Ryan Says…

People generally seem to like when I post write-ups about events I have attended, so I thought I’d do another one.  Today I attended the “I don’t know to CEO” conference at Stanford.  Overall it was a good event with a variety of speakers.  I decided I’ll just focus on one speaker here - Seth Sternberg, CEO and Founder of Meebo.  I found that Seth gave the most practical and relevant ‘insider knowledge’ on building a startup - maybe that’s just because it’s most relevant to me right now.

I’ll stick with my usual style and highlight some of the points I found most interesting/insightful:

• The current meebo product is actually the third idea that the team attempted.  They spent 8 months on each of their first two ideas before deciding to shelve them.  I think this shows a lot of courage, and shows they had a strong and dedicated team.
• The initial launch process of meebo:
• Created a semi-private site meebo.com/shh.html and invited 10 friends to check it out
• Received a variety of bug reports, fixed them, and launched publicly 10 days later
• Initially not many users, until they were written up in techcrunch, gigaom etc.
• The initial blog spike served them well - their service survived the load and has continued to grow since.
• A consumer internet startup should expect to get around 50k users over 2 days when written up in the tech blogs.  You must make sure your servers can handle this load - a crashing site does not create a good first impression.
• After the initial blog spike you will see a traffic drop.  Whether it recovers from here and begins to grow again, stays flat, or drops off completely, depends on whether the initial techcrunch readers tell their friends.  This means you really need to built a quality product that people are excited about.
• A good proxy to use to examine whether you have a ‘mainstream’ audience or just the tech early adopters is to look at your IE to Firefox visitor ratio.  Mainstream looks something like 83%:15%.  If you have a lot more firefox users, then you have a lot of tech early adopters.
• Meebo has a blog/communication mechanism built into the site.  This allows them effectively communicate with their users, and has been used to run surveys to improve the feature set.
• On VC funding: wait for VCs to come to you.  Wait until you have launched, have been featured in techcrunch, and have some traction.  There is no point talking to VCs with just an idea and a team (this only works if you have successfully launched a venture in the past and have a reputation).
• When you talk to VCs, you need a convincing story of why your market will be very, very large
• When valuing a consumer internet startup, VCs will most likely use two methods:
• They want 20-40% of the company, so calculate the required valuation based on the amount of money being raised
• Look at the valuations of comparable companies
• If raising Angel funding, Seth recommends structuring it as convertible debt and not equity
• When going international, meebo looked into paying for a translation service which ended up being prohibitively expensive.  Instead they asked their user base to translate the site, and had 15 new languages in 3 days.
• Press coverage in sites like the NY Times, Business Week etc do nothing for user growth.  This coverage is valuable, however, for raising VC funding, hiring people, forming partnerships etc.
• If your goal is mass market adoption, then a SIMPLE product is best (google search was simple, Yahoo directory was simple etc)
• Hiring people is Seth’s number 1 challenge (and is also the biggest challenge of larger more established companies that Seth has spoken to)
• Meebo tends to make 1 offer for every 100-150 interviews
• Its important to keep standards very high (once you hire B engineers into leadership roles it’s hard to get rid of them, and so you end up with a broken/slow product development process)
• Make sure you have really good advisors/mentors.  Having an official ‘advisory board’ is not necessary for raising VC, but make sure you have advisors you can go to when you have questions.
• Meebo is proactively approaching the IM network owners (AOL, Yahoo, Microsoft) and offering to share any revenues they earn, in order to avoid a messy battle later.
• It is a good idea to buy all international domains before you launch.  meebo.cn is currently held by someone asking for $20k!
• Big companies are often not a good partner for a small startup (take too much time and can devote key engineers away from core development tasks)

Overall I find Seth to be very open and candid, and a great resource for learning about startups from ‘ground zero’.  He’s also written a lot on the meebo blog, check it out.

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