Start-up Conversations With Elon Musk, Tony Hsieh, Reid Hoffman & More
If you could seek advice about company building from one super-successful entrepreneur, who would it be? Elon Musk? Caterina Fake? Tony Hsieh? Reid Hoffman?
Serial entrepreneur David S. Kidder decided to talk to all of them, plus 39 others. In 2009, Kidder, the founder of online advertising company Clickable, began conducting interviews with the country's most accomplished entrepreneurs, asking how they created and scaled successful start-ups.
Their responses--condensed, but largely in their own words--are compiled in his new book "The Start-up Playbook: Secrets of the Fastest Growing Start-ups from Their Founding Entreprenuers," to be published next month by Chronicle Books.
Inc. editor-at-large Leigh Buchanan talked to Kidder about this research, and entrepreneur advice that ranges from the idealistic (Joie de Vivre's Chip Conley: "Create joy") to the practical (Theladders' Marc Cenedaella: "When you have to make cuts, go twice as deep as you want to.") You can click here to read excerpts.
What is a playbook in this context?
A playbook consists of the lenses through which entrepreneurs see the world. It guides how they select their ideas and then build their business over the first five years so as to beat the statistics and not die.
Before you started interviewing other entrepreneurs, what was your personal playbook like?
I believed that the job of the founder is creating a vision people can believe in, hiring amazing people, and never running out of money. And that if you did those three things well and were in a great marketplace, then you would have a lot of success. I thought that was basically it. But I found you need a much more sophisticated philosophy around how you build the business.
What made you set out in search of such a philosophy?
I have the good fortune of knowing a lot of the Brad Pitts of entrepreneurship. I joke that I'm more of a Steve Buscemi. I wanted to become really good at entrepreneurship because that's my career. And I realized that, even after building out four companies, I was still living in sort of my own little movie. If you don't watch 50 movies or 100 movies, then all you have to learn from is your own story. The advantage venture capitalists have is they get to see the lives and successes and deaths of all these companies. I thought that seeing a lot of stories would provide both me and my team with context for our entrepreneurial journey.
What were the top-level findings?
First, don't chase after white space. Instead focus on your innate gift: What you and your company can be best at. Second, have extreme focus on one big idea. Your instinct will be to create many options for success. It takes a lot of courage to place one big bet on a single thing that is either true or not true. Third, build painkillers, not vitamins. Vitamins are elective. They may make you feel better, but not everyone uses them or uses them consistently. If your customer is in chronic pain and you've got the specialized drug he needs, then he's going to be loyal. Fourth, build something that is ten times better than your competition. Otherwise it's kind of a path to nowhere. Customers will only choose you on price or how well your product works. It's not enough to build something really unique. Finally, you've got to think like a monopolist from day one. A lot of the best entrepreneurs put electrified hooks and barbs into their customers. They design the entire company around keeping those people with them.
How did the entrepreneurs you interviewed develop their playbooks? School? Books? Personal experience? Advice?
There's a quote by Will Rogers that says some people learn by observing, some by reading, and some just have to piss on an electric fence. Most of the entrepreneurs I spoke to learned by just raw doing it. They're the dogs that caught the bumper. Silicon Valley does have a very dense mentoring network. And people do think: Who can coach me or who can I put on my team to help guide me through the pain and get to the answers faster? But ultimately they are doing it on their own.
Were there topics about which people held very divergent views?
Market focus and speed. For example, Jay Walker, founder of Priceline, feels most American entrepreneurs are so aggressive they think it's enough to just make progress--any progress. Their philosophy is ready, fire, aim. Jay's is much more aim, ready, fire. Make that: aim, aim, ready, fire. He believes you need to spend more time thinking about what you're doing before you act, because you don't get many shots at the goal. A lot of others were the complete opposite. Their playbook is, we launch early and often, we break everything, and if it works we learn from it as fast as we can. Throw it against the wall and see what sticks.
Did anything the entrepreneurs said subvert conventional wisdom?
Conventional wisdom teaches that entrepreneurs need to know their competitive landscapes. Ideally, they are industry insiders. But most of the entrepreneurs I spoke to largely ignored the marketplace. They were aware of it but utterly unguided by it. They consider themselves radical outsiders. Also, they believe fewer options are better. Conventional wisdom would say that more opportunities, more potential partners or deals, would be better. But you don't want a bunch of options to distract you from the one big idea, the right idea. You have to focus everything on choosing and executing on that one idea. Options can dilute the concentration of money, time, and people you need to break through.
There's an ongoing debate about whether companies should focus more on customers or employees. Where would your entrepreneurs land on that?
Some founders have companies that are very customer-driven. They believe in building backwards from the customer. But I would say 60% of the people I talked to are more idea-driven. They feel the idea of the company, the product or service, is so good that the customer will follow it. Those companies are much more employee-focused. They want to collect and keep the best people in the world who believe in their idea and can execute on it. If Seventh Generation had listened to customers, maybe those customers would have wanted them to add chemicals to their cleaning products because they think that cleans better. Instead they have employees who uniformly believe their mission is to produce safe, environmentally-friendly cleaning products. And because they believe in that and do it so well, the marketplace follows.
Were there significant differences in what you heard from founders of social-venture organizations versus pure-profit plays?
The focus and drive of people who had significant success in the non-profit world were in many cases as great or greater than the commercial side. Because those people are not making painkillers. They're making vitamins. Often they rely on volunteers, and volunteers can be very hard to manage. The motivations aren't the same. In general, it is much harder to build a scalable non-profit. When you talk to people like Charles Best of DonorsChoose or Scott Harrison of Charity Water, their playbooks are heavily weighted toward story. A large part of their success lies in the energy and truthfulness with which they tell their stories to the world.
You sold Clickable last summer. Will you have an opportunity to use what you've learned from your research?
In January I'm starting a new business called Bionic, which is a platform that helps people in enterprise companies accelerate growth and innovation. I designed the idea with those lenses--innate gifts, the mono-maniacal focus in one area, being ten times better than competitors, etc.--in mind. Also, from day one, culturally, everyone will know what we are trying to do and how we make decisions toward that goal. I think that clarity and transparency will keep us all on the same road as we scale, will prevent people from chasing incremental change, and instead focus them on the biggest opportunities.
Of all the folks you interviewed, with whom would you most want to start a business?
Many, many, many of them. These are magical people. They're humble. They're transparent. They're resolved. They're scarred. But if you put a gun to my head, probably Reid Hoffman of LinkedIn, or Tony Hseih of Zappos. They are amazing entrepreneurs but also just incredibly good people who I think would be deep and truthful friends. They are people I would want to follow. And as you know, entrepreneurs rarely want to follow anybody.
Click here for Kidder's favorite excerpts from The Start-up Playbook.