We recently celebrated a decade (!) of building Thumbtack so I’m sharing a few hard-fought lessons from growing a startup to $1B.
To set some context…
A decade ago: Thumbtack had no customers, no product, no money. Our first “office” was a house, and I slept in the closet. (So, yes, I came out of the closet every morning.)
Today: Thumbtack has raised more than a quarter billion dollars, has an amazing team of nearly 1,000, and most importantly helps hundreds of thousands of small businesses earn more than $1B/year.
In between those data points were lots of 😀 and 😬 and 😱, and endless lessons learned. Below are key takeaways for current or aspiring entrepreneurs. I’ve also included some personal news at the end. Enjoy!
If confidence + humility is a spectrum, you don’t want to live in the middle; you need to live on the extremes of both ends. You need so much confidence that you truly believe you can build something no one else in the world has. Confidence that you can recruit, manage, and inspire people more talented than yourself. Confidence that you can beat dozens of competitors who have bigger teams and more money. Confidence that you can persuade investors to give you the first $1M and eventually $100Ms. But just as you need ironclad confidence, you also need deep humility. Humility that your initial strategy will likely be wrong, naive, or stupid (ours was). Humility about your personal shortcomings so that you really hear and learn from your team’s feedback (the criticism will ring more loudly than the praise). Humility about your investor pitch so you learn from every investor who rejects you (there will be more rejections than investments). Finally, you need humility that the skills that made you successful during the first stage of your startup won’t be the same skills you’ll need for the second stage or third or fourth.
Takeaways: 1) Be confident that you can eventually figure everything out 2) Be humble about everything else.
Scaling a startup is hard because you’re not actually building a single company. You’re really building a series of related but very different companies. At Thumbtack we’ve already built five companies: 1) the startup hunting for basic product-market-fit (1-10 team members), 2) the startup hunting for business-model-market-fit (10-40), 3) the startup hyperscaling (40-250), 4) the startup building out a leadership team (250-750), 5) the startup reinventing its business model and product (today). Thumbtack’s values and mission persisted across stages but our processes, org and team were very different. Each company is the foundation for the next, and each stage requires a new level of skillsets from the founders. As a founder, this means you must constantly be learning to scale yourself. (Jeff Jordan has a great primer on how founder skillsets should evolve through each phase.) Your goal as an entrepreneur is to build a new company and a new you at each stage.
Takeaways: 1) Treat your own leadership as a product — solicit feedback, take criticism seriously but not personally, A/B test new strategies, repeat forever 2) Hire an exec coach 3) Do 360 reviews with your team every 6 months, no matter your size. 4) Keep your identity small.
The reality is: your happiness will correlate with your startups’ success. My correlation was 0.64 in these early years.
Let me share two data points to illustrate.
Raising our Series A, we pitched 42 investors…and got 42 rejections. The team was on zero salary and our bank account almost hit zero. Heartbreak, pain, agony.
Just three years later, we completed a fundraise in 72 hours that put $100M into our bank. Joy, disbelief, elation.
These sorts of highs and lows happen not just over years but often every week and even within the same day.
Takeaways: 1) Exercise consistently, prioritize sleep, and start a meditation practice. 2) Avoid what I call “projection porn” which is the root of startup whiplash. If you have a good month or week it’s tempting to project that baseline far into the future to much excitement: “If last week’s growth rate continues we’ll be making $10B/year in 3 years!” A single bad month projected far enough out can be equally soul-crushing. Resist projecting trends too far into the future; instead, focus on what you can accomplish this week. 3) When it comes to fundraising, get market feedback early and adjust. For our Series A, after 42 rejections, we re-grouped, adjusted how much we were asking for, and then we found an investor we loved who had the conviction other investors had lacked.
We talk a lot about product innovation, for good reason. But business model innovation is sometimes even more important to your company’s success. Why? Very few companies grow virally, so most startups succeed or fail based on their ability to acquire customers. Growth hacks are effective at subscale but to reach meaningful scale most startups need to unlock paid acquisition. Paid acquisition is effectively a business model competition: the company who can pay the most for an impression, click or call wins. This is true whether you acquire customers programmatically (Google/Facebook) or via sales. That is why business model innovation is so crucial. If you can invent a new business model that monetizes better than your competitors, you will win.
Takeaways: 1) Acquisition is a business model competition 2) Early-stage founders should spend more time thinking about business model innovation and acquisition strategy.
People often talk about a startup’s culture as how an office feels, or what type of people work in it or, far worse, the perks a company offers. It’s better to think of culture as a shared, self-fulfilling story purposefully designed to help you win. It is a mental picture of what your team wants to become — that you co-author with your team — and then work endlessly to turn from a story into a reality. Just as sapiens came to dominate the world by leveraging shared stories to improve group coordination (e.g. “we are Greek”), your startup should weaponize shared stories (culture/values) to help you dominate your market.
Takeaways: To purposefully design your culture I recommend these steps 1) Determine what attributes the winning company in your space will need to have. For example, the company attributes needed to win in ridesharing (e.g. speed) are very different than healthcare (e.g. rigor). 2) Determine what cultural values will produce those winning attributes (e.g. cultural value of “bias towards action” will generate speed but not rigor). 3) Relentlessly recruit and manage your team against those values.
If you’re only motivated by making money or by building something cool, those drivers will be insufficient to give you the grit you need for the darkest days or the endurance you need to go the distance. The best entrepreneurs I know have a chip on their shoulder — some sort of deep, irrepressible, possibly psychologically unhealthy desire to prove themselves. I’ve purposely collected “shoulder chips” to motivate myself over the last decade, such as this email from the Stanford GSB dean about my decision to start Thumbtack (instead of going to business school). I schedule the email to re-appear in my inbox once/year. I haven’t responded to that email but I mentally relish replying one day from the floor of the NYSE. ;) It’s irrational and dumb on some level but a few irrational drivers are helpful because sometimes it doesn’t feel very rational to trudge forward when you are deep in the grind.
Take-away: 1) Having an irrational motivation is not only helpful but sometimes necessary. 2) When recruiting, look for people with chips on their shoulders. 3)If you’re climbing El Cap without ropes, see a doctor.
People sometimes ask “is a startup a sprint or a marathon?” The best answer that I’ve heard (from my friend Ed Aten) is that it’s both: if you’ve ever watched a world class marathon runner they are literally sprinting the entire marathon. But working long and hard is obvious. The untold secret of startup life is that sometimes the biggest challenge isn’t about running fast or running out of money…but dealing with monotony. There are many thrilling and intellectually interesting moments in a startup; but there are also times where execution requires doing things that aren’t challenging or new or interesting. Example: Most people think when you raise $100M and scale your company by hundreds of people you then mainly focus on strategic, challenging problems. In fact, in times of hypergrowth, you’re often spending 25 hours/week recruiting. I literally once did 25 interviews in two days.
Takeaways: 1) The highest impact work for your startup is often not the sexiest 2) Deal with it. :)
Some founders take pride in working long hours. That’s dumb. You should take pride in having huge leverage (which often requires long hours). When I would work 100 hour weeks, instead of feeling self-satisfied, I knew I either 1) wasn’t delegating enough or 2) didn’t have the right leaders around me to delegate to. By working longer hours you can get 20% or even 40% more done, but with effective delegation you can get 10x or 100x more done. Eventually, as your startup matures you should delegate massive ownership of your team and product to the leaders you hire, but even from the very beginning you should be delegating constantly. I recommend every founder have a remote EA so you can start getting leverage from day one. My EA, Marni, is based in the Philippines and has helped me in endless ways: working better (pre-drafting emails, scheduling, morning bios), connecting better (organizing entrepreneur dinners, helping me invest in my network, sending gifts), living better (tracking my personal goals, planning getaways, paying bills), and so much more.
Takeaways: 1) Hire a remote EA immediately if you don’t have one. 2) If you already have an in-person EA, double your leverage by augmenting with a remote EA. You can increase your personal output significantly for $20k/year which should be an obvious decision for your startup. (Not so coincidentally, I started a company to help ambitious founders and execs with exactly this: Delegate 10x more with Athena.)
There you go. Ten years of hopes, dreams, heartbreak, and everything-in-between synthesized into a Top X list for the internet to consume. ;) I hope you enjoyed.
As for me personally, after a decade of building Thumbtack, I am excited to share that I have transitioned from President to Executive Chairman. In this role I have more geographic flexibility and will be focused on longer-term projects (e.g. recruiting new board members).
Marco, Sander, and I feel endlessly grateful for how far we’ve come in our first decade at Thumbtack, yet we regularly marvel at how much upside is still left. Thanks to the most incredible team and a massive market we have conviction there is not just 10x upside left…but 100x. We are just getting started.
Thumbtack will remain a top priority for me in the decade ahead, but I’m excited (and very fortunate) to be able to tackle some new projects as well:
- Tech investing: My investing partner Jake Zeller and I write $100k to $1M checks to founders who are scrappy, relentless and want to build massive, generational technology businesses.
- Global talent: I’m obsessed with how many talented people there are around the world and how few of those people reach their potential today. Uber and Airbnb are building $100B businesses by leveraging underutilized assets (spare cars, spare bedrooms) but the most valuable, underutilized asset in the world is people. I want to tackle this trillion+ dollar opportunity by finding new ways to leverage global talent at massive scale. As I mentioned above, the first company in this category I’m founding is sourcing high-caliber EAs in the Philippines and training ambitious founders/execs to delegate 10x more with Athena.
- Human freedom: The United States has lots of problems but remains the greatest engine for economic empowerment and human freedom, ever. Yet many billions live without basic human rights or economic opportunity. Over the next decade+, I want to do something about that. I’m inspired by how fearlessly the Oslo Freedom Forum promotes human rights in authoritarian countries, and I dream about building the ultimate startup — an entire city — to make governance more competitive and modern.
- Deep relationships: The longest study on happiness (80+ years!) had one takeaway: deep, lifelong relationships are the biggest driver of human happiness. Meanwhile, loneliness is on the rise, and is getting worse in younger generations. Silicon Valley is, understandably, getting blamed for this. But my partner Katherine and I both believe technology has the potential to help us build better and deeper relationships. We just haven’t built the right companies or—crucially—business models yet. We have some ideas for tackling this. Stay tuned.
- Traveling community: Katherine and I love investing in deep relationships as well as exploring the world, but they are typically in tension. We’d like to build a traveling community that lets us explore our pale blue dot with a close-knit, long-term community of hard-working, mission-driven people. Here’s what we’re thinking: Designing Our Dream Community.
It goes without saying, but my heart is so full of gratitude for all the support, encouragement and of course luck that helped Thumbtack get so far . This good fortune is such a gift, and Katherine and I are determined to make the most of it. Here’s to dreaming even bigger in the decade ahead.
PS-THANK YOU to every person on the Thumback team, past and present, who has grinded with me early in the morning, late at night, on weekends, and everything in between. My appreciation and loyalty to you is for life. I’d also like to thank all the investors, advisors, and friends who have supported me—and Thumbtack—over the first decade, including all our angel investors (Cyan & Scott Banister, Ariel Poler, Auren Hoffman, Hadi Partovi, Josh Schachter, Jason Calacanis, Jim Lanzone, Al Hubbard, Mark Goines, Mark Britto, Denis Grosz, Tory Patterson, Naval Ravikant), Jed and Alex at Javelin, Bryan and team at Sequoia, Lee at Tiger Global, David, Gretchen, and Laela at Google Capital, our advisors (Yanda Erlich, Gary Swart, Laslzo Bock, Rich Hagberg, Laurent Valosek), and of course Marco, Sander, Jeremy, and our amazing team members across San Francisco, Salt Lake, and the Philippines. In our first decade we laid the foundation; let’s make this second decade 10x bigger!