A talented and synchronized team with deep domain expertise. Finding a real problem that customers are willing to pay you to solve. Company culture that fosters growth and excellence. Natural market winds that help push your efforts beyond what you can do. Luck.
Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.
Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?
In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.
I had the pleasure of interviewing Derek Andersen.
For the past 15 years Derek has been building communities. He is the co-founder/CEO of Bevy, a SaaS product that helps companies like Salesforce, Atlassian, Google, Snowflake, and Adobe build virtual and in-person communities. He co-founded Startup Grind, a community of 600 Chapters in 125 countries educating, inspiring, and connecting startup people. Since 2012 Startup Grind has hosted 10,000 events for more than 500,000 people. In 2010 he co-founded Commonred which was acquired by Income.com. Derek also previously worked as a product manager at Electronic Arts. He currently lives in Palo Alto CA with his wife and four children.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I left my job at Electronic Arts in 2009 and started building products, with the ultimate goal of launching a company. It was a struggle and I failed about every five or six months. During that time a friend and I started hosting meetings for those interested in startups in my Mountain View office as a forum (Startup Grind) for people to learn, talk, and help each other. The gatherings started to get bigger and bigger. Then people asked if they could run similar meetings in their cities. They weren’t looking to create their own thing and the values of Startup Grind resonated with them. They identified with what Startup Grind was doing and wanted to be part of something bigger. So, we created a platform for them to take Startup Grind to their city and share the values of the community together. I became CEO in 2012; before that it was just a side project. As Startup Grind grew across cities, states and countries, we started to have issues with software tools we were using to organize the events. While we would have been more than happy to use someone else’s product if it had satisfied our needs at an affordable price, out of necessity, we built our own tool.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
Since Startup Grind gave a large number of people visibility into what we were doing, we had people that wanted to buy the product we created to manage our events. We started building communities for other people. Very quickly thereafter, the interests of Startup Grind and what would become Bevy were diverging. Thus, Bevy was split off as a separate company. In some ways it was difficult and in some ways it was a natural progression.
Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?
In college, my older brother, Brandt, started a successful business that employed lots of people. I saw the start up process up close and it was inspiring. I worked for the company for a while. That experience pushed me to want to do something similar as soon as I had a viable project or idea.
What do you think makes your company stand out? Can you share a story?
We help companies build belonging among their customers by building community through events and other activities. Building community is key to hyper-growth. An active user community drives awareness, increases leads and lead quality, resulting in greater product adoption at a lower cost of acquisition. Creating a community to help users succeed reduces support costs and improves customer retention. Communities can help deepen engagement with customers and increase contract value.
A good example is the SalesForce Trailblazers community. When we started working with SalesForce they had organized 600 groups since the inception of the program 10 years prior. Working with us, the program grew to 1500 groups in two years. It’s now one of the most active business communities in the world.
How have you used your success to bring goodness to the world?
It’s important for our company and investors to reflect the world, so we aim to be one of the most racially diverse companies. We set goals to have 20% of employees and investors be from the Black community.
70% of individuals participating in our Series C funding round — representing 20% of the total funds raised — are Black investors. This includes nationally recognized Diversity and Inclusion pioneer James Lowry; current Facebook board member and EVP at PayPal, Peggy Alford; and former Beats by Dre CMO Omar Johnson, alongside many more renowned Black leaders.
Last year, we also made a commitment to having Black employees represent 20% of our workforce by September 2021, up from 14% today and 0% last February. When you have an objective to include people from all different groups you have a larger talent pool to pull from and a better chance of getting great people.
You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?
- Grit — Hundred of times we should have stopped, but we didn’t. Because we have pushed forward over time, the company has grown. I’ve put in my share of hard work: in 2010 I raised 250,000 dollars for an iPad app that failed spectacularly on launch. Most of the team quit and we ran out of money. It was so embarrassing to have something I had worked on fail so publicly on such a massive scale. But, after a few weeks of feeling sorry for myself I went on to the next thing, which turned into the next thing, that eventually turned into Startup Grind.
- Empathy — You must want to understand customers and their pain and deeply care about trying to solve that pain. For example, Google struggled to bring their world-wide developers together. It can be difficult to bring together people in 100+ countries who are trying to build something together on such a vast scale. We helped them connect the dots to do more while getting more sleep, making the organizers’ lives easier even while hosting more activities.
- Patience — It takes time for something to take hold and become successful. Often you must let things happen and not need for everything to happen immediately; it can take time for ideas to become accepted naturally. The first two years of Startup Grind, it was just a project I did once a month. It generated no money, nothing of material value — in fact, the resources it took to organize it created a significant opportunity cost. It took up so much time I almost stopped doing it. But, I persevered. It just took time for it to catch on.
Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?
Once I followed my investors’ advice about the product direction we were headed. I had raised angel funding mostly from them and I thought we were better going a different way. At the time I lacked the self confidence to go against them and chart my own path. Ultimately the project failed and we didn’t return any of the funding to investors.
Can you tell us a story about the hard times that you faced when you first started your journey?
More than 10 years ago, early in my entrepreneurial career, I raised 250,000 dollars to build and ship a product. Unfortunately, when it launched no one liked it and we lost all the money. I felt terrible (still do in some ways) and it took me weeks to get myself fully back to work. Two other times we were within 6-weeks of running completely out of money, once with two employees and another time we had 20 employees. When you survive these kinds of experiences, all the other adversity feels kind of easy.
Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?
In the toughest startup moments I have often thought, “I have been through worse.” From the death of loved ones and friends, to difficult moments we all naturally have through life, experiences like this make fear of professional failure seem insignificant.
The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?
I work very hard to stay in the middle and rarely get too high or too low. I have experienced huge lows and it’s easy to remember how quickly things can turn both north and south. When something amazing happens I try to store the feeling as long as humanly possible and use it as fuel when I’m back working towards the next seemingly impossible milestone.
Let’s imagine that a young founder comes to you and asks your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?
You need to determine what type of business you want to have in 5-years. Could it get to 100M dollars in revenue in a short period without too big a stretch of the imagination? Is it a multi-million dollar opportunity but not conceivable to be more? Do you want to put expectations on growth or would you rather run at your own pace? Neither option is wrong; it’s all about what you want. I am currently the CEO of both a bootstrapped and a venture backed company. They both offer unique advantages and disadvantages. As long as you’re being creative and working with great people, the size and funding level of a company are just more noise.
Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each.
Most great ideas have unnatural momentum — something in the market that compels it to a level of success that other ideas just don’t get despite each getting the same amount of effort and time put into them. I’ve worked equally hard on 6 different startups but only two gained any traction.
Five things to create a high successful startup:
1 — A talented and synchronized team with deep domain expertise.
2 — Finding a real problem that customers are willing to pay you to solve.
3 — Company culture that fosters growth and excellence.
4 — Natural market winds that help push your efforts beyond what you can do.
5 — Luck.
What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?
Founders often try to force things they think should happen. Rather than fight against customers and users, just follow their lead and trust them to share what they need.
Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?
I just don’t think it’s realistic for anyone to think they can work normal business hours and bring a startup to life from nothing. Once it’s up and running and generating a lot of momentum, I think you can have more help, but other work takes its place. Startup balance in my experience doesn’t mean equal time or even “balance”; it’s more of making time to do the things that need to be done whenever it needs to get done.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I think that racial inequality around the world and specifically in the United States is a big problem. It seems there are a lot of simple solutions that could help bring meaningful change. You can start with something small and it can have a big impact. Maybe it turns into something big.
We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.
Jay Z. If Jay Z is reading this it would mean the world to me if we could have breakfast together. I’m happy to pay.
How can our readers further follow your work online?
This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!