Tag Archives: startup

Startup, Success

Good and Bad Reasons to Become an Entrepreneur

Source : https://medium.com/i-m-h-o/good-and-bad-reasons-to-become-an-entrepreneur-decf0766de8d

Recently we hosted a Q&A at Asana that I participated in with Ben Horowitz, Matt Cohler, and Justin Rosenstein. Marcus Wohlsen from Wired attended and wrote an article that discussed our views on the culture of entrepreneurship in Silicon Valley. This is an important topic, so I want to take some time to clarify what we meant in this blog post. Before I do, I’d like to emphasize that we were talking exclusively about Silicon Valley culture and not the more general ‘small business entrepreneur.’ So for our audience at the time, entrepreneur meant “Silicon Valley startup technology entrepreneur.”

Even given that context, it is notable that we all said you “probably” shouldn’t be an entrepreneur, not that you definitely shouldn’t. This is explicitly a directional position; we believe there are too many startups and entrepreneurs in the SV ecosystem, but that is very different from saying there shouldn’t be any. Many people think there should be more, and we are counterbalancing that view. Whenever you counterbalance an extreme view, you tend to also come off extremely, and certainly do in the media (which is related to the point I made about integration in my last post).

The reason we like best for becoming an entrepreneur is that you are extremely passionate about an idea and believe that starting a new company is the best way to bring it into the world. The passion is important because entrepreneurship is hard and you’ll need it to endure the struggle, as well as to convince other people to help you. Believing that starting a new company is the best way to bring it into the world is important to ensure that resources—including most importantly your own time — are being put to the best possible use. If the idea is best brought into the world by an existing team, then it is tautologically optimal for the world for it to happen that way. Of course, not everyone is actually trying to optimize their impact, but many entrepreneurs are, by their own admission, and it is important for those people to consider this angle.

If you’re not trying to maximize impact, then it seems like a reasonable assumption that you are instead optimizing around personal lifestyle preferences of some kind. You want total freedom to choose how you make your living, regardless of if it necessarily provide large amounts of value to other people or perhaps is even redundant with something that already exists. Or you want extreme flexibility in your schedule, maybe including the ability to stop working altogether for long periods of time at short notice. Or you want to work on a certain kind of problem or with certain kinds of people. For many kinds of preference, you likely can actually find a company able to give them to you, but certainly starting your own is a great shortcut and I personally think that’s totally reasonable. I like people who are seeking to have big impact on the world, but it is not the only path worth taking, and I have no reason to denigrate this type of entrepreneur.

So with all that in mind, here are some of the bad reasons to become an entrepreneur that we were actually trying to speak to:

“People have this vision of being the CEO of a company they started and being on top of the pyramid. Some people are motivated by that, but that’s not at all what it’s like.

What it’s really like: everyone else is your boss – all of your employees, customers, partners, users, media are your boss. I’ve never had more bosses and needed to account for more people today.

The life of most CEOs is reporting to everyone else, at least that’s what it feels like to me and most CEOs I know. If you want to exercise power and authority over people, join the military or go into politics. Don’t be an entrepreneur.”

  • You think it’s glamorous. The media does a great job idolizing various entrepreneurs, crowning Kings and designating Godfathers of various mafias, but this is all colorful narrative. The reality is years of hard work, throughout which you usually have no idea if you’re even moving in the right direction.
  • You believe you’re extremely talented and that this is the way to maximize your financial return on that talent. Why wouldn’t you want more of the cap table? This is flawed logic, since the 100th engineer at Facebook made far more money than 99% of Silicon Valley entrepreneurs. Small slices of gigantic pies are still themselves gigantic. If you’re extremely talented, you can easily identify a company with high growth potential and relatively low risk and get an aggressive compensation package from them. If you turn out to be wrong after a few years, you can try again. Within 2 or 3 tries, and likely on the first one, you’ll have a great outcome and can be confident you contributed serious lasting value to the world. If you instead try to immediately start “the next Google or Facebook”, there is a very high likelihood that you will fail completely, or be forced to settle for a much smaller outcome. It will take a long time to reach success or failure, so you won’t have many tries.

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Startup, Success, trend

Google’s mission is to organize the worlds’ information, but they won’t stop there

( Source : http://www.web-strategist.com/blog/2015/02/03/google-enters-the-collaborative-economy-in-a-big-way/ )

Here comes Google, with a series of five market moves injecting them as a central player for the collaborative economy.

Google’s mission is to organize the world’s information. But it doesn’t just start and stop there. They also want to organize the world’s logistics, commerce, local transportation, service economy, and even how people obtain and receive loans.

In the past, our perspective of the Collaborative Economy has been through startups, like Airbnb, oDesk, Lyft, Uber and Lending Club that enable people to get what they need from each other, using commonly available technologies like online marketplaces and mobile apps.

Today, Google has entered the Collaborative Economy with a series of announcements that leave a casual reader scratching their. But placing the announcements line by line, you can see an organized attempt to enter this space traditionally dominated by early stage startups.

  1. Google is a major investor in Uber and Lending Club. They started with investments, a great way to test the waters. Google Ventures made their largest investment in Uber ($258 million), lending promise for a future of a lifestyle and logistics app which enables people to bypass car ownership and more. Then, Google invested in the P2P money-lending platform, Lending Club ($110 million), which enables individuals to bypass traditional banks. This gives Google additional market insight and a foothold from which to deploy.
  2. Google plans to roll out self-driving cars, competing with car manufactures. Last year, Google unveiled their friendly-looking, self-driving car, which they suggest will enable anyone to be mobile, reclaim time driving, and reduce the need for car ownership. In Silicon Valley, I often see self-driving Google cars whizzing around in Mountain View and on the major freeway, U.S. 101. Google suggests that these will be available in mass production for the public within five to 10 years.
  3. Google now resells P2P loans, competing with banks. P2P marketplaces of buyers and sellers are in every aspect of society. Take a look at the Collaborative Economy version 2.0 to see over twelve industries that are impacted. Last month, Google announced they’re going to resell bank loans from Lending Club, reducing the need for individuals to get loans from banks, competing directly on ease and price.
  4. Google partners with Airbnb and Lyft, challenging hotels and taxis. Last week, Google announced the expansion of “Google Now,” a mobile app that intends to be the starting point for our daily needs. They will aggregate Airbnb and Lyft data and more, enabling us to quickly and efficiently find the right on-demand services in real time. Don’t expect the partnership to stop there. Just as Google leaned into Open Social to connect with many social networks, they’ll partner with many startups who want to connect their API. Imagine Homejoy, Yerdle, Sprig, Instacart, TaskRabbit, Munchery SpoonRocket, and others.
  5. Google is reportedly building a ride hailing app to compete with Uber. It has been suggested that self-driving cars could be idling in our neighborhoods, waiting for us to order food, groceries, electronics, or even get a ride. With this new system, people are sharing ownership of cars with neighbors, hailing them on demand. It’s worth noting that Uber was absent in last week’s announcement of Google Now, although a partnership with Lyft was announced.

What it means to the Ecosystem:
Google’s announcements, in sequence spell considerable impacts to the entire ecosystem of startups, purists, investors, businesses, merchants, and of course, to the people, here’s how each ecosystem player is impacted:

  • Google will be in a dominant position if they can successfully deploy. Google is the homepage of the internet and, as a result, the start of the Collaborative Economy, as they own the ‘intent’ phase with Google Search. In the future, they’ll organize information about what people need, and be able to deliver in real time, dolling out links and customers to startups, sometimes through their self-driving vehicles.
  • Google and Uber are in a tenuous relationship. Over a year ago, I predicted that Uber + Google is a threat to Amazon. In reality, it looks more like Google may be a threat to Uber and Amazon, as they could potentially offer the same things, but on a broader scale. Google has greater ambitions and, perhaps, the business models (or egos) don’t align at Google and their investment, Uber.
  • Startups have no choice but to evaluate partnering with Google. By connecting to Google Now’s API, they can quickly gain market expansion by potentially being listed in search results, tapping a verified set of Google users, accessing new data types (like intent and location), and accessing historical customer data, all on a proven platform that will stand the test of time.
  • Sharing economy idealists feel threatened as large, tech companies embrace the concept. The notion of quaint neighborhood sharing will quickly be supplanted as Google makes it easy for ordinary people to participate in this new economy. The one difference is that, when sharing is efficient, it actually looks like an on-demand delivery model. I’ll stand firm, that this is tech-based commerce and capitalism, not neo-socialism.
  • Investors embrace Google’s streamlining of the market. This injection of such a large entity further validates the investment thesis that collaboration of unwanted resources in two-sided marketplaces is a profitable business. With Google’s multi-million dollar cash injection and shared offerings of search, apps and self-driving cars, they’ll provide additional market acceleration.
  • Brands seek to separate hype from reality with new commerce models. Many are already deeply hooked into Google’s ad business. Eventually, they’ll have the opportunity to offer their wares, services and solutions on the Google Now platform, as well as connect to various APIs to expand their business reach. Google+ self-driving cars spells opportunity for local merchants, restaurants, and retailers who seek solutions for the ‘final mile’ of delivery.
  • For the people, this mainstreams access to real-time services rather than ownership. Most importantly, for the public, and I mean mainstream, normal people, this provides validity for the Collaborative Economy. Using commonly available search tools or apps, people can quickly get services, rides and products from companies in one trusted space: Google.

Google’s mission is to organize the worlds’ information, but they won’t stop there. They’ll also organize our delivery, our transportation, our food service, our money, and our lives.

Here comes Google. Get ready.

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Startup

Twitter struggles to get new users, its revenue side is killing it

In 2009 Twitter was a 50-person company punching way above its weight in cultural impact, its micro-blogging platform blasting its way into the public imagination. But its ambitions were even higher. According to leaked internal documents, the company had privately set goals over the next few years of a billion users and well over a billion dollars of annual revenue. Many people thought that the first goal was inevitable and that the second would be a slog. After all, Twitter’s user base was skyrocketing much in the way of other Internet phenoms like Facebook and Google. But there was virtually no income and no monetization plan in sight. When a Twitter co-founder appeared on the Colbert Report that spring, the host remarked, “So I assume that ‘Biz’ in ‘Biz Stone’ does not stand for ‘Business Model’?”

It wasn’t only comedians who held that view. In that summer’s Sun Valley mogulfest, media icons Barry Diller and John Malone, on a “Making Money on the Internet” panel, called out Twitter as an example of a fad product that might never generate serious cash. Cable-TV pioneer Malone said it was unlikely that the company could build a significant advertising business.

Twitter now is a public company with a headcount of 3600 and a valuation of over $23 billion. But it has not come close to a billion users (not even 300 million). The shortfall has unleashed a torrent of criticism, and even intimations that an executive putsch will be required to address endemic product woes.

On the other hand, in 2014 Twitter did generate that billion dollars in revenue. (The final number will come in when the company reports earnings later this week, but its earlier estimate was $1.375 billion.) And the stash has been rising at an annual rate of over 100 percent. Twitter’s bottom line is not in the black, but blame that on continuing expenses in growing its business and (mainly) paying out huge amounts of “stock-based compensation” to employees. That’s not uncommon in the Internet world: more notable is that Twitter has cracked the code to making money on the net.

You heard that right: while the headlines about Twitter describe a company in crisis, the business end of the company has been nailing its targets, and its revenue team is the envy of the industry. “Twitter sold the wrong thing to investors — it sold the user story,” says analyst Brian Weiser of Pivotal Research Group of the company’s emphasis during the 2013 IPO rollup. “In spite of obvious evidence that user growth was slowing, they picked that as the story, and they failed to deliver. But revenue is doing what it should do.”

So how is Twitter making its money? The obvious answer is advertising — those “Promoted Tweets” that appear unbidden in a user’s timeline. Getting there wasn’t easy. And it takes effort to understand how those ads work. But in contrast to the well-documented turmoil in the company throughout its history, the road to revenues for Twitter has been a steady, coherent, patient and innovative path. And more recently, the company has embarked on a strategy to go beyond those ads to make money from selling products directly, and even monetizing people who don’t use Twitter. (More on this in Part Two of the series.)

What’s more, Twitter has turned this trick in its own unique way, creating a system that’s true to its peculiar culture. So here, in somewhat more than 140 characters, is the tale of Twitternomics.

In mid-2009 Twitter’s CEO was co-founder Evan Williams. (Williams is still on Twitter’s board of directors — and, I should disclose, he is also the CEO of Medium, which makes him my boss.) Just after that Sun Valley panel — Williams was in attendance— I asked him about the incident in an interview for a story for Wired. “I didn’t argue my case, but all the Internet guys I talked to were laughing at the media guys,” he said. “Are you kidding? There’s obviously a huge business there.” Later in the interview, though, he blithely admitted that Twitter had made little headway in that direction, mainly because it wasn’t yet a priority. But he noted that since Twitter was widely used by corporations to connect with their customers, the transition would be natural.

Read more here : https://medium.com/backchannel/how-twitter-found-its-money-mojo-1d170e3df985

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Startup, Success

The most successful tech products have one thing in common

How Facebook and Candy Crush Got You Hooked

Facebook. Twitter. Instagram. World of Warcraft. Angry Birds. The most successful tech products have one thing in common: They’re addictive. And users don’t get hooked by accident. Just ask Nir Eyal. A Bay Area entrepreneur turned desire guru, Eyal has worked with some of the top tech firms in Silicon Valley, teaching them how to apply the system he developed for engineering habit-forming apps, services, and games. His blog, Nir and Far, has attracted tens of thousands of subscribers hungry for insights, and his writing has appeared in both the mass-market pages of Psychology Today and the insider club of TechCrunch. His inaugural Habit Summit, held last March on the Stanford campus, drew 400 participants. Eyal’s book, Hooked: How to Build Habit-Forming Products, self-published in January 2014, shot immediately to the top of Amazon’s product-design list. Penguin acquired it and released it in November.

At the heart of Eyal’s system is a four-step cycle he calls the Hook. These steps were derived from his observation of online products and services, as well as a wide range of psychological and neurological research, from B. F. Skinner to B. J. Fogg. The Hook, Eyal says, is the magic behind just about every icon of the consumer Internet, from Google to WhatsApp.

1 | TRIGGER

2 | ACTION

3 | REWARD

4 | INVESTMENT

Full story here : http://www.wired.com/2014/12/how-to-build-habit-forming-products

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Startup, Success

WHEN YOU START A SMALL BUSINESS, IT’S HARD TO KNOW WHAT SUCCESS OR FAILURE LOOKS LIKE

In 2011, I started a book business with my best friend called Emily Books.

We were qualified to start a business in some ways, not so much in others. We had some expertise in our field: We’d both worked at the intersection of publishing and tech for years, and we wanted to start an online bookstore that sold a small collection of books and allowed readers to subscribe and receive a carefully chosen book per month automatically. Our idea was that this would provide an online version of what we loved about shopping at independent bookstores: the great taste and careful curation of expert booksellers, which no algorithm can replicate. We had no management experience, though, and had never created a PowerPoint presentation or written a business plan. We also, probably more importantly, had no ambition to found the kind of startup that barrels toward acquisition or IPO. We wanted to test waters, grow organically, and pivot on a dime in response to customers’ needs like a startup, but we also wanted to stay independent, avoid gimmicks, and build a sustainable business that would stay true to its core values.

That was three years, many gray hairs, over 5,000 sales and 36 excellent books ago, but we’re still pretty much just as far from the point of being able to pay ourselves any wages as we were when we first started.

http://www.fastcompany.com/3036907/this-is-not-a-start-up-story

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Startup, trend

Finance: ‘We Can Reinvent the Entire Thing’

Twitter. Facebook. AirBnB. Marc Andreessen, co-founder of the $4.2 billion venture capital firm Andreessen Horowitz, has backed them all — along with dozens of others. His latest project? Upending finance. Bloomberg Markets magazine interviewed Andreessen at the firm’s headquarters in Menlo Park, California.

Out With the Old

“We have a chance to rebuild the system. Financial transactions are just numbers; it’s just information. You shouldn’t need 100,000 people and prime Manhattan real estate and giant data centers full of mainframe computers from the 1970s to give you the ability to do an online payment.

‘‘You would not today, starting from scratch, invent any of these financial businesses in the same way. To me, it’s all about unbundling the banks. There are regulatory arbitrage opportunities every step of the way. If the regulators are going to regulate banks, then you’ll have nonbank entities that spring up to do the things that banks can’t do. Bank regulation tends to backfire, and of late that means consumer lending is getting unbundled.”

In With the New

“We’re not going to go backward. When people start doing things a better way, it kind of doesn’t matter what the old way was. You can find people who will say that this is all just an arbitrage on the current trouble in the financial system, and I’m sure the big traditional banks will fight back and try to get things outlawed.

‘‘But think about the scenario of a loan officer talking to a prospective client. To software people, that looks like voodoo. The idea that you can sit across the table from somebody and get a read on their character is just nonsense.

‘‘Lots of industries are changing in a similar way. There’s been a qualitative approach, and now, there’s a quantitative approach. Everybody who grew up in the qualitative approach hates the quantitative approach and considers it a giant threat.”

Big Data

http://www.bloomberg.com/news/2014-10-07/andreessen-on-finance-we-can-reinvent-the-entire-thing-.html

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Startup, Success

Entrepreneurs that Spotting the Hot Spot are the winners

This is an ever changing economy, in which new scenes and niches constantly emerge. A handful of pioneers jump on it, often purely for fun. One, or maybe a couple of them, figure out a way to turn the idea into a profitable business. Others follow suit, and try to replicate the original idea. Most of them are not successful however. This is a cycle that keeps repeating.

The important thing to note is what distinguishes the successful entrepreneur from all others. Often it is “Spotting the Hot Spot”. That is, they have the ability to spot the right opportunities, at the right time. They have to be careful to not be too early, or too late in entering the market. The key is to look for signals that indicate that an opportunity is arising and keeping an eye out for a combination of two factors– momentum and imperfection.

If we look at a couple of examples, it may become clearer. In the online marketing industry, while today, blog posts are easy to upload and and necessary to direct traffic to your product, it is no longer enough to make you stand out. However podcasts are still complicated to use and not fully developed.

Hence what it takes to be able to spot this unique combination of momentum and perfection is not freakish talent or magical powers but simply the result of learning what to look for and keeping your eyes open.

 

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Startup

CEO’s Guide to Burn Rates and Vaporization

Yesterday I post one warning from Marc Andreessen  read it here https://www.currencyfundgroup.com/2014/09/27/one-more-investor-sounds-the-alarm/

 

The alarm has sounded.  A three-alarm fire, with alarms named Bill, Fred and Marc.  Burn rates are too high, change course or risk the consequences.

A CEO might be forgiven for asking: “that advice might have been more helpful before I hired those extra hundred engineers, and leased the fancy SOMA exposed-brick office to house them in.  Changing course on burn-rate now will be a lot harder than it would have been a year ago.”

To which I would say: suck it up and go run your business.  The past is past, and the decision you need to be focused on as the CEO is:  what should I do now?  The board is not running your business, they merely advise you, and you are ultimately responsible for making the correct decisions.

The question remains:  What should I do now?

http://www.joshhannah.com/2014/09/a-startup-ceos-guide-to-burn-rates-and-vaporization/

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Startup

One more Investor sounds the alarm

Netscape founder and Andreessen Horowitz partner Marc Andreessen has joined the chorus of people warning that startups are taking on too much risk and burning too much cash.

The so-called startup burn rate conversation was sparked by Benchmark’s Bill Gurley, who recently told The Wall Street Journal that “Silicon Valley as a whole … is taking on an excessive amount of risk right now.” He believes startups are burning a dangerous amount of cash — an amount that resembles 1999 just before the dotcom bubble burst.

Here was Andreessen’s own warning on Twitter: “When the market turns, and it will turn, we will find out who has been swimming without trunks on. Many high burn rate companies will VAPORIZE.”

Read more: http://www.businessinsider.com/marc-andreessen-on-startup-burn-rates-worry-2014-9#ixzz3EUufI0Bl

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    Yesterday I post one warning from Marc Andreessen  read it here https://www.currencyfundgroup.com/2014/09/27/one-more-investor-sounds-the-alarm/   The alarm has sounded.  A three-alarm fire, with alarms named Bill, Fred and Marc.  Burn rates are too high, change course or risk the consequences. A CEO might be forgiven for asking: “that advice might have been more helpful…
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Startup

Two-pizza team rule by Jeff Bezos

Amazon’s founder and CEO Jeff Bezos is well known for his “two-pizza team rule”. This is a concept that firmly believes that there is indeed something as “Too big teams” that actually reduce productivity. It says that teams shouldn’t be larger than what two pizzas can feed, which is ideally 6-7 people. 

This idea is based in several reasons. 


As group size grows, you  can’t have a meaningful conversation with every person, which is why people start clumping off into smaller clusters to chat. Hence, small teams make it easier to communicate more effectively rather than more in quantity. It plays an important part in staying decentralized and moving fast, and encouraging high autonomy and innovation.Another issue with larger teams isn’t quite the team size itself. But rather, it’s the number of links between people that is the problem. Richard Hackman came up with a formula for determining the number of links between members in a group: n(n-1)/2. The number of links increase disproportionately with the number of people. The cost of coordinating, communicating, and relating with each other snowballs to such a degree that it lowers individual and team productivity.

Moreover, larger team size makes people overconfident. This is the tendency for people “to increasingly underestimate task completion time as team size grows”. On average, if two-person teams take 36 minutes to complete a task, four-person teams take 52 minutes to finish — over 44% longer.

People in larger teams also seemed to be more stressed. This might be due to something called “relational loss” which also affects the performance. Relational loss is the perception that you’re unable to get support by your peers. In these larger teams, people tend to be lost. They don’t know who to call for help because they didn’t know the other members well enough. Even if they did reach out, they didn’t feel the other members were as committed to helping or had the time to help. And they couldn’t tell their team leader because it might look like they had failed.

Hence, as links increase in a growing team, you start losing that close-knit feeling of support. There are a few tips to effectively avoid that.

1. What’s the magic number?
Bezos’s two-pizza rule sums up to teams of at most 6 or 7 members. Hackman however recommends 5 and fervently warns against going above 10.

2. Follow the “Cheers” rule of effective teams.
Relational loss can be avoided by bring your teammates together to remove the perception of helplessness.

3. Make teamwork easier through transparency.
Providing self-service transparency through systems, processes, and tools help distribute information and power so individuals can get aligned and move forward together as a team.

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