The Other Side of VC, Life Advice by Paul Graham, How Things Get Done, Operations at Startups, CEOs Must Delegate, Entrepreneurshit. What Doesn't Seem Like Work? January 2015 My father is a mathematician.
For most of my childhood he worked for Westinghouse, modelling nuclear reactors. He was one of those lucky people who know early on what they want to do. When you talk to him about his childhood, there's a clear watershed at about age 12, when he "got interested in maths. " He grew up in the small Welsh seacoast town of Pwllheli. "Didn't it get boring when you got to be about 15? " "No," he said, "by then I was interested in maths. " In another conversation he told me that what he really liked was solving problems. Few people know so early or so certainly what they want to work on. The stranger your tastes seem to other people, the stronger evidence they probably are of what you should do. It seemed curious that the same task could be painful to one person and pleasant to another, but I didn't realize at the time what this imbalance implied, because I wasn't looking for it.
How venture capitalists focus on their customers. “Focus on the customer”.
“Fall in love with the problem”. We hear those all the time as absolute startup advice. What about venture capital firms? They’re not startups but shouldn’t that kind of advice apply to them? How? Startup founders are not the VCs’ customers If you already know about this, skip to the last sentence of this part. The LPs believe the GP will make smart investments and so they agree to pay management fees to ensure the GP can work in good conditions. Once the returns from startup exits reach fund size, partners share all exceeding proceeds: 80% for the LPs, 20% for Magic Capital. So the LPs pay the GP twice: guaranteed management fees and carried interest as a performance bonus. Money, money, money: the problems of the LPs Now that we know who the customer is, let’s try to find out about customer pain points.
Pension funds have to make money to pay for future retired people. For more specific types of LPs, other pain points appear. DIY vs Delegate. I am a bad delegator and very much a do it yourselfer (DIY).
It’s one of the many reasons I am certain I’d make a terrible CEO. CEOs must delegate. At scale, they should only do three things; set the vision and strategy and continuously communicate it, recruit and retain the very best people, and keep the company funded. Everything else has to be delegated at scale. But when you start a company, you (and your cofounders) have to do everything yourself. I like it when I see a founder team that is resourceful, has range, and can do a lot of this stuff themselves. But at some point they need to start delegating this stuff. Knowing when it is the right time to start handing things off and hiring is an art not a science. One suggestion I frequently make is to find a “utility infielder” for your first business hire. A result. Faster. Why do startups fail?
They run out of money, of course. That's an oversimplification and actually it's more the result than the root cause. A lot of times, it comes down to failing to produce results, and enough of them. What I've realized recently, though, is that smaller, faster results are key--and it doesn't always matter whether those results are good or bad. I know a few startups that are struggling with their execution and it strikes me that they don't have any enough small victories.
Similarly, they get stuck in trying to negotiate with a huge customer for months on and end it ties up their resources. Even in the beginning, some founders can't move forward until they raise their seed round. Lecture 14 - How to Operate. Entrepreneurshit. The Blog Post on What It’s Really Like. It’s 4.50am.
Sunday morning. And I couldn’t sleep. I have much on my mind since I just returned from a week on the road. 5 days. 3 cities. Late night Mexican food. Beers. I left on a Sunday. I’m reminded of this feeling. And so it goes again. So it is now publicly known that we have closed $150 million in our 4th fund. And why I woke up at 4.50am. What’s it really like being an entrepreneur? That was the topic of my keynote at Seedcon, an event hosted by the University of Chicago, where I am a graduate of the MBA program. I like to speak about this topic with first-time wantrapreneurs because if you read the tech press every day you’d get the impression that it all glamor. How things get done. I’ve heard a lot of different theories about how things get done.
I’m interested in this topic, so I pay attention and see how the theories hold up. Here’s the best one: a combination of focus and personal connections.