I Don’t Know to CEO Business Conference - Detailed Notes 2007.04.07
“Connecting is all about your friendliness, your ability to engage, and your willingness to give value first. When you combine those three attributes, you will have uncovered the secret of powerful connections that lead to RICH relationships.” - Jeffrey Gitomer
Contents
- Keynote
- Session I: Business From Ground Zero
- SessionII: Hot Markets - New Venture Trends
Keynote
Presenter: Reid Hoffman, Founder and CEO of LinkedIn
Networking and LinkedIn
Networking
Importance of trust in a relationship
Misconception of the saying, “It’s not what you know, but who you know†because that’s flawed and wrong for two reasons. It gives the notion that you don’t need to know anything and that you are networking to use people.
The better saying is. “Who knows you and who trust you?â€
It’s important to develop that trust because you can’t do everything. Most successful startups have two to three founders and sometimes four. Rarely is there only one founder.
In starting up a start-up, you should consider:
Product person, technologist, investors (they bet on people/team), referrals, advisors (select the right advisors)
Networking – You’re an asset
It is about…
Ask yourself if you extending yourself a little would make the other person that much better. If you can, do so. That’s how you build trust in a relationship and that’s how you can begin to develop your network. It’s about both giving/helping and taking/asking.
Tips at being an Entrepreneur and starting a start-up
For an entrepreneur, you need to have “Intelligent Perseverance and Extreme Conviction.”
Collaborate. Constrain channels productively.
LinkedIn used to be called, “Oh, you’re Friendster, but for business.â€
Consumer Internet: Iterate, Speed Matters, and Patents do not.
For Open vs. Closed… Open it to enhance your product!
Most importantly, entrepreneurs constantly think of what the world could be, not of what it is. That leads to successful innovation.
Pick one idea that would work best! This will show others that you are focused and driven. Not scattered brain with no focus.
Session I: Business From Ground Zero
Presenter: Seth Sternberg, Founder and CEO of Meebo
Topics: Building a team, Growing the idea, CEO role, Big Decisions – Mini case
Background on Seth
Graduated from Yale for undergrad, attended Stanford Business School and met Sandy and Elaine, Dropped out of Stanford Business School to pursue Meebo full-time (Sandy and Elaine quit their day jobs a week before launch).
Meebo
Founders: Sandy (Backend developer: C, C++), Elaine (Front-end developer: AJAX/JS Guru), Seth (Non-tech: Business modeling, communicator, CS support)
Team of three, met in mid 2003.
Original idea was a product on consumer back-up. Eight months into it, shelved it. Then, worked on next idea which was file sharing with IM capabilities. Worked eight months on that and shelved it. Kept the IM capabilities for the next project.
Their third project came about (now known as Meebo) when they all met for their meetings. They would meet at one’s house and realized it was frustrating that they could have get onto their own IM program. That’s how Meebo was born.
Currently
Meebo has 6.2M unique users a month
95M messages a day
207 years spent on Meebo daily
70 min. average sessions
Landscape
500M IM users (12% growth)
Yahoo & MSFT Interoperates
AOL launches OpenAIM
Meebo in MS Spaces (Officially unofficial… MSFT did not ask Meebo for permission to be put on their front page of their MS Spaces.)
IM and SMS: The dominate mode of teen communication
For private beta, it was quasi-hidden for testing it among their friends and for scaling. This is before Google had indexed it yet.
Tips and Pointers
How to market your product?
With the invasion of blogs, marketing your product has an incredibly low barrier to entry and it’s powerful. Mike Arrington is always looking for new, good sites to write about. Essentially no money needed to market your product. Meebo gotten the support of Mark Jent (Plaxo) and O’Reilly’s blog.
How to plan for the wave unique visits after being written about?
Make sure are able to handle about 50,000 unique visitors over a two day period at the minimum. You have to scale to that level to keep from users crashing your site.
Who is your audience?
So your product is written about on blogs. Who are your audience now? Here’s a hint: If IE to Firefox to Safari ratio is 83%:15%:2%, you have more of a mainstream audience.
Why does your audience use your product?
Well, ask them. Push it out to them. When Meebo did that, they got 7,000 responses. The results? The reasons varied; different from what they had anticipated. This helps you understand your users.
Choosing your team
#1 most important thing: Add members that add value and that are NOT like you.
Seth cannot code front-end or back-end. Sandy cannot code back-end and does not want to talk to the press. Elaine does not do front-end work. Elaine and Sandy does not like and cannot handle the press, the CS, and the business/finance models like Seth can.
Examples of what Meebo looks for: humble, motivated, open office, nice, team player – Keep standards really high.
Buy your domain name BEFORE you launch. Trademark it if you have to.
The Money
Besides the techies reading TC, Venture Capitalists and Angels are reading TC. They may call you if they like what you do! If you have a choice, convertible debt is always better than convertible equity.
Meebo raised Angel funding of $100K, Series A of $3.5M, Series B of $9M. The 100K went to servers, customer service/support. Basically with the Series A round, VCs are asking the questions, “Does the product have high growth? Is there an obvious way to monetize with the product?†You may not have to have a business model in a series A in place as long as the VCs can see a way to implement a business model to monetize with your product.
Community – This is the meat of your consumer internet product so you need to listen to them. Here’s an example:
Users were sending feedback for different languages when Meebo was gaining popularity. The Meebo team explored the idea and they found that a company was willing to do it. But the cost was 300K-400K per language. Obviously that’s unfeasible with their budget. So, they decided to ask for volunteers. The got tons of replies that others would help. They set up a wiki with English strings to be able to make the language translation project more efficient. Three days later after setting up the wiki, there were three languages completed by users/volunteers of the site!
Don’t focus on being acquired or you’re setting yourself up for failure.
Seth’s other roles as CEO
Spends time talking to the press. But why does he if it doesn’t help the traffic? Free press helps with fundraising, partners, and hiring. Meebo becomes more credible when credible news media writes about it. Spending time with the press does not equate to new user acquisitions, but with the development of the product!
Meebo consist of…
CEO, VP Engineering (Developer), VP Product (Developer), Director of Ops, Manager of BD and Marketing
Developers
Office Manager, Customer Service, Visual Designer
Board of Directors
Acitvely looking for…
Note: They hire about 1 out of every 100 to 150 applicants. It has to be a good fit.
Mini Case
Three people in the start-up (Seth, Sandy, Elaine)
Just launched
Getting some traffic
Scenario – One large multi-billion dollar company contact them for their technology and implement into their company website, creating a social networking effect. However, they are not asking to buy them. Asked the Meebo team to submit an RFP.
What are the factors to consider?
—
[Here are the items that the group came up with at the session]
• A small team, not much money
• Taking the money from the multi-billion dollar company would mean avoiding the board and not having to take VC money (less dilution)
• Having to provide ongoing support
• Diluting Meebo’s focus and vision
• Perhaps hindering future partnerships
• Multi-billion company could possibly counterfeit their technology behind closed doors
Result: The Meebo team did not take the offer and continued to work hard at their product. They did not feel they could dilute their efforts. All three are crucial to the success it has now and the future success it will have.
Session II: Hot Markets – New Venture Trends
Speakers: Trae Vassallo (Partner, Kleiner Perkins Caufield Byers), Marianne Wu (Partner, Mohr Davidow Ventures), David J. Woodhouse (VP of Healthcare Dept. of the I-Banking Division, Goldman Sachs), Seth Sternberg (Co-Founder/CEO, Meebo)
Green Technology Sector
- Growing network in energy
- Political push, energy crunch
- Huge opportunity in energy with computer and signal processing
- US is actually a lagger, Europe and Japan are farther along
- There are inter-disciplinary programs about energy at many campuses
- Have been six bills signed
Hype vs. Real Opportunity: Prospective for investor v s. entrepreneur
Are certain topics overhyped? Of course some are.
Overhyped from a deal/pricing prospective.
Investors always ask themselves:
What is the value proposition? Are there are any cost advantages? Are their any revenue advantages? Can you take that technology and create innovation?
Key Technology Changes
There is a carrier chokehold in mobile
In 1 year, there will be a nationwide network without having different carriers connecting to it.
Concept of personalization and discovery.
- How to make search more relevant.
How to create a market?
Barrier to entry…
- Technology/software hard to duplicate (i.e. Meebo)
- Value from users – provide them a better user experience.
- Create a network effect because with consumer internet, the technology will eventually be duplicated.
- Analyze your industry – is it self regulated or is it government controlled?
Q&A from the audience: The mapping of the GNOME haven’t quite paid off yet. The technology quite hasn’t caught up yet. But, would eventually get there.
Environment and Government Business Levels
- TXU Deal
- AB32: Signed for carbon control.
- Rise in energy prices.
Clean Tech: Solar driven by highly successful IPOs
Consumer Internet: KPCB invested in Aggregate Knowledge which focuses on personalization and behavioral connectivity for the end users. The so called, “Web 3.0â€
The cost of starting up?
For consumer internet, it’s extremely low. If you want to succeed, focus on developing the product, launch it, get feedback. If you are on to something and there’s a demand, the users will come and the investors will call. You will have much more to leverage in that position. You also will spend less time negotiating difficult term sheets investors throw at you.
