Hot seat : the startup CEO guidebook

329 Pages·2015·3.3 MB·English

by  Shapiro

Praise for Hot Seat
Every CEO in the Highway1 program is going to be welcomed with a firm
handshake and a copy of this book.
Brady Forrest
VP of Highway1
As a longtime founder, CEO, and angel investor, I’ve encountered many
startup challenges. Hot Seat compellingly captures all the key issues any
founder faces in starting a company. I would have killed for this book as I
learned the ropes; it’s now going to be required reading for all the startups I
back.
Mike McSherry
Founder and CEO of Swype
This book is like a compendium of every mistake I’ve made or seen founders
make over my history as a startup investor. If you’re thinking about startups,
read it. It will save you money, it will save you time, and it may save your
company.
Chris DiBona
Director of open source at
Google and angel investor
Dan tells great stories that make you feel he’s confiding in you, and they’re
all wisdom I wish I’d had before I needed it.
Alistair Croll
Founder of Solve for Interesting and co-author of the best-selling book Lean
Analytics
An incredibly useful book for anybody founding a company. It’s full of
practical, hands-on advice and true stories from a guy who knows what he’s
talking about.
Laura Klein
Author of UX for Lean Startups
From founding to the endgame, Dan leads you through the gritty details of the
birth of a startup. The clever mix of stories, advice, and tools is engaging and
compelling. If you’re involved with a startup or even just thinking about it,
compelling. If you’re involved with a startup or even just thinking about it,
you should read this book.
Chris Desjardins Co-founder of Punchtime, Inc.
Having invested in, and with, Dan for over a decade, I expected Hot Seat to
have a lot of great advice, but I was not expecting to enjoy reading it so much.
This book is packed with engrossing real-life stories that should help startup
CEOs avoid common mistakes on their way to changing the world.
Geoff Entress
Angel investor
Hot Seat: The Startup CEO
Guidebook
Dan Shapiro
Hot Seat
by Dan Shapiro Copyright © 2015 Dan Shapiro. All rights reserved.
Printed in the United States of America.
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May 2015: First Edition
Revision History for the First Edition
2015-05-06: First Release
See http://oreilly.com/catalog/errata.csp?isbn=9781449360733 for release
details.
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While the publisher and the author have used good faith efforts to ensure that the
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work is at your own risk. If any code samples or other technology this work
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advice. Please consult a qualified professional if you require legal advice.
978-1-44936073-3
[LSI]
Preface
Anointed in the Elevator
I became the CEO of my first startup in an elevator. I didn’t seize the reins of
power in a bloodless coup. There was no passionate discussion or debate. I
wasn’t even planning to discuss the topic when it happened. My cofounder
merely informed me that we were being stupid as the doors were about to open,
and I was going to be the CEO from that moment forward.
When Charles and I first decided to found Ontela, we were unclear about who
exactly was going to do what. My background was as a “program manager” and
my cofounder’s was as a “developer.” Neither of us had ever managed more than
a handful of people. So we decided on what we thought was a perfect
compromise: I would be the President, and Charles would be CEO.
Needless to say, neither one of us had any idea how to do these jobs.
But from the start, we had a ridiculous amount of work to do. We knew little
about startups—I’d worked at one, but not as a founder; Charles had been a part
of Expedia since its inception as a division within Microsoft, but that wasn’t
exactly seed-stage territory. Besides doing familiar things like writing specs and
code, we had logistical (“Should we rent furniture or buy it?”1), operational
(“Which bank should we use?”2), legal (“Should we incorporate in Bermuda?
My uncle is a lawyer and says it’ll save on taxes.”3), and other conundrums of
startup life to solve.
Charles was an accomplished software developer. I was a marginally competent
software dabbler. So I did design, recruiting, pitching, fundraising, business plan
writing, financial modeling, and many of the aforementioned odds and ends. I
also managed the output of a motley assortment of a half-dozen developers in
various far-off lands, who had—for a total cost of less than $500—built our first
proof-of-concept prototype, and were continuing to maintain it while Charles
worked on doing it the “Right Way" (i.e. something marginally more scalable
than a few shell scripts and a dodgy shared FTP server located in an
indeterminate part of Southeast Asia).
We continued in this manner for a while, spending nights and weekends banging
We continued in this manner for a while, spending nights and weekends banging
away on the nascent project. And after a few months, we decided to double
down on our ignorance: we quit our jobs to work on Ontela full time. As soon as
that die was cast, I began to sink more and more energy into fundraising. And it
was early in February of 2006 when our fateful elevator ride occurred.
We were in the lobby of the Millennium Tower in downtown Seattle, WA, just
north of the historical district of Pioneer Square, where we would eventually
found our company. It’s just one street south that the century-old cobblestones
and purple glass sidewalks appear, but the Millennium Tower was clearly on the
modern side of the divide.
We passed muster with the lobby guardian, wearing our finest khaki slacks and
button-up shirts–the semi-casual entrepreneur’s standard-issue uniform.4 We
stepped into the elevator, which quietly streaked to the building’s top floor.
My ears were still popping when Charles turned to me and gave me an intent
look. “Hey Dan... when they ask what our jobs are, you’re the CEO and
President. I’m the CTO. OK?”
Ding. The doors swung open. I furrowed my brow and opined on this
unexpected development. “Um. Huh?”
Charles stepped into the gap and the elevator doors banged on his foot. “We’re
deluding ourselves. You’re the CEO. You’re doing the fundraising, the legal
stuff. You’re the face of the company. You’re selling the vision. I’m building it.
You’re the CEO, I’m the CTO.” Then he stepped out. I jumped after him as the
doors slid closed, narrowly missing me on the way. We walked up to the
receptionist and introduced ourselves. And that’s how I received the
qualifications, training, and authority to be the CEO of Ontela.
Needless to say, I had no idea what I was doing.
Figuring It Out
My CTO, friend, cofounder, and fellow employee Charles Zapata looked up at
me from the other side of a Costco folding table, across an old inkjet printer. “I
figured out what we’re supposed to be doing here,” he said.
Everything we said sounded resonant and carried an aura of importance. That’s
because we were in my basement, which was tiled and empty.
It was a few months after we’d quit our jobs to work on Ontela full time. Charles
was coding feverishly; I had a multitude of tasks, but at the top of the list was
working every angle I could imagine to raise outside capital. I didn’t know it at
the time, but I was the better part of a year away from anything resembling
success.
It had been a long day. By silent mutual agreement, we were both surfing the
Internet.
“Entrepreneurship is the pursuit of opportunity without regard to the resources
currently controlled,” Charles told me. “It’s from Professor Howard Stevenson at
Harvard Business School. He’s right. That’s what we’re supposed to be doing.”
I nodded sagely, and went back to reading Boing Boing.
The quote sounded sort of faux-meaningful. It kind of rattled around in my
brain, but I didn’t really make much of it at the time.
Since then, I’ve been the founder and CEO of five companies: Ontela (now
Photobucket), in the mobile imaging space; Sparkbuy (acquired by Google), a
comparison shopping site; Google Comparison Inc., a wholly owned subsidiary
of Google; Robot Turtles LLC, a profitable board game company and, at the
time, the most-backed board game in Kickstarter history; and now Glowforge
Inc., which designs, manufactures, and sells 3D laser printers.
Over the course of those five very different companies, I learned the truth.
Stevenson was right. In fact, if you’re a startup CEO, this was as close as you
were going to find to a job description.
This book is dedicated to those who sit in the hot seat. If you’re doing it right,
the opportunities are legendary. You will become Google, and organize the
world’s information. You will become Apple, and equip the world with
tricorders. You will become Facebook, and restructure the way human beings
communicate with one another.
Even if you don’t get there, you’re swinging for the fences. Strike that: you’re
swinging for the moon, and there’s a real (if remote) chance that you’re going to
knock it out of the sky.
But right now you have nothing.
That’s your job. To make something out of nothing. To pull together all the
disparate threads: recruiting (with no money), fundraising (with no reputation),
disparate threads: recruiting (with no money), fundraising (with no reputation),
and delivering joy (with no product).
You must fabricate the chicken and the egg.
Simultaneously.
It’s one hell of a ride.
Maybe You Should Do That
Every year, O’Reilly Media, the publisher of this book, invites a hundred or so
assorted geeks, technology influencers, and miscellaneous interesting folk to an
apple orchard. Well, it used to be an apple orchard. Now it’s O’Reilly’s world
headquarters, a friendly complex on the outskirts of downtown Sebastopol, CA.
This is FOO camp: a weekend getaway for assorted “Friends of O’Reilly.”
The first time I attended, I fell for what I now believe to be an elaborate prank.
In the invitation to the event, O’Reilly recommends that FOO campers actually
camp. Literally pitch a tent on the lawn. This seemed like a fine idea until 9 a.m.
rolled around and the interior temperature of my borrowed bivouac topped 100
degrees. I woke up drenched in sweat and rolled out into the sunshine. My
misery was only momentarily abated when someone walked up and blocked the
blinding rays. That someone was tech luminary Robert Scoble, who cheerfully
wished me a great morning as I staggered to my feet, blinded by perspiration,
and headed off to find a shower.
One of the nice benefits of a well-curated conference is that you can strike up a
conversation with just about anyone in the coffee line and not regret it later. As I
dragged myself to the coffee line after not nearly enough sleep, the person
pumping an Aervoid full of Peet’s coffee into a paper cup was none other than
Laurie Petrycki, O’Reilly’s publisher at the time. I brightened up.
“I’ve got a question for you!” I said. I open a lot of conversations that way.
“What’s that?” she said.
“Every startup I’ve ever founded, worked at, visited, or seen on TV has had a big
stack of O’Reilly books in the background. We buy them by the bushel. You are
the de facto literary brand of choice for tech companies, large and small.”
Laurie nodded modestly.