Wayne Chang, serial entrepreneur, was the self-proclaimed “black sheep” of his family. But in the short decade or so since he dropped out of college, he’s become the definition of success.
At age 32, Wayne Chang is already one of the most successful entrepreneurs in Silicon Valley. His latest venture, Crashlytics, sold to Twitter about a year after it launched—valued at ~$300 million at its IPO. But Wayne started his first company much younger: since age 7, he has been building ventures, and he’s played an important role in a wide variety of leading tech companies, including i2hub, Dropbox, and Napster.
Besides entrepreneurship, Wayne Chang is also an avid angel investor. He has early investments in companies like DraftKings, Tablelist, SoFi, ZenPayroll, Planet Labs, JetSmarter, and Slash Keyboard, and he is a limited partner in several prominent venture funds. Wayne originally dropped out of UMass Amherst as an undergraduate, and he was recently awarded an honorary PhD from his alma mater, recognizing him as a leader who stands to transform the world.
In a recent IVY Entrepreneur Night, Wayne Chang shared his story with IVY members. He offered key tips for entrepreneurship and shared some secrets for how he’s built high-growth, high-impact ventures. Watch the full talk below!
How and why did you decide to start Crashlytics?
When I’m thinking about a new startup, I always ask myself: is it a painkiller, or is it a vitamin? I could give you a vitamin and tell you that if you swallow this everyday, it will save your life in 50 years. It’s natural to be very skeptical about that, which means I have to create more marketing collateral in order to get you to commit. And you’re still skeptical, which means I have to create other proof to convince you. It’s a massive sales cycle.
Flipside: let’s imagine a painkiller. Say something happens and you’re screaming in pain, and I just hold up a pill. You’re going to be crawling over to me and telling me you want that painkiller right now. There’s almost no sales cycle – you want that painkiller. Right now.
Every problem I’ve ever chosen to address with a startup has been a painkiller; it’s been this thing that someone is going to be searching for naturally. I look for problems that people are naturally going to want a solution for. It cuts down on time, and it also has the benefit of a huge growth trajectory.
What three key abilities do you think make a great entrepreneur?
I would say that one of the key abilities is knowing when to kill your project. I know this sounds very morbid, but I’ve seen it time and time again. You’re an entrepreneur with a great idea that’s going to change the world, and then you work on it; you invest time and capital in it. You get your friends involved. You find a co-founder. You get developers. And then you build it out, and you spin it out in the world. It turns out that 5-10 people understand it and start using it. Then, you make a couple of tweaks. Three years later, you’re still working on the project, and it’s still more of a hobby than it is a project.
You’re not going to live forever, so understanding that time is one of the most valuable resources is key to success. You want to take as many swings at bat as possible, so if you’re still on your first swing and it’s half a decade later, your time horizon is short. And it doesn’t have to be that way. So, I think it’s important to know when to end a project and when to begin a new one.
Second, entrepreneurs have to be conscious of what they’re giving up. Imagine a triangle, and at each of the vertices there’s cost, speed, and quality. You can only pick two. Normally, people pick cost and speed or cost and quality. Cost has always been the driving factor—but from my perspective, that means you didn’t raise enough money. You should have enough resources, have enough firepower and enough ammo, where you can not worry about cost. You should just worry about getting the best stuff out there in the highest quality, the fastest way possible. If you’re raising capital and you don’t know how much to raise, find an amount that makes you not even have to worry about money anymore. Raise that amount.
Third, and final, I love products that have psychology built into them. Having an understanding of how human beings actually experience pain or pleasure or all these different types of emotions means that you can create better products. I tell my team every week: we don’t engineer solutions, we engineer emotions.
As an investor, what are some of the big new trends in technology you’re looking at?
I’ve been involved in a lot of different companies. From a macro perspective, I’m looking at the intersection between real-life and software. That’s the next big bet that the human species is pushing toward. Ten years from now, you may be walking around with giant goggles because they’re going to give you radically better vision—think Google Glass or Oculus. Imagine a world where every material that your fingers touch is highly responsive and reactive. That means everything would be personalized to you. This table right here is just a normal table, but imagine it could recognize that there are things on it. For example, if there’s a water glass on it, the table could know it needs to be refilled.
What are you looking at from a micro-perspective?
I have a very simple framework that begins with the founders themselves. If you’re a founder, and you come up to me, and you say you were able to exit 9 projects successfully, I’ll probably write you a blank check. The founder proof is there. If you don’t have the founder proof, then the next question is product proof. Do you have the technical skills to build the vision you have? Do you have the ability to get people around you to build that? And, if you have built that, is there traction? The last thing I look for is the social proof. Let’s say you don’t founder proof and you don’t have product proof, you just have an idea. If you have other top investors involved, it de-risks the investment.
A lot of entrepreneurs have the problem that cash is scarce. Is there a parallel philosophy that says you want to be more careful with how you spend? Do you always want high-growth?
My bias has always been toward high-growth. If you’re a start-up, and you’re worried about revenue in the first year, then you’re probably worrying the wrong way. I’d rather invest in companies that are dominating the market share because that means they’re capturing the potential, and then they can generate revenue later on. The hunter who chases two rabbits catches none—so you have to focus on one or the other, and it’s much, much easier and way more fun to just go for growth. It’s so much more fun to give away free stuff than to convince people to give you money. It’s also valuable because you’re creating growth, which is so valuable in the startup world.
What problems do you think some founders run into when they’re starting a company?
One of the key skills for founders is to understand and know what they don’t know. That’s hugely important. I tend to not waste time with people who say they know everything or who act with too much bravado. It’s more about the self-awareness. If you’re a founder, and you’re really, really great at selling something, that’s fine. Just know you’re great at that. Then find another person that’s not great at that, but that’s great at things you’re not great at. Together, you form a really great team. You don’t have to build your own skills; you just need to know where your skills are.
Don’t waste time trying to level-up on something; just know what you are passionate about and find other people that complement you. The worst start-up composition is two technical founders and that’s it. That means they haven’t really been self-aware, and it takes a lot of coaching and encouragement for them to realize that.
What would be the first 5 positions you would hire at your start-up and why?
The 5 positions you hire depend on your start-up. If you’re building an app, you’re going to have different needs than if you’re building a retail start-up. I can tell you that if your goal is to be super high-growth and you’ve raised capital, one of your very first hires has to be a recruiter. Let me tell you why.
Founders spend a lot of time recruiting, and it’s probably not the best use of their time as a founder. One of the key reasons we exited Crashlytics so quickly was that we hired a recruiter so that person could take on 90% of all that work, which freed us up to think much more strategically and to work on the product and startup itself. Then the recruiter could do a lot of searches in parallel, so by the time we were 4 months old, we had the team composition of a 2 year-old startup.
We brought on high quality people really, really early on, and had we not hired the recruiter, it would’ve taken much, much longer and our window of opportunity might have passed us by. I always worry about time as a huge component to all the decisions I make. I’m always asking: what can I do to drive down the use of time?
At the end of the day, what do you truly fight for?
There’s a lot of horror stories when you start a company. At first, you love everything about your company. Then you get to the hard part, and you have to raise more capital, and you’re exchanging for the worth of the company. You do that, and you make a product with that money. And then you need another investment. Eventually, you get to a point where you’re driving the ship, but it’s not really your company anymore.
One thing that we care a lot about is control. We make sure if we raise capital that we always have control of the board. Always make sure you have control of your company, and be careful of anything that influences the company.
Do you think there’s a particular challenge in your life that’s made you who you are?
I believe that entrepreneurs always need to find a driver, something that motivates them. Mine was that I was also the black sheep in the family, so no one believed in me. If I just came out and became a drug addict or something, no one would have been surprised. So I said: I’m going to prove them wrong.
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