# How to Start a Startup: Raising money and succeeding long-term

**Author:** Jess Lee, Aaron Harris, Ali Rowghani
**Type:** Video
**URL:** https://www.ycombinator.com/library/JM-how-to-start-a-startup-raising-money-and-succeeding-long-term
**YouTube ID:** 5ZXU84_sGXo

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Jess Lee (Partner at Sequoia Capital) and Aaron Harris (former Partner at YC) discuss raising money as an early stage
company, and how to think about the fundraising process. Ali Rowghani (former CEO of YC Continuity, previously CFO, COO
@ Twitter, CFO @ Pixar) shares his thoughts on how to be a great leader and succeed long-term.

## Transcript

I am Aaron Harris. I'm one of the partners at y combinator [I've] Been working at Yc for a while, and I've gotten to fund a lot of companies And I've gotten to see a lot of companies, Raise money Everything from seeds to aids to DC's to weirdo in between rounds So I'm really looking forward to sharing some of those lessons, but mostly I really want to learn and chat with

my My guests over here Jeff lee from Sequoia just you want to introduce yourself sure I'm Jeff Back in 2004 I was sitting are you guys? Taking I think I took databases in this room But I [said] a computer science and then went to google or I was at p.m.. For Google maps and then Co-founded a company called polyvore. I'm ceo there and then in the last six months I am now at Sequoia capital as a partner

so Sequoia is a reasonably [Well-known] venture Capitalist firm It's actually one of the first firms in the Valley one of longest-running and probably the most successful What have you learned in just six months? [I] guess about the people coming in the door what? What distinguishes off the bat people who were? Succeeding or we're going to succeed in fundraising What do you want to see? Yeah? so part of the What we look for it to the [Coi] is we're looking for really daring founders who want to build really legendary companies?

so it's quite we backed folks like Apple Google Yahoo airbnb Dropbox and Stripe so part of what we look for is a founder Who's special in some way or some unique insight and for me in particular because? You know plea poly war was at eight and a half year journey of crazy highs and crazy lows it gets. It's really hard It's just right off the bat like the odds are against you it's a rational Somewhat irrational to start a company because the odds are so bad so you need to have a lot of grit So that's definitely something we look for

And then I think one of the other things is a really clear understanding of the problem. You're trying to solve right? I think that's that's something that really distinguishes people I think a lot of people spend time pitching the solution, but they don't really explain the problem And it should be so crisp and clear what the problem is that you're solving that the solution almost just flows Then the third thing we look for is ideally you're working in a really really big market where there's line of sight to look billion dollars [of] Market cap so those are some of [the] [things] [that] we look for all right? So for me that breaks down into like in three different areas right? There's the

qualities of the founder right in terms of the grit Then there's something that that bridges quality and the problem Which is the problem the way to explain it and then the third thing is just how big that opportunity, so let's take let's take you through those so when I think about the first one that's huge right this concept of grit and It's really hard to assess that in someone. I mean you look see someone on the street. You don't know if they're tall You know they may tell you a little bit about their lives Maybe that tells you they're tough yeah, I know how we think about it

We we look at people We actually want to see how founders interact right we see how founders talk to each other and how they think about the idea? That they're working on and what they've actually done in the past have they demonstrated fortitude And toughness, how do you how do you judge it that you spend more time with the founders usually before? Investing are there tests that you make them well if you drop them in [the] middle of a forest with a knife both one

You know I think grit can come from a lot of different places right like it could come [from] you having for [example] we often ask about the Inspiration for the company right is it something that you're really passionate about that drive you that you have to solve this problem Or there's something you just thought would be a good business idea, but like getting through the roller coaster You mean it needs to be there's got to be something that gets you through each of those really difficult moments So sometimes it's because you just care about the problems so much, and there's an inspiring story They're like you're solving a problem You have your family had something that shakes you in your life, so [that] that's one form of grit then there's like

You said there's people who have [demonstrated] Continued ability to like just run through walls and break down problems and sometimes [that] shows up in Previous work history [previous] Things that they've done and then there's also another form of grit. Which is just I mean sometimes it shows up in Completely naive optimism, and so sometimes it's almost better to be a little Naive anemic about something because you don't know how hard it Can you just keep going is just very positive outlook and sometimes it comes from like a chip on your shoulder We just like we need [to] prove yourself like if something is driving you

Underestimated your whole life and so you just keep going to [come] desire to prove yourself so those are some of the different forms that [grit] can take or the Founder How do the founder convince you that they have those things do they tell you the story? Okay, so we always try to dig in and try to find out what the inspiration for the company is so that's that often did Kelly
and then you just [with] your interactions with someone you can kind of Start to ask them about their background what they did before You know is this they some people with starting companies from an early age some people?

Have worked on multiple businesses Those are some small signs, but the end of the day a lot of is also Just sounds like for the investor that you're working with and whether they see themselves working because you have to remember like great companies take You know I think on average it takes about eight years to exit So when you and your founder when you beckett, okay, the ipo is now something like 11 years yeah, I meant exit So even [just] a quick write But you know it's you're partnering with a person who you're going to be like you're it's a long-term relationship You're getting into especially what you start to get to your series a and B

So you want to find someone who you have good fit [with] like? It's almost like you're Just someone can be married to for 10 years except can't get [divorce] because very hard to Like you [can] kick your investors off your cap table very easily so something. They're really important to think about as you prioritize Picking an investor, so you kind of have to spend a little bit of that time I guess dating and getting to know each other Like cents, that's a super good point this idea that you can't kick someone off the cap table People I think often cavalierly take money Because they say oh look I just need some money. Oh this person offered me money

We can always get these questions from founder saying oh this random person Just offered me 10 50 100 200 thousand dollars like people do crazy things I'm fat leading and one of the hardest things to do at seed at a at B is decide Who it is that you're going to take money from now? I'd say If you get to decide you're actually in pretty a pretty good situation because the first rule is Get the money you need to run your business now

If there are more people offering you money, then you theoretically have room for then you start to get choosing How do you build a competitive dynamic in a round? How do you get people interested now? You're all hopefully Starting small companies and that are going to be startups that are going to get big so one day you're going to want to go out and convince a whole bunch of people you're going to be the next Google, so How do you build a competitive dynamic in that fundraising? So I think first of all you you can't go into fundraising as like a casual side thing that you do

[20%] it's actually better to just be really dedicated to it and just like all right I know it sucks because I have to step away from running my business But I'm going to go all in and just work on this process And you kind of think about it as the process and time it so you have conversations At the right time and I think you want to prioritize like the people that you [talk] to based on how much you want to work with them time sort of Maybe the Likelihood that you might be able to and just work your way through But you know you can also just kind of tell I think when you have Conversations with investors like this is someone who I can imagine working with for the next [ten] years

This is someone who I cannot visit, but you'll start to feel that click but you really just it's all about timing it together and almost running almost if you're trying to run a competitive process right and you have to I think be subtle about Letting people know when trying to set timelines and milestones like you know, I'm hoping to get this done by this date [I] think being clear about your expectations helps a lot setting that timeline saying I'm going into Second conversations like a few of them this week And then you know I've got just keeping everyone informed of the timing so that you've got you Create as much as possible that competitive situation

I think that that turning this into a process [turning] fundraising into a process is something a lot of people ignore Because they want to believe the stories of oh you know I just happen to pitch this person We hit it off and all of a sudden. They gave me this money, and it was amazing But the way to do this is actually build a spreadsheet It's say it seems crazy But put every single person you want to talk to in that spreadsheet and note when you reached out to them What their response was when you met with them with the result of that conversation with? probability weights those

conversations both by how much they're likely to give you and the Likelihood that they're going to give you that money and then you can start to decide who you [want] to spend time on and now this changes between the seed in the a in terms of the time that you expect, so if you're talking to angels one or two meetings Coffees right you need to have like some sort of will actually will talk about dec in a second We don't need that much material for pitching an angel if you're going in pitching series a funds like Sequoia [you] have to have a lot more together right? And you have to be ready for longer conversations that are more in Depth. I

Really though I think [the] the line between seed and a is kind of blurring as they're shifting over the years, so polyvore raised our series a in 2007 and that was a two and a half million dollar out or two point six I think now that seems more like a C So I think it can bleed I wouldn't I would I think when you're doing pre state? It's definitely more than angels, but there are plenty of micro VCS as well as firms like Sequoia that participate at the seed stage so just you know you have to be more buttoned up like the more like I think the larger the [fun-sized] but

It is interesting I've definitely noticed a huge shift in The size of rounds getting bigger and bigger, and then they're starting to be called as later what used to be a b is is a [write] the price at which. They're done is more equivalent I mean seeds are now being done at prices that are significantly higher [than] a is. We're done even three [years] ago now That's not always the case right that happens to be the case in the hot house of Silicon Valley Especially [if] you're [doing] something like yc Prices will be higher than they might be otherwise or if you're you know a well-known founder things like that

But I think people who get hung up on the amount of money You're raising or the price at [which] you raise are doing a disservice to the company so we talked about this the other day That people come in like oh, I have to raise five million at fifteen for my feet. Why? Right you're actually probably hurting the chances of your company by raising too much money too fast Because you're setting the hurdles for your company way too high You're not in some competition to try to have the biggest valuation right like you need to Independent of everyone else in the market all your competitors like you need to think about

What is the business plan that you have what are the milestones you need to achieve kind of you know at and then? What's maybe 12 to 18 months of runway or what's the money you could use to? Accelerate that plan right think about it that way and then you know try to minimize dilution, right? But the end of the day like if you're going to be worth billions of dollars or hundreds of millions of dollars? Though sometimes people over optimize on valuation if you think about all the things you could be thinking about like the valuation in the terms the person that you're working with the individual partner and then maybe the reputation or the the

Firm that you work with and the brand and within the firm I think the two things to look at [are] of the firm's network as well as The community of Founders that you step into right because as much as like Getting help from your peers who are other founders and other ceos and Rubbing shoulders with like really amazing founders who [help] you out then also elevate your game like that's really really important That's really something [to] look for Yeah, I think that the the research ahead of time on whoever you're talking to is

Help you yeah, and people don't do it if you walk into meetings colder people Start talking to investors or prospective investors knowing nothing about what they want what they've invested before You know what their interests are and it's amazing how important those personal connections are and that knowledge People really do react well when you know something about them when you don't expect them to just bring everything to you Yeah, remember, it's a two-way street, right it's a partnership like you said, right [I] mean I think the same goes in the other direction right like if you walk in and your investors like what's your name again and like

What do you do and like have not prepared at all like that's also kind of at that time So you know interesting you know it's a two-way street like your interview You're evaluating your investors as much as they're evaluating you you want someone who's going to be hard-working who you feel? Comfortable with who can be your first phone call right like [startup] like I said It's just like Rollercoaster Epik high's epic glows like in your epic lows like you want someone who's going to be a shock absorber and help you through that not hit the panic button there yeah It's like all run around Like chickens with our heads cut off and panic and then make you make it worse for you make it worse for your team you

Want some who's going to have seen downs before knows what to do we help you out of them and then also? When you're at your epIc high you don't want someone who's just like Rara cheerleader because there's always something around the corner that could you know tank you so you want someone who's sort of a Sparring partner right who like says like have you thought [about] this someone who pushes you and challenges you to go even even greater So that's [something] that's certainly part of our philosophy is for members and Koya yeah You know one of the one of the hardest things to do for investors actually is

To give good feedback when things are going well that isn't about oh my God you're going to kill it It's going to do that because I'll tell you as a founder [you] want to hear the best story of yourself right? You believe the best story of yourself, right? You believe the best story of your future And it feels so good when an investor as fancy investor comes in says ah you're totally right you are going to conquer the world And that advice is super easy to listen [to] because it's just a confirmation bias thing, right? on the other hand don't want an investor who comes in and just beats you up over everything you do and

Finding that medium in the relationship and finding a relationship where [both] sides can have that conversation is huge when iso Sequoia was one of my investors and Brian [shire], and [I] used to do this and he was super supportive about the good things and on the things that needed fixing he Didn't yell at me, but he pointed them out logically. [oh], that's actually a good point That's why he was a valuable investor, and I think a lot of investors [refuse] to do that because they just want to be best friends, and I think investors want to be your best friend

Not that's not a knowledgeable model. Yeah I mean it can be kind of tempting like you But I think that ultimately isn't good in the long run for you or for your company [I] Think be the other model That's not great is the person who's totally uninvolved you know you like you you want your investors to work hard for you, [too]? Right so that's another sort of bad model. What's it worth another? Oh the one who's too involved who wants to like Tell you exactly where your ui and your buttons need to go and like you know sometimes things like Well my sister or my [daughter] uses your product and blah blah blah blah blah and sometimes that feedback can be sent in a constructive

Way, but if it's you know, I got this one data point for you I don't know anything about your product, and I think you should do this and being very prescriptive about that's not good [you] perfect Yeah, yes our investors need to know what their relationship does in company. Yeah here's here's a May be counterintuitive [tip] try not to take office space in your investors offices For a long time this is this thing that's like really tempting because hey there's some free office space [and] hey There's this perk that you get with it, or come work in our accelerator an incubator

You don't want your investor over your shoulder all the time It really inhibits culture and crazy things right because if you know that your investor is going to come look at your spreadsheet Or look at your product you're not going to try the super weird crazy idea that you had because it needs a little Room to to grow into bloom. [oh] good thing. I guess I think you can I Think yeah if it's going to be an investor comes over and like stands over your computer and like says like 110 That's reggie. Definitely definitely not but I think there are models where? You can get office space and not have that relation because many times investors are like running around to also just talking about a company

Said they might not be there and the other thing is if you're you've got another company in the same space with you that can Be really awesome right because then you've got a peer group [maybe] I do they're not super competitive, but you get that founder to founder support in that camaraderie And I think that's a big that's a big a good reason to sometimes take your own yeah, I think yeah They're they're two sides of that one one of the things you said really jumped out at me because it's something that we [work] on a lot with our founders is this idea of being able to clearly communicate the problem and what your solution is

Why is that valuable? So you have to remember that? You know your problem cold right like whatever space you're in the problem You're solving you spend like hours and hours thinking about it and you're [talking] [to] someone who may not know anything about your space in fact I experienced this a lot at polyvore because the Pali word is the fashion and shopping app targeted at women and 94% of investors are male So it couldn't rely [on] you know when I pitched an app saying imagine an app where you could buy dresses all day You know you know 94% of our value. Why would I want that it sounds terrible? I hate shopping

[so] it just didn't [work] so you had to come [up] We had to come up with a way to communicate that really clearly so sometimes it's an analogy sometimes It's you you know you've draw it a persona. This is your user This is their problem use a real [customer] for example for me. What we did is for [Polyvore] we we were trying to explain an analogy so what we did is we took a stack of Fashion Magazines like the vogue September issue, which is like this thick All the september issues. We took them we threw them on the table And we said this stack of magazines is like [300] million dollars of revenue in one issue right now

Imagine that on the internet and people are like oh, I get that so [the] sort of an analogy And then we showed graphs you know and so you have to think about your audience Right if it's a space that they don't understand you really have to take more time to explain the problem You're solving to use the customer you're you're solving for and then from there. You can explain your solution I think a lot of people just jump directly to the solution. I'm like wait. What are you solving for? I don't I don't understand how fish farming works Why would I know it would sell meaning you just use that to just know your audience [yeah] that um that communication thing?

I'm guessing you've all been working on this with your tas and group leaders in terms of encapsulating what you do in a Sentence if possible and it seems a little esoteric because oh you know I'm building this big complex thing why should I have to boil it down and What it is is it's really just this Exercising condensing and clarifying thought and what we found in what we've seen again And again is the best founders can communicate clearly and can adjust their explanation for whoever they're talking to such that it is meaningful and this changes right this is different for the engineer that you're pitching and the

investor you're pitching and the customer that you're pitching and Telling your parents what you do, so they get off your case about the fact that you're not going to work at Google But working on a crazy startup lif you have to be able to [contextualise] for people but that clarity of thought in the end is is a Real defining factor when you're going in and pitching, and I also say it's one of the things That tells you that you're ready to go, raise money, right? And I think this is really tricky, when do I know? That my idea that I've been working on this project that I've been playing with on the side is

Good enough to go raise [money] And I think one of the things that you can actually describe it and why it's valuable Sinked Li, and it doesn't take lots of Jargon and a Whiteboard to explain all the different dynamics Yeah, I think it also says something about a skill that's actually really important when what in being a founder Which is can you take a big hairy complex problem? And then break it down into simpler problems like just how you'd like to take a program You're writing a program and you decompose it to different functions like if you can take something big and

break it down into subproblems and solve those then you know that's kind of what you have to do with your company right like it's whatever problem You're trying to solve is probably quite large very complicate all these moving pieces Can you figure out how to break them into smaller things and then solve them individually and that skill is just being able to do It with your with your pitch deck and being able to explain This thing you're working on or been working on through a few years and condense that down like that is actually [very] important it's like a Hell of an important skill for building startup I think for the last hop it will [we'll] dig into and honestly fundraising could take up

days of conversation [in] terms of case studies and role-playing how you do it and unfortunately we can't do that now, but I think the the The next point for all of you is you build your companies is really figuring out when you're ready to talk to investors And [I've] mentioned [it] briefly for a second But this is a really curious thing to figure [out] [so] how do you know that you're ready to raise around to financing? How do you know that you're ready to take someone's money

So I think you might be better to talk about that one at the friends-and-family stage And that that very early stage you know, [and] [I] think you don't want to like when [you're] I? Think a startup is like. I said it's hard right. It's not something you just kind of it's not as glamorous as one might think There's a lot of like a grunt work that goes into it so I [think] having a Commitment to an idea that you can imagine doing For quite a long time like we said it takes many many years first started to become successful. I think to me

That's one of its the tipping points into being able to stay here for your friends and family hey, Mom Can I have ten thousand dollars and to be able to you know? Know that you might not and I can't all likelihood you won't give that back to her right? So there's got to be enough personal commitment that power describes a very first, Milestone [I] don't maybe you have more thoughts on that one. I think that's exactly right It's kind of a fuzzy decision point But it's just this thing in your head where at some point the balance of evidence says I Want to work on this for real full time and I'm okay

Losing moms or Grandma's or my brothers 10 or 10 grand or 50 grand like that's probably [98] [percent] [chance], that's just going to go poof and if you're [ok] with that from like a [thought-through] Perspective and not just I mean some people are cavalier with their friends and families money But if you're [ok] with that because you really [want] to commit to something. I think that's the time to go do it Yeah, and then as your company grows there become these other things there are certain milestones and metrics

You know if you're building a fast business And you get to a million dollars in arr and you're growing at something like 20% To 30% a month you might be ready for a series a like all this stuff Those are some times right in terms of the next round of financing, but even those are all like fuzzy lines You can never look at someone else's experience fundraising and saying Oh that perfectly ports over to me, so I think it actually plays out forward at every point in time There is a balance of evidence that makes you decide that you are ready

Or that make someone else decide that you're ready and they come and hand you a check. [I] think that's what Sequoia one of the things the [quota] does really well is They'll lean in on a deal before the founder even realizes that they're necessarily ready to be like We think you're amazing and ready we want to fund you isn't that what happened? It was part yet. What happened to us when at our seed round [it's] something that's happened to friends of mine who have been funded later by Sequoia So anyway if you are our you know get to the point where you're ready to raise money

Or have other questions about it. Just email jess. I think it's jay. [leah] Jess it's the question category I can talk and I think we've got time for [a] few questions in the room and you could obviously always email me or email yc I'm Erin Arl in it y combinator Com Yeah, this takes up a lot of time and a lot of thought and unfortunately actually fundraising takes up a lot more time and thought That it should because it seems like something that should be systematic, but it's actually Chaos which really confuses people at speech Especially people who are logically brained?

Yeah since the fundraising strategy you should be like 50 companies [like] photo [50] in the same time which should be [due] [to] [no] over a month or two or What's the right approach in terms of [Murata] running the press with death? yes, so the question was what's the right way to run a process in terms of reaching out to Firms or individuals if you have a list of 50, do you do it sequentially or in parallel? basically I would say do it in parallel like

Everyone to the starting gate at the same time Because one of the things you you want to create [a] competitive dynamic and best way to create a competitive dynamic is to Have a lot of people trying to do the same thing at once right? So you want to narrow gate a lot of people trying to push through it? the only Situation when that one which that isn't true if you have like a super friendly investor who you know really well and you think you can get them to jump the gun and You can like sort of threaten them and [say] like ah you know I'm about to go out and talk to a lot of people, but I'd rather not spend the effort building a deck

And if you can trigger them to jump in It works sometimes if you're good enough applying it, but that's really hard. That's like next level you stop Yeah in the back The question so you mentioned [that] angel investors are a shorter timeframe as in the series answers the investors or a longer timeframe On the topic of process you know if you were going after Tuesday, or your angel like how many more meetings Or what kind of [timeframe] do you think it takes from when you decide to start that process to when?

You might expect to have a result yes, let me repeat a question when you take it up So the question is what is the timeline and what is the process for different stages [of] investing from the Investor's Perspective I? Would say I wouldn't think about it just as angel versus firm I would think maybe a little bit about how much you're trying to raise like if you're trying to raise a two and a $50,000 or $750,000 round and you're mostly talking to individuals and angels then That it can often be just a conversation [a] slide deck helps [who] doesn't always have to happen when you're getting to seed? So maybe like anywhere from?

one to two and a half then you can expect both from Like the Micro VCS as well as like the fantail road investors probably One or two meetings right and that can happen within week like for us it could definitely be within a week Or [just] just two meetings. I don't know about you guys. [well]. I mean your process will be different now and then when you get to an a then you might probably will happen with a firm is you might have One meeting with the first person a second meeting with multiple partners and then the full partner meeting right not every firm requires

Unanimous not every one week not every firm requires that everyone sees it But that also tells you a little bit about how [that] firm is run Is it more of a team sport or an individual Sport kind of firm? [so] that's what I would say would be the cadence And then it's really just about scheduling like can you get those three meetings done in a week in two weeks? Great firms will be able to move fast though Yeah You will be amazed at [how] far timelines can compress in a hot deal and how long? they can stretch out in a cold one and one of the really [interesting] things [is] if you think about the incentive dynamic for

An investor it is in their best interest to wait as long as possible before making a decision [if] they can because they just gather more and more evidence so but as a founder that's bad for you, so You have to juggle those things one more one more any questions Awesome you all know how to fundraise that's great. Thank you so much

All right, [I] think [I'm] the last person between now and lunch and now and maybe just summer right somewhere exams So I'll try to be quick. My name is [Ali] Roy Ghani [subject] of my talk is had to succeed long term and I've been amazed I was watching some of the videos that you guys saw and reading up on some of the notes you guys have heard from some amazing people [Emmitt] Shear and Michael Seibel and Aaron Levie ETC talking about how to build a great product and Out of the Angelyn Stewart butterfield about how to come up with ideas and measure success [Peter] Reinhart about product market [fit] the note Khosla about hiring and building teams. It's an incredible list of people and now

From just and Aaron about the tactics of fundraising I'm here to talk about a topic. That's perhaps more slippery And abstract than any of the topics you guys have heard about so far [and] that topic is leadership [and] in particular I wanted to answer the following question what do you have to do to be a great leader and Hopefully it goes without saying that That learning to be a great leader is pretty fundamental

To long-term success and the reason is pretty simple if you're going to succeed in building a really successful startup There's no really no way around having to hire a lot of people and Motivating and aligning them and getting to achieve something much bigger than you could ever achieve on your own So there's really kind of no way around learning how to be a great leader if you want to succeed and for me the question Really starts the [most] important initial question to ask is the following when you study leaders

Are great leaders largely similar to one another or are? [they] really different And I remember when I was sitting at Stanford I was an undergrad and a business school student here, and I remember sitting in business school And if you'd asked me that question I would [have] said pretty clearly that I think there's kind of a single personality trait like leaders are all pretty much the same and either you had those genes or that sort of leadership mojo or if you didn't then you better kind of work on changing your

personality traits around so you could exhibit some of those leadership personality traits, so you could be a be a leader and This question for me [was] largely an academic one until after [business] school I started working at Pixar the animation Studio and Had the extreme good fortune of working with four people four leaders that I consider extraordinary And these four people were Steve jobs who is our ceo? Ed Catmull who was Pixar's founder and was the president of pixar when I joined?

John lasseter who was Pixar's chief creative officer and Bob iger who was the ceo of Disney? Who acquired Pixar in 2006? The surprising thing for me about working with these leaders was that they couldn't have [been] more different in terms of their personality their temperament their style and really just the way they went about doing their jobs and [I] want to tell you a little bit about each [one] of them with the aid of a picture

That's John lasseter John was an x is an extroverted artist he is He studied cartoons. He went to animation school. He's boisterous and fun-loving He loves toys, and he has a massive toy collection. You can see part of that behind him [he's] emotional. He's energetic You could always read how he felt on his face He loves wine and good food he had dozens of hobbies outside of work

He didn't manage his time particularly well and was always over committed And he always showed people a lot of love the people around him he gave everyone hugs and he wore hawaiian shirts every day Ed Catmull on the other hand was an introverted scientist he had a phd he studied computer graphics at University of Utah and graduated in 1974 with the dream to one day make an animated film on a computer He was quiet thoughtful

exceptionally calm Never reactive. He was hard to read and decipher He was really health-conscious. He kind of lived his life the right way. [he] didn't drink. He didn't smoke just ate well, and His primary Hobby outside of work believe it or not was to go on week-long silent meditation retreats You guys all know about steve. He was a college dropout. He never really worked for anyone in his life

He was a magnetic presence in meetings walking around. He was intense he was impatient [he] was extraordinarily quick on his [feet]. He was not really prone to bonding with people or showing love or affection You certainly never I never saw him give anyone a hug at work He could say really pointed things he was aggressive He was always in a hurry [and] he was in a hurry to get to the answer he had this energy about him And a clarity of thought and communication that was really remarkable, and then finally [Bob] [iger] Bob was the ceo of Disney

He had unlike Steve spent more than 30 years at the same company Before he [eventually] became the ceo he was diplomatic is Genteel He was patient wise calm he had gravitas He exude it a trustworthiness and honor that you wanted to be around and follow and he had really really high emotional intelligence Here's a picture of the for them on The day we announced Disney's acquisition of pixar when I look at this picture

[I] think [to] myself these four guys work extremely well together [and] if they'd been each other in high school or in college There's no way they would have ever been friends You had an artist and a scientist a hippie and an athlete and age would not have run in the same circles So working with these guys Taught me [a] lot and it kind of led me to my personal first insight about leadership Which is that? There's no single personality type for great leaders?

There's really no single Model And this is actually really great news if you think about it because it means that people of varying personality types can all strive to be great leaders you're not you don't there's not a Gene set or a certain personality type that you know allows you to be a great leader or disqualifies you from being a leader But the other implication of this insight is that in your quest to become a leader of your startup or even or even a bigger aspiration for leadership

You have to be yourself You have to [be] authentic You can't try to be someone else or copy someone else's personality or style and hope to be [a] great leader you can't try to be like Steve jobs and The reason for that is that as humans were actually really highly evolved at detecting inauthenticity and other people and We don't follow People we find to be inauthentic so this kind of leads to my second insight that I wanted to share which is despite the

Variability and personalities despite the fact that really all personality types can be great leaders All great leaders have to do three things exceptionally well the first is that great leaders think and communicate clearly as a leader you have to paint a compelling vision for the future that other people can understand and follow and This is the case if you're a three person startup, and you're trying to motivate your co-founders or early employees

and it's even more the case when you're a hundred person company a thousand person company and so on and the key thing [about] communication as a leader is that simplicity of communication is vital I remember Marveling at Steve jobs ability at pixar to take the most complicated problem. We were discussing and be able to simplify it to Its core essence break something complicated apart into what really mattered and what she should approach something first second third

it was like we were all sitting in darkness, and there was one guy who had a lantern and that was Steve and Because of that because he had clarity and could explain something in a way that you could understand and sounded right you would follow him The other example. I love on simplicity is an example from Jeff Bezos of Amazon [he] once said that in Amazon's retail business which now encompasses almost every category if not every category of products on Earth He said only three things mattered

first low prices second broad selection and third fast delivery these three things were the only things that consumers cared about and they would always care about those three things so anything that an Amazon Employee would do to improve Amazon's performance in those three areas was aligned with Amazon strategy And that simplicity has been there at a Bedrock of Amazon's retail strategy from the beginning That's great communication now obviously bezos and jobs set a pretty high bar

And I'm not here to try to teach you to be any of those guys but I can tell you that if you want to improve as a communicator the [first] thing you [should] do is to step back and give yourself more time to think Even Steve jobs used to tell us that when [he] was at his best running both apple and pixar half of his time half of his schedule was Unscheduled meaning it wasn't filled with meetings with other people he created time in his calendar To be able to think and that's going to be really hard when you guys start your startups

You're it's going to be frenetic your time is going to be you're going to be pulled in a million directions And it's going to be very very difficult to actually devote time to just thinking I don't mean answering email I mean time to think and plan ahead and plan your communication. What are you going to say? How are you going to explain what you think in a clear way, and so my best advice on this is Force your to yourself to take as little as an hour a day or an hour every other day at the beginning and Try to grow that amount of time on your calendar that you're devoted just to thinking go for a walk sit at [your] desk

Whatever you do that helps you get clarity Take that time You can get better at communication [some] people have natural gifts, but anyone with practice and we're giving themselves time To think can get better [and] the core insight here is that clarity of thought? always precedes clarity of language Second thing all great leaders do is they show [great] judgment about people?

So you heard vinod Khosla a few weeks ago say that? The first [ten] people you hire into your startup or absolutely critical and he's right and when you grow your startup You have to have great judgment not only about the people you hire into sort of individual Contributor roles, but even more so the people to whom [you] decide to give authority and power the people you decide to promote and to make managers and to make into leaders and If you show bad judgment there if you pick the wrong people if you bring the wrong people under your company

you can never grow into a great leader and Like communication, you can [actually] improve and develop your intuition about people practice and experience again help here and So as you guys start your companies many of you will likely be hiring people for the first time and so here's my advice Don't rush it Take the time to get to know the people you're hiring Ideally start with co-founders and early employees who you already know? It's important to be aligned from a values perspective

It's not just can this person code or can this person get the job Accomplished you want to try to hire people for the long term spend time to get to know them? You know it's not unusual when people at larger startups are hiring their first members of leadership That they spend ten twenty thirty [hours] with the person before they decide to hire them So spending time to get to know someone is very very important and trying to bond with them on values like what do they really? Care about are you guys aligned? Do you think you can get along well in the long term?

Evaluate that as well as their competence and the second thing is very important in developing your intuition is Try to meet people who are absolutely great at what they do even if you can't hire them in order to develop your own understanding of what great is Again, I could give you lots of examples of founders who spend a [lot] of time doing this? but the more people you meet The more great people you meet you fine-tune your ability to detect those characteristics and other people

Finally a lot of hires don't work out no matter how well you do it you're going [to] have to change people out You're going to have to ask people to leave Make sure you do that quickly make sure you're courageous about it and make sure that you reflect on the lessons learned every time someone doesn't work out and Also, every time someone works out make sure you're reflective about your own process and how you've decided to to bring people into the company And who you decide to promote into more bigger leadership roles? Last insight Great leaders have exceptional personal integrity and commitment

Integrity means standing for something that's important bigger than yourself it means having a mission to accomplish That is much greater than your own personal wealth or fame It means avoiding behavior that would erode trust in all of us things like favoritism or conflicts of interests or using inappropriate language or having inappropriate work relationships

The key test for me is if you consider if all of your communications All of your emails all of your verbal communications that you have with those around you if they were all transparent to everyone would you be embarrassed by anything you've done or said and Really you [should] try to hold yourself to that bar Commitment means making your work making your startup to a life mission in a way that inspires other people It means giving it your all that's inspiring when people see

Others when people see leaders motivated by a big purpose and giving it their all to accomplish that [purpose] It's motivating in and of itself and when you think of the opposite when you see someone who is motivated by selfish ends Who is cutting Corners who is slacking off who is showing? ethical Weakness Those are not people you want to follow so if you want to be a great leader It's really important to hold yourself to [the] spark So I wanted to Leave you guys with the last inside. I have and a piece of parting advice

Ultimately if you want to measure a great leader by one thing I think [the] most important success metric for a leader is trust and Trust as a squishy concept and in the way, I'm using it. I mean it almost in a 360-degree Sense the job of every leader is to build trust is to build trust and employees and investors and customers and users and Building trust is both an art and a science the science part of it's fairly Fairly easy it means when there is an empirical question to answer when you have to think through

What is the technology we should build or the product direction? We should go in or the or? what sort of partnership we should strike in the marketplace like you've got to be right about those those things a lot right if you it's a question of competence and It's also a question of confidence when it comes to the your people judgement are you good at Detroit people choices you make both hiring and promotion the [art] of Trust is more difficult It's about showing Empathy Having good timing choosing the right words

dealing with the right different people in the right ways and it's about the integrity [and] commitment that I mentioned striving for something bigger in yourself than yourself rather than being selfish or self-centered and when you see a leader who has Incredible trust think about in your personal life the people you follow in your life Whether it's your friends or family members ETC think about who you have deepest level of trust [or] in your life? outside of maybe outside of your parents And it's likely that those same people are people you would listen to and follow because trust is such a strong bond

So here's my parting parting advice At every step is you guys move forward build your startups [startup] may succeed it may fail. You'll try it again Etc You're going to have hard times and and hopefully good times always try to optimize for trust You're going to have a lot of hard decisions to make you're going to you're going to if you scale a start-up You're going to have to fire people you're going to have to admit mistakes to your employees and [to] your customers You're going to have to say no to people because you disagree with their ideas

try to view every challenge you guys face as leaders as an opportunity to increase the trust that people have in you and Always as you're evaluating one course of action versus another my best advice is to ask yourself which path will generate more trust in you as a leader and always try to choose that path Thank you [very] much. I'm happy to take questions

Or not yeah [you] [never] mentioned where you learn how [to] communicate so clearly or just a natural column you know steve as you [guys] know started off very early as an entrepreneur and you know there's a great interview of him if you guys haven't watched it with Steve jobs and Bill Gates together and One of the things that steve talks about he said one of the things that bill and I have in common is we were always very early [on] the youngest people in the room and

how hard that was and Sort of what a trial by fire. That was to try to as the youngest person in the room convince other people that you're right [so] I think in his case he had years and years of practice before you know I ever met him I'm not I don't know if he had any particular techniques. I'm sure a lot of these gifts came, naturally but Proctor definitely helps and and being around people who [are] great at it and observing them and holding yourself to a high bar

[really] helps there How do you repair broken trust me people not certainly something you did on ethically? But people make mistakes an acumen [car] truck How [do] you repair that I think the most important thing you have to do is to acknowledge your mistake and to and to Talk about it. You know brushing onto the carpet or hoping that people won't notice or people will forget is a Natural human Instinct, but it's Not the right thing to do and so I think the first [step] starts with being able to admit it

You're absolutely right everyone makes mistakes [and] most people are forgiving of mistake But they they want I think people want to see that you have You're like them You have some humanity and that you can accept when you've made a mistake that you're open to feedback all these things are really actually Important so don't feel like if you've made a mistake or goof something up help talking about it and admitting it Makes you weaker, or that shows lack of leadership? it's actually usually the opposite it usually builds trust to see people be honest about mistakes that they've made and to see people have the

Self-Awareness to realize that they've made a mistake We take one more Yes, you can't this one driver behind those four people's motivation. Oh, yeah for sure Well, it's hard for me to speculate. Well. I'll just talk about John and Ed because I know them the best John was motivated. I think first and foremost by

Making great films that brought families together and you know would last forever you know he used to say that What other film other than snow white can anyone name that was made in 1937. [I] hope I got though. You're right But is it the [thirties]? [and] he said if we do [our] jobs, well, you know these films will live forever And he was also motivated frankly by just like having fun doing what he did I mean he that that guy really you know squeezed all the joy he could out of life

And I think those were probably his from my observation some of his biggest motive motivators in Ed's case I think edie That is a great learner and a sinker. I think what motivated him was trying to create an organization That could repeatedly Be successful repeatedly produced great films And he kind of became an organizational thinker he of course also wanted to make great films, and you know he's also a technologist So he cared a lot [about] the you know the software we were we were building

But I think fundamentally he wanted to try to figure out how to make pixar this sort of almost almost impossible continue it's almost impossible streak of creative success build an [organization's] able to repeatedly be successful and understand why and how that was So at least this but yeah the motivations did differ I think there was some some definitely some shared value some shared aspirations, but each of them had a different a different specific motivator

yeah, all you mentioned that you look at the feature the early rise to the most likely will end go so we're Kind of like on the earliest stage. I think so, it's almost like high school Yeah, and in the future [join] them together of your own They won't get [together] [you] gotta like balance getting people of diverse backgrounds like that [together] Well, I would say you shouldn't do that when you're when you're early start up I mean, you should hire people who can first of all that you're connected with and you can work with well And you think and get the job done?

The point about [their] diversity had to do with for all of you in the room I'm sure there are many personality types here all of you in the room your personality type whether you're introverted or extroverted Whether you have a more, silly personality a more serious personality, whether whatever you've studied Whatever your background is I don't think personality type Disqualifies you from being a being a great leader or becoming a great leader that was really the point not that every company should Strive to hire for people as diverse as them as their first employees that probably you're right probably a mistake. Yeah

Okay, okay. Thank you
