is a great time to learn from BigCo or MediumCo BLOG:
  21. 21. Startups are Incredibly FUNI absolutely RECOMMEND it for all highly driven employees
  22. 22. Ex-Microsoftee Founded Startups Microsoft Founders of Startups (Acquired, IPOed, or Significant revenue): Jonathan Sposato @ Picnik: ACQUIRED Dan Shapiro @ (Shell) ACQUIRED Rev, Acquisition or Market Cap Mike Matthew @ All Stars Directory ACQUIRED Amount: TA McCann @ (Exchange) ACQUIRED $1+ billion: 3 Joe Giordano @ PayScale Companies Rich Barton @ Zillow & Expedia IPOed Mike Slade @ Starwave ACQUIRED $100+ million: 6 Companies Kevin Merritt @ Socrata Jordan Schwartz @ Pathable (MSN) $30+ million: Many Bill Bryant @ Qpass, Visio, Mixxer, etc. Hadi Partovi @ Tellme Networks & iLike ACQUIRED IPOed 5 Alex Castro @ Delve Networks (Shell) ACQUIRED Rob Glaser @ Real Networks IPOed Gabe Newell @ Valve Alex St. John @ WildTangent Companies Bryan Starbuck @ TalentSpring (Shell) ACQUIREDNumbers are often confidential. Some information came from people in the companies listed BLOG:
  23. 23. Anatomy of a Startup CEO Direct Learn in MBA Program Often learned after MBA Program Cutting Edge CEO Balancing managing theClassic Marketing Startup Marketing companyCorporate Finance Startup Disruptive Ideation: Business models, break through marketing, etc. General Great Product Building Strategic Analysis to ensuringCompany Building (Design, Software creating an idea for a startup Ideas Engineering, etc.) School Level writingBusiness Plans, Pitch Decks BLOG:
  24. 24. The ENDNext Steps: Create your company and have a BLAST Join the “MicrosoftStartup Learning” mailing list Join here: Bryan Starbuck’s Blog: