EE2019: “Startup basics” with YC’s Anu Hariharan
We were very fortunate to have Anu Hariharan be part of Extreme Entrepreneurs mission second time in a row. Drawing on her rich experience of partnering with multiple startups at Y-Combinator and Andreessen Horowitz, Anu underscored the importance and ways to master “Startup basics” through real life examples. It was also energizing to hear Anu’s bullishness on the Indian startup ecosystem as she opened the masterclass. We have captured highlights from the session for the benefit of wider audience.
Recruit your first 100 users
Kicking off on a provocative thought of “Start by doing things that don’t scale”, Anu urged the founders to recruit their first 100 users who love their product. Giving examples, Anu shared how founders of Stripe recruited their first set of users within the YC batch– “They asked other teams about their opinions on Stripe’s product and if anyone liked it, they would grab their laptops and install it then and there!” The learnings that you get from the direct feedback of recruited users is unparalleled. Recruiting also helps you test your product in a closed and controlled environment, and iterate quickly. “There was a reason why Facebook restricted itself to Harvard for first 18 months. Once it hit the target metrics (retention, engagement), it quickly expanded to other colleges.”
Be the user or be as close to the user
Talking about how to find super-users, Anu explained that how more often than not founders are trying to solve the problems that they have faced. This is more common if you’re a B2B startup. In such scenarios, you need to find 100 users who look exactly like you, however, this approach might not be applicable if you’re building a startup like Airbnb (it’ll not be easy to decipher the mind of a house owner). In such cases, you need to be as close (both physically and emotionally) to the user as possible– be on the ground and engage closely with your users to understand their pulse.
Co-founders relationship is like a marriage
Co-founder relationships last for 20–30 years, almost as long as a marriage, yet there are many co-founding teams which are formed having known each other for a brief amount of time. “If you don’t make decisions about your partner lightly, how can you do so while finding your co-founder!”, said Anu. To have clarity of thought around engagement among the co-founders, Anu encouraged the teams to write down 6–7 things that a co-founding team needs to do (e.g: Fundraising, Hiring, Product roadmap, handling customers etc.) and mark the co-founder who is the ultimate decision authority on each. This decision framework helps founders divide and conquer without letting any conflicts come in the way. Having said this, Anu added a caveat that the ultimate-ultimate decision authority, for cases which have strong divergent point of views, lies with the CEO. Anu also advised the teams to have 1:1 informal weekly catchups among the co-founders to enable honest conversations and direct feedbacks. “You’re each invested in success of company. Always ask what makes the company successful, not what makes you individually successful.”
Your first 10 hires are mission critical
It’s important for founders to understand that the first 10 hires will form the foundation of a company. The next 20–30–40 hires will look exactly like them. You need people who can roll-up their sleeves and do whatever it takes to succeed. Knowing whom to hire requires deep introspection among co-founders. Anu encouraged founders to write down their strengths and then identify the complements the team needs right away. E.g. Brex’s founders spiked on engineering, particularly back-end, hence one of their first hires was a strong UI/ UX person. Cultural fit is another important criteria which founders often disregard. Getting a person who is a high performer but not a cultural fit will have negative consequences. When asked about how to define the culture of a company, Anu explained that it is a way of operating that a company cannot compromise on. Just saying “Do right by customer” isn’t enough. It’s the hard decisions you make that define a company’s culture.” A now billion dollar company almost went bankrupt in early days because they refunded an unhappy customer. One customer vs company– they chose the customer!
Speed of execution separates successful founders from the rest
As a founder, you’ll take a number of decisions on a daily basis, with the desire to take the right call every single time. But the reality is, no matter how many books your read or people you talk to, you’re always going to make mistakes. If your speed of execution is fast then you have the chance to learn from these mistake and course correct quickly. “It’s often the indecisiveness of a founder that causes stress”, said Anu. Writing down your problems and categorizing them into knowns and unknowns will help you task the team to solve the problems objectively and make sure that execution is in the right direction.
Compromising on health is never an option
Ending it with an often undiscussed topic, Anu talked about how to handle the stress that comes along with entrepreneurship. Using Bezos’ framework, she said “When things are going wrong, it’s never as bad as you think. When things are going right, it’s never as good as you think.” It’s important for a founder to have this clarity to not fall into the trap of getting too excited or too depressed, which can lead to stress. “There is no excuse for not eating right, not exercising and not sleeping well.” You can’t build a valuable business if you’re not in the right health to do so. She also shared how getting a coach to help resolve tensions or uncertainties is not uncommon in the founder community.
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