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Startup DNA: the formula behind successful startups in Silicon Valley (updated May 5, 2017)

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[Updated May 5, 2017] "Successful startups are all alike; every unsuccessful startup is unsuccessful in its own way." These are my personal observations on a few traits that make startups successful. You can find a video of the talk at https://www.youtube.com/watch?v=z_D9oXCK2lM and the book at http://www.hello-startup.net/.

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Startup DNA: the formula behind successful startups in Silicon Valley (updated May 5, 2017)

  1. STARTUP DNA The formula behind successful startups in Silicon Valley
  2. STARTUP DNA The formula behind successful startups in Silicon Valley
  3. Most startups fail
  4. A few succeed
  5. Why?
  6. “Successful startups are all alike; every unsuccessful startup is unsuccessful in its own way.” Leo Tolstoy, probably
  7. This talk is about a few traits that make startups successful
  8. I’m Yevgeniy Brikman ybrikman.com
  9. Co-founder of Gruntwork gruntwork.io
  10. PAST LIVES
  11. Author of Hello, Startup hello-startup.net
  12. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
  13. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
  14. The road to startup success is paved with failure
  15. Failed projects
  16. Answers Events GitHub Tweets Lead accelerator Many others
  17. Beacon Places Deals Credits Questions Lite Email
  18. Wave Buzz Labs Health Knol Catalog Video Answers
  19. Pivots
  20. Initial idea: Game Neverending (MMO). Pivoted to focus on photo sharing. Acquired by Yahoo for $35M in 2005.
  21. Initial idea: burbn (social network). Pivoted to focus on photo sharing. Acquired by Facebook for $1B in 2012.
  22. Initial idea: Odeo (podcasting). Pivoted to focus on microblogging. IPO in 2013.
  23. Failed companies
  24. Reid Hoffman’s first startup was socialnet.com, a social network for dating. Never heard of it? Exactly.
  25. Went on to become COO of PayPal and co-founder of LinkedIn.
  26. “Startups are like jumping off a cliff and building a plane on the way down.” Reid Hoffman LinkedIn co-founder
  27. Virgin Clothes Virgin Cola Virgin Vision Virgin Vodka Virgin Wine Virgin Jeans Virgin Cars … all failed
  28. But several hundred of Richard Branson’s other companies succeeded!
  29. “I have not failed. I've just found 10,000 ways that won't work.” Thomas Edison
  30. These were not failures. These were experiments.
  31. The goal of an experiment is learning.
  32. “I've come to believe that learning is the essential unit of progress for startups.” Eric Ries
  33. #1 cause of startup failure: “No Market Need.”
  34. The biggest risk is building the wrong thing.
  35. The only way to find the right thing is through experiments.
  36. The experiments can’t take too long, or you run out of money.
  37. That’s why you need to fail fast.
  38. That’s why you need to fail fast.
  39. That’s why speed wins.
  40. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
  41. “Speed Wins.” Steve Kaufer TripAdvisor co-founder
  42. Boyd’s law: speed of iteration beats quality of iteration.
  43. Product development (naïve)
  44. Product development (reality)
  45. Product development (reality)
  46. In a trial and error world, the one who finds errors faster, wins.
  47. Key idea behind Agile, Lean:
  48. Some of your assumptions are wrong.
  49. The problem is, you don’t know which ones.
  50. “Winners recognize their startup ‘vision’ as a series of untested hypotheses in need of ‘customer proof’.” Steve Blank Bob Dorf
  51. Speed wins recipe:
  52. 1. Identify your riskiest, most central assumption. 2. Perform the smallest possible experiment to test the assumption. 3. Repeat.
  53. Minimum Viable Product (MVP)
  54. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
  55. Some of your assumptions are wrong.
  56. Data can be a good way to find out which ones.
  57. “Anything you need to quantify can be measured in some way that is superior to not measuring it at all.” Douglas W. Hubbard
  58. Server and client metrics
  59. User and site metrics
  60. Code and bug metrics
  61. Use feature toggles and A/B testing
  62. 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%).
  63. Measure the impact of new features!
  64. Without A/B testing
  65. With A/B testing
  66. Example: same page, different stock photo.
  67. Which one should we use?
  68. Using A/B testing to pick the right image significantly increased clickthroughs
  69. Note: use data to inform your decision-making process, not replace it.
  70. “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
  71. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
  72. If you build it, they will come.
  73. If you build it, they will come.
  74. If you build distribution into the product, they will come.
  75. The best product doesn’t always win
  76. How many customers do you need to be successful?
  77. (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:
  78. 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:
  79. The number of customers you need to reach determines your distribution strategy
  80. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
  81. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
  82. Print ads, online ads, newspaper ads, billboards, etc.
  83. Potential to reach millions, but you’re battling for attention.
  84. “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” John Wanamaker
  85. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
  86. Newspapers, TV, magazines, radio, etc.
  87. Massive reach. Can be positive or negative.
  88. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
  89. Email, Twitter, Facebook, LinkedIn, Pinterest, etc.
  90. Reach depends on the size of your audience.
  91. Personalized content can be very powerful
  92. (My CTR on “you’ve been tagged” emails is 100%.)
  93. LinkedIn’s “Year in Review” email also had a CTR of > 100%.
  94. Potential for virality
  95. Note: viral loops must be built into the product
  96. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
  97. Attract users with content: blog posts, open source, videos.
  98. The goal is to teach and to build a following
  99. Medium reach, but high conversion rate and low cost
  100. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
  101. SEO = Search Engine Optimization
  102. Google handles 2 trillion searches per year
  103. You can build a massive business on just a tiny slice of that
  104. TripAdvisor is built around being the top result for most hotels
  105. Need lots of (user generated) content to be successful
  106. Common distribution strategies: 1. Advertising 2. Traditional media 3. Social media 4. Inbound marketing 5. SEO 6. Sales
  107. Hire a sales team to sell the product
  108. Inside sales: sell in a store or over the phone.
  109. Outside sales: travel to customer site to do a deal.
  110. Small reach, but essential for expensive products.
  111. 1. Make excellent mistakes 2. Speed wins 3. Data 4. Distribution 5. Sharing Outline
  112. Silicon Valley companies share (almost) everything
  113. Papers: MapReduce (Google)
  114. Open source: Kafka (LinkedIn)
  115. Hardware: OpenCompute (Facebook)
  116. Companies: Mozilla
  117. Why?
  118. Quality: you do better work when others are looking.
  119. Free labor: free QA, free docs, free bug fixes...
  120. Happiness: something you keep with you your entire career.
  121. Branding: you become an expert by sharing your expertise.
  122. Mastery: the best way to learn is to teach.
  123. That’s why I’m here today:
  124. To share what I’ve learned with all of you.
  125. To learn more, see Hello, Startup hello-startup.net
  126. Questions?
  127. 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

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