Focus — A list of five things is usually too many. You want everyone on your team to be able to pick their one to two most important projects that are their top priority and build strategic routines where they can laser focus on just those things.
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 Kevin Wu.
Kevin Wu is the Co-Founder and CEO of Pathrise, an online mentorship program that helps people land their next job in tech. Kevin is a Forbes 30 under 30 and Kairos K50 entrepreneur. Before going through Y Combinator with Pathrise, Kevin worked in product & engineering at Salesforce & Yelp and in edtech at mission-driven startups and nonprofits.
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?
At 19, I left school to work full-time as a software engineer at Salesforce. I landed the job through a connection of a connection I made through cold emails. I later ended up returning to school and finishing my education.
Afterwards, I ended up as one of the first employees in product and engineering at Leada (YC S15), a startup for online data science education courses. I also explored the edtech space with a variety of independent projects, like building a study app used by tens of thousands of students across multiple universities and directing an award-winning nonprofit for tech mentorship.
After some time at Leada and in edtech, I went on to work in product management at Yelp. While at Yelp, I founded and later left to direct a game studio. We grew it to a team size of 30. Overall, I’ve had a decent diversity of experiences that I try to draw from to be as helpful as possible to the job seekers that use Pathrise today.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
Of course! I believe really strongly in “hustle”. When I say “hustle” I am not referring to working overly long hours or a lifestyle hashtag, but rather, I would define it as being intentional and clever about how you approach a funnel problem (like sales, marketing, or your job search).
That is why I started Pathrise. I wanted to teach people the tactics that were successful for me, whether it was cold emailing strategy or elevator pitch tips. After working with our first few Pathrise fellows, I realized how little anyone, or even I myself knew. While I started off Pathrise knowing a few tricks here or there, what research really backed my advice? If you compare the way the head of growth at Airbnb thinks about marketing to the way career services at any university or any career coach approaches the job search, you find a large disparity in rigor, analysis, and thoughtfulness. For example, nobody is really A/B testing resumes the way that a marketing team A/B tests Facebook ads, or doing anything at that level of deeper research for interviewing and negotiation.
Once that clicked, we realized the fundamental problem: all these other funnel problems (marketing, sales, even recruiting on the other side of the job search) were so well-developed because companies invested billions of dollars a year into research and experimentation to optimize them. These companies did so, because there was high ROI. What if we could build a business model that convinces investors it’s high ROI to invest in research and development for the job search? A model where job seekers would share a portion of their income in return, but only after they landed a high-paying job themselves, which rewards aligns incentives? That’s how Pathrise was created.
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?
I have been inspired and helped by so many people I feel extremely lucky to know. Someone who comes to mind who was an important mentor to me earlier on in my career would be Eric Liu, who at the time was a cofounder of a YC-backed nonprofit called Bayes Impact.
Early on in my career I became an avid fan of Paul Graham’s essays, and idolized Y Combinator (and still do appreciate it a lot now as an alumni), and I was also involved with a lot of nonprofit work. Eric was someone who had gotten to where I aspired to be in a combination of both worlds.
One of the many things I learned from Eric was how to sell a vision. I think a lot of less experienced founders rely on founders a few years ahead of them to help them develop certain key skills, like building up a “reality distortion field” or a way of pitching and writing that inspires people to consider your crazy ideas.
What do you think makes your company stand out? Can you share a story?
I think there are a lot of reasons why Pathrise stands out, but one of the biggest reasons is our obsession with data. Everything that we recommend comes from years of experience on both sides of the hiring table and helping over 1,000 people successfully navigate their job searches. Basically, we know what works and what doesn’t and we have the data to prove it.
Another thing that I think allows Pathrise to stand out is a human-centered approach. We work very closely with each Pathrise fellow 1-on-1 (and build technology to make this scalable). This means we are much more involved, much less transactional than say a job board or online course. The team is obsessed with individual fellow success and impact.
The perfect story that’s a combination of all of this is a story about one fellow in particular who was really nervous about negotiating an offer they recently received. In order to help set them up for the best possible negotiation, of course we tapped into our database of hundreds of companies’ compensation distributions and developed a plan around the right compensation to ask for and the most successful messaging template to use to ask for it. However, somehow the fellow ended up on a call with the recruiter, in a situation where they had to negotiate over phone instead of email. This fellow was extraordinarily anxious about the call, so they ended up simultaneously getting on a Google Hangout with their mentor, while on speaker phone with the recruiter, so that the mentor could whisper advice to the fellow while the call happened. There’s something ridiculous but awesome about the mentor whispering advice to the fellow (like an imaginary angel on their shoulder), who then parrots the right lines to their recruiter, that demonstrates just how far Pathrise is willing to go to bat for their job seekers.
How have you used your success to bring goodness to the world?
When you are looking for a job, every day matters. In fact, the average job-seeker takes 9 months to find a new position and one month of unemployment is 8,333.33 dollars in lost income for someone who would make a 100k dollars salary. Quite literally, time is money on the job hunt. However, people continue to apply for hundreds of jobs online and then sit back and hope for a response. When this method leads to a longer job search or less fruitful results, it is not only ineffective, but it is also costly. With help from Pathrise mentors and our data-backed guidance, fellows in our program find jobs in 3–5 months on average and make 12,600 dollars above industry standard on average. In our last post-placement survey the average difference in income for previously employed fellows, comparing before and after going through Pathrise was over 50,000 dollars. Most importantly, Pathrise adapts to what fellows actually want from their careers, so they can find a job that is truly fulfilling.
Helping people find meaningful work that makes more money faster than they would on their own brings goodness to the world. We have worked hard to make the program as accessible as possible by utilizing an income share agreement (ISA) and awarding scholarships. We are continuing to add more accessibility options as we grow including a variable ISA, more tracks, and more opportunities for us to meet people where they are.
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?
The three character traits that have been the most important to any success I’ve had so far are (1) intentionality, (2) practicality and (3) humility.
- Intentionality ranges from first principles thinking, to utilizing data well, to having conviction around hypotheses that guide business decisions.
- Practicality to me means being willing to move quickly and get things done. The saying that encapsulates this is “don’t let good get in the way of good enough.”
- The irony of highlighting my “humility” in response to an answer where I self-aggrandize myself as a successful business leader is not lost on me, but perhaps that is a sign I am not yet lost. 🙂 If I keep thinking I have everything to learn and something to prove, I think I’ll keep attracting others like me, and those are the types of people I enjoy working with.
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?
The worst advice I’ve ever received was to “just build what I want to build.” At the time, I had founded a gaming studio and had just landed a deal with a major board game publisher to build an official mobile adaptation of their game. Once we had developed a few board game adaptations, we had ambitions to use the traction that we’d have built up to develop our own original title.
An advisor at the time heard this long-term strategy and told us we should just build what we want to build, and go for building the original title now. What ended up happening was a lack of focus working on both our original title and the board game adaptation, getting stuck in development hell, not really making it far past a soft launch for either. Had we just focused on the board game adaptation and had patience, the studio would be thriving today.
The lesson learned was that it turns out what I wanted to build more than anything else, was something that actually launches and matters. I shouldn’t have chased a less realistic project while I had a massive opportunity and existing partnership to realize first.
Can you tell us a story about the hard times that you faced when you first started your journey?
Before we got into YC, we were rejected by every single accelerator we applied to (including one that I was literally an alumni of, had gone through before and where I knew one of the directors — it stung). Before we closed our seed round, we grinded for several months longer than most of the other companies in our batch. Before we closed our series A, we were maybe “one year late” with dozens of rejections beforehand. I’ve gone through times where we’ve had less than a week of expenses in the bank (though despite this, we’ve never missed a single payroll and have never jeopardized our team’s livelihood). We’ve been sued, faced reneged term sheets and every other thing under the sun. In all honesty, it’s been really fun!
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?
For me, when things get hard, I channel the situation into the next productive action I can take. At that moment in time, I feel like taking the next step and reducing a problem down to a list of action items is freeing. It goes from something that is affecting me, to something that I am going to affect.
That happens to work for the first 24 hours, but sometimes it’s a tough situation and I need to continue to process and digest my circumstances. Usually, I share what I am struggling with, with a friend or teammate. When I share it, I often seek to explain my struggle in as entertaining a way as possible, in some ways making it “fun.” This allows me to treat each setback as a notch on my belt, an interesting anecdote instead of an emotional weight.
Finally, what will oftentimes reinspire me is talking to Pathrise fellows. Oftentimes whenever I return to user research, usually for the purpose of solving some problem or evaluating some launch, I end up instead gaining the most value from just hearing the stories of people who have been able to change their lives using our platform.
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’ve mostly answered with my thoughts on the highs & lows of being a founder in previous answers, but to add to this topic I actually think the most important lesson that I’ve learned about the rollercoaster startup ride is to make sure to take care of your fellow riders.
The early team you gather will be so passionate, so hardworking and so accommodating to what you need, especially if you’re making the right hires, that they won’t always know when they need to advocate for themselves and their own well being. You should still be pushing your highest performers to always be better, but there’s no dichotomy between that and also checking in with how they feel and their level of burnout.
Let’s imagine that a young founder comes to you and asks for 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?
If you want full control over your business, and are not interested in high risk and high growth (50%+ chance of failure, getting to 1mm dollars ARR fast, and at least 3x year over year revenue growth from there), then bootstrap. If that chance of failure and those benchmarks don’t scare you, and you want to build a big, world-changing business, then raise venture capital.
Technically, you can build a big business without raising venture capital or growing 3x YoY, but if you just do the math it becomes obvious why this doesn’t happen often. (Hint: it’s because at a normally slow rate of growth it takes an entire lifetime, whereas a venture-backed business can achieve similar scale in a decade or less).
If you have a good idea with sustainable revenue, and you want to never have to worry about money again, make a local impact, and hire the people you like to work on what you like, then don’t raise venture capital. There is a way to learn how to consistently build and automate lifestyle businesses in the range of 100k dollars — 1mm dollars in annual revenue.
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.
As a founder who currently operates a venture-backed startup, I’ll focus on that category. These things may be less important if you are bootstrapping your company with the goals I mentioned above. The five most important things are:
- Growth — If you don’t grow fast then mathematically speaking you’ll never get to the scale where you’ll be able to change the world to match your vision. Let’s assume that happens at the 100mm dollars run rate mark. Let’s say you start at a 100k dollars run rate and you grow 20% a year. It’ll take you about 38 years to get to that point. Who knows what can change in that time in terms of competitors or market needs? You have to grow faster, especially early on, more like 20% a month.
- Vision — If you aren’t working towards something larger, your people will not stay in the long term and your business will suffer all the consequences and weaknesses of scale (e.g. bureaucracy, complexity, increasing costs) and none of the benefits (e.g. network effects, flywheels).
- Talent — If you don’t like and trust the people you work with, your people will not stay in the short term and work will be painful. Being a founder is already painful enough! A part of this is building a culture that embraces diversity and practices inclusion.
- Money — As dumb as it sounds, you need to get raise money or earn money. Raising money is not an indicator of success (oftentimes it’s more of an indicator of hype), but it certainly is a contributor to success in funding the right initiatives.
- Focus — A list of five things is usually too many. You want everyone on your team to be able to pick their one to two most important projects that are their top priority and build strategic routines where they can laser focus on just those things.
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?
The most common mistake that founders make is overthinking their business idea. It is my opinion that developing yourself as a founder should be done in a certain order. I’ve seen many founders start in the wrong area, where they theorize and build the perfect business plan but never actually get anything done.
It is so hard to launch something that people actually care about and will use. There is also so much you can learn once you get on a call with someone who truly loves and uses your product (even if that person is the only person in the world who is a user). Founders, especially when starting out, should ruthlessly optimize to get first one real user, then ten, then a hundred, then a thousand. They should take whatever shortcut necessary to get to each milestone, whether it’s creating a fake back-end operated by their own manual labor or selling products while they’re only half-done building them.
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?
Maybe a few practical points I’d say are:
- Intentionally work hard. Know what you’re signing up for in terms of hours, late nights and weekends invested and be content and happy with that. Take breaks when you really need them. Prioritize getting 8 hours of sleep a night (at least I know I personally need it).
- Don’t hesitate to consistently see a therapist. Being a founder is extremely stressful. Therapists can pay dividends in terms of the insights that a change in perspective or the productivity that a change in mood can provide. They help you effectively process the stress and anxiety innate to the role. If you feel like once a week is too often, you can try once every other week or once a month.
- Confide in your cofounder or your early employees. Transparency and vulnerability do a lot in terms of building trust and relationships up. Own up to frustrations and emotions, but express them through your words, not through your tone (don’t be angry and yell, but feel free to gently tell someone about something that frustrated you). It will help not only you but also the overall loyalty and comradery across the team.
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 would love to see more businesses, nonprofits and organizations built around the idea of an “engine of impact” (to borrow some terminology from Kim Starkey Jonker and William F. Meehan III who coined the term when describing how to achieve scale as a nonprofit). I think there are so many wonderful and intelligent people in the world motivated to do good, who leave the intent to do good as just intent or smaller deeds. I would love to encourage them to think about how they can build an engine instead.
Pathrise is an example of Derrick (my cofounder) and me wanting to build an engine to make more and more of an impact for job seekers and provide mentorship over time. The engine needs a way that the output (e.g. job placement and mentorship for Pathrise) leads to more input of resources and capital (e.g. the income share agreement) such that the engine can generate even more output and can scale.
Basically, rather than just making an impact, aspire to build engines to (i) make an impact, (ii) use that impact to generate more resources, (iii) invest those resources into more impact and so on, as far as you can take it!
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.
I’d love to meet Jeremy Lin. I have been a huge fan since his Harvard days!
How can our readers further follow your work online?
I would say the easiest way to follow our progress and get useful content from my team or me would be to follow the Pathrise blog at https://www.pathrise.com/guides.
This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!