thought nuggets

In a course of just few days I have read two wonderful posts from my two favorite bloggers Marc Andreessen and Martin Varsavsky about applied note taking from Marc and tons of "thought nuggets" of Martin collected through Twitter and posted in 3 batches.....  Althogh very different, these posts have something in common - how to organize your thoughts and transfer them into bigger products. 

 

I keep on being impressed by insightfulness of Marc's writings and productivity and diversity on Martin. Both are CEOs of their companies and board members and advisers of dozens of other ventures...  Also, husbands and fathers of few children....

 

the question I have: do they sleep?

The Google Enigma

Matt Mullenweg, creator of Wordpress, links to a terrific piece from Strategy + Business called The Google Enigma. Is the search giant "a model or an enigma?" (This pub, from consulting shop Booz Allen Hamilton is one we reference from time to time. It's worth reading.)

 

read here

 

big thanks to Found+Read

good question to ask yourself before starting your company

via AkstheVC

 

Q: In your experience, what are the chances a talented entrepreneur will make $1M from his startup? (And no, I don't mean making $150K/year for 6 years and 8 months. :)

A: (Brad): I have no clue as it depends on many different inputs as to be an impossible question to answer simply (e.g. you need to know a lot more to determine anything that resembles an accurate analysis of the potential outcome.  However, this is a thought provoking question which I'll answer a different way then intended. 

If the goal of a talented entrepreneur is to make $1m from a startup, he should consider getting a job that makes $150k / year for 6 years and 8 months. Whenever I meet an entrepreneur that is focused on a specific economic outcome, I lower his chance of success because I think he's focused on the wrong thing.  By definition, an entrepreneur should be striving for a significant economic payoff.  Yet the economic uncertainty of entrepreneurship is so high and the range of outcomes so broad that an entrepreneur just has to believe that if he nails it, good financial things will happen.

The direct tradeoff between a specific financial outcome ($1m) and a salary over time ($150k * 6.667 years) doesn't really capture the essence of the financial trade in entrepreneurship.  In a success case, the $1m could turn into $10m, $100m, or even more.  Or $0.  The $150k * 6.667 is still going to be $1m. 

 

Which would you rather have ?  (a) 0 < x < $100m+ or (b) $1m < x < $2m?  If (a) you are an entrepreneur.  If (b) you should stick with your day job.

some funny HR math

sounds VERY familiar....... ahhhrrrrrrr

via Found + Read - read here

 

I have noticed some funny math in my startups over the years.

This funny math doesn't start until after VC funding — so to better explain it, I must first rewind the clock to our pre-institutional investor stage.

See, I do funding a bit different than other entrepreneurs. I launch the company myself. I form (some of) the team. We build the product. We get to revenues … and we even go profitable. In short: we get our ship lean, mean, and pumping efficacy from every valve.

Then we go get VC funding (less dilution, more control, etc.)

It's so predictable what happens next. Ya gotz some green in the bank and a newly formed HR department, replete with a salivating recruiter, brimming with job reqs to be filled. Go! Go Go!

Staffing at warp speed always scares the crap out of me.

I approve each new req. — queasy — because this new person will now solely be focused on what used to be 1/20th of my job. As I sign the req, I hope they will be better at "it" than me, care more about "it", and get more of "it" done.

But, in my heart, I feel the funny math coming on.

Each new person that gets added to a startup, instead of adding an integer worth of value actually temporarily subtracts value. The old person, instead of doing their old job, is now training the new person. Add a body and get less for your pleasure. 1+1= ½

Eventually you end up having more new people than you do old – I call this being "upside down". That is when the ownership problem starts to compound. Nobody has really been here long enough to know, or care, and once the "new job excitement" has worn off, accountability starts to dwindle. In my old company, this problem was pervasive. The more people we had, the longer it took for anyone to pick up the phone when it rang.

It won't always be this way. If you survive your terrible twos, you will eventually get more efficient with each new body. Slowly 1 + 1 = 1.25, then 1.50 and it probably never gets much higher than 1.75. With the exception of specialized industries like wholesale and investment banking, the most efficient companies in the world can achieve $1M of revenue, per employee, per year. Google is $1M, Dell is at $900K, Cisco $570K. The average of non-financial Fortune 500 is about $290K.

In my current company, I made a firm decision to combat the chaos of these mathematics from the outset – wielding the best weapon I have in business: honesty. I started warning people about it from day one. During "all-hands" company meetings, whilst folks munch pizza and hear about our financial numbers, I remind them " 1+1= ½". When I see five people in a meeting that only requires two, "1+1= ½" is all I have to say.

Way to succeed by believing into it

another great post from Found+Read.

 

Why Self-Delusion Can Help You Succeed

 

the author expands on delusions which can help you being successful

Will it Fly?

A great framework for evaluation of the new business ideas. Discovered through Found+Read (I love this blog!).

 

Executive summary (thanks to the same Found+Read people):

1. Tractability: How difficult will it be to launch a worthwhile version 1.0?
2. Obviousness: Is it clear why people should use it?
3. Deepness: How much value can you ultimately deliver?
4. Wideness: How many people may ultimately use it?
5. Discoverability: How will people learn about your product?
6. Monetizability: How hard will it be to extract the money?
7. Personally Compelling: Do you really want it to exist in the world?
   

Full article here

The Ideas People

Check this out

http://theideaspeople.economist.com/

Mobile Ads Will Go Big By 2010: IAB UK Survey

via MocoNews

 

By Carlo Longino - Thu 13 Dec 2007 03:15 PM PST

Mobile advertising will become a mainstream medium over the next three years, according to results of a newly released survey (warning: PDF link) from the Internet Advertising Bureau in UK. The IAB surveyed its members and garnered responses from 41 companies, with just over half of them coming from agencies. While its not a deep pool of responses, it does give some indication of how companies active in internet advertising view mobile. The full report can be downloaded here. Among the findings:

-- 41 percent of respondents say mobile ads will be mainstream in 2010, and 27 percent believe theyll make it to the mainstream in 2011, while 20 percent believe it will happen in 2008.

-- The ability to create one-to-one marketing relationships because of the personal and intimate nature of mobile phones is cited as the most popular reason why mobile ads will be successful. The ease of response, and the ability to target and make ads very relevant were also mentioned. More after the jump.

-- The main barrier to the respondents use of mobile ads was a lack of evidence of the success and effectiveness of the medium. While the demand for a clear-cut ROI is understandable, this is a bit of a chicken-and-egg situation: until mobile ads become more widely used, there wont be a huge amount of data about their efficacy. The push isnt just solely for volume, though, as marketers are also looking for standardized and consistent measurements.

-- Many of the same issues were cited as barriers to growth of mobile advertising, along with the issue of reach. Advertisers are looking for volume in mobile, just like in other media.

-- Its unclear what role operators should play. Some people believe operators shouldnt be involved at all. Others say they should play a supporting role, while some believe they should take the lead. This is a big question hanging over the sector. While plenty of big names and small companies are moving ahead with their plans, so too are operators, many of which see mobile advertising as a huge potential revenue stream. Both sides seem to be headed for a collision here, and the uncertainty of what operators will try do, or what theyll allow could be holding back some marketers from embracing mobile ads.

how you should run your business

Ignore how you "think" you should run your business.

Start running it the way you "know" in your heart you can run it.

Success will follow.

 

via Found+Read

Why should you spend time (and money) on design

via Found+Read

 

Why Design Matters, Too
Posted: 27 Nov 2007 09:01 AM CST

Let's face it, startup founders have their hands full with a multitude of issues, large and small. Most attention is placed on the nuances of business models, viral marketing, user acquisition, etc. But an often overlooked success factor in building a web business — or any business — is design. Good design can often tip the scales in your favor; make your company very hard to ignore. In this post, I'll explain a few important reasons why design matters so much.

1. Good design implies credibility
You only get one chance to make a first impression. When people visit your website, most won't go through a fact-finding expedition to figure out your Series A numbers, who your investors are, and what your story is just to decide if your company can be trusted. Initial trust is a gut-feeling. The easiest way to put your company on that path is via well executed visual design that shows you put some effort, and money, into delivering a first-rate and satisfying experience to your customers. They will notice. Ignore design and you risk creating distrust of your business from day one, and driving up that bounce rate.

2. Brand+1
There's no such thing as a 'neutral' brand experience. This little word is kicked around a lot and its meaning is often confused. Your company's 'brand' is how other people feel about your company. (Yes I said feel!) Put another way, it's what your customers say about you, not what you say to them. You might even call it your company's personality. For example, what do you think about Amazon.com? That's their brand. If Amazon has done a good job, what you think will match up with what they want you to think, also known as their "brand values." Every interaction between your company and your customer affects your brand in a positive or negative way. Well-executed visual communication can go a long way to providing the right takeaways.

3. Usability is life and death
In the world of web 2.0 and beyond, a UI is what turns an idea into a usable product. A well-executed, intuitive UI is what turns a usable product into a successful one– especially today when there are so many options available. There have indeed been successful pieces of software over the years that were poorly designed, but in these cases you can point to lack of competition, closed-standards, or sheer market power. Web 2.0 changes this, and is forcing companies to create simple and elegant solutions that create the shortest paths from start to finish for their tasks. This is especially true with free apps, where little is invested. The age of feature bloat and design by engineers, with all due respect, is over.

4. Design is a powerful business advantage
There's another adage about building a better mousetrap. Somebody had to design that mousetrap. For you MBAs out there, first-mover advantage is powerful, but great design by a second-mover can nullify it. Do you remember who released the first MP3 player in America? If you do, kudos, and you probably also know that they aren't around anymore. The Apple iPod was three years late to the game, has less features than competing devices (the Zen, and now the Zune as well), and yet completely dominates the market today. Why? An innovative UI in the clickwheel, and purely emotive and beautifully-designed branding that pioneered music as a necessary component to your lifestyle.

5. Connect with your customers emotionally
Design is one of the only ways you can connect with your customers emotionally. Design allows you to deliver visceral experiences that can affect people. Recent advances in neuroscience, specifically FMRI, have shown that people tend to act on emotion, then back it up with reasoning later (if at all). This revelation has spawned a whole new marketing movement, known as emotional branding. The vehicle is pure design. Emotional brands, says Marc Gobé, create "strong…personalities that closely match the aspirations of their customers" through "the strength of their culture and the uniqueness of their brand imagery." Apple is so successful at this that it spawned a book, The Cult of Mac. Facebook's new product pages are an excellent vehicle for emotional branding, too: people become 'fans'; when they publicly declare support for your product, they are saying your values match up with their own. You've connected with them emotionally. You've won.

Jason M. Putorti is currently the lead designer of Mountain View-based Mint.com, which makes software for online consumer money management. Prior to Mint, Jason founded an advertising agency and publishing company in Pittsburgh, Pennsylvania.

Sales: a Scince or the Art?

A post from from Seth Levine's VC Adventure saying it is science....

Other opinions?

Sales is a science, not an art

Andy Blackstone had a great comment to my post yesterday on Atul Gawande's New Yorker article about explicit behavior (in the case of the article, doctors using checklists). I've edited the comment slightly for clarity.

An important concept in the article is that the checklists are not aimed at a specific condition but at an overall process in the ICU. One of the objections I often encounter in my consulting practice is "my business is different" - I'd contend that at the process level that's most often not true. The resistance to adopting these checklists often comes from doctors that think the "art of medicine" is being threatened by the regimen of the checklist. In my practice, I see sales managers and salespeople with the same objection. In fact, as the article states, it is the reduction of the routine aspects of the process to the rigors of the checklists that enables the art to emerge. Finally, I was struck by the feeling of the doctors in the ICU that there was just no time available in the midst of their chaotic day to deal with checklists - a reaction I've seen in lots of business managers as well. This is a major barrier to implementing any new business process. The success of checklists in the ICU in not only reducing accidents, deaths, and costs, but in making the doctors time efficient, can be seen as new business processes are implemented as well.

It's the perfect lead in to some thoughts about what's wrong with many sales organizations – a topic I've been meaning to write about for a while). Sales, in my experience, is significantly more scientific than people typically give it credit for. And because people (sales professionals, CEOs, boards) don't always see sales that way, they let slide behavior that is counterproductive to the overall goals of the organization ( i.e., to sell more and – importantly – to sell with increasing efficiency and predictability). Specifically, the lack of a detailed and well documented process for sales results in:

• Salespeople wasting huge amounts of time on deals that are hopeless, because there's no enforced checklist that keeps them from continuing to pursue opportunities where essential events aren't being checked off
• Sales cycles that languish while salespeople have "good meetings" instead of checking off the next task on the sales process checklist
• Executive management, sales management, and BOD members searching for the magician that will improve the "black magic" sales situation instead of incorporating and enforcing process that ensures success independent of superstar performance
• Turnover in the sales organization but without improved performance
• A lack of predictability in sales performance (lumpy and generally random sales results)
• A stagnant pipeline – sales people can't handle as many deals as they should be because they're spending too much time on deals they shouldn't be working on and the deals themselves take longer than they should because they're not actually being pushed through a real process
• "Fuzzy" pipeline reviews (where every deal has a story associated with it, but where the basic questions of where the deal stands are never really answered)
  

High performing sales organizations have real rigor in their process and religiously enforce that rigor from qualifying leads, to initial contacts, to how they move a prospect through their pipeline to an extremely detailed "closing" list that guides an organization through the final stages of each close. They use this rigor to determine which leads to follow up on, what prospects are real, and what steps remain to a sale for each and every potential customer. They quickly put prospects onto a hold list when they don't meet specific near-term buying criteria and they generally have a good view of what's possible at the end of each quarter because they know exactly what steps remain for each prospective customer, who needs to sign off on what, and how they will (or will not) be able to make that happen in a timely fashion. Pipeline reviews are focused around where a prospect is in the sales process and are crisp reviews of each account (a few minutes is more than enough time to cover an account at a high level – spending more time than that is either wasting time or a sign that the "story" is covering up the lack of real progress or understanding of that account). Every sales person (not to mention the VP and CEO) can take you through the stages of an account, the "[insert company name] way of selling", and the closing process. In short, the entire company is on the same page around what it takes to turn a prospect into a customer.

All of this isn't to suggest that sales as a discipline and sales people as practitioners of that discipline don't possess skills that range far beyond the ability to check items off a list. To the contrary, skilled sales people are extremely nuanced in their ability to understand the buying patterns of their prospects, navigate the internal landscapes of customers and, of course, effectively convey the value proposition of the product they are selling. But sales people are human and – like doctors in an ICU – benefit from the rigor and oversight that is provided by process.

Thanks to Andy for sharing his thoughts on this subject with me in both his comment and in email (which I borrowed from liberally in writing this post). Head to his site to see more about the sales process work he does at Blackstone Associates.

when founder-CEOs do really well, that also increases the chances that they’re going to be replaced

HBS's web magazine Working Knowledge has another useful piece today that addresses the reasons why founding CEO's are so often replaced by their boards of directors. It also reveals a frustrating paradox: "when founder-CEOs do really well, that also increases the chances that they're going to be replaced."

The Founding CEO's Dilemma: Stay or Go? is based on a new work co-authored by Noam Wasserman, a professor of entrepreneurial management at Harvard, and Henry McCance, Chairman of VC firm Greylock Partners. We've highlighted a few important points, including the authors' Rich or King Test, which they borrowed from Onset Ventures. Take it to see if you're replaceable or irreplaceable founder.
Says Wasserman to Working Knowledge:

Typically, early in the life of a company—when it is developing its first product or service—the founder who conceived of the idea and began developing it is the perfect person to lead the company … However, when that milestone is reached … The challenges within the company change so dramatically…

Now, the product has to be sold: You have to create a sales organization, manage multiple functions, deal with customers, handle more complex financial issues, and deal with a very different set of challenges for which many founder-CEOs are not equipped. … it is precisely their success that has increased the need to replace them at this point.
Of course this pattern is exacerbated when a founder-CEO brings in outside investors. VC's, says Wasserman, "often make the assumption that the person who started the company is going to have to be replaced along the way, and may therefore have a quicker 'trigger finger.'"

Then Wasserman shares one way to tell if you are more, or less, likely to be replaced:
The Rich vs. King Test

We teach a case in our first-year entrepreneurship course on a Silicon Valley VC firm called Onset Ventures … called the "Rich versus King" test. It gets to this essential trade-off around what drives an entrepreneur: Is it the need to control the company (that is, to be King), or is it the drive for success, particularly financial success (Rich), which may require that the entrepreneur step aside once certain business milestones have been reached? Onset does not like to invest in founders who "want to be King" out of concern that they will not want to be replaced if such a step is required in order for the company to be successful.

The only founders who can assure their ability to continue as CEOs are those who don't raise outside money from Onset and its peers.
Of course, that outside money is often necessary to build a valuable company, so King-motivated founders usually have to give up a lot of potential growth to remain King. In the entrepreneurship class, I push students to think hard about why they are choosing to be founders to begin with, and then to make conscious choices that are consistent with those motivations. The founders who get into trouble are often the ones who make decisions without regard for "Rich versus King," and who therefore decrease the chances that they will achieve their goals because they haven't made choices consistent with their motivations.

 

via Found+Read

Ad Revenue Models

Question: (1) How do Web 2.0 companies like Feedburner make money?  (2) What makes a blogger or content provider select one network or blog community over another (i.e., are the bloggers themselves being paid or are they essentially working for free)?  (3) How is online media advertising different now than during the internet boom?

The most popular Web 2.0 revenue model is based on advertising. Publishers (blogs, media sites, etc) get paid by advertisers who advertise on their site. FeedBurner is an ad network and while it made some money off of licensing its platform to large publishers, most revenue came from the ads inserted into the feeds. This ad inventory comes from either the company's own direct ad sales force or from ad networks. Some of the ads are CPM based (impressions viewed) while others are CPC ($ per click...a la Google). The publisher generally keeps 60-70% of the ad dollars and the ad network gets 30-40%. So, if Motorola runs an ad campaign through an ad network like FeedBurner, they might pay $5-10/CPM (cost per thousand impressions). The ad network then takes that ad and serves it up on the various websites it has deals with. If the ads are viewed 1,000,000 times, Motorola would pay the network $5-10,000. The network would keep $2-4,000 and the publishers would get the rest. In the case of bloggers, they first pick which ad networks to go with (usually based on which drive the most revenue for the space given) and then approve different ad campaigns. They get a cut of those ad dollars.

More advertisers understand the benefit of online advertising and so, there are more ad dollars flowing into this space than during the Bubble. More importantly, Google has created an entire ecosystem based upon its CPC model where advertisers only pay when ads are clicked on. They feel there is more accountability since they only pay when an action is taken. Also, there is very little cost associated with running many of these publisher sites, so it doesn't take much to get to break even.

That said, the economy is likely sliding into recession and ad budgets will get slashed. CPC and CPA (cost per action) based revenue should hold up better than CPM based ones since there is a clearer ROI. In  2000, Yahoo saw its revenue plunge 40% in one year. When the cycle corrects, there will be quite a lot of carnage in the ad supported publisher world. Smart operators will get their costs inline and focus on driving the best possible results for advertisers.

 

Via Ask the VC

Ask The VC on Early Stage Board of Directors

Dick Costolo (aka Mr. Ask the Wizard) - the founder/CEO of FeedBurner (now a Googler) has another outstanding post up titled Early Stage Board of Directors.  In his delicious way, Dick talks through how he thinks about the potential composition of a Series A board and gives entrepreneurs some ammunition for their potential investors when they say "let's have a board with five Series A investors and no founders."

via Ask the VС

Van Gogh on personal productivity

Van Gogh's philosophy for producing good work:

"You have to eat well, be well housed, have a screw from time to time, smoke your pipe and drink your coffee in peace."

 

Via pmarca blog Via Reuters

PayPal Mafia

a great story of a great company with great people....

read here http://money.cnn.com/2007/11/13/magazines/fortune/paypal_mafia.fortune/index.htm

 

angels enjoy better returns than VCs?

from RedHerring.com

Angel Returns Outpace VCs'

 

At a time when many venture capitalists are retreating from early-round deals, a new study has found that angels, the earliest investors, are wearing solid-gold halos.

 

The study, sponsored by the Ewing Marion Kauffman Foundation and the Angel Capital Education Foundation, found that members of organized angel investing groups had an average 27 percent internal rate of return, or the annualized compounded rate of return. That compares with VC returns for all investing stages, which historically average in the mid-teens, said Robert Wiltbank of Willamette University,  one of the study's authors.

 

Overall, the angel groups investors posted a return of 2.6 times their original investment after 3.5 years. While 7 percent of the exits were home runs with returns of more than 10 times the investment, more than 52 percent of exits came at a loss. More than 60 percent of the angel investors at least broke even on their overall portfolio.

 

The study, conducted last spring and summer by Mr. Wiltbank, an assistant professor of strategic management, and Warren Boeker, professor of management at the University of Washington, asked the 539 participating angel investors to detail their investments as far back as they could. Sixty-two percent of the exits occurred after 2004, while only 8 percent happened before 2000.

 

Though other studies focus on angel investment activity, Professor Wiltbank said this is the largest to look at investment returns.

Professor Wiltbank said the study found that angels who took a more active roll with their portfolio companies fared better.

 

"You can see strong effects when investors do a little extra due diligence; and if they keep in touch with the ventures a couple times a month, the numbers are stronger," he said.

In Search of Inexperience

Great post from Guy Kawassaki's blog about fresh vs. serial entrepreneurs. Not that I agree with everything said (mind Martin Varsavsky, a founder of FON and tons of other companies before), it does give some bonus to the fresh startupers.

 

In search of Inexperience

 

TechCrunch published a great guest post by Glenn Kelman, the CEO of Redfin, called "Entrepreneur 2.0." It inspired me to piggyback on his idea that investing in "serial entrepeneurs" who have already been successful might not be all that it's cracked up to be and write this post.

Both our posts run counter to the theory that many entrepreneurs, wealthy from their previous smashing success but restless and too young to die (or become venture capitalists, which is roughly the same thing) are the best bets for the next big thing.

Superficially, it's hard to fault this "back the proven entrepreneur" theory. For one thing, from a venture capitalist's point of view, if you fund a serial entrepreneur and she succeeds, you "knew" that she was proven. If she fails, at least you backed someone for a good reason—that is, she was proven—so your limited partners shouldn't get too bent out of shape.

That's a lot better than backing a first-time entrepreneur who fails—then you are just stupid. (Also, if you back a first-time entrepeneur, and she's successful, you take the credit: "It's because of my hands-on coaching and guidance.") But, just as Glenn wrote, if you think about it, great, world-changing companies such as Hewlett-Packard, Apple, eBay, Microsoft, Google, Yahoo!, and YouTube were zero for three according to the official venture-capitalist spec sheet: Proven team, proven technology, and proven business model.

Hence, I would like to declare my support for Glenn's perspective and help him make the case that second-time entrepreneurs are not necessarily the be-alls and end-alls.

• Serial entrepreneurs try to prove that their first success wasn't a fluke. Rather than starting from the basis of technology ("isn't this cool?") or customers ("there must be a better way"), the reason for existence is "I'm going to prove that I'm talented." This is a bull shiitake reason for starting company compared to solving people's problems or changing the world.

• Serial entrepreneurs cannot distinguish between causation and correlation. The root cause of earlier success may have simply been blind, dumb luck, but few people realize this and even fewer will admit. Thus, they have the hollow arrogance of people who just go lucky instead of people who have been truly tested, and arrogance is a bad thing in entrepreneurs.

• Serial entrepreneurs are likely to use the same methods again. How can you fault them for using the same methods that made the successful the first time? For example, if they built a high-end computer the first time, they build a high-end computer the NeXt time. If they used dealers the first time, they use dealers the second time. If they gave everything away to get eyeballs and sold the company to a bigger, dumber, richer company, they try try that "business model again."

• Serial entrepreneurs don't (or can't) work as hard. When you have a 5,000 square foot house, a second house in Montana, a car made by a company whose name ends in "i," a spouse, and kids, attitudes change. Indeed, attitudes should change or people never grow up. However, it's one thing to work to survive and another to work for fulfillment. They can say they're just as hungry this time, but the point is that no one had to ask if they were hungry the first time.

• Serial entrepreneurs don't get smacked around enough. Life is good as a serial entrepreneur: they walk in, tell people that their last company was sold for a bazillion dollars, and now they're starting another one, and it's a privilege and honor to invest. Who's going to poke holes in their strategy when Sequioia, Kleiner Perkins, et al are issuing term sheets and ever lesser venture capitalist is sucking up? No one. And that's too bad because they won't get anyone checking their sanity.

• Serial entrepreneurs fill new, unfamiliar roles in their next companies. For example, in the first company the person was an engineer who became the vice-president of engineering who became the CTO. Just because you were good at writing designing chips doesn't mean you're CEO material in your next fabulous fabless chip company. As Glenn says in his post, "This means that what I used to be really good at — designing software — I don't do as much of anymore, and what I never had to learn how to do — manage people – I now do all the time."

• Serial entrepreneurs hire their buddies who were with them the first time. Thus, the entire founding team suffers from all the problems listed above. People who don't know what they don't know are few and far between, but a startup needs this kind of people to push the boundaries of what's possible in what ways. Ignorance is not only bliss; it's also empowering.

I once heard Mike Moritz of Sequoia explain what kind of entrepreneurs he wanted to invest in. I'm paraphrasing: "Guys under thirty who are building a product that they themselves want to use." Amen, baby! I vote for two guys or gals in a garage who are an unproven team, unproven technology, and unproven market.

Generic Range of Equity Desired By a VC for Round 1 or 2

Question: What's a completely generic range of equity a VC typically
wants for a round 1 or round 2 investment?

Most VC's will generally say they target 20-30% ownership in a company
to "make it worth their time". This means that if they invest $3m
early on, they expect the post-money to be around $10-15m and if, in
later rounds, they are investing $10m, they expect to have a $30-$50m
post-$.

Often, however, VC's will use the "percentage" threshold as a means by
which to increase money into a round or to get the valuation down. I
have seen a given VC say they need 25% ownership for deal (to get
valuation down) and do a more competitively sought deal at 15% two
weeks later. In the end, two things drive all of this. First, there
are legitimate minimum investment amounts a firm needs to have per
deal. A $500 million fund will never get its capital deployed by doing
$2m and $3m deals. They need to put $7-10m to play early and $20m+
over the life of the investment. Second, the valuation (and hence %
ownership) will be driven by attractiveness and competitiveness of the
deal. In the end, it is really about valuation (assuming their
investment appetite remains in a set range).

via Ask the VC

Sorry to talk so long...

Good point from Seth Godin's blog

I was at a gala a few weeks ago (featuring no less than ten speakers). At least 80% of them began their talk by saying, "I know you're hungry, but..." or "I know it's late, but..." or "I know you want to go home, but..." and then apologized for giving a speech.

If your speech needs to be prefaced by an apology...

don't give it.

That's why they call it giving a speech. It's a gift. If you have to apologize, it's no longer a gift, is it?

Our collective fear of public speaking has created a host of awkward situations and events. It's pretty simple: Be brief. Or don't come at all. Don't do anything you need to apologize for.

(and brief means sixty seconds, usually. That's enough to say hi, to say thanks and to move on.)