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I know a brilliant young kid who graduated from college a year ago and now works at a large investment bank. He has decided he hates Wall Street and wants to work at a tech startup (good!). He recently gave notice to his bosses, who responded by putting on a dog and pony show to convince him to stay. If he stays at the bank, the bosses tell him, he’ll get a raise and greater responsibility. Joining the technology industry, he’d be starting from scratch. He is now thinking that he’ll stay, despite his convincing declaration that he has no long term ambitions in finance.
Tim O’Reilly poses a question every entrepreneur and investor should consider: are you creating more value for others than you capture for yourself? Google makes billions of dollars in annual profits, but generates many times that in productivity gains for other people. Having a positive social contribution isn’t limited to non-profit organizations – non-profits just happen to have a zero in the “value capture” column of the ledger. Wall Street stands at the other extreme: boatloads of value capture and very little value creation. I think of people who aim to create more value than they capture as “builders” and people who don’t as “extractors.” Most entrepreneurs are natural-born builders.
Jeff Bezos appeared on Charlie rose two weeks ago and spoke about Amazon's history, future and best of all, its culture. In the interview, Bezos discussed Amazon's core values: We are willing to be misunderstood We are obsessed with customers, not competitors. We are long term thinkers While all of them are critical to Amazon's success, my favorite is the first because it combines three critical concepts for startups. First, it requires knowing a secret, in the Peter Thiel sense of the word, seeing something in the market that very few others understand.
“I’d shut down Apple” - Michael Dell, 1997. That line is from one of the most memorable quotes ever. Today Michael Dell said it was a misunderstood quote .
For most people I know who join or start companies, the primary goal is not to get rich – it is to work on something they love, with people they respect, and to not be beholden to the vagaries of the market- in other words, to be independent. The reality is being independent often means having made money and/or being able to raise money from others. A while back, I posted about how I recommend thinking about non-founder option grants. In the comments, Aaron Cohen made the point that given today’s “good” exit sizes and standard equity grants, most non-founders will not gain independence even in the (non-extreme) good cases: Most startup employees need to realize they are on a journey and that in addition to making a few hundred thousand dollars on a good outcome they are learning how to become more senior at the next company.
Generally speaking, there are two approaches to relating to other people in the business world. The first approach is transactional and legalistic: work is primarily an exchange of labor for money, and agreements are made via contracts. Enforcement is provided by organizations, especially the legal system. The second approach relies on trust, verbal agreements, reputation and norms, and looks to the community to provide enforcement when necessary.
Recently, a friend was trying to recruit a programmer to join his early-stage startup. The programmer had just graduated from college and his impression of startups was shaped mostly by popular media. His main concern, he said, was: “What if we end up being the next MySpace instead of the next Facebook?”.
January 18, 2010 Annals of Business How entrepreneurs really succeed. In 1969, Ted Turner wanted to buy a television station. He was thirty years old. He had inherited a billboard business from his father, which was doing well.
I read blog posts by Don Dodge and Glenn Kelman today about people jumping from Google to Facebook and it got me thinking about entrepreneurs. Most people have an aversion to risk, my college economics professor told me. Which means they have to be rewarded to take on that risk. The higher the risk, the higher the possible payout has to be for people to jump. We make risk/reward decisions every day, all day. Do I go skiing, and enjoy the rush of flying downhill even though there’s a small chance I’ll blow out a knee?
I talk a lot to people who are deciding between startups and established companies. They’re usually early in their careers and have been exclusively affiliated with well-known schools and companies. As a result, they’re accustomed to praise from family and friends. Going to a startup is scary, as Jessica Livingstone, cofounder of Y Combinator, describes :
Sometimes peoples' first startups are successful. More power to them. I've been pretty lucky, but not that lucky. In a startup career path, failure becomes experience for the next startup, which unfortunately will probably also fail. Repeat until success. And then repeat some more.
Yesterday Hunch hosted about 25 Columbia University undergraduate computer science students for a lunchtime chat about what it’s like to work at a startup, particularly compared to being on Wall Street. Hunch co-founder Chris Dixon led the discussion, with lots of other companies (including employees from OMGPOP , HireHive , Knewton , and Popstay ) adding their own perspectives. Some of the key takeaways: If you’re interested in startups, start one or join one now (when you graduate). Don’t kid yourself that it’s going to be useful to join BigCo for a few years to gain ‘experience’ first.
If you’re a first-time reader, you can get future posts by subscribing via email or following me on Twitter . Note: This post is loosely based on our experience 2 years ago when TechCrunch covered Yipit’s launch. You wake up earlier than normal, grab your iPhone which you slept on top of and do a twitter search for your startup name. Boom. A tweet every 5 minutes.
I was talking to a friend who has been displaced because of Sandy. They are struggling to get back to their daily routine and it is hard living out of a suitcase without access to the things they rely on from day to day. I was talking to the CEO of a company whose business was negatively impacted by Sandy. They are struggling to get the business back to where it was before the hurricane. One is a personal thing.
On Thursday night I gave a talk at NYU Poly and in the Q&A a young man asked me for advice for "those who aren't technical". I said he should try to get technical. The next morning I met with a bunch of Sloan Business School students doing a trek through NYC.