7 lessons learned on the journey from founder to CEO

Two days ago I had the honor of keynoting at the First Round Capital CEO Summit in San Francisco. The event was held at the Jewish Contemporary Museum. During my speech, I promised to put my notes up on my blog and so here they are.

My talk was about the 7 lessons I've learned on the journey from founder to CEO. First Round Capital invested in us when Bazaarvoice was under 10 people; they came in alongside Austin Ventures - where I am now a Venture Partner - in our Series A. First Round has been an incredible partner in our journey from startup to public company. Personally, I think they are the best first round investor in the U.S. with the portfolio to show for it. Josh Kopelman, a fellow Wharton grad, is especially strong and he has helped me many times along the way.

I started off my talk emphasizing that the journey matters most in your transformation from founder to CEO. It is both a beautiful journey and also at times a gut-wrenching one. As Kirk Dando, my CEO coach of four years, says, "the path to heaven goes through the road to hell". This couldn't be more true. You aren't born knowing how to either found a company or be a CEO. You aren't born knowing how emotional this journey can be. But it is a journey that I've cherished and, in my opinion, the most profound journey that one can take in a career. It is a journey that led to me being recognized as Austin's best CEO for the large company category last year. This doesn't mean I have done everything right or that I don't make mistakes (hopefully less of them are repeat mistakes).

The death - and rebirth - of retail

The death - and rebirth - of retail

On January 29, Marc Andreessen predicted the death of retail in favor of disruptive, pure-play etailers, such as Fab.com. A choice quote from the PandoDaily article:

“Retail chains are a fundamentally implausible economic structure if there’s a viable alternative,” he says. “You combine the fixed cost of real estate with inventory, and it puts every retailer in a highly leveraged position. Few can survive a decline of 20 to 30 percent in revenues. It just doesn’t make any sense for all this stuff to sit on shelves. There is fundamentally a better model.”

I've been studying retail ever since I can remember. My parents were retail entrepreneurs from the time I was born, as I wrote about in this Lucky7 post. I've been programming since I was seven-years old, as I wrote about in why I named this blog Lucky7 - in tribute to my mother. I leveraged these two experiences to start my own etailer in 1998 - programmed on an eCommerce platform that I created. And I've founded two large companies to help retailers - Bazaarvoice and Coremetrics. I've also served on the Board of Shop.org for three consecutive terms. So to say I've been thinking about this for awhile is an understatement.

The tale of Bazaarvoice, as told through the shirts on our backs (2005-2007)

Every startup has their t-shirts, and we were no different at Bazaarvoice. But you can tell a lot about a company by the t-shirts they produce. And so I would like to take you through our history - and our culture - with probably the most complete collection of Bazaarvoice t-shirts with the possible exception of my co-founder, Brant Barton.

This will be a series of post, and this first post covers our first two years in business - 2005-2007.

The first t-shirt we made was the coveted Bazaarvoice Community One 2005 t-shirt. There are very few of these. The point that I was making was that we were part of a very special community - those that joined in the first year of business (Brant and I founded Bazaarvoice in May of 2005).

50% of startup exits in 2012 exited for less than $50 million in 2012, and the founder mindset

As this article and the chart below from Business Insider points out, 50% of startup exits in 2012 exited for less than $50 million in value. Personally, I would only sell a business if it didn't have a great future ahead of it. This is the founder mindset needed to go long. At Bazaarvoice, we created over 1,000 jobs and a valuation of around $550 million today. But Brant and I could have sold Bazaarvoice for around $25 million when it was around a year old. As I point out in my Lucky7 post about the five critical ingredients to build a big company, the founder mindset matters for ultimately what ripple effects will be created.

Are you going to create 10 jobs or 1,000 jobs? Are you going to create less than $50 million of value or greater than $500 million? It all depends on your potential or TAM (Total Available Market), execution, and your mindset. Some entrepreneurs are only in it for the quick flip, and they do it over and over again. They feel more comfortable in that groove and they haven't pushed themselves to go beyond it - perhaps because it is so hard to do so.

If you are looking to join a startup, avoid these entrepreneurs unless you know that is the game and they are open enough to call it like it is. Make sure this is what you want to do - and you get a large percentage of the equity. There is a big difference in who makes money with a $50 million versus $500 million valuation, and that also means a big difference in the company's benefit to the community (jobs, future philanthrophy, etc). It is also really fun - but really hard - to go from a $50 million to a $500 million valuation. But I've never had more fun in my career than that ride at Bazaarvoice, even when factoring in all of the challenges and learning along the way. And I know many early Bazaarvoice employees feel the same way.