Mike Cassidy is currently the CEO of D-Orbit USA and the CEO of Vulcan Fusion. Prior to D-Orbit and Vulcan, Mike was Cofounder and CEO of five exited startups: Apollo Fusion (acquired by Astra for $145mn), Ruba (acquired by Google), Xfire (acquired by MTV for $110mn), Direct Hit (acquired by Ask Jeeves for $532.5mn), and Stylus Innovation (acquired by Artisoft for $13mn). After Ruba’s acquisition by Google, he served as VP of Product and spent 5 years as the Project Leader of GoogleX’s Project Loon. He was also an Entrepreneur-in-residence at Benchmark Capital and studied jazz piano at Berklee College of Music.
Mike shared his most important strategy for success with our community of interns. Watch the full video here!
Lesson 1: Speed brings great advantages
- Rapid product rollout/updates make it extremely difficult for competitors to gain traction against you (2 wks v. 18 mos)
- Rapid success build strong team morale. Happy people are 10x more productive (which leads to more success)
- Rapid success generates more PR (which leads to more revenue, strategic partnerships, key hires, etc.)
- Fast growth drive higher company valuations when fundraising or using equity for strategic deals
Lesson 2: The lightning speed startup timeline
- Typical startups take 23-27 mos to launch:
- Explore ideas: 3 mos
- Raise money: 3-6 mos
- Hire core team & open office: 2 mos
- Build product: 12 mos
- Market & get customers: 3-6 mos
- You can launch in 4 mos:
- Explore ideas: 2 wks
- Raise money: 1 days
- Hire team & open office: 2 wks
- Build product iteratively: 3 mos
Examples:
- Direct Hit: Internet search engine - sold 500 days after launch for $500 million
- Entrenched competitors
- Owned 95% of market (AltaVista, Excite, Infoseek, Lycos, Yahoo)
- Used traditional text-based inverted index algorithms
- Direct Hit
- 1st search engine based on tracking user voting (like Digg, YouTube, etc.)
- Provided search for AOL (ICQ), Microsoft, Lycos, etc.
- AOL deal within 5 mos of company start
- Entrenched competitors
- Xfire: Instant messenger for PC videogamers - sold in 2 yrs for $110 million
- Entrenched competitors
- Owned 95% of market (AIM, Yahoo Messenger, MSN Messenger)
- Focused on traditional IM (not gaming)
- XFire
- 1st IM to track and connect videogamers
- Grew virally from 100 users to 3 million in 2 yrs
- Dominated market segment within 5 months of XFire start
- Entrenched competitors
- Ruba: Recommendation engine based on your friend’s recs - sold in 2 yrs to Google
- Entrenched competitors
- Facebook, TripAdvisor, Yelp, etc,
- Ruba
- Started focused on recs for services (car mechanic, locksmith, etc.) target at moms
- Morphed to travel recommendations
- 1 million visitors to site before acquisition
- Entrenched competitors
Lesson 3: How to fundraise quickly with a single, consistent strategy
- I didn’t raise a lot of money because we moved fast and didn’t burn that much money
- Stylus: $1500 initial capital, no VC
- Direct Hit: $1.3M (DFJ) - through launch, HotBot, AOL, Apple spent $400k; through MSN, Lycos spent $600K
- XFire: $1M Series A
- Ruba: Only raised Series A, no follow-on rounds before acquisition
- Learning: have a single, consistent strategy. Not "lowest cost and best customer service." For us, our strategy is SPEED. We didn’t raise as much so we raised quickly, and didn’t burn as much.
Lesson 4: How to fundraise quickly - 4 keys
- Raise when conditions are in your favor
- Direct Hit Series A: 1998, portals growing rapidly
- Direct Hit Series B: as deal with AOL is closing
- Direct Hit Series C: as MSN/Lycos deals are closing
- XFire Series C: Social networking 'hot,’ steep growth curve established
- Get all decision makers in room
- Synchronize timing of competing VC offers
- Bring 'if/then’ contracts with customers to your VC meetings: Ie. if you can build a platform that does what you’re promising, then we’ll pay you…
Lesson 5: How to hire the best people quickly
- Hire experts
- Stylus: 4 Sr. product managers (5+ yrs) → CEO, VP Eng, VP Mkt, VP Sales
- Direct Hit: 5th product manager → VP Eng; 10 yr dev; 15 yr dev
- XFire: 10 yr dev; 10 yr dev; 10 yr dev
- Ruba: 10 yr dev (Google tech lead for Chrome); 10 yr dev
- Hire known talent
- Stylus: 13 of first 15 had worked with before
- Direct Hit: 12 of first 15 had worked with before
- XFire: 2 of first 3 came from absolutely trusted source
- Ruba: 4 of first 4 had worked with or came from absolutely trusted source
- Close candidates quickly & set the tone for speed
- Group huddle during last interviewer
- Offer letter ready before interviewee arrives
- Make offer same day
- Have pre-read materials ready before their first day
- Have laptop, email, projects and deliverables ready on day 1
Lesson 6: Build product quickly and iteratively
Which one is faster: A or B?
- Incremental Development: Build 1 module/feature at a time and then launch. Add features as you go. Figure out over time what features users want and then try to add them
- Spec your product CAREFULLY: Make sure you do great customer research! Hit the market with a rich, compelling product because you only get ONE first impression. If the product is lame, people will never come back.
A (Incremental Development) is better and faster
- Launch a very simple Version 1.0
- Simplify your development effort and marketing effort
- Learn what your customers want and build iteratively
Lesson 7: Business Development Deals - Fast or Never
- The probability of a deal ever closing declines by 10% each day it doesn’t close
- Create scarcity
- Sponsorships for July, Aug, Oct already sold…
- Map of USA with certain regions already controlled by competitors
- Create competitor FOMO
- "Well, I just want you to know, I thought I'd warn you, and if you see the announcement of us partnering with one of your competitors, don't say I didn't warn you"
Lesson 8: PR is faster than Marketing
Marketing takes a lot of effort, time and ultimately delays. PR takes 1 person and 1 article to reach thousands of people and ideally thousands of customers if your target customers if you choose the right publication.
- Stylus
- Not marketing budget
- Editorials in Computer Telephony Magazine - 3 cover articles which led to many deals
- Direct Hit
- No marketing budget until Q9 '99
- Cover of Industry Standard
- XFire
- No marketing budget
- Extensive courage in Fortune, CNN, GameDailut, Forbes, WSJ, USA Today, Marketwatch, Wired, Red Herring, SJ Mercury, etc.
- Ruba
- No marketing budget
- Quickly ramped to 10,000 Twitter followes/Facebook fans
- Got promoted by NTA (National Travel Agent Association)
Lesson 9: If Something is Broken, Fix It - Immediately
In three of four startups, the product didn’t work at the start. Once you decide it's not working, you have to be very decisive when you change direction and do it quickly.When pivoting, commit fully. For example, when Xfire pivoted to focus on gaming-specific IM, the entire company shifted immediately, enabling them to dominate the market within five months.