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August 01, 2007

On the Other Hand: The Flip Side of Entrepreneurship by Glenn Kelman

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This is a guest posting by Glenn Kelman, CEO of Redfin, a company that enables people to buy homes online. He offers a counterpoint to my posting about how easy it is to make millions of dollars with "user-generated, long-tail, Web 2.0, social-networking, open-source content."


Last month, Guy called James Hong and Markus Frind heroes for running multi-million dollar websites like Hot or Not and Plenty of Fish in their underwear. Their stats are jaw-dropping: twelve billion page views, 380 hits per second, two hours of work a day.

Lately I've been thinking how hard, not how easy, it is to build a new company. Hard has gone out of fashion. Like college students bragging about how they barely studied, start-ups today take care to project a sense of ease. Wherever I’ve worked, we’ve secretly felt just the opposite. We’re assailed by doubts, mortified by our own shortcomings, surrounded by freaks, testy over silly details. Trying to be like James or Markus has only been counterproductive.

And now, having been through a few startups, I’m not even sure I’d want it to be that easy. Working two hours a day on my own wasn’t my goal when I came to Silicon Valley. Does anybody remember the old video of Steve Jobs launching the Mac? He had tears in his eyes. And even though Jobs is Jobs and I am nobody, I knew how he felt. I'd had the same reaction--absurdly--to portal software and more recently to a Redfin, a fledgling real estate website.

“The megalomaniac pleasure of creation,” the psychoanalyst Edmund Berger wrote, “produces a type of elation which cannot be compared with that experienced by other mortals.” Jobs wasn’t just crying from simple happiness but from all the tinkering, kvetching, nitpicking, wholesale reworking, and spasms of self-loathing that go into a beautiful product. It was all being paid back in a rush.

Like the souls in Dostoevsky who are admitted to heaven because they never thought themselves worthy of it, successful entrepreneurs can’t be convinced that any other startup has their troubles, because they constantly compare the triumphant launch parties and revisionist histories of successful companies to their own daily struggles. Just so you know you’re not alone, here’s a top-ten list of the ways a startup can feel deeply screwed up without really being that screwed up at all.

  1. True believers go nuts at the slightest provocation. The best people at a start-up care too much. They stay up late writing Jerry Maguire memos, eavesdropping on support calls, snapping at bureaucracy, citing Joel Spolsky on Aerons, and Paul Graham on cubes. They are your heart and bones, so you have to give them what they need, which is a lot. The only way to get them on your side is to put them in charge.

  2. Big projects attract good people. If you aren’t doing something worthwhile, you can’t get anyone worthwhile to work on it. I often think about what Ezra Pound once said of his epic poem, that "if it's a failure, it's a failure worth all the successes of its age.” We’re not writing poetry, but it matters to us that we’re trying to compete with real estate agents rather than just running their ads. You need a big mission to recruit people who care about what you’re doing.

  3. Start-ups are freak-catchers. You have to be fundamentally unhappy with the way things are to leave Microsoft, and yet unrealistic enough to believe the world can change to join a start-up. This is a volatile combination which can result in group mood swings and a somewhat motley crew. Thus, don’t worry if your start-up seems to have more than its fair share of oddballs.

  4. Good code takes time. One great engineer can do more than ten mediocre ones especially when starting a project. But great engineers still need time: whenever we’ve thought our talent, sprinkled with the fairy dust of some new engineering paradigm, would free us from having to schedule time for design and testing, we’ve paid for it. To make something elegant takes time, and the cult of speed sometimes works against that. "Make haste slowly."

  5. Everybody has to re-build. The short-cuts you have to take and the problems you couldn’t anticipate when building version 1.0 of your product always mean you’ll have to rebuild some of it in version 2.0 or 3.0. Don’t get discouraged or short-sighted. Just rebuild it. This is just how things work.

  6. Fearless leaders are often terrified. The CEO of the most promising start-up I know of recently used Hikkup to anonymously ask his Facebook friends if we thought his idea was any good. Just because you're worried doesn't mean you have a bad idea; the best ideas are often the ones that scare you the most. And for sure don't believe the after-the-fact statements from entrepreneurs about how they "knew" what to do.

  7. It'll always be hard work. Most start-ups find an interesting problem to solve, then just keep working on it. At a recent awards ceremony, Microsoft CEO Steve Ballmer tried to think of the secret to Microsoft’s success and could only come up with “hard, hard, hard, hard, hard, work.” This is an obvious cliche, but most entrepreneurs remain fixated on the Eureka! moment. If you don't believe you have any reliable competitive advantage, you're the kind of insecure person who will work your competition into the ground, so keep working.

  8. It isn't going to get better--it already is. In the early days, start-ups focus on how great it’s going to be when they succeed; but the moment they do, they start talking about how great it was before they did. Whenever I get this way, I remember the Venerable Bede’s complaint that his eighth century contemporaries had lost the fervor of seventh century monks. Even in the darkest of the Dark Ages, people were nostalgic for...the Dark Ages. Start-ups are like medieval monasteries: always convinced that paradise is just ahead or that things only recently got worse. If you can begin to enjoy the process of building a start-up rather than the outcome, you'll be a better leader.

  9. Truth is our only currency. At lunch last week, an engineer said the only thing he remembered from his interview was our saying the most likely outcome for Redfin--or any startup--was bankruptcy, but that he should join us anyway. It’s odd but the more we've tried to warn people about the risks, the more they seem to ignore them. And since you have to keep taking risks, you have to keep telling people about them. You don't want to be like Saddam Hussein, who never prepared his generals for invasion because he couldn’t admit he didn't have nuclear weapons.

  10. Competition starts at $100 million. A Sequoia partner once told me that competition only starts when you hit $100 million in revenues. Maybe that number is lower now. But if you do something worthwhile, someone else will do it too. Since you can’t see what’s going on behind a competitor’s pretty website, it’s natural to assume that all the challenges we just went over only apply to your company. They don’t, so keep the faith.

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Listed below are links to weblogs that reference On the Other Hand: The Flip Side of Entrepreneurship by Glenn Kelman:

» Flip Side of Entrepreneurship from The Compost
Great article by Glenn Kelman of Redfin describing the struggles of entrepreneurship. Lately I've been thinking how hard, not how easy, it is to build a new company. Hard has gone out of fashion. Like college students bragging about how [Read More]

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» Flip side of Entrepreneurship from Kinderism.net
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» On the Other Hand: The Flip Side of Entrepreneurship from bizdig.com
This is a guest posting by Glenn Kelman, CEO of Redfin, a company that enables people to buy homes online. He offers a counterpoint to my posting about how easy it is to make millions of dollars with "user-generated, long-tail, Web 2.0, social-networki... [Read More]

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Comments

Enjoyed the article. As a bay area resident and entrepreneur, I couldn't help but replace every instance of tech "entrepreneur" with "gold miner" and found the advice and comments still pretty awesome.

Glenn,

You nailed it, which is typical of you. I've appreciating seeing you lead and the way you handle each situation with remarkable candor and integrity.

When I started my own company I felt so much of what you write about and I took the easy way out and sold it. Reading this I can't help but to wonder about that choice.

You paid me a great compliment in last week in San Francisco and it mattered to me because of who it came from.

Best of luck...

Thanks Guy

You have no idea what effect this positive energy can have on people.

collin douma
toronto

I've worked in 6 startups of 5-50 employees in the past 10 years, often as one of the first tech employees or leader of the tech team. And I know plenty of people in similar situations. What you describe is accurate but perpetuates a misguided work ethic that is increasingly unacceptable to younger entrepreneurs. The really hard task is to figure out how to do what matters, not waste your time working 15 hours a day.

I've been there...I understand the excitement. I used to leave home at 5am to beat the traffic on the Sunol Grade, then work late, have a few beers at the Sports Page and drive home by 11pm so I could get up and repeat the process the next day. It was a thrill to build the tech team up from scratch.

In retrospect, I/we did a lot of rationalizing. The long hours didn't make our product any better, they just made us/me feel important. Truly, those hours were not necessary; we wasted so much time on minutiae that didn't matter. Better leadership--myself included--would have recognized that we should have prioritized better and not accepted that lifestyle as inevitable. But that was 10 years ago.

Today, I work in a startup with a different mindset. People are always thinking and working and in contact with each other as necessary, but we have lives also and respect each other's time. The true entrepreneur's mindset is about creating value and searching for the best way to do that, not trying to whip the team into a frenzy of fanaticism and self-delusion.

Great article! I will keep driving on. Entrepreneurs are the sole of this country. I would rather depend on myself than another company any day. Everyone is replaceable at a job!

www.DebbyBanning.com

Having done two successful software startups I could not agree with Glenn's post more. He nails it!

To go along with his great points I would add two.

1. A leader is one who refuses to show his panic. (His point 6.)

2. Truly great software is only built by fanatics. (Esther Dyson)

I fully agree with Glenn's Post 7.

Entrepreneurship is extremely hard hard work and the secret to knowing that you are cut out to being an entrepreneur is actually getting to a point where you actually ENJOY the hard hard work

Wow....it is always powerful to read something that hits you right between the eyes. As someone in the middle of launching a real estate 2.0 startup I appreciated this so much. It is all consuming and it certainly makes you question your sanity at points.

Great post Glenn! It is interesting that you position Redfin as competing with real estate agents, inferring that what Redfin is doing does not involve real estate agents.

Glenn,

You are the hero of those who aspire to succeed through acts of creation.

--Selly

Great post! Having the freedom to work only 2 hours a day can only be acheived by working 14 hour days for years.

A great post !! Not only a good reality check, but also am awesome motivator. Although I must admit, the last point did make me gulp couple of times.

As a pastor who started a church from scratch in Austin, TX, #5 and #6 ring so true. The "rebuilding" is what so many previously churched ppl. can't stomach--and it is gut-wrenching at times.
And fear can be a great tool and ally--IF you don't let it degenerate into anxiety or depression. Thank you, Glen, for voicing the realities of startup so well and Guy for giving him the mic.

Call me a romantic, but start ups offer something that regular jobs don't: drama.

As Shakespeare wrote, "But we in it shall be remember'd; We few, we happy few, we band of brothers; For he today that sheds his blood with me shall be my brother. - Henry V.

John Bradley Jackson
www.firstbestordifferent.com

On #5 -- A truism for the ages. When I was in the aerospace business in the 70's, I discovered this truth by observation. My way of expressing it was "Be man enough to throw the first one away!" (never mind the 70's "neuter->male" convention) plus a corollary:

"Don't make your prototype good enough to ship, or marketing will pressure you to ship it and you'll end up taking the blame for the flaws."

I saw this evolution several times before I figured out how damaging it is.

Later, I saved my own a** and those of my team's by mounting some "black boxes" (don't ask) on a piece of plywood, dripping oil on them and the wood, and not bundling the wiring harness. It looked like s**t but it worked pretty well. It LOOKED like a prototype and even smelled like one (important, 2 senses involved not the brain).

-- Bob

PS: Guy - we met back in 1987 or so at Apple. I was working with Apple and Kinetics to allow the old DEC VAX to act as a Mac file/print server, pre-AFP and before Sidhu "got it".

Amazing read! So, so true...sometimes it hurts.

This is a great story. As a recent start-up, we are going through a lot of the chlenges that are common of most start-ups. Reading this is very re-assuring. Thanks for all of the insight.

http://www.refinedrogue.com

Thanks for telling it the way it is. I just picked up a great book yesterday in the same vein as this post: "Founders At Work" by Jessica Livingston. It chronicles the stories of the early days of some today's most successful web-based businesses, including 37Signals, Blogger, Flickr and Del.icio.us. The common thread that is woven throughout all of these success stories is one of hard-work, perseverance, and the joy of creating something that users want.

Even if you're putting in 80-hour weeks, cut yourself a few hours slack and get this book. It is inspiring and enlightening.

Jody Baty
http://www.mycatshq.com

Great article Mr.Kelman!

I started my company nearly a year and half ago and the associated highs and lows have really tested my perseverance - At times it would have been really easy to quit, but I have kept going. Plenty of naysayers as well, but I kept going. The journey has been really tough but I get great satisfaction when a client calls/emails me and lets me know that our solution has helped them out.

For me, it is more about building something enduring rather than looking for a quick exit. My motivation has always been to build a sustainable company, similar to what my father has done (he runs his own RE brokerage), observing my Dad work 12+ hours a day, 6-7 days a week provides plenty of motivation as well as great articles such as yours - hard hard hard hard work!
--

Saeed

Excellent read. I am of the strong belief that there are enough ideas out there to make a big difference for all the big and small players to work on, rather than hoping that saying innovation, incubation, vision enough times will make anything innovative. I have written a series of articles (at http://thebestofitall.blogspot.com/search/label/nextup) that describe why it is important to focus on the consumer experience, which seems to be the last priority nowadays (way behind getting your company acquired, marketing junk and screaming innovation!innovation!innovation to force a quick sell). As the article above states, many people are looking for the easy way out. But, in fact, having a clear strong vision and going after it is easier, if only one can stick to it through all the naysaying.

I think this post

16 Lies about Web 2.0 you shouldn’t believe
http://niquel757.blogspot.com/2007/05/16-lies-about-web-20-you-shouldnt.html

would complement what's written here. It talks about how we are constantly sold the idea that building a community is easy...only to crash against reality!

Fantastic post - as with all things in our "modernity" it seems that people want the "jackpot" win without the effort, sweat, pain and suffering that is needed to create something - the "payoff" is directly related to the amount of effort put into something...

Bravo.

What with all the 4-hour work week freaks, one-minute managers, 60 second first impressions, 16 day six-pack abs, overnite shipments, instant coffee, microwave popcorn, and other demons of speed --- the realities of the long struggle are often lost in the jet trail.

Big wow!
I have been thinking about this lately especially in the wake of blockbuster books like "4 Hour Workweek" and all the other references you cite in your article.

I kept thinking do I just like to work? Is that why I don't have a 4 hour work week?

I think you illustrate that for the vast majority of businesses there is a huge amount of work that needs to be put in to get things off the ground. And then beyond that there is more work! But if you're doing what you love then, it's all play!

I often wish that I could get more done on any given day and I'm constantly seeking efficiencies and better strategies, but after reading your article at least I feel validated that I'm on the right track!

Thanks!
BTW - I saw your interview on 60 minutes. Looks like you have a great company at Redfin! Congrats!

Always good to hear the voice of a fellow entrepreneur. It isn't easy and it is very scary as well.

Fear is a great motivator. We will always be our own worst enemies.

I do disagree with the fact that you need a big mission to recruit people who care about what your doing. However, I will say that an idea (big or small) without vision (vision being the creation of an idea or dream that can aid in the fulfillment of ones calling or purpose) is dead. And those working with that company must catch the vision of the idea creator to sustain a work ethic worthy of a founding team.


I'm not sure hot or not was a world changing idea and certainly not one that would have gripped the heartstrings of a VC group and be touted as the next market disrupting company.

However, my hat off to the gentlemen who created a place where you can waste an inordinate amount of time making or breaking someones self-esteem.

Great article.

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