My personal site is also now up at http://harjtaggar.com

The UK we’ve come back to is very different to the one we left in January. Seedcamp is off the ground, first time entrepreneurs are raising their seed rounds in the UK and things generally seem to be far more buzzing than they were when we were building boso this time last year. Nothing shows the progress that’s been made more than the growth of Zenopy – which started out as a bunch of us working on our first startups reaching out to each other for the support we all desperately needed. The group has come a long way since then – there’s been successful exits, acquisition offers, angel rounds and VC rounds so it’s pretty clear that the trend is heading in the right direction.

Something that’s taken me by surprise though is that whenever I’m back in the UK – I always feel like working on a startup is that bit more difficult than it was in SV. I couldn’t quite put my finger on why. Ultimately a lot of that is personal – my family are not overly enthusiastic about what I’m doing but it’s pretty easy to escape that when you’re on the other side of the world and not so much when you’re staying at home with them again. There’s also the fact that returning to the UK also means brief separation from co-founders, which obviously adds to the mental load slightly and a general sense of feeling like you’re away from where you should be i.e. where the network you’ve built up is.

But what I’ve realised is that the bulk of it comes from an age distortion effect I feel when I’m back here. It first struck me when I read this recently, a sentence from an old PG essay:

“If you try something that blows up and leaves you broke at 26, big deal; a lot of 26 year olds are broke”.

I knew there was something that bothered me about that sentence when I first read it. When I read it again it was obvious why – because for my data set (i.e. my peer group/friends) that statement is false. As a result of attending a good university, inevitably most/all of my friends are embarking in lucrative careers whether it’s in banking/law/consultancy/tech. None of them are going to be broke by the time they’re 26 – they’ve still got 3 or 4 years to reach 26 and they’re already talking about mortgage payments and buying apartments or houses. I know that’s not representative of the general population – there are plenty of 26 year olds who are broke in the UK but ultimately we judge ourselves against our peers and not the general population.

What I mean by an age distortion effect is that whenever I come home – I suddenly feel like I aged 5 years and the amount of time I’ve got left to achieve some success is running out. I have to undergo the mental exercise of reminding myself that I’m still young – I’ve only missed out on one years worth of salary (in reality not even that as I’d have spent the past year in legal training if not for doing a startup) and in the grand scheme of things that really is not a big deal. I can afford to stay calm!

However for my peer group in SV – it’s different. Almost everyone is pretty much broke and will carry on being that way unless their startup takes off. Just look at the examples – Evan Williams didn’t start Blogger until he was 27, Paul Graham didn’t form Viaweb until after Grad School, Max Levchin had, I believe, three failed startups before he started work on Paypal. That’s why there’s less mental pressure for a young entrepreneur in SV – there’s social proof.

That social proof is taken to the extreme by Y Combinator – where you’re instantly put into a large group of people in the exact same situation as you. The cross-fertilization that goes on between YC groups that fail and the ones that stay alive only serves to strengthen that. The power of that social proof really can’t be understated – it’s why Y Combinator founders are all so close, it’s like a big fraternity because everyone relies on the support of each other so damn much.

Balancing up the scales on this one will again take time – but hey the first step was getting young people starting companies and getting them funded and that’s happening. As those entrepreneurs fail the next challenge is making sure they learn from their mistakes and stick at it and go onto their second companies. Universities have a massive role to play here – they have to fight the saturation of recruitment material on campus at the top universities (at Oxford it was difficult to walk for very long without seeing another piece of recruitment material thrust in your face) and that’s why organizations like Oxford Entrepreneurs and Imperial Entrepreneurs are so crucial to the effort.

Well Kul has puts it all fantastically into context, in just a single blog post, by using concrete examples of how the YC network has helped us. I’d really recommend you read it here. It’s a great post.

So boso did quite simply change my life. If it wasn’t for starting up boso while at university, I wouldn’t have seen how amazing doing a start up is and things may well have worked out very differently. It’s not surprising then that I had a HUGE amount of emotional attachment to boso – who doesn’t get attached to their first start up? Even though it’s no longer the project I’m working on when I saw facebook marketplace, my initial reaction was still the same as if boso was still my life. I suppose that by virtue of doing a web start-up you have to accept the fact you’re always sailing pretty close to the wind. With such a low barrier to entry and big boys in the space you face a bewildering range of threats to your livelihood. I can imagine just how seriously it would have hurt to have seen FB marketplace if I were still working on boso and it’s something I guess you just have to face up to as an entrepreneur, sometimes the big boys can just decide to crush you.

The other thing that makes it all slightly surreal is actually seeing and using the facebook marketplace in real life. As facebook continued to grow we always knew it was a potentially serious threat. I reached a stage with boso where I had a quick comeback for any criticisms of the boso concept but the one I always knew I was fudging was “what would you do if facebook did this?”. So after expending latent mental energy on trying to answer that question (if only to myself) now actually seeing it as a living breathing entity is strange.

Having the relief factor of not being in the space is obviously comforting but in a way that’s just coincidental this time around. There’s a seriously big chance that next time I won’t be lucky and it’ll actually be my livelihood being threatened by someone. If that day comes then I’ll have to decide whether to knuckle down and get ready for the fight or call it a day.

One thing I won’t do is start remaining “emotionally detached” from my startup. I’ve heard people give that advice before but that’s no way to run a startup. I do believe you need to reach a level of emotional balance where you’re not continually swinging high and low but that doesn’t mean you’re in any way detached. If I wanted to be emotionally detached I’d work in a bank. I want to do a startup so I can carry on dreaming (and executing on) changing the world in some way.

Anyway so my personal feelings aside, what do I think about FB marketplace itself? Well I don’t think it was always going to be an instant success. Norms of behaviour are important on the web and facebook has always been careful about which ones they promote. The reason I think marketplace will be massive now is because the users have started using it for that purpose. I’ve seen my friends start using facebook notes to list things they’re trying to sell or putting the names of items they want in their status updates. That’s not what they used facebook for a year ago (if marketplace had launched then I still think it would have been beatable but maybe my vision is a little clouded on this one) but that is what they’re using it for now. For me that was the final nail in the coffin and I’ve been expecting to see this development since.

As with all facebook features it’s been very slickly implemented and it’s hard to imagine how you’d compete with it (though I wish they’d make it easier to just see a whole facebook marketplace with all listings on facebook, marketplaces need to at least give the impression of liquidity and I’d be happier starting from the position of a generic marketplace and then drilling down into the networks I wanted rather than vice versa). You could try and focus on facilitating the trades themselves in a way that facebook couldn’t replicate but a lot of the sales will be low value items which are suited to quick and easy trades anyway.

What I might be interested to see is the potential for API spinoffs (assuming the developers who tried using the API to build their own classifieds solutions aren’t too disheartended of course). Maybe you could mashup ticket sales for events on facebook with the marketplace and make that trading experience better than facebook can, like StubHub did to eBay, though once you start getting into niches of niches you’re getting further away from big business.

As far as I’m concerned, sites like Chegg or DormItem (college classifieds) should stop trying to compete with FB and see if they can do something complimentary to the marketplace service. Otherwise they’re in big big trouble.

1. How we got to YC

I think a lot of people assume that Kul and I made the decision to move to Silicon Valley from London once we got accepted by Y Combinator. That’s not true. We arrived at that decision independently of Y Combinator. It first started when Kul went out to San Francisco last year with the intentions of just meeting some people to see what people thought about boso. On that trip he met Max Levchin, Evan Williams and Naval Ravikant (Founder Epinions). He had some pretty intense sessions with these guys and when he came back he couldn’t get over just how higher a level the conversations he’d had with these people were compared to our experiences of talking to people about boso in London. That’s when the seed was first planted.

The tipping point came when I read Paul Graham’s blog post about the mistakes that start ups make – near the top of the list was location – and forwarded the link to Kul. His response was pretty brief, “Well why don’t we just move out there then?”. One thing I like to do is look at things from the opposite view point of my co-founder and present the opposing view, that often results in arguments but it also means that we fully utilize the fact there are two brains working on a problem (having a honeymoon type set-up where you both tell each other how great you are is pointless in my opinion). So I tried to make up a list of reasons why we should stay. It was a futile exercise – not a single argument stood up and that’s when it was pretty obvious that we had to move. As much as the thought of leaving everyone I knew behind was incredibly scary it was time to make the move and so we started looking into places to stay/people to hire/office space/etc.

It was after this that we actually applied to Y Combinator. At first we’d thought that YC was only for US companies so we’d always dismissed it. Then I think I read a FAQ on the website that said foreign companies could apply (there hadn’t been any funded at this point though) and we figured we’d at least give it a go. We put together our application pretty quickly and sent it off (it really was completely speculative but as I’ve seen over and over again, it’s often the most speculative actions that yield the most fruitful results) – then we headed out to Boston for our interview.

Our interview was probably a more person focused that product focused interview. At that point we had a launched product, bosowith a few thousand users but we didn’t do any demo. Our interview was centered around our story so far – how we’d got the site launched, what problems we’d faced, where we saw the idea going, which competition we were most worried about. Then we talked about why we wanted to move out to SV from London and how we planned to get around the fact that neither of us were hackers. From other people I’ve spoken to – their ten minutes revolved more around product demo and product talk so I guess if that tells you anything it’s that there’s no formulaic approach to the YC interviews.

After that we got the call frm PG on the same day and a month or so later we headed out to SV to begin the adventure.

2. What I Expected From Y Combinator

So just going over my old blog post again in terms of tangible goals I guess the biggest one was to find a technical co-founder. As I mentioned, with neither Kul or I having a hacker background our biggest weakness has always been plugging that gap in our skillset. We’d gone through an outsourcing attempt where we had some offshore developers working with us. Although that wasn’t a spectacular blowup failure, it became clear very quickly that we weren’t going to build a successful startup by outsourcing. We also tried hiring developers to work with us in-house. The problem with this was that they weren’t co-founder material. They were just average people who happened to have spent time at some point in their lives learning the keystrokes needed to code something. In essence we were hiring people with a 9-5 mentality and it became painfully clear to me that when you’re a startup, you’re not going to take on bigger companies by having a smaller number of 9-5 people. You’re only going to have an advantage if you have a special group of people together who are greater than the sum of their parts (how many 9-5 employees worth of output do you think Steve Woz had in the early days of Apple?).

To sum up the point I’m making is that we had always craved having someone who had all the “ingredients” of a co-founder like we did (e.g. passion for startups, smart, driven, ambitious, etc) and also had the technical skills we lacked. At this point in time, it became clear we weren’t going to find that in London. Quite simply there were not (or we did not find) enough people in London who fitted our criteria who were prepared to join a startup rather than accept a job at a bank/law firm/management consultancy. We knew that YC would increase the frequency with which we met people who would be prepared to join a startup so that was possibly the most important expectation we had.

The next most “tangible” expectation we had was removing a large amount of the headache involved with investment raising. Kul quit his job at Deutsche Bank in February last year and until August the vast majority of his time was spent trying to raise investment. We got there eventually but seeing just how much of a time and resource drain it was made us extra determined to minimise that drain for any future rounds of financing. Going to YC we expected to reduce that drain in two ways:

1. There is a greater density of investors based out in Silicon Valley who understand the Internet and have already made a lot of money from it. In London we were dealing with investors who just didn’t “get” the potential for making successful web businesses (the state of the London investment scene is a whole debate unto itself, you can read about the issues here and here) and that was a time drain we didn’t need. Just from talking to PG for 10 mins in our interview we saw how much better it was dealing with an investor who understands what we were doing and that made us hungry to be around those types of people.
2. The YC brand is incredibly powerful and when we learnt about how the investor day process worked we knew just what an amazing opportunity it would be. Having so many investors in the same room was exactly the kind of situation we’d craved for so long and we knew it’d be an incredibly efficient way of raising more money if we needed it.

In terms of expectations that could be loosely termed as “tangible” those two would be it. The other intangible expectations were:

- You often hear the phrase “better to be a big fish in a small pond” thrown around. Kul and I have always had the opposite mentality to that. If there’s one thing above all else that studying at Oxford taught us, it’s the value of being around people you perceive to be as smart/smarter than yourself. At times that can be uncomfortable (I remember going from being the (academically) smartest guy at my school to now being one of many studying law at Oxford and finding that a strange adjustment) but it’s the only way you can really fulfil your potential, or at least that’s true for me. I feel more comfortable feeling like I need to step up a gear if I want to be noticed. Moving out to SV, where just doing a startup is no longer newsworthy (most of the early national PR we got for boso was more down to the fact Kul and I were young and starting a company than the actual idea behind boso) material, made that true and it was a challenge we wanted to face.

- It’s been said many times now but doing a start up is lonely. Even when you have a great co-founder, it’s still lonely. This was especially true for us – all of my peer group started jobs in banks or law firms and it was tough going when they were getting nice pay checks while we’re struggling to get any seed funding. There’s a massive difference between going through a graduate training programme with 100 other people and building a startup with one other person. I love my friends but there was a big part of me that wanted to be around other people who were doing the same thing I was. That type of ecosystem was starting to form in London when we left (we helped start a group called Zenopy) but it wasn’t anything near the scale of SV.

- I generally had always wanted to live and work abroad in some point in my life (the only reason I’d accepted a job with law firm Latham & Watkins was because they’d let me move out and work in Silicon Valley for 6 months during my training). I’ve always wanted to see what it’s like to be exposed to a different culture and all the stuff that comes with working abroad. I never expected it to happen so soon but it did and I definitely felt that on a personal level, I’d learn a lot from living abroad.

3. What I Got from YC

So let’s start off with the tangible goals.

Co-Founder: Within a few weeks of being out in SV we were introduced to the guys behind, YouOS. As fate would have it, one of the founders (Srini) was actually living in the building next to us and we started having informal hacking lessons where he’d teach us how to hack. We got on really well and we agreed to work together more formally for the three months of YC – he’d help us build our product and teach us how to become hackers. Once the three months were up he rejoined the YouOs guys to work on their new product, Project Wedding.

Shortly afterwards, again through YC, we met Patrick Collison – a young whizzkid hacker (he wrote his own programming language when he was 16) who’d applied to YC with an idea relating to the online auction space. We got on fantastically well and we’ve now joined forces with Patrick so we have the co-founder we’ve always wanted. It’s left us incredibly excited about our future and its going to be an awesome ride. We’ve got some more potential additions to the team lined up as well which have got us even more excited and I’ll blog about them in due course.

During the three months my initial expectations were all confirmed, we met an incredible number of talented young people who didn’t need convincing to join a startup but were pro-actively seeking startups out. The biggest sticking point for me has been the sheer rise in my internal meter of assessing the people I want to work with. It’s risen from essentially “anyone who can code” in the early days to people who have worked at companies like Google, IBM, Oracle, Microsoft – the thought of being able to work with people like that had just never been an option before and that’s part SV and part the power of YC.

Investment: This one is easy to sum up, everything we expected came true. It is quite simple, YC will save you an incredible amount of time in the investment raising process. And that’s not just because of the brand name. A lot of you might be thinking about competing incubators but one thing you have to ask yourself is will those guys work as hard for you as YC? One thing people don’t realise is just how hard the YC partners actually work for you – PG is continually pitching YC companies to investors investors and I’ve lost count of how many “I met this great person and told them about you” emails I’ve had from Jessica now. It’s made the investment raising process this time around infinitely better than the last one.

As for the intangible expectations, it’s probably quite obvious from the rest of my blog posts that they’ve all been met. But just saying they’ve “been met” is a massive understatement. Perhaps what I didn’t expect was just how amazing it would feel to actually have all of those expectations met. I’ve never had a problem with self-confidence so saying that YC gives me a new feeling of self-confidence wouldn’t be accurate. I think what has done is given me a new sense of belief and that has come from being around people who have been a success. When you’re having dinner every week with people like Joe Kraus, Evan Williams, Paul Buccheit, PG it suddenly dawns on you that there’s actually a chance you can succeed despite stupid odds. Logically speaking you can argue that I’m looking at it from a skewed data point – for each of these success stories there’s a 100 failures you might say. And you might well be right. The point is that sometimes you just need to forget what logic tells you and just go after something because you want it that bad – YC gives you the belief to do that by placing you in the perfect environment.

When I look back on the past three months, YC has been by far and away the most happy/amazing three months of my life. I can barely recognise myself from when I first started out in January, it feels like there’s been a lifetimes worth of knowledge crammed into my brain and once I’m back out there – I fully expect to have that same feeling another three months down the line. It’s that process of learning from your peers that makes YC special and it’s the way they make that happen that makes YC unique. Just putting a bunch of smart people in a room together isn’t enough (if it were there would be a ton of successful incubators all over the place) there has to be something else going on to make it special. I’ve got a lot of ideas about what that X factor might be but whatever it is, the important point is that YC has it. That’s not to say YC is the only way to start a company (of course it isn’t – there were successful startups before YC and if YC disappeared tomorrow there would still be successful startups somewhere) but it is a great way to do it.

Right that post should definitely be long enough to get out all my pent up blogging cravings for a while.

Actually when we practiced our pitch at Obvious HQ before investor day, Jason Goldman referred to the whole process a “weird kung-fu battle” and that analogy has stuck with me. I think it’s a good way to look at it. I don’t pretend to offer anything new here, I’m sure this advice is available around on the net somewhere but here’s a collection of all the lessons I’ve learnt re investment raising since YC which hopefully may be of use to some of you, they’re in no particular order.

1. Believe you’re a hot deal- When you’re a first time founder and you’ve never raised funding before, the whole investment raising process takes on a disproportionate level of importance. I think this often leads to founders creating a mental unbalance between how important they are to potential investors and how important those investors is to them. Always remember investing is a two way process – you need the money but the investors also need good deals. You can’t afford to act desperate or not full of belief, you have to convince investors that you’re the next Google and that starts by believing it yourself. It’s harder to do this if you’re not in the Valley, where there are literally way more investors than there are good deals, but it still needs to be done.

2. Investor and founder intentions are not always aligned – One thing to keep in the back of your mind is that what’s in the best interests of your investors is not necessarily in the best interest of you as a founder. This generally applies more to VC’s than angels but it’s still true to some degree for both. Investors are looking for one thing – a MASSIVE hit in their portfolio – and that is built into their mentality. What might be a good result for you, might not be a good enough result for your investor and that has potential to cause friction further down the road. This basically comes down to managing your investors well and if you’ve retained control of your company then you don’t have to worry about it so much (and it’s not necessarily a bad thing to have that think big mentality pushing you) but what it does mean is that you should always make your own decisions and not blindly follow advice.

3. Know the investor – I’m going to use two speakers from YC dinners to highlight this point. First up is Ron Conway, probably the most prominent/well-known angel investor of all time. When asked what he criteria he looked for when investing he replied “Obviously I want to see an opportunity I’m excited about but generally I don’t invest in ideas. By the time a startup reaches the point of being successful it’s hardly recognizable from the initial idea anyway. I invest in people and teams – I want the founders to be flexible and have the courage to change their business model”. Next up is Greg McAdoo of Sequoia Capital, who said that the first thing he looks for in an investment is the market opportunity. He wants to know how big the market is and see in-depth research of it. So it’s pretty obvious then that in your one-pager to Ron, you want to place a little more emphasis on the team and with Greg you might want some more market data. I know this is pretty obvious advice but when you’re in the midst of the fundraising storm and meeting a load of investors, it’s easy to forget the importance of researching each investor you meet. Do it ruthlessly, know their best investments and which ones blew up in their face. Treat knowledge like ammunition, the more you have the better off you are.

4. Talk is cheap – They say a picture paints a thousand words, if that’s true then a well rehearsed demo of your product must paint a million. I’ve now seen tons of people pitching ideas to investors and I can categorically state that nothing is as powerful as a well rehearsed demo. Being able to sum up your idea in a few sentences is not a competitive advantage/something to feel good about – that’s the minimum standard just to enter the game. Showing a good demo to an investor has a lot of positives 1) It shows you’re not talking bullshit, you can actually build something 2) It saves investors time, you can paint a clearer picture in a 5 minute demo than 5 minutes of talk 3) A demo is visual and sticks in the memory more than talk/one pager. Always have a demo ready – of our current YC batch Weebly and Zenter have awesomely slick demos and it’s not a coincidence that they’re doing very well in the investment raising process.

5. Don’t think in % equity, think in % success – This is something PG has said countless times and is a v important point. Don’t waste time trying to hold onto every last grain of equity, you’re better off deciding how much that particular investor increases your chances of success and use that as a guide as to how much to negotiate with them. There have been enough blogs about this point so I’ll leave it at that.

6. Don’t let your ego dictate your valuation – It’s very easy to take the bigger is better approach when negotiating the valuation at which investors invest in you at. It’s not as simple as that – if you’re a first time founder the one thing you really don’t want to do is lose all your investors money. You want to give them at least some form of return on their investment – even if it’s just 1x or 2x. The likelihood is they’ll put that money straight back into your next venture and so the circle continues – having a set of angels you can always call on is an incredibly powerful asset to have. But let’s say you are a superstar/superhuman negotiator and you manage to raise $5 million and only give away 5% of your company. You might pat yourself on the back and congratulate your success. But what that really means now is that your company is valued at $100 million already – so if you want to give your investors their expected return (about 10x) you need to create a $1 billion company. Even just to give the investors their money back, you need to create a company worth $100 million. Of course you should be aiming high and believing in yourself but you can see why trying to get the highest valuation possible can actually limit your options somewhat.

7. Think of money as a commodity – This is something we only did this time around and it’s incredibly liberating. When you first raise money it’s tempting to grab the money from the first person to make you an offer, after all cash is cash right? Logically though it can never be that simple, if all investment was about was putting money into a business then it’d be totally irrelevant where the money came from. That’s obviously not true though – having $100k put into your company from Ron Conway is worth ALOT more than $100k from Mr X who made all his money from pharmaceuticals (assuming you’re a web startup). When you realise that it’s somewhat liberating, you start to ask the right questions about investors which naturally gives you more power (linking in to point 1) and means you’re less likely to end up with an investor you don’t get along with.

8. VC or not VC – One thing a number of YC speakers have repeated is how the VC’s think behind the scenes and why founders should be careful. To sum it up – VC’s raise their cash from Limited Partners (a VC is really nothing more than a fund manager who takes money from rich people and invests it – they just happen to invest it in startups and not stocks). There are a few implications of this:

So that’s the first big thing to keep in mind about VC’s, they have incentives to offer you more money than you probably need. That’s not by definition a bad thing but it can be (a lot of people argue that the best innovation happens when a startup has to bootstrap for survival – having $5 million sitting in the bank isn’t bootstrapping but you might counter that eliminating financial concerns lowers stress and helps founders concentrate on the business). Either way, keep it in mind.

Another thing to remember is that VC can also limit your exit potentials – once a VC invests a successful exit = BIG bucks and quite simply, there are not as many $500 million deals happening each year as there $10 million ones. This comes down to what you want to do, if you’re thinking big then this isn’t an issue but worth keeping in mind (especially if you give away control and wouldn’t be able to sell even if you wanted to). (Just a quick note on this: VC’s are increasingly allowing founders to cash out so if you did get a lowball offer, you might be able to cash out i.e. the VC buys some of your stock which could be a nice compromise if you’re torn).

So I think that’s about it – as I said this is nothing new but I figure it’s probably useful to have this stuff collected together in one place. Good luck with the fund raising!

Also thankfully there’s now a web site that actually lets you unearth all the hidden gems by way of daytrips – make sure you check out 71miles.com to plan what you want to do. Web stuff aside – the Bay Area is a fantastic place to visit.

And you thought all I could blog about was web stuff. Depth and breadth of character = me.

1.  The first stage of any web idea should be building a product that works i.e. taking the idea and making it something real.  Anything else is seriously irrelevant.  With boso in the early days I spent way too much time worrying about getting the marketing and sales teams in place and getting PR.  I left the actual building part of the site to Tom who put something together very quickly using some old code and we launched it after a couple of days- which was totally the right thing to have done but it needed to be followed up with continued iterations of the site.  The time I spent drumming up press should have been sent on asking people how the product could be improved.  That’s what we’re doing with Auctomatic now and I see now why it’s so important.  By asking users how to improve your product you gain something more important than just a better product – you give the users ownership of the site.  That’s the first step to building what I think is the hardest aspect of any web product – a real community.
2. It’s not a coincidence that almost every successful tech founder could code in some capacity.  There really is no excuse for not taking the time to teach yourself the basics of building the product if you’re not a hacker.  You don’t need to be a master hacker – you just need to be able to understand the processes involved in building a product.  It’s much less frustrating for you as you actually appreciate why things take longer than expected.  That applies even if you have a tech co-founder, you’ll get along much better if you have a basic understanding of what’s going on in the product side.  After all in the early stages it’s really only the product that matters – if you can’t contribute to that you should ask yourself what can you actually contribute?
3. The benefits of being around other startups and founders simply cannot be described properly in words.  If you are stuck somewhere trying to do things by yourself without any other startups you only have one choice. Move.  Yes there is always the chance you’ll get uber lucky and launch your killer startup and suceed from Alasaka but why make it so hard for yourself?  Why not have the statistics work for you rather than against you?
4. Do not react to competition negatively – in a perverse way you need it to suceed.  I remember in the early days of boso having a near neurotic approach to potential competition.  I saw every competitor as a threat and expended far too much energy digging into every detail about them and worrying they were going to overtake us.  This time with auctomatic we’re entering a market where there is probably an overload of similar products but now I see it as a positive because 1) having competitors who can display some moderate success/user uptake validates that there is a real problem to solve 2) you can learn from competitors – ask their users what mistakes they’ve made and make sure you don’t 3) having competition forces you to up your own game.  I have a strong competitive streak in my personality and I’m never more focused than when I make it my personal mission to take something on directly.  Also when you’re in the Valley, competition is a fact of life – if you’re doing anything remotely interesting there are just too many people out here for someone to not go up against you.  You have to deal with it and move on.
5.  Respect the advice mentors/people you look up to give you but don’t mindlessly follow it.  You need to do what you think is right because ultimately no one knows your company better than you do.  You’ll gain more respect from mentors by taking your own path and following it through than just doing what you’re told.  I think there is some element of taking the pressure off yourself here – if things don’t work out you can always turn around and say “but X said to do it like that” right?  Sure you can – but you may still have killed your startup when your gut was telling you to do something different.  This is much harder to do than it sounds, especially when your mentor is a hugely respected personality with bags of charisma, but it needs to be done.  If for no other reason than to enjoy the real benefit of doing your own startup – namely being your own boss.
6. Recruiting the right people is more important than anything else.  This is often thrown around as a piece of advice so Im not offering anything new and it’s pretty obvious but I just can’t express how fundamental it is.  And what makes it worse is that the best people ALWAYS have other options.  In fact be suspicious of any candidate who seems to have no other options than joining your startup.  If no one else wants them then why should you do?
7. Investors can smell desperation and it will make them run a mile.  When we raised our first round of angel funding for boso – we had pretty much reached breaking point.  Kul had emptied out his savings account and I didn’t have enough money for lunch so I was making my own (disgusting) sandwiches.  But we never let our investors know this, we always kept up the front of being eternally optimistic and in control.  When negotiating terms we made it clear we wouldn’t be walked all over (when in reality it was far from clear if we’d be able to survive any longer without funding).  As soon as you let an investor know you’re desperate for their money you dramatically reduce your chances of getting it.  In reality money is a commodity – with a bit of selling raising cash is not hard, especially not in the Valley.  What’s more difficult is getting good money from good investors – once you realise that you’ll be less desperate to accept the first cheque put in front of you and investors can sense that.
8. Don’t think you know what you’re doing because you don’t.  Just focus on getting anyone and everyone onto the first launch of your product and iterating it like hell – let users do the hard work for you.  Your product might be barely recognisable in a few months time from what it launched as (we’ve gone from student marketplace to online auction tools) – just accept that.
9. Level out the highs and lows.  Im offering this piece of advice but I’ve still been unable to achieve it.  Sam Altman says he has finally been able to get some sense of detachment and not let the highs carry him away or the lows drag him down.  I’ve not been able to get there – I’m still on this ridiculous emotional rollercoaster which see my views of how we’re going to do swing around on a daily basis.  Thats just startup life and you have to deal with it.  For me this is the toughest part of startups because I find it emotionally draining but I also appreciate that right now I’d find it incredibly difficult to return to a “normal” life.  I’m hooked on this way of doing this now.
10. Finally – visualise the qualities you think you need to be a good founder and let them creep across into all aspects of your life.  For me I felt like I needed to project a greater air of confidence when talking about my startup (hiding the highs and lows going on beneath the surface) and that has now come from just generally acting more confident about anything.  Personality traits can be faked – decide what you need to be in order to be a success and just become it.  There is no such thing as not being a good presenter/a morning person/technical/assertive/socialable.  People are generally stupid, they can be fooled into believing you are whoever you tell them you are.

Ok I think I’m done, I’ve probably missed a load of stuff – there have just been too many great speakers and people at the YC dinners for me to recall everything I’ve picked up from them.  Most of the stuff I’ve learnt along the way should be covered in my other blog posts.

Time for bed. Over and out.

Alek and Tom are both great of examples of how sometimes things just work out without you trying. When we first raised Angel money back in August/September we went on an interview spree to find good coders – we tried recruitment agencies and interviewed more candidates than I can remember. None of them worked out. Alek randomnly replied to a speculative ad we posted on Craigslist – the CV looked impressive, Google funded his project for their summer of code so we thought let’s give him a shot. When he finished his two hour tech test in less than an hour (only one other person ever managed to complete it and they used the full two hours) we knew we were onto something.

Then there’s Tom – again another speculative response to an ad we placed on the 37signals gig board. The CV looked good but he was based in Paris so we didn’t really follow up on it. Then we decided to give him a shot and asked him to build a boso landing page for when users first sign in – the stuff he came back with was amazing. Then we worked with him remotely and continued to be more and more impressed (boso looks better than it’s ever done) so we asked him to fly out here and join us. It’s all a bit spur of the moment/generally chaotic but it shows just how small the world is – people from Paris and London, who have never met, join together in Silicon Valley to work on a tech startup. I have a good gut feeling about Tom and I’m learning more and more that when it comes to startups, your gut feeling is probably the best tool at your disposal most of the time.

So what’s been happening on the business side of things? We finally launched our eBay selling tool – it’s now live at auctomatic.com. It was a totally different experience to launching boso for a few reasons:

1) This time it wasn’t a student side project and we have all the experience from boso this time around

2) I’ve been learning more and more code and have been very closely involved in the actual product, coding all of the views and some of the back end stuff. It’s a pretty amazing feeling to feel like you’ve been a part of building something which is something we never really had with boso. More importantly, I have full access to all aspects of the site and can do bug fixes myself as and when I see them. It takes me a while to figure out what’s happening and a lot of the time what takes Srini five minutes will take me more than a couple of hours but I have to learn at some point and there’s no better way to learn than by just doing.

3) With auctomatic we’ve really stayed very very faithful to the idea of launching early and continually iterating. It definitely feels like we launched too early as there is not much functionality on the site but I heard a podcast from Reid Hoffman recently where he says “if you’re not embarassed by your first release of your product, you launched way too late” and I see now why it’s so important. Getting something out there early and receiving feedback from actual users (in our case eBay powersellers) is like gold dust. We could have spent years on the site and we wouldn’t have been nearly as perceptive as actual users are. They tell us what they want, we build a better product and they feel a sense of ownership. It’s pretty much a win win situation. Also once stuff is live, there’s no hiding and it’s one hell of an incentive to never let up the pace. There’s no point trying to build the perfect product without users, let them do the hard work for you.

I’m feeling excited about auctomatic, we’ve already had sign ups and positive feedback about the site. There’s a long long way to go but it’s definitely solving a very real problem and it’ll be interesting to see how it goes. Learning about subscription based business models/businesses is also another good experience and piece of knowledge to have. Once we start charging users I’m sure it will feel like a whole new ball game once again.

So as I mentioned this week is the big week in terms of YC. I’m feeling quite confident about the pitch itself but there’s plenty of time for things to change. Emotional rollercoaster is a term often used in connection to entrepreneurship but I can’t express just how true it is. I’m not sure how I would cope with a regular existence any more – I’ve become so used to one day feeling on top of the world and the next day wondering what the hell I’m doing that it feels as though I’ve almost become dependent upon it. No matter how hard I tell myself to stay emotionally detached and not get carried away by the highs and lows I can never manage it. So sod it, I’m going to enjoy the highs and work through the lows. Probably not good for my blood pressure but that’s just the way it goes.

I feel on a high right now because even though having Alek and Tom working remotely was going well – there’s never any substitute for working in person with someone. The apartment feels like a real startup environment right now and it actually feels good to have the feeling of being in charge and responsible for making sure things go slowly. Working/leading a team is definitely one of the things I enjoy the most and this next week should be pretty awesome.

So on the speaker front our last YC speaker was Ron Conway – the most prolific angel investor in the Valley (which probably makes him the most prolific in the world). He gave a great talk with some great tips for founders looking to raise investment. Things that stood out for me:

- He has an index fund approach to investing i.e. he invests in as many companies as possible and often his companies are in direct competition with each other. That obviously seems like a slightly strange set up but you also have to remember that Ron Conway can get you a meeting with essentially company, however big or small, in the Valley which is a pretty good reason to have him involved in your company.

- He wants to see flexibility in founders i.e. that they are prepared to adapt the business model when needed. It reinforces the whole concept of failure being a badge of honour out here – investors are more impressed by someone who can admit their business model isn’t working and they’ve had to restart the company than someone who just sticks to their initial business plan.

- A lot of the time he doesn’t even care about the actual idea, in his words “in a year the idea will have changed so much anyway it makes it pointless to invest on that basis alone”. Ron invests in people, a real cliche but it’s so much easier said than done. The difference with Ron is that he’s done it, several hundred times.

So all in all, looking back it’s been an incredible experience this far. I expected to learn a lot but I couldn’t have imagined just how much in such a short space of time. By the end of this week, having pitched to that room full of investors, I’m sure there’ll be a ton more experience/knowledge into this head and that’s a pretty cool feeling to have. Right I’m going to catch some sleep now, probably won’t be getting all that much this week so may as well grab it when I can.

• <a href=”http://news.ycombinator.com”>news.ycombinator.com</a> – This is essentially a digg/reddit type site but only for stories related to startups and the web. This is a good way to quickly find out what the most interesting web stories of the day are and Paul Graham also has plans to turn this into a virtual “recruiting” ground for his future YC investments – you can read more about that <a href=”http://ycombinator.com/announcingnews.html”>here</a>
• <a href=”http://startupping.com”>startupping</a> – An online resource for web entrepreneurs, includes wiki’s but what I find the most useful is the forum. This needed setting up for a while (perhaps even a social network built on top of it?) and I’m glad Mark Fletcher has been the one to do it.

Ok so the title of this post probably gives away what I want to write about. After Kul’s article for the BBC there’s been a lot of talk of the Silicon Valley vs the rest of the world – some people arguing no one can replicate SV and others saying it doesn’t have a strangehold on innovation. Saul Klein wrote an interesting post here about the growth of innovation in Europe and there have been a number of spin-off posts around the place about the topic. Since I’ve been out here I’ve blogged indirectly about SV vs the UK (based on my experiences obviously) without directly writing a post about it. I feel like I have some stuff to say about the topic so I’m going to do that now.

One thing I think it’s important to lay down before talking about the issue is the problem of over-generalisation. The speaker at our last Y Combinator dinner was Paul Buchheit – employee #23 at Google and also the founder of Gmail. His talk was definitely the least conventional of the talks we’ve had so far – he began by telling us to ignore the advice of other people because ultimately “people are just talking monkeys”. The point he was making is this – people generally give advice based on their own experiences and as a result they inevitably end up over-generalising about things. I think that applies hugely to the context of the Silicon Valley debate – people can only write about their own experiences and so a lot of the time they end up taking this all or nothing position which really doesn’t do justice to all of the issues involved. So with that in mind I want to lay out some variables that will inevitable lead to some degree of generalisation by Kul or I when we write/talk about our experiences of the UK v SV:

1. We had a very hard time trying to raise early stage funding for our venture in the UK. There are a number of different reasons why that could be the case and they don’t all lead to the conclusion that the UK will never give birth to a Google or Yahoo. The point is that was our experience so that’s all we can talk about. The best way to show that our experience can;t be used to make generalisations from is to show everyone a group of young entrepreneurs, just out of university, with early stage funding for their ventures.
2. We came out to the Valley to take part in Y Combinator which instantly handed us a fantastic network to draw upon. Not everyone who moves out to the Valley will have access to immediate angel funding + the YC partners + a massive group of people their age who are also starting companies and feel a sense of loyalty to each other. We’re lucky to be in that position but we know that isn’t the case for every single person starting a company in the Valley. The telling thing is that to find a Y Combinator set up we had to move out to the Valley.
3. On a personal level we already had a network out here before we came – largely due to the annual Silicon Valley comes to Oxford event held by the Said Business School, Oxford. It’s through that event that Kul met Evan which is how we’re now working from the Obvious offices, he’d also worked closely and is good friends with Bob Goodson of Yelp. It’s at the same event that we met Chris Sacca of Google and we also had one of our friends Kirill, working out here on Slide (Max Levchin’s venture). All of those contacts were obviously a great help to us and shape our experiences of the Valley. The most powerful thing to take away from that though (at least for me) is the fact that we probably had a stronger network over here while we were still in the UK and that’s not something we engineered – it just happened but the fact it was easier for us to make contacts in the Valley than in London must be indicative of something.

The point I’m trying to make my laying these things out is that I don’t think there’s a right or wrong answer to the question of what’s better for each individual – starting their tech company in SV or somewhere else. It’s perfectly feasible you might find a fantastic group of people to work with and an angel investor you have an awesome relationship with if you’re based out in the Isle of Man. If that’s your situation then great for you but statisically speaking, however it’s far less likely that you’ll have that set up somewhere outside of Silicon Valley. That’s just a fact and one that can’t be argued with – if you were to look at things completely objectively and wanted to give yourself the mathematically best possible chance of making your startup a success you would want to be based in the Valley. Of course statistics are statistics and both Kul and I are fully aware of the fact that coming to the Valley does not magically guarantee you success and nor does staying in London make failure inevitable.

What I liked about a recent podcast I heard from the Future of Web Apps conference held recently, was when Saul Klein said it’s time we stopped worrying about why we’re (Europe) not Silicon Valley and started focussing on what we’re going to do to drive tech innovation. So the question becomes not how does Europe compete with Silicon Valley – incidentally one thing I have to say is that since I’ve been out here this notion of competing with SV has not been heard/seen once. I find that people don’t walk around with a “SV is the best place in the world” t-shirt each day because for them this is normality. SV wasn’t engineered it just happened and for people out here, this is reality and I myself have not encountered any smugness from people. Sure they accept the fact they’re lucky to be in such an amazing place but they don’t try and make out like they are the be all and end all of the web world. That notion is one I think has been fabricated more by external parties who take creative interpretations of articles about the Valley.

So if you were somewhere in the world and wanted to learn from Silicon Valley and set up a start up hub what would you do? Well my thoughts are this:

• Be prepared to lose a lot of money. There is no way of hiding from the fact that the majority of startups fail. When you’re talking about first time founders being involved those odds become incredible – it becomes incredibly unlikely that any startups from young founders will actually suceed. But the problem is that to institute a real startup culture it’s the young founders who need to be starting up companies. Silicon Valley is amazing because by the time people reach their mid-twenties they have already started a few companies. Some of them may have suceeded but most will have failed but the overall experience floating around will always be rising. Everything else builds off that – the more founders you have, the more startups = more startup opportunties for other young people = more networks forming = more success stories = more people doing startups. It’s not complicated but to get to that stage will not be cheap – those startups that are going to fail have to be invested in. Simple as that.

There is also a wisdom of the crowds theory at work here which is illustrated by drawing analogies to bees. Bees are good at finding nectar because a large number of bees will fly out and find the flowers they need – each bee who doesn’t find a flower creates a path that is then crossed off the list of potential paths to follow. The same applies to startups – for the really good ideas to take off it needs more people to be working on them. Every time someone tries an idea and it fails, that’s one less fruitless path for people as a whole to follow which has an overall net benefit on the ecosystem. I think failing startups are actually the backbone of what makes SV so successful.

• Stop focusing on getting the really motivated/”natural” entrepreneurs involved. I’m sure that in every city there will inevitably be some people who will naturally just gravitate towards startups and any hubs that are formed. Much like the early adopters of a website. You don’t need to expend too much effort on finding these people because they’ll find you. What you do need to focus on are the potentials – the people who have the potential to do a startup but just don’t realise it yet. I know the importance of these people because I was one. I was no Richard Branson and there was no sweet selling in the playground for me. I stumbled into startups (or was pushed into it by Kul) and now I can’t imagine doing anything else. But I am not alone – for every one person like me who ended up in startups, there are hundreds who did go through with that job offer and are now sitting behind a desk somewhere. Focus on those people and get their attention and make them think about what they can achieve. SV is amazing because it seems like the majority of these potentials do end up going into startups rather than getting safe jobs (it’s probably not the majority but it definitely feels like it).

• Get rid of the notion that startups are born from lightbulb ideas – it’s rubbish and it does no good. Google was not born because one day an angel from above came into Larry and Sergey’s dream and told them they should build an amazing search engine and then a few years later introduce adsense and then start taking over the world. Google started because those two guys wanted to do improve the search at Stanford, they did it and the rest is history. I recently read an article on the Guardian about the boom of online entrepreneurs in Britain. What depressed me most about it was how much it played up to the lightbulb stereotype. This is a bad thing because it puts people off – it’s too easy to hide behind the “i would do a startup I just don’t have the idea yet” excuse when you’re obsessed with those lightbulbs. If you read Jessica’s book Founders at Work, you’ll quickly realise that remarkably few startups orginate in this lightbulb way. They usually start because the founders buy into the idea of being their own boss rather than one specific idea – they start something and then go with the flow. If they’re (very) lucky it pays off otherwise they try something else. Without fostering that kind of culture, which flows through the Valley, I don’t think your startup hub is going to get the traction it really needs.

I think I’ll stop there before this post becomes far too long. That basically sums up my thoughts on SV v the rest of the world but I deliberately haven’t framed it as good points of SV v bad points of everywhere else. That’s not where the debate needs to go so I don’t want to add to it. This stuff is really not that complicated. It’ll take a lot of money and time to see the full benefits so any notions of short term profits need to be put aside. Short termist investments or motivations are not going to get people anywhere.

Personally do I think it will happen? I’d like to sit on the fence and say it’s too early to tell but my gut tells me this. There isn’t going to be some sudden destruction of the Valley and in the next tech boom (not trying to imply there’ll be a bust in the meantime) I still think SV will be the hub of it. But I think the landscape will change and it’ll become flatter – like Greg McAdoo from Sequoia said, they are going further afield to make their investments than they have ever done. SV will always be the best place to start a tech company but it doesn’t always need to be the only place.

Then again what to I know? Like Paul Buchheit said, I’m just a talking monkey so you’re better off ignoring everything I say. Time for bed now. Night.