Sequoia Seven Questions: Hard-won advice for founders

On September 1, 2009, Steve Garrity and I signed the docs to officially incorporate Hearsay Labs, Inc. Then we hunkered down and got to work to make our vision for social selling a reality– drafting a product strategy and business plan, interviewing anyone who'd talk to us and could become a prospective customer, prototyping, testing, coding, iterating, and repeating. Before long, we scored our first paying customers: Jimmy Smart, an Allstate agent in Columbus, Georgia (who has since retired) and Coldwell Banker of the Midwest. We realized we needed to make some hires– and therefore fundraise– ASAP.

We were fortunate to enlist an amazing group of smart and helpful angel investors including Ron Conway, Patrick Pohlen, Thomas Layton, Alberto Savoia, and Aydin Senkut. Thomas encouraged us to raise a bigger round (such great advice, since fundraising is so distracting) and made introductions to several Sand Hill Road venture capital firms. We received three Series A term sheets, decided to go with Sequoia, and have never looked back. NEA led our Series B, Sequoia Growth led our Series C, and this past summer, Salesforce Ventures led our Series "CRM" (pun intended).

Recently, I did an interview with Sequoia to reflect on startup founder lessons learned over the last 11 years. Here are some of the highlights:

When the world turns upside down, embrace it. I’ve had to draw on every bit of empathy, courage and resilience built up over my career. My guiding light is thinking about what would make the people in my life proud—my employees, our customers and above all, my mom. In part, that’s meant taking swift action—from closing our offices and cancelling critical sales meetings as the earliest Covid cases emerged to making a snap call to replace our June all-hands meeting with an open forum about race. Each decision felt scary in the moment and required me to lean into my fear.

It’s also meant frequent communication—making sure the team heard from me consistently and often, about everything from the tough situation for working parents to our company’s financial situation. In the last few months, I have experienced how leadership is forged in crisis.

I think that through our actions and words, we’ve been able to help our team to move through denial, anger and grief, and earned the opportunity to cheer them up. We’ve mailed surprise gift boxes to team members, shared poems, and held cello concerts over Zoom to double-down on our humanity and fight the mundane.

And through it all our team unexpectedly uncovered a new sense of purpose. Hearsay’s users are advisors who communicate with their clients through our platform, and we’ve been deeply moved by the humanity in those conversations. People are losing loved ones; they’re worried about their jobs; their retirement savings are getting wiped out. Seeing that has inspired even more urgency and conviction for everyone in the company.

Ruthlessly prioritize. When we were just getting started in 2009, one of our early angel investors, Thomas Layton, told me, “The hardest part of starting a company isn’t deciding what to do—it’s deciding what not to do.” I didn’t really understand what he meant at the time, but it has turned out to be incredibly sage advice.

When you’re starting out, there are endless possibilities. You can do anything, but you can’t do everything. I remember in our early days, social media was really hot, and many companies asked us for features that weren't part of our vision and roadmap. We got an inbound invitation from Coca-Cola to participate in their social brand marketing RFP, which wasn’t at all aligned with Hearsay’s founding mission to establish social selling as a new category. But we hadn’t raised money yet—and it was Coca-Cola! It was terrifying to respond to a Fortune 100 company with “no thanks.” But they were looking for a brand solution, which wasn’t part of our social selling vision and would have distracted us with requiring different product features. So we walked away. That clarity of purpose, staying focused on what we were actually trying to build, turned out to be critical.

I usually ask how the candidate has changed since they first started their current role. The most important things I’m looking for when I hire are learning ability and speed, which lend to other qualities like growth mindset and bias for action.

I want to dig into the ways someone has set themselves up to learn—not just how they’ve changed, but how much agency they had in that process. Do they actively seek out feedback? What’s the pace of their learning? In any role with any company, there is a lot you can learn about the business, yourself, your management style. It’s about taking ownership and continuous improvement.

In the pandemic, I’ve been obsessed with Think Like a Rocket Scientist by Ozan Varol. He's like a millennial Taleb meets Kahneman, two of my favorite writers. The book makes a ton of really provocative points, but two in particular stand out for startup founders. First, we should be careful not to let our egos and identities trap us—we should be the ones to evolve our stories and identities.

Second, he takes a neat contrarian view against two Silicon Valley staples: that the "move fast and break things" mentality popularized by Facebook might be fine for consumer entertainment apps but not mission-critical projects, and that the Agile methodology comes with the danger of incrementalism and not thinking big enough. Rocket science is a better analogy for large, high-stakes projects which need iteration but ultimately must work without error.

Full original interview here: https://www.sequoiacap.com/newsletter/2020-08-05-clara-shih