“Every business is going to be a software business in the future. Just full stop,” Alexis Ohanian, co-founder of Reddit and venture capital firm Initialized Capital, recently said at a startup event in New York, expounding a pervasive view held by many Silicon Valley visionaries nowadays that “software is eating the world.”
But Ohanian was never a professional software engineer himself—by any standard. When he started Reddit in a dorm room at the University of Virginia with his college friend Steve Huffman in 2005, he was studying business and history. Thankfully, Huffman, an adept programmer majoring in computer science, was able to do most of the coding needed for the first version of Reddit, while Ohanian, by his own account, took care of everything else.
In 2006, Ohanian sold Reddit to Condé Nast (the publishing titan shelled out between $10 million and $20 million for the online community) and became an overnight millionaire at the age of 23. After a few more startup gigs during the ensuing years—including a nonprofit project in his grandfather’s home country of Armenia—Ohanian co-founded the venture capital firm Initialized Capital in 2010 with former Y Combinator partner Garry Tan to focus on early-stage startup investing. Initialized Capital was an early backer of a number of today’s billion-dollar companies, including Coinbase (COIN), Instacart (CART) and Opendoor, among others.
Ohanian was one of the clairvoyant (and lucky) few who reaped rewards from the early days of social media. Is his success replicable today—especially for people like Ohanian with non-technical backgrounds—in a world where having coding skills has increasingly become a prerequisite to start a company?
The answer is mixed. Ohanian admitted that, if given a second chance, he would have chosen to pursue a computer science major in college, but also said his degree in liberal arts has helped him in ways that would have been impossible with a purely STEM (science, technology, engineering and math) education.
In a recent interview with Observer, the now 35-year-old Reddit co-founder revisited his “not so glamorous” days of being an early-stage entrepreneur, discussed what he looks for in founders from an investor’s perspective, and shared his thoughts on how a non-technical founder can still find a path in today’s cut-throat competitive startup world.
Observer: When we talk about starting a company from a college dorm room, most people automatically picture a programming wunderkind, someone like Mark Zuckerberg as depicted in The Social Network or your Reddit parter Steve Huffman. But you are a notable exception to this stereotype. What was it like for you to build a tech company when you had no formal training in programming?
Ohanian: Most people think the CEO job is all about glamour. But when you are a co-founder in an early-stage company, you are doing a job that is very unglamorous. As a CEO, you have to negotiate cell phone fees, order takeout, run the day-to-day business operations and really do everything you can to support your technical co-founder so he can focus on writing code. In the early days of Reddit, Steve focused on writing codes, and I focused on everything else—from designing our website and the company logo to tending to actual business affairs, talking to customers, going to cafes and getting people to try out our software so we could get some basic user testing.
How do these two types of founders think differently? When you presented a product idea to Steve, how did you know if it was actually viable?
The good news is that I had enough of a background in coding. I’ve been programming since high school. I was taking classes, even in college. I was just not a great programmer, and I wasn’t planning to be a computer science major in college because I was more interested in history. But I knew enough and was handy enough with Photoshop to create viable product mock-ups. I even did some front-end HTML and CSS. Very basic stuff.
It was when it came to the actual engineering of products that the discussion with Steve happened. I had a vision for how things should work, and, of course, we would debate. Design teams always have these debates. Eventually, we would settle on what we could build, and we would get to building it.
Actually, I think about this a lot now as an early-stage startup investor. We are often the first check companies [receive]. Today, Instacart and Coinbase are multi-billion-dollar companies that employ thousands of people. But when they started—when we invested—they were just a solo founder with a rough prototype. But that was enough to set the dream in motion and start building a team of experts who can create all the things in your vision.
Speaking of investing, your current partner at Initialized Capital, Garry Tan, is also a former engineer. It’s kind of a similar situation to Reddit. How does that difference play out on the VC side?
I think our skills are very complimentary, because we both have product backgrounds. You are right, though. Garry is a much more impressive engineer. I’m really lucky this time around. I have a co-founder who is not only a super talented engineer, but also really good at understanding people and human relationships. That is something that makes this job a lot easier, because Garry just has this tremendous ability to quickly understand from a user’s point of view what their needs are and whether they are being satisfied. So, whether we are considering investing in a company or helping a company grow, he always has a very empathic designer mentality at approaching things.
What are some of the most important things you look for in a startup pitch?
We want to see a founder who we know is not going to quit. We talk about [Initialized Capital’s] honey badger mascot as a symbol for what we are looking for in founders—they have to be really tenacious. In the early days of a company, very few people are going to believe in you. You have to not only have a vision for how the world is going to be, but also be able to take real steps in the short term to get there.
Great founders aren’t just bold; they are able to deliver and execute. That is something we really look for. We can see that based on their trajectory: What have they been doing in the years leading up to this meeting? Have they been working in the industry, dealing with real problems? Or have they been busy just shipping codes and launching products? Which is great, too. Whatever they have made of the past is a really good indicator of their goals, as well as their ability to actually act on them.
How important is the actual product proposal compared to the specific sector a startup does business in?
We are pretty sector-agnostic. Actually, we want to be so early that a lot of trends don’t exist yet, because trends always happen afterwards. If we go to these pitch meetings with trends in mind, we are already too late. That said, we do want to know that the market opportunity is big enough to build a billion-dollar business. But beyond that, we are really leaving it to the founders to teach us something new—either show us something we had no idea could exist or should exist, or help us think differently about an industry we really thought we knew everything about. If your pitch does one of those two things, you’re probably tackling a good problem.
Currently, you are leading an entrepreneur contest in partnership with 1850 Brand Coffee to provide starter funding to promising business ideas. What have you observed in the startup pitches you’ve received so far? Has anything in particular grabbed your attention?
What was really interesting to me was that we have seen such a wide range of pitches, from very philanthropic to very commercial to very “societal” projects, meaning that success is going to be measured by total social impact, not necessarily revenue. That was a really nice touch to the whole campaign.
I think founders are increasingly thinking about social impact, even if they are doing commercial endeavors. For example, more and more founders have started thinking about what legacy they are going to leave. I think there needs to be more opportunities like this, because we have great ideas and great potential founders everywhere. And I really want to help as many of them as possible spread their bold ideas.
What advice do you have for business founders who have liberal arts backgrounds just like you? Where do they start in today’s software-eats-everything world?
As a founder with a business and a history degree, I can say that it has gotten easier than ever to test a business idea. Just simply put up a website, a landing page, and direct users to it. You can pretty quickly test a whole idea now faster and cheaper than ever before.
Also don’t feel overly protective about your idea. Some founders make the mistake of not wanting to share their bold ideas, because they are worried that someone is going to steal it. But the reality is that almost never happens. And if you want to be successful, you eventually are going to launch that bold idea and someone is going to copy it anyway. That is just a part of doing business, and you just have to keep getting better. So, don’t lock up your bold ideas. Get it in front of as many people as possible as soon as possible.
A practical question: In the end, every tech company needs to recruit great engineers. But, if a founder has no expertise in engineering or coding, how does he tell who the great engineers are from the average ones?
Right. Game recognize game. It is very hard. The best advice I could give, especially if they are still in school, is to start learning how to code. You can literally get on Codecademy right now for free and start learning. That’s not required, but I highly, highly recommend it. It really is the most useful skill that you could learn right now.
And frankly, if you believe in your vision enough, and you are non-technical but want to build something in the world of software, you are going to have to either have someone in your friend network whom you can convince to join you or make the first version by yourself. You can have a development shop build the first prototype for you, but that’s very expensive.
What do you think is the biggest advantage for founders with a liberal arts background, if there is one?
I think getting training in how to synthesize a broad range of ideas into a cohesive story and then communicate that story is something that my degree really helped me with. The humanities education really prepares you for that in a way other disciplines don’t. The value of critical thinking and communicating is something you use day in and day out. It’s just that that alone is not sufficient to build something.
But like I said, there are so many avenues to start picking up that skill and so many building blocks that have already been laid out for you. It really has never been easier to learn how to code. And it is only going to keep getting easier. For an entrepreneur starting up, that’s what I would recommend.