I wanted to chat about start-ups, so I called up Ben Yoskovitz, who’s been an entrepreneur since the 1990s.
After we got caught up on each other’s projects, I asked him if he’d be willing to share his latest and greatest with our audience at Mirasee. He graciously agreed, and the result is this interview about start-ups, entrepreneurial strategy, and lessons learned from past businesses.
Here it is, 31 minutes for you to enjoy:
Here’s the full transcript:
Danny: Hi Ben, it’s a pleasure to speak with you, and I want to thank you for taking the time to do this interview.
Ben: No problem.
Danny: For the benefit of our listeners, Ben Yoskovitz was the founder of a start-up company called Standout Jobs before starting Year One Labs, which is an early stage seed start-up accelerator, he also blogs at InstigatorBlog.com. Now Ben, before we start talking about your more recent ventures, I remember you mentioning at one point that you had quite a few entrepreneurial experiences before you even started Standout Jobs, can you tell us about that early experience?
Ben: Sure, I started my first company in 1996, it was between my third and fourth year of university, it was a web development company, four guys, and that company was eventually acquired by a U.S. firm, in about ’98 or so, so a couple of years in. Not a, not a huge acquisition but we were doing a lot of consulting work, outsource development work for one particular firm, decided to join forces, that was a service business, then we converted that business to into the product company, we launched it a web-based project management software in about ’99 or so, and that product was called Vertabase, web based software, so B2B software we went from a service to a product business. What I left that company in 2006, and then in 2007 started Standout Jobs.
Danny: Okay, so tell us about Standout Jobs.
Ben: Sure, Standout Jobs was in the recruitment space. So again, it was business to business, web-based software, you know, which is a broad category that I was familiar with, and Standout Jobs was in recruitment and we were building a platform to help primarily, the target originally was small business, help small business with recruitment. So the basic argument was that a small company that’s hiring has a very hard time getting the word out. There are job boards and other things, but they’re often just overloaded with, by, big companies or recruiters, and we wanted to leverage some of what was going on in social media and the social web and apply that into recruitment. So, we built a platform for doing that, launched the first version of that project in the beginning of 2008. We, we did raise capital for that business from venture investors and angel investors, and eventually, we got hit, unfortunately, with that business, we got hit by the recession, so you know, end of 2008, or fall of 2008 the economy, uh, tanked, particularly in the United States, you know, that really was a struggle, because very few companies were recruiting at that point. We eventually sold the assets of that company to another firm that was based in Vancouver and that was in April 2010, so it was about a three year life for Standout Jobs.
Danny: Okay, and what was the, like how was the… I’m just trying to get my head around, and I’d like our audience to be able to do the same… what was the value offering, what was the customer experience created by Standout Jobs?
Ben: Yeah, the value offering was giving, was really to empower a company to do much more in terms of their recruitment. So anybody who’s ever hired knows that, for the most part when you’re hiring somebody, although you might have a list of credentials or requirements, you really hire based off of the intangibles. Its personality fit, its cultural fit, timing is a big part of it, and we wanted to help companies expose that to the outside world. So, you know, even If I use examples… simple examples like pictures. So you know a job description is a very poor way of recruiting people, take pictures of your office and show people what the office looks like and all of a sudden it makes a huge difference. So we really wanted to help companies tell their story, whatever their story might be. Um, and every company can be different and the value can be different and the benefits of working at specific organizations can be different. We wanted to help companies tell that story in a very, very easy, intuitive way, so that they could then, the time that they would spend recruiting would be really in nurturing leads, just like we do in sales.
Danny: Cool. So with Standout Jobs, I mean, you know, you were working on this project for three years and you were, you know, despite setbacks in the economy you were still able to sell the company which is great. Can you tell us about some of the things that went really well and some of the things that went not as well and that you’ve learned from?
Ben: Sure. I think, you know, things that went, well, with Standout Jobs, there were a ton of things that went very well. I mean, we were really successful at hiring really talented people, so we ourselves took to heart the necessity in recruitment of telling our story as a company: we were two founders, we raised money, you know we used video as an example to describe what we were doing and the value we were trying to bring and what kind of people we were attracting to our own organization, so there was a bit of eating our own dog food there in terms of our own recruitment and we hired a very talented team. We had a very, I still believe even though the end result of Standout Jobs wasn’t what we had hoped for, that we had a very good vision, we were very much on mark, in terms of where recruitment is going, and how, now social recruiting, if I use that as a tagline, is you know, very popular. More understood than it was when we started. We were very successful early, or at least reasonably successful from a marketing standpoint and a brand building standpoint, so we do not come from a recruitment background, and so, but we were able to position ourselves individually, but also as a company as thought leaders in the space of social recruitment. And that was very important to establish credibility, business development partners, channel strategy. A lot of that came out of our ability to kind of start, sit down and say this is what we believe in, this is what we think is important. This is where we think recruitment is going. Not everybody agreed with us, but a fair number of people said hey, these guys have a good view on this, let’s see what they’re doing. You know, on the bad side, I think, we didn’t really understand the market well enough to jump into the market, and I think that was a pretty significant mistake. We were going after small business because we recognized that small business always has a hard time recruiting, they don’t have the budget, they don’t have the brand awareness to attract people, they often don’t pay, you know, benefits or salaries that other companies that bigger companies offer. But you know, there were some fundamental flaws in our assumptions. An example being: small businesses don’t hire a lot. And our message was “always be hiring, always be recruiting” so make a commitment and an investment in your recruitment strategy except that if you only hire a few people every year, it felt to a lot of people like it was a waste. Even though you could argue otherwise. So we made some fundamental assumptions that were mistakes, you know, timing, which we couldn’t control, obviously had a significant impact. Ultimately, the biggest impact on that business was timing, with respect to the recession. But we did make mistakes like, you know, flawed assumptions at the very beginning that we didn’t recover from.
Danny: Okay, and you know, that happens to all of us, I mean, I’ve certainly been there with one of my start-ups MaestroReading and something I like very much from The Four Steps to the Epiphany, in the back in his bio Steven Gary Blank describes himself as I think, an 8-time entrepreneur who created 5 IPOs and 3 giant craters. So you learn just as much from the craters as you do from the IPOs. So after you sold Standout Jobs, you moved onto Year One Labs, which is an early stage seed start-up accelerator. Now, some of our listeners probably don’t know what an early stage seed start-up accelerator is, can you explain what that is?
Ben: Sure. So it’s basically a, at least our, and there are many different variations of an accelerator and what that means, but our accelerator, Year One Labs is really about helping super, super early stage companies, specifically web and mobile companies come up with or validate an idea, and you mentioned Steve Blank and Four Steps of the Epiphany, and we very much follow a lean start-up process, and so it’s a, it’s a bit of a seed fund. We have a small amount of money, we invest a small amount of money into each company and for Year One Labs we did five start-ups. We invested in five companies. We provide 12 months of hands-on mentorship, and that goes anywhere from, you know, collaborating on an idea, to helping with connecting them to business partners, to helping them raise follow-on capital when they leave Year One Labs. Ultimately it’s really about providing a framework for building companies. So you know, it’s not a curriculum, it’s not quite a school, but it’s a framework and we say, step one is this, step two is this, step three is this, and we put these companies through that process and for us it’s really about investing in people. So we’ve invested… some of the investments we’ve made have been with people who didn’t necessarily have an idea coming into Year One Labs. Or they had an idea and we said “fantastic, go talk to 20 people, and let’s see if that idea makes any sense.” And very quickly found out it didn’t make any sense, but we still liked the entrepreneurs and then they just moved on to doing something else. So that’s the best way I can describe it, and the acceleration part is really about saying, it’s really about moving the companies as quickly as possible to the point where they’ve got something, some kind of traction, ideally product/market fit, but I think more likely it’s going to be traction, early customers, in some cases it might mean early revenue. Getting them to that stage where they can do this on their own, they can raise follow-on capital, or their profitable and they can move on, on their own, and grow their companies.
Danny: So, why did you go to found Year One Labs rather than another start-up of your own?
Ben: I think, you know, it’s primarily because I wasn’t ready to start another company on my own, so… when you’re running a business, it’s really like putting blinders on, it’s very, very hard to focus on anything else, and in fact, if you do focus on other things, it’s usually to the detriment of your company. So after Standout Jobs which was, you know, not quite a crater, but painful enough of an experience, I wasn’t really ready to jump back in. I didn’t have any burning ideas, desires, that I really was, you know wanted to launch again. Like, I really want to go do this thing, I’m going to do it right away, and so Year One Labs was a very good way for me to be actively involved in the start-ups, help other people with their start-ups, but put less of blinders on. So instead of me focusing on being the CEO of one company, I participate in five companies, but I’m not ultimately responsible for any of them.
Danny: Cool. So Ben, you mentioned that to a certain extent you’re not investing in businesses so much as you’re investing in people, but that being said, I think there’s still some parameters of what kind of business direction you’re looking for you, and you know, the flip side of that is what kind of business should really be thinking about working with an accelerator. Can you elaborate on that a little bit?
Ben: Sure, yeah, absolutely. I mean, for us, it’s always any company, well I wouldn’t say “any” but you know, the broad industry that we focus on are web and mobile. Most of the companies that we’ve seen in the past tend to be business to consumer plays. And although the back, my background is primarily B2B, the background of the partners is also B2B, a lot of what you see these days tends to be business to consumer. It’s what appeals to a lot of people, they see big things like Twitter and Facebook and they, you know, they, that’s the kind of company that they envision themselves building versus the company that sells, you know, software to accountants for example – just a little bit less sexy. So, you know, web and mobile are the broad strokes, we don’t have any specific parameters around industries within that, so if I look at the companies in Year One Labs, you know, we have one that’s in the location space, we have one that’s a social game, we have one that’s targeting parents, there’s one that is a B2B play, so, it’s a broad range, and we would never necessarily narrow it down by specific industries, but web and mobile, B2B, B2C, are the broad categories that we play in.
Danny: and is there some kind of, I guess a checklist would probably be too formal and rigid, but, like, for our listeners who are on this call, you know, many of them are entrepreneurs, they’re starting and running businesses. If they’re wondering to themselves “gee, I mean, you know, a bit of cash and all of this support and mentorship sounds really good. Maybe I’m a good fit for this; maybe I should go after it.” Is there some kind of self-evaluation criteria you could give them to explore whether they should be sending you an email?
Ben: Well, I guess the first thing I would look at is, the first thing I would look at is they have to be willing to work on it full time, and, you know, if you imagine $50,000 in capital for twelve months, and it may be less than twelve months, but you know $50,000 is not a lot of money, so they have to be able to make that commitment to, you know, surviving on a very small amount of money that we’re providing and have potentially other sources of income that they can draw down on. But they have to be 100% committed to what they’re doing for up to a year. From a product and market perspective, we do ultimately look at the people and, you know, like I said we’ve made deals or we’ve made investments in people where the original idea didn’t pan out. So I don’t like to focus too much on that. But having said that, the idea does play a role. If, if you haven’t done research into your market, if you haven’t done research into your competitors, if you haven’t really looked at the feasibility of your idea, or the likelihood that you can get traction because you have, maybe, some kind of unfair advantage, business partners that will help you, then we’re going to, we’re looking at that and questioning the thinking that the entrepreneur has gone through. So those are the kinds of things that we do look at, I mean there are certain markets that may be more interesting than others because there’s a lot of activity in those markets, or there’s a lot of funding going into those markets. If there is expertise in a certain area, you know if you’ve spent the last ten years working in a certain industry and you know it really, really well, that can play a role versus somebody coming in into an industry like I did with recruitment going: “Oh well, I can fix that, I can change that industry.” So there are criteria like that, that we look at that I think are important. And then when we talk about business to consumer, I think we see a lot of copycat stuff. You know, just today I was talking to somebody who was, you know, pitching me on an idea around the idea of matching people based on their interests. I’m not, you know the most prolific investor, I haven’t seen, you know thousands of deals, but I, off the top of my head could name five or ten companies doing the exact same thing as that. So those kinds of things, I can look at say: “Okay, so why is yours going to work more than somebody else’s?” So you need someone who’s going to say: “Well I’ve got this kind of partner, I’ve got this kind of experience that’s going to make that difference.” And unfortunately a lot of entrepreneurs don’t have those things, but some do.
Danny: Why do you think that is? Do you think that’s just a matter of, you know, getting caught in the sparkly lights of Twitter’s rapid success kind of thing and you know: “me too, I want that”?
Ben: Yeah, I think that plays a role, I think people have an unrealistic view of what it takes to build a company. So, and that’s just, that’s just people who just don’t know. Right, and if you haven’t done it then you don’t know and that’s fine. But, you have to look at it and say well, how do I get a million users? And you know for a business to consumer play, you know, five users, five thousand users ten thousand users doesn’t count, you need hundreds of thousands of users. So, I think there’s a certain naiveté that people have. I think people look at things and they see problems and they think: “Oh, I can solve that problem.” But they don’t realize or they haven’t put the effort in to research the fact that there are 100 other people doing that. I wrote a blog post once, not that long ago actually, saying: “If you’re doing something, I guarantee you there’s 100 other people doing it.” And 100 people might sound like an exaggeration, except, one of our companies, Local Mind, which is location based Q&A, as they were launching, there were five other competitors literally launching at the same time. And at least two times while we were being pitched for investment in Year One Labs, multiple people came to us with the same idea. And that’s just in Montreal, right, let’s say Montreal, Toronto, Ottawa is where, predominantly, most of our deal flow came from.
Danny: So you’re not even dealing with New York, the Valley.
Ben: No, no. And so if in Montreal, there are, I think it was at least twice if not three times, two to three different companies came and pitched us literally on the same idea. If that can happen in Montreal, if there are two to three to four to five different companies in Montreal working on the same idea that you have right now, imagine the rest of the world. And especially in the web and mobile space where Montreal is not the hub, Silicon Valley and New York are the hubs, so what’s the competition look like there. Again, early stage competition, who knows? It doesn’t mean there are any market leaders necessarily, but it just, you know, if somebody comes in and I say: “Well who else is doing this?” Very often people say: “Nobody!” And then I Google it and I find ten other companies. So you know, there has to be a certain amount of effort and thought that goes into your start-up idea. There has to be a certain amount of, I don’t know the seriousness that you put into and reflection that you put into whether this is reality or not. And all entrepreneurs, rightly so to a certain degree have a reality distortion field, in that they believe they can do it, above and beyond anyone else. And you need that to sort of go on every single day with your life as an entrepreneur, but that can only take you so far. And then some amount of reality has to set in.
Danny: I call it the Bugs Bunny effect, you know, Bugs is fine when he runs off a cliff until he looks down, but as an entrepreneur you can only go so long without looking down.
Ben: Right, exactly. And part of what Year One Labs is here to do, or any accelerator is to provide that, you know, it’s not our company, right, so we’re not, we can sleep at night and, but it’s sort of arm’s length perspective that we can then provide. We care, we need these companies to succeed we want them to succeed, and that’s how accelerators make money, is when these companies ultimately are acquired by other companies. But it’s, you know, we’re not so in love with it, we’re in love with it enough to push it, but not so in love with it that we can’t provide perspective. And I think a lot of entrepreneurs, again there’s a certain balance there. They need a lack of perspective, but not so much so that it just makes no sense whatsoever.
Danny: And I think all this, the reality is that there are so many competitors working on the same idea at the same time… really drives home the importance of, as you said, people have to be serious about their idea, they have to be ready to work on it full time, they, you know, yuu have to move fast. I’m reminded of a sticker I saw on a gym locker once, it said: “every second you’re not training, someone else is training… to kick your ass.”
Ben: Right! Yeah, I mean speed is a huge part of it, and I think, there’s a certain amount of, in Montreal, in Canada we tend not to move, this is just, broad strokes, we tend not to move as fast as they do in the US. And I think speed is a key, key factor in terms of having a chance at success, and I think a lot of entrepreneurs don’t realize the speed, but they don’t also realize some of the unfair advantages that other companies had. They look at a company and they say: “Well that company has a million users. I can get a million users too.” What you don’t realize is that they had A-B-C connection, and whatever it is, I’m making this stuff up, but, you know, they had unfair advantages that you didn’t see and didn’t realize existed, that gave them the boost they needed and the traction they needed to get started. And often times you see people that have similar ideas, but they don’t have those things in place, they don’t have those advantages that are going to give them the initial traction, the initial boost, the initial virality, the initial publicity they might need.
Danny: Yeah, and there’s a lot of moving parts, right, even when you have the unfair advantage, you’re not guaranteed a success, so imagine how hard it is without it.
Ben: No question, there is very little that actually guarantees success, it’s one of those things when it’s only success, you know, you can look at it almost in hindsight and say: “Well that was successful.” Right? Because it’s really hard to know, any time along the process, you know, how you’re really, and it also depends on how you define and measure success. But I really just, think, you know when I think of a lot of entrepreneurs that they come to any accelerator, they’re, you know, it’s so easy to do research online, it’s so easy to be more prepared, it’s so easy to understand you know, what is an executive summary, what is a pitch deck, how do I present this idea, should I build a prototype first or not? I mean all of these things have been answered countless times by very, very successful entrepreneurs publically on the internet. You know, my sort of, advice to people is do your homework. And do a lot of homework, so that you can be as prepared as you can possibly be. Or, and then one of my big things these days that I’m talking to people about is intellectual honesty, so entrepreneurs do need the distortion field, but if there’s zero intellectual honesty about how things are going, then you’re bound to fail. Or you’ll fall into, you know, you’ll just be so insanely lucky that it will work, but I find that a lot of people are just not intellectually honest with themselves, because they just don’t want to admit that things aren’t going the way they want them to go.
Danny: I can tell you though, I mean, from my experience and seeing other entrepreneurs as well, I think that’s very much a function of experience, cause when you’re doing your first or second business your, your head is full of these stories of you know: “You’ve just got to try hard, never give up! And you know, eventually things work out.” You don’t recognize that, well no, you try hard but you’ve got to be smart about it, too.
Ben: Yeah, I know. Putting in twenty hours a day is pretty much a prerequisite for being an entrepreneur, but if you’re spending those twenty hours you know staring at your computer it doesn’t count, right? Or staring at a wall, it doesn’t matter what you’re staring at. So, I think that being smart about it, and look, there’s no absolutes here, right? When I think about working hard and persevering, I’ve seen people who I’ve thought: “That company is not going to succeed.” And yet they persevere and they seem to come out the other end and things seem to be going well. In other cases I’ve seen, what I describe as zombie companies, they just keep going and going and going and going, and they’ll never actually die, but they never actually get anywhere either. So I would lean more in the camp of: better to just admit failure, move on and restart, because you’ll be re-energized by some new idea, the passion will come back, the motivation will come back and you’ll take another crack at it with all of the lessons learned, as opposed to just trudging in every day and thinking to yourself: “well maybe if I just work a little harder, it’s finally going to happen.” There are no absolutes, there are success stories, you know people who have failed and then succeeded, people who have persevered even though it looked like they were going to fail and they succeeded. But I would lean more towards being intellectually honest with yourself instead of just trudging along and being a zombie, shut it down, admit defeat. And every single successful entrepreneur on the planet has failed, so, that’s almost universal. Even people who have had successes, they try again and then they fail. So, I just think, you know what, better to fail faster in most cases.
Danny: Mmmhmm, I agree, and you touched on something important, that you can never know for sure, no matter how good you are at this and how many businesses you’ve started and run and invested in and advised and so forth, you never know for sure if it’s going to work out or not. And when I spoke about this with Randy Komisar a few, a couple months ago, and he was saying kind of the same thing, you know, you never know for sure, you would be incredibly successful if you could, but nobody can. What you can do is apply processes and experience to kind of maximize your chances and minimize your failure rate. You never know about any particular investment is it definitely going to work out, investment or a business, but you do know that if you apply these learnings and this experience and this process, across the board, more of them will be successful than otherwise they would be. And I think that’s a big part of the value that an accelerator brings to the table: that structure and that experience.
Ben: Absolutely, and I think the process helps to identify the problem areas, you know where you’re veering off the path, and veering off the path is inevitable for all start-ups many times, but you know, experience will tell you, you know, will identify those things faster and then hopefully be able to correct those things faster,as opposed to people veering off for significant amounts of time and then being unable to get back into heading in the right direction, so, you know, experience definitely helps.
Danny: Umhmm. Ben, we’re coming up on a half hour and I want to be respectful of your time, but I also want to make sure our listeners walk away from this interview with a clear action step they can take to improve their business, get it either back on track or further along on that track depending on where they are and what they’re doing. If our listeners who have been listening to this for the last half hour, they listen to this and they, you know, it really struck home with them. They were saying: “Wow, there’s really good insight here, this experience, this structure, I want to leverage some of that. I’m going to clear my afternoon, I’m clearing three hours.” What should they do with those three hours?
Ben: I guess it depends in part at what stage they’re at with their business, but assuming they’re all relatively early I really would encourage people, whether it’s The Four Steps to the Epiphany which is unfortunately very difficult to read, but I would really encourage people to look at the framework behind Lean Start-up, and it’s not hard to find, if you Google: Lean Start-up you’ll see it. But I really, I really think that that provides the good framework for understating the path that your business is on and you know, focusing on things like the value that you’re providing to customers, and is there real value there, are you solving a real problem, will people pay for it if it’s a B2B situation. I would really go back to that, it’s kind of like going back to square one, but even companies that have products in the market, no matter what they’re doing, can sort of go backwards a little bit and work on the validation side of things, the validation of “yes, I’m solving a problem. Yes, I’m creating value. Yes, this is the appropriate price or not. Yes or no these are the right or not right target markets for this.” There are just some fundamentals there that a lot of people skip. They skip because they don’t know about them or they skip them because they don’t want to face those things because what a framework like Lean Start-up forces you to do, or what Steve Blank describes as customer development, is to be intellectually honest with yourself.
Danny: And for people who don’t have either the time or the patience to read The Four Steps of the Epiphany, which as you said really is quite a difficult book to get through, there’s a crib sheet kind of version of that book called The Entrepreneurs Guide to Customer Development by Brant Cooper and Patrick Vlaskovits, just 100 really short pages.
Ben: Yeah, that’ a great version, and it’s a little bit more focused on business to consumer web applications whereas, you know, The Four Steps to the Epiphany is very much about enterprise software, so slightly different, but very similar. And there, there’s lots of guys doing great work on this stuff like Ash Maurya, Eric Ries. And you can get lost in this stuff quite a bit, and it’s not really about becoming an evangelist for a specific process, it’s not about accepting things like religion, it’s not about doing them verbatim, it’s really just about assessing your own business and looking at the fundamentals of it and being realistic with yourself and, I think the best, and the most important tactic here, is really, and again, it depends on what stage you’re at maybe, but it’s really about going and talking to your customers. And there’s ways of doing that, and interviewing customers about the problems they’re having to collect the feedback that you need, it’s not just pick up the phone and saying “hey, how’s it going?” But so few, especially in the tech space, so few entrepreneurs pick up the phone, or meet their customers face to face cause they just say, “hey, I’m putting it on the web and people will come and buy it or use it.” It generally doesn’t work that way, so you know, what we do at Year One Labs in the very beginning stages is say: “Okay, you have this idea, you think people have this problem, you think this is the group of people or a defined kind of market. Fantastic, go talk to 50 of them.” And by the time they talk to ten of them, either they’ve completely invalidated what they thought or they found a slightly different direction, or they’re seeing patterns that are just so repeatable that they know they’re legitimately on to something. But if you haven’t gone through that exercise, you really should go through that exercise.
Danny: Ben, that is fantastic advice, and it’s perfect for us to end on. Thank you very, very much for your time, I’ve enjoyed the interview, I know that this is going to be very valuable for our readers and listeners. I wish you and the entrepreneurs that Year One Labs is funding tons of success. Thank you very, very much.
Ben: Thanks, I appreciate it Danny.