Lessons for the Early Entrepreneur | Director of Zappos Labs, Will Young

Do you invest in a lot of startups with patents?

Like, it's not a requirement, because patents are kind of a little bit bogus. I think you guys have probably heard a lot about that, but I think there's some interesting thing in just being a bit defensive about your patent. Like, if you're doing something really interesting, you know, don't be afraid to go for a patent, although they're expensive, but it's more to almost protect yourself. Because, like, if you're a good-natured startup, you're not planning to sue anyone, but having that patent prevents people from suing you. Like, for example, big corporations like Amazon, Facebook, Twitter, they often just get patents. And when they get sued, they use their patents to say, well, you're suing us, but you're actually violating 2 of our patents. Let's just call it even. That's actually a really common thing. So, it's called being defensive with your patents.

So, if you get a seed-stage company coming to you, you're happy to see they have a patent?

I think it's a bonus, and it shows that they've— I think what's interesting, if they've actually gotten a patent issued, it's a little bit of validation of, like, wow, you guys are actually doing something different.

Are there problems that if, you know, I'm a seed-stage company and I'm already worrying about that, you think, oh, that's too early, like the revenue discussion? What good thing to worry about at some point in the company don't you want to see a seed stage company thinking about?

International expansion, I think, or even if you're an American company, national expansion, I think. And it depends obviously on the startup, but I give the examples like you can build, show some really early traction just focusing on one city. Like Angie's List, if you guys know Angie's List, like online services, they pretty much went public just being successful in Indianapolis, like a small market that no one else really cared about. It wasn't San Francisco, and then they pretty much convinced the industry, it's like, we can do this everywhere, and that was good enough. And so I think sometimes, I think the moment you're like, okay, now I need to hire a salesperson in New York, Boston, huge distraction early on.

The city-by-city sort of growth, I mean, we're seeing a lot of startups now that really need to launch in one place. What advice do you have? Would you have someone launch here? Would you have them launch in Las Vegas? What are good test cities?

I think, again, depending on your business, but when you're going to raise— hopefully all raise a little bit of seed money, right? And hopefully that lasts you 12 to 16 months. So you need to now work backwards. It's like, in my 12 to 16 months, what city can I be most successful in is the question you need to ask yourself, right? If you're doing another online door-to-door delivery service, San Francisco's a tough place to do that. There are so many, right? If you're trying to launch another ridesharing service, another really tough city. Interesting thing, I was just in Kansas City over the weekend, and not that I would launch another competitive ridesharing service, but for whatever reason, there's only Uber in Kansas City. If you're thinking about, oh, I'm going to launch an Uber competitor, pick a city where there's not Uber, Lyft, Sidecar already. Kind of some obvious stuff.

Any lessons here? This is a big company sort of problem, but they They're about to hire their teams. How should they think about it? What creativity should they bring to it, and what lessons here do you think there are?

I think it's— well, lesson number one is it never gets easier. A lot of early entrepreneurs are like, man, once I get to this stage, life is going to get easy. Look at Tony, right? He's been CEO of Zappos for 14 years. He says this is probably one of the hardest times it's ever been at the company. And because, like, because even though we have this great culture, we've been seeing some things, like some cracks in the system, right? It's like you always need to pay attention to those and don't think you ever have it solved. So even though we have these great core values, and I think we do still have a great company culture, he's like, we need to kind of reboot things. So don't be afraid to, like, 3 months into your startup, 6 months into your startup, this isn't working, and just kind of do a hard reset. And sometimes, you know, that means— I think Tim was talking about people on your team. Yeah. Sometimes that means parting with good people, and that's tough, especially early stages. Like, I think the biggest mistake I see big companies— even Zappos makes this mistake— and startups make is, we really need a programmer to get this Android app out. He's not like a great team fit, but he or she's just— we need this Android app. So you make that hire. That is such a slippery slope, because the next thing you know, you make that second hire that's not a good team fit, and they're good, right? Here's the thing: when you're a startup or a big company, it's It's super easy to fire people who are completely useless, because you look like, oh, you're not doing anything, you're fired. That's kind of easy.

Right.

It's really hard to fire people who get stuff done, but aren't a good team fit. But that not good team fit will cause long-term tension, and kind of be so toxic to your company. So, like, maybe if you need to prep for Demo Day, get a contractor to help build the Android app. That's— I get that. But, like, don't do short-term hiring decisions. that aren't good team fits. Like, never sacrifice on that.