Episode 70: Rand Fishkin
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Lost & Founder: Truths About StartUps
Entrepreneurs are drawn to stories of successful start-ups, but in reality, creating a business from scratch is more grueling than they anticipate. Today, Rand Fishkin tackles the mythology surrounding tech start-ups, exposing the ups and downs of start-up life and shares his hard-won lessons. Rand is the co-founder and CEO of audience research software start-up, SparkToro.
His book Lost & Founder openly discusses frustrations and low points as an entrepreneur, ultimately leading to a transparent and thorough celebration of his lessons and accomplishments.
Gain a fresh perspective on the most crucial role of a business leader and what a start-up founder would like to see improve in the venture capital ecosystem.
Episode Quotes:
Criticisms on the Venture Capital world.
“There are three outcomes that I really dislike from the venture-backed world. This is in no order particularly, but the first one is biasing entrepreneurs and founders and people who want to join startups and participate in that ecosystem, just as employees or as customers even, that there's one correct way to build a company. Right? And that way is to raise a seed round, and a series A and a series B and a series C and a series D and go public, or get acquired for something north of $500 million or a billion dollars. And become a unicorn or to make that attempt and die trying. And I don't mean die personally, but to sacrifice much of your time, energy, attention, the rest of your life in pursuit of trying to become one of those, because that is the only worthwhile goal. I disagree fundamentally with both sides of that equation.
The second outcome I really dislike is the massive way in which it furthers income inequality. Right? I mean that a little bit less in the way that it's often brought up in politics where it's sort of individual income inequality, and a little bit more in the way that macro economists might look at it in business outcomes. Right? So essentially, Google and Facebook and Amazon exist because they were able to, yes, create a lot of value, but also suck a ton of the wind and oxygen out of the room in terms of small and medium businesses that previously existed. And even multiple large companies that existed were competitive in a market.
And then the third one of course is who gets funding and it is Gregory. You notice almost exclusively people who look like you and I.
And it is brutal. I mean, we are talking about more funding going to men named John over the last 20 years than all women combined. We are talking about less than 1% of all venture funding going to any founding team with a black team member.”
Thoughts on productivity.
“There's this mythology that is driven by, again, that same element of Silicon Valley culture that I despise, which is that your whole life must be consumed by your work and your business. That is not only untrue, it's also counterproductive. The emerging research on this is that in fact, putting 30 or 40 hours of very thoughtful, high quality work a week into a project, into a company, is both more sustainable and more likely to be successful than 80 hour weeks.”
What is the main role of a start-up leader?
“To me, that is to make great decisions. It's not about, did I write the best blog post, or was this email perfectly composed? Or did I reply to all my emails within five minutes or less? Or, I don't know, send a bunch of tweets or write the most code? No. It's did I make the best decisions on who to hire and let go of? Where to contract things? What direction to take the strategy of the product? What to do in marketing and not?— that's the really crucial part of a leader's job.”
What have you learned from switching roles with your customer?
“The big takeaway that I talk about in Lost and Founder is empathy for your customer. I got to sit with Sears’ team for a full week, build a bunch of relationships with people who lived and breathed the work that they were doing with our product, and seeing a lot of gaps between what we should be doing and what we were not doing and seeing why their consultants were at the time already switching to different products in the market. And that was a very eye-opening experience.”
Time Code Guide:
00:01:14: Lost and Founder: A Painfully Honest Field Guide to the Startup World
00:03:52: The Myth of Success in the Venture Capital Ecosystem
00:07:54: The Start-Up Math
00:13:11: SEOMoz startup story
00:14:13: The reality of stress, pressure, and debts in building a business
00:14:59: Creating value for a consulting business
00:16:58: Passion alone is not enough to run a business
00:18:57: Thoughts about productivity
00:20:12: The main role of a startup founder
00:21:34: Building unconventional management structures
00:24:23: Minimum Viable Products
00:27:22: When a CEO switches roles with a client
00:29:15: Learning empathy for customers
00:33:07: Building the company from customer and employee feedback
00:34:14: Addressing a business leader’s blindspot
00:36:43: Sacrificing profit for core values
00:39:53: Emotional maturity in leadership and business
00:42:32: Creating a culture of open communication and empathy
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