STARTUP DNA The formula behind
successful startups in Silicon Valley

STARTUP DNA The formula behind
successful startups in Silicon Valley

Most startups fail

A few succeed

Why?

“Successful startups are all alike;
every unsuccessful startup is unsuccessful in its own way.” Leo Tolstoy, probably

This talk is about a
few traits that make startups successful

I’m
Yevgeniy
Brikman
ybrikman.com

Co-founder of
Gruntwork
gruntwork.io

PAST
LIVES

Author of
Hello,
Startup
hello-startup.net

1. Make excellent mistakes 2.
Speed wins 3. Data 4. Distribution 5. Sharing Outline

1. Make excellent mistakes 2.
Speed wins 3. Data 4. Distribution 5. Sharing Outline

The road to startup success
is paved with failure

Failed projects

Answers Events GitHub Tweets Lead
accelerator Many others

Beacon Places Deals Credits Questions
Lite Email

Wave Buzz Labs Health Knol
Catalog Video Answers

Pivots

Initial idea: Game Neverending (MMO).
Pivoted to focus on photo sharing. Acquired by Yahoo for $35M in 2005.

Initial idea: burbn (social network).
Pivoted to focus on photo sharing. Acquired by Facebook for $1B in 2012.

Initial idea: Odeo (podcasting). Pivoted
to focus on microblogging. IPO in 2013.

Failed companies

Reid Hoffman’s first startup was
socialnet.com, a social network for dating. Never heard of it? Exactly.

Went on to become COO
of PayPal and co-founder of LinkedIn.

“Startups are like jumping off
a cliff and building a plane on the way down.” Reid Hoffman LinkedIn co-founder

Virgin Clothes Virgin Cola Virgin
Vision Virgin Vodka Virgin Wine Virgin Jeans Virgin Cars … all failed

But several hundred of Richard
Branson’s other companies succeeded!

“I have not failed. I've
just found 10,000 ways that won't work.” Thomas Edison

These were not failures. These
were experiments.

The goal of an experiment
is learning.

“I've come to believe that
learning is the essential unit of progress for startups.” Eric Ries

#1 cause of startup failure:
“No Market Need.”

The biggest risk is building
the wrong thing.

The only way to find
the right thing is through experiments.

The experiments can’t take too
long, or you run out of money.

That’s why you need to
fail fast.

That’s why you need to
fail fast.

That’s why speed wins.

1. Make excellent mistakes 2.
Speed wins 3. Data 4. Distribution 5. Sharing Outline

“Speed Wins.” Steve Kaufer TripAdvisor
co-founder

Boyd’s law: speed of iteration
beats quality of iteration.

Product development (naïve)

Product development (reality)

Product development (reality)

In a trial and error
world, the one who finds errors faster, wins.

Key idea behind Agile, Lean:

Some of your assumptions are
wrong.

The problem is, you don’t
know which ones.

“Winners recognize their startup ‘vision’
as a series of untested hypotheses in need of ‘customer proof’.” Steve Blank Bob Dorf

Speed wins recipe:

1. Identify your riskiest, most
central assumption. 2. Perform the smallest possible experiment to test the assumption. 3. Repeat.

Minimum Viable Product (MVP)

1. Make excellent mistakes 2.
Speed wins 3. Data 4. Distribution 5. Sharing Outline

Some of your assumptions are
wrong.

Data can be a good
way to find out which ones.

“Anything you need to quantify
can be measured in some way that is superior to not measuring it at all.” Douglas W. Hubbard

Server and client metrics

User and site metrics

Code and bug metrics

Use feature toggles and A/B
testing

Wrap new features in if-
statements. Default is “off”. Group users into buckets. Toggle features for some buckets: A/B testing, ramping (1%, 10%, 100%).

Measure the impact of new
features!

Without A/B testing

With A/B testing

Example: same page, different stock
photo.

Which one should we use?

Using A/B testing to pick
the right image significantly increased clickthroughs

Note: use data to inform
your decision-making process, not replace it.

“If we can’t identify a
decision that could be affected by a proposed measurement and how it could change those decisions, then the measurement simply has no value.” Douglas W. Hubbard

1. Make excellent mistakes 2.
Speed wins 3. Data 4. Distribution 5. Sharing Outline

If you build it, they
will come.

If you build it, they
will come.

If you build distribution into
the product, they will come.

The best product doesn’t always
win

How many customers do you
need to be successful?

(From the Stanford Startup Engineering
Course) Company Product Price Customers Coca-Cola Soda $1 1,000,000,000 Unilever Household goods $10 100,000,000 Blizzard Games $100 10,000,000 Leonovo Laptops $1,000 1,000,000 Toyota Cars $10,000 100,000 Oracle Enterprise software $100,000 10,000 Countrywide High-end mortgages $1,000,000 1,000 To make $1 billion in revenue:

Company Product Price Customers Coca-Cola
Soda $1 1,000,000,000 Unilever Household goods $10 100,000,000 Blizzard Games $100 10,000,000 Leonovo Laptops $1,000 1,000,000 Toyota Cars $10,000 100,000 Oracle Enterprise software $100,000 10,000 Countrywide High-end mortgages $1,000,000 1,000 Note the “customers” column:

The number of customers you
need to reach determines your distribution strategy

Common distribution strategies: 1. Advertising
2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales

Common distribution strategies: 1. Advertising
2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales

Print ads, online ads, newspaper
ads, billboards, etc.

Potential to reach millions, but
you’re battling for attention.

“Half the money I spend
on advertising is wasted; the trouble is I don't know which half.” John Wanamaker

Common distribution strategies: 1. Advertising
2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales

Newspapers, TV, magazines,
radio, etc.

Massive reach. Can be positive
or negative.

Common distribution strategies: 1. Advertising
2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales

Email, Twitter, Facebook, LinkedIn, Pinterest,
etc.

Reach depends on the size
of your audience.

Personalized content can be very
powerful

(My CTR on “you’ve been
tagged” emails is 100%.)

LinkedIn’s “Year in Review” email
also had a CTR of > 100%.

Potential for virality

Note: viral loops must be
built into the product

Common distribution strategies: 1. Advertising
2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales

Attract users with content: blog
posts, open source, videos.

The goal is to teach
and to build a following

Medium reach, but high conversion
rate and low cost

Common distribution strategies: 1. Advertising
2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales

SEO = Search Engine Optimization

Google handles 2 trillion searches
per year

You can build a massive
business on just a tiny slice of that

TripAdvisor is built around being
the top result for most hotels

Need lots of (user generated)
content to be successful

Common distribution strategies: 1. Advertising
2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales

Hire a sales team to
sell the product

Inside sales: sell in a
store or over the phone.

Outside sales: travel to customer
site to do a deal.

Small reach, but essential for
expensive products.

1. Make excellent mistakes 2.
Speed wins 3. Data 4. Distribution 5. Sharing Outline

Silicon Valley companies share (almost)
everything

Papers: MapReduce (Google)

Open source: Kafka (LinkedIn)

Hardware: OpenCompute
(Facebook)

Companies: Mozilla

Why?

Quality: you do better work
when others are looking.

Free labor: free QA, free
docs, free bug fixes...

Happiness: something you keep with
you your entire career.

Branding: you become an expert
by sharing your expertise.

Mastery: the best way to
learn is to teach.

That’s why I’m here today:

To share what I’ve learned
with all of you.

To learn more, see Hello,
Startup hello-startup.net

Questions?

Rocket: manhhai Leo Tolstoy: Wikimedia
Biz Stone: Joi Ito Richard Branson: Chatham House Thomas Edison: Louis Bachrach Reid Hoffman: startupofyou Dogfight: Alan Wilson MVP car: Henrik Kinberg Crowd of people: Scott Cresswell Picadilly Circus Ads: Sebastian Bertalan John Wanamaker: Bain News Service Social media: Ibrahim.ID Man using laptop: Negative Space Laptop with Google: Pixabay Handshake: Flazingo Photos Woman coding: Hamza Butt Resume: Flazingo Photos References & image credits