Marvin Liao – 500 Startups: Forget About Perfection!
Marvin Liao is a Partner at 500 Startups, running the San Francisco based accelerator program as well as investing in seed stage startups. He has worked in Silicon Valley for 18 years and will be one of the investors at the Digital Freedom Festival. He will also join other 500 Startups mentors in heading the judging panel at the pitch competition! For more information on how to apply to 500 Startups Pitch competition click here.
You’ve worked in Silicon Valley for many years, 10 of those at Yahoo. Why did you move from a big company to the startup world?
I’ve worked in Silicon Valley now for 17 years. And I actually worked at a startup called Alibris before Yahoo. They sold used books and textbooks. I’m a huge book fan, so I randomly sent a resume and they literally called me the next day for an interview. I ended up working there for almost two years. In 2001, when the dotcom bubble came to a bust I got laid off just like everybody here. I was out of work for almost 5 months and down to my last 500 dollars, when finally I landed at Yahoo. It was still quite startup-y then with only 3 000 people working there. When I left, there were about 15-16 thousand. I was fortunate to be a part of that growth. After leaving the company I had the luxury of goofing around for two years, doing angel investing, speaking at conferences and mentoring accelerators. One of them happened to be 500 Startups. When they opened up the San Francisco office they asked me to join as one of the partners.
What is the difference between working for a big company like Yahoo versus the startup world?
The pace is very different. With a startup you don’t have that much money, yet you have way more control. But it’s still pretty terrifying. You’re always trying to find new customers and working on your product, while at big companies you have your core business and customers figured out. There’s already a business model in place, but it also attracts a very different kind of person. They tend to be much slower moving and there’s a lot more politics, just because there’s a lot more people. Not that you don’t work hard at a big company. But when you work with so many people, you just spend so much time battling others and not necessarily focusing on customers and the things that really matter. In a startup, if you don’t do those things, you’re company is dead. There’s a sense of urgency that I find more interesting. And you can impact a business at an early stage way more.
You’ve worked with startups all over the world. Have you noticed any cultural differences in the way they present themselves and do business?
Generally speaking entrepreneurs are quite similar everywhere, with a few differences. For example in Central and Eastern Europe there’s so much technical talent. Yet in the US there is an amazing talent and ability for sales, marketing, presentations and storytelling. Outside US it is really bad and gets worse the more East you go. The other thing is pace. Silicon Valley really is a test for you and your work ethic, because of the competition. People really have to work. I noticed in the 500 Startups batches that it takes the European, Latin American and Canadian founders three to four week to adjust to the pace. Right now we have two Latvian companies, startups from Brazil, Estonia, Finland, etc. It’s really interesting to see how they adjust to this pace and this level of competitiveness. Some of them just don’t.
What would be your advice to startups from our region? What should we work on the most?
In the early stages spend a lot of time talking to customers. It’s so important, but people tend to shy away from that. Your product doesn’t have to be perfect and people who are really into the tech side of the startup sometimes forget that. Really learn the basics of sales and marketing. Take acting or improv classes. It can only help you.
How many applications you get for a 500 Startups batch?
Anywhere between 1500 and 2000.
So you’ve seen thousands of startups. Do you already have any definitive criteria that lets you know almost instantly – these guys will be a success?
It’s really hard. I’m surprised all the time, even though I’m pretty good at figuring out who’s going to be the loser. And I mean ‘loser’ in a way that when we talk to them, something seems a bit off. It’s either the way they make the decisions, or manage the team, or if they’re dishonest. Maybe they’re just not that into it. I’ve had 227 companies go through this process and I now have quite a lot of data points to get a feel by week four or five of who’s not going to make it. I think it’s harder to predict the successful ones. The ones that make it might have some problems with the business initially, but they are always really smart guys or girls that will figure something out no matter what.
We talk about failing a lot in the startup world, but have you ever come across people that are more afraid of success, e.g., the responsibility that comes with success? What would be your advice to them?
Yeah, I see that a lot. I’m dealing with that right now with one of the companies. They tell me they want to go big, yet they just don’t take the necessary steps and don’t put in the necessary time. If you want to be a small business, that’s absolutely fine, but don’t lie to yourself and don’t lie to your investors. If you want to go big, you have to go all out. If not, don’t pretend and don’t half-ass it.
In your view what should startups focus on now to be successful in the future of self-driving cars and the internet of things?
Maybe saying “do what you love” is not completely correct, because you have to accept that there will always be some elements that you won’t enjoy. But there’s something to it. To be successful, especially in startups, where you are potentially giving up years of your life to work on something, make sure you work on something you’re really interested in. Not something that the tech press thinks is hot or something that VCs want to fund or some trend that is considered sexy right now. Do things that you would want to work on regardless if you’re being paid for it or not. That way, even if you don’t succeed, you will look back at that time and not regret it. Sometimes people see that something got funded in the Valley, so they try to copy that in their country. But keep in mind that many stupid things get funded here too, it doesn’t mean that it will work. Don’t try to be “the Uber of Latvia” or “the Pinterest of Poland”. That’s just some consensus sheep thinking, because the Pinterest of Poland is Pinterest. By the time it’s widely recognized in the press, it’s too late, work on something else. Work on something that genuinely interests you.
What are some common mistakes startups make?
Depends on the region. Not having balanced team of a business lead and a technical side. The Co-CEO thing makes no sense to me as well, having one person in charge is important.
Do you have any words of encouragement to the startups that are still considering applying for the 500 Startups Pitch Competition?
If you want everything perfect, this is the worst industry for you to be in! (laughs). “Good enough” is much better than perfect. Steve Jobs once said: “Real artists ship’’. There’s a lot of truth to that.
What are some main life lessons you’ve learned from being in the startup world?
Having urgency and being decisive is very important. And it’s underrated.
What would be your advice to people who have just started their startup?
Be a learning machine. Read as much as you can, meet as many new people as possible. Invest in your own education. And be open about what you’re working on. What I see a lot in new ecosystems is secrecy. Be open, be helpful. I think what makes Silicon Valley unique is the culture of pay-it-forward. When I started as a VC many important people in the Valley really took the time to help me. Be open minded, help others out. One thing I see particularly in the Baltics and Nordics – some people are just not very open to feedback. They take it so personally. When we give you feedback, it’s because we want you to become better, to learn from our experience.