Startup DNA: the formula behind successful startups in Silicon Vall...

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STARTUP DNA
The formula behind successful startups
in Silicon Valley

STARTUP DNA
The formula behind successful startups
in Silicon Valley

Most startups fail

A few succeed

Why?

“Successful startups are all
alike; every unsuccessful
startup is unsuccessful in
its own way.”
Leo Tolstoy, probably

This talk is about a few traits that
make startups successful

I’m
Yevgeniy
Brikman
ybrikman.com

Co-founder of
Gruntwork
gruntwork.io

PAST
LIVES

Author of
Hello,
Startup
hello-startup.net

1. Make excellent mistakes
2. Speed wins
3. Data
4. Distribution
5. Sharing
Outline

1. Make excellent mistakes
2. Speed wins
3. Data
4. Distribution
5. Sharing
Outline

The road to startup success is
paved with failure

Failed projects

Answers
Events
GitHub
Tweets
Lead accelerator
Many others

Beacon
Places
Deals
Credits
Questions
Lite
Email

Wave
Buzz
Labs
Health
Knol
Catalog
Video
Answers

Pivots

Initial idea: Game
Neverending (MMO).
Pivoted to focus on
photo sharing.
Acquired by Yahoo
for $35M in 2005.

Initial idea: burbn
(social network).
Pivoted to focus on
photo sharing.
Acquired by
Facebook for $1B
in 2012.

Initial idea: Odeo
(podcasting).
Pivoted to focus on
microblogging.
IPO in 2013.

Failed companies

Reid Hoffman’s first
startup was
socialnet.com, a social
network for dating.
Never heard of it?
Exactly.

Went on to become COO
of PayPal and co-founder
of LinkedIn.

“Startups are like
jumping off a cliff and
building a plane on the
way down.”
Reid Hoffman
LinkedIn co-founder

Virgin Clothes
Virgin Cola
Virgin Vision
Virgin Vodka
Virgin Wine
Virgin Jeans
Virgin Cars
… all failed

But several hundred of
Richard Branson’s
other companies
succeeded!

“I have not failed. I've
just found 10,000 ways
that won't work.”
Thomas Edison

These were not failures.
These were experiments.

The goal of an experiment
is learning.

“I've come to believe that
learning is the essential
unit of progress for
startups.”
Eric Ries

#1 cause of startup failure:
“No Market Need.”

The biggest risk is building
the wrong thing.

The only way to find the right thing
is through experiments.

The experiments can’t take too
long, or you run out of money.

That’s why you need to fail fast.

That’s why you need to fail fast.

That’s why speed wins.

1. Make excellent mistakes
2. Speed wins
3. Data
4. Distribution
5. Sharing
Outline

“Speed Wins.”
Steve Kaufer
TripAdvisor co-founder

Boyd’s law: speed of iteration
beats quality of iteration.

Product development (naïve)

Product development (reality)

Product development (reality)

In a trial and error world, the one
who finds errors faster, wins.

Key idea behind Agile, Lean:

Some of your assumptions
are wrong.

The problem is, you don’t know
which ones.

“Winners recognize their
startup ‘vision’ as a
series of untested
hypotheses in need of
‘customer proof’.”
Steve Blank
Bob...

Speed wins recipe:

1. Identify your riskiest, most central
assumption.
2. Perform the smallest possible
experiment to test the assumption.
3....

Minimum Viable Product (MVP)

1. Make excellent mistakes
2. Speed wins
3. Data
4. Distribution
5. Sharing
Outline

Some of your assumptions
are wrong.

Data can be a good way to find out
which ones.

“Anything you need to
quantify can be measured
in some way that is
superior to not measuring
it at all.”
Douglas W. Hubbard

Server and client metrics

User and site metrics

Code and bug metrics

Use feature toggles and
A/B testing

Wrap new features in if-
statements. Default is “off”.
Group users into buckets.
Toggle features for some
buckets: A/B tes...

Measure the impact of
new features!

Without A/B testing

With A/B testing

Example: same page, different
stock photo.

Which one should we use?

Using A/B testing to pick the right
image significantly increased
clickthroughs

Note: use data to inform your
decision-making process, not
replace it.

“If we can’t identify a
decision that could be
affected by a proposed
measurement and how it
could change those
decisions,...

1. Make excellent mistakes
2. Speed wins
3. Data
4. Distribution
5. Sharing
Outline

If you build it, they will come.

If you build it, they will come.

If you build distribution into the
product, they will come.

The best product doesn’t
always win

How many customers do you need
to be successful?

(From the Stanford Startup Engineering Course)
Company Product Price Customers
Coca-Cola Soda $1 1,000,000,000
Unilever Ho...

Company Product Price Customers
Coca-Cola Soda $1 1,000,000,000
Unilever Household goods $10 100,000,000
Blizzard Games $1...

The number of customers you need
to reach determines your
distribution strategy

Common distribution strategies:
1. Advertising
2. Traditional media
3. Social media
4. Inbound marketing
5. SEO
6. Sales

Common distribution strategies:
1. Advertising
2. Traditional media
3. Social media
4. Inbound marketing
5. SEO
6. Sales

Print ads, online ads, newspaper
ads, billboards, etc.

Potential to reach millions, but
you’re battling for attention.

“Half the money I spend
on advertising is
wasted; the trouble is I
don't know which half.”
John Wanamaker

Common distribution strategies:
1. Advertising
2. Traditional media
3. Social media
4. Inbound marketing
5. SEO
6. Sales

Newspapers, TV, magazines,
radio, etc.

Massive reach. Can be
positive or negative.

Common distribution strategies:
1. Advertising
2. Traditional media
3. Social media
4. Inbound marketing
5. SEO
6. Sales

Email, Twitter, Facebook, LinkedIn,
Pinterest, etc.

Reach depends on the size
of your audience.

Personalized content
can be very powerful

(My CTR on “you’ve been tagged”
emails is 100%.)

LinkedIn’s “Year in Review” email
also had a CTR of > 100%.

Potential for virality

Note: viral loops must be built
into the product

Common distribution strategies:
1. Advertising
2. Traditional media
3. Social media
4. Inbound marketing
5. SEO
6. Sales

Attract users with content: blog
posts, open source, videos.

The goal is to teach and to build a
following

Medium reach, but high conversion
rate and low cost

Common distribution strategies:
1. Advertising
2. Traditional media
3. Social media
4. Inbound marketing
5. SEO
6. Sales

SEO = Search Engine Optimization

Google handles 2 trillion searches
per year

You can build a massive business
on just a tiny slice of that

TripAdvisor is built around being the
top result for most hotels

Need lots of (user generated)
content to be successful

Common distribution strategies:
1. Advertising
2. Traditional media
3. Social media
4. Inbound marketing
5. SEO
6. Sales

Hire a sales team to sell the
product

Inside sales: sell in a store or over
the phone.

Outside sales: travel to customer
site to do a deal.

Small reach, but essential for
expensive products.

1. Make excellent mistakes
2. Speed wins
3. Data
4. Distribution
5. Sharing
Outline

Silicon Valley companies share
(almost) everything

Papers: MapReduce (Google)

Open source: Kafka (LinkedIn)

Hardware: OpenCompute
(Facebook)

Companies: Mozilla

Why?

Quality: you do better work when
others are looking.

Free labor: free QA, free docs, free
bug fixes...

Happiness: something you keep
with you your entire career.

Branding: you become an expert
by sharing your expertise.

Mastery: the best way to learn
is to teach.

That’s why I’m here today:

To share what I’ve learned with
all of you.

To learn
more, see
Hello,
Startup
hello-startup.net

Questions?

Rocket: manhhai
Leo Tolstoy: Wikimedia
Biz Stone: Joi Ito
Richard Branson: Chatham House
Thomas Edison: Louis Bachrach
Rei...

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