Dharmesh Shah

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8 Tips For Building An Internet Company Outside of San Francisco

By Dharmesh Shah on March 3, 2011


The following is a guest post by Healy Jones.  Healy is head of marketing at OfficeDrop, a digital filing system and scanner software provider – and moved to Boston from San Francisco.

The San Francisco Bay area is the clear leader in the internet startup world. Approximately 50% of the early stage fund raising in the United States is in California, with Silicon Valley and San Francisco dominating. Some days it seems like it is impossible to start an internet company anywhere other than the SF Bay Area.east west interstate

But it can be done. Entrepreneurs everywhere are succeeding in getting their internet businesses going! I’ve polled some of my entrepreneurial and venture capital contacts outside of San Francisco to see what advice they could offer for successfully building an internet venture in their towns. The following is some of the great feedback I received. I’ve organized their responses (and some of my own thoughts) into seven tips on how to grow an internet business when you don’t live in sunny Palo Alto.

1) Cultivate the right mentors. In Silicon Valley, it’s easy to meet experienced startup entrepreneurs. I know for a fact that being around startup founders who have been there, done that can really make the startup process better. Both formal mentorship relationships and unstructured conversations with successful internet executives have helped OfficeDrop overcome significant startup challenges. Outside of the Valley you may not have access to a deep talent pool of potential mentors, so you’ll need to be nimble. Even though I’m in Boston, I’ve had great luck pinging smart internet marketing gurus in San Francisco and getting their thoughts on my marketing initiatives. You should also take advantage of being part of a smaller entrepreneurial community. Gabriel Weinberg, two time internet entrepreneur and angel investor based outside of Philadelphia says, “People really want to help you. Not that they don't in the Valley, but there is an extra component of wanting to put the location on the map.” But be careful – Linea Geiss, an Atlanta based venture capitalist, comments, “Smaller investing ecosystems mean personalities / egos get magnified a little.  A smaller ecosystem presents an opportunity to do well by securing help and backing from well-respected advisors, but also beware of the landmine of pseudo-advisors that are not well thought of in the industry.“

2) Create networking groups. You know that feeling at 1:30 in the morning when it seems like you are the only person still up working your startup dream? Well, that feeling is a little bit easier to take when you have personal relationships with other people in your area who are experiencing the same thing. If internet founders aren’t exactly falling out of trees in your city you may need to be the organizer who gets people together. Sharing in each others’ successes and learning from each others’ failures is part of the fun of being part of a startup. I’ve also learned a ton from other executives in the same lifecycle point at OfficeDrop; people who are going through very similar challenges. I really recommend organizing a group of your peers and getting together as regularly as you can. In other words, you don’t just have to hang out with people who have been there, done that – people who are RIGHT there, DOING that have a lot to share and teach as well.

3) Think outside of your town. For most internet companies, competition is national or global, so you need to be 100% aware of what is happening in your space in SF and around the world. The technology press can be merciless, so if you “launch” something that gets compared to existing solutions/other technology darlings you need to be ready to discuss why/how your solution is better. Financing sources like VCs and some angels are also pretty sophisticated and often know a lot about particular verticals they find interesting. You never want to be in the position where some smart-alecky VC associate knows more about your competition than you do. Finally, and most importantly, your customers may be very savvy on the different technology solutions available to solve their problem, and if you don’t know how to position yourself against competitors then you are in trouble!

4) High hiring standards are critical. As Dharmesh has pointed out, there is a global talent war going on for developers. It’s hard to find experienced hackers everywhere. But compromising when hiring can be a big mistake. Scott Holsopple, CEO of Smart401k, based in Kansas City,  says, “Kansas City does have very talented people, but not surprisingly they aren’t as plentiful as SF so you have to be willing to dig a bit more.  We’ve made very good hires and some mediocre hires and the differences (on the company) were startling.  Lesson - Don’t hire just to fill a need.  Make sure they have the skills you want and the personality you want to reinforce inside the company.” Being able to manage a distributed development team is also a major asset. Vikram Kumar, CTO of OfficeDrop, says “if you know how to manage a distributed technology development team then you can find great developers. However, it is a mistake to assume that you can manage a distributed team in the same way that you manage people sitting in your office. And you need to be willing to invest in communication and project management technologies.” Finally, Scott mentions finding employees who get the startup mentality can be difficult outside of San Francisco, “if start-ups aren’t the norm the culture of start-ups won’t be the norm.  This may actually make it harder to recruit because you may be seen as the “risky” job rather than the “hot” job.” Scott suggests making sure you vet the culture of the people you interview just as much as you vet their technical chops.

5) Know your local ecosystem and play to its strengths. This tip comes from Linnea “Atlanta is strong in supply chain and logistics, fintech and security. It’s a lot easier to get funding, find customers and recruit experienced employees who will get excited about and understand your vision.”

6) You need to be in the flow (and have something to say) to get press. Attend important national conferences for your industry and for the web, and don’t be afraid to approach reporters.  OfficeDrop has had luck aggressively pinging targeted reporters with story ideas, and Jeremy Levine, founder of Boston based sports stock market StarStreet Sports suggests that you can be successful if you “reach out to those who have covered similar companies.” Jeremy also adds that Twitter has also revolutionized how people not in the Silicon Valley echo chamber can get to know what reports are working on. Engaging on Twitter in relevant conversations that reporters are having with intelligent content can help get the door open. I am in total agreement with Jeremy, and have a Tweetdeck list of technology reporters who I follow very closely. Without Twitter I don’t know how I’d have a clue as to which reporters I should be approaching.

7) Capital efficiency matters. General consensus from entrepreneurs I spoke with was that getting financing is much harder than in San Francisco, so focusing on getting the most out of what you have is critical. Scott Holsopple says, “I think resource (whether $, human capital, time, etc) efficiency is key.  This may sound trite, but if you’re in an area that isn’t a hotbed for start-ups or investment your resources are likely to be more constrained.  So you have to do more with less and minimize your missteps (not that you can’t make mistakes, but you have to recognize them and limit the resources used).” Max Niederhofer, founder of people search engine qwerly in London, agrees “Focus on a straightforward model not dependent on VC financing. Get to profitability early.”

8) Tap into the growing global angel capital market but also think local. This can often be the hardest part. How do you get money when you are not in an angel/venture capital hub? Gabriel says that “I think there are lots of angels scattered around who often invest outside their cities, but are willing (and often want) to invest inside. So you just have to find them and meet with them face to face. AngelList is getting good at that, but also look at angel groups, find out who is in them and pick off the people who invest in your kind of deals. They'll often invest individually as well and will serve as an advocate for the group.” Mark MacLeod, a well known Canadian startup CFO and angel investor, says it is critical to network into local financing sources, since local momentum can build credibility with non-local angel investors. However, as many entrepreneurs know firsthand, getting funding outside of the Valley often requires more traction, so doing more with less is likely a necessary challenge.

The internet has given us the tremendous power to engage with tools and people without being constrained by geography. It would be a cruel irony if one region had a complete monopoly on good internet businesses.  Shouldn't the Internet help us build great Internet businesses anywhere?  What do you think?

Topics: guest strategy
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Startup Culture Memes: Do You Have A Duck Of Awesomeness?

By Dharmesh Shah on February 16, 2011

The following is a guest post from Tom Critchlow. Tom is head of search for Distilled, a London and Seattle-based SEO company. 

Have you noticed how as people spend time together they develop certain attitudes and practices unique to them? That's culture.

"The set of shared attitudes, values, goals, and practices that characterizes an institution, organization or group" - Culture defined at wikipedia

Working environments force people to spend a lot of time closely interacting with each other and startups even more so! This close interaction leads to the emergence of culture.

In my eyes there are two ways of identifying the emergence of culture within your business. Behaviour and language.

I'm no linguistic scholar but I believe the two are very closely related. Behaviour affects language and language affects behaviour. A feedback loop that is constantly molding the culture within your business.


Within Distilled there is a rich set of language that’s unique to us. Here’s just a few:

  • breakfast of champions
  • getting shit done
  • delivering change
  • the duck of awesomeness
  • getting close to clients
  • phone ninjas
  • the skiing trip
  • labs
  • you can't outsource giving a shit
  • actionable insights
  • communication solves all problems

Within our company these are used often and with a rich history of experience behind them. Here's a brief explanation for a few of them:

Phone Ninjas: About 6 months ago I wanted to persuade our consultants to spend more time on the phone to clients so I implemented some game mechanics internally to give out points everytime you made a phone call to a client. Simple and effective. I believe it took off however because the highest level you could reach was called "Phone Ninja". Over time, the points system became less used but I'm not so bothered about that because the concept of spending time on the phone and the phone ninjas term has stuck around. Here's a few pics of @PaddyMoogan (Distilled) and @SamuelCrocker (ex-Distilled) as phone ninjas:

The Duck of Awesomeness: We've had various schemes within Distilled aimed at recognising and rewarding exceptional behaviour. Unfortunately, none of the schemes really caught on. People would forget about nominating others for good work or we'd suck at feeding back to everyone who had done what. All of that changed when we bought a blue duck with stars on and called it the duck of awesomeness. It moves from desk to desk as people do good things. The combination of the duck and the name has been a huge success and the duck often moves between desks once every few days. It's a fantastic way of keeping people motivated and providing recognition to people who do good work.

Hopefully you can see how the language here is more than just words. The rich culture that goes along with the language shapes behaviour. These words and phrases mean more to us than they do to an outsider. They have become memes.

‘Examples of memes are tunes, ideas, catch-phrases, clothes fashions, ways of making pots or of building arches. Just as genes propagate themselves in the gene pool by leaping from body to body via sperms or eggs, so memes propagate themselves in the meme pool by leaping from brain to brain via a process which, in the broad sense, can be called imitation. If a scientist hears, or reads about, a good idea, he passed it on to his colleagues and students. He mentions it in his articles and his lectures. If the idea catches on, it can be said to propagate itself, spreading from brain to brain. [...] When you plant a fertile meme in my mind you literally parasitize my brain, turning it into a vehicle for the meme's propagation in just the way that a virus may parasitize the genetic mechanism of a host cell. And this isn't just a way of talking -- the meme for, say, "belief in life after death" is actually realized physically, millions of times over, as a structure in the nervous systems of individual men the world over.' - Richard Dawkins The Selfish Gene

The power of these memes lies in the feedback loop between language and behaviour. Sure, the concept of breakfast of champions hasn't changed the company that much, but the concepts such as getting shit done (more details here), or the duck of awesomeness most certainly have.

Let's take another example. SEOmoz. They have a wonderful set of beliefs laid out by Rand eloquently in this blog post. That's all very well, but is this set of beliefs simply empty promises or a half-forgotten blog post? How do we tell how strongly SEOmoz believes in them?

We know this set of beliefs has been deeply ingrained in the SEOmoz culture because of language. The single word TAGFEE is part of the SEOmoz vocabulary. The staff use the term all the time and it's come to mean something very important. You'll often overhear an SEOmoz employee say something like "Should we do that? Doesn't feel very TAGFEE".

There's no specific reference to Rand's post and the wording of the specific beliefs. In fact, if you did a spot survey of SEOmoz and asked "what does TAGFEE mean", I bet you'd get many different answers. But that doesn't matter, because it would mean something to everyone. TAGFEE has evolved. It's a meme.

Actionable Insights

One of the up and coming memes within Distilled is “actionable insights”. As with all memes, it’s a part of our culture rather than a clearly defined rule. I apply “actionable insights” to all kinds of things from meetings to presentations I give (aside: I wish we were big enough to afford a meeting fairy).

For example I’m putting together the slides for our upcoming Link building conference and as I’m building my deck I’m constantly trying to ensure the audience will get actions out of my talk. The phrase “actionable insights” bounces around my head over and over again. The language is influencing my behaviour.

I also apply actionable insights to blog posts. The takeaway message from this post is as follows:

Pay close attention to the language used within your company. Any behavioural change within your company will have an associated change in language. And vice versa: Any language change within your business will have an associated behavioural change. Think carefully about how you name initiatives, present training or what you call your internal tools. Language is powerful.

There’s a corollary to this insight as well. Language is powerful and this works both ways. Negative language can shape negative behaviour and negative behaviour can shape negative language. You’re likely already watching out for negative behaviour but make sure you watch out for negative language too, this can be just as dangerous.

Language Envy

Memes are difficult beasts to tame. Trying to control them is like herding cats. I’ve had some success with creating and shaping internal memes to best suit the behaviour I want but there’s always room for improvement. Here’s some language I’m envious of from companies and communities I’m closely involved with:

  • Fail fast - from Reevoo, a developer heavy startup. I’d love to ingrain this in our culture, a wonderful phrase that symbolises at once innovation and determination.
  • TAGFEE - mentioned above from SEOmoz, although we have a manifesto internally at Distilled it’s not become a meme. We need an idea internally that defines our ethics.
  • Hustle - the Hacker News community always talks about hustle and although we have a very similar meme with “getting shit done” I’d love the single word hustle to make it into our lexicon as a way of persuading people to constantly step outside of processes to get things done no matter what.

What’s the lexicon of your startup? What internal memes are there? Which memes are you most jealous of? I'd love to discuss in the comments or on twitter.

If you liked this post, follow me on twitter or book tickets for our upcoming Link Building Conference in London 18th March, New Orleans 25th March.

Topics: culture
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