How To Make It as a
First-Time Entrepreneur

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Six months after leaving our jobs to start Yipit, Jim and I realized we had made a mistake: we shouldn’t have picked each other as co-founders.

The Steves: Jobs and Wozniak

Jim and I trusted each other and we were working really well together; but, it became painfully clear that we needed a technical co-founder. We had made the critical mistake of starting a company with someone who didn’t have complimentary skills.  We were too similar to each other.

We tried to find a technical co-founder but it was hard to convince a great technical co-founder to join two “business guys” with no start-up experience. So, we went to Houston’s, our favorite serious business meeting restaurant, and made the decision that Jim would learn front-end development and I would become our temporary technical co-founder.

I had taken a few computer science courses in college but had never built a website nor coded in 7 years. Six intense months later, I had learned how to build our prototype. The code wouldn’t be scalable, but it would be good enough for us to get traction and attract real engineers to join our team.

• I proposed a panel for SXSW entitled “Can’t Find a Technical Co-Founder? Become one” based on my experience. If you like it, vote for it!

Meanwhile, Jim, despite having very little technical background, taught himself HTML/CSS and jQuery in a few months. Another major key for our early success is that Jim became very adept at using Mechanical Turk and outsourced manual processes. We used those skills to quickly solve what would otherwise be very complicated technical challenges that would have set us back months.

Three Important Characteristics of a Great Co-Founder

So, having had the chance to experience picking a co-founder and having met many co-founder teams, I’ve come to appreciate three very important characteristics an entrepreneur should look for when choosing a co-founder.

1. A friend. Your co-founder should be someone you’ve been friends with for a while because you need to really trust your co-founder not to give up on you or sabotage the start-up. Jim and I had been friends for five years. There were serious bleak times on our journey building Yipit and, truthfully, one of the main reasons we kept going was blind loyalty to each other. We had made serious sacrifices to work together and neither one of us wanted to be the one to let the other down by giving up.
2. Previously worked together. Just because someone is a good friend doesn’t mean you will work well together. Making matters worse, it’s really hard to predict which of your friends will be good co-workers. Fortunately, Jim and I had worked together before in college and for a summer after college.
3. Complimentary skills. This is the toughest one. You tend to be friends with people who are just like you but your start-up doesn’t need two co-founders with the same set of skills. I always cringe when I hear three friends who all used to be consultants trying to start a company. As you’ve read above, Jim and I were really guilty of this. As far as web start-ups go, a product manager and a developer seem to be the ideal pairing.

There are way more things to take into consideration like fundraising philosophy, outcome expectations, domain expertise, start-up experience.  But, it all starts with the three above.

Also, I’m sure someone in the comments will say: “I just found someone on Craigslist and we sold our company to Google.” Don’t listen to them, they were lucky that the person worked out. More often then not, those start-ups are disaster stories that you never hear about. Startups are full of risk, if you’re not going to mitigate the risks you control (like picking a co-founder), your chances of success will go down drastically.

How to Find that Co-Founder

Lastly, I know that most people’s college roommate wasn’t an awesome CS major or an established product manager. That makes it tough to find a co-founder matching the characteristics I mentioned above.  For those of you, I recommend the following:

• 

  Work at a growing, successful startup. It’s the place where product managers and engineers become friends and learn how to work together. This is one of the main reasons why so many successful startups are born from perviously successful startups like PayPal and why I’m excited for Foursquare’s, Hunch’s, and Gilt’s progeny here in New York

• Work on several small projects. If you don’t want to wait, I recommend working on a few very small projects with several potential co-founders with complimentary skills. Hopefully, through the course of working on the project, one of them becomes your friend and you realize you work well together.

• Go it alone. If you’re a technical person, this is much easier.  If you’re a product manager, either teach yourself how to build your prototype or hire a programmer to do it. Once you get traction, you’ll be able to attract awesome people.

Picking a great co-founder is really hard. It’s a tough decision that has serious consequences for your start-up. Please take the time to choose wisely.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Odysseus resisting the Sirens

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

On my three year startup journey that lead to Yipit, I had over 30 other completely unrelated ideas. Each time I got the idea, I would immediately start sweating profusely for three straight hours in a ridiculous state of unbridled excitement and optimism. Sounds great, right? Not really. Those new ideas and the emotional frenzy were a serious distraction.

To be clear, the “ideas” I’m referring to are the ones that have nothing to do with your current startup. Switching your startup’s focus to a related area based on what you’ve learned (i.e. pivoting) is a winning strategy and one that Yipit employed twice.  This post also assumes that you are and have been actively working on an idea.  If you haven’t started yet, experimenting with new ideas is a great way to start.

In our case, Yipit had always been about organizing local information and we had been working on it for a while. But, along the way, we spent significant time on other unrelated ideas including:

• Social version of delicious (summer of 2007)
• Tool to recommend the best version of the online video you were currently watching (spring 2008)
• 140it.com: Bookmarklett that smartly shortens your tweet to less than 140 characters. Over 350K tweets shrunk (spring 2009)
• UnHub.com:  2-minute personal website creation using your existing third party profiles. 10K accounts, 40K monthly unique visitors (spring 2009)

I now think of these new ideas as the Sirens of the startup journey. If you listen to their call, your startup journey will cease to make progress. Each of these projects were serious distractions from our initial vision of organizing local information.

The Temptation

To understand why these new ideas can be so tempting, I refer you to the incredibly insightful startup transition cycle.

The gist is that when you have a new exciting idea, you are in a state of “uninformed optimism”.  As you spend more time on the idea and start learning about all of the issues, you get into a state of “informed pessimism”.  This is a bad state that eventually leads you to a “crisis of meaning” where you either turn the corner into “informed optimism” or crash and burn.

Most startups are in “informed pessimism” and heading to a “crisis of meaning”. And, that’s when the Sirens start calling with new exciting and unrelated ideas.  Those new ideas are tempting because they are still in the “uninformed optimism” stage and seem so much better than your current idea.  I fell for it several times.

The Danger

Your ability to become a successful entrepreneur is about taking your current “informed pessimism” idea and turning the corner into “informed optimism”.  If every time you get to the disappointing “informed pessimism” stage, you impatiently hop back to a new idea at “uninformed optimism”, you’ll get caught in a never ending cycle. You have to be patient long enough with your idea to see if you are able to turn the corner.

The Solution

I finally learned to resist these new ideas after reading Tim Ferriss’s post. I now see those ideas for what they really are, “uninformed optimism” ideas. They may seem amazing but you just don’t know about all the issues associated with them.

So, if you are in the “informed pessimism” stage, either plug your ears or tie yourself to the masthead like Odysseus and keep working on your current idea.  Don’t be seduced by the Siren call of that exciting but shallow unrelated idea.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

No One Wants To Play With Me

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

I remember walking into my first NY Tech Meetup almost two years ago. I looked around and didn’t know anyone in the 120-person crowd.  After watching the demos a safe two seats away from the closest attendee, I approached someone and introduced myself.  They didn’t seem interested in talking to me and walked away a few minutes later.  After standing around for a few more minutes acting like I was looking for someone, I just walked out.  Ouch.

Two years later, that’s all changed.  I’m now a member of the tech community.  Don’t get me wrong, I get left out of all sorts of tech events (a painful experience of seeing the event get announced on Plancast weeks before and then getting reminded the day of, courtesy of Foursquare checkins).  But, more often then not, I make the cut and, when I go, I’m greeted by many friendly faces. I even get emails from people wanting advice on how to break into the NY tech community which is why I’m publishing this post.

Here’s what I did (like everything else in my life, it’s a logical series of steps):

1.  I realized it’s really important. I didn’t think it was till I had a couple of lunches where people completely changed how I was approaching my work (both on the product side and the entrepreneurial side).  I also read this crazy but brilliant book: Never Eat Alone.

2.  I set up social media profiles. LinkedIn is good and easy but Twitter is the really important one.  After meeting with people, Twitter was a great way to keep the connection alive as most people (including me) are thrilled and flattered whenever anyone responds to their tweets.  The other thing to do is set up a blog.  If you can do it, that’s awesome and it will be really helpful.  I never was able to keep up with it till more recently.

3.  I reached out to my existing network. I found all my existing friends who were in tech and met up with them.  I also asked them to introduce me to other people they knew.  This got the ball rolling.

4. I cold emailed / got intros to prominent young members of the community.  I met with community organizers (Charlie O’Donnell with nextny and Nate Westheimer with the Tech Meetup).  I also met with anyone who was seriously working on a startup.  Out of every five meetings, one will go nowhere, three will be good and one will be amazing.  I had amazing meetings with: Tobin Schwaiger-Hastanan, Fraser Kelton, Jonathan Wegener, Jon Steinberg, Jason Schwartz, Andrew Kortina, Nathan Folkman, Mark Davis, Eric Friedman, Bryan Birsic, Dave Ambrose, Justin Tsang, Greg Galant and a bunch more I know I’m forgetting).  They gave me advice that would have a profound impact on what I was working on.

5. I went to tech events.  The NY Tech Meetup is a great way to support your community and meet new people; but, if you’re not good at going up to people, you’re going to struggle.  I had more success at the smaller meetups like the NYC Lean Startup Meetup.  You should try to form a quick connection with someone and email them afterwards to set up a breakfast or lunch.

6.  I helped organize an event for founders.  This may have been the most helpful of all.  Jim Moran, my co-founder at Yipit, and I organized an “Entrepreneur’s Brown Bag” with DFJ Gotham.  Every month, 12 different entrepreneurs would get together at DFJ Gotham’s offices for a pizza lunch and we would talk about our challenges.  We no longer do it but, over a seven month period, we met so many awesome founders that turned into great friends.

7.  I joined Soccer 2.0.  I played a ton of soccer growing up and I found out about a tech team that played soccer (you wouldn’t think that’s the best way to put together a sports team but we actually ended up winning our division). Whatever your non-tech related hobby is, I’m sure there are other members of tech community who share it.

8.  I didn’t keep score. My goal with everyone I meet with is to be more helpful to them than they are to me.  I try to spend more of the meeting talking about their stuff than mine.  I try to give them advice / ideas and come up with introductions that might be helpful to them.  Trust me, it all comes back and way more than you would expect.  After I met with Chris Dixon, who was obviously way more helpful to me than I could be to him, I got back to my office and spent four hours going through his site Hunch and sent him a hundred points of feedback.

While it took a serious commitment, becoming a member of the tech community has been crucial for me.  I can honestly say that much of the success that we’ve had at Yipit (funding, product improvement, PR) can be attributed to someone in the tech community who was kind enough to help us out.

(Photo courtesy of Larry)

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

On Thursday, Owen Davis of SeedStart invited Amol Sarva, from Peek, and me to answer some questions on early stage entrepreneurship.  The session was  wonderfully moderated by Jalak Jobanputra.

Amol represented a more experienced entrepreneur that had raised $20 million while I represented the first time entrepreneur having raised a seed round.  The video is below.

The topics included fundraising, team building, the art of pivoting and high level tips on entrepreneurship.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

It’s hard to argue against going through the Customer Development Process (CDP) when building your startup. It just makes sense and experienced entrepreneurs are really excited about it. If you want to learn more, I recommend starting with Steve Blank’s Four Steps to Epiphany and Eric Reis’s Lessons Learned blog.

But, despite reading the books, the blogs, going to the meetups and truly believing in CDP, most of us don’t do it and our startups fail. We come up with some practical excuses:

• We don’t have the time for it.
• I already know what our customers want.
• We can’t convince customers to meet with us without a real prototype.
• We’re not ready yet.

These are BS reasons. The real reason is we’re afraid. We don’t want to grab someone from craigslist and have them tell us our idea is dumb. We don’t want a potential customer at a big company to laugh at our idea. We quit our job for the idea. We have risked our savings. Our professional credibility is on the line. We’ve convinced people to be part of our team.  Their livelihoods and their families are counting on us. What if people tell us they don’t like our idea? I’m not sure we can handle that kind of feedback/rejection.

So, what do we do?  We close our eyes, build the product and launch it. Hopefully, when we finally open our eyes, we find people using it. Most of the time, people aren’t using it and we’re in big trouble. It’s reckless and not fair to our team, our investors and our family.

How do we overcome that fear? We have to convince ourselves of two critical points (the most experienced entrepreneurs have successfully done this):

• Our initial idea isn’t worth much. If our initial idea isn’t worth much, where’s the value?  The value is in the team. More specifically, the value lies in our ability to continually adjust that initial idea based on feedback from potential customers and morph it into something that people need. If we’re not doing that, we’re not creating value and our startups are relying on luck to succeed.

• Changing our idea isn’t inconsistent, it’s smart. Our society rewards people for being consistent.  When people aren’t consistent, our society punishes them (e.g., politicians get negatively labeled as “flip flops” for being inconsistent). In the startup world, we don’t have to be consistent.  We should be willing to dramatically change our views based on what we learn. We have to overcome that instinctual urge to remain consistent.

So, lets stop coming up with excuses for why we aren’t meeting with customers.  Face our fears and get out there and start learning what’s wrong with our ideas and figuring out how to fix it.

(photo via Scott Ableman)

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

As a former i-banker, I struggle to overcome each of the following five shortcomings. I’ll write about how I’m dealing with them in future posts. But, the first step is recognizing you have a problem.

1. You have no useful start-up skills. You certainly didn’t learn how to program (cheap excel macros don’t count). But, it turns out that i-banking didn’t teach you essential non-technical skills either including product management, marketing or fundraising skills. You’ll need those skills, not just an idea, to attract a technical co-founder.
2. You hesitate to make uninformed decisions. In the i-banking world, you were taught to never make decisions without fully investigating the issue. In the start-up world, you are better off making 100 decisions with a bunch being wrong than 10 well-researched decisions.
3. You’re a perfectionist. When I joined The Blackstone Group, Steve Schwarzman, the company’s CEO, told us:  “99% right is 100% wrong”. In the i-banking world, you had to be perfect — the numbers had to tie, the formatting had to be consistent, and, above all else, no extra spaces. In the start-up world, you can’t afford to be perfect. You can only spend 20% of the time to get 80% done.  You don’t have time for the last 20%. As Reid Hoffman, CEO of Linkedin, said:  “If you review your first site version and don’t feel embarrassment, you spent too much time on it.“
4. You don’t network. In the start-up world, you’re told to never eat alone. But, in i-banking, you always ate alone at your cubicle. If you were lucky, you got to eat dinner with some of the other analysts in the conference room.  In the start-up world, you need to become a member of the tech community. You need to meet everyone because those people can help make or break your start-up with their support and ideas.
5. You’re too private. You spend hours adjusting your Facebook profile privacy preferences to make sure you couldn’t be searched. You never tell you friends about what you’re working on — you weren’t allowed to. You’re not a self-promoter.  In the start-up world, you can’t be secretive. You have to talk to you friends about what you are working on without making them sign an NDA (sorry to the people I did this to). They’ll completely change the way you are thinking about your project; they’ll make valuable introductions.  You need to start a twitter account and a blog. You need to become a self-promoter.

Fortunately, what you did learn on Wall Street was how to work incredibly hard and do 30 things at once. You just need to be aware that you have some new habits to pick-up and a few habits to lose. I’ll continue writing about what I did to overcome each of these limitations here and you can follow me on twitter. (see #5 for self-promotion).

Update:  Interesting post by Kate Huyett on 5 Things I Learned in Finance That Are (So Far) Helpful at a Startup

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.