How to be a CEO of a startup, from a guy who knows

Seattle is one of the best places in the country to launch a start-up, but you might not have any idea how to do it. That’s why Dan Shapiro wrote his new book, “Hot Seat. The Startup CEO Guide.”

It’s a subject Shapiro knows well. He launched his first start-up 18 years ago.

“I was working full time at Microsoft and I had an idea for a company, which I tried to start with a friend. We had no idea what we were doing, we never got anywhere, we never even incorporated. We failed after nine months and it was really depressing. After that I worked at somebody else’s startup. I started a company that’s now called Photobucket. I had a company called Sparkbuy, which I sold to Google. I have a company called Robot Turtles that makes a board game that teaches programming principals to kids as young as preschool. And now I have this amazing company called Glowforge where we’re building a 3-D laser printer, which is honestly one of the most fun things I’ve ever done with my life.”

So basically, Shapiro knows what he’s talking about. And most importantly he knows how hard it is to create a start-up.

“I got to start a company and found so many terrible problems which I thought were all my fault. I had all these things go wrong, all these challenges and I’m like, I’m the only one who stinks at this and I was clearly not meant to do it,” Shapiro said. “It was only years later I learned that everybody kind of stinks at it. It’s really hard and you learn a lot of crazy stuff along the way. So I wanted to write something so that people who aspire to go create their own businesses, would know about the challenges ahead of them, would have some clues with what to do about them. But most importantly, to know it wasn’t just them. It’s just really hard to do.”

Let’s start out with a depressing fact, shall we?

“Nine out of 10 new companies fail. A lot of those people just don’t have any idea of what they need to do to be successful. That’s what this is all about. Things like validating your idea before you start the business. Understanding what the market is, what people want, how you’re going to make money from it,” Shapiro said. “It’s funny how many businesses start without even that.”

“Finding a set of people who can help and support you. Great cofounders, mentors, brilliant people who’ve had their own successes, and a different set of backgrounds, is one of the things that really helps you get through those set of company killer problems early on,” he said.

Shapiro says one of the toughest challenges people face is finding a cofounder. And once you find a partner, he says there are usually a lot of arguments about equity, strategy, titles. He says it’s important to have those fights at the beginning, before you launch.

Even before you quit your job to launch a startup, there is one piece of advice Shapiro gives.

“The one question I get the most is: How do I get into startups? It took me years to figure out the right answer, it’s both obvious and self-serving,” he said. “Which is, if you want to get into startups, you should go work at a startup. I say it’s self serving because we’re hiring at Glowforge.com!”

“It’s surprising to me, people who spend a lot of time at a big company who say, okay I’m going to bet it all on a startup. Without saying, wow, I can get paid to learn how to do startups for a couple years, helping out someone build their company, and then be all the better off to go have the connections and the experience to go do it myself,” Shapiro said.

As to where to start your company, Shapiro breaks it down to Seattle versus Silicon Valley.

“Seattle is really good at grownups. The Valley’s really good at fresh college grads,” he said. “I’ll give you two examples. There is a company called Box.net that was actually founded up here, somebody graduated high school I think, and started the company. Couldn’t get any investment, moved to San Francisco, was funded. The company’s worth billions of dollars now.”

“On the flip side, you have companies like Zulily or Zillow which were founded by people who’ve spent decades in their business, who are great at real estate, who are great at E-commerce, who come back to bring that all to fruition, build multibillion dollar companies around the things that they know and understand well,” Shapiro said. “So I think Seattle has got a tremendous environment for taking people who have perfected their craft and supporting them in creating something amazing out of that. I think the place where San Francisco and the Valley excels is in taking really raw talent and throwing some structure around that so they can go and try something for the first time.”