#entrepreneurs

A New Glue For A New Kingdom

To me, the most exciting part of the Facebook/WhatsApp deal has nothing to do with the deal itself. Instead, I’m excited about the ramifications of such a deal. And I’m not talking about Facebook or WhatsApp here either. History will ultimately prove that deal genius or folly. But more importantly, I know that a deal like this has other people talking, thinking, and building.

The last group is key, but let me start with the first group. Once the fervor around the deal itself died down, we got a couple of compelling posts from the likes of Benedict Evans and riffing on it, John Lilly. Incidentally, both are now VCs. But neither started out that way, and both have long histories of solid thinking and writing.

Both understand that the Facebook/WhatsApp deal is simply the strongest signal yet that we’ve fully entered a new age in the world of computing where mobile is now the kingdom. And the $19 billion price tag simply shows that there isn’t yet a king.

Read More

Benedict Evans:

The problem is, this sort of ignorance and misunderstanding is often how we get true disruption - people are so ignorant that they don’t know something can’t be done and won’t work, so they go and do it, and it works. Dropbox and Paypal are particularly good examples of this, while Bessemer’s ‘anti-portfolio' is a fun look at the sensible reasons why some amazing companies would never work. The challenge of venture investing is that the model depends on investing in things that are laughable, because those are the only things that can make billions of dollars from zero in a few years. So you kind of want people to laugh at you and think you don’t understand the sector. You just have to be sure that you understand why they’re laughing.

Said another way: if it was obvious to everyone, everyone would be doing it — or worse: would have already done it. Only truly “crazy” ideas change anything. And only those ignorant enough (or “crazy” enough) chase “crazy” ideas.

The Focus On And Of WhatsApp

This morning I had a meeting with a couple entrepreneurs whose company was recently acquired. It was just a general catch up session, no real agenda. Still, it seemed quite random when a good third of our conversation was spent talking about WhatsApp and its incredible penetration in India.

Why was this growth happening? The consensus was: focus. On what they’re good at. On what their users want. On what ultimately matters.

A couple hours later, what at the time seemed a random conversation turned almost a little spooky when it was announced that Facebook would be acquiring WhatsApp for $19 billion and change.

I’m not going to spend time breaking down this extraordinary deal as I know no more about it than what I’ve read. But what I do find fascinating is what’s becoming clear from those closest to the company: in an age of pomp and circumstance around all things startups, the team behind WhatsApp was all about keeping their heads down, focusing on product, and avoiding bullshit at all costs.

Read More

Schumpeter:

The first lesson from “Breaking Bad” is that high-growth businesses come from unexpected places. Mr White uses his skills as a chemist to revolutionise the slapdash meth industry (he was a researcher before becoming a teacher). He is not alone. William Thorndike of Harvard Business School (HBS) studied eight bosses whose firms outperformed the S&P 500 index more than 20-fold over their business careers. He found that they were all outsiders who brought fresh perspectives on their industries. Clayton Christensen, also at HBS, argues that great entrepreneurs look at the world through a “marginal lens”. It so happens that Bill Gates, a university drop-out working in a then marginal bit of the computer industry, started Microsoft in Mr White’s home-town, Albuquerque, before moving to Seattle.

Three things help our chemistry teacher turn an insight into a flourishing business. The first is huge ambition. He is not in the “meth business” or the “money business”, he says. He is in the “empire business”. The second is product obsession. Other dealers might peddle “Mexican shoe-scrapings” on the ground that addicts care little about quality. He produces the king of meth, so pure that it turns blue, and would rather destroy an entire batch than let an inferior product be traded under his brand. The third is partnerships and alliances. He spots talent in a former pupil turned drug-dealer, Jesse Pinkman, and forms a strong working relationship with him. He also contracts distribution to a succession of local gangs so that he can concentrate on the higher-value-added part of the business: cooking and quality control.

Brilliant. 

Look, you should wake up worried, terrified every morning. But don’t be worried about our competitors, because they’re never going to send us any money anyway. Let’s be worried about our customers and stay heads-down focused.
Jeff Bezos, just after the burst of the Internet bubble, to his then 150 employees facing increased competition from Barnes & Noble with its 30,000 employees.  

Cromwell Schubarth sat down with Ravikant, a couple thoughts stood out to me:

On the other hand there are others who try to distinguish themselves just by brand. The more disappointing trend is the branding of celebrity investors or celebrity entrepreneurs. It leads a little bit to the Hollywoodization of Silicon Valley. Like that Bravo TV show, which just tried to make it look like it’s about parties and who you know, and who is attractive and who is at what event and who you’re networking with. Frankly, I think all that stuff is worse than useless. It’s a distraction.

Completely agree. When I actually worked in Hollywood, the thing I could never quite reconcile in my head was just how much time, energy, and money was being wasted on bullshit. I always thought Hollywood could be run so much more efficiently (and profitably) if some of the excess was simply cut. 

On the other hand, some of that excess is part of the allure of Hollywood. People want their movie stars to be larger than life — especially in an age where social media and the internet as a whole has a great leveling effect.  So the bullshit remains intact and is often celebrated.

But what’s great about Silicon Valley is that not only does it not need any of that excess to work, it needs the opposite. Efficiency is paramount. And excess is much more detrimental because it is just a distraction from efficiency. I suppose you could argue that some entrepreneurs being lionized inspires others to want to dream big, but too much emphasis is placed on the wrong ideals:

It’s especially disappointing when you see some company get bought for a huge sum and you don’t think that company is worth that. But it has a celebrity kind of presence, and it incentivizes people the wrong way. At the end of the day, what makes Silicon Valley work is technology and the outcome of making money. Those two things have to be healthy. It has to matter a lot more than who is the celebrity and who is famous and who goes to the best parties.

Back to work.

So, how did artists make a living before the 1700s and 1800s? Basically, all great art — Michaelangelo’s David, Da Vinci’s Mona Lisa — has been because of patronage.

Patreon founder Jack Conte, speaking with Liz Gannes.

It is sort of crazy that most great art used to be commissioned and now basically none is (though Kickstarter is changing that in a different way, of course). I do wonder if we ever go back to that — especially in a world of collapsing media/art/entertainment businesses.

Sam Altman:

Most early-stage startup founders do a bad job of getting the company to focus on just two or three critical priorities—they chase whatever shiny new object appears that day.  This is somewhat expected—the sort of people that start companies generally like doing new things, not executing relentlessly on the same things.  But restraint is critical.  It’s very easy to justify taking on one more project by saying that it won’t be that time consuming.  Unfortunately, it will likely either be time consuming, or it won’t be worth anything.  Most founders know what to do; they just don’t know what not to do.

Gerry Smith digs a bit into the background of Jason Floarea, a Detroit area entrepreneur who is the founder of Ace Wholesale, a shop under investigation as a hub of stolen smartphone/tablet activity:

Now 27, Floarea is a married father of three and an ordained minister. He aims to open his own church focused on outreach to convicts, alcoholics and the homeless, the site says.

Local law enforcement, however, accuse him of less savory activities: acting as a well-known buyer of smartphones and tablets stolen in burglaries and armed robberies.

In January 2010, Dearborn, Mich., police pulled over Floarea in his wife’s silver Lexus and found two handguns, more than 30 cell phones, marijuana, a bottle of prescription drugs and more than $40,000 in cash, according to a local police report obtained by The Huffington Post through the Freedom of Information Act. He was arrested on charges of possession of marijuana, possession with intent to distribute narcotics and possession of a firearm in commission of a crime, the report says. 

Sounds like a great guy. Family man.

Paul Graham:

I should mention one sort of initial tactic that usually doesn’t work: the Big Launch. I occasionally meet founders who seem to believe startups are projectiles rather than powered aircraft, and that they’ll make it big if and only if they’re launched with sufficient initial velocity. They want to launch simultaneously in 8 different publications, with embargoes. And on a tuesday, of course, since they read somewhere that’s the optimum day to launch something.

It’s easy to see how little launches matter. Think of some successful startups. How many of their launches do you remember? All you need from a launch is some initial core of users. How well you’re doing a few months later will depend more on how happy you made those users than how many there were of them.

100% agree. I’m still surprised how few entrepreneurs realize this despite the proof being everywhere you look. I get that you worked really hard on something for months (if not years) on end and you want to see (and want for your team to see) your startup’s name in lights. But it’s so much better when those lights are shined on a star, not an actor in an audition.

Very, very few startups are star-level right out of the gate. Use that time with less of the spotlight to your advantage. Learn how to become the star. Then the spotlight will find you.

Glenn Rifkin:

A perfectionist and a devotee of classical music, Dr. Bose was disappointed by the inferior sound of a high-priced stereo system he purchased when he was an M.I.T. engineering student in the 1950s. His interest in acoustic engineering piqued, he realized that 80 percent of the sound experienced in a concert hall was indirect, meaning that it bounced off walls and ceilings before reaching the audience.

Pretty amazing inventor/entrepreneur that was never talked about enough — perhaps because he remained in tight control of his company and never went public. Which allowed him to do this for M.I.T.:

He taught there for more than 45 years, and in 2011, donated a majority of his company’s shares to the school. The gift provides M.I.T. with annual cash dividends. M.I.T. cannot sell the shares and does not participate in the company’s management.

Quite literally the gift that will keep on giving.

Meg Graham on the rise of Cards Against Humanity, and the eight Chicago-based friends behind it:

While would-be entrepreneurs chase venture capital funding and dot-com riches at incubators and startup boot camps around the city, the Cards team rejects investors, refuses to sell the game to retailers or license it to other manufacturers, and hasn’t bothered to appoint a CEO, let alone create a management structure. Their business plan has the sophistication of a lemonade stand.

And just as refreshing, actually.