William Hsu recounts startup mistakes driven by hubris: treating marketing as parties, giving away enterprise software while paying for sales, and spending on ads with no path to profit. He distinguishes hubris from confidence and argues that real confidence means understanding your limits and mastering unit economics.
Chapters
You think that I tell you guys the moral of the story is, hey, as a 23-year-old, don't quit your job or don't leave Stanford and don't get a job and just don't start a company because you guys are not ready. Well, that's not the case actually. I will never say that, right? Because there are guys out there like the Dorsey, the Zuckerberg, the Gates, the Dales of the world that are outliers. They're born to start companies. They have an inherent knowledge or understanding of how to navigate the travails, the obstacles of starting a company. They're just geniuses, right? They're the Beethovens and Mozarts of entrepreneurship, right? And they know. And in a lot of ways sitting here today I would never be able to figure out whether I was or I wasn't. So yes, go chase your dream, right? Very quickly understand that there are things that tell you that you might not be a Jack Dorsey or Mark Zuckerberg or Bill Gates. And these are the things I did. I thought marketing was open bar parties. So I actually threw a lot of parties. I was an enterprise software company throwing parties for marketing. The mentality was completely off. If you guys think a lot of these young entrepreneurs were overly confident to the point of having lots of hubris, I was one of them. I thought I was better than everyone else. I was 23 and on paper worth tens of millions of dollars, right? So why shouldn't I deserve to drive a nice car and pretend that I'm better than everyone else? Well, there is a very big difference between hubris and confidence. Confidence is the willingness and the fearlessness of solving a problem, right? The ability to tackle a problem head-on without fear. Hubris is the belief that you could solve a problem even without tackling that actual digging deep and understanding the components of that problem. And to be serious for a second, one of the most important things I ever learned which I do want to impart on this class is to understand the concept of unit economics. I had an enterprise software product I was giving away for free. So here Mr. Company, take my product, have it for free. I had a sales force I was paying about $150,000 per salesperson to go sell a product that was for free. I was advertising at the San Jose Arena with big billboards at the Sharks Shark Tank, right? I actually had ads in— you guys probably don't remember— Red Herring, a tech magazine like Wired. The customer segment, the go-to-market strategy, the product itself, the component economics of how you become profitable was completely misaligned. So if there's one thing you learn is to really understand how you're going to market, and what the unit economics of that, and can you be profitable on a per-acquisition basis.
