Rob Hayes First Round Capital

What Rob Hayes, First Round Capital says about topics vital to entrepreneurs

Rob Hayes Posts – Titles

Rob Hayes  Posts  – Titles  (4 posts)

 

Going for Growth vs. Revenue

Successful Entrepreneurs’ Common Trait

What Hundreds of Founders Have in Common

Red Flags: Signals Not to Invest

Red Flags: Signals Not to Invest

Rob Hayes Partner First Round Capital

Hayes discusses red flags, things that would make him not want to invest in a founder or entrepreneur. 

Red flag:  If he doesn’t have the best possible people as part of the initial team pre-funding.  “When someone comes to [him] who has already surrounded [himself] with people [] who have quit good jobs [to come and work with him] because they’re so passionate about [] working with this person but also what they’re working on, [] that’s a good indicator.”

Red flag: “[] [The founder] is so enamored with [the] product [to the exclusion of addressing other important business elements.] There have been very few products that have been so good that the world just beat a path to their door [like Google or Facebook]. [] If someone is so enamored with their product that they can’t think through how things might change or they’re focused on one particular slice of the market and they only know that piece of the market and not a much bigger market [], I would be concerned about [that].”

Red flag: “[The founder says] now [he] need[s] to hire a designer[]. [] [Hayes likes] a product with design built in from the very beginning. [] When [Hayes talks] about design [he’s] talking about UX [user experience], feel, everything []”.  Rob Hayes, Rob Hayes of First Round Capital - TWiST #249, (ThisWeekIn Start Ups with Jason Calacanis), Published Apr. 18, 2012 @ 25 min.; http://www.youtube.com/watch?v=GEPqy0ad0BU

 

 

What Hundreds of Founders Have in Common

Rob Hayes Partner First Round Capital

“[One] thing that the hundreds of founders [he meets] each year have in common [] is that their plan is wrong. Sometimes it’s the big things, sometimes it’s the little things, but the plan is always wrong.  Founders who can pivot to a new idea given what they learn will survive their plan being wrong while those who believe that all signs pointing to trouble are wrong are not going to survive. []

[Here are lessons] that every founder should follow- start with a solid plan, but always listen to your customers, employees, advisors, and your gut.  When signals suggest that the path you are on is not going to take you where want to go it is time to pivot. 

So how do you pivot?  Always be ready.  Listen to your customers-they will tell you what they want.  And when the time comes, pivot clearly and decisively.  Understand what can be reused, what needs to be thrown away and what else has to be built.  Ensure that your team understands the pivot and is on board.  Manage your cash and make sure your business partners, including your board, understand [the pivot] and are supportive.  [Assess] whether you have the right skill sets for the new direction.

[] [Always] be assessing your situation and expect to pivot [to reach the destination].”  Rob Hayes, Do More Faster by David Cohen & Brad Feld, copyrt 2011, Pg 201-202 

 

Successful Entrepreneurs’ Common Trait

Rob Hayes Partner First Round Capital

Hayes says that a common trait for entrepreneurs to succeed is that “they stay the course even through the rough times. [] They tend to be very optimistic and very confident but also they’re not afraid to talk about what they don’t know.[] [They’re] resourceful.”  Rob Hayes This Week in Start Ups  #249, @ 53-57 min. Published Apr 18, 2012; http://www.youtube.com/watch?v=GEPqy0ad0BU

Going for Growth vs. Revenue

Rob Hayes Partner First Round Capital

When determining their business model Hayes advises entrepreneurs to consider whether it’s better to initially go for growth or revenue.  There’s conflicting advice on this issue.

Examples of business model strategies and how they played out when acquired:   Hayes believes Google’s $1.6 billion acquisition of UTube was visionary. “[] [Hayes] look[s] at what Google did with UTube [] and everybody thought [Google] was crazy [to pay $1.6 billion for it] and it was absolutely the right thing to do.”  Today UTube is certainly worth several times $1.6 billion. “[] [UTube was a] great buy. [Hayes] think[s] [the] Instagram [acquisition] may be along those same lines.”

Hayes believes the Instagram acquisition was also visionary.  When acquired by Facebook for $1 billion April 2012, the photo-sharing site was experiencing substantial growth but hadn’t generated any real revenue nor tried to make money.  Hayes believes that Instagram’s focus on growth was the right strategy because it was obvious it could eventually generate revenue by nominally charging for filters. 

“[] [If] how you can [eventually] make revenue is obvious, [] then focus on growth [] [and] user acquisition.  [] Distribution is the absolute hardest thing to do with an Internet company. [] [Focusing initially on generating revenue] slows growth and growth is what sells.  Growth is where you get the highest valuations.”   Rob Hayes  This Week in Startups, TWiST #249 Published Apr 18, 2012  @ 15- 20  min; http://www.youtube.com/watch?v=GEPqy0ad0BU