Mark Pincus on Why Most Startups Fail, Founder Control, and How to Win

Mark Pincus on Why Most Startups Fail, Founder Control, and How to Win - https://www.youtube.com/watch?v=t7iv3N-hG-4

You know, Mark, you don't need much introduction, but you know, we got to work together a million years ago. You were, you were founder of Zynga, but repeat, founder before that. And you know, have done a bunch of really interesting things. Since you incubated a bunch of companies, invested in a bunch of companies, you continue to be really passionate about helping founders. So thanks for coming. What does foundermo mean to you? Who are you as a founder and how did that manifest in your companies? It used to be that you as a founder that were like the employee of the venture capitalists and that was normal. That was life in Silicon Valley. And at my first few companies and so long before this term, founder mode came about, which I love. Like a lot of founders, I had a chip on my shoulder because I'd had these painful experiences where you have VCs who are smart, but they come into your board meeting, if you're lucky, once a month, once a quarter. Either way, there's no way what you're doing is moving so fast, sometimes by the day or the week, and there's just no way that they can be fully informed unless you take it on as a second full time job to keep your board completely up to speed on the issues. And so they come in lacking the data and information that you have, but they want to make big decisions on strategy. And so what ends up happening on most boards, unfortunately, is that you're managing your board and you're trying to guide them to wherever you want. And it's scary if your board gets into just an open ended strategy debate with you where they may come out in a different place, especially if you are trying to do something risky and unpopular, which is probably what you're going to have to do a lot of. Because maybe Andreessen came in believing that you were going to be this consumer, you know, the next GPT for, you know, elder nursing, health care, blah, blah, blah. And it turns out you realize like that dog isn't going to hunt, that hill's not takeable. And then what do you do? You get this bad pit in your stomach and you've got a team, you're supposed to look confident and you have this team behind you and investors and they're kind of paying you to be confident. Boards don't like it when the CEO comes in and says, you know, that this whole thing we've been doing, it's just not going to work. They're like, oh, okay, so what's the plan? You're like, well, we need some time. I'M not sure what the. Like, if you're being totally honest, you're like, I don't know what the plan is and there's a real question that you're probably, you're going to face this like it's. I'm not saying it's 100% likely. Let's just say it's probably 80%. And the question is, have you aligned your investors, your board, your team that this is going to be a really bumpy, scary fucking nutso ride? How ambitious are you and how willing are you to go through periods of being disliked or even sometimes you're gonna win the war but lose every battle on the way to get there? And I've been there so long story on founder mode. But for me, before I had control, I had a company support.com, really boring enterprise software help desk automation software, but valuable. And we went public with one of the only two companies who go public then of the dot com because we were a real company and we sold. We were doing 170 million in subscription software. It wasn't called SaaS yet. But after we went public we. I saw the writing on the wall that inside the firewall all Internet purchases were over. After the dotcom crash, CIOs were licking wounds. They were not going to go to their CEO and spend spend millions on something with.com in the name and they weren't going to spend money on anything inside the firewall. So anyway, I said that business is going away completely. We need to invent a new version of our business which is outside the firewall. And I realized that cable companies and Internet service providers had this big opportunity but we didn't have the right product for it. So my investors had no interest in the company until we were one of the only ones in their portfolio that could go public. And then all of a sudden they're like, oh, this is interesting. This could be worth billions. You're 31, you've never run a public company. We need a real CEO. And then so it's like be careful what you wish for. They got interested and then they forced me to hire a real CEO who was a bad micromanager who had no understanding of product or sales. But, but she had gray hair and she had been at hp. It's weird, I'm never in the right spot because now gray hair is not good and I've got it. So it's always the opposite. I had to get this company on this other path and I negotiated this deal for 25 million that was a quarterly subscription deal because I knew I was going to get pushed out. But I knew they also couldn't say no to this and it forced them to build a product anyway. My point about Founder Mode is after the pain of that experience and realizing I had to leave my own company for it to make it, by the time I got to Zynga, I said, I'm going to build a house I want to live in. And I want to encourage you to think about what's a house you want to live in, every aspect of it. We talk about culture, but what does that even mean? You need to make sure that you're hiring people in that you're hiring investors in that are aligned with this mission and the kind of company you want to create. And you need a fail safe button in case that doesn't work. Control. And I always say the only term that matters in your term sheet is control. Like, I would take half the valuation for control because at the end of the day, like, it's what lets you make sure that this is going to be the company you want and the direction you want and you're not going to have to leave it. And oddly, I still had to leave Zynga even though I had control. I fired myself twice. But then the only reason I really was able to come back with Marcus Siegel, who's here, and save the company from ruin was because I had this control mechanism in place. And even with control, once you're public, all bets are off and you really kind of need board consensus. But anyway, the net of it is Founder mode is an awesome thing. Don't listen to the information or all these adults that say, oh, founder mode is an excuse to be a jerk. And it's actually an excuse for bad entrepreneurs to have too much control. Because no one's a bad entrepreneur. If someone's giving you money, they're voting for you. So they might as well be all in with you. Like, if you're giving money to this founder but you're at some point not gonna trust them, when at any point in the journey, your money's gone anyway. You've spoken before at Speedrun and it's been extremely value about truesignal and how that sort of like, is the only source of conviction that, you know, kind of really, really matters. Can you talk a little bit about what TrueSignal is and how to sort of fuel conviction so that you can make the best use of your control? Sure. So I'm trying to get a book done on all this and My editor, I've been working on this for like three years. I've talked about it here for like three years. And my editor finally like gave me like June, drop dead. She's like, you have to deliver us the book by June. Which I'm glad she's putting a gun in my head. But it's called Life at the Speed of Play and it's my PM Bible. We used to call the PM Bible. So I'm trying to have my whole stack in it. And it starts with, I think everything we're doing starts with this one fundamental concept that we have to separate our winning instincts from our losing ideas. You're here probably because there's some instinct that you feel in your gut. It might be a gigantic one about the AI wave. It might be something much more specific that relates to the product that you're trying to build. Don't stick to your one idea. Assume all new fails. Write that on the wall. All new fails. That's your time machine. All new fails. If all new worked, we'd be using new shit all the time. But how often do you change what's on the front of your iPhone? How often do the top 10 or 25 apps change? They haven't changed in eight years. Cause all new fails, a million new apps a year, they all fail. If you can change your odds instead of one shot on goal, you could take four instead of. And also say I'll get to True Signal but burn this idea of mvp, minimum viable product. That is the death zone. Okay, I'm sorry. It was a great idea for a while and now it's not going to serve us anymore. MVP is it terrible concept if you think about it. Because it's going to take you too long to fail and it will fail. How many of us want to use a minimum viable product? When I can use a maximum launchable product, why would I take the minimum viable product? We got to get to minimum viable idea state. You should fail 1,000 times a week. We should be build failure machines. We have a chance to to get to an A and get to traction. Especially right now when people are moving into a state of discovery again. But it's not going to happen. You don't want to bet on random chance. So True Signal is perfection and we know it when we see it. You know when you hear maybe a song that resonates for you, I see it with my 2 year old that certain songs, you know, Circle, Unbroken, he's got True Signal on that song. When you use a product, look at Yourself in the third person and think, what is my experience? Is it resonating? Or am I forcing myself to because it's, you know, my job or whatever. When something really speaks to you, become a student of that, because that's true signal. And when it's not true signal, that's when you're struggling with, oh, this clicked five times better than this. And these metrics look good. Or this one worked more like that. You come up with a million excuses to fail and to be a victim. And I'll just say this leads into the core of my approach to product making, which is not inspiring. Proven. Better. New. And this was the core of what we did at Zynga. It was our religion. And I invite you to. To make a version of this, your religion. Take this. Take whatever I've created, others have created. Nikita, I think, talks to you guys. He has brilliant things around. He just put something out that I sent to my whole team that I loved. Steal from everywhere all the best ideas and then come up with your own version of it. Don't rote follow anyone's but mine with proven better. New is to start with whatever category you're going in de risk it. So start with what is proven. Proven means 10 out of 10 of the existing users of that product like that and say, fuck yeah. And you like that. You, your team, everyone's like, yeah, that works. That weather app, whatever it is, capture that. And you don't have the right to change. Proven. Like change it legally. Don't copy the art, but you should copy every other pixel of that experience. And you do not have the right to change. Proven you are not good enough to change. Proven you have not taken enough time to change. Proven it is an art that we do not completely understand. Better means 10 out of 10 of the current users say, fuck yeah. What you think is better, that's called new. That's not better. When you say it's better, that's cause you're fucking naive. Grow up. Grow up. And this is Katie is gonna give this back to me. I need to fucking grow up too. I'm guilty of this. We all are. Cause we get emotional. We fall in love with our own ideas. So we need something to hold us accountable. Zynga Poker. Proven. Copied. Every other poker game out there just picked one. Indecipherable. The difference didn't change a thing. Same color table. Felt everything. Better. No download. That was it. Who wants. Do you want to download with some weird malware thing on your computer or no download. Turns out you Lose half your users every time you click download. So don't even need to ask. I know that's better. New was pictures of real people and often your friends. That new worked. I got lucky. It worked on my first time. That is lightning in a bottle. You can't ever plan for that. We just got to look through the user's eyes and not our peers. This isn't about getting respect around this little bubble here that doesn't fucking matter. This is about people in Chicago and Indiana and this is about normal real life humans, not us. Like really this resonating and they don't care if you copied that doesn't matter to. They don't care how innovative it is. All they care about is does it feel better? And they can't even tell you why. Think of a product like Slack. I thought it was brilliant because there was nothing new in it. It was just more cuddly interface. I think they said Namaste when you signed in. That's awesome. But the innovation just often comes in littler bits like with Words with Friends with some of our games. So anyway and I'm not saying don't innovate because you're going to have to. And that's how we find a vein. Especially when it feels like a red ocean. When distribution feels so impossible. We need something that sounds and feels really novel to get people interested. Many of the founders here are hiring their first employees, building out the initial core teams. What have you learned about building teams and what advice would you give to the founders about their first hires? The whole idea that your first 20 people or 30 people or whatever the number is, you have to go really carefully because that's going to be your founding team and that's going to be that. Every one of those has to be best in class or however you think about. I think that's a myth also. That doesn't serve us. And I personally think that you need to tune for speed and realize that it's so hard to know up front who is going to be the great people. Like I had had a couple of companies. One went public, one was sold. I was not a first time founder. I still couldn't get a Josh or a Marcus and I didn't have the time to try to get them. I fished in the bottom of the app store like I not my team, me. I sat there and I'm not the App Store. The Facebook app directory, soon after they were launched I found people had good looking Flash and apps and games that went nowhere and I just kept Messaging them. And this kid, Justin waldron, who was 18, living on his mom's couch. Oops. Living on his mom's couch in Connecticut. Just found him, hired him by the hour. He worked for me for I don't know, four or five, six months before I even met him. Everyone was like in different countries, virtual. I had stand up calls for like two hours and I had everyone's name in a spreadsheet and I was like, you know, blah de blah in Pakistan. What were you supposed to do yesterday? Did you do it? And that was. And that was the company. You would have laughed. It was so inefficient, so ragtag. I used hiring as an interview practice. I mean that was my interview funnel. Anyone who said they knew php, we hired them and then we kept like half or less that actually could do php. And that was how I hired people. But you know what, I got people fast. And I found these gems in the rough. Like JW ended up being like a savant. He was. You know, to get an 18 year old who is a gamer in your company early on turns out to be just game changing. But how would I have ever found and hired a jw? I wouldn't have. They were doing me a bit of a favor by joining me. At the point that they did. They had lots of other options and I'm glad they joined but early on you just, you can't wait. And so I would tell you don't be too careful and you could try use hiring as an interview practice. Things you'll only hear here please. Let's give Mark a huge round of applause. You know I used to to be neighbors with Craig from Craigslist. He introduced. Took him two years to introduce photos with listings. Who the fuck doesn't want to see a picture of the couch that you're driving across town to buy? This is another especially looking around the room. This is another real like foot and mouth opportunity. I'm good at that. But hey, we live in a new world now where we're allowed to like mostly say what we want, right? There's only a few chuckles. Mark and Jackals. This is good. I'll give you your contact info to everyone so they can complain when they made the wrong hires.