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Yammer's David Sacks Offers 3 Tips for Tech Entrepreneurs

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Launching a technology startup is considerably easier than it used to be. Yammer founder and CEO David Sacks knows this better than a lot of people.

Sacks spoke Saturday during a SXSW Interactive (SXSWi) session called "Insights About Innovation." He recalled his reaction after catching an early screening of jOBS, the forthcoming biographical film based on the life of Apple co-founder Steve Jobs. Sacks was struck by scenes of a young Jobs -- played by Ashton Kutcher -- making call after call but unable to convince anyone to invest in his startup.

"It's a reminder of how hard it was to get a company off the ground," Sacks said. "It is so much easier for us all now to start a company because of trailblazers" [like Jobs].

A member of what's known to some as the PayPal mafia, Sacks joined PayPal in 1999. In addition starting enterprise social networking service Yammer -- which was bought by Microsoft last year for $1.2 billion -- Sacks launched genealogy website Geni in 2006.

While the barrier is arguably lower now for tech entrepreneurs, the road to startup success isn't always clear. Here are three tips Sacks offered for aspiring tech entrepreneurs:

1. Don't be shy about raising startup capital.
Sometimes entrepreneurs raise less money for their startups than they have the ability to. Don't undersell your product or service to investors, and don't aim to raise less money than you know you need, Sacks recommended.

During the early, pre-dotcom crash days at PayPal -- when the company had "good traction" with customers but wasn't making revenue -- the team was slow to raise its goal of $200 million, Sacks recalled. But it managed to collect $100 million right before the market crashed. "If we waited one more week, PayPal would have died," Sacks said. "You never know what's going to happen. Raise money while you can."

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2. Be innovative.
"No real entrepreneur wants to build something that's simply a feature of someone else's product," Sacks said. His advice: find a nontech industry with a need and then build a simple product or service that transforms it.

"The key is to develop a simple experience that hooks people. . . then graduate them into more sophisticated, immersive features," he said.

3. Don't try to invent something altogether new if you don't have to.
Many entrepreneurs and their developers have "excessive pride," Sacks said, meaning they don't want to copy elements of a product that already exists. Sacks suggests entrepreneurs "get over it," especially if they're trying to build around a feature or service that people have come to expect in a tech product. There's no problem if you're improving something in a way that's never been imagined before.

"If don't copy, you're being kind of foolish," he said. "Saying you're never going to copy is almost like saying you're never going to learn."

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