The Early | 20th Edition ✨ 

Happy Friday and welcome to a special edition of The Early, featuring Patrick Lee! 🎉 If you’re thinking about starting a company and/or navigating the beginning of your career, you won’t want to miss this one 👀 

This article is a collaboration with Asian Hustle Network’s (AHN) Awaken newsletter where they interview Asian founders. Check out some previous interviews they did with Garry Tan (YC), Eddie Kim (Gusto), Larry Liu (Weee!), and more. A huge thank you to Patrick for generously sharing his insights and to AHN and Edwin Ong for collaborating to make this wonderful conversation happen. 

🍿 If you’ve ever searched for the latest movie ratings, trailers, or reviews for the hottest new TV series, chances are you’ve come across Rotten Tomatoes. Today, I’m thrilled to share a conversation with Patrick Lee, CEO of Fanverse and Co-Founder of Rotten Tomatoes, Hobo Labs, and PKO Investments (among several others!) Patrick is a true serial entrepreneur and was generous to share his learnings from a 30-year journey in entrepreneurship. We dig into:

• Weighing speed vs. product perfection as a founder

• Signals that your product is on the path to product-market fit

• When you should stop working on an idea

• Qualities of founders who change the world

• Taking risks vs. going the ‘cozy job’ route

• Finding and focusing on the ‘one thing’ that’s pulling customers to your product

• The landscape for Asian Americans in entrepreneurship and investing

This was one of the most insightful and actionable conversations I’ve ever had about founding a company as a young professional. Excited to dive in ⬇️ 

-Mic 

💡 TLDR; Key Takeaways  

If you only have a few minutes, here are a few golden nuggets from the conversation with Patrick:

• It’s hard to leave the cozy job once you’re in it - do the hard things early. Many young professionals will say, “Hey I was thinking about doing a startup, but I wanted to go work in corporate or management consulting for a couple of years, get experience, and then start it.” Once you’re in and you’re used to a salary, getting raises, promotions… it gets harder and harder to quit.

• The best founders just do it. Yahoo, Google, Facebook - their founders were all students who dropped out. They had so much belief that they just had to do it. 

• Get the most basic version of your product out into the world for people to see it as soon as possible. This can be anything from a simple website to a mockup or napkin scribble of your product. You don’t know what perfect is until you actually get the product out into the world. 

• Launch and test quickly. Founders can spend 6-12 months trying to perfect a product and end up burning through cash, without knowing if it’s even wanted. Get feedback from target customers immediately and tailor features accordingly.

• Focus is key - find your ‘one thing’ that is pulling customers to you. For Rotten Tomatoes, it’s the TomatoMeter. If you think about big fast food chains, each one started out specializing in a single type of food. It’s the same with social media platforms and tech companies - Instagram, TikTok, Twitter, YouTube... they all started as one thing they did really well. Find this one thing and put it out as fast as possible. 

• We’re in the midst of a new technological wave: AI. The biggest companies tend to form every time there’s a new wave of technology. Desktop computing gave us Apple, Microsoft, IBM. The internet gave us Google, eBay, Amazon… and Rotten Tomatoes! Edwin believes that the AI wave is bigger than all of these trends combined.

• If you have the risk appetite, this is the time to build and take advantage of the new wave (AI). Assuming you're not too risk averse, now is the time to get on the wave. Do something, and just survive and stick with it for a while. 

🍿 Take Risks, Launch Quickly, & Just Do It: A Conversation with Patrick Lee (CEO of Fanverse, Co-founder of Rotten Tomatoes)

What role did you play in the founding journey of Rotten Tomatoes?

Rotten Tomatoes had three co-founders. I was the CEO. There's Senh Duong, who was the creator of Rotten Tomatoes, and he was basically our chief product officer, and Stephen Wang, who was our CTO. I knew them all from my freshman year of college. Senh was down the hall from me in the dorms. 

Prior to Rotten Tomatoes, Stephen and I had founded a web design firm. We were doing a lot of work for the entertainment industry, a lot of work for Disney Channel, stuff for Warner Brothers, Artisan Entertainment, MTV, VH1, and ABC. We even made the online flash game for Who Wants to Be a Millionaire. 

During that time, Senh was our creative director, and he came up with the idea on the side. He was a huge movie buff. He came up with it and launched it on his own. It was written in static HTML because he wasn't able to code at the time. And we hosted it for him. After about a year of hosting, we were like, maybe this should be the business. So we actually merged our company with his company and became co-founders of both companies and had equity in both. I went out and raised a million in funding, then transitioned our design firm off to another group to take over. We kept an equity stake in that design firm, but then we basically passed our clients to another group to take over. They took over the name and everything so that we could focus on Rotten Tomatoes fully. 

What was your journey like raising capital?

Rotten Tomatoes was my third company. In my first company, we put in our own savings. For the second company – the design firm – we took loans from our families. $10,000 from my mom and $20,000 from Stephen’s uncle. Once we started getting clients, we paid back the loan with interest. 

For Rotten Tomatoes, one of our clients raised some venture money, so they put us in touch with their VC who said they would lead the round. They put in half a million. The rest we actually raised from our old design firm clients. A number of them were tech companies and had successful exits. So they were totally open to investing, and they knew what we could do because most of them were our old clients.

Why did you decide to go the VC funding route for Rotten Tomatoes?

This was in late 1999, right before the dot-com crash, so there was a lot of money going around and a lot of investment into the internet. It's kind of like what Web3 was like a few years ago or what AI is like now. Multiple companies we worked with had raised a lot of money and had successful exits. We were basically building for all these companies and realized that we were on the wrong side of the business. We decided to try to build something that was our own instead of being a services company. That's why we went and approached the VC that we had contact with. It was a small VC out of Taiwan. I remember we had a couple of different ideas. The first one was Rotten Tomatoes, which already had traction. The other one we thought was interesting was making a portal for Asian and Asian American websites. We were doing the official Jet Li site. We were working with Yolk magazine at the time. I remember having a meeting with Jet Li and he was getting excited about that idea. He was saying he could bring on Jackie Chan. At that time, there were a couple of other Asian magazines that were within our reach. It was a very small community back then. Our thought was, what if we got the different magazines, the different Asian sites, some of the big Asian or Asian American celebrities, and brought them all together? I remember when we pitched these two ideas to our VC, they told us to do Rotten Tomatoes because it features mainstream movies–something everyone can watch. At the time, only 3% of the population in the US was Asian. Even among Asians, there are many different types and they might identify separately as Chinese, Japanese, Korean, Filipino, etc. They felt it would be very difficult to have content that appeals to all of them. They recommended we do Rotten Tomatoes, which, looking back, was definitely the correct decision. The other idea would have probably been about 20 years too early. 

The Rotten Tomatoes site was launched in only two weeks. How did you navigate the tension between creating the perfect product versus getting it out as soon as possible?

Rotten Tomatoes was our creative director Senh Duong's idea. He was a huge Jackie Chan fan. He wanted to know what everyone was saying about Rush Hour when the movie was coming out, so Senh went to the library and gathered reviews from magazines and newspapers–back then, very little was online. He decided that if he was putting all this work together, he might as well share it with other people. So he went home, built a page for Rush Hour and the other mainstream movies coming out that week, and put all the information up there. Because the scope was limited, he was able to go from idea to launch in about two weeks. He was gathering, perhaps, twenty or fifty reviews per movie for three or four movies. It was a lot of work, but doable by one person. 

It turns out that just having the new releases was still very useful because people are most interested in the movies coming out that week. He didn't need to have tens of thousands of scores for the long tail of movies. He just focused on the head, the tippy top of the head. It was immediately useful, and instantly started getting traffic and attention. Then he just kept it up. He would work on the next week and the next week and the next week. It wasn't until a year in that we said; “hey, maybe we should turn this into a business.” 

You'll see over and over, especially in consumer, folks put something out as a test and then it blows up. Twitter was a weekend project and then they just blew up. Twitch was Justin.tv in the beginning. They just messed around and put something out there. You just have to get the basic thing out there to see if people want it. Sometimes you don't even have to build anything, you can literally just interview people or just do a mockup, make a walkthrough of what the product would look like. It could literally be a napkin scribble and you can immediately start getting feedback. That feedback can actually give you a lot more information than putting something perfect out there. Go back to almost any consumer site or app and try and look up what version one looks like. Go look at the first versions of Facebook or eBay or Amazon or whatever. They were ugly. But they solved something. That's why they kept growing and taking off. I'm always recommending that.

The other thing I say to people a lot of times is to really focus. It's generally a single thing that people care about. For Rotten Tomatoes, it's the TomatoMeter. We could get rid of the cast, crew, filmography, photos, movie showtimes, almost everything else on the site. But really, as long as you have a score, that's the critical thing that you need. 

If you think about fast food chains, every fast food chain specializes in a single type of food. The restaurants that do multiple types of food are generally all mom and pop shops. The really big chains, they do one type of food. Every single one of them. And you look at social media, every social media platform started off with one unique singular feature that literally was a feature. Like TikTok, Snapchat, Clubhouse, Twitter, YouTube, Instagram, Substack. They all started as one thing. And again, as they got big, they started looking more like each other because they added more features. But they all started out as one thing. You find one thing that people actually care about. And you try to put that one thing out as fast as possible to see if they really care.

How do you know when to stop working on an idea? 

Try out the idea as quickly as possible. Iterate on it if you can, as you get feedback. 

But basically get it out there. You iterate on it. You can sometimes try multiple ideas. So a lot of times I tell people it's totally fine to: “A, B, A, B, C, D” test. But you shouldn't be A plus B plus C plus D. 

Testing doesn't have to be serial. You can actually do some stuff in parallel. As an analogy: if you have a kitchen, you can test a few different types of food concurrently. You could even do a survey before you start cooking to narrow down your options. Then, you can try each of them out and go forward with the best performing one. It doesn't have to be: Let's try chicken, now let's try hamburgers, now let's try pizza. You can try all of them at once. 

In terms of knowing if an idea will work–you’ll know it when you see it. Rotten Tomatoes got press instantly. It was getting noticed. USA Today was writing about it and Netscape was highlighting it at Yahoo. The day Pixar released A Bug's Life, right around the time we released Rotten Tomatoes, we saw spiking traffic coming from Pixar. 

Take an average YouTube video. You'd have a hard time getting even 100 views on it. Then every once in a while, for whatever reason, someone puts up a video and it gets millions of views and everyone's sharing it like crazy. You kind of know it when you see it. If you're begging everyone you can get, you're trying to market in every way, you're even buying ads and you're having trouble getting a hundred views or a thousand views, you're probably done. If it's an app or a website, it's probably not the right one. The way you know if you have product-market fit is if people tell other people about it without being asked to or incentivized to. Think about TV shows like The Queen's Gambit a couple of years ago or Squid Game. People were sharing it with each other unprompted. They would just tell other people about it and it's essentially free marketing.

Look at what the Asian Hustle Network did. I think they had that right. When it works, it works. Let’s say you put out Asian Hustle Network and it's crickets for months, it's probably not the one. You could launch 10 different networks… and try them all. Then one takes off, you're like, "Okay, well I guess that's the one," and just keep focusing on that.

Is it necessary to have startup experience or experience working for another company before starting your own? Do you think there's an optimal experience for starting your own company? 

I would say that there is an optimal founder. That founder would be very bootstrappy. They would be able to launch things very quickly, iterate quickly, and without many resources. Also, they would have what I call irrational confidence. They just believe in themselves and what they're trying to do with this insanely crazy confidence, and often based on nothing. 

“When we did Rotten Tomatoes, we didn't know anything about movies. The Airbnb people weren't hotel people. The Uber people were not taxi people. Industry disruption often comes from outsiders because disruption requires something out of the box and those people were never in the box to begin with. It's rare that the disruption happens from within.”

I often speak to students and recent graduates. Some of them will come up and say, "Hey, I was thinking about doing a startup, but I wanted to go work in corporate or management consulting for a couple of years, get experience, and then start it." There's a 99% chance you'll never leave once you're in and you're used to a salary, getting raises, promotions, and all that stuff. It's going to get harder and harder to quit, especially if you get to a point where you're in your early 30s, married, with kids and a mortgage. The chance of you risking all of that is pretty much zero.

These people, when they come up to me, they're saying, "Look, I'm too scared. I'm too conservative to actually go out and do it." The best ones just do it. Yahoo, Google, they were grad students at Stanford and just left. Zuckerberg was an undergrad at Harvard. Steve Wozniak and Steve Jobs just left and did it. Most of them don't even finish school because they're not scared of leaving early. They have so much belief that they just have to do it. This has happened so many times.

In some ways, dropping out was a good sign. It's not that they dropped out to bum at home playing video games, they believed in themselves so much they didn’t have that fear of failure. I absolutely think that founding a startup is not for everyone. I don't recommend it if you're someone who's very conservative, very scared. Go get a normal job, do the safe thing. But there are people who just have to do it. Even if you have the confidence, you still have to have the ability to iterate, to bootstrap, to do those things properly. 

When you see that mix, it almost doesn't matter what the idea is, assuming that they want to do something big. When you see that mix, that's the right person. It doesn't matter what their idea is, they'll figure out something that's going to work. 

They are sharp, bold – it doesn't surprise me at all when they make it later on. Look at any of these great athletes or entertainers, and when they were young, they probably had that spark. There is an element of luck, but a lot of it is who they are as a person. The biggest thing when looking at young founders is their irrational confidence. This is true for athletes, entertainers, or anyone who takes that risk. Go back to the beginning and look at them, they have that spark. 

You've been in entrepreneurship for many years now. How have you seen the landscape for Asian American founders change since you started, particularly within tech and venture?

In tech and venture, we generally punch above our weight. At the highest levels, if you look at Nvidia, Yahoo back in the day, YouTube, Twitch, Zoom, there are Asian founders. If you're also counting South Asians, look at corporations such as Microsoft and Google, the heads are all Indian. 

A lot of Asians tend to lean towards engineering, so we tend to be weaker on the executive side. When people talk about diversity, they often don't count Asians as diversity for tech and venture. 

Similar to college, it's actually harder for Asians than anyone else. From when I started until now, it's gotten better, but overall, we could use help on the executive side. In other industries like entertainment, it's getting better but it's still not great.

What are you working on now with Fanverse? 

When I came back from Asia, I did another startup, a mobile gaming company. We raised a lot of money – $5 million – but it didn't work. We made every mistake you could make, including not being focused. I took a break and then ended up doing PKO Investments with Holly, Kun, and Kevin. We made an investment syndicate, investing at the intersection of tech and entertainment. We had about 800 people in our syndicate, half of which invested into at least one company. From 2021 to 2022, we invested in 45 companies and raised $35 million for those companies. Around November of 2022, there was a big market crash and a lot of angels were taking a break. At that point, no one in our syndicate was looking to invest. We talked about potentially doing a fund or doing something else and eventually, we decided to do another startup.

That’s [Fanverse] what I’m currently working on full-time, and we're basically doing a membership-driven community. We’re bringing together all the best builders, creators, and talent in the geek fandom space. Geek fandom being things like comic books, video games, anime, sci-fi, fantasy. Geek fandom is something I've loved my whole life. We have founders of companies like Patreon and YouTube. We have gaming people: the CEO of Tetris, ex-chairman of Midway Games, a board director from Roblox, a board director from Atari. We have entertainment people, such as Adele Lim (a Malaysian director/writer), Shannon Lee, (Bruce Lee's daughter who produced the film, Warrior), Karen Gillen (Nebula in Guardians of the Galaxy). We have sci-fi authors like Neil Stevenson. This is a super cool group of people. There's about 80 people so far and it's all community. We're doing dinners, larger events featuring different speakers, a WhatsApp group, online Zoom stuff, all these things to try and get this community together. 

At a very high level, we want to be broad enough that you're going to meet people outside of your lane that you don't know, but narrow enough that they are people you should know and could potentially collaborate with in the future, especially since pop culture and geek fandom IPs often span multiple mediums. For example, you have The Last of Us, Halo, and Fallout which are games that became TV shows. You have One Piece, which was a manga that became an animated TV show that has become a live-action TV show. You have the Marvel and DC comics which have become TV shows, movies, and games. 

With all this crossover, our idea is to bring in people from each of those different mediums together, let them all meet socially, and then see what happens. We're already seeing folks working together and investing in each other. Essentially, it's a networking group of these nerdy folks.

Any final thoughts or advice for young professionals? 

The biggest companies tend to form every time there's a new wave of technology. Desktop computing gave us Apple, Microsoft, IBM, and Hewlett Packard. The internet gave us Google, eBay, Amazon, and others. Mobile and cloud computing brought more. Today, I think AI is bigger than all of those combined times a thousand. It’s crazy what AI can do to change literally everything we know.

Rotten Tomatoes, for example, rode the wave of the internet. Most of these companies that are still around rode some wave. AI is the biggest wave ever and if you are interested in entrepreneurship and you are reading this article, get on that wave. When there's such a massive wave, why wouldn't you get on it? Why would you just go and get a normal job and do something boring and have this wave pass you by? Assuming you're not too scared and you're not too conservative, you should get on the wave, do something, and just survive and stick with it for a while. Everyone I know that got into entrepreneurship and stuck with it for ten years ended up doing something pretty interesting.

Thank you, Patrick! Follow Patrick on X here. Also a big thank you to Edwin and the AHN team for making this happen. 

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And that’s all for this week! You can find me on LinkedIn and X. As always, feel free to reach out to [email protected] with any questions or feedback. I’d love to hear from you! 🙂 

-Mic