Walter Chen - iDoneThis Blog

Why You Shouldn’t Build a Billion-Dollar Startup

July 22, 2014 by Walter Chen 2 Comments

Entrepreneurs dream about building the next big billion-dollar company. But the Apple, Google, and Facebook-shaped stars in their eyes end up clouding their vision. It’s easy to get caught up imagining your company going viral and getting to millions of users — all before your business has made a single dollar.

All the hopes and visions in the world won’t get you any closer to your billion-dollar exit. In fact, setting out to build a billion-dollar startup is one of the biggest mistakes you can make.

Gary Chou, an instructor at the School of Visual Arts in New York City, teaches his students how to launch a startup by taking a completely divergent approach. His course in Entrepreneurial Design has an unexpected syllabus for a business class: forget about creating a business plan or making a pitch deck for a fictitious billion-dollar unicorn company. Instead, get out there and do it — create a real $1,000-dollar company.

Chou’s assignment is to create a business that will produce $1,000 in monthly profit in a way that’s repeatable and sustainable. What has emerged from this exercise includes real profitable, ongoing businesses and funded Kickstarter projects. But beyond the money that’s been made and the companies created, what’s most important is the experience and knowledge you take away — for if you take on the challenge of building a $1,000 startup, you’ll learn three invaluable lessons.

This Company Made Millions Because There Was Nothing Going On

July 21, 2014 by Walter Chen Leave a Comment

Harvest is a multimillion-dollar, fantastically profitable, growing business that boasts thousands of customers from freelancers to Fortune 500 companies. The company has grown to over 30 employees and boasts one of the most beautiful tech offices in New York City.

But it’s how they did it that’s most impressive — over the course of 10 years, without a dime of outside investment, 100% bootstrapped, and in the city of New York.

In an age of tech celebrity, high-profile fundraises, and billion-dollar acquisitions, it’s how Harvest founders Shawn Liu and Danny Wen’s achieved success that you’ll find incredible. What Shawn told me was their secret ingredient is something you’ll never guess.

3 Psychological Traps that Keep Your Startup in the Trough of Sorrow

July 18, 2014 by Walter Chen Leave a Comment

You’re stuck in the trough of sorrow. No matter what you do, nothing in your company is improving.

You look around you, and everyone you know is crushing it. Their companies are getting acquired, they’re raising huge funding rounds, and they’re announcing new product features that people love.

But not you. You’re stuck in the trough of sorrow, and it feels like you’ll never get out. It’s emotionally trying and tough to handle psychologically, and you’ll want to quit. That’s why famed startup investor Paul Graham has said that the number one underlying cause of startup death is that “the [founders] become demoralized.”

How you handle those plateaus, psychologically, will determine whether you remain stalled there forever and your company ends up in the startup graveyard. You’ll face these three psychological traps — avoid them, and you’ll have a chance of making it out alive on the other side.

A Remarkable, 10-Year-Old Email from Tony Hsieh on Zappos Company Culture

July 17, 2014 by Walter Chen 2 Comments

In early 2005, Tony Hsieh was a relative unknown.

Zappos was a fast-growing company, but it was far from being the household brand that it is today. While it hadn’t yet come up with its core values for which it is famous today, the company had a growing sense of its own culture and identity. They were on the cusp of something big.

It was against this backdrop that Hsieh emailed this never-before published update to investors, employees, partners, and friends of Zappos. It’s an awesome behind-the-scenes look at what drove Hsieh and kept him up at night. In this glimpse into how Hsieh thought about building a company, you can see the seeds of what would grow into Zappos’s world-famous company culture and brand.

Within five years, Zappos would hit $1 billion in revenue and Hsieh would author Delivering Happiness, a #1 New York Times Bestseller, which would catapult him into being one of the most influential business persons in the world. But here is an unfiltered look into the mind of Tony Hsieh, before the notoriety and fame.

This Deli Makes $50 Million a Year By Staying Small

July 16, 2014 by Walter Chen Leave a Comment

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It’s crazy to learn about a deli that makes $50 million dollars a year. It’s stranger yet how they’ve done it.

Most restaurants grow their revenue by opening more locations and eventually developing a franchise model like Subway. You sell more and more sandwiches as you open more and more stores. The problem is that the quality inevitably declines. Your restaurant becomes more about volume than great food and remarkable service.

Zingerman’s, a deli based in Ann Arbor, Michigan, faced this fork in the road: open more locations or face continually stagnating revenue growth. Instead of choosing the conventional franchise path, they blazed their own trail.

How to Hire Like Jeff Bezos

July 15, 2014 by Walter Chen Leave a Comment

It’s hard to believe now, but in the early days of Amazon, Jeff Bezos had a tough time hiring.

While he had some extreme methods, he refused to compromise on them even when the company was in desperate need to staff up. Bezos stuck to his guns and turned down candidate after candidate, much to the frustration of his lieutenants.

What must have felt unbearable in the short term turned out to be absolutely critical in the long term, as Amazon built the unique and high-performing company culture that made it the prime tech giant it is today.

95% of Managers Follow an Outdated Theory of Motivation

July 14, 2014 by Walter Chen 28 Comments

What, by a long shot, is the most important motivator for employees at work? Is it money, pressure, or praise?

Typically managers believe the idea that pressure makes diamonds. The thinking is that if you want exceptional performance, you align employee objectives with end-of-year bonuses for hitting certain milestones and then employees will turn up their work ethic to reach them.

Long-held conventional wisdom on management dies hard. That’s because it’s based on gut instinct and superstition — and managerial understanding of motivation is no different. A massive 95% of managers are wrong about what the most powerful motivator for employees at work.

Not only that, they’re thinking about employee motivation fundamentally wrong.

Build a Lucky Startup, Don’t Leave it to Chance

July 11, 2014 by Walter Chen 2 Comments

Luck is a critical component of startup success, but it’s misunderstood. While the unlucky blame fate, the lucky act as if their success happened by accident.

It turns out that some of the luckiest and most successful companies don’t leave luck to chance. They intentionally engineer and build lucky companies.

The Boring Trait Google Looks For in Its Leaders

July 10, 2014 by Walter Chen 6 Comments

The prototypical leader is a hero: gives the rousing speech, inspires the troops, and shows up at the last minute to save the day. At least that’s how leaders are portrayed. but that’s not at all what Google discovered as their most important qualities.

At Google, they’re obsessive about looking at data to determine what makes employees successful and what they found in the numbers was surprising.

The most important character trait of a leader is one that you’re more likely to associate with a dull person than a dynamic leader: predictability. The more predictable you are, day after day, the better.

What Will Fast Company Write about Your Startup’s Culture?

July 9, 2014 by Walter Chen Leave a Comment

Successful entrepreneurs like Tony Hsieh, CEO of Zappos, exhort startups to write down their core values on Day 1 and make company culture a first-order concern from the very beginning.

Have you tried it? The problem is that after you look at what you wrote, you’ll probably see a bunch of boring clichés. Many of your company values might sound suspiciously similar to Zappos’s and Netflix’s. Your company couldn’t sound less exciting.

Molly Graham, former Head of Mobile at Facebook, who worked with Mark Zuckerberg to define Facebook’s company culture in 2008, recognized this common pitfall. She came up with an ingenious solution to the problem, rooted in a simple trick that Amazon uses to build its products, that helped Facebook own the Hacker brand that defined the company through its IPO.

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