Tracy Young: Solve the Problem You Have [Entire Talk]

TL;DR

The strongest startups begin when a founder solves a problem they personally have, because that founder often becomes the beta site for the next million users. PlanGrid emerged this way, reaching 500,000 construction projects. Sequoia's Doug Leone invested because the company already had product market fit, sales coming in, and a passionate, domain-expert founder.

Transcript

(audience clapping) - All right, you guys. So, Tracy, let me start with you. What's PlanGrid? - PlanGrid builds beautiful, simple, effective software for the construction industry. We emerged from Y Combinator's winner 2012 batch. And we partnered with Sequoia and Doug joined our board in May of 2014. And today, over 500,000 construction projects h... Read More

Key Insights

• Solving your own problem is the strongest starting point for a company, because a founder in the right circles is often the beta site for the next five million people, as Tracy Young was for construction software.
• Product market fit is the hardest thing to achieve when starting a company, and Doug Leone says once you have it, investors can help with everything else that follows.
• PlanGrid signaled product market fit unusually early, running with 20 to 25 people, no salespeople, and revenue coming in from employees answering the phone.
• Prioritizing the right problems matters more than solving every problem, and Tracy Young's team asks whether an unsolved problem will become ten times worse in six months.
• Many landmark companies solved founders' own problems: Airbnb founders rented a room for cash flow, Zappos founders couldn't find shoes, and Yahoo founders couldn't find things in the Yellow Pages.
• Losing a founder means losing the soul of a company, so Sequoia looks for at least one founder who can carry the company all the way to becoming a CEO and leader.
• Starting a company operates at the genius level, while Doug Leone says building and running one is more mechanical, requiring courage, IQ, and recruiting ability rather than genius.
• The real measure of a venture partner shows when things go badly, not when they go well, which is why Doug Leone told references to call anybody, including deals where Sequoia lost money.

Questions & Answers

Q: What is PlanGrid and what does it do?

PlanGrid builds beautiful, simple, effective software for the construction industry, allowing construction managers to oversee projects via their device. It emerged from Y Combinator's 2012 batch and partnered with Sequoia when Doug Leone joined the board in May 2014. Over 500,000 construction projects have been built with PlanGrid, from small kitchen remodels to the largest projects in the world. It is the number one mobile construction software on the App Store, Google Play, and Microsoft Windows, and Apple named it one of the top 10 enterprise apps of 2016.

Q: Why should founders solve their own problem when starting a company?

Doug Leone advises founders to solve a problem they personally have rather than intellectualizing something they know nothing about. If you are up and coming and in the right circles, your problem is often a proxy for the next five million people, making you the beta site for a large market. He cites Airbnb founders solving cash flow by renting a room, Zappos founders unable to find shoes, Yahoo founders unable to find things in the Yellow Pages, and Tracy Young solving a construction problem she had firsthand.

Q: How do you prioritize which problems to solve as a startup?

Tracy Young says the first step is making sure you have prioritized the right problems, because startups face a constant barrage of problems with only limited resources and time. Her team thinks further ahead, asking how bad a problem will be six months from now if left unsolved. If it is going to become ten times worse and come back to bite them, they should solve it right now. This forward-looking triage keeps the team working on what matters most.

Q: What made Doug Leone and Sequoia decide to invest in PlanGrid?

Sequoia saw a company of 20 to 25 people with no salespeople yet revenue coming in, which is unusual and signaled product market fit, the toughest thing for any startup to achieve. They also saw a founder who solved a real problem she had in the business, plus passion, domain knowledge, commitment, and authenticity. Doug Leone considered these the ingredients they look for. Tracy also showed she could grow from a terrific founder into a terrific executive and CEO capable of taking the company all the way.

Q: Why is product market fit so important to investors?

Doug Leone says the toughest thing to do when starting a company is achieving product market fit. Once a founder has it, investors and partners can help with everything else that follows. He contrasts this with a world where you lack product market fit, where there is little investors can do. PlanGrid already had sales incoming with no dedicated sales team, which Leone called a heck of a data point, making it an unusually strong and attractive investment for Sequoia.

Q: How did PlanGrid's founders cope with the death of their co-founder?

Co-founder Antoine was diagnosed with cancer at 27 and passed a month before his 30th birthday, coding until his last days with code still live in PlanGrid today. The founders lived and worked together, with hospice care in their house and families visiting often. Tracy Young describes finding a co-founder sobbing quietly in the corner for months. As humans they cried, mourned, and eventually found beauty again, then channeled that hurt and pain into fueling the company.

Q: What does Doug Leone look for when choosing which founders to back?

Doug Leone looks for clarity of vision and clarity of thought, especially when a founder arrives with only an idea and no code. He seeks passion, domain knowledge, founders who solved their own problem, and people who are committed and authentic. Critically, he wants at least one founder who can take the company all the way, because losing a founder means losing the soul of a company. During Tracy's Sequoia presentation, she held her nerve and delivered like a champ, showing she had the courage to go all the way.

Q: What is the real measure of a good venture capital partner?

Doug Leone says the real measure of a partner is not when things are going great, but what happens when things are not going so well. He told Tracy to call anybody as a reference, including his last two or three deals where Sequoia lost money, to keep himself honest. Tracy did extensive homework and reference checks, even gifting Doug a card summarizing feedback she heard about him and Sequoia. His resume is essentially a sheet of CEO and founder names and phone numbers to call.

Summary

Tracy, the CEO of PlanGrid, discusses the company's background, the importance of solving the right problems, the unique mindset of founders, the partnership with Sequoia, and the challenges faced by the company. Doug, a board member from Sequoia, talks about the common elements he sees in successful founders, the process of meeting and investing in PlanGrid, and the role of VCs in supporting startups. They also discuss talent recruitment, managing difficult conversations, the importance of culture, and the trials and lessons of running a company.

Questions & Answers

Q: What is PlanGrid and how did it start?

PlanGrid builds software for the construction industry and emerged from Y Combinator's 2012 batch. It has partnered with Sequoia and has been used in over 500,000 construction projects. It is the number one mobile construction software and was named one of the top 10 enterprise apps of 2016 by Apple.

Q: What does it mean to "fix your own problem" when starting a company?

"Fix your own problem" means solving a problem that you personally experience and understand well. By solving a problem that you have a deep understanding of, you can prioritize the right problems and anticipate their future impact. This approach helps in making better decisions and focusing on the most important issues.

Q: What did Doug find unique and compelling about Tracy and PlanGrid?

Doug found Tracy and PlanGrid unique and compelling because they had revenue coming in without any salespeople, indicating good product-market fit. They had a founder who had personally experienced and solved a problem in the business, a trait shared by many successful entrepreneurs. Tracy also displayed passion, domain knowledge, commitment, and authenticity, which are important qualities for success.

Q: How did Doug first meet Tracy and what was the process for investment?

Doug met Tracy through a young associate at Sequoia who had started a successful company and had invested in several others. The associate made the introduction, but Tracy did thorough research and references before choosing Sequoia. The process involved multiple meetings, presentations, and discussions to ensure a good fit between PlanGrid and Sequoia.

Q: What challenges did Tracy face when dealing with personal tragedies and how did she overcome them?

Tracy and the founders of PlanGrid faced personal tragedies when three of their four founders' parents were diagnosed with cancer, and one founder passed away. Tracy mentioned that they coped with grief, built shields around their hearts, and eventually found beauty in the world again. They channeled their pain and commitment into building a tool that makes construction more efficient and creating a good company that takes care of employees and provides value to users.

Q: Did Tracy and the team receive outside help during the difficult times?

Tracy mentioned that their families and Antoine's family provided support during the difficult times, and they also had care and hospice at their house. They received emotional and practical support from their loved ones and the community.

Q: How does Doug assess talent and what advice does he have for recruiting the right people?

Doug emphasized the importance of recruiting world-class engineers and surrounding oneself with people who have built things before. Past experience and track record are good indicators of future performance, especially when looking for leaders. He mentioned that rapidly growing revenues, strong gross margins, and a clear market opportunity also help in recruiting the right talent. He advised focusing on clarity of vision, clarity of thought, and explaining the market potential and career opportunities to candidates.

Q: How does Doug approach difficult conversations about performance or fit with an executive?

Doug highlighted the importance of setting clear expectations and agreements from the start to avoid surprises or misunderstandings. He mentioned the need for accountability and performance, and the role of founders and board members in providing support, guidance, and resources to help executives succeed. In extreme cases where there is a mismatch of values or conflict, tough decisions may need to be made, but it should be handled with care and consideration for all parties involved.

Q: How does Doug view the balance between market potential and founder qualities?

Doug believes that great founders find their way to great markets and that the two are interrelated. While market potential is important, great founders have the vision, execution skills, and ability to recruit and build a team that can capitalize on the market opportunity. It's a package deal where the founders' qualities and ability to execute and lead are crucial for long-term success.

Q: What were some of the challenges and mistakes made by PlanGrid and how did they learn from them?

One challenge was transitioning from a flat management structure to a more structured organization as the company grew. They realized the importance of clear communication, setting expectations, and creating career paths for employees. Mistakes were made in attempting to be too clever in organizational structures and not recognizing the need for conventional business practices. They learned the importance of seeking help from experienced professionals and investing in systems like NetSuite for financial management.

Q: What advice does Tracy have for CEOs and founders in managing work/life balance?

Tracy admitted struggling with work/life balance and mentioned meditating as a way to manage stress. She acknowledged the constant focus on PlanGrid and the challenges of being a CEO. Balancing personal and professional life may be difficult, but it is essential to find ways to cope and take care of oneself.

Q: How did PlanGrid build its culture and what values are important to the company?

Tracy is proud of the company's culture, which values hard work, fairness, respect, and building tools for the construction industry. The team has diverse backgrounds but shares a passion for building and solving problems. She mentioned the importance of clear communication and selling the vision, product, and market size to potential recruits. The recruiters have played a key role in maintaining the culture by filtering out candidates who wouldn't be a cultural fit.

Summary & Key Takeaways

• PlanGrid builds simple, effective software for the construction industry and emerged from Y Combinator's 2012 batch. It partnered with Sequoia when Doug Leone joined the board in May 2014. Over 500,000 construction projects have been built with it, and it is the number one mobile construction software across major app stores.

• Doug Leone invested because PlanGrid already had product market fit, the hardest thing for any startup. With 20 to 25 people and no salespeople, revenue was still coming in. Tracy Young solved a problem she had in the business, showing domain knowledge, passion, commitment, and authenticity, the ingredients Sequoia seeks.

• Early adversity struck when a co-founder, Antoine, was diagnosed with cancer at 27 and passed a month before his 30th birthday. The founders channeled that grief into building PlanGrid responsibly. Tracy did extensive reference checks on Doug Leone and Sequoia before choosing them as partners.