STANFORD GRADUATE SCHOOL OF BUSINESS—What are the best practices for hiring and firing employees? How do you identify the right time to start a company? What are the pros and cons of hiring friends? Do you have any insights on whether large amounts of money can produce happiness, or whether immigrants make better entrepreneurs?
Speakers took on these topics and some others not often found in standard textbooks at the 2006 Stanford Business School Entrepreneurship Conference, which featured panel discussions staffed by recent graduates, venture capitalists, and established entrepreneurs who offered their own thoughts on a range of topics.
One emerging theme was the importance of developing a strong inner instinct when there is no roadmap to follow. Asked how he knew it was the right time to start his own company, for instance, Pradeep Sindhu, who in 1996 founded Juniper Networks, had no logical answer. "It just seemed like something that had to be done," said Sindhu, who today serves as Juniper's chief technology officer.
Sindhu and others who participated in a panel on the "Top 10 Mistakes Entrepreneurs Make" also said they relied on gut instincts to manage their time when the tasks on the "to do" list far exceeded the number of hours in the day.
"It doesn't work to do everything on the ‘to do' list," advised Dan Avida, the Silicon Valley serial entrepreneur who co-founded Electronics for Imaging Inc. as well as the storage security company Decru Inc. before becoming a general partner at the venture firm Opus Capital. On how to prioritize, Avida offered this piece of seat-of-the-pants advice: "You just have to figure it out."
Danny Shader, MBA '89, a former entrepreneur and current chief executive of the wireless software company Good Technology Inc., likewise confessed that he was "terrible" at running a startup in an organized fashion.
But Shader added that many strong businesses had emerged from a chaotic start. He worked as a vice president at Amazon.com in that company's early years and recalled being amazed to discover a business "that small and that disorganized." Far from praising the chaos he saw, however, Shader suggested Amazon might have gotten off to a better start and been able to retain more talent had it not been so disorganized. He advised young entrepreneurs who lack the organization gene to go out and hire others with better skills.
The conference was organized by MBA student members of the School's Entrepreneurship Club in cooperation with the Center for Entrepreneurial Studies.
Beyond the very basics of starting a business, many participants focused on the best way to build a talented staff and drew some lively debate over whether friends or relatives were better than strict business acquaintances, and whether a killer instinct counted for more than years of experience. Several panelists thought that it did, and some even suggested that too much experience could be a liability for the sort of "outside the box" thinking required to create a new business.
In fact, when asked what quality in new hires was most overrated, Avida put experience at the top of the list. When he and his team at Decru started out, he said, "we knew nothing about storage and nothing about security."
"But in a year we knew more than anybody," he said.
Avida and others said that it was far more important to find the right character for a startup than it was to find the right set of skills. All seemed to agree that intelligence, unquestionable integrity, and an enthusiastic ability to suspend disbelief were critical. But they differed on the merits of that common practice of hiring close friends, business school classmates, or even relatives. Andy Rachleff, MBA '84, a Benchmark Capital partner, recalled—not altogether jokingly—that some of the biggest challenges he encountered as a venture capitalist came from working with teams of brothers.
"It's a bond that runs deeper than man and wife," Rachleff said. "It's impossible to come between them."
Perhaps most important, those who had gone through the process of building a company advised those who were just starting out to examine their motives and consider whether they were after a quick payoff or the more enduring satisfaction that comes from creating something altogether new.
Shader, who landed at Amazon after the online retailer acquired his startup, Accept.com, said the experience of "flipping" a company brought only limited gratification.
"I was briefly rich on paper, but it was a great lesson to learn early on that that wasn't going to make me happy," he said.