Why 90% of Startup CEOs Are Failing | John Kim Sendbird

Summary

John, CEO of Sendbird, emphasizes the importance of customer interaction and product-market fit for startups. He advises founders to commit to their ideas for at least a decade and balance product development with customer feedback. John shares insights on building a strong company culture, learning from others' experiences, and having a long-term vision to achieve success. He reflects on his journey, including the challenges of expanding to the US market against all odds.

Takeaways

• 🗣️ Founders should talk to 3-5 customers daily to gain insights and validate ideas.
• 🔍 Networking and attending events are secondary to understanding customer needs and building a strong product.
• 🚀 John, CEO of Sendbird, emphasizes the importance of product-market fit over other activities in the early stages of a startup.
• 🤔 Founders should choose ideas that align with their strengths and be prepared to commit to them for the long term.
• 💡 It's crucial for founders to balance their natural biases, such as focusing on product development, with the need to engage with customers.
• ⏰ The early days of a startup should prioritize rapid iteration and customer feedback to find product-market fit.
• 📈 Sendbird's success is attributed to a strong focus on customer communication and quick response to feedback.
• 🌐 Culture is described as an 'organizational superorganism' that is greater than the sum of its parts, reflecting collective habits and values.
• 🔁 Culture is hard to change and evolves slowly, influenced by daily operations and decision-making within a company.
• 🛠️ For rapid company growth, it's essential to learn from others who have already achieved the next stage of success.

Q & A

How many customers should a founder talk to daily according to John?

John suggests that founders should be talking to 3 to 5 customers a day.

What is Sendbird and what does it do?

Sendbird is the world's leading Conversations platform for mobile applications, powering a quarter billion users monthly and enabling messaging for major applications like DoorDash, PayPal, Reddit, Yahoo!, Fantasy Sports, and Krafton.

How many employees does Sendbird have and in how many countries are they located?

Sendbird has over 340 employees globally and is located in seven different countries.

How much funding has Sendbird raised and what is the company's valuation?

Sendbird has collectively raised over $220 million in funding, which values the company over $1 billion.

What is the common mistake John observes in first-time founders when choosing ideas?

First-time founders often pick ideas that are not aligned with their own strengths, which can lead to giving up too quickly when they realize the challenges are greater than expected.

Why is it important for founders to consider a long-term commitment to their idea?

Founders should be able to commit to their idea for the next ten years because the process of building a successful product takes time and perseverance.

How does John emphasize the importance of talking to customers?

John stresses that founders should prioritize talking to customers daily and not just focus on building products or attending networking events without validating ideas with customers.

What is the significance of product-market fit in the early days of a startup?

Product-market fit is crucial in the early days of a startup because it validates that there is demand for the product, and no other activities matter until this fit is found.

How quickly should a startup follow up with customers after an initial interaction?

John recommends following up with customers within 24 hours of the initial interaction to discuss next steps or pricing.

What is John's perspective on company culture?

John views company culture as a superorganism, a collection of people that is greater than the sum of its parts, and emphasizes that culture is like a muscle memory that evolves slowly through iterative feedback loops.

How does John suggest startups learn and grow quickly?

John advises startups to seek out companies or people one or two stages ahead and learn from their experiences to identify patterns of success and build a path towards achieving similar growth.

What role does the CEO play in a company according to John?

The CEO's role is to get the strategy right, ensure its execution, onboard the right teams, and manage resources such as fundraising or resource allocation.

Outlines

00:00

🗣️ Customer Engagement and Founder's Commitment

John, the founder and CEO of Sendbird, emphasizes the importance of frequent customer interactions for founders, suggesting a minimum of 3 to 5 conversations daily. He critiques the tendency of some founders to focus on networking and conferences rather than building a strong product-market fit. John shares his company's success, serving a vast user base and powering major applications, and stresses the significance of aligning startup ideas with personal strengths. He advises founders to envision a long-term commitment to their venture, considering whether they can dedicate a decade to it. The paragraph also touches on the importance of balancing product development with customer feedback, and the iterative process of product improvement based on immediate customer responses.

05:01

🌟 Building a Strong Company Culture

John discusses the concept of company culture as a superorganism, where the collective is greater than the sum of its parts. He suggests that personal core values translate into corporate values, shaping the organization's culture. He compares culture to a muscle memory, indicating its resistance to change and the importance of consistent, iterative efforts to shape it. John shares his experience from a past company where a weak culture led to poor execution and the departure of valuable employees. He highlights the proactive approach he took in his startups to define and nurture a strong culture from the outset, including workshops and discussions on core values. He advises seeking guidance from more experienced individuals to learn from their patterns of success and to plan for the future by setting clear strategies and assembling the right team.

Keywords

💡Customer Interaction

Customer interaction refers to the process of engaging with customers to understand their needs, gather feedback, and build relationships. In the context of the video, the speaker emphasizes the importance of frequent and meaningful customer interactions for founders, suggesting that they should aim to talk to 3 to 5 customers daily. This is crucial for product development and finding product-market fit, as it allows for continuous feedback and iteration based on real customer insights.

💡Product-Market Fit

Product-market fit is a term used to describe the point at which a product meets the wants and needs of its target market effectively. The speaker in the video stresses the significance of achieving product-market fit early on, as it is foundational to a startup's success. The video mentions that without a strong product-market fit, other activities like networking or attending conferences become less relevant.

💡Networking

Networking is the process of building relationships with others, particularly for business or professional purposes. The speaker points out that while networking at parties and conferences is common among founders, it should not overshadow the fundamental need to build a strong product. Networking is a means to an end, not the primary focus when seeking product-market fit.

💡Fundraising

Fundraising in the context of startups refers to the process of seeking financial investments from various sources to support the growth and operations of the business. The speaker mentions that their company has raised over $220 million, indicating the importance of fundraising as a means to scale the business and achieve significant market presence.

💡Core Values

Core values are the fundamental beliefs and guiding principles that an organization holds and uses to make decisions. In the video, the speaker discusses how personal core values can translate into corporate core values, which form the basis of a company's culture. These values are integral to the company's identity and operations, influencing everything from strategy to daily interactions.

💡Company Culture

Company culture refers to the set of shared attitudes, values, goals, and practices that characterizes a company. The speaker likens a company to a 'superorganism,' where the collective is greater than the sum of its parts, emphasizing the importance of culture in driving the organization's success. A strong culture can empower employees and align them towards common goals, as opposed to a weak culture that can lead to disengagement and poor performance.

💡Iterative Feedback Loop

An iterative feedback loop is a process where feedback is continuously collected and used to improve a product or process. The speaker mentions the importance of creating an iterative feedback loop for company culture, suggesting that culture is not something that can be changed overnight but evolves slowly through consistent effort and feedback.

💡Execution

Execution in a business context refers to the implementation of plans and strategies to achieve desired outcomes. The speaker highlights that a company's culture heavily influences its execution capabilities, as it dictates the behaviors and practices of its employees. Effective execution is critical for meeting goals and delivering on the company's mission.

💡Strategy

Strategy in business involves setting long-term goals and determining the actions needed to achieve them. The speaker outlines the CEO's role in getting the strategy right for the company, which includes defining the direction, making sure it is executed, and aligning the necessary resources. A well-crafted strategy is essential for guiding a company towards success.

💡Time Horizon

A time horizon refers to the length of time over which a decision, investment, or strategy is expected to have an effect. The speaker encourages having a longer time horizon and bigger dreams, which can lead to greater achievements. This concept is illustrated by the speaker's own experience of expanding to the US market despite the risks and skepticism, demonstrating the value of thinking beyond immediate outcomes.

💡Risk Taking

Risk taking in a business context involves making decisions that involve uncertainty and potential negative outcomes, but also significant rewards. The speaker reflects on the importance of being willing to take risks, as exemplified by their decision to enter the US market despite the lack of a proven playbook for a Korean startup. This risk-taking mindset is portrayed as a key factor in achieving ambitious goals.

Highlights

Founders should talk to 3 to 5 customers a day to understand market needs.

Networking and conferences are secondary to building a strong product.

Product market fit is crucial in the early stages of a startup.

John, CEO of Sendbird, shares his company's journey to becoming a leading conversations platform.

Sendbird powers major applications like DoorDash, PayPal, and Reddit.

The importance of aligning startup ideas with founders' strengths.

Commitment to an idea for the long term is essential for startup success.

Balancing product development with customer interaction is key for engineers.

The necessity of iterating quickly to find product market fit.

Setting expectations for customer feedback and product development timelines.

Cultural fit and company values are as important as strategy and execution.

Culture is an evolving entity shaped by collective habits and decisions.

Leadership's role in shaping and maintaining a strong company culture.

The impact of a disconnected leadership on company culture and performance.

Seeking out mentors and learning from more experienced individuals for growth.

The CEO's role in strategy, team building, and resource allocation.

The importance of having big dreams, a long-term perspective, and patience in entrepreneurship.

Overcoming skepticism and taking calculated risks based on past successes.

Transcripts

I'm so surprised by a lot of founders when I ask them, like,

how many customers did you talk?

They're like, I talked to three customers last week or five customers last month.

I'm like, Are you kidding me?

You need to be talking to 3 to 5 customers a day.

You'll be attending so many networking parties,

going to every single conferences, going to every single speaking events.

But you don't go back to the fundamentals of building a strong product.

None of that really matters until you find a strong product market fit In the early

days, none of it else matters.

Hi, my name is John, founder and CEO of Sendbird.

We are the world's leading Conversations platform for mobile application.

We powered a quarter billion users on a monthly basis, sending seven plus billion

messages powering major applications like DoorDash, PayPal, Reddit, Yahoo!

Fantasy Sports, Krafton.

In Korea today, we have over 340 employees globally and seven different countries.

We have collectively raised over $220 million in funding,

which valued our company over $1 billion.

Something that a lot of first time founders don't really think about

is they look for market trends or opportunities they think

that are interesting and timely.

But a lot of founders pick ideas that are not really aligned to their own strengths.

So what ends up happening is after 2 to 3 years, they realize that pretty much

whatever you do is harder than you think.

It will take longer, it will be harder.

So a lot of smart people end up giving up too quickly because it

wasn't really something that they wanted to commit for the next ten years.

Whatever the next thing you pick, try to see if you can really commit to the idea.

Imagine yourself doing that for the next ten years, which is very, very hard.

But if you can really see yourself in the next ten years

doing things hopefully greater at scale, that would be more important questions

I would also ask myself when I'm starting my next company is to can I commit to this

for the next ten years?

I'm still surprised by a lot of founders when I ask them, like, how many customers

did you talk to last week?

They're like, I talked to three customers last week

or like five customers last month.

I'm like, Are you kidding me?

You need to be talking to 3 or 5 customers a day.

People who are good with one thing tend to overlook the others.

So, for instance, if you're an engineer, if you love building great products,

you will be naturally biased for spending more time on product.

So instead of spending more time with customer, you're like,

you think you have an idea about customer?

You try to go and build it before you even talk to your customers

or validating from customers.

If you're so outward facing, you'll be attending so many networking parties,

going to every single conferences, going to every single speaking events.

But you don't go back to the fundamentals of building a strong product.

So think about what your strengths are and try to make sure that you

are balancing out talking to customers and building a fantastic product.

Try to deprioritize everything else.

None of that really matters until you find a strong product market fit.

In the early days, none of it else matters.

In the early days, we were trying to find product market fit.

It was obviously within 24 hours.

You talk to a customer in the evening, you build something next day you follow

up. 20 to 40 hours is when you follow up.

So when I was doing the sales call myself towards the end of the first call,

I always say within 24 hours you'll hear back from me on X, Y, Z, whether it

be pricing the next steps within 48 hours, you'll get a call from me.

So I always try to set that milestone in my very first call that when I will be

following up, it is a feature development.

They will surely know at least whether we are going to deliver it

or not within 24 hours.

And if we do, we'll probably ship it within a week.

I have about a two week sprint, so every two weeks we're releasing

something new about our product.

So we have that level of iteration.

Once the B2B gets to a certain scale, you can't do on a daily release,

they'll freak out some customers because they built one way.

Next day the documentation changes, they're going to freak out.

So you want to manage the expectation, the cadence a little bit.

So you kind of build that, whether it be 2 to 3 weeks cadence back in the day.

So it's a matter of days, if not a week.

The way I think about culture is they call it organizations, superorganisms.

It's a collection of people, but the collection is greater

than the individuals combined.

So one plus one is not two. Ideally, it's three and greater.

So if you were to look at a single person, a person has a set of core values.

They may have dreams and aspirations.

If you kind of map that to an organization, you can also think

of the culture as your core values.

Personal core values turn into a corporate core values, your

organization's strengths and weaknesses.

All those things collectively combine is something that we kind of put

a label on it called The Culture.

A culture is like a muscle memory. It is very hard to change.

A habit is very hard to just say, Hey, today we're going

to define our culture as XYZ.

We're just going to change this way. Like it doesn't work like that.

It's a collection of people's habits that's like, again, like a superorganism.

So you have to like really nudge and create an iterative feedback loop.

It's a slowly evolving thing.

So that's why it's so critical, like your day to day decision making,

day to day operation.

Everyday execution is really dictated by the culture of your organization,

not by a couple of checklist.

It's not what you write on the wall.

It's what you do and live and breathe every day.

And that is the culture I came to realize the culture of a company is

super important, even way before I did my first startup, because I also used

to work at other companies too.

Before finishing school, we had 100 employees, CEOs studied abroad.

He was a PhD, actually. I was pretty cool.

It was like the earlier version of StarLink.

Then I started to see the company kind of not execute well, missing the goals.

I think what really drove down the company was the culture.

The leadership was disconnected from what was happening in the field.

And then I start to see a lot of good people leave first and people

who are a little bit toxic and were not doing a good job, but they were great at

like selling to their senior bosses.

They were getting more power and like more roles.

I can tell these guys who were playing Starcraft all day long,

they are not working.

If I were this person, if I were the CEO, what would I do differently?

What would I have done differently?

And ultimately came to the conclusion like if they had a very strong culture

of understanding, empowering good people, and then knowing what's

happening to the company, maybe they could have have a different outcome.

So when I started my first company and also the second company,

we started out with a mission statement, a set of core values.

We do workshops, we try to get the early employees and the management,

like the founders, to get together, spend maybe a day talking about core

values and the culture of the company.

And so since then, we've always kind of thought culture was one of the most

critical operating system of a company.

People have to realize if your company is growing quickly, you don't really have

a time to organically learn the things you need to learn, like the skill sets.

So my general advice is continue to seek out companies or people that are

maybe one stage or two stage ahead of you.

And I think this is generalizable to not just the startups, but anyone seeking fast

growth in their own professional lives in their careers too.

What does greatness look like?

Try to seek out people who have been there, done that before,

and then try to not connect with one, but try to interview 3,5,10 people to

see what is a general pattern of greatness that look like that will get you to the

next level of the company, next stage, maybe a year, 12 months from now,

24 months from now, seek out people who kind of went down that path a few times.

Then you'll start to find this pattern that starts to emerge.

What are the things that you need to have 12 months from now, 24 months from now

that you currently don't have?

Then try to like build a path towards that.

Almost like Amazon's or Jeff Bezos mantra of working backwards.

Think about what your end game or next stage look like and then figure out your

steps to getting there and who do you need to work with upgrading or coaching your

existing team or recruiting from somewhere else to really level your leadership?

Because ultimately the job of a CEO is to do three things, right?

One is get the strategy right for your company, making sure it's executed,

get the right teams onboarded, getting the resources, whether it be

fundraising or allocating your resources.

So a strategy, people or team figuring out how you need to navigate those things

to get to the next level.

Have bigger dreams, have longer time horizon.

Also have the patience to hopefully dare and again risk greater things.

I believe that probably gave me more confidence

to be able to do something like this.

Coming to the US when everybody said, No, you can't do it.

We couldn't really find a playbook of a Korean startup coming to us

and doing something in Silicon Valley.

And literally everyone I spoke to, whether it be here in US or in Korea,

said, No, it cannot be done.

That's stupid. That's too risky.

You will lose all the money in your time, etcetera, but still be

able to take that bet was probably coming from that first time experience.

Being able to achieve something, have the positive feedback loop and increasing

the time horizon of the next journey.

So I think that's is probably one of my greatest learning.