Let it go - Learning at Stanford GSB as an entrepreneur

While there's no HBS type of competition, make no mistake. Stanford GSB does not have the highest GMAT average score among admits for no reason. People are competitive here, just in a slightly different way. Everyone is used to being the first in one or many things and is extremely talented. Like many business school students, they are also extremely conscious of their personal brands in this community.
Students would eat ramen at home and splurge on lavish Vegas trips and world tours. They would flock to everything that helps boost their personal status while flaking at everything else. Like any social environments, gossips, hookups, and competition for attention are eternal topics. It's a hedonist heaven like most business schools, just with better weather!
So why did I learn the opposite - to be myself, to let go, and to really not care what others think - in such an environment? Why did I not work on building a popular, cool, fashionable, cute, lovely, sexy, sporty, or some special image? It's too tiring to live for anyone else.
More importantly, I realized this when I decided to embark on the highly risky career path called "entrepreneurship". I had to get ready to work extremely hard, to live on a budget very different from my PE or hedge fund classmates, and to be ready to completely fail. If I care too much about my image or status, I simply won't even get started down this path because I can't be ready to fail.
Herd mentality is huge at business schools, less so at GSB but still quite prevalent. People often opt for the safe career choices and it can be difficult to go against the majority. when everyone has a fat offer in hand, I admit it can be stressful to continue to toil away at bootstrapping your startup with much uncertainty. I learned to completely forget where I come from - a prestigious business school, in order to not become a slave to my degree but free myself from comparison with anyone else.
Entrepreneurship is an extremely hard but joyful adventure to stretch your capabilities beyond imagination. People do so because they want to CREATE and they yearn FREEDOM, not because of money (at least not for me). As our professor and seasoned entrepreneur Audrey MacLean put it well: Entrepreneurship is an extreme sport. You are constantly hanging on the cliff with one finger gripping the rock and the abyss on the other end.

Talk by Greg, founder of Odwalla - How to innovate in consumer beverages?

GREG STELTENPOHL, Founder of ODWALLA and ADINA FOR LIFE, came to talk about the consumer beverage industry.

He talked about importance of hiring a strong local sales team to get beverages into the shelves. It's the biggest challenge for beverage startups. He didn't see any impact from social media and still believes in the offline sales/channel strategy. Funding and scale are important for beverage startups. Relationships with Walmart etc. are important but not necessary at the beginning. Odwalla didn't initially have a relationship with Walmart.

Personally, he's interested in developing regional brands and developing innovative beverages with good nutrition ingredients. Odwalla was a Northern Californian brand when it started.

Greg recommended avoiding venture capitalists because he's had misaligned interests with his investors in the past. He had a longer term vision for the Odwalla brand than his investors. He strongly advises entrepreneurs to "professionalize" themselves and build a strong team. He suggested looking into co-op structures for entrepreneurs seeking alternative investment sources. Another source is the supplier network - offering equity to your suppliers or distributors. Finally, he suggested that you can just go more slowly and develop a stronger brand.

Just hiring experiences doesn't always work. Need people who can adapt fast.

Fair Trade is not as big a cost factor compared to Certified Organic ingredients. When he built the Adina brand, he wanted to give a mainstream appeal, a light taste, and use progressive ingredients. Meanwhile, he keeps branding simple (let the monkey talk) than to overly promote all the progressive components.

On packaging, either follow a leader or be so innovative that you build your own image. following a leader is more cost effective.

By the way, Adina has done a great job with social marketing on its site:
http://www.adinaworld.com/# Check out all the twitter feeds, flickr, facebook, and other integrations on Adina's website, even though the founder claims that social media is not a sales influencer.

Peter Thiel Speaking in Class

It was one of my highlights at Stanford GSB! Peter Thiel, the legendary founder of Paypal and famed venture investor (Founders Fund) came to speak at my class "Entrepreneurship and Venture Capital" taught by Professor and Venture Capitalist John Glynn.

The Paypal Mafia is known for its streak of impressive successes in the silicon valley. Last summer, I also enjoyed reading the book "the Paypal Wars" by Eric Jackson, one of the early employees at Paypal.

I've jogged down some of my key learnings from Peter's talk, as well as some of my thoughts.

With Founders Fund as the case in point, we discussed problems facing the venture capital industry today:

1) Too much VC money is chasing a limited number of good ideas.

2) While fund sizes grew, costs to start up a company have significantly come down due to better technology infrastructures. There are also more veteran entrepreneurs why rely less on VCs.

3) VCs' interests are likely less aligned with the entrepreneurs' given the large management fee VCs generate from the large fund sizes.

4) VCs often take too many board seats and have limited time to bring real value to each portfolio company. They also have very limited time to respond to new deals.

5) There are fewer liquidity events, making exits hard.

6) Many venture capitalists are professional investment managers who do not have hands-on entrepreneurial experiences and cannot relate well with entrepreneurs.

Founders Fund, founded by Peter Thiel and a few Paypal co-founders, made a few changes accordingly: a smaller fund size ($100-250M), a team of seasoned serial entrepreneurs, an opportunity for entrepreneurs to partially cash out as their companies grow through the Series FF stocks, and the investors' own direct involvements as entrepreneurs outside of Founders Fund.

Peter discussed Founders Fund's approaches:

1) Contrarian: he used SpaceX as an example. Few other VCs would have thought about investing in a rocket company!

2) Partnership with Entrepreneurs: Will not fire original founders. No need for a board seat.

3) Not Constrained by Structures: He discussed his willingness to invest $500K in Facebook and get a <10%>

4) invest in people who are really smart, sectors that are not too crowded, and think hard about why it is a great company and why others do not see it.

I particularly liked a few perspectives he shared:

1) He would invest in "terminal technologies" - technologies that marked the end of an era - such as Google, after which search technologies only experienced incremental improvements rather than breakthroughs.

2) There are two types of business: monopoly and commodity. Google and Microsoft are both monopolies. it's VERY HARD, in Peter's opinion, to unseat a monopoly. In that sense, Google and Microsoft's efforts at "mutual destruction" (Chrome OS and Bing Search) may be just a waste of shareholders' money. I've long thought that if I were at Microsoft, I would not continue to sink money in the direct search battle against Google. Try something else! For example, Microsoft is better at enterprises. Use its know-how and customer base to build a more robust suite of cloud services. For God's sake, move Microsoft Office online and make it 10x better than Google Docs!

3) When asked where he sees opportunities in 2010, he refers to certain hard technology areas which need improvements, ranging from space technology to genomics.

Given Peter's track record at building an all-star team, I couldn't help but ask him about his secret sauce at discovering superstars. Here's his feedback:

driven, motivated, individually talented, teams that work well together

He also suggested a rule of thumb: what's the CEO's salary. If it's above $150K, it'll most likely fail.

Finally, when asked again why the Paypal team was so strong, Peter said that Paypal was a "difficult success". This made the Paypal team special, compared to people from other successes that almost came to easily, from Microsoft to Google.

An Inspiration from Listening to Jessica Jackley's Talk - Education Microloans

Jessica Jackley came to give a talk in a class last Friday. It's hard to believe that a young lady who looks just like my peer has done something so impressive - Kiva has facilitated over $100 million microloans since its founding four years ago. Hearing her story is further inspiring. She started so small, just by writing stories of entrepreneurs in developing worlds who need some small amounts of lending to start their businesses, and sending those stories back to friends and sharing them on a website. It all started there. The human one-to-one touch is what really made Kiva special. Traditional lending syndicates multiple borrowers, and in doing so, disconnects the human touch between the lenders and the borrowers. Kiva allows one to build a direct connection with the person he/she is helping and it's not charity - the lender only gives up a small amount of interest income.

I've always kept a list of interesting ideas, and one of them I spent some time on last summer was to build a "Kiva for Education" - allowing individuals to lend small amounts of money to help more people get access to education. The assumption is that education is the best investment you can make and potentially yields high ROI. Investing in a person and empowering that person to take on a more productive life should yield a positive outcome. However, education lending itself has several challenges: (1) education is a longer-term investment, especially if you want to invest in the younger children; (2) the field infrastructure is much less available than the wide network of MFI partners which help make Kiva scale so fast.

I'm still interested in that idea and hope to revisit at some point in the future.

Bing Gordon's Talk at GSB

Bing Gordon, former Chief Creative Officer and co-founder of EA and General Partner at KPCB, came to speak at GSB last Thursday.

I met him when he and Marc Pincus (founder of Zynga) came to give a talk at Stanford's engineering school last quarter. I really enjoyed that talk and the concept of "digital skyscrapers".

Some great stories and tips from Bing:

When he graduated from Stanford Graduate School of Business (GSB), he had three goals in mind: developing people, designing organizational process, and making money. Not bad goals! What are my goals? I think they are: building amazing products that people love, building great organizations, making money, and make the world more fair.

I always have a love hate relationship with video games, sometimes feeling it's mental porn like the tabloids - a waste of time. At other times, I think they are good as long as they make people happy. Bing had an interesting theory. He quoted some research saying that games are a key driver of human evolution!

Bing also gave this great career advice that you want to join an org where everything is measured by metrics. You don't want to join a company that doesn't have any young people in the senior ranks.

He talked about games as a great educational tool to motivate students to learn. I've personally thought quite a bit about this. Given my boyfriend is working on it, I will do something different :)

when you come to think of it, gameplay has played a big role in making the most popular consumer web startups, ranging from Yelp to Twitter or Facebook. It's all about converting your social status and relationships into numbers. The numbers are more measurable and people can be obsessed with them - how many follow you, how many retweeted you, how many photos tagged you, how many friends you have, etc.

Bing talked about how games train people to test the edge of rules, to measure by data, and to cooperate - all key ingredients for a modern success in career!

Some interesting data he shared (don't quote me, I jogged down the data too quickly to verify): Zynga $10 ARPU, facebook $3, WOW $0.25/hour, and Google $35/hour! In Asia, games make $6-10/year.

The best are his tips to GSB students:

1) do 3 outside projects - not only build your imagination but also support it with facts. Well I did one last year in mobile payment space, then I got too busy with my own startup.

2) build personal relationship with one to several professors. yes, amazing profs at GSB!

3) write 3 business plans! - Ha, I guess I'm well on my way. have gone through 2 detailed plans and so many more briefer versions in my pocket.

Thank you, Bing, and sorry that I forgot to order lunch beforehand!