Beyond the obvious Localeur-based reasons for analyzing the tech industry, I’ve also long been a big fan of studying patterns in the tech business.
One of the patterns you’ll hear about in the tech startup world is that venture capitalists love investing in companies with great founders. The majority of Series A investments you read about on Techcrunch each day, especially the ones that happen pre-product launch, are to companies run by successful serial entrepreneurs or guys and gals whom were execs at companies that already “won”. Even the big Angel List crowdsourced/syndicated rounds are for guys who’ve worked at companies that are now widely viewed as big successes like Google or LinkedIn.
For example, Jeremy Stoppelman was a VP of Engineering at PayPal (which sold to eBay for $1.5 billion) before starting Yelp, so you can see how a VC would look at the 2004 version of Yelp as an easily fundable business regardless of the idea. [It’s also well documented that pretty much all the key early employees and execs at PayPal aka “the PayPal Mafia” went on to make millions founding or investing in companies ranging from Facebook and LinkedIn to Tesla and YouTube.]
That’s not really something to be surprised about, but what is interesting is that the definition of a great founder has changed a bit in the last several decades based on what I’ve seen.
Ben Franklin, Alexander Graham Bell, Nicola Tesla, the Wright Brothers, Henry Ford…these were passionate guys who had seemingly impossible dreams, broke them down into tasks, then tinkered and tinkered and eventually pushed us all to think about the world and ways of living in new ways. They shaped what it means to be a technology founder.
Years later, it used to be that great founders started with a keen understanding of technology that came through outsized and early exposure to tech. Bill Gates is a great example of this, where he got his 10,000 hours long before Microsoft Office existed, as documented in Malcolm Gladwell’s “Outliers”.
But then, I believe, the great tech founder model changed a bit in the ‘90s – largely due to the decreasing cost of computers and increasing access to the Internet - to someone who not only had the vision to see what others could not through a unique perspective on tech (Gates, Steve Jobs 1.0), but they also had an ability to make very hard business decisions that others could or likely would not have at those critical moments.
Steve Jobs 2.0, Larry Ellison and Jeff Bezos each fit the mold here with their layoff, hiring and product investment decision-making abilities that ultimately positioned Apple, Oracle and Amazon for rapid growth despite the tech bubble that almost consumed the industry’s ‘90s momentum. This is also one of the reasons why Michael Dell isn’t revered in the manner these guys are, because Dell didn’t make some of the savvy moves (particularly at the outset of the 2000s) these guys did when things were going extremely well.
More recently, with the likes of Mark Zuckerberg, Marc Benioff and Jack Dorsey, what you’re seeing is the new, social media-fueled age of great tech founders who have to be masters of tech, make savvy business moves, but also have an expert marketer’s understanding of their consumers. Seemingly, you have to emulate Gates, Jobs 2.0 and Seth Godin to be a founder and CEO of a publicly traded tech company these days.
A strong case can be made that Jobs 2.0 is actually the Godfather of this category of founders, but I think that’s really the second half of his second stint at Apple (Jonathan Ive deserves a lot of credit, too) more than the leadership style he exhibited initially as founder in the ‘80s that lost him the CEO gig in the first place.
Nonetheless, this more recent class of tech founders has shown that product vision is only as good as marketing execution. With Facebook, it was about the college go-to-market strategy. With Salesforce, it was all about laying the foundation (and repeating it over and over) for cloud computing. For Twitter and Square, Dorsey has focused on upselling the ease of transaction (be it with words or credit cards) in a quick, trustworthy manner. It’s no reason so many news outlets and local businesses alike have adopted Twitter and Square.
Post-2009, however, a new breed of founders has been introduced into the tech Parthenon.
These are uber-market-centric founders. I don’t mean market in the since of having intense knowledge on one particular segment on an industry. No, I’m talking about the founders who understand a specific demographic or personality type or gender better than any class of founders before them.
Instagram. AirBnB. Tumblr. Birchbox. Spotify. Warby Parker. Uber. Snapchat.
Each of these companies were founded by really smart tech-savvy people, but their intelligence wasn’t just about code or industry knowledge from years of studying or working in a particular space or customer set.
These founders really get Millennials. And/or urbanites. Or young professionals. Or fashionistas. Or music lovers. Or photographers. Or teenagers. Again, you may be able to call Zuckerberg and Dorsey the parents of this movement, but they still have one foot rooted in the “this idea can one day work for everyone” world of tech rather than the “it’s OK if this isn’t for everyone” ways of the newbies.
I mean can you imagine the Warby Parker guys saying what Zuckerberg recently said about him embracing the fact that Facebook isn’t cool anymore? Those are the words of a founder/CEO trying to reach everyone now, not just their original core consumer.
This is one reason why MySpace doesn’t exist (Facebook had to go for the jugular by removing the need for college email addresses) and why Benioff acquires so many companies to build the Salesforce empire. The previous age of founders played zero-sum games where the winner takes all. Meanwhile, AirBnB – in execution thus far, at least – doesn’t mind that HomeAway has captured the vacation rental market in the same way Warby Parker is still focusing on eyewear rather than trying to start into the one-for-one footwear market TOMS already secured.
Whatever space these young design-savvy founders are in, they’ve shown an ability to figure out not only what gaps exist in a particular industry – be it housing or beauty or texting – but to also figure out the precise “sweet spot” to target their core consumers.
For Instagram, pre acqusition, they largely played on Facebook fatigue by limiting their focus to photos (possibly the most valuable piece of data Facebook would pay for). For Tumblr, they focused on design-savvy bloggers (a consumer audience Yahoo was most interested in paying to secure). For Birchbox, they focused on ladies who weren’t so entrenched on their beauty choices (the audience Estee Lauder and the like are spending hundreds of millions each year to reach).
Can you imagine what these successful startups would look like if their founders didn’t have this evident wellspring of knowledge and insight on their consumers?
Sure, there were fits and starts and pivots and business plan changeups for each of these companies along the way, but the ability to understand the customers they sought to help is what set them apart from say, Amazon, which is more of a grab bag business model focused on world retail domination…who cares if its books, movies, clothes (Zappos acquisition), or, more recently, groceries.
That doesn’t take a keen understanding of the consumer as much as it takes a keen understanding of operating margins, Wal-Mart’s weaknesses and the overall retail industry. No offense to Bezos, the guy is a genius, but no one is going to confuse him with Seth Godin despite their appearance similarities.
With Jobs’ passing, Gates focusing on philanthropy, LinkedIn’s Reid Hoffman focusing more on investments (CEO Jeff Weiner is now in charge), and Benioff spending a lot of time worrying about what his chief rival Larry Ellison is up to, it seems to me that the founders worth emulating are the ones that spend more time in cities, with Millennials and designing kickass product experiences. [Tesla/SpaceX founder Elon Musk should be mentioned in this post, he’s somewhere between the Jobs and Dorsey classes of founders, IMHO.]
These are the founders that are changing the world today. Their predecessors, dead or alive, should be proud. Their admirers, myself included, should pay close attention. This moment won’t last long before a new breed of great tech founders arrive.