Bad advice- why join a startup

That said, one should never join a startup expecting substantial financial gains — it is a (mathematically) unlikely outcome. Join a startup because you’ll have a big impact and you’ll learn a ton.

via What are the things one should know when switching from a large company to a startup? – Quora.

This is terrible advice.  It assumes that startups are all alike and the outcome boils down to mathematical chance. That’s bull.

Join a startup that you think will be a game changer.  If you’re right, you’ll make a big impact, learn a ton, and maybe even make some money.

Startups & VCs: Learn How to Design, Market, & Eat Your Own Consumer Internet Dogfood – Master of 500 Hats

I agree with this but I think that says more about the nature of entrepreneurship in new tech than anything else.  Guys who do have a clue are not willing to take a far chance on a new startup that doesn’t have a clear advantage.

Probably more than half of the startups, and more than 90% of the investors have no goddamn clue what the hell they are doing re: user experience and online marketing.

via Startups & VCs: Learn How to Design, Market, & Eat Your Own Consumer Internet Dogfood – Master of 500 Hats.

Netflix Competitors Learn the Power of Teamwork – NYTimes.com

There is a lot to say about the lessons learned of collaboration:

The biggest lesson learned, according to members of the two top teams, was the power of collaboration. It was not a single insight, algorithm or concept that allowed both teams to surpass the goal Netflix, the movie rental company, set nearly three years ago: to improve the movie recommendations made by its internal software by at least 10 percent, as measured by predicted versus actual one-through-five-star ratings by customers.

via Netflix Competitors Learn the Power of Teamwork – NYTimes.com.

But there’s also a lot to be said about the importance of deadlines in creating the pressure to produce results.  Don’t underestimate that aspect of this story:

When BellKor’s announced last month that it had passed the 10 percent threshold, it set off a 30-day race, under contest rules, for other teams to try to best it. That led to another round of team-merging by BellKor’s leading rivals, who assembled a global consortium of about 30 members, appropriately called the Ensemble.

Submissions came fast and furious in the last few weeks from BellKor’s and the Ensemble.

Fun Entrepreneurial Stories

Here’s an article about a guy bottling New York City tap water and selling it (and doing quite well). This guy is a born entrepreneur– read about his previous business ideas.  My favorite is this one, which is a good analogy of the CDS/risk shifting game that was being played on Wall Street:

At 16, Zucker started a business enticing people to pay $1 to take a swing at a golf ball. The prize for a hole in one from 150 yards: $1 million. He rented space from a driving range and persuaded an insurance company to allow him to pay a premium for a million-dollar policy. No one made it, but Zucker made some extra cash.

Many Niches » Zappos Deal Shows VCs Hate Entrepreneurs

In response to this: Many Niches » Blog Archive » Zappos Deal Shows VCs Hate Entrepreneurs.

First, Tony made a lot of money on this and I’m sure he’s very happy.  He made Sequoia a lot of money too.

But I want to write about this whole topic of negotiating with VCs.  VCs simply have much more experience negotiating these deals, so when entrepreneurs do things like spend too much time worrying about valuation, they can get screwed.  The best advice I can offer is to surround yourself with people who can give you good advice.  Also, you want to do some scenario analysis to make sure you know what you’re getting yourself into.

To recap, don’t always trade off better valuation for a worse liquidation preference.  Usually negotiating liquidation preference also depends on the market.  They’re higher now than they were three years ago because VC money is harder to come by these days.

Also, read this Bussgang post if you haven’t.  Again, a story where there was too much emphasis on valuation.


The Startup Story of LegalZoom.com – Scaling Legal Services » Power of Scale

LegalZoom is a great case study in entrepreneurship but there’s really not that much information about them out there.  Here’s a great tidbit about how they got Robert Shapiro, a high profile attorney, to join them as a co-founder:

They thought calling 411 is the best way to do that. So they called 411, got the home phone number of Robert Shapiro and called him at night. For some reasons, Robert really picked up the phone himself. Amazing! After Brian told Robert that they was planning to pitch him a business idea, the famous attorney planned to hang up immediately. But they asked him to give them 2 more minutes. Robert agreed. And Two minutes later, he likes their business ideas so much and finally becomes their business partner and co-founder of LegalZoom.

via The Startup Story of LegalZoom.com – Scaling Legal Services » Power of Scale.

Tim O’Reilly: “The classics are part of my mental toolset, the context I think with”

An interesting post by Time O’Reilly on education in the Classics and how that drives his values and how he thinks.  Here’s one example:

When Alexander the Great came to see Diogenes in his barrel, he was so impressed by the philosopher that he offered him money. Diogenes scornfully pointed out that he had no need of money, to which Alexander replied, “Have you no friends?” I’ve always thought that Alexander had the better of this encounter. His awareness that even when your own needs have been met you can work for the betterment of others has helped me to understand that being a successful businessman can be a powerful way to contribute to society. In building a business, it’s important to remember that you aren’t just acquiring wealth for yourself, but creating value for your employees, your customers, and others whom you may never even meet. This is the principle behind one of the mottos we use at O’Reilly: “Create more value than you capture.”

via The Benefits of a Classical Education – O’Reilly Radar.

MySpace slashes head count by 30 percent | The Social – CNET News

In Owen Van Natta’s words:

Our intent is to return to an environment of innovation that is centered on our user and our product.”

via MySpace slashes head count by 30 percent | The Social – CNET News.

Generally, you can’t change culture merely by slashing 30% of your staff.  If you think you can, you’re pretty much running this ship into the ground.  On the other hand, if you’re doing the other things that you need to be doing to change the culture, then there’s some hope but it’s still a high risk move.