Thank you for coming, Dustin.
Sure. But yeah, so Sam asked me to talk about why you should start a startup, there’s a bunch of reasons you might have. And there’s a bunch of common reasons that people have that I hear all the time for, for why you might start a startup. It’s important to know, like, what reason is yours? Because some of them only make sense in, in certain contexts. Some of them will actually, like, lead you astray.
You may have been misled by the way that Hollywood or the press likes to romanticize entrepreneurship. So I want to try and, like, illuminate, you know, some of those potential fallacies so you guys can, can make the decision in a clear way. And then I’ll talk about the, the reason I like best for actually starting a startup. It’s very related to a lot of what Sam just talked about. But surprisingly, I don’t think it’s the most common reason. Usually people have one of these other reasons or they just want to start a, you know, start a company for the sake of starting a company.
So the, the four common reasons, just to enumerate them, are it’s glamorous, you know, you’ll be, you’ll get to be the boss, you’ll have flexibility, especially over your schedule, and you’ll have the chance to have, you know, bigger impact and make more money than you, than you might by joining a later stage company. So, okay, so you know, you, you guys are probably pretty familiar with this concept. When I wrote the Medium Post, which a lot of you guys read a year ago, I felt like the story in the press was a, a little more unbalanced, you know, entrepreneurship just got romanticized quite a bit.
You know, the movie The Social Network came out, had a lot of sort of, like, bad aspects of, of, you know, what it’s like to be an entrepreneur, but mainly sort of painted this picture of, like, there’s a lot of partying, and you kind of move from, like, one brilliant insight to another brilliant insight, and really made it, you know, seem like this, like, really cool thing to do. And I think the reality is just, you know, not quite so glamorous. There’s sort of a, there’s an ugly side to being an entrepreneur. And also just more importantly, with, what you’re actually spending your time on is, is just a lot of hard work.
Sam mentioned this, but you’re basically just sitting at your desk, heads down, focused, answering customers, customer support emails, doing sales, figuring out hard engineering problems, so it’s really important that you kind of, like, go in with, with eyes wide open. And then also it’s, it’s really quite stressful. This has been a popular topic in the press lately. The Economist actually ran a story just last week called, like, Entrepreneurs Anonymous, and she was, like, a founder, kind of, like, hiding under his desk and talking about, like, founder depression.
So this is, like, a very real thing. Like, you know, let’s be real. This, if you start a company, it’s going to be extremely hard. Why is it so stressful? So a couple reasons. One is, you’ve got a lot of responsibility. So people in any kind of career have fear of failure. It’s kind of just like a dominant part of the psychology. But when you’re an entrepreneur, you have fear of failure on behalf of yourself and all of the people who decided to follow you. So that’s really stressful.
In some cases, these people are depending on you for their livelihood. Even when that’s not true, they have decided to devote the, the best of your, years of their life to following you. And so you’re responsible for the opportunity and cost of their time. So that’s a big deal. And you’re always on call if something comes up. Maybe not always at three in the morning, but for some startups that’s true. But if something important comes up, you’re going to deal with it. That’s kind of the end of the story. Doesn’t matter if you’re on vacation. Doesn’t matter if it’s the weekend. You kind of always got to be on the ball and always be in a, in a place mentally where you’re prepared to deal with those things.
And then a sort of special example of that is, is or of this kind of stress is fundraising. So seen from the social network. This is us partying and working at the same time. And somebody’s spraying champagne everywhere. You know, so the social network spends a lot of time kind of painting these scenes. Mark’s not in the scene. The other thing they spend all their time on is kind of like painting him out to be a huge jerk. This computer? Yeah. Okay, so. This is an, an actual scene from a movie.
This is an actual scene from Palo Alto. Spent a lot of time at this desk, just kind of heads down in focus. Mark was still kind of a jerk sometimes, but in this more like fun lovable way and not a like sociopathic scorn lover way. So this is him like signaling his intention to, you know, just be focused and keep working, not be social.
So then there’s also the scene sort of demonstrating the like brilliant insight moment. It’s kind of like straight out of a beautiful mind. They.Literally stole that scene. So they like to paint it as you just kind of like jump from one of these moments to, to the other moment with like parting in between, but really reset that table the whole time. So interestingly, if you compare this to the other photo, Mark is in the exact same position, but he’s wearing different clothes, this is definitely a different day. So cool. So that’s what, that’s what it’s actually like in person. And I just covered this bullet up here. This is the economist article I was talking about a second ago.
So another form of, of stress is just like unwanted media attention. So part of it being glamorous, you get some positive media attention sometimes. It’s nice to be on like the cover of Time and like be the person of the year. It’s maybe a little less nice to be on the cover of People with like one of your wedding photos. Depends who you are, some people would like that. I’d really hate it. When Valley Wag like, you know, analyzes your lecture and just tears you apart, like you definitely don’t want that. Nobody wants that.
And then one thing I almost never hear people talk about is you’re just a lot more committed. So if you’re an employee of a startup and, you know, things are stressful, it’s not going well, you’re unhappy, you can just leave. For a founder, you can leave, but it’s, it’s very uncool. Pretty much a black eye on the rest of your career. And so you really are committed, you know, for ten years if it’s going well. Probably more like five years if it’s not going well. So three years to figure out that it’s not going well. And then if you find like a nice landing for your company, another two years at the acquiring company. And if you leave before that, again, it’s not only going to harm yourself financially, it’s going to harm all your employees. So you pretty much don’t.
So if you’re lucky and you have a bad startup idea, you fail quickly. But most of the time, it’s not like that.
So and, and I should say, I, I’ve had a lot of the stress in my own life, especially in the early years of Facebook, you know, I just got really unhealthy. I wasn’t exercising, had a lot of anxiety. Actually like throughout my back, like almost every six months, like when I was like 21, 22, which is like pretty crazy. And so if you do start a company, be aware that you’re going to have to deal with this and you have to actually manage it. It’s actually like one of your core responsibilities.
Ben Horowitz likes to say, the number one role of a CEO is managing your own psychology. It’s absolutely true, make sure you do it. So another reason, so people, especially if they’ve already had a job at another company, you tend to develop this narrative of like, okay, like the people running this company are idiots, they’re making all these stupid decisions, they’re spending their time in, in these stupid ways, I’m going to start a company and I’m going to do it better. I’m going to like set all the rules. It’s a pretty attractive idea, it makes a lot of sense. If you’ve read my Medium post, you know it’s coming. I’ll give you guys a second to read this quote.
Cool, so this, this really resonates with me. And one thing I’d point out is you know, the reality of these decisions is pretty nuanced. The people you thought were idiots probably weren’t idiots. They probably just had like really difficult decision in one of them and people pulling them in multiple directions. So the most common thing I have to spend my time on and, and focus my energy on as, as a CEO is like the, the problems that like other people are bringing to me, the, the other priorities that people create and it’s usually in the form of a conflict.
People want to go in different directions or like customers want different things and like I might have my own opinion about that but really the, the game I’m playing is like who do I disappoint the least and like just trying to navigate all the, all these difficult situations and even on a day-to-day basis I might come in on Monday and like have all these, you know, grand plans for like how I’m going to improve the company and what I’m going to spend my time on but then if like an important employee is threatening to quit, that’s what I’m spending my time on. That’s my number one priority.
So a subset of you’re the boss is you have flexibility. You have control over your own schedule. This is a really attractive idea. So here’s the reality, another Phil Live in quote. So this, this really resonates with me as well. And some of the reasons for this, again, you’re always on call. So maybe you don’t intend to work all parts of the day, but you might not get to control which ones. Your role model, this is super important. So if you’re an employee of a company, you might have some good weeks, you might have some bad weeks, some weeks when you’re, you’re low energy, maybe you want to take a couple extra days off. That’s really bad if you’re, you’re an entrepreneur. Like your team will really signal off what you’re bringing to the table, and so if you take your foot off the gas, so will they.
And you’re always working anyway. So if you’re really passionate about an idea, it’s just going to like pull you to, to keep working on it. If you’re working with great investors, you’re working with great partners, they’re going to want to be working really hard. They’re going to want you to be working really hard. And again, you’re going to want to work really hard. So some some companies like to tell the story about you can have your cake and eat it too, you can have like four day work weeks maybe.
If you’re, if you’re Tim Ferriss, maybe you can have a 12 hour work week. It’s a really attractive idea and it does work in a particular instance, which is if you want to like actually have a small business or go after a niche market, then you’re a small business entrepreneur. That makes total sense. But as soon as you get past like two or three people you really need to step it up and, and be full time committed. So this is the big one.
So this is the, the one I hear the most. Especially like candidates applying to Asana. They tell me, I’d, I’d really like to work for, for a much smaller company or start my own because then I have a much bigger slice of the pie, I’ll have much more impact on how that company does. And I’ll have more equity, so I’ll make more money as well. So let’s examine when this might be true. So I’ll explain these tables. They’re a little complex, but let’s focus on the left first. So these are, this is just explaining Dropbox and Facebook. These are their current valuations and this is how much money you might make as employee number 100 coming into these companies. Especially if you’re like an experience, a relatively experienced engineer, like you have like five years of, of industry experience.
You’re pretty likely to have an offer that’s around ten basis points. So if you joined Dropbox a couple years ago, the upside you’d have already walked in is about ten million. There’s plenty more growth from there if you leave in the company. If you joined Facebook a couple years into its existence, you made $200 million. This is a huge number. And if you, even if you joined Facebook as employee number 1,000, so you joined it in like 2009, you still made $20 million. That’s a giant number. And that’s how you should be benchmarking when you’re thinking about what might I make as an entrepreneur. So, moving over to the table on the right, these are two theoretical companies you might start.
So, Uber for pet sitting, pretty good idea. If you’re, if you’re really well suited to this, you might have a, a really good shot at building a $100 million company. And then your share of that company is pretty likely to be about 10%. This certainly fluctuates. Some founders have a lot more than this, some have a lot less. But after multiple rounds of dilution, multiple rounds of option table, option pool creation, you’re pretty likely to end up about here. If you have more than this, I’d recommend Sam’s Post on like the equity split between founders and employees. You probably should be giving out more. And then, but, so basically, if you’re extremely confident about building this $100 million business, which is a big ask.
It should go without saying that you should have a lot more confidence in Facebook in 2009 or Dropbox in 2014 than you might for a startup that doesn’t even exist yet, then this is worth doing. So, if you have a $100 million idea and you’re pretty confident you can execute it, I would consider that. If you think you’re the right entrepreneur to build Uber for space travel, that’s a really huge idea, $2 billion idea. You’re actually going to have a pretty good return for that. You should definitely do that. This is also only the value after four years, and this idea probably has legs. So, definitely go after that. If you’re thinking of building that, you probably shouldn’t even be in this class right now. You should just go and, go and build that company.
So, why is this financial reward and impact? I really think that financial reward’s very strongly correlated with the impact you have on the world. If you don’t believe that, let’s talk through some specific examples and not think about the equity at all. So, why might joining a late stage company actually provide you a lot of impact? You get this force multiplier. They have an existing massive user base. If it’s Facebook, it’s a billion users. Or if it’s Google, it’s a billion users. They have existing infrastructure you get to build on.
That’s also increasingly true for new startups, things like AWS and all these like awesome independent service providers. But you usually get some like proprietary technology, and it’s all maintained for you. It’s a pretty great place to start. And you get to work with a team, and they’ll help you just leverage your idea into something great. So, a couple specific examples. Brett Taylor came into employee around, or came into Google as around employee number 1500, and he invented Google Maps. This is a product you guys probably use every day. I used it to get here, and it’s used by hundreds of millions of people all around the world. Didn’t need to start a company to do that. Did happen to get a big financial reward. But the point is, yeah, massive impact.
My co-founder, Justin Rosenstein, joined Google a little later after Brett, he was a PM there. And just as a side project, he ended up prototyping chat, which used to be a standalone app, as integrated into Gmail. Like you see it in the upper right there. And before he did that, like people didn’t even think you could do chat over Ajax or chat in the browser at all. And he just kind of like demonstrated it and showed it to his team. And then they made it happen. And again, this is, this is probably a product most of you use maybe every day. And then perhaps even more impressively, shortly after that, Jar left, he became employee around number 250 at Facebook. And he led a hackathon project along with people like Andrew Bosworth and Liam Perlman to create the like button. So this is one of the most popular elements anywhere on the web. It totally changes how people use it. And again, didn’t need to start a company to do it. And almost certainly would have failed if he had tried, because he really needed the distribution of Facebook to make it work.
So important to, to keep in mind the context for what kind of company you’re trying to start and like where will you actually be able to make it happen. So what’s the best reason? So Sam already talked about this a little bit. But basically, you can’t not do it. You’re super passionate about this idea. You’re the right person to do it. You’ve got to make it happen. So how does this break down? So we’re getting close to the end here.
So this, this is sort of like a word play. You can’t not do it in two ways. One is, you’re so passionate about it that you just like, you have to do it. You’re going to do it anyway. And this is really important because you’ll need that passion to get through all of those like hard parts of being an entrepreneur that we talked about earlier. You’ll also need it to effectively recruit. Candidates can smell when you don’t have passion and there are enough entrepreneurs out there who do have passion that they may as well work for one of those. So this is sort of like table stakes for being an entrepreneur. Your subconscious can also tell when you don’t have passion and that’ll be a huge problem.
And then, so the other way to interpret this is the world needs you to do it. So this is sort of validation that the idea is important. It’s going to make the world better. So the world needs it. If it’s not, if it’s not something the world needs, go do something the world needs. Time’s really valuable. There are plenty of good ideas out there. Maybe it’s not one of your own. Maybe it’s an existing company. But you may as well work on something that’s going to be good. And then the second way to interpret this is the world needs you to do it. You’re actually well suited to this problem in some way. If this isn’t true, it may be a sign that your time is better spent somewhere else. But also just best case scenario, if this isn’t true, you out-compete the team for which it is true. And you just end up with like a suboptimal outcome for the world. That doesn’t feel very good.
So drawing this back to my own experience at Asana, Justin and I were kind of like reluctant entrepreneurs before we founded Asana. So we were working at Facebook. We were already working on a great problem. And we would basically work all day long on our normal projects. And then at night, we would keep working on this internal task manager that was used internally at the company. And it was just because we were so passionate about the idea. It was so clearly valuable that we couldn’t do anything else. And at some point, we had to have the hard conversation of like, okay, well, what does it mean if we don’t actually start this company? We were pretty, we were able to see the impact it was having on Facebook. We were pretty convinced it could be really valuable for the world. We were also pretty convinced nobody else was going to build it. The problem had been around a long time, and we just kept seeing sort of incremental solutions to it.
So if we didn’t go out with the one that we thought was best, we thought there’d be a lot of value left on the table. And yeah, so we just couldn’t, couldn’t stop working on it. And literally, the idea was like beating itself out of our chest, like forcing itself into the world. And I think that’s the feeling you should really be looking for when you start a company. That’s how you know you have the right idea. So I’ll go ahead and stop there. I’ll put some recommended books up here, but won’t narrate them.