Top Mistakes in Year One
Sam Altman from loopt was the speaker at the Y Combinator dinner last night. (Sam is a close friend and one of the best entrepreneurs I know.) During Q & A, Paul Graham asked: “What do you wish you’d known when you were at these guys’ early stage?”
I asked myself the same question. What do I wish I could tell my past self?
I think we’ve done a great job so far. That being said, if I had known these things when we began, Xobni might be worth twice its current value.
Equity
First, offer significant equity to rock stars you find early in the company. When we met Gabor Cselle in August, we were in love. We asked our friends how much we equity we should offer, and the feedback was all over the board. We took the wrong advice and offered him too little.
We recently corrected that mistake, and Gabor is now joining the company about seven months later. I’m really happy about this, but we left a lot of value on the table by not getting him earlier.
Conflicts of Interest
Matt and I passed up three introductions to a VC firm because of their investment in another email company.
The truth is that there are going to be other companies in your space, but if they’re not competing directly then it might be foolish to turn down a meeting with their investors. As John Doerr said, “No conflict, no interest.”
We eventually realized we were wrong. We took the fourth introduction, and haven’t regretted it.
So don’t be so paranoid about conflicts of interest as long as you’re not a direct competitor.
Idea Due Diligence
We knew we wanted to leverage hidden email data. The most obvious thing to do with hidden data is to display it with graphs and tables, so we spent the first six months working on that product.
It turned out that Xobni Analytics didn’t generate enough recurring value for individuals. Whoops.
We didn’t know how to judge an idea, so we started with the most natural idea. Instead, we should have forced ourselves to answer “Why do people want this?”
This goof only slowed us down by about 30% because we used bottom up programming. Most of those six months were spent building out the baseline platform that we’ll need for any product in our space.
Saving Grace?
The common theme of these mistakes is that we eventually woke up and recovered. I’d love to say this implies that we’re brilliant at spotting our mistakes. Instead I’m compelled to ask myself: what big mistakes are we making now that we don’t know about?