“It’s not lost on me that the future of innovation is in the minds of the people sitting in this room,” said angel investor Ron Conway, addressing a crowd full of entrepreneurs at Startup School today. One of the 11 speakers at today’s event, co-sponsored by Y Combinator and Stanford University’s BASES.
Known as the premier angel investor, Conway admitted that he had fretted about what the content for today’s lecture should be, but with some urging from YC’s Paul Graham, Conway opted to simply tell a few stories of how he had met a number of today’s strongest tech companies: Napster, Google, Facebook, and Twitter.
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Conway started his tales with the background of his co-founding of Altos Computers in 1979, noting that in its day it was a very disruptive technology. “It was a typical startup,” said Conway, but he described an investment environment that was much different from today’s. Then, you had to bootstrap your company and have some level of profitability if you were going to get VC funding.
Although going public with Altos was a huge win for Conway, he argued that he defines success by having what was, at the time, the fastest growing company in America. “And that was more satisfying than getting rich.”
And the message Conway repeated to the crowd at Stanford today: “You can do it too.”
Napster’s Shawn Fanning: Superstardom and Borrowed Suits
Conway told of a party at his house in 1999, at the top of the Internet bubble. With 40 million users at the time, Napster founder Shawn Fanning had a large crowd around him the whole time at the party. “I’m going to go talk to the two wallflowers over there, Larry and Sergey,” said Conway, who told the investor that “We’re going to build a big company too, but we will never be famous like Shawn.”
Conway pointed out that Fanning managed to cultivate a strong brand name with Napster, and while Napster didn’t survive, Fanning used that brand name to build future companies. When Napster lost its first court ruling, said Conway, Fanning showed up in a suit he’d borrowed, as he’d never worn one before.
But as Conway noted, Fanning was smart enough to know that once Napster found itself in the courts that things were probably all over. And Fanning was perceptive enough, despite his young age, to be ready to move on to his next idea and his next company.
Building a Good Service, Building a Good Brand Name, then Monetizing: Early Google
When Google was looking for its first VC round, the founders told Conway that if he could help the company secure investment from Sequoia that they’d let him invest as well. Criticizing some of the recent protestations about valuations of startups, Conway noted that the valuation of that round was $75 million – “and every one of us felt lucky to get in on it.”
Conway talked about the attention that Larry and Sergei paid to learning how to become good CEOs. And he said that the important things to the founders of Google was providing a good service, making users happy, and building a good brand name. And then monetize.
Conway also related an anecdote when Sheryl Stanberg approached Conway as Google thought it was running out of money. Ten days later, Conway joked, Google changed its mind as “AdWords started working.”
What The Social Network Gets Wrong about Zuckerberg
“Zuck,” says Conway, “meets the definition of ‘anyone can do it if they think big.'” Railing against the depiction of the early days of Facebook as chronicled in The Social Network, Conway insists that Zuckerberg was not partying all the time. Nor was he sitting in depositions five days a week, arguing with lawyers. Rather, “he was working his tail off like any good entrepreneur.”
Conway argued that Zuckerberg has had a consistent vision about what Facebook is, something that isn’t evident in the film. “How are you going to measure success with this thing called ‘social networking’?” Conway asked Zuckerberg in an early interaction. “Because some day I am going to have 300 million users using this product,” was Zuckerberg’s response. Something that demonstrates the founders humility, says Conway.
The Origin and the Definition of “Founder Friendly”
“Once an entrepreneur, always an entrepreneur,” said Conway. You don’t need to have a business plan or an MBA. All you need, says Conway, is a great idea. Anything is possible and you can accomplish it.
Demonstrating how he has been known as not just an early investor but a strong ally and advocate for startups but also alluding to some of the recent “Angelgate” controversies, Conway ended by saying “entrepreneurs build companies and should be the one who are the focus of the stories” the press writes – not investors.
“Never forget it’s your company,” said Conway. “It’s the founder’s company.”
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