What They Don’t Teach in Business School about Entrepreneurship

By | November 20, 2019

[MUSIC] A session on, what they don’t teach in
business school about entrepreneurship. Having taught entrepreneurship in Stanford
business school for something like 13 years, I can tell you there’s a
lot. Some of it we know we don’t teach, and
some of it we probably should teach if we knew a
little more about the subject. So, I think it’s a very pertinent subject
today. So Mike, why don’t you introduce yourself
and tell us a little bit about what you did, and just remember,
I’ve got a little bio here.>>Okay.>>So if you don’t include things, I can
include it, and if you, if you do include things that, that aren’t in
here, I may question you on it.>>Okay. It’s like the Senate Investigation
Committee.>>Exactly.>>Except you’re not sitting out there.>>I do have lights flashing at me.>>That’s true.>>So I’ve been the CEO and co-founder of
four startups. I was very lucky with the first three. One was, the first one was, I started with
$500 of myself and each of my two partners putting $500
so we had $1,500. We started in my second year of business
school at the business, the Stanford of the East
Coast, in Boston.>>You’re very kind.>>[LAUGH] We, we never raised venture
capital. It, it started as a company called
Dialafish. It was where you could order groceries
from home. It was insane. This was before the internet and
everything. We eventually sold it for, we had to
change direction because that was not gonna work into a
computer telephony tool. We sold it for $13 million a few years
later, which was tiny for Silicon Valley standards, but, you know, a fair New England return on the $1,500
investment. The second company was Direct Hit, which
was an internet search engine. Nobody ever heard of inter, of Direct Hit,
but we were providing search results to
Microsoft, AOL, Lycos. We’re kind of a behind-the-scenes
provider. And it was the right time we grew to a
market value of $500 million. 500 days after we launched it, and we sold
it in January of 2000. And then the third company was X-fire
which is an instant messenger for PC video
gamers. It spread virally. We got to about three million users, two
years after launching. We sold it for a $100 million to MTV and now there’s fifteen million users,
using it. And I’m now work on my fourth one, which I
could end up being, I want to be four and o but I couldn’t be three and one because
we haven’t sort of found the formula for
success on Ruba. Ruba’s a travel site, so that’s sort of my
background.>>And when did you graduate from Harvard?>>A long, long, time ago.>>Look.>>We have to get into numbers.>>Oh, yeah, the rea, yeah, well, the
reason why, is, is sort of interesting to know the timing of your first venture,
right, because, that was, you say, prior to the
internet.>>Yes.>>But, so you were, you were actually a
leader in that, others came after you, also
didn’t do very well. Right?>>So I would.>>You may have been the, the, the biggest winner in that whole space of ordering
food from home.>>If we’d started a different time.>>Well, you, you sold it for $13 million.>>Yeah.>>Most of the other companies I know lost
money, right?>>[LAUGH] So win by default.>>Yeah.>>sure. So I decided I was going to stop aging at
age 31. So, I graduated Harvard from 1991. So I must have graduated around age 11.>>11. [LAUGH].>>You can figure out.>>Good. All right, thank you. Zila.>>So I’m Nazila Alasti and I started life
as an engineer. I’m Iranian originally, and in my country
if you’re a good student you either become a doctor or
an engineer, so there was, that was the choice and I
was scared of blood so off I went into
engineering school. But it was actually a really great
background I thought for Silicon Valley. I didn’t know I would end up here, but I
did. And I was thankful for my parents for
having pushed me into engineering. Fast forward, five years of working, at a
technology company at Mass Microdevices. I became a project designer, project lead,
went to business school, and learned that people can actually, make
money selling pencils. And that it doesn’t have to be
semi-conductors. That was my big, learning from, from
business school. Entrepreneurial activities at the time
were not as hot as they are now.>>What was it, when did you graduate?>>I graduated in 88.>>88.>>So, I also stopped aging at 30, a few
years earlier than you, yeah. and, and, I have to say that my experience
at business school, was really eye-opening, broadening, but I wouldn’t
say that I was focused on necessarily becoming an
entrepreneur. It seemed very risky at the time. However after I got out and experienced
the venture capital world for a couple of years and then went on to work
at Apple, which I consider really my formative years at
Apple, and worked on a big failure of a project called Newton,
which was the original hand-held device. I came to understand that I really needed
more freedom in my life, and that the corporate structure wasn’t
providing that, and I was stupid enough or naive enough to say that I could do things
on my own, so I started a long line of all sorts of
startups, failures as well as successes. And ended up now running Jooners, which
was my first, from Powerpoint, to funding, to product startup, where I’m CEO, founder
and I’m growing that business. So, that’s a little bit about me.>>Zila’s also the mother of two
daughters.>>Yes, I am.>>And, someone who is passionate about
trying to help those of you who are thinking about
entrepreneurship learn more about it. So that’s why she’s here today.>>Yeah, let me add to that Chuck. Thank you for bringing it up. I also want to talk to the women in, in the group if you’re interested
afterwards about why I believe entrepreneurship is actually
a very valid choice and, and, and compatible with being
a mother. So anyone who is interested in discussing
that, I’m open to doing that. the world will tell you no, it’s 24/7,
etc. Unless you burn the midnight oil, you
won’t be successful. I happen to have a different story. So if anyone is interested I’m happy to
share that.>>Great. Thank you. So we, we talked to, we’ve heard from two people who actually had technical
backgrounds. Will, give us your background and what
you’re doing now.>>Thanks, Chuck. So I graduated in 1999 from Kellogg, and
I’ve been in the valley since then. I’ve done a combination of both startups
and venture capital activity. So currently I am the CEO of Sequoia Hummer-Winblad funded company
called Widget Box. And I joined Widget Box two years ago. And before that, I was a managing director
at Hummer-Winblad and spent six years in the
venture capital business. So since I got out of business school,
I’ve had kind of the opportunity to see both,
entrepreneurs in action as a venture backer, and thinking
through business models and deciding who to finance and who not to
finance. And then also, having decided that to
become an entrepreneur myself and it’s only recently I even considered
myself one, quite honestly. But the last couple years of running a
small startup that’s not profitable makes you
one, I think. It’s been it’s been a very interesting
time to run a, run a company. So, now I’m definitely excited to be here
today and kinda share my thoughts about what
business school taught me, what it didn’t taught me, to, teach me about,
you know, how to, to lead a company, bring products to
market, sell, etc. And Chuck’s right, like in terms of
backgrounds, I went to Harvard, studied East Asian studies and finance and
started my career actually in Asia. So I worked in Hong Kong, and Singapore,
spoke Mandarin Chinese and thought I was going to be part
of the Asian miracle, and, but so that, so
I’ve done I’m not coming from an engineering
background, in other words. And so part of, you know, one of the
questions today I think is, how do MBAs and finance people
fit in to a culture that’s really run by, by
engineers, as opposed to business types, and kinda the MBA being a joke, as opposed
to something good. So I, you know, I’m happy to be here and
look forward to a good discussion.>>Now one of the things, Will, if I am
correct in reading this and listening to you, you formed, you joined Widget Box
after it had actually been founded.>>That’s correct. So there were three technical founders. They’d actually raised $10 million before
I got there.>>Some from you. Some for me, I was the seed financier and
then Sequoia did the A round and then Brent Jones and Tommy
Vardell at Northgate did the B round. And at that point they were looking for a
CEO and the, they did a nine month search and the
last guy that we made the offer to, I told myself
at the dinner if this guy doesn’t take the job,
I’m doing it. He didn’t take the job. [LAUGH] So, yeah.>>So, so, so some different paths here, I mean starting their own company, going out
and trying to find the idea, put the team together,
versus joining a startup after it’s had the
initial founders. The way we want to start this is to, is to
ask them a little bit about what led them to decide
to follow an entrepreneurial path. Because many of you are in business
school, or not in business school, you’re thinking
about this and you’ve got a set of ideas in your head as to what it’s going to be like to be an
entrepreneur. And then, what has been the biggest
surprise for them as they joined the
entrepreneurial world? So you got a vision, what led you to, to,
to do this, and then, what’s been the biggest surprise
once you, once you jumped in? Let’s start with Nazila.>>So I, I, I think I touched on that. For me, the, my job was such a big part of my life that, unless I was very
creative and had the freedom to do what I wanted to do, didn’t have to explain myself too much, I
was unhappy. So I thought that a smaller environment, less bureaucratic environment
would afford that. I wanted to be my own boss, and, kind of live and die by the decisions that, I
made. I also like adrenaline, I like living on
the edge. I like being pushed to make decisions. I, felt that I had too much cushion at Apple, frankly, my decisions really didn’t
make a difference. The juggernaut was going on, and I was
doing my best but, you know, er, wh, wh, where was my
contribution really. So those were some of the reasons that I decided to jump into the entrepreneurial
pool. Er, the biggest surprise though, and this,
probably you all are smarter than I was. I, I’m an immigrant so I always thought of
myself as someone who can do anything, just, just, give the
problem to me, I’ll do it. I’ll take care of it. I really never put too much emphasis or attention on partners and I learned the
lesson the hard way, that in the startup environment,
the biggest surprise for me was how much you needed
partners. Just like you can’t have a, well you can
have a baby on your own I suppose, you can adopt one, and maybe
that’s what you did, coming in late as a CEO. I don’t know. The analogy stops there. but, but, but, you know, I cannot
emphasize the importance of partners. And I cannot emphasize how much I was
lacking in that dimension. And how much I wish, had I done things a
different way, to go back and make ideas, joint ideas as
opposed to my idea. So that was the biggest surprise for me.>>You thinking about a, a partner, is
this a founding partner, or you thinking about a partner in terms of somebody in the supply chain or the distribution chain
or?>>Oh, the founding partner more. Yeah, and I also, just let me briefly say
that I think, my experience in business school told me what
I was good at, not was I was lacking. And, so I, if I were to do it again, I
would emphasize a lot what I’m lacking, so that that defines the
type of partner you’ll be looking for. So more on that if the discussion goes
that way.>>Okay. Will?>>Yeah, for me I think it was just, a combination of a lot of different
variables. But if you, if you think about where we
live today, right now, in this valley, it’s almost like how
could you not do it. You know, if not now, when, you know. And this is, the whole ecosystem here is geared toward risk taking, testing
yourself. There’s a whole, you know, obviously, a huge base of institutional venture capital
support. Legal systems are here. And it, really it came down to, I remember
to doing investment when I was in the, in the investment side about
how to test semiconductors. And at the time there was, the
state-of-the-art was testing a quarter of the wafer, and then it was half the wafer, and then finally this breakthrough to test the full
wafer. And I feel like entrepreneurship is a full
wafer test. It’s every, testing every part of who you
are. It’s testing your passion, your endurance,
your perseverance, your leadership skills, your sales ability, you know, it,
it, it, and I just felt that if I was 65 looking back on my career, I would
never forgive myself for living in this environment, at this time and not
testing the whole wafer, you know. And so, venture capital is a great job but it’s, it’s literally it’s it’s a
research job. You know, where, and, and it’s a job where
you make investment decisions. And I always felt when I met with the
entrepreneurs, I’m like, God, these guys. You know, I admire them so much, and it
just got to the point where I, I couldn’t imagine
not doing it.>>And once you jumped in, what was the
biggest surprise?>>The biggest surprise was, it being okay
that you don’t have all the answers, and trusting in process to
help you get to an answer. Like I really thought, cuz as an investor
you’re hypothesis driven. You believe that you’re making an
investment based on the following characterization, a, b and
c, therefore, d. And as soon as you start running a company
you realize none of those hypothesis work, and because the venture guy, you’re
paid to have an opinion. When they say, Will, what’s your opinion
on this deal uou have an opinion. And all the sudden I realized, like, shit,
I don’t even know what to do now. And realizing that that was a very
unnatural feeling because I. I’d find in myself of always knowing of
you and realizing now that I don’t know. And we’ve basically, in the context of
this is we had no idea how to make money, none. And like dealing with that and accepting
that and then realizing, like, well how are we gonna get out of
this problem? And just deciding that, okay, this, I’m
reminded of when Nick Saven won the national chair
and he said that hey, we believe in process not results at Alabama and what did that
mean. What he meant was that if you know how to
block, you how to play defense, you know how to
do these things, you just play the game and then
you trust the process to help you get to the result that
you want. But, so rather than a random act of heroism where you’re gonna have this flash
of genius that’s gonna make you rich, just
deciding slowly steadily plod your way in a
predictable way where you’re going and then trusting
that that’s gonna have you arrive at the right answer as opposed to a prior saying I have the answer, now we’ll just make that
happen. That was a really hard transition from you
know being an investment hypothesis driven thinker to
being a process driven thinker.>>Mm-hm.>>MIke [COUGH] out, out of engineering
school I went and worked at place Hughes, Hughes
Aircraft Company. And one of the projects I got to work on
wa a solar powered race car. And it was a totally cool job. We raced across Australia from Darwin to
Adelaide. And this car, before we built this car, the fastest, again, this was a long time
ago, the fastest solar powered cars were going
maybe 20 miles an hour, maybe 22 miles an hour. and, we built a car that could go 55 miles
an hour forever, just on sunlight. Which is, from a knee jerk perspective
like it’s an amazing accomplishment. And we won the race and we came back and I remember clear as ever my boss saying
that’s amazing. You know, I just wanna let you know the
average race at Hughes Aircraft Company is 6%, you’re
gonna get 6.5% this year. [LAUGH] And just the feeling at that
moment of you know, your fate being in your own hands was like okay this
is not gonna work. [LAUGH] I was also fired between, between
first and second year at business school. I went to work with a consultant company. At the end of the summer everyone got an
offer to come back except for me. And they fired me because I scowled at
people senior to me in the firm. And they, they told me that I, I admired
them for at least telling me that, but you know, talk about wanting to be in control, these are all, sort of, strong
influences. [LAUGH] and, and one other thing, sorta,
how you get into entrepreneurship I, I was I was
interviewed on Japanese TV actually and I said, well I think one of the key
tests is how do you feel at 9 o’clock on Sunday
night. If you feel like oh, you know yeah, it was
a great weekend. I’m looking forward to this week cuz of
cool projects, that’s one thing, but if you feel like oh, man, I can’t
believe the weekend’s over. I’m really not looking for work, it’s time
to change. Well they show this on Japanese TV and
actually showed this at 9 o’clock on Sunday night and
apparently they got flooded with 12,000 phone calls to the
switchboards or whatever saying, yes, we, I need to get a
new job. [LAUGH] So so, so, so, so those were my
influences doing a new start up and the biggest surprise for me at the
risk of Chuck’s wrath because this is one of the Ben said things yeah, in
terms of, I believe the most important things are a small team with high morale
is really hard to defeat. And you can, we had to change, three out
of my four companies had to change. Original idea completely failed and had to
change to a new idea and that was a surprise to me. It wasn’t so much the quality of the
original idea, but it was the quality of the team and the morale of the team
that I think we’re, the key think.>>Yeah, interesting, so yeah. Interesting so, similar to the point, is
that you need a team, you need a high performance team, because let me just
generalize what you just said Mike. There are very few companies that start
off maybe here, and just go like that. Most of them go, like this, even if they
get there, and many more go like this, and end up
over here.>>Hm.>>And, the question is, how do you, how
do you do, this, sometimes what’s called the
art of small-boat sailing. Any of you who’re sailors, you know, you
tack back and forth. And a good team is the, is the way to do
it.>>Yeah.>>So, so now we’re gonna, we’re gonna
sort of turn a little bit to thank you very
much. We’re gonna turn a little bit to lessons
learned. And, and to start off just asking each one
of the panelists so what what are the two key lessons, one of
two lessons that have been important to your success, lack of
success, you know, if there’d been failures, you know, you, you, you learn more from failures often than from
successes. And how and where did you learn it, and
then we’re gonna, gonna, after we leave that, we’ll come and
talk about reflecting back on the your business school experience and
to find out sort of, what you think was, was most important
about your business school experience. So let’s start with what are one or two
key lessons that have been important to your success, lack
of success in your entrepreneurial career. How and where did you learn them, and, let’s get started with let’s, let’s start
with Will.>>Hm. [LAUGH] I, I would say [COUGH] the kinda,
I don’t wanna repeat myself a little bit, but I
think what Mike said is also really important, too, like, you
know, Andy [INAUDIBLE] wrote the book Plan B, and they basically,
it’s, it’s the same point Chuck made about
tacking back and forth. It’s, it’s, it’s being, having a smart,
high-energy team that learns really rapidly what the
signals the market are giving it, and you know, we, we have a thesis about
our business and now we’re on like thesis four
I think, probably. And recognizing that like I use to
remember Chuck was on the board of ConEd and the founder of ConEd told me once, when I was thinking about starting a
company. He said, hey listen the first step is the
hardest, but once you start [COUGH] your just on a journey and
process, and I think that;s right. Like so beginning this work, be very, very
aggressive about it. But at the same time be very flexible as a
team about how to attack based on what you’re hearing
so thesis around revenue or monozation or customer acquisition, market
segment positioning all that you it should be taken with, with a degree of flexibility
so you can re, reconstitute yourself. And then being able to work with investors
is really critical around that. Because investors again, going back to my
original premise about difference between start ups
and investing. Investors are thesis driven. So if you say we are gonna go do this. I’m raising money for this purpose, and we
are gonna attack this market this way. We are gonna characterize revenue model
this way. And, the first board meeting you are like,
well, [LAUGH] that’s not why it not work, you
know? Having the ability to have that
conversation with them. So their with you through the journey as
opposed to being surprised by the attack. And so I would say being able to work down
with your team and try to attack the market and
learn and then other challenge is how do you work back up with
your investor group to basically say, okay, well, here’s what
we’re seeing in the market. Here’s the data points. Here’s how I’d characterize those. Here’s why I think we need to move direction a little bit, and then, making
that an open conversation, so they become part of
the solution as opposed to like, critically
observing your problem. So, I don’t know if that makes any sense.>>So, so the lesson is, I’ll be ready for
changes of course, and embrace them.>>Yeah.>>And also, have the courage to go back
to your investor group and explain to them, this is not, this company
is not doing what they invested in.>>Yeah.>>And, and your point, your point about
as an investor, you’ve got a thesis, and you are investing
in a market. And if at the first board meeting, they
come back and say, oops sorry, guys, I just took your
$10 million, but-.>>Right.>>You’re not going there.>>Right. Another thing I’ve, I’ve, I really learn I
think, and I say this with all due respect is that investors are extremely
opinionated, like, you know, alpha male. Type people typically. And they, and they have a lots of
opinions. The other thing I learned was to acknowledge and be respectful and listen
to all of them without being overly reactive
[LAUGH] to respond to any particular one of them. I got, what I mean by that, is I’m gonna
say you know, you should do this, this, this and this and I’d go back and
I’d go okay well that doesn’t make sense. Why would I do that? And but, I, I was over, so I guess there’s a fine line between having an open
conversation with investors and being extremely respectful of there
opinions because CEOs that don’t listen to their investors get fired
relatively quickly in my experience. So, you listen, but then you still are in
charge. And so, you have to decide how you
incorporate their feedback, make them feel like
they’ve been heard without making decisions that you go against your
own gut feel or what you think the business should
really do. That’s something that’s also hard to
learn, I think.>>Just, so, you were, he was an investor
with a firm called Hummer Winblad. One of those two was Ann Winblad. so, if we change a little bit the alpha male to very determined and, and
opinionated.>>Yes.>>How is that?>>That’s very, very fair.>>All right. Mike.>>So for me, one of the golden rules is
speed is the ultimate weapon. And I’ve learned that in, in a good way
and a bad way. I have all these little sayings. [COUGH] I think that the probability that
any business development deal ever happening declines by 10%
everyday it doesn’t close. And I really believe that. so, you know, mi, we closed the Microsoft
deal with direct hit where our results were shown on the
Microsoft search result page. And that deal was done in, in less than
ten days. And I think if it stretched on to, you
know, six weeks or something it would have never
even gotten done. Same with the AOL deal. I’ve just seen from my you know, history
which ones close and which ones don’t. Same thing with, with raising money. I think I’ve raised seven rounds of
financing and six out of the seven had a signed term sheet the
day I pitched. And I think if we stretch it out longer,
all these questions and second thoughts, and more market research and whatever
comes up and, and even closing employees. I, someone comes in for an interview,
we’ll do do diligence checks while they’re still
interviewing other people in the company, and before they leave the
building, we’ll give them an offer and say, are you ready to
accept? And they’re like floored. And right now? [LAUGH] We say you know yeah. And we don’t wanna rush you sleep and let
us know 9 o’clock tomorrow morning. [LAUGH] But we get a lot of those people,
and if we don’t, I’ve seen people spread out and then you,
you know, you lose them. Also, launching products, all my company
we’ve launched, launched a product within three months, three and a half months of,
of starting the company. And then you, it’s not a very
full-featured product but you get the feedback from the market
and everything. So speed for me is far and away the, the
most important lesson I’ve learned.>>So, one of the points you made there
had to do with with raising money and, and signing the, the deal the
same day you, you pitched it.>>Yes.>>Were you able to do that the first time
out? Let’s assume that, that, that, that these
people are all gonna be the first time out.>>Yes. So, people always ask that. And so let me just say, part of the, part
of the, the, party of the reason all of us I think here are
doing this is for aspirations. To sort of get you guys, you know,
motivated and excited so some of these things may seem like oh, I
can’t believe that. But it’s sort of a goal to go after. But actually J for Jertson my second
company so I had one under my belt, $13 million one. We pitched them at 8:15 on a Tuesday
morning in April of 1998, and we got a signed term sheet from
them by 4:30. And the way you do that, anyone in this
room can do that. I think some of the techniques are you
come into that meeting with what I call and if then
contract. And if then contract I go get a customer
for the, for the product and, and make this
amazing claims. Like, if we can provide search results in 50 milliseconds that 80% of your users
think our results better than your [UNKNOWN]
results, would you buy them for a dollar per thousand? And almost anyone will say yeah, okay. So, they sign a letter or whatever and,
and then walk into the troops Trevor Fischer
with this letter. Now there’s all sorts of caveats and
clauses and no legal contract, but at least Trevor Fischer says okay, you
know market risk has been eliminated. He’s got a customer. And also you walk into that meeting with
sort of how your gonna build that product. Here’s the Gantt chart, here’s the people. Here’s the three people I’m gonna hire. I’ve already talked to them, they’ve
already committed to joining. Here’s the, you now, the database schema. Trevor Fischer doesn’t know whether the
scheme is right or not right, or which way they are going to
take six. But at least they think, okay, this person
seems to know where they are going. And so, it is much easier for them to say
okay, yeah. And of course you also play competitive
pressure. I always do my meetings, I’m meeting, you
know, Will’s been on the receiving side of this
probably. I meet with three VCs in the same day. And I say it’s moving fast, and I’m actually expecting a term sheet by 5
o’clock today. And sometimes, they’ll call me back the
next day and say, we’re in. And I say, it’s gone. And they’re like, what do you mean it’s
gone? And I say, I told you 5 o’clock. And they say, but all entrepreneurs say
that. And I say, well, sometimes, it is gone. So I think if you just project this, if
you project this, you can get it done. And a lot of times, you know, the venture
capitalists will sense this. And they say, wow, this is, this is
moving.>>Who were you dealing with at Draper.>>On that day?>>Yea.>>I had Tim Steve and John all in the
room at 8:15.>>Yeah. They are a group that can and does, and do make quick decision, so that’s
pretty good.>>Yeah, yeah.>>Let’s see, who do we [UNKNOWN].>>Yeah wow. I’m floored. [LAUGH] I want you on my board. My experience has been very different. The small sailboat analogy I think
corresponds to our journey definitely with Juners the company
I’m leading right now. It was different with e-circles this was
late 90s, you know 98 99, we raised $27 million and it
was very much of this quick you know, now or never
but I guess my biggest lesson is that you
shouldn’t give up. And if 9 o’clock at night on Sunday you
still feel that you have the passion, it’s an it’s, it’s, it’s
an affair that’s not finished. If you’re still coming up with good ideas. Then keep on at it, even if you don’t have
the term sheet, right? so, so persistence, always pays. And it’s kind of what Will was saying
about the process. Be very, focused on what you’re doing,
where you are in the process, and don’t give it up. Don’t let people derail you. Because they will try to. The other lesson I learned is that, maybe
I’m too much of an engineer. I, I really don’t have it in me to go and
bluff like that.>>Yes you do.>>[LAUGH].>>yeah, exactly. So I need you as a coach. I, I, I, I will urge all of you to find a
mic and learn from. Seriously, there have been board members
in my company that have told me, you did this and this is how you spoke
about it? I think it’s also, perhaps, not too fine a
point on it, a female characteristic. Well, you know, yeah, you were expecting
me to do this, right? Why should I even brag about it? As opposed to, because you’re dealing most
of the time with these alpha males, that are, I
characterize them as lions. Right? I am an ant. You know, I build. [LAUGH] And then I face the lion, and the
lion just basically, all he does all day long is sit under the
shade [LAUGH] and watch. [LAUGH] Ooh, that looks like a good prey
over there. Attack. And that, when the lion is attacking Mike,
Mike is like, whoa, I’ve got 3 other lions
coming. Quick. Whereas with me, I’m [LAUGH] okay. So we’re laughing about this, but this is
a serious point. Find out if you’re an ant, get yourself a
lion partner somewhere, [LAUGH] if you’re a lion, get
yourself an ant partner, right? Because both are necessary and that’s the
combo is really unbeatable. The combo is what lets you do the speed. Right? And the ant and the lion better trust each
other. You don’t look like me. [LAUGH] Yeah, yeah, yeah, I know you wear
lipstick. Yeah, I know. But I have, I have a brain I can help, you
know. Let me also share since I’ve got the audience laughing, I think I have
permission here. [LAUGH] I was 6 months pregnant with my
second daughter. Amazon made an offer for the company I was
at. E-Circles, at the time for $250 million. $245 million to be very precise. Imagine, second child, belly comes that
much faster. I am this big, and I’m literally jumping
up and down on the table saying to the CEO, take it, take
it, take it. And he looks at me and he says, you’re not
an entrepreneur. You really don’t have the balls. [LAUGH] An entrepreneur will say no to
them. I’m like, no, this is $245 million. Don’t say no. We sold that company for $13 million to
classmates.com 6 months from that point, right after, you
know, whatever. February of 2000, April of 2000, right? So at that point, I really felt this
small. I’m like, oh, yeah, that’s right, you
know, I’m pregnant and my hormones have gotten the better of me, and
I’m definitely not an entrepreneur. That’s why I’m working for this guy as a
VP of Marketing. I may have all these ideas. I may know where I’m going, but yep, I’m
not an entrepreneur. Don’t let ever the world tell you that
even if you’re 6 months pregnant. [LAUGH] Right? Seriously. Stick to it. Go to the board. Do whatever you need. You know. Because sometimes right. People come in different packages. And don’t let the world tell you that you
need to look different. anyway, I stop.>>All right. And there’s a, there’s a a female
intuition in some of these things I think that’s pretty
important. I’ll tell you one other story. Hotmail Samir Bartia had an offer from
Microsoft for $250 million.>>Mm-hm.>>Samir’s from India. Samir called home and he’s talking to his
father and he said we just had an offer for $250 million from Microsoft and
his father says that is really great. And he says I turned it down. [LAUGH] His father hangs up. [LAUGH].>>A nanosecond later his mother’s on the
phone saying, Samir, call that man back and tell him you’ll
take that offer. [LAUGH] He took the offer. [LAUGH].>>So the moral of the story is better be
a mother than an entrepreneur. [LAUGH] [INAUDIBLE].>>Yeah. Exactly.>>And Steve Jurvetson was on the board
saying don’t take the offer.>>Yeah.>>Yeah. Yep.>>well, so let’s turn now to to Business
Sch, School education and how that might, or might not, have helped
prepare you for your work. In general, and in specific, instances,
sort of, in general, but then, they did or didn’t. And then what were the most valuable
classes you took and what classes didn’t you take that you wish you had taken and I
guess we’ll start with Will.>>Okay. I’ve thought about this quite a bit. I guess I have 3 comments that I thought
of. This is more about what I didn’t learn. The first is that risk is really relative. People think that doing start ups is
risky. My, a lot of the guys that when look back, I went to my tenth [UNKNOWN] this
past year. Went to Merrill Lynch, Morgan Stanley, BCG
and McKenzie. They all got fired. All of them. And fired in two different waves. The first in 2002 and then again in the
last year. There’s no such thing as a safe haven in
this economy. People will cut jobs as soon as they
decide. And by the way, you’re like a number in
some budgeting exercise. The CFO says, we gotta cuts heads, you
know, 15%. And there’s like all right, take this
whole department out. So, just first think I’d think is just,
there’s no such thing as a safe place so if you’re
gonna take risk, which you are, whether you realize
it or not you might as well be in control [LAUGH] of
your own destiny. That’s the first thing that, that I think
a lot of my classmates got wrong. And by the way, when you’re a 10 year
Merrill Lynch vet and you get whacked in New York City, in the
meltdown of a financial market. What are you gonna do then? You’re screwed. If you’re an entrepreneur in Silicon
Valley and it doesn’t work out, there’ll be plenty of
things to do. I guarantee you. Sec, second thing is I really think business schools overteach how rational
organizations are. [LAUGH] They basically, basically make up
this thing that business, every businesses some DCF model
or some rational exercise and then everyone gets around and
they make a logic based decision about how, what to
do. When I first got out of the business
school, I remember going into meetings and going,
what the fuck just happened? Like, how did that decision just get made? It makes no sense whatsoever, and I
literally was like, this is so weird. I, I was like, disoriented for like weeks
and just like, I don’t understand how anyone’s
making their decisions. Like, no one’s even doing any analysis,
they don’t understand what they’re talking
about and I read this book and it was kind of a cliché’, but it basically said there’s two types of
companies. There’s companies that are idea driven,
where they’re flat, they’re merit based, and people, and
they’re generally engineering companies in a lot
of ways, and they make decisions based on rational
logic. And then there’s people driven companies
that are driven by politics and personal affiliations, and logic has
nothing to do with it. There may be this kind of pretend that
there’s a process but basically, there’s some
decision that gets made based on who knows who or this or that,
and all of a sudden it gets announced to the
company. And what. Generally if you work in those companies,
everyone goes, whoa, what is going on? And I worked in a lot of people call up
political based organizations and, and as a MBA, a business person, I just was completely dumbfounded by how
companies were working. And I, I think that there’s, you know,
there’s like OB and people talk about that, but it really, I think one of the challenges about business in general
is [UNKNOWN] economics or finances, people presume
logic is the basis for how large companies make
decisions and all we have to do is look at Washington D.C. to realize that’s not
true. [LAUGH] The last thing I would say is
some, for some reason business schools are
prejudice against sales. And like they’re, I guarantee you when you graduate none of your classmates will
become sales people. And yet John Thompson, John Chambers, Sam
Polusamo, the guys who run>>Cebo.>>Cebo.>>John Mortgage.>>Yeah, John Mortgage Steve Ballmer ran
sales with Microsoft. Sales people run the world. [LAUGH] You know, like they, they are the
guys that go and like, and this, it’s very rare that a marketing
person is gonna run Cisco or IBM. You know, it’s sales people. So, why is it that business schools don’t,
don’t embrace sales in sales cultures, and
variable base compensation? Like, all right, we’re gonna pay you 100,
but you can make 300 if you knock it out. Most MBAs are like, no, I just want a 125
and a little bit of variable. But it’s like why? Like, if you’re good and you can sell,
then you should go and sell. Certainly, whether you’re selling to raise
money or selling your product. Like, sales is the heart of everything we
do. And I just wish that someone had said to
me like, go become a sales guy. You know, or like learn sales or sales
management. Or like, and it’s kinda like this dirty
thing, like yeah, I will do product management I will do business
strategy oh, and then someone’s gonna sell it. Well, who? You know? [LAUGH] And, and if you’re gonna manage
sales people it would probably be good to do
that. So I, I, I just don’t get that part of it. MBA’s all have the same mental frameworks
rather than make decisions, and when you go into a company you have to,
you get almost challenged a little bit. Like, you went in with a visual designer
and they’re very creative and they think in terms of
pictures and, and, and design. And then engineers are very logic
architectural driven and they won’t understand scale and all the
other things. And when you do a lot of group work at
business school, everyone’s kinda sharing a common
framework, cuz they’re teaching you a, a frame, a method of decision making, and
then you get into a company, and you realize there’s a lot
of this communication problem. You’re like, how does this person not
understand how they think, or it makes no sense what they’re
saying to me. Well, that’s because they, they’re looking at the problem completely differently than
you. And I would say, the other thing I wish I
had done more of in business school is do cross-discipline
work, like with other people not in my school. And I think that D school here’s a great
example of that, where you can go work with some creative designers and some
engineers, and, and you can really realize that to solve a problem with people from different
disciplines requires to be a flexibility in how you communicate and how you think about it,
and that was a real shock to me too. And you end up like, I have a of couple
people for me who are designers. And like whenever I talk to them, I realize like, wow, I don’t, they’re
looking at this problem from such a different
vantage point than me, but yeah, it’s very
valuable. The way they’re thinking and they’re
better at it than I am. So, those are all things that I wish I’d
learned more of I suppose.>>[COUGH] so, a, a while ago I had this,
this dream, this fantasy, I like gosh I wish I had this magical power that
I could get my company to work. I could control the brain of someone I’m
trying to get a business development deal with
[LAUGH] you know, get inside, get Google to do this, get
Google to up you know, change my page rank or
whatever. And I’m trying to get around to supporting
Will’s point that and then I realized you
actually can. And that’s through this, this persuasion,
this charisma, this sales technique that I think is the most
important thing CEO’s do. One way that I got a lot of experience was
in my first company, we were selling this software product, $500 software
product over the telephone. And there were 3 people in the company. And we had just gotten this article in
this magazine, and sure enough, 300 people called [LAUGH] in the next two days
saying yeah, we wanna get the product. We didn’t even have it finished yet, we
were a little bit, jumped the gun. And so we cr, yeah, we created this
database and we started to put everybody’s name down
and call ’em back. And then more people would call in about
the product. So in the beginning, out of every 100
calls, you know, I would take their information
down, I would send them a brochure and I, you
know, I’d say okay, I’ll follow up or something
like that. I basically was closing nothing. In 10 weeks later, out of every 100 calls,
I could get 33 of them to give me their credit card number
by the end of the call. And you just learn to say well look, you
know, we have a 30 money back guarantee, so why
don’t you just give me your credit card and I’ll
send it to you, then you can just do the
tutorials. You don’t like it, why do, why do you
wanna spend time reading the brochure? Why don’t we just have the product in your
hand? And you can try different techniques and different approaches, and learn which ones
work. And the other thing I think that happens,
that’s very powerful is when you ask for
something huge, something you think is maybe a little bit
outrageous, and someone gives it to you, it’s a very eye opening
experience. When you say to AOL, you know why don’t
you put our search results right here and split the
revenue 50 50 with us. And when they say okay, you’re like, oh my
goodness, [LAUGH] you know. There’re some other analogies I could give
maybe, probably not appropriate in this environment but,
where if you go for something you think is maybe
unattainable and sometimes they say yes, it’s a very
powerful experience. And it makes you try more often. So.>>Good.>>Okay. So I, I said that business school should
require every student before graduating to sell
$10 worth of goods. $10. I second your point, and I’m gonna move
on. Selling is underestimated, and it is hard
to get $10 out of a person, believe me. It doesn’t matter the age, doesn’t matter
the size, doesn’t. So, in our company, at Jooners, we started
as a free service, we debugged it and then
realized that we have a long way to go for this market to realize, and we’d better have some
money coming in. So, we turned it into a subscription
service. And, the amount of effort and thinking
that went into this exercise, I can write books
about. But, the net result of it is that we
became the, the, the masters of our own universe,
if you will. It’s a very small business, but it is
self-sustaining. Right? So, important stuff: sales. I can’t, I can’t highlight it enough. similarly, I thought that in business school my biggest learning was on
organizational behavior, just because I love to learn
more about people and how minds work. And accounting, because I knew nothing
about it. Right, so it, those were the courses that
attracted me the most and I learned the most from. I, I think there is an over emphasis, at
least in my years. But, I, I, I’m sure things have changed on
maximizing revenues and profits, as opposed to
maximizing value. And that’s a critical question that. And the reason for it, I think, goes a
little bit to the fact that all of us living in U.S capitalist society, and so
for, I, I don’t know what the reason is. But we always think bigger is better. And, I’m not sure if that’s the case for
everyone. So, understanding on the spectrum of very,
very, very small to very, very, very large where your idea, product,
mentality, personality, wish for life, you know,
what,whatever. Where that fits I think we’ll with the
question what am I maximizing? Certainly you can’t create Cisco, just
maximizing value. Although some would argue that if value
wasn’t maximized in some form or fashion, Cisco wouldn’t be
created. We can have a debate about which one comes
first. But at the end of the day, the question
that I face as a CEO in my company right now, is, what
am I maximizing? Right? Certainly I’m not maximizing number of
people coming to the site and registered members because I am putting in front of
them a 1995 barrier, right? Subscriptions. Give me money. Otherwise, you can’t use the product. But I’m maximizing. The fact that I know the people that I
have are going to pay this money, because there is a pain
that I solved for them. That’s, that’s what I’m maximizing right
now. So, so, so, on that. Another point scale. When I was at Apple, I was so ignorant. I would look around and say this is so
stupid. This is so big. And they don’t really see the value of my
great ideas. You know, what, what is going on? I, I was like you. I was like I have, I’m an MBA! Use me! [LAUGH] You know? I’m smart. I can do, you know, etcetera. But if you end up in a big company,
please, do me a favor and take the time to learn
about scale. You know just watch it. Just watch how organizations are billed,
watch how products are shipped. Just watch it. Cuz there are a lot of lessons that you’ll
learn, that you don’t know where did, when and where
they’ll come handy, but they will. I guarantee you. So scale, it’s kind of. If you don’t understand it, like I was
when I was at Apple, it’s easy to pooh pooh at and just say, ugh, I’m
just gonna go be an entrepreneur. But, if you pay attention and learn from
scale, then you can be a better entrepreneur, I
think. And I would harp once more, again, learn
where you are weak. I think, in business school, because it’s
such a selective program at Stanford. People that come in, we all felt we were
the chosen and the school does nothing to
diminish that, right? We’re, we’re continuously pumped, at the
very same time that I was going through business school my
husband, my now husband, then boyfriend, was going through
a PhD program at Stanford and every day he was told how
stupid he is.>>[LAUGH].>>Seriously. He was writing a thesis, he was doing
cutting edge work, he was doing modelling like you
wouldn’t believe. And every day, they were telling Murph.s,
yep, you came short, you came short, you. And every day, I was, just for sitting in these great chairs, I was being told I’m
wonderful. And and, and so what happens is that you really, I think, gravitate towards what
you’re strong at. As opposed to finding out what you’re weak
at. And, you know, you may, you may be fine,
you know, I’m good at talking, so I’m just gonna
keep on talking. I may not be very good at thinking, or
understanding people’s feelings, so I’m just going let
another person do that. That certainly is a strategy, nothing
wrong with that. But, if you want to be a more holistic manager, and more well
rounded entrepreneur. I would definitely pay attention to the
negative space. And what it is that you don’t do well. And why and how can you, how can you beef
it up? [SOUND].>>Thank you. So, we’ve got a couple other questions
that we can. Throughout here the panel. But let’s open it up here and see if
there’s any questions from the audience.>>Nobody’s mentioned financing on your,
on your own. Growing organically. I actually have started a number of
businesses one of which 30 partners who are each partners
have made a million dollars and the company is now
the biggest company in the United States in
this particular field. Can anybody comment on that I never think
on any of it in any business.>>Anybody want if not we’ll. I can so my first one was self financed
with 1500 dollars we never raised debt or equity
from investors. It’s quite painful to run a company with
1500 dollars in invested capital it reduces
your flexibility about. Having any computers, for example, in the
company. So I don’t think you have to raise venture money, but it’s a sort of an optimization
decision. The fastest way to get there a lot of ways
is to raise venture money. Now I actually haven’t raised a lot of venture money, Direct Hits started with
$1.4 million. The next par share was $1 million. so, I think you can do just fine with
with. See? I’m even, Evan drink the Kool-Aid in
Silicon Valley. Even small amounts like a million dollars. I think you, you can get quite fine with
that.>>Any question? Right here.>>Yeah, I just, thank you, by the way. My name’s Erica, and I’m a first year,
PSP. And we’ve had an ethics class and an OB
class, and in both of those classes we’ve been
talking a lot about biases recently, and just how we’re
inherently biased, kind of like self fulfilling nature, and I’m,
I’m constantly struggling with. Going with that, and then also looking at
entrepreneurial spirit, because it’s like, head down, get it done, like, how do
you, there’s a little bit of talk about in attacking and
reacting to the market, but how do you reconcile your own biases with also
just moving straight forward ahead?>>By biases, you mean, in terms of. Of thinking about what, t, what
consequences might be of a particular action or or you’re thinking about biases against entrepreneurship or for
entrepreneurship?>>It was just the, the [INDISCERNIBLE]>>How do you deal with your personal,
your, your, your your, your personal might call prior, priors in
terms of how the world works? Yeah. Anybody wanna?>>I’ll take that, so, I came in with my biases about where the direction of the
product should be. And, was fortunate that I had team members
that helped me see how the market was reacting, what was
good and bad, we. Switch that. But I had very strong values and I went to
school that says, you know, if you don’t believe it,
nobody else will believe it. Right, so in that I drove really hard, and
people kept presenting me with data of here is how it is not
going to work. Other times I haven’t done so well So it’s
a continuous struggle. But, you know, one of the things I do at
the end of everyday. I allow ten minutes to just sit. And it’s amazing the things that occur to
you in the, to me, in those ten minutes. I would highly recommend you doing that because those types of answers come by
sitting. And, and thinking about it. You, you, you know what I mean? You just need to let them percolate a little bit and then the answer will be
self-evident. But if you don’t believe as an entrepreneur, nobody else will believe,
so.>>Yeah, the only thing I’ve found is
that’s really been helping me through that is being very
authentic with people. And you know you think of entrepreneurs
maybe you know there’s a fine line between being constant
salesman optimism and being authentic. You know and we’ve all met plenty of
people where you’re like this guy is such a
snake. So you don’t believe it. So, what I’ve found that’s been really
helpful is having access to people that. Or I can just be completely honest with
and let my guard down and say here’s I’m really
struggling with this and I have you know you know obviously if you’re
a leader you don’t wanna panic people by making it seem like
it’s hopeless or anything. But if you can have access to people. You can just generally lay out your
concerns and get feedback. You, you really find out that having [INAUDIBLE] with the David Hornik’s
Conference, the lobby in Hawaii and it was just great for almost like just the people sharing pain
basically. It was willy. But in a way, that was very cathartic in the sense that you realize like everyone
goes through this. Even people who are super confident super
accomplished have gone through very dark moments and they have, even you’re going
through that and you’re concerned, you can get recharged by just having that kind
of conversation and being able to go back and get stronger to deal with,
you know, your issues.>>[INAUDIBLE]
>>Any other questions? Right here.>>You mentioned that the things you
learned from [INAUDIBLE]. [INAUDIBLE] I’d be interested in hearing
some of those lessons and takeaways [INAUDIBLE]
aeronautics [INAUDIBLE].>>Well, Mike, I already told you you get
a 6% raise. [LAUGH]
>>Six and a half.>>The average. So. Mike, so what do you think? Other than the fact that you learned you
wanted to be an entrepreneur? I mean, Will’s point made me think about
why some decisions are made. I mean, I was at, let’s just say an
unnamed big company where. All day long people would go into
meetings. There would be no agenda. People would talk for an hour. There would be no action items taken. People would walk out of the meeting and
it’s as if the meeting didn’t happen. It’s kind of like, why? So we don’t have very many meetings at my
companies. We have a 12 minute weekly all hands
meeting on Monday and. We have one on ones you know at 30 minutes in between back and forth and it’s
about it.>>So, you gave some examples of the
problems that you saw. But was there anything you took away from
that that was valuable. Yeah.>>Further question.>>So one thing to do is watch executives. How they run meetings. What they do. What they’re paying attention to. And the best way to do that is to get to
know their admin. If the admin knows and likes you, you’ve
got access to the executive. So. And don’t be shy, you know, go and ask
them all your dumb questions. How do you run meetings and why? What kind of, so those types of access to
people that when you come out of that company you will not
have access to. The other things I learned was the
decision making process in a big company. Company. So if you’re searching for a partnership
with an AOL, what you wanna do is understand how AOL works inside so that
if you have a notion of what a VP looks like and what type of
decisions and the size company they concern themselves with, what a
director looks like, what a manager looks like. Then when you’re facing them, you speak to
their concerns. You’re not speaking out of context, if you
will, their context. Lots of lessons about, you know, effective meetings as well as
non-effective meetings. Again, depending the executive, depending
on how the meeting was run. And then the whole idea that, you know,
how do you make a ship move when there are
thousands of people involved and are there any
lessons that can be taken from that to apply to a small
company. so, yeah, I think it was a really rich
environment. Oh, one last thing, lots of training. Classes and so forth as they look at large
companies. Come to a small company, there is none of
that. You have to beg your boss, can I please go for this $200, you know,
entrepreneurship conference whatever. The answer is, in my company, no. And so, so, benefit from those because. Larger companies are more accommodating.>>Yeah, I started my career at Morgan
Stanley. And I went through the analyst training
program there, and I learned excellence, work product, and how
to just get stuff done. And that was just, you, you’re like Friday
4 O’clock, MD calls and says. Alright, we’re gonna go see a client on
Monday. We need to build this gigantic model and
run these 50 different scenarios. And by the way, there better not be any
mistakes. And have it printed, bound, and at my, at
my home in Westchester by 7 a.m. Monday. And and I just remember there at Morris
Stanley, they taught me once like, hey, the
difference between good and great is ten minutes [INAUDIBLE] you
do something [UNKNOWN] go walk around the block, go get a coffee
[UNKNOWN]. If you print it out and take it to him and
put it onto his desk he will find it for you or she will
find it for you and Big companies that are, that maintain a culture in excellence in execution can
really teach you how to be very personally effective and to learn, to functionally execute very
quickly. Like build this DCF, now and do this and
do that. And so Golden sales that are companies
that are big companies but. They’re high performance companies where a
lot of good work gets done. I remember joking like, those army
commercials we do more by six am than most people do all
day. I used to say that, you know. I’d go down to the lobby at Morgan Stanley
and you go to work at 5pm and everybody would be
going home. You’d be like alright, shift two is about
to start, let’s go back up and crack some more stuff
out. You know, you learn to work. And that, that I take, I took that away. For sure.>>So some of you have probably worked
for, or are working for large companies. I mean, I think one of the things you
should do is take from that that there’s things
to learn. And it can be important to you as an
entrepreneur. 15 years ago, certainly 20 years ago, but
even 15 years ago if you asked. A venture capitalist in Silicon Valley,
what was the right profile for an entrepreneur they
wanted to back. It would be, you know, five or ten years
at Hewlett-Packard, or some other company to
learn these life lessons. If you ask them now, they don’t say the
same thing. And the reason why.>>Is because you have people like these
three people here. [COUGH] You can go to work for an
entrepreneurial company, and you can learn these lessons
because you have a, a set of managers in there who really are, really excellent and can teach
you that. other, other questions? Right here.>>I’m an engineer and I don’t know if I
would learn sales. [INAUDIBLE] Business. How am I going to get sales?>>Well, you could try selling. [LAUGH].>>I mean, like.>>How do you get in there? Well, on sales, let me just reinforce what
your panel has said here. You think about this, so you, you, you
have a company, and you’re generating revenue, and it comes time for
a vacation. So who do you want to go on vacation? Let’s say you’re going to take a month
vacation. Could you get by with the marketing people
gone for a month? Could you get by with the finance people
gone for a month? The only people you couldn’t let go for a
month, are sales and operations. You’ve gotta ship the product, and you
gotta have someone to sale it, to sell it,
right? So it is, it is really important. Now, your question is, how do you get a
chance to do that? Is that right?>>Yeah. How do I get a chance ,but also I never
had an opportunity to work at like a
telemarketing firm or something like that.>>It’s only one kind of sales.>>Right.>>Yeah, right. So let’s get to the panel here.>>All right, I, I, I have the answer for
you [LAUGH] I, I think any company you work for as an engineer would welcome an opportunity for you to sit on help
desk. In my company, I am on help desk at least one, once a week, at least for a couple of
hours. You’ll answer emails and technical
problems or issues people are having using your product and
so forth. And then through answering those, you will
learn how you can shift their perception of the
product. That’s like step number one in sales. You don’t have to necessarily get dollars
in exchange but you help the company maintain
that customer. Right? So if you’re an engineer, best place for
you would be to sit on help desk. And do it and offer yourself, and I know
wherever you’re working, people will jump at the opportunity because, you
know, you have the technical know-how. You’ll learn a lot that way. Then tag along to the sales people as, as
the expert, right? They always know how to sell, but they may
not have as much in-depth knowledge of the
product as you do. So, just ask them you know, hey, take me
with you next time you go on a sales call, I promise not to
open my mouth. Or, if this is a really hard customer that
has technical problems, tell me what they are and I’ll come
prepared to answer those. I, so I think the first step is just
observation. I’ll also say that when I was an engineer
I wanted more money, and so I looked around
at AMDM, and I saw sales people making a lot of
money, so I said I want to go be a sale’s person. So I went and applied. And they told me, what you’re an engineer,
go back to your corner, what, what do you mean you
wanna be a salesperson? You’re an engineer, sit there. And that was the reason why I applied to
business school, because I thought okay in my limited
worldview, if you wanted to sell, you have to go to business school
only to learn that there’s really no selling
happening in business school, right?>>[LAUGH]
>>So anyway, they’re our avenue.>>We now have a sales course.>>Oh, good.>>Yeah. This course was created, because I was
teaching a class on Netflix, and Reed Hastings, the founder
was in the class and John Morgridge was there and So, John asks the question, he says how many,
and also there were Frank Capone, who was the guy who took them public, and
the lawyer who took them public. So John asks the question, he says how many people in this room have been in
sales? And, so one person raised his hand, John
none of the students raise their hand. So he looks at Frank Capone. Says what are you doing these days, Frank. And Frank finally looks at him and says,
oh, I get it. Raises his hand, okay. And then of course Reed Hastings of the
CEO raises his hand. The only person that doesn’t raise his
hand is the lawyer sitting over there, taking
notes. [LAUGH]
So John what’s the reasons. So, what are you doing these days, instead
of just, oh, raises his had. So we left, we left that meeting and went
out and decided that, that class, and we decided
we needed that sales course. So we have it now. I don’t know how many of you students have
taken it or. Thinking about taking it. And this is something that I think a lot
of students are taking advantage of. I think we have four sections this year.>>That’s great, great.>>Anything else on this question?>>Right here.>>[INAUDIBLE] Question for, for you guys,
because, so far I’ve been hearing two years, three years cycles
and you sell your companies. So I’ve been running my company for about
nine years, now. Have you guys have any experience of other
people that, you know, really, [INAUDIBLE] at a small medium size level
could be plus 50 or 60 people. In nine or ten years do you see [INAUDIBLE] getting tired or impatient
and stuff. And how do you handle that?>>Michael you start.>>That’s one of the reasons why I like to
sell my companies in two years. I, I think there’s, there’s all sorts of
benefits you get from exponential growth. From evaluation standpoint, when you’re
raising additional financing. From valuation standpoint when you’re
selling the company. From an employee morale standpoint, you
know, literally if you show this exponential
growth. Of any metric then everyone’s so excited. Every-, with the meeting, behind the
numbers up you know. I think it’s really hard to have to
maintain the intensity and drive over longer
periods of time. I think there are different sets of
people. There are certain sets of people who they
couldn’t do it. I mean I couldn’t do it. And I guess the only other comment I have
is I, I, I sometimes advise start up companies, and they say oh, yes, you
know, I’m engineering team’s feeling a little bit, you know, not
driving as hard, they’re. You know, they’re leaving early and
whatever, and how do I get them to work harder? And a lot of times I say, that’s the wrong
question. The question is, the problem isn’t what
they’re doing now. The problem is who you got in the company
in the first place. It’s a little bit simplistic, but I think
it comes down to the questions you ask during
interviews, and the type of people you get in the first place, so
you may wanna consider switching the team out
to people who are. I mean, you don’t have to worry about motivation and drive issues, that
they are, it’s so much an internal part of them that
it’s not an issue for, for you.>>Greg, you had your hand up?>>Well, I was just going to say that I’m
the anomaly in the room because. I’m soft drink company, and not a software
company but we, sales and marketing has been very much a part of we
have been doing and a more important part of course is the next
session in which I’m going to which is on angel investing, because we’re
at the stage we need more money. But, I think that there are so many
companies out there. Where there are opportunities to get sales
experience. And it doesn’t even have to be in your
particular field either, and that’s something that I
want to emphasize. That if you can get any kinds of sales experience, if for example you are in
engineer you can. Why that is important to another area. So, I was wondering why any of you enjoy
careers. And everything with technology is focused
obviously, because where we are. But I guess you have had experiences in
your lives that taught you that sales
experience for marketing outside.>>[NOISE] I, I remember, working for an
entrepreneur and he said, told me that every CEO has basically has two
jobs, to sell and raise money. And, and so I’ve had two, I’ve been CEO twice now, and I’ve basically my view is
like. You know I’ve subscribed to Mark Lesley
philosophy on this. You know, crack the sales code the formula
for sales yourself, get renaissance people who
are not typically functionally aligned in any one area but they can do everything and work out the process for
how you sell. And as soon as it’s starts to be codified
and repeatable then you can bring in execution people who are
expert at a discipline.>>And so, I, I think that’s been my
approach to make the first five or six sales, what works, what doesn’t
work and soon as I feel like you know, this kinda be guarded then, then you
ca go hire someone who is little [UNKNOWN] sales person, okay here’s the
sales process, here’s the [UNKNOWN] or here is your
number. Let’s go do it together three, four times and then [SOUND] like launch them off, and
so. just, that’s, that’s kinda what I did,
yeah.>>Big [UNKNOWN] right here.>>I just want to follow up on your [UNKNOWN] PC saying you should work for HP
for-.>>Yeah.>>What do they say now.>>[LAUGH].>>Now, now they, now they, they don’t say that anymore, because the, because the
people who are running start up companies often have the same
kind of experience and their sophisticated, so you
can learn from them. They don’t say don’t do it, but it used to be that’s exactly that’s the past you
know, we want invest in you Kleiner Perkins
unless you’ve been at HP for ten years, not quite like
that.>>Chuck did you see what Leoni said when
he went to give a talk in San Jose?>>No.>>They said no one over 30.>>Yeah,
>>Seriously. That’s what he said. He got a lot of trouble for it. But Sequoyah they were quoted as saying,.>>Well, Sequoyah is extreme in not over
30.>>So. [LAUGH] I was like okay.>>Sequoyah, Mike Morris told me the other
day. But he doesn’t believe in market research. So, what do you mean you don’t believe in
market research? He says, he says the end of entrepreneurs
needs to understand the market, so well, and have
you know, the million other people that are just like
him or her, or else we are not going to invest in
them. So that’s, I would say that is an extreme
approach.>>Yes.>>Let’s see we have one here. Anybody else? Right up here.>>So, you all have kind of a long term experience around, and you’ve
seen several cycles. Can you comment on opportunities in this,
this specific period in time [INAUDIBLE] economy [INAUDIBLE]
model that is maybe broken [INAUDIBLE].>>[SOUND] I, I, I, I would say that one
of the big challenges, the [INAUDIBLE] business, of course everyone’s talking
about is, there’s a surplus of committed capital and there’s no public
market, [INAUDIBLE] exits are challenged, and so, you have this situation where the
media and ITX is like fifty million bucks. And, you know, the average company raising
[UNKNOWN] company is raising you know, 18 million or something, so like how
does the math work? So, I, I would say there’s this rise of
the Mike Naples the first rounds, the true ventures founders fund there’s this whole
new class inve, investors who are trying to be super
capital efficient. Y Combinator would probably be the best
example of that. And so I think, that, combined with, huge
differences in the cost of operations. You know, the rise of Amazon EC2S3. The ability to not own a single machine,
and run a pretty big web application. So I think the, the rise of capital
efficiency, and, And, And, and a new class of investors whose expectations are
slightly different from someone who’s got an $800 million
committed capital fund. It’s pretty interesting. And it makes it possible, especially if
you’re a software guy, to be very
capital-efficient and find access to capital where people have
expectations where a $50 million exit is actually part of their
model.>>I analyze something else with i, i I think every interaction now is so
dependent on email. That there will be a shift towards actual
customer support and customer service. So, to the extent that you can have more
hand holding you can have a more complicated
product that’s web based. Not just rely on user experience for that
and how you train these people to help you and what
technologies they use. I think that’s going to become a very rich
environment. You know, the whole idea of customer
support and customer education I think we’ll see a
renaissance. Tagging along all the things that
[UNKNOWN] said.>>Mike, any last comments?>>I think, I think you should, I think you should ignore whatever
macroeconomic trends are around. I think, sure there’s disadvantages in
some situations cuz it’s hard to raise money, but there’s
counterbalancing, positive [UNKNOWN], it’s easier to hire and retain people now, and it’s easier to
get cheaper office space now, and the competition is lower
because they can’t get funded. So. I really think you should ignore macro
things and just build your company and just not worry
about it.>>I think we’re going to close with that. Thank you very much, and we appreciate
your feedback. [SOUND].>>It’s nice meeting you.>>Yeah, nice meeting you. [BLANK_AUDIO]

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