Always Get A Lead Investor

I love Jason Lemkin’s writings about entrepreneurship and building SaaS companies.  Jason’s most recent success is EchoSign (sold to Adobe), and he was unusually candid about the importance of having a VC investor rather than a “party” round: “Everything else, for funding, in the end didn’t really matter.  The first $2m?  Great, but we … Continue reading Always Get A Lead Investor

Why You Have To Be A Value-Added Investor

One of the tempting illusions about angel or VC investing is that you can relax once you’ve made the investment.  After all, if you’ve picked the right startup, isn’t that 90% of the battle? Alas, this is just an illusion.  In fact, once you’ve made an investment, it’s critical that you demonstrate your value to … Continue reading Why You Have To Be A Value-Added Investor

The Crucible of Reality

I was talking history with my old friend Alvin Fu when we both realized that there seemed to be a consistent pattern with some important implications for the startup world Our conversation began with a discussion of Ulysses S. Grant, the great Civil War General and two-term President: When the Civil War began, Grant … Continue reading The Crucible of Reality

“The Blip”, False Patterns, And How Startups Are The Future of Work

I spend a lot of time thinking about the future–both mine, and that of the world as a whole–and one of the things that has been on my mind is the need for us to do things differently. A recent longform piece in New York focused on the theory that the seeming inexorable economic progress … Continue reading “The Blip”, False Patterns, And How Startups Are The Future of Work

The Real Odds of VC-backed Success

I try to give entrepreneurs a realistic view of their chances of startup success.  Yet I’ve always relied on anecdote and example, rather than hard numbers.  Now I don’t have to.  Here is a set of definitive numbers from across the entire industry: “According to the data provided by Sand Hill, since 2003 only 6 … Continue reading The Real Odds of VC-backed Success

The Curse of Originality

While we were on vacation in Washington DC, we spent a fair amount of time in art museums.  We visited the National Portrait Gallery and the National Museum of American Art twice, as well as the Sackler Gallery, which is part of the Smithsonian Castle complex. One thing that struck me over and over was … Continue reading The Curse of Originality

The VC Cosmological Constant

In his recent essay on “Startup Investing Trends”, the always insightful Paul Graham referred to the VC cosmological constant: “There’s a rule of thumb in the VC business that there are about 15 companies a year that will be really successful. Although a lot of investors unconsciously treat this number as if it were … Continue reading The VC Cosmological Constant

Your startup’s advantage is tempo

Why do startups succeed? They have fewer people. They have fewer resources. They have less brand recognition. Most founders are smart, but incumbents have smart people too.  That’s usually how they became incumbents. The answer, and your startup’s fundamental advantage is tempo. We usually call it speed or agility, but speed and agility are capabilities, … Continue reading Your startup’s advantage is tempo

You can’t mass-produce startups

The rise of the startup accelerators has given many the impression that you can mass-produce startups.  500 Startups has invested in 450 companies.  Y Combinator has graduated 567 startups.  Every demo day, the startups and their pitches get more polished. But the problem with mass production is that it causes entrepreneurs to focus on the … Continue reading You can’t mass-produce startups

The reasonable startup valuation formula

It seems like it’s unfashionable these days for investors to worry about startup valuations.  In my opinion, that kind of thinking is likely to lead to disaster for both investors and startups. Far too many people make the mistake of focusing on relative valuation.  “This deal is a bargain in comparison to the other deals … Continue reading The reasonable startup valuation formula