Tips for entrepreneurs from Yammer co-founder Adam Pisoni

Caitlin Fitzsimmons Online editor

Tips for entrepreneurs from Yammer co-founder Adam Pisoni

Published 04 October 2013 12:02, Updated 04 October 2013 14:36

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Adam Pisoni co-founded a software company and sold it to Microsoft for $US1.2 billion five years later.

The product, Yammer, is a social networking tool to foster collaboration inside companies and is being integrated into the Microsoft Office suite. Pisoni is still running the business, based in downtown San Francisco with about 350 staff. A year after the acquisition, Pisoni claims to want to stay at Microsoft to see Yammer “change every company on the planet” – although he would be bucking a trend if he did so. (Statistics show the majority of start-up founders leave within two years of an acquisition). BRW caught up with Pisoni last month at Microsoft Australia’s TechEd conference on the Gold Coast and he shared his tips for aspiring entrepreneurs.1. Experiment constantly and implement your discoveries

“You have a belief or an idea for a product. That belief is based on a whole series of assumptions about the world – about how people will find you, whether they’ll use it, how much they’ll pay for it. The right way to look at that problem is to aggressively and rapidly prove or disprove those hypotheses. You pour your efforts into as rapidly as possible saying ‘OK I know I have these assumptions, how quickly can I validate them?’. If it turns out it’s not true, then move on to the next experiment.

“Part of that experimentation is about how you build your company – iterating the organisational structure of your company, the systems you use and everything about your company. Nothing should be stationary – everything should be an experiment.”

2. Technical founders should appreciate business skills

“Right now it is the engineers who are starting companies. There’s a negative thing in Silicon Valley right now where engineers are funded on their own without any business skills or people. It’s this thing that’s happened, even with Y Combinator, but people are starting to realise that you need these skills, you need sales, you need marketing, so there’s an increasing need for engineers to partner with the business side.

“Tthe history in Silicon Valley is there’s this joke that if you want to value a start-up, you value them at $1 million per engineer but minus $1 million for every MBA, but I think we’re realising that’s not true. I think the reason for it is that the history of Silicon Valley is about disruption and often people with business history will want to do it the way we’ve always done it and that doesn’t work either. There’s going to be a lot of jobs for the sales and marketing people who really get it.”

3. Don’t waste time focusing on getting funded

“There are two ways to get money [in Silicon Valley]. One is relationships. The other is being an employee at a successful start-up. If you’ve got no relationships with venture capitalists but you’ve worked at Facebook or you’ve worked at Twitter, that alone may get you the confidence of investors.

“I also tell founders don’t make the trade-off between time and money. You need to move as fast you can so whatever money you can get, whatever ways you can use money to accelerate, do it, because you can get more money but you can’t get more time.”

4. Build the company, not just the product

“Startup founders tend to love building products and they tend to build products rather than companies. When a startup gets acquired or goes public, there’s often not really a company, there’s just a product and the will of the founders.

“When you’re a five person start-up, all that matters is the product. At some point if you have any success and you start getting 30-40 people, the founders of the company have to shift their thinking and stop thinking that their job is to build the product and start building the company that builds the product. That’s how you accelerate to the next level. I think we did that really well. Because we were building a product that was helping companies be better companies, we felt extra pressure to be a good company.”

5. Build community wherever you are

“San Francisco is a magical place for technology … but there are a number of other pockets of start-up community forming and I hope there’s more. It’s just not possible that San Francisco will be the only place because it’s not big enough, there’s not enough people, and as Marc Andreessen says ‘software is eating the world’.

“You need enough people in a given area who are networking. The thing that makes San Francisco so unique that other communities can learn from is even among direct competitors, we share ideas, and the spirit of collaboration has really fuelled our collective knowledge.

“It’s really important in Australia and these other places that people build communities and it is not just about competing among [start-ups] but also sharing ideas and talking about how to elevate the profile of that place.”

6. Don’t succumb to start-up addiction

“When we started Yammer, we had no idea what we were getting into. We saw that social networking was blowing up the consumer space, it was 2007, and we knew it was going to go to the enterprise but we didn’t know the impact would have. We stumbled on a set of major changes that were already happening at companies and we just happened to be in the right place at the right time. In that sense it feels like a ‘Black Swan’ event in that I don’t believe I could go off and have another Yammer happen.

“Furthermore when we started Yammer, we had a feeling like we were going to change every company in the planet, that every company was going to work socially at some point and we wanted to be a part of that. We’re at 8 million users now and thousands of companies but it’s a big world out there and now we’re part of Microsoft Office I’m excited about seeing that to fruition. Office touches almost every company so if you can change Office you can change almost every company.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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