MKS Alternative Investments: the first three months

It’s been a few months since I started to work with MKS Alternative Investments, and we have had the pleasure to invest in several promising startups. Here is a bit of love for all those teams working hard to give you online access to doctors, help you get cash anywhere, or get in touch with businesses via text messages in India.

Lookup, chat with local businesses for free, led by Deepak Ravindran
Lookup is a free and secure messaging app which helps consumers chat with local businesses or shops. Lookup is currently available in Bengaluru (Bangalore), India and expanding to more cities soon.

Be-Cash, the peer to peer ATM network
Be-Cash revolutionizes the world of cash distribution. By linking consumers and retailers with ease, thanks to our terminals, we make withdrawing money even easier. Led by Malik Khalfi et Bertrand Vermorel.

Ring.md, an innovative online platform that allows patients to connect with expert doctors by video or phone. Always available, from all over the world, led by Justin Fulcher

Sailogy charters boats with skippers worldwide. Sailogy has direct, personal relationships with over 5,500 vessels in over 50 of the most prestigious countries around the Globe. Led by Manlio Accardo

http://www.youtube.com/watch?v=ApM4YsnrizM

iRewind, the personal media company
iRewind is a Swiss Tech start-up, based at the Innovation Park of the Swiss Federal Institute of Technology in Lausanne, backed up by a development team in Romania and strategic partnerships with several global hardware manufacturers. Led by Bogdan Manoiu.

We look forward to continue investing in talented teams from around the world. Please get in touch with me or Omar Liess if you would like to discuss your early stage project(s). For fintech startups I am proud to continue my work with Anthemis looking at global startups working to disrupt finance.

Building for the Enterprise

Part 11 of Stanford’s How to start a startup class. Presentation by Aaron Levie (CEO of Box) on building for the Enterprise. All notes are consolidated on a single page here.

– Box was founded in response of founder’s need to fix file sharing on the internet
– 3 forces contributed to Box emergence: cost of storage dropping dramatically, more powerful browsers and networks, and people wanting to share more and more and from more locations
– after product launched, was in between a consumer product (too many features) and an enterprise product (not enough features)
– consumer looks really fun, enterprise looks really hard. But in consumer space, it’s hard to monetise. Only two ways: people either pay for the app, or you sell advertising.
– to measure the opportunities, let’s look at global market sizes:
$35b = money spent on apps
$135b = global digital advertising
$3.7 trillion spent on enterprise IT per year…
Should you fight with millions of people for a bit of money, or with few people you charge lots of money?
– Enterprise software: building is slow, expensive, complex, and sales process is also very slow (and usually involves an intermediary, which internet people hate)

WHAT HAS CHANGED IN THE ENTERPRISE?
Everything has changed in the past 5 years, most magical time to build an enterprise software company
– on-premise computing -> cloud
– expensive computing -> cheap, low cost computing. Barrier for client introducing a product to their enterprise is lower.
– customised software -> standardized platforms, that the client customises themselves
– large enterprises -> every business can be sold an enterprise software. Makes the market much larger for enterprise software
– regional -> global, people will buy enterprise software from anywhere
– IT-led -> user-led, bring your own devices etc

LOTS OF INDUSTRIES NEEDING NEW TOOLS
– every company needs better, faster, more secure technologies
– retail: will need technologies to reach customers across all channels. No current solution addressing this [totally true, huge but complicated opportunity]
– every single healthcare company needs to personalize its services to the patients, electronic health records, assistance for doctors, etc
– media: from linear to on demand experiences, new forms of distribution and production need to appear. Need for big data analytics for marketing, etc

HOW TO GET STARTED?
– spot technology disruptions: look for new enabling technologies that create a wide gap between how things have been done and how they can be done. Ex: iPad disrupting blueprints management and collaboration, www.plangrid.com
– intentionally start small: start simple and expand over time. What are the gaps in the incumbents solution that customers will want to use? Expand to the larger solution at a later time. Incumbents will overlook you [or buy you if they notice you get traction?]
– find asymmetries: do things incumbents can’t or won’t do because the economics don’t make sense to them, or because technically they can’t.
Ex: software suites have a hard time being on multiple platforms, so go multi platforms [lesser service across more platforms]
Find the fringe/extreme customers: go after those who are working in the future without totally losing their minds
– Listen to customers, but don’t always build exactly what they want, build what they need
Modularize (openness, APIs), don’t customize
– Your product should sell itself, but you will still need sales people to help clients navigate the competitive environment and your product

Startups hiring and Culture

Part 11 of Stanford’s How to start a startup class. Presentation by Ben Silbermann (Pinterest), John Collison (Stripe) and Patrick Collison (Stripe) on how to hire and create a strong corporate culture. All notes are consolidated on a single page here.

MOST IMPORTANT ASPECTS OF BUILDING A COMPANY CULTURE
– who do you hire
– what do you do everyday, why you do it
– what you choose to communicate
– what you choose to celebrate (and punish)
– have everyone informed (transparency), which becomes a challenge as your company grows
– have everybody aligned on the vision

WHAT DO YOU LOOK FOR IN THE FIRST 10 EMPLOYEES
– hire people that look like you and share your values
– look for multitalented people who have a lot of interests outside of work [ties into what E.Schmid is calling “smart creatives”]
– nobody knows your company, so you will have to fight lack of awareness and relatives telling future employees not to join
– have your early employees refer friends, word of mouth is a very powerful way to recruit
– get people early in their career, most of them will likely be undervalued
– genuine, straight people, trustworthy, who like getting things finished, with no ego getting in the way
– there is no wrong place to find people

HOW TO IDENTIFY RAW TALENT
– you never 100% know if people are going to be good [remember to use that trial period as a real trial period]
– ask yourself what’s really world class. Ask people who are world class at a certain thing what you should be looking at in a new hire, the questions to ask
– good people want to solve tough problems, to come on hard things
– be very transparent why it’s an amazing opportunity, but also explain that it’s gonna be hard.
– tech people: spend a week-end working with the person

WHAT CHANGES DID GROWTH BRING TO YOUR COMPANY?
– either you fail, or growth becomes your number one problem [Better be good at it]
– try to make people feel like they are in startups inside a larger organization. Let people control the ressources and priorities and let them know how success is measured.
– recreate diversity inside teams (designers + writers + programmers together)
– as you grow, your time horizon grows. At the beginning you hire people for a month, then you hire them for years
– at the beginning, you need people who can contribute immediately. After a few years, you can make longer term investments, start working on things that will pay off down the road and not immediately.
– your tools will need to evolve (from email to better communication tools, because it becomes harder to copy the whole company on emails)
– make sure people don’t HAVE to grow into leadership roles. Some early hires have what it takes to become managers, others don’t. Don’t create an organization where the only way to evolve within the company is by taking a management role.

Startups culture

Part 10 of Stanford’s How to start a startup class. Presentation by Brian Chesky (CEO, Airbnb) and Alfred Lin (Sequoia, former Zappos) on how to build and sustain a strong corporate culture. All notes are consolidated on a single page here.

– Culture is important to scale the business and the team. How to build a company culture?
– company culture = beliefs and actions leading towards the company goal
– Mahatma Ghandi: “Your beliefs become your thoughts. Your thoughts become your words. Your words become your actions. Your actions become your habits. Your habits become your values. Your values become your destiny.”
– Why does corporate culture matter? Provides alignment, stability, trust, exclusion (what not to do) & retain right employees.
– Why does corporate culture matter? Returns of best companies to work for close to double of others

– Create a “core value worksheet”
1) what are the personal values most important to the founder(s)?
2) what are the most important values for business success?
3) what values will you look for in employees?
4) what could not be tolerated?
5) incorporate your mission into your core values

– Elements of high performing teams:
1) trust
2) trust leads to the ability to have debates and constructive conflicts
3) if you don’t have debate, there can be no commitment. You need to come to the right answer before people commit
4) If people don’t commit, you can’t hold them accountable
4) if people can’t be held accountable, there will be no results

– Some best practices for culture:
1) incorporate your mission with your values
2) think harder, deeper, longer about values
3) interview for cultural fit
4) evaluate on culture as well
5) make it a daily habit

Brian Chesky, Airbnb

– First you build a product, then you build a company. To build a company you need a culture
– Our product changed, but our values didn’t. There have to be things that don’t change, that are unique to you
– Wrote core values before hiring anyone
– First hire took time, because this person would bring some of their DNA to be added to the company’s DNA
You want diversity of culture, age, background, education, but you don’t want diversity on values
We want people who join the company for the one thing that will never change: the mission of the company. Not because they like the valuation, or the money.
– Constraints bring creativity. The less money ou have, the more creative and frugal you will be
– Three things you never hear about culture:
1) nobody talks about culture, it’s mystical and fuzzy
2) culture is hard to measure, and what’s hard to measure has a tendency to be discarded
3) culture doesn’t pay off in the short term. If you want to make money quickly, don’t pay attention to culture. Culture makes you hire slowly, which in the short term can slow your progress down.
– hire only people who are world class and adhere to the culture
– have people interview on technical aspects (employees with similar jobs) but also on culture (with employees doing other jobs, that can meet with the potential hire only in the culture)
– Airbnb was ripped off by Rocket Internet who cloned the site, and at a time Airbnb was 90 people they put together a team of 400 with 90M raised. Airbnb shied away from buying them because they wouldn’t fit culturally. Mercenaries vs missionaries.
– Your brand evangelists are you employees. The stronger the culture, the stronger the brand because it will be relayed by all employees.
Don’t communicate on the details of your products, communicate on your mission (cf Apple’s think different campaign)
– In the early days, airbnb communicated as a utility: save money, find many rooms. Then changed tagline to “travel like a human”, meant to say the company thinks in a certain way, that the world should be a village. Did a lot of story telling.
– Role of the CEO: vision, strategy, people.
– Automate services after they took off. Example: photographers making photos of hosts’ rooms. First was the founders doing it themselves. Then named an intern to manage the process. Then interned was upgraded and hired other interns to manage the photographers. Then it became impossible to manage by hand and then airbnb built a system for it.

Startups: how to raise money

Part 9 of Stanford’s How to start a startup class. Presentation by Marc Andreessen (Venture capitalist, Andreessen Horowitz), Ron Conway (Founder, SV Angel) and Parker Conrad (Founder, Zenefits) on how to raise money. All notes are consolidated on a single page here.

HOW DOES AN INVESTOR CHOOSE A STARTUP?
– Think about a startup as having all conceivable risks on day one (right founders? can you build the product? right technology? launch risks? market acceptance risks? revenue risks?). Raising money helps you peel away risks from the project. Each round has to help you remove some risks from the equation.
– To pitch: show for each round what risks you’ve eliminated. Show what risks the money you’ll raise will help you get rid of.
– questions asked about founder: is this person a leader? is the person focused and obsessed by the product?
– look for communication skills, because to be successful you will need to communicate a lot, especially with your team
– better founders are solving a personal problem, something they really struggle with
– Venture capital is about outliers, you’re looking for people that are different. There are only a few winners every year
– Invest in extreme strength rather than lack of weakness. Look at extreme strength that makes a project an outlier, but projects with extreme strengths also have weaknesses
– Make sure the startup does not conflict with an existing investment
– Think in terms of opportunity cost: is this really the best way to use that money/time/bandwidth? Every investment reduces the capacity of the investor to make other deals.
– Ron Conway: “we invest in people first”.

PITCH INVESTORS
– Don’t ask people to sign a NDA, it tells the investor you don’t trust them. Relationship has to involve a lot of trust
– Send a really great, short executive summary. Investors are busy. If you make the cut you’ll get a phone call. If phone call goes well, you’ll get a meeting, and then there is a good chance the investor will invest.
– You want the investors to understand in your first sentence what you do. Get that first sentence perfect.
– Pitch to a lot of people so that your pitch gets better
– Raising capital is the easiest thing an entrepreneur will have to do, much easier than hiring, or promoting your product. If you get in a situation where raising money is hard, keep in mind the hardest is yet to come
– Biggest mistake from founders is to not get things in writing. When somebody makes a commitment, email to them and confirm what they just said to you. Investors have very short memory, forget the valuation, etc. Get rid of all controversy by putting everything in writing. Take notes in meetings, and follow up on what’s important.

CHOOSE THE RIGHT INVESTOR
– investors with a good rolodex and domain expertise will add more value than their money. Dumb money vs smart money debate…
– Seed stage: find someone who can introduce you to VCs for your A-round
– You’re going to live, deal with and go to war with your investors. It’s like a marriage, make sure you like these people because you will spend a lot of time with them. Shared values and ethics are a must. Second time founders take that point very seriously. It really matters who you partners are.
– Your 2 hours meeting with an investor is a microcosm of years to come, so make sure you learn from them and enjoy their presence

RAISING THE RIGHT AMOUNT
– Bootstrap as long as you possibly can, if you can don’t raise money [point coming from a VC…]
– don’t forget there are ways to borrow money instead of selling capital.
– raise as close to your needs as possible, don’t raise too much money because you will dilute yourself too much and complicate your life further down the road (C+ rounds)
– Identify investors mental thresholds. Example: just go below 10M and suddenly the investors turning you down might fight for bits of your project
– How much should a founder sell?
Seed stage: sell between 10 and 15%
Series A: sell between 20 and 30%
Real question: at what point of dilution does the founder get demotivated? If you give away 40% on the seed round, not much remains for the founders who could lose interest.

RAISING MONEY ≠ SUCCESS
– Raising money is not a success, it’s not a milestone. Don’t let your ego get involved. Raising money just puts you in a position to do other things.

Peter Thiel on business strategy and monopoly theory

Part 5 of Stanford’s How to start a startup class. Presentation by Peter Thiel (co-founder of Paypal) explaining his theory that startups should always try to become monopolies, starting with small markets and expanding from there.
Previous week’s notes are grouped in a single page here.

– if you start a company, you should always aim for a monopoly and avoid competition, “competition is for losers” [easier said than done…]
– two types of business: businesses in a very competitive environment, and businesses with monopolies
– differences between these two types of businesses not obvious, but enormous
monopoly: will downplay its dominance to avoid being regulated
perfect competition: will always pretend to be doing something unique to stand out or raise capital
– Monopolies say “we’re in a huge market”
Non-monopolies say “we’re in a narrow market”
– “the something of somewhere is often the nothing of nowhere”.

MONOPOLY? DEPENDS ON HOW YOU LOOK
– Google has 66% of search traffic -> monopoly?
– but if you consider Google as an advertising company:
$17b = US search advertising
$37b = US online advertising
$150b = US Advertising
$495b = global advertising
So actually Google becomes a company competing with others for a share of a larger pie

START SMALL & EXPAND
Build a monopoly in a small market, then expand to other markets
– Facebook: was addressing a super small market (10k people at Harvard), but went from 0 to 100% market share in a few days.
– Amazon: started with book store, slowly expanded to other markets
– Paypal: started with power sellers on ebay, expanded to the general public
– Many people miss these big companies because they start small. If you’d assess Paypal or Facebook back in the days, you’d think their market was way too small
– Companies that failed: people who wanted to address huge markets, who had tons of competitors who they didn’t even know who they were. Large existing markets = lots of competition

THE MANY WAYS TO BUILD A MONOPOLY
– The next Bill Gates won’t be building an OS. The next Larry Page won’t be building a search engine. You need to find a totally new market, or…
– Building a monopoly is not about being the only one: it can also be about being so much better you differentiate radically. Amazon was different/monopoly cause it was selling 10 times more books than its closest competitors
– Network effect can also create a monopoly
– Regulation / high fixed costs that prevent new entrants from coming in
– Branding
– Proprietary technology
– Build a complex, vertically integrated structure. Examples: Tesla, SpaceX, no real innovation but very good at making different things fit

SUSTAINING MONOPOLIES
You don’t want to be the first mover, you want to be the last mover. Google is the last mover, Facebook is the last social network.
– You want to be the last breakthrough for a long time (ex: Google’s search algorithm outpacing competition, hasn’t been surpassed since)
– Keep improving on your product faster than people can catch up
– Economies of scale
– Most of the value of these companies exists far in the future. Paypal: most of the value in 2001 was in the cash brought by the business 10 years later. 85% of the value of good companies happens 10 years down the road

CAPTURING VALUE
– Value for entrepreneur = X * Y, X = market size, Y = market share
– technological innovation -> people coming up with innovation can get some of the value
– scientific innovation -> inventors rarely come up with value for their inventions. X = 0
– Structure of your industry is what defines your potential for success

PSYCHOLOGY OF COMPETITION
– We find it reassuring if other people do what we do
– Competition is a form of validation [This is where we go into cultural differences. True in the US, probably not as much in Europe]
– Competition does make you better
But competition makes people lose sight of the bigger question: is what I’m competing for worth my time?

QUESTIONS
– when investing: don’t focus on the narrative market, but on the real market
– Google had all four advantages of a monopoly: network effect (ad network), proprietary technology (page rank technology), economies of scale (storage), brand
– successful companies didn’t really do market testing and lean startup methodology. Founders had better ideas that differentiated them from the rest of the pack. If you take too much time to figure out what people want you risk missing the boat

Video of the lecture.

Notes on Stanford’s “How to start a startup class”

[update: I’ve added lecture 4’s notes, and compiled all notes in a single page here.]

I have been watching Sam Alman (Y Combinator president) brilliant attempt at explaining the unexplainable: the art of starting a business. It is great to listen to people able to put in words what one has done instinctively, sometimes right, often wrong. Lots of great lessons for entrepreneurs and wanna be startupers. Here are my notes & videos from the first three lectures.

Lecture 1 – Sam Altman, Dustin Moskovitz (video)

IDEAS ARE EVERYTHING, NOT
– startups = idea + product + team + execution + luck (from 0 to 10’000)
– idea not much importance, but still. Bad idea can derail you.
– having a mission is better, cause it will be easier to federate people around it
– copycat companies don’t excite the public or the team
– good ideas can look terrible at the beginning (ex: Facebook: social network for moneyless students)

PRODUCT
– find a small market inside which you can have a monopoly and quickly expand
– first version of your product doesn’t have to sound very big. Product can be imperfect but has to improve rapidly
– investors make the mistake of only thinking of the growth of the startup, while they should look at the growth of the market
– you can change everything in a startup but the market
– ask “why now” (Sequoia question), why not two years ago, why not in two years?
– two things you should be doing: build a great product, talk to your customers
– most startups don’t die of competition, but because they don’t do something that people love
– do sales at the beginning cause you need to understand client needs. Great founders don’t put anyone between themselves and their users. Don’t hire sales and customer support people at the beginning
– start with a simple product
– build something a few people love, and expand to a lot of people (orange in the graph below), rather than build a thing a lot of people like, and expand to love (grey in graph)

MEASURE
– iterate around the same loop:
1) user feedback
2) product decision
3) show and test
– startups do what founders measure: measure growth indicators like total registrations, active users, activity level, cohort retention, revenue, net promoter score (https://en.wikipedia.org/wiki/Net_Promoter)

UGLY SIDE OF BEING A FOUNDER
– you’re responsible for opportunity cost of the time of people who follow you
– you’re always on call
– fundraising
– unwanted media attention
– you’re more committed, i.e. less option value
– number one thing is to manage your own psychology

STARTUP = BEING THE BOSS?
Phil Libin (Evernote CEO): “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. If you want to exercise power and authority over people, join the military or go into politics. Don’t be an entrepreneur.”

Lecture 2 – Sam Altman (video)

FINDING HIGH GROWTH MARKETS
– Use your intuition
– watch what younger generations are using

WHAT MAKES A GOOD CO-FOUNDERS TEAM
– co-founders are the most important part of startup teams. Co-founder fights one of the main reason startups fail
– choosing someone that you’re not friends with usually ends up in disaster
– be a student or work in a cool company like google or Facebook cause it has lots of co-founders
– much better to have co-founders than solo founder
– qualities of co-founder: unflappable, tough, calm, creative, decisive, ready for anything: James Bond 😉
– If you’re not technical get a technical co-founder
– know your cofounders or early hires for years
– 2-3 co-founders good, 4 or 1 usually does not work, 5 really bad
– skeptical of remote teams: for early days, communication and speed are key. Don’t work remotely, really really tough.

WHEN TO HIRE
– it sucks to have a lot of employees (high burn rates, slow decisions, complex management). Try to have very few employees in the first year. Should definitely hire (in the early days) when dying need. Then when growth comes you’ll need to hire fast. Very bad first hires can kill the company.

EMPLOYEES SOURCE
– best source of people: people you already know or your staff already knows
– at Facebook or Google, HR sits down with new hires and goes through their network for good people
– look outside your geographical boundaries, bring people from the outside

WHO TO HIRE
– for early hires: go for attitude over experience. Most good hires are people who have never done it.
– attitude: good communication skills, manically determined, like a little bit of risk,  people who you would feel confortable reporting to.
– mediocre people in a small company will kill a startup
– lose a mediocre potential hire (who can kill the company) over losing a client (you can recover from that).

HOW TO HIRE
– took 5 months for airbnb to hire first employee
– 5 questions:
1) are they smart?
2) do they get things done?
3) do I want to spend a lot of time with them?
4) what are concrete projects the person have worked on?
5) call references, people who worked with them in the past. Really dig in: are they in the top 5% you worked with? would you hire them back? what are they good at?
– many people are bad at hiring, but good at assessing a person after they have worked with them. Try to work with people on a project before you hire them
– have a list of values and make sure people adhere to them
– have an extremely high bar, hire slowly
– founders underestimate how hard it is to get the very best people
– founders should spend 0 to 25% time hiring people.

EMPLOYEE EQUITY
– employee equity: you should aim to give 10% of the company to the first 10 employees. Founders are generous with equity to investors, less with employees. Totally wrong. Employees have more value over time, while investors write a check and tend to vanish
– At YC, companies who have been more generous with equities to employees are the most successful

CO-FOUNDERS EQUITY
– set cofounders equity very soon after you start working together. If you don’t want to give people the same equity than you, you should think hard about whether you want them as a cofounder
– pre-negotiate what happens if one of the founders leaves. In Silicon Valley, it takes 4 years to own all your equity. So if you leave after one year, you get 25% of your equity. If you don’t do that, deadweight in equity table will make it hard to find investors.

RETENTION
– keeping people: founder thinks he/she’s doing things the best but need to learn to delegate and trust people
– praise your team for things that work.
– Get people new areas of responsibilities
– be aware that as a first time founder you’re likely to be a bad manager

FIRING
– fire fast: firing people is one of the worst part of running a company. Every first time founder waits too long.
– fire fast: better for company, better for employee
– fire people who are bad are their jobs, create politics, are negative. Completely toxic to the company. Might work in a large company, will kill a startup
– one or two fuck ups -> ok, team spirit. If somebody consistently fucks up -> fire them. Fire those who are consistently doing bad things over weeks, and people doing the opposite of what you would do.

CEO HAS 5 JOBS
1) set the vision
– focus
– say no a lot
– have a few clear goals
– communicate on goals so whole company is aligned
– always focus on growth and momentum, see how you’re doing against metrics
– don’t get caught up in the PR, can make you feel like you’ve made it while you’re not
– be in the same space, remote slows down the cycle time
– indecisiveness is a startup killer
2) raise money
3) evangelize
4) hire and manage
5) make sure the entire company executes (intensity)

EXECUTION
– being a founder is signing up for years of grind around execution
– work hard, pay attention to details, care for customers
– company needs to see CEO as maniacal execution machine
– ideas aren’t worth anything, execution is where the value is
– most good funders have a small number of goals for the company. Everybody in the company should be able to say each week what the goals are.
– always keep momentum: always keep growing, don’t let your ship date slip
– relentless operating rhythm (Facebook: “move fast and break things”)
– obsession with execution quality
– every time you talk to a good team, they have gotten new things done
– when momentum is down, get small wins. “Sales fix everything”

SET AN OPERATING RHYTHM
– ship products, launch new features
– review/report metrics and milestones
– repeat

COMPETITION
– don’t worry about a competitor at all until they really beat you with their product
– don’t let your company get down because a competitor is in the press
– Henry Ford: “the competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time”.

Lecture 3 – Paul Graham (video)

– startups are very counter intuitive, it’s an area where you can’t only rely on your intuition
– many people ignore YC advice because they seem wrong
– you can however trust your instinct about people. Big mistake is to ignore these intuitions about people, because they seem impressive, etc
– pick people as if you were picking people to be friends with

NO STARTUP EXPERTISE NEEDED
– what you need to succeed in startups is not an expertise in startups
– what you need is expertise in your own users
– one of the risk of young founder is they will go through the motions of starting a startup, and neglect the one thing: making something people want
– universities can teach you about startups, but it’s not what you need to know. What you need to learn is the needs of users, and you can’t learn that before starting the company. You can only learn about startups by doing it.

NO GAMING THE SYSTEM
– starting a startup is where gaming the system stops. Can work in a large company (like sending late emails to pretend you’re working evenings). In startups that doesn’t work. There is no boss to trick. All users care is that your product works, you can not trick them.
– faking does work with investors. You can foul them for one or two rounds, but you’re wasting your own time cause all you’ll do is lose your time sending your company down in more time than it would have taken.

STARTUP WILL TAKE OVER YOUR LIFE
– if it succeeds it will take over a long time, 10 years or your own life
– being the boss of a very successful company has drawbacks: there are many things only you as the emperor can deal with. As the company daddy you can never show fear or weakness. As a billionaire you get no sympathy when complaining about stuff.
– as startup grows, it never gets easier. New kind of problems, but total volume of worry never decreases, if anything it increases. It’s similar to having kids, it never stops.

OPTIMAL AGE TO START A STARTUP
– don’t start at 20, travel and enjoy life first because you can’t do it later, and you’ll learn a lot
– success takes a lot of serendipity out of your life. You run your company as much as your company runs you. Serendipity gives you more options.

YOU CAN’T TELL IF YOU CAN RUN A STARTUP
– you probably haven’t done a startup when you start one
– as an investor, easy to predict if someone is smart. Hard to predict how tough and ambitious they are
– in the army, you can’t tell who is going to be successful between the arrogant and the quiet recruits. Same for entrepreneurs.
– if you’re terrified of starting a startup, don’t do it, unless you’re someone who is fuelled by fear and excels under pressure

THE WAY TO GET STARTUP IDEAS IS NOT TO THINK ABOUT IDEAS
– the way to come up with good ideas is not to make a conscious effort, and take a step back
– twitter, google, yahoo, apple, facebook were all side projects, rejected by the conscious mind as ideas for companies
– how to turn your brain into the kind that has startup ideas unconsciously:?
1) learn a lot about things that matter
2) think of problems that interest you
3) with people you like and respect (how you get cofounders at the same time than the idea)
– get yourself on the edge of a technology, “live in the future”
– example: student who built voice over IP because he wanted to talk for free with his girlfriend

QUESTIONS:
– role of non technical founder? run the business side of things. For ex: Uber, non technical founder will bring domain expertise, and run sales.
– any value in business school for entrepreneurs? Not really. What business school was designed for was to teach people management, a problem you only have in startups if you’re sufficiently successful. You might be better off going to design school. Best way to learn is to start something. You might fail but you will learn.
– ideally, you’re successful before you hire your first employees. So you don’t need to manage before you have traction.
– are we in a bubble? There is a difference between high prices and bubble prices. In bubble years, VCs knowingly invested in bullshit trying to unload it on retail investors before it would blow up. That is now what’s happening today. Prices are high, it won’t be as easy as today. Bubble right now? no.