What is the best way to build a startup?
Naturally there are lots of different answers, but a few misconceptions and wrongheaded ideas should get put to rest while chasing unicorn dreams.
Thursday morning in New York, David Klein, CEO of student loan marketplace CommonBond; Brad Hargreaves, CEO of Common and co-founder of General Assembly; Kathryn Minshew, CEO of The Muse; and Matt Lieber, president of Gimlet Media, came together for a panel on the new startup economy at CommonBond’s headquarters. Maria Aspan, senior editor with Inc., moderated—and the conversation focused largely on what goes into building a startup these days.
Lieber threw ice water on the fable of the wunderkind who launches a breakout idea from college, and takes the world by storm. “This sort of Zuckerberg myth, it’s all true for Facebook but that’s not how most businesses start,” he said. Rather, it is more common in the U.S. to see a person who is mid-career, has had different jobs, been a manager, and then decides to go out on their own.
He also stripped back other illusions from the startup scene, such as always telling people that the team is “crushing it” when in reality plenty of mistakes are made along the way. At Brooklyn-based Gimlet Media, known for its podcasts such as StartUp, Reply All, and Mystery Show, Lieber said he and CEO Alex Blumberg took recordings of their most cringe-worthy, failure moments from the process of starting the company and shared them with the world. “You don’t have to follow the popular narrative of what it means to be an entrepreneur,” Lieber said.
Sure, not every idea takes off, but figuring out what to do in the aftermath of disappointment is part of building something that could last. Ten months prior to launching career advice and employment website The Muse, Minshew started a business that she said did not work out, but in time she reassessed a few of her missteps. “What I wish I had done was start working somewhere in the startup ecosystem first,” Minshew said. “I didn’t know anybody in startups when I got into it.”
She spent her first year in the scene learning and building up a network of people she could get advice from. However, she also said working within a startup first would have been a good way to see how other founders make decisions while she put her own plans together.
Creating that kind of opportunity for others, Minshew said, became part of the recruitment pitch for The Muse. Potential hires can have the chance to be part of a company that grows from the ground up, she said, which may be of value if they one day want to start businesses of their own.
Even Hargreaves spoke a little about the learning experience General Assembly faced when it expanded to Berlin—the only location to date, he said, where they pulled the plug on their operations. Career education school General Assembly typically sets up shop in cities where groups of people want to sign up for classes, he said. The push into Germany, though, strayed from that strategy and it ultimately did not work out.
“In Berlin, we got paid a ton of money by Deutsche Telekom to go there,” Hargreaves said. The problem was the team did not think through everything it would take to build an operation overseas, he said, such as dealing with cultural and language barriers, and different pricing structures. “One of the toughest parts of being an entrepreneur is deciding when to be opportunistic and when to be strategic,” he said.
One opportunity that startups should not avoid, however, is looking at diverse hires. How a startup populates its ranks, even with a small team, is a chance to avoid lapsing into homogeny with people who all look and think the same way—which can stifle innovation. Hargreaves said he posts all his job openings on Craigslist, largely because it is a very public forum that brings in a mix of candidates. “When you post [jobs] on some very startup-centric sites, that can create a little bit of an echo chamber,” he said.
Klein said CommonBond has focused on qualities such as strategic acumen, business judgment, and internal drive for its hires, but he wants to make more of an effort in varying its ranks. “I think we can get better about being intentional about diversity,” he said. “One of the things I want our new VP of people to focus on would be to ensure that this place is a reflection of the outside world.”
