AWS Startups Blog
Greylock Partners’ Josh Elman on how he picks entrepreneurs from the crowd
During a recent fireside chat at the AWS Loft in San Francisco, Greylock Partners’ Josh Elman Elman shared with the crowd of founders and entrepreneurs that he had just wrapped up a recent investment in a startup. While he declined to name the company just yet, he did stress that the dynamics of that deal applied equally to all of his investments. One aspect in particular that Elman stressed is how he and the founders built a relationship over time. Elman didn’t invest the first time he met these folks, but he kept tracking the team, and just as importantly they kept Elman in the loop.
“We were getting to know the team as they came up with new ideas,” Elman says. “I’d run into them at events, or they’d send me an email and say, Hey, I’m in the Bay. Do you wanna stop by and catch up? So, we really got to track them over time and build a relationship.
That takes time and effort. “When we’re making an investment, we’re not like Oh, this thing looks great, the data looks great. We must invest,” Elman says. “We’re really trying to connect all the dots that have gotten the person here. Because if you think about a startup, you’re expecting it to grow and then at some point be 1,000 times bigger, 100,000 times bigger. So, we’re not looking for, ‘hey, look, this linear growth is going to keep going,’ but rather, ‘this is a team that looks like it can create something exponential.’ And so the only way we do that, is really by getting to know somebody over time and really kind of seeing it work and understanding it.”
Elman also shared three rules he generally recommends to early-stage entrepreneurs looking to succeed. Namely:
1. Know what your product is, and who it’s for.
“Then find a set of people that you’re really delivering that value to,” Elman says. “Don’t worry about big numbers of users, worry about some users who are passionately committed, and really focused on your product.
“It doesn’t really matter how many people you’ve touched, it matters how many people have you top-of-mind every day. I would much rather see you have 100 people who have changed their lives to work around your product, than to have 100,000 people who’ve lightly heard of your product, but aren’t actually engaged with it.”
2. Once you have changed people’s lives with your product, understand what the long-term business relationship could be.
“Your business may not work until you really get to scale, but you should at least start to have some frame of reference for how you monetize it,” Elman says. “For example, if they’re turning to my product five times a day to find out what’s going on the world, I can probably stick some really relevant ad in there. Or: If I’m delivering this value for them, maybe they’ll pay for it, or somebody else will pay to subsidize their time in solving this problem.”
Elman calls them monetizable behaviors. Get some. “It doesn’t need to be clearly thought through,” Elman says. “But it needs to be clear that you’ve got a really important behavior in people’s lives that you can probably monetize later.
And if big companies start taking notice of your market, well, let them.
You can’t live your life worrying that some big company can just enter your space and take it over,” Elman says. “The things you can control are delivering more value to your users every day, and making sure you have a team and the ability to scale. I’ve been through companies that have built something that scaled up quickly and then it kind of fell over because they weren’t unable to maintain their user base. And if you start falling over and you’re not serving your users well, it gets very hard to continue to serve your users, and you leave room for big companies for other people to go, Oh, that did look interesting, let’s jump in.
3. Treat everybody well. All the time.
That may not be typical hard-charging business advice, but it will not only make your company a better place to work, it can ultimately change the broader culture of startups and tech. “Just be a good human being,” Elman says. “The stories that have been coming out in the past few months in the news, and to everyone brave who are telling their stories, thank you. You’re hiring people, you’re meeting customers, and you’re meeting partners. Business is business and just keep it that way.”
For more with Elman, listen below: