Blog
Startup School "Secret" Talk
Ideas
- “The great ideas have come from people who weren’t paid to have great ideas” (cf. Isaac Asimov)
- “A lot of the best tech startups are ideas that have been around for years”
- What the smartest people do on the weekend is what everyone else will do during the week in ten years
- The next big thing is sitting right in front of you
- Developing new startup ideas
- The next big thing will start out looking like a toy
- The myth of the Eureka moment
Startups
- There are two kinds of people in the world
- “Otherwise do something else”
- Capabilities and sensibilities
- Critics and practitioners (cf. Venkatesh Rao)
- The default state of a startup is failure
- Is now a good time to start a company?
Starting Up General Advice
- Naming your startup and Portmanteau Wikipedia
- Why you shouldn’t keep your startup idea secret
- Underhyping your startup
- The myth of the overnight success
- And then, suddenly, it works
Risk
- Different types of risk
- Financing risk and Things startups do and don't need
- The risks of being a small investor in a private company, Jumpstart Our Business Startups Act Wikipedia, and "defensive capital"
- The problem with investing based on pattern recognition
Research
- “It’s pretty difficult to solve big problems in four years”
- Some problems are so hard they need to be solved piece by piece (cf. Andrew Parker)
- The product lens
- What jobs are users hiring your product to perform? (cf. Clay Christensen) and Clay Christensen's Milkshake Marketing
- Forces that affect whether a large company will buy your product (cf. Marc Andreessen)
- Accurate contrarian theories (cf. Reid Hoffman) and Reid Hoffman: "world-changing startups need to be premised on 'Accurate Contrarian Theories'"
- Founder/market fit (cf. Marc Andreessen, David Lee, Paul Graham)
- Timing your startup
- Competition is overrated
- Some thoughts on incumbents, Judo Strategy: Turning Your Competitors' Strength to Your Advantage HBR, and Judo Strategy: Turning Your Competitors' Strength to Your Advantage Amazon
- Incumbents and Disruptive Innovation Wikipedia
- Understanding your market
- The challenge of creating a new category
Incubators, Angel Investors, VC Firms
- Incubators
- How to select your angel investors
- The segmentation of the venture industry
- Every time an engineer joins Google, a startup dies (cf. Fred Wilson, Bill Gurley)
- Does a VC’s brand matter?
- It’s the partner, not the firm
- Information is the (other) currency of venture capital
- VC’s care about the upside case, not the mean and Outlier Wikipedia
- Being friendly has become a competitive advantage in VC
- Big timing
- The Babe Ruth Effect (in Venture Capital), Loss Aversion Wikipedia, Expected Value Wikipedia, and Power Law Wikipedia
Allocation investing and the social premium
- Allocation investing and the social premium, Discounted Cash Flow, Capital Asset Pricing Model, and David F. Swenson: Yale Endowment Model Wikipedia
- Institutional failure, Keynesian beauty contest Wikipedia, and Efficient-market hypothesis Wikipedia
Carry Fees
- Money managers should pay the same tax rates as everyone else (cf. Fred Wilson), Capital Gain Wikipedia, and Ordinary Income Wikipedia
Equity Versus Convertible
- Equity value, Equity Value Wikipedia, Present Value Wikipedia, Profit Margin Wikipedia, Market Inefficiency Wikipedia, Regulation Wikipedia, and Economies of Scale Wikipedia
- Converts versus equity deals (cf. Paul Graham, Mark Suster, Seth Levine)
- Why seed investors don’t like convertible notes
Funding Rounds
- Shoehorning startups into the VC model
- Best practices for raising a VC round
- Ideal first round funding terms
- The importance of investor signaling in venture pricing
- Inside versus outside financings: the nightclub effect
- Once you take money, the clock starts ticking
- Some thoughts on when to raise money, and the current financing environment
Seed Financing
- Notes on raising seed financing (cf. Paul Graham) (See Also: Other Business Plan Resources) and The Entrepreneur's Guide to Business Law
- What’s the right amount of seed money to raise?
- The most important question to ask before taking seed money
- Revisited: big VCs investing in seed rounds
- It’s not that seed investors are smarter – it’s that entrepreneurs are (cf. Paul Kedrosky)
The Problem
- The problem with taking seed money from big VCs
- The problem with tranched VC investments
- The other problem with venture capital: management fees (cf. Bill Gurley, Fred Wilson)
- The downside of accelerated investment decisions (cf. Seth Levine)
- Later-stage rounds and “setting the bar too high”
Acquisitions
- Three types of acquisitions
- The economic logic behind tech and talent acquisitions
- Notes on the acquisition process
Pitch
- Pitching the VC partnership
- Pitch yourself, not your idea
- Size markets using narratives, not numbers (See Also: Other Business Plan Resources)
Planning, Business Plans, Law
- Plans are nothing, but planning is indispensable (InfiniTrust a.k.a. SiteAdvisor Business Plan)
- Advice for writing startup business plans (See Also: Other Business Plan Resources)
- Entrepreneurs need to learn some law
- Don’t be creative about the wrong things
Other Business Plan Resources
Term Sheet
Equity Grants
- Dividing equity between founders
- The one number you should know about your equity grant
- The worst time to join a startup is right after it gets initial VC financing
- Question from a reader
- Owning equity in your company should be as common as owning equity in your home
Options (Black-Scholes Model)
- Options, Derivative (finance) Wikipedia, Exogeny Wikipedia, and Black–Scholes Model Wikipedia
- Options on early stage companies, Volatility (finance) Wikipedia, Call Option (European Call) Wikipedia, Option Style (European Call) Wikipedia, and ERI's Black-Scholes Calculator
Cost/Price, Revenue/Margin
- What’s the relationship between cost and price?, Supply and Demand, Barriers to Entry Wikipedia, Commoditization, Fixed Cost Wikipedia, and Variable Cost Wikipedia
- Pricing to the demand curve, Demand Curve Wikipedia, Consumer Surplus, Proxy, and Robinson–Patman Act Wikipedia
- Revenue vs margin (cf. Fred Wilson, Mark Suster), Future Value Wikipedia, and Price Earnings Ratio Wikipedia
Programming and Platform Risks
- Bedrock programming
- Who should learn to program?
- The only college major that matters
- Platform distribution risks
- The importance of predictability for platform developers
- The importance of institutional redundancy
Ops
- Some tips for interacting with the press
- Maximizing capacity utilization as a startup premise and Capacity Utilization
- Always have 18 months of cash in the bank
- Business development: the Goldilocks principle, Goldilocks Principle Wikipedia, and Rare Earth Hypothesis Wikipedia
- Good bizdev cannibalizes itself, Cannibalization Wikipedia, and Business Development Wikipedia
- Outsource things you don’t care about
- The farther away the better
- “It is the human friction that makes the sparks”
- Agency problems (cf. Fred Wilson) and Principal–Agent Problem Wikipedia
- Vanity milestones (cf. Eric Ries)
- Growth curves of startups, Growth Curve Wikipedia, and Shock (Exogenous) Wikipedia
HR
- What to look for in hiring a VP Engineering for your internet startup
- Recruiting programmers to your startup (cf. Naval Ravikant)
- Showing up
- The ideal startup career path
- Joining a startup is far less risky than most people think
- Firing
- The credentials trap (cf. Jessica Livingstone, Peter Thiel)
- Twelve months notice
Exponential Growth
- Exponential curves feel gradual and then sudden
- Non-linearity of technology adoption (cf. Joel Spolsky)
Strategies
- Come for the tool, stay for the network
- Two eras of the internet: pull and push
- How bundling benefits sellers and buyers
- The real strategy behind tiered data plans
- Give away the diagnostic, sell the remedy (cf. Fred Wilson)
- Building products from improvised user behaviors
- Selling pickaxes during a gold rush
- The “thin edge of the wedge” strategy
- The “ladies’ night” strategy and Two-Sided Market Wikipedia
- The bowling pin strategy (cf. Geoffrey Moore)
- Designing products for single and multiplayer modes
- Collective knowledge systems
- What carries you up will also bring you down
- Dividing free and paid features in “freemium” products
- Six strategies for overcoming “chicken and egg” problems
Pivoting
Endings
Adoption
Silicon Valley
Bubble
Patents
Trends
- “The Future of Reading Depends on the Future of Learning Difficult to Learn Things”
- We asked for flying cars and all we got was the entire planet communicating instantly via pocket supercomputers (cf. Benedict Evans)
- The next twenty years are going to make this last twenty years just pale
- Software eats software development
- The decline of the mobile web
- Full stack startups
- Technology predictions
- The computing deployment phase (cf. Carlota Perez via Fred Wilson)
- Ten million users is the new one million users
- Increasing velocity
- The internet is reshaping our economy from one of huge corporations with lots of jobs to huge platforms with lots of income streams
- Technology and job creation
- Incumbents die due to irrelevance or ineptitude
- Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.
- Old VC firms: get ready to be disrupted
- The tradeoff between open and closed (cf. Clay Christensen, Joel Spolsky, Tom Eisenmann)
- What if online business model innovation is slowing down?
Words of Wisdom
- Blogging to learn
- “Meaningful” startups
- Some lessons learned
- Do you want to sell sugar water or do you want to change the world? (cf. Tim O'Reilly)
- If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough
- Builders and extractors (cf. Tim O'Reilly)
- Man and superman
- The importance of asking people questions
- Climbing the Wrong Hill and Hill Climbing Wikipedia
- Getting a job in venture capital (cf. Bill Gurley)
- Thanks…