Startup Archive

Peter Thiel on the type of company more startup founders should build Thiel first emphasizes his belief that when starting a company, you should always ask: “Can this company become a monopoly?” He then lists three of the most common types of monopolies: 1. Super fast distribution on a very thin product (e.g. Twitter) 2. A technological advantage that is continually built upon with iterative improvement and compounds over time (e.g. SaaS software) 3. A truly brilliant breakthrough (e.g. Bitcoin) But he argues that there’s a different monopoly category that’s continually overlooked: “A different modality for innovation that we do very little of and we don’t even recognize as an important category is what I would describe as ‘Complex Coordination,’ where you take a lot of different pieces and the challenge is to coordinate them into something new.” Thiel continues: “This is the thing that’s maybe 180 degrees antithetical to the Lean Startup ethos. It’s complicated. You have to put all the pieces together in just the right way. I think this is on some level what really drove Apple as an innovative company in the last decade… What was new about the iPhone? There was no single component that was new. It was just that you put all of these things together in just the right way… and once you built it, it was actually super hard for people to replicate. You had an advantage for many years.” He points to Tesla and SpaceX as more recent examples. “There’s no component to the Tesla that’s actually that new. It’s just that you put all of the pieces together. You re-engineered the whole distributor network. It was this complex coordination that made it work. There’s like this lost art of accounting where you figure out how much things cost and add them all together. And Elon has discovered this lost art of accounting which no other people practice.” Video source: General Assembly (2015)

Marc Andreessen on handling a crisis: “There are no silver bullets, only lead bullets” Marc reflects on his partner Ben Horowitz’s essay “Lead Bullets”: “There’s this temptation - especially when you get into crisis - to think there must be a magic answer or some stroke of genius [similar to Sherlock Holmes]…. There’s this really strong tendency to think that that’s out there. And we see a lot of entrepreneurs cycle through different silver bullets that don’t work. Ben’s point is the answer is probably in firing a whole bunch of lead bullets.” Marc explains: “The answer is probably the engineers working later at night for six months and getting the next version of the product out. And the answer is probably for the sales reps to go call on twice as many customers and try to close more deals… I’ve certainly come around to that point of view a lot.” In other words, there rarely a silver bullet that solves all your problems. So don’t waste a lot of time looking for one. Instead, identify the few key drivers of success for your business and do them extremely well. Here’s a brief excerpt from Ben’s essay: “There may be nothing scarier in business than facing an existential threat. So scary that many in the organization will do anything to avoid it. They will look for any alternative, any way out, any excuse not to live or die in a single battle… There comes a time in every company’s life where it must fight for its life. If you find yourself running when you should be fighting, you need to ask yourself: ‘If our company isn’t good enough to win, then do we need to exist at all?’” Video source: Stanford University Graduate School of Business (2014)

Mark Zuckerberg on why the Growth Team was one of the biggest factors in Facebook’s success “Making it so that we could grow faster was the most important product feature we ended up building for Facebook. The traditional approach to growing and marketing is you have a communications group or marketing team and you buy ads. Sometimes there’s a place for that.. But if you’re actually trying to grow a product, the best levers for doing that are often within the product itself.” He continues: “There’s no magic in the group we’ve built here that other people can’t replicate. It’s just being very rigorous with data and investing in data infrastructure so that you can process different experiments and learn from what customer behavior is telling you.” Mark cites Facebook’s “People You May Know” feature as an example of a critical product growth lever. And his key point is that the best levers for growth are often within your product itself. Facebook’s growth team had a simple framework for growth focused on acquisition, activation, engagement, and virality. They then used this framework to prioritize design experiments and build products. Quickly iterating through these experiments and rigorously measuring what was working (and trying to understand why it was working), helped put the platform on the path to billions of users. Video source: Y Combinator (2016)

“When I first became a manager, I had mixed feelings about training... Then I read chapter 16 of Andy Grove’s management classic, High Output Management, titled “Why Training Is the Boss’s Job,” and it changed my career.” - Ben Horowitz Read the full chapter here: https://lnkd.in/euDFVBPb

Jeff Bezos explains why product is more important than marketing in the Internet era In this 2012 interview with Charlie Rose, Bezos points out that the Internet has made word-of-mouth more powerful than ever. This, he argues, has dramatic implications for business strategy: “In the past, if you were making a product, the right business strategy was to put 70% of your attention, energy, and dollars into marketing the product and 30% into building a great product. So you could win with a mediocre product if you were a good enough marketer. And I think that is getting harder to do.” He continues: “The right way to respond to this if you’re a company is to say, I’m going to put the vast majority of my energy, attention, and dollars into building a great product or service. And put a smaller amount into shouting about it (marketing). Because I know if I build a great product or service, my customers will tell each other.”

Uber founder Travis Kalanick on how to hire the best people Travis gives two pieces of tactical advice: 1. Write a truly inspired blog post “Write a truly inspired blog post that describes the company, the mission, the vision, how it's amazing, why you're amazing and why it's going to be amazing if that candidate comes and works with you.” 2. Inspired networking. “This isn't for everybody, but if you can really go out there and talk to everybody you know and find those amazing people, and inspire the people you know to help you find amazing people, you're going to do a good job.” He continues: “If you can do both of those, then what happens is you get amazing people quickly. And there's a few situations where I've seen that, but it doesn't happen very often. But if you do neither of those, you're going to have a mediocre team or no team at all.” Video source: Tech.co (2011)

Dropbox founder Drew Houston’s response to investors who told him online storage is a commodity When Drew was trying to raise money for his startup Dropbox, he got a lot of pushback from investors. “Google is going to do this” “Online storage is a commodity” To which Drew would respond: “Yes, all of those things are true, and there are 50 other products in this space, but do you use any of them?” They’d say “No”, and Drew would reply: “Isn’t that interesting?” Today, Dropbox’s market cap is almost $9 billion. Drew argues that if you’re doing something interesting and new, you will always face criticism. “You simultaneously have to have thick skin and be able to tune negativity like that out. But you also have to have thin skin if your customers or team aren’t happy and respond to it… it’s a weird dynamic that you’re going to have to handle, but I think it starts with getting some perspective that you will always face negativity and criticism from some people.” Video source: Y Combinator (2017)

Vinod Khosla and Sam Altman on how much equity to give your first 10 employees In the early days of Sun Microsystems, Vinod Khosla recruited some of the best engineers in the world: Andy Bechtolsheim, Bill Joy, and Eric Schmidt. Sam Altman asks Vinod how he convinced these people to join him when Sun was just a small startup. Vinod replies: “I see this as a major problem nowadays. People aren’t allocating equity widely enough. I think among the first three or four founders at Sun, we kept less than half of the common. The total was something like 25-27% for the founders, an equal or slightly larger chunk for everybody else we would hire, and then investors had like 40% after the A round. In retrospect, that was a very good idea.” When his son Neil founded the AI startup Curai Health, Vinod advised him to keep only 15% of the company rather than 45% and try to hire one or two people at 15%. Then he advised him to leave 30% of the pool for non-founders. Vinod explains his reasoning: “Even though they’re coming in later and they didn’t come up with the idea, they will be incredible resources, especially as magnets to attract other people. If you believe a company becomes the people it hires, then your task becomes attracting the best people, and selling depends on magnets.” This what Vinod did with Bill Joy. Vinod gave Bill half his equity even though Bill joined later: “Bill Joy was an incredible magnet. People wanted to work with Bill and Andy. And even if Bill didn’t do a day of work, he was more than worth it because he helped attract Eric Schmidt. I don’t think Eric would have come work for me as a 25 year old.” Sam Altman agrees on Vinod’s philosophy of maximizing the size of the pie rather than your ownership percentage: “I think this is the most important piece of advice we’ve talked about among many important things today. Being super generous with early employee equity and getting founder-quality people in the first 10 employees—I think all the evidence is on the side of doing this, and yet almost no one does. So there’s a huge edge if you’re willing to do it.” Vinod argues it’s the “single-most important thing to do in the first six months of a company.” The best people can start their own companies. If you want them to join your company, you have to be generous with equity. Video source: Y Combinator (2019)

Naval Ravikant on shutting down a startup “One thing I’ve learned myself the hard way, is that it is easier to tear down a company and restart it in Silicon Valley, than it is to constantly try to pivot or keep something alive. There’s very little stigma associated with capital loss or shutting down and restarting. And investors want to back entrepreneurs of experience. They know how difficult it is.” He continues: “It is so difficult to build something brand new that the world has never seen and to break through the noise and to get people to pay for it, to make an institution… It’s so difficult to do that. Very, very, few people succeed in the first go around. For every person you heard who succeeded in the first go around, they actually did five, ten other things at the same time or before. Even Mark Zuckerberg and Bill Gates and Steve Jobs—it wasn’t just their first thing. They built many projects along the way. They just started younger than you, and they parallel tracked, and they got lucky, and they were good.” Investors know this: “As an investor, you do want to back previously failed entrepreneurs. The ideal is to find someone who’s failed through no fault of their own or as little fault of their own or they’ve learned their way past it. Either the whole sector failed or there was a cofounder that’s no longer with them or there was a particular shot or a bet that they took and they followed the bet properly. The bet didn’t pay off and they realized it didn’t pay off and they moved on. But it’s easier to start over. So trying to cling with your fingernails onto something that’s not working, can waste a lot of your time.” Video source: AngelList (2023)

NVDIA CEO Jensen Huang explains why your startup doesn't need a traditional business plan “I didn’t know how to write a business plan… Making a financial forecast that nobody knows is going to be right or wrong turns out to not be that important.” Jensen continues: “I think that the art of writing a business plan ought to be much, much shorter. It should force you to concisely answer: What is the problem you’re trying to solve? What is the unmet need you believe will emerge? And what is it that you’re going to do that is sufficiently hard that when everybody else finds out it’s a good idea, they’re not going to swarm it and make you obsolete? It has to be sufficiently hard to do.” Marc Andreessen echoes similar points in a separate interview: “The process of planning is very valuable for forcing you to think hard about what you’re doing, but the actual plan that results from it is probably useless. In particular, now that we’re VCs, we’re evaluating pitches and when people come in, we want to hear their plan and we want to hear it in some detail because we want to see that they can think about the entire thing end-to-end. And if their initial plan doesn’t make sense, then obviously there’s an issue because they’re not quite capable of fully thinking this through. But when you get somebody who comes in and they present you the perfect plan and everything is fully integrated and makes sense, all you know from that is that they can come up with a good plan—which is good! But the odds that will be the plan they succeed on is still very small.” Video source: Acquired (2023)