Month: February 2008

Founders At Work
interviews by
Jessica Livingston

ISBN-13: 978-1590597149

Lately, while reading, I’ve been underlining sentences and passages that are worth thinking about, sharing, or just rereading. I mark their position in a book by stickers. I don’t have to tell you how many things you can learn in this book – my copy has 53 tabs and looks like that:

Here is my read of it. In a To(Not)-Do list. Remixed.

Luck

• Get lucky. I am not kidding. One of the things I kept noticing is how everybody got lucky at some point, “we lucked out we found a great CEO”, or “that deal was total luck, came out of nowhere” etc. After all, if 1/10 startups succeed, if you do ten there is no way not to get lucky, is there? (statistically significant)
• There seems no luck, so don’t wait for it. It looks like a lot of the pivotal things happen on their own, but in reality it’s the result of your actions that you couldn’t predict. A lot of the founders seem to have ’caused’ good luck on themselves.

Qualities

• Do not give up. Jessica Livingston starts off with this point in the introduction, “In fact, I’d say determination is the single most important quality in a startup founder….Perseverance is important because, in a startup, nothing goes according to plan.” Unless you are lacking motivation, you should keep that on a sticky note on your screen.
• Think unusual ideas and don’t be afraid. Here’s what Buchheit (creator of Gmail) said about the googles, “…they are very open to crazy ideas – more so than almost anyone I’ve ever met.”

Marketing

• Make your product so good so it can market itself, I wrote about it. Here is Blake Ross on it, “It turns out that marketing is just making the product good enough that people spread it on their own, and giving them ways to do that. It’s a lot easier and more natural than I thought it would be.” In that category falls the story with choosing the right market. Marc Andreessen also said it in this post.
• Hire a good PR firm. The more I think about it, write business plans, and make projections it seems that direct advertising is just not the way to go. Word of mouth with PR help can do the trick. Paul Graham Says PR worked for them.
• Do not write business plans as a guidance of what you should be doing. It seems to be more of a marketing tool, “You can easily add a couple of zeros everywhere and sell the same thing to people. Instead of 10 percent market growth you make 20 percent market growth, and you suddenly make $200 million more in the fifth year, but so what?”

Hiring

• Hire the best people you can find (even if more expensive), “I still think it’s more efficient …. if you have two really good people and a very powerful tool. That’s still better than having 20 mediocre people and inefficient tools.”
  
• Hire someone with passion/desire. From my own experience too – even if people are not good at something, when they want something badly they will go long way to achieve results.

Product

• Release early/often. It will save you a lot in the end.
• Follow your guts more than anything else. They have been exposed to all the things in your life, so they know. And your users’ guts too.
• Make research on user’s requested features. Sometimes they want one thing, and when you look closely they actually wanted something completely different but didn’t know how to explain it.

VC’s

• Learn to guess when VC’s cut you off, because they never say, “No”. It’s quite logical that they don’t want to cut their connections with you. If you do succeed they want to be with you. But not know. So let’s talk Monday about it again?
• VCs are strange birds. Here’s a quote from Currier’s interview:
  They all told me $18 million wasn’t interesting. And I’d say, “But most people will tell you $50 million, and you know they’re lying. I’m already discounting it because I’m a venture guy just like you are.” And they’d say, “Yeah, but $18 million just isn’t interesting.
  So I changed my spreadsheet to say $50 million. And they said, “OK, that’s pretty interesting.”

Help From other people

• Move to the right place. Ross again,
  One thing I didn’t know was how tightly connected everyone is in the Valley. We’ll meet someone, and then we’ll meet someone who I would never expect to even know that person, and they’ll say, “I heard you met Tony last week.”
  (Oh god, I have to do this one myself…)
• People will help you if you are pushing enough. Winblad, “I think this is something that people underestimate – that there are always people out there rooting for you.”

Tricks to get there

• Get it anyway you can – software, hardware, whatever does it. Meaning, don’t get bogged down by trying to do it one way or another. Switch, try, explore. Be flexible.
• Do it with leverage. Why do robbers use crowbars? You can do more with less. Find ways. Don’t build everything from ground up. There are free stuff you can use. Don’t create Google analytics. It’s there, use it.

Misc

• Do not kill yourself. Uhm, okay what I mean is what Winblad said, “But the majority of companies fail by self-inflicted wounds by the leadership team.”
• Setup your startup user registration to send you a text on the cell phone. Awesome idea I read in there…
• I like James Hong, so this section is just for his advices:
  • “One, do it while you are young”
  • “Two, there’s no right path”
  • “Three, even if you raise money, spend it as if it’s your own and you have none”
  • “Four, there so such thing as easy entrepreneurship”

I think it’s time to end, but this book is a fountain of precious experience. Also this is just my look at it. If there is one book you have get and read and think about, it’s this one, read it.

Burn Rate: How I Survived the Gold Rush Years on the Internet
by
Michael Wolff

ISBN-10: 0684856212

Though I knew generally what burn rate meant, I wasn’t aware of its implications. So I accepted this Amazon recommendation when I was researching for startup books. The book talks of how the owner of a media company is struggling to sell or position it strategically in the race of the upcoming internet (whatever internet meant back then). What this book really is – a book manual on business moves. Deals flying, promises exchanges, and crazy meetings. But interesting to see what really happens and that a startup is not just coding. Highlights:

• Naturally, the brightest figure from Burn Rate is the business guy that is trying to tie up random investors with companies on a variety of strategies. By the way, he makes it seems like business in itself is nothing like buying selling, but rather and art. The creativity Machinist comes with in terms of forming alliances, luring people into believing that the deal is going through are unimaginable. Basically – its what you make out of all the players, not what they are. You can move them. Just like a pieces of chess.
  • Author says it really nice, “It was true that when you reconstructed the specifics of conversations with Machinist, you often could not find the bridges by which we’d crossed these large chasms to great fortune”
  • Here is another example,
    “You know, your friend Machinist promised me, absolutely promised me, no doubt, no question, he’d have me out in a year, ” Rubin said, his pain apparent.. “You think I would ever have gone into this deal without that promise?”
    I nodded. “He made me the same promise. He swore he’d get rid of you in a year. I would never have done this if I thought I’d get stuck with you.”
    He bitterly laughed. “God, that Machinist is a fat fuck.”
• As Michael Wolff is trying to figure out what animal the Internet is, he made one of the most accurate 1-paragraph explanations and I love it, because I myself try to explain it somewhat like that:
  

  For Entrepreneurs (or unemployables) the Internet offered one of the most startling opportunities since – actually, has there been anything to match it? The cost of entry was minimal, the required knowledge base was so idiosyncratic that few could claim a meaningful head start, and there was little or no competition, regulation, or conventional wisdom. It was ground zero: no rules, no religion, no canon, no bullshit. It was startup time. If all else failed, you could still have the satisfaction of having been there; it was like Hollywood in the teens or Detroit in the twenties. A new American industry was being born.

Amazing.

• Another mystery seems to be accompanying the whole story, “Is internet a new medium?”
  – I believe no. A website is a medium. So Internet is more like a medium for other media. And no, nothing to match it…

Freakonomics
by
Steven D. Levitt & Stephen J. Dubner

ISBN-13: 978-0061234002

I bet that 90% of you have seen Freakonomics in one of the zillion bookstores around you. To be honest I was slightly disappointed since I didn’t find any firm, solid knowledge explaining today’s economics but rather a collection of random interesting economics-related facts. I did like some of them though so here we go:

• Crack dealers actually have extremely bad jobs – they make anywhere between $3.3 and $7 with a chance of getting killed of 1/4th! Why do they keep doing it? They play in a highly competitive field where the sweet life is only the top 1%, which is what everybody wants. Sounds familiar, doesn’t it?
• We often seem to oversimplify the situation. That causes us to be wrong, because the simplest explanations doesn’t get to the root of problems. When crime went down significantly in the 1990 (NY) people thought this is the result of random things – “gun control”, “clever police strategies”, and “better paying jobs”. However truth now discovered is quite unexpected: since most crimes were committed by teenagers and kids in their 20’s that were badly raised with no families and future, it was the Supreme Court’s legalization of abortion in 1973 that drastically reduced unwanted children so by 1990’s crime suddenly disappeared for unknown reasons. If you don’t step back to look at a huge picture, collect massive data, and analyze to the last detail you keep thinking that it was the “clever police strategies” that killed the crime in New York City.
• Authors make a good note on people’s incentives for… uh…anything. So basically if you want to motivate someone, you have to attack in all three areas:
  • Economic motivation…paycheck, duh!
  • Moral – you have to make someone believe that what they are doing is right and good for everybody. Painful example – Army.
  • Social – we want to be approved by other people so it is important that they accept our actions. Bring A’s from school and your parents are happy and you feel good about that.

  That being said now, we have to be careful not to create wrong incentives through others. Ex. In a daycare center, parents that are late picking up their kids started being charged $3. Surprisingly, after that surcharge was introduced many more parents started coming late. Why? Because the moral incentive has been replaced by the economic, but the economic wasn’t large enough to hold. So parents basically assumed that it is OKay to leave the kid longer and pay the money – “daycare center makes more”

• Somewhere around the book I saw a wonderful analysis of risk and people’s reactions to it. It looks like that:
  RISK = HAZARD + OUTRAGE
  (How dangerous) + (how much people are excited about it, and talk about it)
  OUTRAGE is significantly higher if risk occurs NOW – terrorist attack vs heart attack (more people die from heart attack, i don’t have to say it)
  OUTRAGE is significantly higher if we have NO CONTROL – plane accidents vs car accidents (as you might expect, chances of being in a car accident are many times higher than being in an airplane accident)
  So if the hazard is high and outrage is low – people under react
  But if the outrage is high and hazard is low, then people overreact
  So here is another fascinating example – rate of kids drowned in a residential pool is much higher than kids that shot themselves with guns. More specifically 11,000 to 1! So why are parents freaking out about guns and barely caring about their own swimming pools?

As a whole it was fun to read, but little helpful knowledge to be learned except this one lesson: Dig deep when you research, you’ll find amazing answers…