Startup library.
Monetization. 15 Books Every Entrepreneur Should Read. Business Basics - Equity: Dividing the Pie. Email: mike@risktaker.com I'd rather have a small piece of a big pie than a large piece of nothing! (M. Volker) Why Do You Need a Partner? If you are very bright, very tenacious, and financially well endowed, then you can start a company which you own in its entirety and in which you can hire a bright, capable, highly motivated and well-paid management team.
How do you deal in New Partners? Valuation is the issue. Unless you are greatly concerned about control issues, each time you dilute you should be increasing your economic value. If you bring in a new VP of Marketing and give her 5% as a signing bonus, how do you know that her contribution will be worth 5%? There is only one way to bring in new partners: carefully and with deliberation. Who Should Get What? What percentage of the company should each partner in a new venture receive? Suppose Bill Gates said he'd serve on your Board or give you some help. Often, company founders give little thought to this question. 1. 2. 3. Summary. Startup = Growth. September 2012 A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit. " The only essential thing is growth.
Everything else we associate with startups follows from growth. If you want to start one it's important to understand that. Redwoods Let's start with a distinction that should be obvious but is often overlooked: not every newly founded company is a startup. When I say startups are designed to grow fast, I mean it in two senses. That difference is why there's a distinct word, "startup," for companies designed to grow fast. To grow rapidly, you need to make something you can sell to a big market. For a company to grow really big, it must (a) make something lots of people want, and (b) reach and serve all those people. Writing software is a great way to solve (b), but you can still end up constrained in (a).
Ideas Rate Value. Why Companies are Not Startups. In the last few years we’ve recognized that a startup is not a smaller version of a large company. We’re now learning that companies are not larger versions of startups. There’s been lots written about how companies need to be more innovative, but very little on what stops them from doing so.
Companies looking to be innovative face a conundrum: Every policy and procedure that makes them efficient execution machines stifles innovation. This first post will describe some of the structural problems companies have; follow-on posts will offer some solutions. Facing continuous disruption from globalization, China, the Internet, the diminished power of brands, changing workforce, etc., existing enterprises are establishing corporate innovation groups. These groups are adapting or adopting the practices of startups and accelerators – disruption and innovation rather than direct competition, customer development versus more product features, agility and speed versus lowest cost. Strategy Maps.
Rate-of-learning: the most valuable startup compensation. The frothiness of today’s environment in Silicon Valley makes it easy to get sucked into a warped sense of reality. Valuations are high, capital is cheap, housing prices are skyrocketing, and RSUs are flowing like wine. Talk of another “bubble” is rebuffed, even by those who were scarred by the Dot-com collapse of 2000. Some argue we’ve exited the installation phase of technology—which was still sputtering along at the dawn of the new millennium—and have entered what Carlota Perez calls the ‘deployment phase’ of technology. In this phase, startups move “up the stack”, switching from building core infrastructure (i.e. interstate highways) to applications that go on top of it (i.e. Teslas). Undoubtedly, changes in technology over the last 15 years have been breathtaking.
One risk of living in this Gilded Age of Tech is the temptation to view your own career and compensation through a disproportionately financial lens—much as a growing company would. Compounding interest on learning. How Funding Works - Splitting The Equity With Investors - Infographic. A hypothetical startup will get about $15,000 from family and friends, about $200,000 from an angel investor three months later, and about $2 Million from a VC another six months later.
If all goes well. See how funding works in this infographic: First, let’s figure out why we are talking about funding as something you need to do. This is not a given. The opposite of funding is “bootstrapping,” the process of funding a startup through your own savings. If you know the basics of how funding works, skim to the end. Every time you get funding, you give up a piece of your company. Splitting the Pie The basic idea behind equity is the splitting of a pie. When Google went public, Larry and Sergey had about 15% of the pie, each. Funding Stages Let’s look at how a hypothetical startup would get funding. Idea stage At first it is just you. Co-Founder Stage As you start to transform your idea into a physical prototype you realize that it is taking you longer (it almost always does.)
The Angel Round. Do Things that Don't Scale. July 2013 One of the most common types of advice we give at Y Combinator is to do things that don't scale. A lot of would-be founders believe that startups either take off or don't. You build something, make it available, and if you've made a better mousetrap, people beat a path to your door as promised. Or they don't, in which case the market must not exist. [1] Actually startups take off because the founders make them take off. There may be a handful that just grew by themselves, but usually it takes some sort of push to get them going. A good metaphor would be the cranks that car engines had before they got electric starters. Recruit The most common unscalable thing founders have to do at the start is to recruit users manually.
Stripe is one of the most successful startups we've funded, and the problem they solved was an urgent one. There are two reasons founders resist going out and recruiting users individually. Airbnb is a classic example of this technique. Fragile Delight Experience. Notes Essays—Peter Thiel’s CS183: Startup—Stanford, Spring 2012. Petits conseils des protagonistes de l'aventure de Neolane à l'attention des créateurs d'entreprise. If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough. Tech My most useful career experience was about eight years ago when I was trying to break into the world of VC-backed startups. I applied to hundreds of jobs: low-level VC roles, startups jobs, even to big tech companies. I got rejected from every single one. Big companies rejected me outright or gave me a courtesy interview before rejecting me. VCs told me they wanted someone with VC experience.
Startups at the time were laying people off. The reason this period was so useful was that it helped me develop a really thick skin. One of the great things about looking for a job is that your “payoff” is almost always a max function (the best of all attempts), not an average.