Facebook filed their S-1 with SEC on February 1, 2012 and triggered yet another round of discussions in the valley digirati and digirazzi alike. From computations of founder stakes to opinions on investment, tech and popular media made sure no one missed any aspects of the filing.
So what does it mean (If anything) for current and future founders of tech startups? Success at this scale – adoption, financial success, and pioneering a new segment of communications is rare and deserves much praise. The founders in this case – from Zuckerberg to Parker, Moskovitz, and even the Winklevii deserve all the praise they get for playing a role in the success.
Your first few employee matter a lot more than you think
I would also like to point out the critical role played by the first tens of engineers (hackers if you will) in building Facebook. Less heralded and often ignored all together by the media, this corps of engineers in my opinion deserves as much praise as the ones grabbing headlines in the press. Without the efforts of this group, Facebook could not have made it – founder foresight/passion/skills notwithstanding. Referred to as ’employees’ this group is as much of a co-founder as ‘the founder’ himself. They took nearly the same risks, likely contributed as much to product, platform, and technology, and helped it get from its early success to a product whose expansion beyond .edu domain was one of the most eagerly awaited consumer product introductions ever.
For founders, the aspects worth emulating aren’t the ones highlighted by blogs and media today – try and focus on the early parts of the arc of Facebook’s success. You will find many of the traits espoused by Eric Ries and Steve Blank when you examine the first year or so at Facebook (2004-2006). Some of the ones that stood out for me:
Build fast, release early, Find your Market-fit.
Famous for putting out the first iteration of the kernel of ‘TheFacebook’ in a week, this is a great example of lean development and testing market-fit. It wasn’t the first iteration either – Facemash which was a hot-or-not style site/application that Zuckerberg built prior to Facebook at Harvard and saw immediate adoption. Remember that hot-or-not was a circa 2000 phenomenon and Facebook’s first iteration was in 2004.
Focus on Users; user-adoption, user-experience.
In 2005, the valley was hearing whispers about Facebook and how Accel “went and got the deal” at an unheard of valuation (remember we were just coming off the dark years of 2002-2003), no one talked about Facebook’s technology or its platform or how it may one day be the dominant social-connector and app-platform. But the first line one heard about Facebook was how many users they had, how much time these users were spending on Facebook, and the rapid growth rate that was easily the highest for any consumer app. This was a dramatic contrast with Google where the talk was about the outstanding infrastructure and how that gives them a unique advantage vs. everyone else in search and advertising. Unless you are building an application that needs to invent new systems and infrastructure, stay focused on users. Adoption will enable you to invent a platform and plenty of technology once you’re successful.
Surround yourself with people smarter than you
Graduating from a Harvard dorm room to University Avenue in Palo Alto, Facebook continued to find and learn from some of the best in their domain – whether it was Zuckerberg learning from Don Graham (Washington Post) or the stellar list of its board members and investors, it didn’t just happen by accident. I am not saying Zuckerberg is not smart, I am saying one of his smartest moves was to find people smarter than him at that point in time about an aspect of his startup. For founders, the clear lesson is find and pitch the smartest people you can find. I suggest a simple approach to accomplishing it:
When you meet prospective VCs (Partners or Associates) or Advisors, ask them to introduce you to two other people that they think are the smartest in the business. Be persistent and chase down these introductions, turn them in to meetings, and ask them to introduce you to two more in turn. In a few months you should be able to meet with enough people to learn from and who can be potential investors, advisors, or informal-advisors to your startup.
Think long term
This one is the easiest point to state and the hardest to follow. I believe there is a fair value at every step for a startup if they have taken angel/venture money. And they must be responsible in considering any offers that come their way. I also believe there is much (realizable) value in finding a way not to take that offer. Each such situation is unique but do consider that if you can find a way to build more value, you will have a chance to deliver life-changing rewards for yourself, your team, and your investors.
You know what’s cool? A Billion users.
Building a startup that delivers a Billion+ in profits eight years after starting is Cool. But do you know what’s really cool – that Zuckerberg’s efforts changed and enriched the lives of thousands of employees and millions of users. A founder’s measure isn’t the capital they return or create, it is the number of lives they touch, improve, and change.
If all you wanted to make was money, there are easier paths to realize that goal. Be a founder if you want to make a difference. Money will follow.