“When you innovate, you’ve got to be prepared for people telling you that you are nuts.” – Larry Ellison, Oracle

Every startup makes hundreds, even thousands, of small decisions every day. But, there comes a time when every startup has to make some really big decisions that will dictate their overall success. I believe there are three big decisions that every startup will make throughout their lifecycle. Without rolling the dice to make these big bets, most companies will hit the “mediocre pool.” This is where startups go when they plateau. They don’t die or grow exponentially. They just flatline and become mediocre.

1. What to Build? Most startups (99%) fail in this stage because they build the wrong product for the wrong market. Are you building something  of value that people will use and care about? Are you building the right product for the right market? A lot is written about what to build and how to reach “product/market fit” as fast as possible. This is covered within the lean startup methodology, customer development, etc so I won’t dive into too much detail and reiterate.

2. Who to Hire? After you build something of value, the next major decision to make is on who to hire and what they’ll be doing. The number one cause of death for a startup in this stage is not scaling properly (prematurely) and hiring the wrong people to work on the wrong things. It’s an extremely tricky thing to balance as you’ll be hiring people before your company becomes sustainable (if you have VC funding).

Most startups fall apart here because they don’t have a solid foundation where communication, collaboration, and teamwork are stable and integrated into the company culture. This is where vision, recruiting, process, and holding your team accountable to each other are extremely important. At this stage, you start building the machine that builds the company.

3. Where to Innovate? This is the biggest and hardest decision you’ll ever have to make as a startup. If you look throughout history, most companies become irrelevant because they aren’t innovating properly. Apple and Facebook have done a great job but companies like Yahoo, AOL, Myspace (I would even argue Google) have not innovated successfully to stay relevant in society.

In this stage, most startups fall into the trap of one-upping their competitors. If one of their competitors releases a key feature, they will copy that feature and make it 1% slightly better. This is a sure-fire guaranteed way to hit the “mediocre pool”. However, if you’re “thinking about the idea that you want to see in the world” (Jack Dorsey quote) then you’ll be leading your company to innovate (even when people are telling you that you are nuts). As a startup, you should understand the major decision points that will dictate whether you will be truly successful or not.

At Skillshare, we have a very clear vision of how education should exist in the world. It’s a vision of education that has never been done before and there’ll come one day where we’ll risk everything to realize that vision. It’ll be a huge decision and if the bases are loaded, we’ll definitely swing for the fences.

Michael Karnjanaprakorn is the CEO/Co-Founder of Skillshare.

Last year,  I wrote an article on “Five Entrepreneurial Lessons from 2010” which was a very monumental year for me as an entrepreneur.

There’s a natural progression that entrepreneurs make over time. For me, if 2009 was a year for exploration, 2010 was the year to make a commitment, and 2011 was the year to make shit happen.

At the beginning of 2011, we closed our seed round for Skillshare from Founder Collective. Me and Malcolm shared a desk  and worked non-stop designing and developing the first version of Skillshare. In April, we launched Skillshare, which was picked up by Daily Candy (our first major article)!  By August, we closed another round of financing from Spark Capital and Union Square Ventures. And by the end of the year, our small team of two (2) grew to twelve (12) and our community grew to the size of a major university. It was a roller-coaster year beyond our expectations and I learned more in those 12 months than the past 12 years about becoming a leader. Here are some lessons that I hope you can apply to your own journey as an entrepreneur.

1. Building a product is hard. Building the machine that builds the product is harder. Disrupting an industry is the hardest. I came across a TechCrunch article quoting Dennis Crowley at Foursquare where he says that “the hard part is building the machine that builds the product.” I agree 200%.

This is the biggest lesson I’ve learned in 2011. In the early days, I was so focused on building the product. Over time, I realized that we couldn’t reach any of our goals without building a great team so I shifted my role from building the product to building the “machine.” My role shifted to recruiting, culture, process, strategy, management, communicating our vision, and becoming a leader.

Looking towards the future, I’m convinced that disrupting an industry will be the hardest endeavor at all. It would not be possible without a great product, community, and team working together to transform an industry. I believe these are the three major stages/bets that a company will make in it’s lifetime: 1) what to build; 2) who to hire; 3) how to innovate. This will be my next blog post so saving all the juicy bits for a latter post.

2. A great team is 100x than a good team. After reading “Tribal Leadership“, I realized that a great team is not just better than an average/good team; it’s exponentially greater. This is when I shifted my focus from recruiting individuals to building out a cohesive team (much like the 1995-1996 Chicago Bulls).

Since time is finite, success can only happen from teams that can create magic and distort reality, which is notable in the first Macintosh team. From picking our investors (Founder Collective, USV, Spark) to our advisors and employees; every decision was made to build a 100x team to help Skillshare achieve it’s vision.

3. People -> Culture -> Process ->Accountability. While I was reading Eric Ries’ latest book on Lean Startups, I came across a diagram he called “The Startup Way” which I found fascinating:

When I started to build out our team, I realized that talented people thrive in a culture with just enough process/structure to hold them accountable to each other. Without it, a lot of time is wasted, things aren’t clearly communicated, and everyone ends up rowing in opposite directions.

“The success of a company depends on its tribes, the strength of its tribes is determined by the tribal culture, and a thriving corporate culture can be established by an effective tribal leader.” – Tribal Leadership

We started by writing the values of our culture (to attract the right talent to our team), implemented MORPH’s as our process so that everyone would be held accountable to each other. Today, everything is aligned from the top to the bottom and back up to the top. It’s aligned on the company, team, and individual level as well as across all projects. Accountability to the team is the foundation of any great company.

4. Meetings are O.K. We used to have an anti-meeting rule at Skillshare. We adopted the PayPal Mafia policy of cracking down on all meetings. One day, I walked into the office, and it was eerily quiet because everyone was working on their computers with headphones. At that moment, I realized that what worked for other companies and cultures wouldn’t necessarily work for Skillshare.

We believed that innovation comes from creativity and collaboration from our team. So, we designed a meeting space that fosters collaboration. We educated everyone on the power of efficient meetings (coupled with the power of being action-oriented/shipping/executing). A lot of the recent and future innovations from Skillshare were seeded in these “meetings” which I believe will be the key ingredient to our success in the future and transforming the education industry. Our competitive advantage will always be our team, community, creativity, speed and innovation.

5. Work/Life Balance. This year, I really embraced the balance between working and enjoying life to prevent myself from getting burned out. I took one day off a week (Saturday), ran a couple of half-marathons, practiced yoga weekly, and made sure to spend time with family and friends. In 2011, I spent the last week in upstate Maine as part of my “think week” which cleared my mind to make higher-level decisions for Skillshare. I made a conscious effort to not let work overpower my life which is something I see happening a lot with first-time entrepreneurs (me included).

Today, it’s easier than ever to start a company, but building a company will always be as hard as it’s ever been. Wherever you are in your journey, understand that you will always make mistakes. But as long as you learn from them, improve, and stay focused to your mission; great things will almost always happen.

Michael Karnjanaprakorn is the CEO/Co-Founder of Skillshare, which is a community marketplace to learn anything from anyone, anywhere. You can follow him on Twitter.

If you take the best team executing an idea in a huge market and put them in the wrong  startup culture, they’re destined to fail. Jack Dorsey talks about creating Square as “one startup with many startups inside” which is something I spend a lot of time thinking about for Skillshare. How can we create a culture that  allows entrepreneurial talent to thrive and succeed?

We love entrepreneurs. We love working with them. We love recruiting them. But, entrepreneurial folks thrive in a different culture from the norm. They love taking ownership, influencing major decisions, and having the freedom to swing for the fences. In a way, they’re running a startup within our startup. The challenge is balancing the big picture of what’s most important and giving individuals complete autonomy to excel. Below, I’ll share some of my thoughts around creating an entrepreneurial startup culture from my experience at Skillshare.

1. Hire Entrepreneurs, Not Employees. Entrepreneurial drive is the #1 trait we look for in recruiting and hiring. While most companies want to be known for having great engineers, product; or marketing folks; we want to be known for the entrepreneurs that emerge out of Skillshare (similar to the PayPal Mafia). We even created a role called “Founder Apprentice” to groom future entrepreneurs. And joke internally that the only time someone leaves Skillshare will be to start their own company.

Last year I read an article from Steve Newcomb about renting entrepreneurs, ”let me rent you for 6 months.  You’ll learn an insane amount about building a startup from me that will help you prepare to start up your first company.” At Skillshare, we believe that an entrepreneur working with us for 24 months will provide us more value than an employee working with us for 24 years.

2. Startups within Startups. At Skillshare, we have a flat organization and foster ownership in everything we do. Everyone on our team is tasked with exactly one priority, and everyone on our team has the same responsibility — creative problem solving.

The usual norms around productivity and organization (top-down deadlines, standing meetings, traditional product/project management) don’t mesh well with entrepreneurs. This weekend, I read a great article about the Github culture, “we do things differently at GitHub: we work out of chat rooms, we don’t enforce hours, and we have zero managers. People work on what they want to work on. Product development is driven by whoever wants to drive product.”

We’ve shifted our focus to results and Big Hairy Audacious Goals (BHAG), which has shifted our focus away from creating a rigid process. For example, we had a team retreat in October to talk about the company goals for the next 6 and 12 months, which everyone created together. From there, ad-hoc teams started forming around new ideas to hit our milestones. Now, we’re in the process of creating new teams around these new ideas and everyone on our team will be the CEO of Something, which allows us to get rid of “managers”.

3. Anti-Meetings. I’ve read a lot about the PayPal Mafia culture on cracking down on meetings. We follow a similar cultural principle to reinforce that action and making ideas happen are the most important tenets of our culture. Meetings are expensive (time-wise) and also interrupt creative flow, which is what leads to true innovation.

4. Feedback & Personal Development. However, there’s one meeting that is mandatory at Skillshare. Every Friday, Malcolm and I spend 20-30 mins in a one-on-one meeting with individuals on our team as a form of professional development. This allows them to tell us what they like/dislike about Skillshare and allows us to give them feedback on their performance.

We also spend the other half of the meeting coaching/mentoring them on anything from building a personal brand to fundraising for startups to calculated risks & decision making principles. This is extremely valuable because entrepreneurs are constantly looking to learn new skills.

5. Fun. We also have the usual cool perks: friday team lunches, stipends to attend Skillshare classes, TaskRabbit credits to run personal errands, new MacBook Air laptops, YogaWorks monthly discounts, bi-yearly team retreats, and game and/or bar nights. We also setup field trips with other startups like Kickstarter to check out new exhibits at MoMA, conduct cross-design feedback with Svpply, and invite our investors to stop by the office to have lunch with our team.

As we start thinking about creating an entrepreneurial startup culture, I always look to create small things that can make a huge impact and reinforce our culture. Up next, we’ll experiment with a company chatroom (yes, we don’t have one yet!) to reduce emails and meetings, writing a company manifesto to attract more like-minded entrepreneurial people, and setting up company metrics to objectively measure our results.

Is there anything you do at your startup to create an entrepreneurial startup culture? If so, I’d love to hear them in the comments section below!

Michael Karnjanaprakorn is one of the co-founders of Skillshare. We’re also looking for entrepreneurial folks to join our team.

“Creativity is 99% perspiration and 1% inspiration” – Thomas Edison

In the corporate world, there’s a standard ladder to climb to get to the top. In the world of entrepreneurship, there is a similar ladder to climb. Entrepreneurs should start with small ideas and learn how to execute those ideas. Learn how to gain traction, learn from your mistakes, and learn how to make something out of nothing. And eventually the ideas you pursue get bigger and bigger.

I’m a firm believer in execution and follow the Thomas Edison quote pretty closely. The secret behind launching your startup idea is to always move the ball forward on your ideas through execution. Every journey for an entrepreneur is completely different but I’d like to share the process that eventually led to the launch of Skillshare.

1. Exploration & Execution. This is a time for the entrepreneur to creatively explore his/her personal interests, ideas (small or big), and consume as much of the world as possible. For me, this involved traveling around the world, reading as many articles/books as possible, meeting as many interesting people I could fit into a day, and executing ideas.

I also knew that I wasn’t ready to be an entrepreneur so I gained startup experience by working at Behance and Hot Potato. On the side, I launched a ton of small ideas including The Feast Conference, By/Association, World Series of Good, TBD, and Lovely Day. By executing all these smaller ideas, the filter for what I wanted to work on got higher and higher.

The idea for Skillshare didn’t happen overnight. It took 5+ years of climbing the ladder of ideas and immersing myself in a lot of different experiences. There is no rush in understanding yourself and your passions. Keep in mind that most entrepreneurs get stuck in this stage because they never execute anything. The more you execute, the more your learn about yourself and your passions. Your goal at this stage is to find a problem you are truly passionate about solving.

2. Brainstorming & Validation. While I was exploring, I wrote down a list of startup ideas, which quickly became a list of over 100+. From there, I narrowed it down to a few ideas and flushed them out extensively. I brainstormed ideas, sketched wireframes, and did everything else I could to understand the opportunity with Malcolm Ong (Skillshare Co-Founder).

We fell in love with one idea around democratizing education and turning cities into huge campuses, which eventually became Skillshare. Rather than spending nights and weekends flushing out the idea even more, we let the idea sit and marinate for a pretty long time. I personally spent a lot of time validating the idea as I didn’t want to fall in love with it too easily. In other words, I did all the research I could to convince myself this was worth my time, which is the true goal at this stage.

3. Feedback & Commitment. Once I convinced myself this was an idea I’d like to pursue, I asked a dozen really smart people I knew what they thought about the idea with a small twist. Rather than asking them if they liked it, I asked them why the idea wouldn’t work, why it would fail, and why I shouldn’t work on it. Malcolm did the same thing and we eventually had a list of 20-30 huge holes in our idea.

We hit the drawing board again and came up with solutions to plug all the holes. We went back out to a dozen different people and asked the same questions. We repeated this until almost every hole was plugged in our startup idea. We eventually had rebuttals for rebuttals and felt very confident that we should commit to working on this for the next 5+ years of our lives.

Your goal at this stage is to “go all in” on your idea and put your stake in the ground. This was the hardest part of the process for me but once you put your chips in the middle, it’s the best feeling in the world. Remember that you’re running a marathon, not a 5K.

4. MVP (Minimum Viable Product). Malcolm and I agreed that we wouldn’t write one line of backend code unless we knew this was something that people wanted. We did this by setting two really simple milestones: a) 1,000+ email addresses for our alpha page and b) selling out all of our initial classes ( 3 per month for 3 months). We didn’t want to spend too much money on the idea so we set an overall budget of $5K.

I bought the URL and hired Ed Nacional to design the brand identity around Skillshare. From there, we put up the “alpha” version of Skillshare, which took less than a day as it was HTML/CSS. We used Campaign Monitor to capture email addresses and Eventbrite to power all of the ticket purchases. I taught the first Skillshare class around poker, which you can still view on Eventbrite. We needed some marketing juice so I wrote a controversial article on “Why College is Overrated” for GOOD Magazine and we put up a Kickstarter project around the same topic.

We ended up getting over 5K+ email addresses from folks that signed up to be notified about Skillshare. All of the initial classes sold out (huge validation) and our Kickstarter project got fully funded. If you follow the lean startup methodology, you’ll know that most startups don’t fail because of the technology, they fail because they are solving a problem that no one cares about.  Our goal at this stage was to see if anyone on this planet wanted Skillshare to exist. We passed that initial test, kept hitting our next milestones, closed a seed round led by Founder Collective, and launched a full beta site in early April.

This was a very long process for me. It didn’t happen overnight. If Biology 101 is the weed-out classes for doctors in college, launching your startup idea weeds out the majority of new and aspiring entrepreneurs. I failed over and over, but as long as you make the best decisions and take calculated risks, you can successfully launch your idea and make the world a better place!

Michael Karnjanaprakorn is the CEO/co-founder of Skillshare. You can follow him on Twitter and take his class  on”How to Launch Your Startup Idea” through Skillshare.