Thursday, July 9, 2009

10 years of entrepreneurship

I recently passed my ten-year anniversary of becoming an entrepreneur. I almost didn't realize it, but there's no escaping the math. In the summer of 1999, I started working on a startup from my college dorm. I'd eventually take a leave of absence from school and pursue it full-time, making just enough progress to catch the tail end of the dot-com bubble - and all of the dot-bomb crash. As we say, it was a "good learning experience."

Since then, entrepreneurship has occupied me in one form or another pretty much full-time. Much of what I've learned over the years has been invested in this blog, and that makes creating a sweeping summation challenging. I'm honored to be advancing the work of putting entrepreneurship on a more rigorous footing. But that's still in the future. Looking back, what strikes me the most is not how much I've learned - it's how much time I wasted on stuff that turned out to be utterly unimportant.

I pretty much missed all the trends. I'd been on the internet since I was playing MUDs as a kid, but by 1999 I felt I'd already missed the boat. All the good domain names were taken, all the good ideas were being implemented. If I'd bought just a handful of the "best of the rest" domain names that were available at the time (for a whopping $70 each), I probably could have just retired right then. And the great ideas that became today's successful tech startups dwarf anything that had been done to that point. I just couldn't imagine what the next ten years of innovation would look like. Yet my feeling of having missed out prevented me from experimenting with ideas that might have worked.

Nonetheless, my first startup was a tool for college students from elite colleges to create resumes and help them find jobs. Getting students to create their online profile was easy, but getting employers to pay for access proved difficult. Unfortunately, we were fixated on "building a real business" and never noticed that maybe students would want to share their profiles with each other. Could we have built the first college-based social network five years before Facebook? Maybe, but the thought never even entered our minds. (You can even see the humiliating evidence of my smug incompetence in this absurd article from 1999.) We were focused on revenue, but we didn't understand that revenue is not important for its own sake in an early stage company. Instead, we should have thought of it as an indication of validated learning.

And speaking of Facebook, I definitely didn't think it was a good idea when I first heard about it. Heck, I'd already seen Friendster flame out. What was different this time? And Google? No business model, either. I turned down two opportunities to interview at Google in its pre-AdWords days. It seemed like just a bunch of research-oriented PhD's. Oops. And then, at my first Silicon Valley startup, I watched friends get laid off in successive waves as it started to fail. Almost all of them got scooped up by pre-IPO Google this time. I was "lucky" to not be laid off, or so I thought. Yet, as it turns out, the earlier you got laid off, the earlier you got your Google options. That year, right before the IPO, those months mattered a great deal in terms of financial outcomes.

And while I'm confessing, let me add that I knew Matt Cohler way before he was famous. When he left his consulting job to join LinkedIn (whatever that was), I didn't think twice about it. In fact, I remember sending him and his obscure-to-me co-founder (aka Reid Hoffman) a bug report early-on, instead of taking them up on their offer of an in-person meeting. Doh! And when Matt left LinkedIn to take the reins at Facebook; once again, it didn't register. I was much more focused on other transient success stories of the day. I managed to be envious of dozens of other companies, founders, and colleagues who seemed to be having tremendous success but later turned out to be a mirage. If you'd asked me to rank the top most important people I'd met that year, I doubt it would look very impressive in retrospect.

I'm confident of that last statement, because I made the same mistake again a few years later, when I won an award in 2007. BusinessWeek named me one of the top young entrepreneurs in tech, based on my work at IMVU. Being called a techno-wonderboy in front of everyone I knew was pretty strange, and it felt stranger still to be taking credit for the hard work of the many people who really made IMVU a success. But they were very supportive, and the experience was a good one. Trying to take full advantage of the opportunity, I even reached out and met a few of the other award winners. But, looking back, was it obvious which of the other winners were destined to create world-changing companies? Nope. I completely missed Twitter, for example, which was just one more company to me. Oops.

And yet, missing out on these trends wasn't the end of the world. If I had joined Google early, I'd never have had the opportunity to be part of the founding of IMVU. Then I wouldn't have the chance to work with the incredible employees and mentors from whom I learned so much. And, as I've said many times on this blog, if it weren't for those colossal failures and embarrassing missteps, I'd never have learned anything of significance. So, looking back, I'm grateful for the failures and missed opportunities, embarrassing though they are.

One thing really stands out to me today. I wasted a lot of energy, time, and passion on trend-spotting and trying to compare my success with others. Is it really worthwhile spending time and money trying to impress each other with our supposed successes, especially in a business where real feedback can take five or ten years? We go to mixers, buy fancy offices, focus on PR, and try to one-up each other. I think it's wasteful. Instead, let's focus on building companies that matter, on creating real value for customers, and learning. In time, success will come. And if it doesn't, at least you'll have spent your time doing something intrinsically worthwhile.

In the meantime, don't worry if you can't spot the trends. Neither can the rest of us (well, except for Matt Cohler).

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  1. Great post.
    Thank you!!!!

  2. I'm going to past this post around to everyone I know. This is FANTASTIC - especially for someone in their mid-twenties like myself!

  3. Definitely one of the best posts from you. Thanks!

  4. I understand you, because i have 22 and i´m exactly like you was. All my products and ideas focus on early cash and a business model that works from the first day.

    But ...

    You made me remember that maybe, and just, MAYBE, the early days is not at there to earn money, but rather understand your user and improve your product. Of course, will be hard to turn in future your free success onto money success, but maybe it´s a to go.

    About spot trends ... i dont believe we can do thinks like that. What we do is to build the future WITH the users. Talking about trends is more about trying to forecast the future, like a guru, sometimes it works, sometimes not ... all about luck. The reality depends more of what we do, how we do and how much users need that. And a lot of more factors out of our controls.

    So, the idea of starting without a business model is good ? What you think ? Like a more inclined business man, i think the most important think is to educate your users to pay from the beginning, but i could be wrong ... what your experience says about that ? (talking about web based business)

  5. Thanks for an inspiring post. Reminded me of Randy Komisar's book "The Monk and the Riddle". Concentrating on spotting trends is what Komisar writes of push towards something which ultimately is not sustainable or fulfilling as such. Contrast with the pull of doing something intrinsically worthwhile and at the same time learning. If it doesn't work the first time, you'll be in a better position for the next round.

  6. I'm still looking for a word (in any language) that represents "experience from failure" or a "beneficial failure". The word "failure" has such a negative connotation to the average person, and even people who know better don't clearly distinguish between failures that that were part of the path to success and outright failure.

    Looking for suggestions if anyone has any..
    Someone suggested "benefail" (not a real word), but seemed like a benefail in itself..


  7. Thanks for an amazing post. Your perspective on the past decade makes the outlook for the next one scary and inspiring at the same time. The "big guys" of 10 years in the future are probably going to displace those of today, and if we think the market is crowded now, it's scary to imagine how much more so it would be in 10 years.

  8. Cognitive dissonance? Maybe there were other companies you heard of, but didn't register because they are not in business anymore, if they were the scale of FB/LI you would have noticed.

  9. I really appreciate this post. Thank you.

  10. This is a great post. I hope that this message reaches many people - we'd probably have better products and businesses, and happier people doing more interesting things!

  11. Thanks for sharing this inspiring post Eric.
    As you said, though you didn´t catch any of those really big waves, you ended up learning a lot. Luckily for us you´re committed to sharing it.

    Be sure that you´ve already helped me and some friends a lot (down here in Brazil) to become better entrepreuneurs.

    And congratulations on the anniversary! ;)

  12. Congrats on 10 years and thanks for the wisdom you generously share.

    My most important take away from this post is not about the trend spotting or learning from past mistakes, but rather focusing on creating REAL value.

    I had the good fortune of working at Intuit in the early years and that is what Scott Cook always talked about and it worked out well for all involved.

    Of course, those were the days when 12 year old, 80% market share, $200mm, 30% net profit companies were the ones going public. In other words, companies that had delivered real value over time.

  13. WhatDoYouThink - two options are "Learning Experience" and "Challenge." Learning Experience is pretty obvious. But Challenge, in the way it's used in (entrepreneurial) U.S. of A., means 'difficulty to be overcome'. Essentially, a super-set of what you're trying to communicate.

    One thought regarding trend-spotting. It's not so much a question of identifying if an idea has potential. It's a question of identifying if a person will succeed in implementing an idea. Google was not the first search engine, but it's the one that succeeded. Why? Because the people performing the task had the vision that most exactly matched users' subconscious needs.

    It's a question of predicting a multi-faceted empirical fact. Maybe #2,7,23,45,49,52 will win tomorrow's super-lotto. But here you are, today, trying to select between 2 and 3, based trend-spotting? Someone will win the lotto. Someone always does. But you can't kick yourself for choosing 3 rather than 2.

    Maybe it's not quite the lotto, because there is an iterative component - a little voice saying 'warmer... colder...' as you try the numbers 3, then 4...

    You are teaching us to listen to that voice. The essence of your lessons learned is not "Guess the lotto from the first shot". It is more, "keep homing in on the winning combination..."

  14. Eye-opening, honest but true. Thanks for sharing and for the link "building companies that matter".

    In the long-run one must work on what he likes to do. Building a product that makes everybody's life better or something bad undone will drive you and will make work meaningful.

  15. Somehow, if we persist in moving, we will finally get to somewhere.
    Congratulations on moving down the trail for 10-years.
    It seems to me that you have gotten somewhere good and you are willing to move us along too.
    Thanks for sharing your stories along the way.

  16. That was one of the most informative post I've ever read. It really made me realize how I regret all the missed opportunites and mistakes I made in the past, but without them I would not have gotten to where I am right now.

    It's great to see someone as succesful as you make mistakes just like everyone else.

  17. Great post - I learned about your blog as you answered my question at Aardvark. Your blog is full of stuff I wanted to learn. Thanks for this and please keep it up. Mitsuko

  18. Belated "happy birthday" Eric. Funny that you and I share some of the same regrets. I passed on LinkedIn's angel round, despite being a fanatic early adopter of the service, "because it was kinda expensive for something that might be difficult to monetize". Doh, at $10M pre. And then twitter, which I was a big early fan of, and offered to invest in - outside of their fund raising cycle, before their Series A. Oh well ;).

  19. A post even a screenwriter could love...

  20. Dear Eric,

    I'd like to invite you to speak at a European Web startups conference I'm organizing in October. If you're interested please send me an email.

    Best regards,

    Berislav Lopac.

  21. Great post! As a young entrepreneur, this is quite motivational. Keep up the good word! A\

  22. @Berislav - I'd be delighted to learn more; I'm planning to be in Europe this fall around that time, with any luck. Unfortunately, I don't see your email address in that comment. Feel free to drop me a line:


  23. "If dogs don;t eat dog food, you loose" says a book! It doesn't matter what business model you have thought about, in the early day. Ultimately your product must be useful. Figuring out a business model is easy from there onwards.