Zynga Founder Mark Pincus, Pitiful No More

One great thing about the top b-schools is that you get industry leaders coming to the school to speak, all the time. Almost every weekend some school club or another has a conference and invites top speakers from the field to the school. Last week was the Entrepreneurship Conference at HBS, with keynotes from Nathan Blecharczyk, AirBnB co-founder, Alfred Lin, previous Chairman and COO of Zappos, and Ali Pincus, OneKingsLane co-founder. By leveraging Ali, the organizers were able to to drag husband (and HBS alum) Mark Pincus along to give a lunchtime speech to the attendees. In case any of you have been living under a rock, Pincus is a serial entrepreneur who founded social gaming juggernaut Zynga in 2007, a company now worth about $10 billion, and is apparently a "fearsome" negotiator according to Eric Schmidt.

He spoke a bit about making non-traditional career choices as an HBS student and alum, and took the opportunity to portray himself as a bit of an outcast from the traditional HBS consultant and financier circles (easy now that he's made more money than all of them). As he describes it, he was one of two people in Bain's history NOT to receive a full-time offer after spending a summer interning for them. Then, he had no job lined up for most of the time at HBS, and people felt sorry for him. However, he found a job he enjoyed after graduation at a telecom firm. More recently, at 41, he decided to start Zynga, seemingly very risky at the time given how little money companies were making on Facebook, and says again his peers felt a bit sorry for him. He said it's a bit like a 41-year-old trying out to be pitcher for a baseball team, when all his peers were owners and managers of ball clubs already. However, he saw a big opportunity and was passionate about going after it. In fact, he spent several years trying to acquire CNET in order to leverage its assets to launch a gaming platform before giving up and deciding to do it organically by creating Zynga. 

He later also talked about his policy of making every employee CEO of something. While he's talked about this in the past, it's a great management tactic worth reiterating. At one of his previous companies, one day he put everyone's name on sticky notes on a wall and told them to write down by the end of the week what they were CEO of. Not only did it help keep people accountable, but the employees liked it. Every employee should not only be responsible for some area, whether large or small, but should know what they're responsible for. Otherwise, as he points out, too many people end up going to work all day and not knowing what their job is or what they're responsible for. 

Do Clones Innovate?

I've debated often over the last year the merits of copying others vs. what one might consider original innovation. Could probably spend many more posts on this, but here's a start.

I've had a chance to work in a Samwer brothers (aka Rocket Internet) business in the past, and they are pretty much the quintessential cloners/copycats. Their model is to find successful US Internet co's, then copy the model in Germany (originally), Europe (later), and around the world (now). They've successfully created and sold clones of ebay, Zynga, and Groupon, among others (the 10% stake in Groupon they received effectively making them billionaires). Currently, they're copying many of the hottest models and implementing  them all over the world, including Birchbox, AirBnb, Zappos/Amazon, Fab and Pinterest in regions ranging from Germany to as far as Brazil, HK and Indonesia.

Having met Oliver Samwer a few times (and heard him on conference calls many times), I'll admit that I do think he's extremely, extremely intelligent, and one of the most energetic people I've met, albeit almost comical in his overuse of military language and expletives. Their businesses are, in my eyes, 0% technical innovation. On the other hand, I think they do have some operational innovation in various ways. In each of their businesses, they are able to crank out technical copies of the original business, while looking for ways to build out the operations, sales, marketing and distribution side of the specific businesses in as fast and aggressive a manner as possible. Additionally, I think they have innovated operationally by a model where they take ambitious 24-28 year old ex-McKinsey, Goldman, and MBA-types, pay them very well, promise them tons of responsibility, but give them very little equity and micromanage them constantly, while asking for fast execution as opposed to intelligent thinking or strategy.

Despite the innovations, however, I still simply don't think it's a good model, and would not feel comfortable working for them again. It's one thing to take inspiration from one business and try to improve upon it, which probably most entrepreneurs do, and another to have an explicit goal of copying businesses, down to layout and design. While there's likely nothing illegal about it for many Internet businesses in terms of IP law, particularly when you're talking about copying outside the US, from an ethical perspective I think it's at least questionable.

Oliver pitching at HBS

On the other hand, one could argue, how much does any company really innovate? Wasn't Facebook just copying other social networks? Isn't Google just another search company? Outside of the Internet realm, Walmart first became successful because Sam Walmart ran around to competitors' stores copying the best ideas he saw at each.

For some reason, in my mind I have more of an issue when people copy across geographies (say Chinese clones of US sites, or Rocket Internet clones), but less of an issue when it's across verticals (say all the sites these days that are AirBnb of X ie eventup, RideJoy etc, or Birchbox of X ie KiwiCrate, Trunk Club etc). People just take a great idea, then apply it to an area where it has not yet been implemented (geographically or vertically). Are these two really all that different?

Co-founders

The young co-founders of Rent the Runway came to speak the other day, and one thing that stood out to me was how their personalities seemed to mesh very well.

The two women were HBS classmates, starting building the business while in school, and have run the company for the last 2 years (pretty successfully, I'd say. Check out the site if you don't know it, it's a cool model and one of the seemingly many HBS fashion-related startups now).

In terms of working background, they are very different; one from a finance-heavy background, the other more strategy and entrepreneurship. This lends itself well to a division of labor. When they spoke, one would fill in a fact or point just as the other finished, in a very fluid, natural, respectful way. I've no idea how they are behind the scenes, but on the surface it seems like a good partnership.

Investors value this kind of co-founder relationship a lot I think. When Drew Houston was applying to Y Combinator for Dropbox, they basically told him to find a co-founder before applying. He happened to find one at the last minute, and has gone on to do very well. A one-man show is probably easier and tempting most of the time, but similar to my last post, may not give you enough chance to debate and discover ideas.

In thinking about successful companies, I wonder what the hit rate is for solo operations vs. 2 or 3-person teams. Something to look into another day...

Creativity in Teams

This'll be quick since I'm a bit sleep-deprived these days...

It's interesting to think about the different situations where working in teams vs. working individually is best. In general, people in the US often stress teamwork, cooperation etc, but let's face it; in certain situations, teamwork is not best. When writing an article or coding on a deadline, for instance, only 1 person can write/code at a time, so it's best not to have one person writing and 6 people sitting around watching that person type or talking to that person while he/she types.

However, as I was reminded today when my team was brainstorming team names, working in teams is great for creativity. There's nothing like working in a team and bouncing ideas off each other to unleash creativity. One person mentions a suggestion that another would never have thought of, but then the 2nd person immediately can build upon the 1st person's idea etc etc. There's also nothing like teams to make sure your idea doesn't suck (as long as your teammates are being honest with you). In order to be effective, however, a few things probably need to be in place. The members likely need to have some kind of organized way of reaching results, and a mutual respect for each other in order to feel "safe" in suggesting ideas freely (and rejecting ideas freely).

In startups, I think founders often think of an idea or a problem, and convince themselves of the solution and path that should be taken. However, I think they need to remember the power of teams for looking at problems and solutions from many angles, not just their own.

JetBlue's Chairman, Board Member Extraordinaire

Today Joel Patterson, the father of a classmate came to school and I heard him talk twice. Once to advise our team on a class project related to entrepreneurship, and once when he addressed an audience of over 100 students. Joel Patterson, as a quick background, is the Chairman of JetBlue, on the board of Bonobos and several other companies, is a Stanford GSB professor in entrepreneurship, founded a growth equity firm, and has 7 kids to boot. Yeah, he's kicking ass

Takeaway from the morning's meeting: we presented to him several business ideas that we're considering for our class, and aside from quickly and kindly showing us all the gaping holes in our ideas, he helped us see a few main messages: 1) we're not focused enough in our target market, 2) we should focus more on strengths we have given our backgrounds, and 3) we need to be more realistic about our time and resource ($$) constraints. While our class gives us a very small budget, and we're forced to be on teams of 6-7 with people from all different business backgrounds (probably one of the worst possible setups, as demonstrated by our noodle-marshmallow towers), these can probably be applied for any startup. The first one I just mentioned in my prev. post

The afternoon's talk was much more high level, more career and life advice than anything else. Key takeaways:
- Need balance in life. This is something I struggle with sometimes, but I think is important. Coming from someone with 7 kids and having the kind of business success that he has, I believe he is able to achieve it
- He said his son wanted to be a CEO so he wouldn't have to report to anybody. He responded that CEOs have to respond to EVERYbody. Employees, customers, vendors, shareholders, etc

Best line of the day: part of his response to a question about the role of board members on a company:
"I made a rule of thumb for myself that I'll only be a director on 6 boards at the same time". SIX boards!

Focus on your promise like Dropbox and Ryanair

Today's theme is FOCUS. Laser-like, no-distractions, who-cares-what-the-customers-say, this-is-what-guides-our-company focus.

In both looking at Dropbox and Ryanair, one can see how a laser-like focus on the company's core mission or core customer promise has been key to their success.

In the case of Dropbox, a cloud-based file storage/sharing service with a freemium model, as most people know, they offer an EXTREMELY simple customer experience. For most people, you sign up, download the app, install it, and then just save files into the Dropbox folder like you did with any other folder in your hard drive in the past. Sometimes you share files, and any time you get another device you repeat the same, dead-simple process. No fuss, no muss. And while you may have wondered why they don't offer more features, or why they don't have a business version, or why Google or Apple or Microsoft haven't killed they yet (I for one thought they would at various points in the last few years), none of these happen because of their dedication to their core competency and core customer promise: to make a cloud storage and sharing solution that just. plain. works. Regardless of your internet connection, if you're online or offline, if you're using a Microsoft, Apple, or Android device, it just. plain. works.

Don't think that Drew Houston, their CEO (and the MIT classmate that will probably always make me feel like I'm an underachiever), doesn't hear customers complaining about all these other potential features they desperately want him to add; he does. The fact is, though, for every feature change he makes, he always needs to weigh how this may take away from his core mission. Letting you select any folder in your computer instead of the designated Dropbox folder, for instance, is highly requested from customers but would likely end up causing many synching problems with customers.

In the case of Ryanair, an Ireland-based European discount airline, they likewise have had a laser-like focus on their mission. In my mind, they believe that the most important things to travelers is 1) that they get from one city to another, 2) ticket price, 3) that they can rely on the planes being roughly on-time and not being cancelled. Basically, by sticking to these basic priorities and throwing everything else out the window, they've managed to stay the leading (and very profitable) discount airline of Europe. Anything else that doesn't add to this mission is expendable. Free food, free check-in luggage, air bridges, sales agents, using primary airports, window shades, reclining seats, etc can all go out the window. They're willing to throw out any conventional practices as long as it fits their mission. Putting ads on their plane exterior, ads all over seatbacks, and even having an in-flight magazine that's purely ads with no editorial content is not beneath them. Does that make them look cheap? Probably. Do they get tons of customer complaints and do new customers often get angry at their nickle and dime practices? For sure. But are they delivering a useful service, and highly successful? Without a doubt.

Everlane launch!

Looks like Everlane just launched today. Everlane's a startup that my buddy Mike Preysman is launching with a friend of his. Aside from this, though, it's just a cool company. Part of the trend of direct-to-consumer manufactured goods, Everlane is selling original, designer-quality clothing at wholesale-ish prices. Looking to cut out the middleman, Everlane skips retailers, distributors and other intermediaries to get clothes cheap to the consumer from manufacturer.

Unfortunately, their first offering doesn't seem especially appealing, as they're offering basic shirts of various colors and styles (v-neck etc) for $15. While this is a good deal vs. designer retail brands, it's not a great deal vs. cheap tees you could get from scores of other places. I was under the impression that the original idea (probably from this article) had a more social or personalized aspect to it, but I could be wrong or perhaps that's coming in the future; in any event, they basically just offer a limited amount of generic t-shirts and tote bags currently.

Nonetheless, I'm excited for Mike & co and think they have the potential to do very well. There's no reason in this day and age that we can't cut out the brick and mortar retailers for many brands and products. Companies like Made are also gaining momentum in the space.

Go check out everlane today!