I suppose I shouldn’t be surprised that with the continuous growth in the number of startups (we’re seeing between 150 and 200 new seed opportunities per month at Homebrew), we’re also seeing a related trend in the growing number of companies being started by solo founders. I’ve taken a particular interest in this because Hunter and I have a strong bias against investing in solo founders (although we have done it once so far). This clear shift in the market caused me to reflect on why we prefer founding teams over founding individuals. In fact, we prefer teams that have known each for a long time and ideally have worked together before. While solo founders can absolutely build great companies, I think we’re right that having a founding team materially increases the chances for success. Building a great company is hard enough. It’s even harder to do it alone. In
It’s a humbling and educating experience to raise money, whether you’re a volunteer, philanthropist, startup or VC. Hunter and I are thrilled to announce that we’ve concluded our fundraising process and closed Homebrew II, a $50 million seed venture fund. More details on the Homebrew blog. And now back to work.
“The difference between successful people and very successful people is that very successful people say “no” to almost everything.” – Warren Buffett
We’ve been spending the past few weeks at Homebrew helping several of our portfolio companies work through their planning for 2015. It’s no surprise that during these conversations incredible ideas for new products and features, partnerships, revenue streams, technologies, etc., emerge. So we and our founders all remind ourselves about the value of doing just one thing (or a very small number of things) exceptionally well.
Often times it’s easier for companies to choose to do lots of different things. New initiatives are fun and energizing and get lots of attention while the effort required be truly exceptional at one thing can be an exhausting grind. But being adequate at lots of things almost always comes at the expense of being excellent at the most important thing. Great companies are born of focused excellence. Google was the best at search before it expanded into new product areas and markets. Facebook was a powerful social network before venturing into mobile communications and virtual reality. Narrowing from lots of good ideas to just the most critical ones is the lifeblood of a successful company. We constantly remind our teams that startups rarely die from lack of ambition, only from a lack of focus. And we insist that there’s incredible power in saying “No” to the things that distract them from being best in the world at whatever they are doing.
So what are examples of things that startups should be saying “No” to so they can focus on what really matters?
- Settling for the good enough hire: It’s tempting to fill the hole on the team that seems like the obstacle to progress. But hiring people with enough aptitude but the wrong attitude is guaranteed to impede and even reverse progress in the long run. These kinds of early hiring mistakes can cripple a company.
- Building new products or more features: There’s that one customer that is willing to pay a lot for just one new feature. Or if you just add this small feature that will solve your user growth problem. Or you’ve got early customers that love your product so you want to give them more to love before growing the customer base. Do any of these help you deliver the simplest offering for the core use case you’ve identified? Are you sure that you’re not iterating toward a local maximum versus placing a bet that might unearth a global maximum?
- Short term revenue: Revenue can be found in lots of places, such as consulting contracts, project development work, one-time ad sponsorships, etc. But does generating revenue in an ad hoc way help you build a business that will scale and be sustainable? Is the revenue you’re generating the income stream you want to bet on long term?
- Potential investors: The dirty little secret about “coffee meetings” with investors is that even though they’re positioned as Continue reading "Successful startups say “no”"
Every day we meet amazing founders sharing their ideas for how the future will evolve. In fact, we see about 150 new companies each month. Where do these teams originate from? Roughly 65% are referred to us by other founders or people we know. 25% are introductions via investors – either angels or VCs. The remaining 10% are a combination of cold inbound/outbound sourcing, often based upon a specific area we’re investigating. So recently we asked ourselves a question “is there strategic value in keeping our list of interests to ourselves?” That didn’t seem like a very good idea if our goal is to connect with thoughtful founders or inspire conversation. And thus http://bit.ly/HomebrewWhatIfs
What Ifs will be an dynamic list of ideas, questions and technologies that we are curious about and specifically want to connect with entrepreneurs to discuss and learn. We’ll edit, add and remove items as appropriate and link to our longer blog posts when it makes sense.