TL;SWR (too long; still worth reading)
After I left Real Food Works (and its subsequent demise), I told myself that I was done with startups. It was the seventh. The next stage of my career was to coach and I founded Trajectify. Along the way of figuring out my coaching offerings and building a pipeline, I was doing a lot of networking. One meeting would result in a couple of introductions, and each of those in subsequent meetings and introductions, and so on. Through Novotorium (a business incubator) and Philly Startup Leaders (PSL) I met entrepreneur Chris DiFonzo. He introduced me to Christopher Mengel, a marketer who had recently moved from DC to Philly. Christopher introduced me to Carl Grant, biz dev at law firm Cooley in DC. Carl thought I should know about Martin Babinec, the founder of TriNet who was looking for someone to help him build a networking and introductions application.
IntroNet is born
The intros from Chris to Christopher to Carl to Martin took 16 months. Martin’s idea was to make introductions easier, more fluid, smarter, faster (originally called vConnector). I really liked the idea and the opportunity to partner with Martin. He and I shared a lot of common values and passions. I broke my “no more startups” pledge and we formed IntroNet in late 2013. I worked part-time on it, hiring a developer and marketer to build it. We launched an introduction utility on the Web, learned a lot, turned it into a mobile app, then a Gmail plug-in. We couldn’t get traction for it. The product was useful and well adopted by super connectors like Martin and myself (who make many introductions each week), but that market was just too narrow to build a company.
We took what we learned and pivoted. Let’s use machine learning to help members of groups and teams share their networks and AI to eliminate the serendipity that was needed for Martin and I to have originally met. The system would be smart enough to automatically suggest and facilitate introductions to make or people to meet. We’d make it easier to find expertise, connections, and information. Secretly, we were going to build the LinkedIn-killer. Martin liked the new idea and agreed to fund it on the condition that I worked in it full-time, completely committed. I did. We did, and IntroNet v.2 was born in July 2015.
We hired six more people - two developers, a UX/designer, a data scientist, and two contract developers from the Czech Republic (who had built similar products). We decided to go mobile first, both iOS and Android, and support both Gmail and Outlook to maximize the market potential.
So to make the long story shorter… We hit the ground running, 9 of us (10 including Martin) thrust together in just a couple of months, working on a new product and company. We were smart, experienced and working hard, but it was a lot more difficult than we thought. There were missteps in our processes and teamwork, we struggled to find the right culture with a diverse and distributed organization, and we underestimated efforts. We replaced some of the team. Our “alpha” (which we called MVE, Minimal Viable Experiment) took 8 months instead of 4. We continued developing while we were testing MVE. Getting users proved to be much harder than we anticipated. We couldn’t validate many of our hypotheses, but launched beta (MIP, Minimal Investable Product) a few months later. It wasn’t investable. We still hadn’t figured out how to get customers to use and recommend the product. We continued to struggle to find the right targets, we weren't activating customers, and we couldn’t get enough data for the company to be interesting to outside investors. We ran a bunch of A/B tests on mobile vs. web, on groups vs. open networks, on B2B2C vs. B2B.
The cash is running out
This was taking too long. We now scaled back the team to make the cash last longer and focused on more testing and less development. In the meantime, Martin decided to run for Congress, distracting him from IntroNet. By the end of 2016, Martin and I looked at what we had built and accomplished, what we had learned, and the remaining risks if we continued with IntroNet. At the time, the risks didn't outweigh the opportunity we perceived, so we decided to not make further investments and shut it down the application. (BTW, Martin hadn’t won his Congressional bid, but as an Independent, earned a very respectable 12% of the votes.) We turned off the servers and the team members took on other projects as we put things on hold to consider the IntroNet's future.
The IntroNet product is solid and actually pretty cool - there's value in the platform. Martin and I continue to work to find a buyer for IntroNet, or an opportunity to merge it with another product or company where the whole would be greater than the sum of the parts. There were a few deals on the table, but none have yet to yield results. The IntroNet that we built together was done, but perhaps a third pivot is lurking in its future.
What lessons can we learn from the journey we took, the mistakes we might have made, or the choices we should have made to achieve success with the talent, time and capital that IntroNet had?
On the surface, the business didn't succeed inthe first two iterations of IntroNet for the same reason that 90% of tech startups fail: we did not find a product-market fit before the end of our cash. It’s a math equation that is pretty deterministic. Why didn’t we find product-market fit? Perhaps we were solving for a pain (e.g., LinkedIn sucks) instead of a real problem (e.g., I can’t find expertise)? Did we try to change user behavior in a way that wasn’t tractable? Yes, probably all of that. There must already be thousands of blog posts on these very topics of startup road bumps and failures. Search for "reasons why startups don’t succeed" and get many perspectives on the same few themes. I want to share something more insightful.
The fact is that both Martin and I are experienced in startups, entrepreneurship and tech. We built a really good team. With the money and talent we had, the business didn't succeed after two attempts. So what is unique about our IntroNet experience that can serve as lessons for the future? As I take off my Startup CEO hat and put back on my Coaching hat, there are four observations and lessons worth sharing:
A startup needs an obsessive founder in the trenches;
Being shoulder to shoulder gives a startup more agility;
The biggest gains come from taking the biggest risks;
Embrace the strengths of the local ecosystem
1. a Startup NEEDS AN OBSESSIVE Founder in the trenches
I had been part of building seven other tech startups, as CTO, COO, and CEO. Execution is something that I should have nailed. So why did it take twice as long as we planned (burning twice as much cash) to get the first version of our new product to market? Because I was a CEO. A pre-product, pre-revenue company doesn’t need a CEO. It needs a visionary - often wacky - a founder whose passion makes him obsess over every detail. It’s the kind of leader that startles the team when he walks in a room, who sends email people are afraid to read, and makes phone calls they won’t take because they know it will result in more work.
I had spent so much time over the past 15 years developing my leadership skills, and then coaching others to do the same, that it didn’t occur to me that I wasn’t performing the best role that I could for IntroNet. Instead of being in the trenches with my team, I was out of the office, building relationships, marketing, creating a path to the future.
Pioneer tech entrepreneur Dame Stephanie Shirley shares in her talk “Why do ambitious women have flat heads?” regarding building a company: “It’s one thing to have an idea… but making it happen is a very difficult thing and it demands extraordinary energy, self-belief and determination, the courage to risk family and home, and a 24/7 commitment that borders on the obsessive.” Borders on the obsessive. I had the energy, courage and commitment, but not the obsessiveness.
So as CEO and founder of an early stage startup, I fault some of our lack of success on my having missed the opportunity to be the right kind of leader sooner. I secured the funding and I built a good team, and we laid out clear plans - doing what I knew a leader should. But I don't think I was hands-on enough. Being the CEO, I mostly let the team drive itself. Our challenge was that the vision was still being formed, the market was unproven, and we were learning too much too quickly to keep the plans intact. The team was new and I missed the impact of their struggles to work effectively together. Instead of making everyone crazy having their leader in the trenches, I led from too far.
Thankfully, I was paying attention and did eventually catch myself. Seeing in December that we should have been within a month of launch but weren’t, I began to spend more time with the team asking hard questions and perceiving challenges that weren’t readily visible. There were issues with communications, culture clash, team performance, technology choices. I got in the trenches and became a different kind of leader - the obsessive kind - but not before we had wasted a few months of cash and shortened our “runway.”
2. Being shoulder to shoulder GIVES A STARTUP MORE AGILITY
When Marissa Mayer took over Yahoo, she banned telecommuting to boost productivity. IBM chief marketing officer Michelle Peluso recently “cracked down” on remote workers, forcing workers into one of their six main offices. She said that “there is something about a team being more powerful, more impactful, more creative, and frankly hopefully having more fun when they are shoulder to shoulder. Bringing people together creates its own X Factor.”
You may say that Yahoo and IBM are big companies, whose culture isn’t comparable to that of the small startup. Still, a Gallup State of the American Workplace report found that people who work remotely are more engaged, enthusiastic and committed to their work -- but only if they work outside the office no more than 20% of the time. The data shows that teams who predominantly work remotely are less effective than teams who spend most of their time colocated.
Why did a young startup like IntroNet choose to have team members in four states, three time zones, and two countries? Because that was the best that could be done given the time and money available. As a leader in startup communities, I see this all the time. Entrepreneurs can’t always find the talent they need convenient to their location. Or they can’t afford to hire from the local talent pool and need to seek it from less costly regions. Philly, where I’m headquartered, has a relatively small tech talent pool, especially those with startup experience who would be comfortable working in the crazy environment of pre-product, pre-revenue. Not only was the local pool limited, but the competition for the people we wanted to hire was too great, demand was stronger than supply.
Timing was also an issue for us. IntroNet wanted to moved fast, to build the team quickly so we could get a product to market in just a few months. We needed to hit the ground running because we thought the window of opportunity was small. LinkedIn engagement was down, competitors were getting funded, the Series A crunch was starting to look real. One could say this logic was flawed, and I can’t really defend it given the results, but we had a sense of urgency. Bill Gross has a TED Talk about why startups succeed, and he basically says that timing is everything (“timing accounts for 42 percent of the difference between success and failure”). In order to build a team quickly, I needed to look at the largest possible universe of talent.
IntroNet's distributed team certainly was not a failure. Each member was a solid fit and strong contributor. We got good at tools and processes to be able to be effective working remotely. Slack. Zoom. Google Docs. Github and Zenhub. Daily stand-ups. We even frequently shared photos of whiteboards. But the “trenches” we were in together were virtual, and you can’t easily win a war that way. The water cooler, the coffee station, or the beer keg, and the late nights working on herculean tasks (or napping on the office sofa) are of value in person, together. I can’t disagree with Marissa or Michelle, that it’s simply more effective to be in one place, and at IntroNet we would have benefited from having that advantage. Given the opportunity to do it again, I’d build the team - and the company - more slowly, and work hard towards us being colocated. We had an amazing team in PA and NY and CA and FL and the Czech Republic, but could I have moved us all to one town, I would have.
3. The biggest gains come from taking the biggest risks
There are multiple paths you can take towards accomplishing any goal. In some technology spaces, like Hacking or SEO, they use the terms White Hat and Black Hat to characterize the ethics of how you act along your path. White Hats play by the rules, do what they do for the good of all involved, and often operate with transparency. Black Hats look at everyone as the enemy, do whatever it takes to achieve their purpose without regard to legality or consequences, and typically operate in the dark.
Going Black Hat is a line most of us should never cross. But what about Gray? Ethics aren’t always clearly White or Black. A Gray Hat isn’t looking to do harm, but is willing to consider a wider range of tactics to achieve the goal. They’ll abide by the rules, but craft or interpret them in a way which might favor a more expeditious outcome.
You’ve likely tried a social, viral, or networking tool that has used your data for their benefit, sometimes in the form of what we call spam (but technically isn’t). They make contact with your connections to solicit them to their service. Sitting in your emails right now is probably one saying that “your colleague, Bob, just invited you to connect with him on our new application,” even though Bob probably never specifically or intentionally did so. I hate those emails.
Most of IntroNet’s competitors have done this. One even shared with me that he has a “spam dial” in his system, to turn it up and down as needed. LinkedIn has done it. Most Unicorn companies have, too, along with faking (phantom) data and other Gray Hat practices. They achieved the traction that we didn't.
One should never compromise their values or ethics, though recognize that not all decisions fall clearly to one side or another of where we might draw a line. Were we too risk-averse to in our policies that we limited IntroNet’s chances for success? When not considering that lines can be blurred, it can limit the ability to make decisions that ultimately are in the best interests of all constituents (customers, investors, employees). I can hear schoolyard chants of “do it, do it, do it” as peers tempt one another to try things out of their comfort zone (like eat a worm or throw the first punch). When we were finishing with IntroNet, I heard it again, “do it,” and regret not having considered doing so.
4. Embrace the strengths of the local ecosystem
It's pretty hard to build a Silicon Valley company in an Everywhere Else location.
On the East Coast, and most notably in the Mid-Atlantic (where IntroNet is), we talk about our conservative nature in startup investing, more aversion to risk than other regions. the ability to generate revenue early, a clear path to tractable goals, preference for B2B. It's sane. We like Enterprise, perhaps because most of the world’s largest and richest companies are within a six hour drive from Philly, from Boston to Northern Virginia. It’s the cradle of corporate America. Many of our investors have made their money in corporate, real estate, family offices - kind of "old" money. We now also seem to like Healthcare and Life Sciences (perhaps because most of the sick people are on the East Coast - joking. not joking.)
In Silicon Valley, the breadth of companies is so much greater. B2C, B2B, services, operations, social. Revenue seems less important than traction. The capital is relatively new (when compared to the East Coast). It is the success of tech companies that feeds the next generation of startups. And a generation isn’t 20 years there, it’s more like 5 or 7. Here on the East Coast, had I told investors that wanted to build the LinkedIn killer, or LinkedIn 2.0, I would have been laughed into the Atlantic. In Silicon Valley, I would have perked up some ears by sharing a vision that bold.
There are also differences in the talent pool and the types and concentration of mega-tech companies providing a source for talent as well as a safety net for those coming out of startups.
The two coasts have access to different resources. On the West Coast, there may be an incubator and accelerator for almost everything and a fund (or three or ten) for every purpose, plus many mentors and advisors who have pertinent experience. Given IntroNet’s focus, there could have been NFX, an accelerator centered “around a narrow idea with very broad implications: the importance of network effects, or when a product or service becomes more valuable to its users as more people use it” (Techcrunch). It's not what we easily could access from where we were.
Finally, there is the opportunity for virality in Silicon Valley, perhaps unrivaled. The density of tech-savvy, early adopters is greater than anywhere else. There is an opportunity for wildfire that is nearly impossible in less dense, more reluctant startup regions. If you build something interesting in Silicon Valley and ask your friends to try it, days later you could have many thousands (or millions) of trials. Here in the East, we just don’t have the critical mass to ignite such traction, it’s a longer, slower (and more deliberate) growth.
Of course, there are examples to contradict these observations. Those are outliers. The lesson here is that for where IntroNet headquartered, in the Mid-Atlantic, should have led to building a company that played to the culture, talent, and resources that were available and deemed acceptable. Not playing to the region's strengths creates friction. Had IntroNet gone B2B, prioritized revenue first, and didn't rely on a virality effect to aid in its growth, things might have been easier. Building a startup company is already challenging, so why make more difficult?
Over the past three years at IntroNet, so much good has happened, even though we have yet to achieve our original definition of success. While I would have done a few things different, we fought hard to succeed. When we weren't ready to continue, we paused it in a way that maintains strong relationships within our team and partners, and foundation for future possibilities. We created value with IntroNet that may not currently sustain a company, but has taught us so much and provides a platform for hopefully bigger and better things.
And if I ever again end up in the CEO seat of an early stage startup (never say never), you’ll find me:
in the trenches, being obsessive, making everyone crazy;
building the company more slowly with a colocated team;
taking bigger risks, knowing that the difference between survival and failure might outside my comfort zone;
- and playing within my local ecosystem, not fighting it, doing like everyone else does because less friction is helpful.
We can't always succeed, and when we don't it is important to embrace the learning. I try to not make the same mistakes twice, but I am always open to making new ones. We learn more from failures than successes, they are more deeply ingrained in our memory. The lessons over 25 years of starting, building, and growing companies, have made me a better coach and leader. As I rejoin Chuck and Joe at Trajectify, I am looking forward to incorporating these new experiences into the work that I do with my clients.