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Hooman Radfar, Founder and Chairman, AddThis, and most recently partner at EXPA, counsels StartupGrind DC attendees to "find the right advisers or investors, depending on where you are in the growth cycle."[/caption]
If I hadn't met Hooman Radfar before, I'd wonder if he were for real. For such an accomplished entrepreneur, he just seems so...normal. When the Pittsburgh-raised son of two Persian doctors told the crowd at Startup Grind DC in May that his parents were both psychiatrists, he deadpanned, "So let the jokes ensue about what happened to me." He had our full attention.
People want to know how Hooman, at age 35, has had such great success as an entrepreneur and continues to build on it. Sure he's smart and grew up amidst the dot.com exuberance, but he's got something else going for him: He's grounded. His recent chat at Startup Grind DC with Brian Park made it clear that Hooman owns his own mistakes, learns from his actions, and accepts input.
For him, a healthy culture is transparent. He warns entrepreneurs not to confuse amenities, like foosball tables and free food, with culture. "You hit a recession and those things go away," he says. "What are you about?" He recalls that he didn't even have chairs his first year in business, his team sat on bean bags.
A logical progression
Hooman's view of his accomplishments to date seems to indicate his ego hasn't grown big enough to cast a shadow on reality. He sees his entrepreneurial path as a logical progression of experiences and projects. Straight out of Carnegie Mellon with an MS in Electrical & Computer engineering-INformation Networking in 2004, he scored big as Founder and Chairman of AddThis, the world's largest content engagement platform. Hooman says the idea for AddThis seemed like something worth pursuing simply because "at the time people were sharing a lot of things and widgets on the Internet."
AddThis raised over $73M in funding from top institutional investors and noteworthy angel investors, Steve Case, Ron Conway, and Ted Leonsis. Hooman moved from Pennsylvania to DC where he found proximity to New York City particularly helpful for building marketing technology or advertising technology. When hew grew into a role as investor/adviser to "companies that think in billions," including Uber, Hooman moved to San Francisco, which "clearly has the most VC dollars, most management, and most engineers." That said, he observes there are trade-offs of living in San Francisco. For starters, it's harder to get visibility, the churn is higher on your team, and what you pay for a developer is insane. DC has a smaller base of institutional investors, but there's also "more loyalty" all around. His next comment pegs him as down to earth. He says:
...And, honestly, there is the benefit to not be subject to the buzz I've already seen at board meetings. Every single meeting, the same investor comes in with a different Tech Crunch article they're referencing, 'I read this,' or 'We should be trying that.' You almost want to record them in snapshots: You...know...how...crazy...this...sounds? There's a lot of that here.
For his most recent venture, there's no place like San Francisco. In September 2014, he became a partner in Expa, a $50M early stage fund led by Garrett Camp, Cofounder of Uber, and Naveen Selvadurai, cofounder of FourSquare, that is a cofounder in products. Their resident UX guy helped design Twitter.
Two of Expa's projects, Reserve and Operator, are focused on consumer internet, partly because they're less costly to bootstrap, and maybe because of a bit of founder inertia. But, there's an enterprise company coming soon and Expa has been looking at "more aggressive plays" for its second fund. They're into basic needs with trillion-dollar markets, like transportation and food. He observes: "Trucking is a $3 trillion industry worldwide...If you build an online advertising marketplace, it's ballpark $150 billion."
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Hooman Radfar tells the crowd at Startup Grind DC: "The challenge for investors dealing with really smart entrepreneurs is that some entrepreneurs sound like they know what they're doing, but they have some areas where there's no depth."[/caption]
What to look for in an investor
Finding the right advisor or angel investor can e valuable, depending on where you are in the learning cycle. Some provide hands-on help; others offering funding and a great network. There's a place for different investor types. You've just got to understand what you need and when. And, it doesn't hurt to be the kind of person others feel good about referring and mentoring. Hooman says:
One of the weird things that happens with founders, especially if you grow something really fast is that there's a false positive on all of your decisions. You tend to learn a lot so you sound like you know what you're doing but some parts you do; some parts you don't. Nigel Morris [co-founder Capital One, a $21 billion company] was the first real management push I ever had that spent a lot of time and taught me very basic things.
He adds this tip, smiling: "When VCs tell you your idea is 'interesing,' they're not interested."
Nigel Morris wasn't "as hard to get to as he should have been," Hooman explains:
The Internet itself, in particular consumer and enterprise, has a small network of people who are investing in and building companies. In DC, Ted [Leonsis], Steve [Case], and Nigel [Morris] all knew each other and what was going on in the community. They were shuttling deals to each other...I believe one of our investors said: 'Hey, you're going to get along well with Nigel. He's an analytical guy; he probably thinks like you and can teach you how to do business maybe in a way that fits your style.'
Biggest mistake he ever made
As an early entrepreneur, Hooman admits to "not being a data-informed business." Ironic, he notes, given the company he founded. It led to his biggest mistake:
We definitely tracked our metrics, but it wasn't a hypothesis-driven loop. We didn't say 'if we do this, it's going to move by this much, let's roll back the test to see if it succeeds or fails'...It wasn't deterministic, it was more by the seat of your pants. One of the mistakes I made was that I didn't use data at all in the very beginning because I had been right a couple of times -- so I'm awesome, right? And then, when I was wrong, I was really wrong. I think we probably lost $1 million on this product that I launched. So, that was bad...
If he could give his younger self some advice if face to face with a big-time entrepreneur? He said simply: "Listen twice as much as you talk."
What's ahead?
The on-demand ecosystem represents a systemic shift in a lot of industries from the ownership to the rental model. "I would even say that Spotify and others like it are part of this modern movement," Hooman says.
When he talks about business trends, he almost sounds a bit like a psychiatrist himself. He says:
There's more of a noncommittal relationship with companies these days. Optionality is key. In particular, millennials have a good reason to think that. They've had a crappy time after the recession; they don't know what's going to come next. It's easier to just buy as they go. I think a lot of it is stemming from this economic stuff, but it's going to [continue to] be very big.
"Honestly, right now we're just looking for solid businesses that we can build with people," he adds. Stay tuned for some interesting things from Expa this summer.
Life as progression
Every Startup Grind DC chat ends with the question: "If you could be any historical figure or super hero, who would you be and why?" Hooman was prepared:
Tony Stark. I don't know about you guys, but engineer-turned-entrepreneur-turned super hero? It's like a progression, right? I have something to shoot for. I told Garrett straight up if we're not working on Ironman suits in 10 years we're doing the wrong stuff.
Hooman is all about progression. It just never ends.
About Janice Mandel
I'm a communications adviser that supports projects that make the world healthier and happier. I have spent a career writing about innovation and growing businesses for publications, Big 4 firms and other organizations. Currently, I write about innovative ideas and the startup community in my blog at janicemandel.com. Aside from being a computer book editor for the Brady imprint of Simon & Schuster and an adjunct professor at Columbia University's Graduate School of Journalism, my favorite projects began as startups: I was a senior editor at EIC/Intelligence, the first online, commercial database (1980s); Equinta.com, an early online home and community search platform (2000) with 360-degree views; and Reach Networks, the first Intranet for Coopers & Lybrand. I'm at it again as an adviser for Routeam.com and other growing businesses in the Washington, DC area.