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flickr-3116296915-image(I’m live-blogging from Startup School, a daylong program from startup incubator YCombinator held at Berkeley today. Mark Pincus is the CEO of social gaming company Zynga . If these notes are a bit scattered, it’s because it’s paraphrased and Pincus is doing a stream-of-consciousness style talk.)

So Pincus starts his talk by outlining his pretty conventional career right out of college — he went into banking. Then to business school. Then he said he hadn’t really succeeded at any of those companies. “I got kicked out of some of the best companies in America,” he said.

“I thought I was washed up at 28 or 29. And then I started my first company called Freeloader. My first advice is you should set a goal. At first I wanted to just show that I had revenues. I think we sell ourselves short and give ourselves permission to fail.”

He went and built the company up. Sold it.

“It was really a disaster. The CEO had a breakdown. He was doing weird stuff I won’t even talk about. Yossi, I’m sorry. He’s now a CEO coach. So anyway, I locked in the success of a company and everybody was proud of me. But I had nothing to show for it. My investors were happy. Now I had my green card to go and be an entrepreneur. I had $8,000 in savings which everyone should do when they start a company. But I shorted three Internet stocks as they quadrupled in price. So I lost all my money.

So then I did the cliche thing with all the credit cards. But the company got bought for $38 million. I had no idea what to do with my share of that, which is not $38 million. People always ask you what did you get? But usually you just get a small share of the total. So I had a career. I moved the company and myself to San Francisco, which I thought was the motor city of the Internet. Then I did nothing for awhile, which everyone should do. Then I started attracting a different group of friends — it’s like that a ghetto version of the show Entourage. You go out on Monday at 1:30 a.m. Then they show up at your house on Tuesday. But that gets old after a few months.

So then you kinda realize there was some other reason you were doing that. You weren’t trying to go out and make money. There was something else. When you achieve things, you start to realize those weren’t your real goals. Then I thought I wanted to build a great company. So I spent a whole bunch of time and I accidentally built this company I won’t bore you how I got there. We created this service that nobody wanted. We luckily figured out that no one wanted it. John Doerr talks about this idea of failing fast. And that’s important.

I’m going to diverge on that for one minute. I have this one friend like on this dating show. They have some harebrained idea for a startup. And they keep sticking with it, and think if the world doesn’t see it, they will one day. They confuse stubbornness with great entrepreneurship. We should all intervene with these friends. If they can’t get funding, it may be a good idea. Or a bad one. You should give your five to seven friends a pitch. Ask them if they want to buy stock in that company. First off, consider that there’s going to be a grade inflation. But use that as your sounding board.

Anyway — I had a bad idea and then I shifted it into a good one. ….

I find that we all occasionally end up building companies that we ultimately don’t want to work with. You find out that the big venture capital firm backs you and you feel like you can’t say anything if you’re not totally sold on your own idea. All my friends gave me 5’s out of 10’s but this guy’s giving me $5 million. We ended building some tech support software we ended up selling to a bunch of companies. We became profitable.


The other thing with VCs is that their junior guys are pretty conservative. They’re more worried about the downside. So what happens is that you end up being successful after that junior guy didn’t believe you. So now what happens is they say is the company could is so valuable — then they say you’ve never run a big company before. So then what they do is they talk about hiring a COO. And you think, hell yes. Someone else to do my job. Then you find out that there’s no really good, world-class COO who will work for a twenty-something. (Unless you’re Mark Zuckerberg.) You probably won’t be in that situation.

Then you think: I don’t like this. And then the happy-smiley thing goes away. And then it’s witch hunt time. And the junior VC guy comes in and has meeting with your entire team and says they’re really concerned about your leadership. Now your company’s successful but they might change your leadership. And then the new CEO’s kind of weird. The company culture’s changed. And you realize you don’t like it. And then you’re back where you’re started. You’re back at your home, drinking booze with all those old friends. Or you could get married and have kids.

Anyway, I was out again and I wasn’t fulfilled. I started thinking. I wanted to build something that will matter in people’s lives. That was a big goal. But I was going to hold myself to it. I went through a bunch of ideas and ways to get there. Set very high goals but be willing to take any path to getting there. I realized that the only way I was to have a chance at building an Internet treasure was to control my own destiny.

That’s part of the reason of why you guys are becoming entrepreneurs. You don’t want some boss controlling your destiny. You want to live or die by your own efforts. There were a couple things I realized I needed. First, I needed capital. Well there are not a lot of people who are just going to give you capital and then call you a few years later.

So I realized I needed to be profitable right away. It was 2007. If we’re going to start a business, it can be profitable. We don’t have the luxury of building a great feature. You can connect all the dots and you should.

We’ll skip forward to a few things. One is control your destiny. If you’re profitable, you can control your board. This is another thing entrepreneurs get wrong all the time. You control your board. The valuation is not what matters.

Who gives a shit what your valuation is? That’s your ego. Your future will be impacted more by a bunch of white men who don’t know anything about your customers than your valuation. You’re having lunch all month long trying to convince them of what you want to do. It moves faster if you just tell them what you’re going to do.

The second thing is you ought to all aspire to be a great CEO. And that is going to have greater impact on bringing great products to the world than being a great entrepreneur. It’s not just about the ideas and the strategy. If your company is successful like Mark’s been and Tony’s been, you will have many more people than 10 people. You can be a great entrepreneur with 10 people. You’re not going to be a great entrepreneur with 100 or 1,000 people.

You should always be trying to learn and raise your game. If you guys want to create world-class products, it’s probably going to be 10 years of learning and flailing and one year of getting it all right.

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