00:04Stanford University so welcome back to
00:08ie 145 technology entrepreneurship and
00:11this next video in the customer
00:14development series I'd like to introduce
00:16an entrepreneur jason freedman he is a
00:19co-founder of flight caster and is now
00:22doing his next startup 42 floors and I'm
00:25excited to have him talk to you a bit
00:27more detail about some of the lessons
00:28he's learned as a successful
00:30entrepreneur I want to spend a few
00:32minutes with you guys today and just
00:35give you three brief stories each of
00:37which showed a lesson on how I built my
00:41last companies I've been an entrepreneur
00:42for four years I've had some successes
00:46and some failures and I don't know we
00:48all go through the same process so
00:49hopefully this will be helpful to you
00:50please feel free to reach out to me and
00:52give you my contact information here
00:54would love to be helpful to you as you
00:55guys build your companies when your
00:57name's in TechCrunch and the word
00:59acquires is there it's generally a
01:00pretty good thing and we got acquired by
01:04caster got acquired after several years
01:05of building it and it was pretty awesome
01:06especially after we had failed several
01:09times as a team before before we talked
01:12about what made it work with flight
01:14caster let's back up and I'll show you a
01:16bright young entrepreneur age 18
01:18freshman at a university who really
01:21thought that the most important product
01:22that anyone could ever want was a loft
01:25and so I built student lofts this was an
01:29outstanding company and for those of you
01:31that are building technologies that will
01:33I applaud you but at 18 what I thought
01:36was most important was helping people
01:38put their beds 6 feet above so that they
01:40could fit a couch below in their college
01:42dorm room and student lofts was probably
01:47the best beginning of a company I've
01:50ever done because all it was was a
01:52problem that needed to be solved and had
01:54a super simple solution that I could
01:56then provide and charge money for and we
01:58really get caught up in disruptive
02:00technologies and network effects and
02:03trying to create moats around what we
02:05build and how are we gonna create the
02:06next big thing but at their core all
02:09companies have one fundamental thing
02:12and that is that you are solving a
02:14problem with a product that people want
02:16and you know flight caster when we did
02:20that was y combinator funded and Paul
02:22Graham the head of Y Combinator he makes
02:24us wear these shirts that have this one
02:26fundamental lesson which is make
02:29something people want and everything
02:32else you do if you're talking about
02:33venture capital or fundraise fundraising
02:36or advisory boards or how you're
02:38integrating new technology every one of
02:41those thousands of decisions you make if
02:43make something people want is the single
02:45most important thing you do then
02:46everything else will work itself out and
02:48that student lofts are a little college
02:50company we made something people want
02:52and we made a lot of money from it and
02:54we were really happy with how the
02:56business turned out and at times I think
02:59our entrepreneurial community gets
03:01caught up in certain trends that that
03:04lose sight of that so if that I show you
03:07my next company this was open vote
03:09and this was part of the social
03:11networking web 2.0 craze of 2007 and
03:152008 and what we created here was a site
03:19that would allow people to talk about
03:20conversations within their college and
03:23we raised some money and we worked
03:26really hard on building the site and
03:27tons of people used it and we were
03:31looking at as we were going to try to
03:32become you know the next big Facebook
03:34and lots of people had advice for us so
03:37in this company because we were further
03:39along and we had already done some work
03:40we really felt that working with
03:45advisors was really important and
03:47raising money was really important we
03:48spent a tremendous amount of time on
03:50that and one of the things we did is we
03:51got a lot of advice and when you're
03:54building your first startup we realize
03:57that there's so much stuff you don't
03:59know that you have so much respect for
04:01anyone that can give you advice and
04:02there are lots of really well intentions
04:05people that will give you advice that
04:08for them is good so one of the best
04:09examples I have of this is we were
04:12learning how to like just build a
04:15product development of our site and you
04:17know people who formerly were
04:20large tech companies like IBM or
04:21Microsoft we're giving us advice on how
04:23you do Tech Specs and how you build a
04:26development process that's really bad
04:29advice for a startup when you know agile
04:31development at that point was not yet a
04:34buzzword and really it was the emerging
04:36trend that we should have been doing
04:37which is let's just keep all of our
04:40development cycles really short and
04:42build something really quickly but it
04:44really it taught me an important lesson
04:46and this company ended up failing and it
04:47was horrible miserable and I hated every
04:49minute of it but the most important
04:51lesson I learned out of there was it is
04:53the entrepreneurs responsibility to get
04:55good advice and avoid bad advice you
04:57will get lots of advice that isn't like
05:00an absolute truism whether you can
05:04decide whether you can figure out which
05:06of that advice is good it's totally on
05:08you and you can't go blaming people who
05:10gave you bad advice when they just they
05:12weren't running your company so I have a
05:15few suggestions lots of these hopefully
05:17you're already familiar with but you
05:19know when you're looking for good advice
05:20the single most important thing about
05:22searching for advice is to do is to find
05:25people who have recently been in your
05:27shoes I like to think of 18 months as
05:30the ideal startup advisor time frame 18
05:33months ahead of you means if you're just
05:36starting your company now maybe your
05:38advisor just raised their Series A or
05:40just hit product market fit or if you've
05:42already raised your Series A then your
05:44advisor just raise their series B
05:46they're only a couple steps in front of
05:48you and so the the names on this on this
05:51list just they're all guys who know how
05:54to write that way Paul Graham being one
05:57of my favorite his essays on Paul Graham
06:00comm slash essays are it's like a
06:02frequently asked questions book of
06:05everything you want to go through with a
06:06startup and if you're raising money
06:08venture hacks they're writing some of
06:10the best stuff out there on how you
06:12actually raise money from the
06:13perspective of like being on Sand Hill
06:15shuffle rate raising your round
06:18obviously most people hopefully in this
06:20video are well familiar with Steve Blank
06:24the customer validation is now a process
06:28that we can all follow and it's always
06:30amazing to me when I talk to an
06:32entrepreneur who's working so hard on
06:34but they haven't read through these
06:36particular people when when I find that
06:40it often correlates with them having
06:42wasted tremendous amounts of time and
06:44your goal and being an entrepreneur is
06:46to seek out the really good advice that
06:49allows you to save time because time is
06:51what is going to kill you if you don't
06:53reach product market fit it won't matter
06:54whether you have money left after enough
06:56time you're just not going to get there
06:58the emergence of incubators has also
07:01really helped this and what Y
07:04Combinator's done with their incubator
07:06is it's helped people unlearn bad habits
07:11so I came out of business school and I
07:13learned a whole bunch of bad habits for
07:14instance I learned how to do a
07:16PowerPoint and startups don't do
07:18powerpoints startups build products that
07:20people want and then investors really
07:22like it because of that and then after
07:24that you build a PowerPoint that shows a
07:26graph going up into the right but when
07:29Business School students think that they
07:31can write a PowerPoint talking about
07:32their dream they're living as if it's
07:331999 and that still counts and it
07:36and what Y Combinator does is it puts
07:39you in a group full of people and
07:40teaches you that so what happens if
07:43you're not in Y Combinator they've made
07:46all that stuff free you can go on news
07:48dot Y Combinator calm and read about it
07:50through hacker news or you can go to
07:52startup school which is often hosted at
07:54Stanford but it's free and if you can't
07:58even get there all of its online those
08:00are all pieces of advice by people who
08:02are eighteen months ahead of you and
08:03they can copy you can contrast that with
08:06some very senior person giving you
08:08guidance on building a company because
08:10they took their company public fifteen
08:12years ago which they may be great for
08:15introductions but they're not going to
08:16give you the best advice so after a
08:19failing open vote we started flight
08:21caster and we did it as a Y Combinator
08:23company and flight caster was our
08:28efforts to solve the problem of flights
08:31being delayed we predict delays six
08:33hours before the airline alerts and we
08:35do that with a series of mathematical
08:37algorithms and great data managing and
08:39it's a suite product
08:41and the biggest thing that was helpful
08:44in building flight caster which ended up
08:47being venture-backed and we had a lot of
08:49users and we ended up selling it is that
08:51all companies kind of follow the same
08:53process so this is an epic picture that
08:56a lot of companies in Silicon Valley
09:00know this is the process you will go
09:02through we went through and everyone
09:04else does your TechCrunch of initiation
09:06you thought was this destination it's
09:08where your user spike massively and
09:11everyone in your life tells you how
09:13proud they are of this thing that you've
09:14built and it is followed like hours
09:16later with the wearing off of novelty
09:18where all your users go away until you
09:20are four days later and people are still
09:22congratulating you and you are the only
09:23one who knows that 14 people visited
09:26your site yesterday and you know you're
09:27in trouble and that is when you're
09:30finally starting to be a real
09:31entrepreneur which is you have hit the
09:33trough of sorrow and that is the time
09:36when customer validation is most
09:37important because everything you thought
09:39about your company is wrong and for a
09:41flight caster that was absolutely true
09:42it took us forever to figure out what
09:44all these problems were and then finally
09:46after months and months of works we had
09:48the you know this eminent release of
09:50improvement moment which was followed
09:54like hours later by the crash of an
09:55aptitude and this is so typical and it's
09:58helpful to know that it's typical
10:00because if you quit here you're not
10:03quitting because your idea didn't work
10:04you're quitting because you decided to
10:06quit flight caster we did not decide to
10:08quit and through some Wiggles of false
10:10hope and a lot of luck we hit the
10:12promised land but we did that by trying
10:14lots and lots of new things and that's
10:17the third big lesson which is
10:18optimization is not iterating if you're
10:21going to be changing things actually
10:22change them and err on the side of
10:25making really big changes to your
10:26business model because that's the only
10:28way to iterate towards a brand new
10:29product that's gonna change the world
10:31optimizing is what people do once
10:33they're already successful so that's my
10:36little spiel now I'm working on a new
10:38company forty two floors we're gonna fix
10:40the way people search for commercial
10:42real estate same process same customer
10:45validation maybe fundraising gets a
10:47little bit easier but everything else is
10:48startups are tough but we want to make
10:51it so that when you go searching for
10:54foot office we're gonna be the ones that
10:55help you find it online so my name is
10:57jason freedman I'm happy to help any
11:00entrepreneurs out there who are trying
11:02to change the world connect to me and
11:03your through your social network of
11:05choosing and feel free to look me up on
11:07humbled nba.com thanks guys
11:10for more please visit us at stanford.edu
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