Below are some random notes that I wrote down today at the Entrepreneurship Club’s annual conference at HBS. This is a bit free form, but I think there are some gems in here. I’ve taken out attribution to protect the innocent, except in the case of Dharmesh Shah because I think the comments are important in the context of Hubspot.
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Overcoming Adversity
“Never ask an entrepreneur what you’d do differently, it will take up the entire panel.” This was nice to hear, I guess all entrepreneurs make lots of mistakes.
“Good judgement comes from experience, and experience comes from bad judgement”
Embrace the challenges you face, don’t spend time thinking about what you did wrong, keep moving.
Love the tough things – like slowing growth, HR issues, getting rejected by VCs.
Failure is part of the process, especially in fundraising. Therefore, it’s not failure.
Advice on Raising Capital
Most investors, especially angels, are afraid to make the first move. You need to get the ball rolling.
Social proof is important in seed stage capital raising. Get some high profile people to use your product, or partner with you, or recommend you.
When talking to investors, think about your trophy case – what are you actually proud of about your biz (customers, awesome senior hires) – not just the fact that you got some feature done.
Most companies don’t get multiple term sheets – just the guys being chased by the big VC firms.
VC firms structurally take a lot of time to get $$ from. A past entrepreneur can write you a check after coffee.
Don’t ever actively fundraise. You should be in the early stages of getting to know investors, or at the end of closing a round, but never actively seeking capital. “Passive fundraising.”
Trying to raise VC is a good way to check your idea and strategy. They may not want to invest because it’s simply a bad idea. But, it can be tricky to figure out if this is what they truly think, and even harder to figure out if they’re right! It’s just a proxy.
Other Nuggets
You need someone with a tech background on the founding team or else you’re dead. eCommerce is the exception.
There is a point where a founder becomes CEO – and they are very different roles that can cause a lot of confusion when you make that transition. The biggest difference is that a CEO takes a step back and thinks about the business from a higher level.
The benefits to not being in SV – lack of turnover, especially for engineers. But, there are lots of knowledgable founders in SV to leverage. If you’re a founder in Boston, you know all other founders and VCs.
Intelligence is pattern recognition (not in the VC sense, just patterns generally).
“You’re a harvard MBA, you’re going to be ok. Play the 30 year game. Learn the most right now. Doesn’t mean starting something, but could” – this is targeted towards anyone thinking they need to take a job at McKinsey right now.
When you’re feeling “on tilt” after an entrepreneurial failure, maybe take time and get a job and make some $$. Don’t go back to starting something for the wrong reasons.
When you fail, you’re in some senses at the height of your power – you just learned a lot. You probably failed for some structural reason, or bad early decision, that you can circumvent next time.
Dharmersh Shah on Culture
Culture is not perks (beer/ping pong), culture is how you work together.
Hubspot didn’t think about it for 3 years. Their CEO went to a “CEO group” – like group therapy – determines they should focus on it. Dharmesh put in charge despite being introvert. They were 75 FTEs.
They did a net promoter score (NPS) survey of employees – “Would you recommend Hubspot as place to work?” – people loved working there => main reason was other people at Hubspot. But, what do you do with this info?
Culture debt is like tech debt – really hard to get over. Start with the right culture.
If you hire a schmuck – you send a signal that it’s ok to be schmuck, even after you fire that first guy because they were there for 9 months.
Every hire should raise the average of the team…hard, but good goal. Every hire should also do something you can’t do yet. Hires ELEVATE the team, aren’t just there to be delegated to.
Good interview question: “What can you do that none of us can?”
The better the culture, the easier recruiting is. Save time. They put their culture deck online. 1 mm views. 2nd ever most read culture deck to netflix. Imagine the resumes they got…
Better culture => don’t have to worry about stupid stuff – like where people sit and what that implies about their power.
Most companies have a purpose (except maybe Zynga). Theirs is to reduce spam and sketchy marketing tactics.
Dharmesh has made 50 angel investments (only met 12 people in person, mostly online DD- looking you up online, playing with product, etc). Ideas don’t matter a lot – they will change.
There is a currency with titles. People want a narrative when sharing “what they do” with others…this is a really interesting point!! Plus, it hurts people’s chances to succeed after Hubspot if there are no titles (they didn’t have titles for 3 years).
They had an unlimited vacation policy. People weren’t taking it. Now 2 weeks min vacation. Still don’t track it.
If you don’t know what your culture is (and can articulate it), you are probably just hiring people like you and telling self you’re hiring for culture.
They like humble people. Humble people spread credit and take blame. They have questions to flesh out culture fit for each of their principles.
Dharmesh on raising money
When raising angel round:
Get good at marketing yourself/your company.
Angels will:
-Look at your website
-Play with product
-Look at demo video
==> before taking meeting
Have someone who doesn’t know what you do go through site and speak out loud as they use your product. Do they get it?
Design of slides matter in raising capital. It’s dumb, but it’s true
Don’t talk to VCs too early. Too much time wasted, can make you think your idea is bad.
One last note: Many of the people at the conference are clearly people you’d want to work with: hard working, smart, humble, genuine. But, there are always a few people on these panels that come off as arrogant and abrasive (especially VCs it seems) – just a warning to those on panels. If a bunch of HBS people walk out of a room and note how arrogant you were, you’re an outlier on this scale!
I hope these notes are helpful 🙂