Getting the Startup Equation Right

Deciding which Great Idea to pursue is just the first step, says Caterina Fake. The next essential is forming the team that can make it happen

Fake, center (next to the dog), with the Hunch team.

The Entrepreneur: Caterina Fake, 40

Background: Social media pioneer and co-founder of the photo-sharing service Flickr, she led the technology development group at Yahoo (YHOO) after it acquired her company in 2005. In 2008 she left Yahoo and joined Hunch as co-founder.

The Company: Hunch is a recommendation tool that uses machine learning to harness its users' knowledge and offer customized answers to their questions. The 12-person business launched the public version of the service in June 2009, had 1.2 million unique monthly users in January, and has raised $6 million in funding.

Her Journal: I have always been very interested in invention and creation and the Great Idea. But the idea is just the starting point, just the first step. You also have to find the right people to help you do it. No successful company has have ever been the product of just one person.

The way the story is told is that Martha Stewart or Steve Jobs or Richard Branson is the sole driver. But that's because people like to have a protagonist, just as there's a protagonist in every novel. A group of people makes a bad protagonist. Turning an idea into a company means you have to find brilliant, capable, amazing people and put together a team. And then you have to get everybody on board with the Great Idea. And then figure out how to get there.

You see companies that have the Great Idea but are not able to make it happen. As an example, there were probably about 100 companies that were doing a YouTube-like video sharing service in 2005-07. But the reason YouTube succeeded is it had all the essential elements together: the right team, the right product, the right location in Silicon Valley, the right execution. The entrepreneurs were able to raise the capital they needed to build and scale it. Obviously, it was a good idea, but the combination decided who the winner was. So again, the idea is really just the starting point.

It was the combination of idea and team that led me to Hunch. After Yahoo acquired Flickr, I'd joined Etsy's board and was flying to New York all the time for board meetings. I was introduced to the Hunch guys as a possible board member. It's funny, because I was not given a very specific pitch. The product wasn't built yet; it was an embryonic expert system built on computer-aggregated data. It was clear to me that the idea of an expert system had tremendous possibility, because I'd been looking at these particular problems at Yahoo. This was a very different solution from other things that had been proposed and from other ways that people had been working with data, and it needed a user-generated content/social media component. That's the thing I do best.

Importance of the Team

This was also a great team, and they were clearly solid entrepreneurs—they were going to be successful. They had been successful. They had started a company called SiteAdvisor, which they sold to McAfee (MFE) for $74 million less than a year after they started it. They knew what they were doing. Not only that, the team was already in place. I think it's important for people to take care of the team, to appreciate everybody they work with. In fact, Tom and Chris brought three of the team from SiteAdvisor to Hunch. When you have a working team, it's very important to keep that dynamic alive.

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