Resources Posts

We’re spending the next few months officing at Kicklabs at 250 Brannan (info@kicklabs.com) and the new SOMAcentral building at 153 Townsend (ken@somacentral.com).

These spaces are good for startups, service providers, lawyers, VCs, and folks in the south bay who want an auxiliary office space in the city. Leases are short, rent is affordable, and they’re perfect for small teams under 5 people.

Kicklabs (top) is a big fun open space. SOMAcentral (bottom) is the opposite: private offices with doors that close and great views. We’re using both. If you’re looking for office space in San Francisco with Zipcar-like simplicity, check them out and tell them we sent you.

Please add your office space suggestions in the comments — keep them restricted to places with leases under 6 months that are good for small teams (~ 5 people).

At the end of the day, the reason to get an office is simple. It is so you can bring people into your office and say, this is where I office.

This Week in Venture Capital is awesome. I’ve watched every episode. The show is a mix of startup advice and startup analysis:

“Entrepreneur [now VC] Mark Suster and a rotating group of guest experts bring you weekly news and commentary on the top 10 recent venture deals and exits.”

Episodes

This Week in Venture Capital (TWiVC) is a great way to get to know Mark and his guests without ever meeting them. And if you’re not in the Valley, TWiVC is a wonderful way to get a feel for Valley culture, even though the show is filmed in LA — Silicon Valley is a mindset, not a location.

Here’s a recent episode:



Video: TWiVC #6 with Jason Calacanis

Jump to 33:05 for a solid block of startup advice on:

  1. Your deck getting in the wrong hands. @ 33:05
  2. If this is your first time raising angel money… @ 38:13
  3. “VCs—when we fund raise—never ever are raising money. We’re pre-marketing until the round’s closed.” – Mark Suster @ 44:34

And if you see a guy named Farb Nivi on the site, that’s my brother (yes, I go by my last name):


Video: TWiVC #8 with Farb Nivi

One more thing…

Also check out TWiVC’s sister show, This Week in Startups with Jason Calacanis. The episode with Joel Spolsky is the best one I’ve seen so far.

Ben Horowitz:

“Training is, quite simply, one of the highest-leverage activities a manger can perform. Consider for a moment the possibility of your putting on a series of four lectures for members of your department. Let’s count on three hours preparation for each hour of course time—twelve hours of work in total. Say that you have ten students in your class. Next year they will work a total of about twenty thousand hours for your organization. If your training efforts result in a 1 percent improvement in you subordinates’ performance, you company will gain the equivalent of two hundred hours of work as the result of the expenditure of your twelve hours…

“When people interview managers, they often like to ask: have you fired anyone? Or how many people have you fired? Or how would you go about firing someone? These are all fine questions, but often the right question is the one that isn’t asked: When you fired the person, how did you know with certainty that the employee both understood the expectations of the job and were missing them? The best answer is that the manager clearly set expectations when she trained the employee for the job. If you don’t train your people, you establish no basis for performance management. As a result, performance management in your company will be sloppy and inconsistent…

“Andy Grove writes, there are only two ways for a manager to improve the output of an employee: motivation and training.”

Read the full post.

Ben’s post reminds me of classic Peter Drucker. For examples, see Drucker’s Management by Objectives and other writings by Drucker.

Venture Hack’er Naval Ravikant has a personal blog that I consider a must-read. It’s called Startup Boy and his latest post is Who has time for meetings?

“A lot of entrepreneurs assume that the initial way to engage with an investor is to *insist* on a meeting. It’s a relatively safe assumption that anyone on the buy side (an investor, an advertiser, an executive at a large company) receives far more requests for meetings than they can follow up on, and are constantly looking for excuses to say “no.”

“Synchronous activities, such as phone calls, screencasts, videos, and webex conferences are almost as bad. If you’re trying to get the attention of an investor or exec at a major company, and don’t want to waste either your time or their time, pay very, very close attention to the cost of their time and you’ll fare better. In order of escalation, one should proceed as follows…”

Read the full post. More of my favorite posts from Naval’s personal blog here.

“nicely done as always. i can count on one hand the number of daily emails worth signing up for.”

Matt Oesterle, Sweepery

We read a lot of startup blogs and share our favorites on Twitter. But not everybody uses Twitter. And the folks who use Twitter follow too many people to catch all our links.

So we’ve put together a daily digest that we’re calling “Startup News”. Once a day, you get links to our favorite posts via email or RSS (if you want to read it on the Web, go to our Twitter page).

Here’s what it looked like a couple days ago:

If you want us to consider including one of your posts, submit it to Hacker News — we read it every day. Or tweet it and include: “Tip @venturehacks”.

Try out Startup News for a few days via email or RSS. And please give us your feedback in the comments.

Thanks to Mihai Parparita, whose wonderful Twitter Digest makes this possible.

Some weekend reading culled from our most popular tweets this week.

Steve Blank and I have a good discussion about his and Eric Ries’ new customer development overlay. Regarding the Atlas Developer Beta, John Gruber says that “Access to the beta program is $20″ — this is the new way and I like it. Fake Steve Jobs always has better analysis than WSJ, NYT, TechCrunch, Economist, and your mom combined. I don’t think you need operational experience to be a good VC but Mark Suster‘s great new post illustrates the difference.

I recommend you pair these posts with white tea.

I recently re-connected with an up-and-coming venture capital Associate who thanked me for introducing her to the masterworks of Steve Blank and Eric Ries. I told her to check out Sean Ellis’ blog, and mentioned that I’ve learned just as much from Sean.

Later that night, she sent me a note: “Sean Ellis is awesome. Thanks so much.” Let me tell you why Sean is awesome.

First, Sean lead marketing from launch to IPO filing at LogMeIn and Uproar. He later worked with Xobni (Khosla Ventures, First Round Capital), Dropbox (Sequoia Capital), Eventbrite (Sequoia Capital), Grockit (Benchmark Capital), Flexilis (Khosla Ventures), eduFire (Battery Ventures)…  the list goes on. So all of his theory is backed by a wealth of experience across a broad range of startups.

Second, his startup pyramid changed my life and increased my bench press by 75 lbs. This is the best model I’ve seen on how to build a startup. Read it.

Finally, he shares a lot of his knowledge for free on his blog. Here are extracts from a few of his posts. Make sure you click through and read all of them in full. I read his blog from front-to-back when I first discovered it (start with the newer stuff).

When Should a Startup Start Charging?

“I’ve recently changed my long held belief that all startups should charge immediately upon the release of a new product.  I now believe that non-enterprise targeted startups should only charge once you have achieved product/market fit.  As explained in this earlier post, I define product/market fit as at least 40% of your active users saying they would be “very disappointed” if they could no longer use your product…

“For startups targeting enterprises, it actually does make sense to charge before reaching product/market fit.  This is the best way to help the enterprise figure out how to get value from your product (somebody on the inside will be motivated to work with you to unlock value since they’ve already spent the budget).  If you haven’t charged anything, your attempts to engage the customer and find value are likely to be perceived as an aggressive sales annoyance rather than genuinely helpful…

“Startups often delay implementing a business model claiming “we’re focused on growth right now.” But once you’ve achieved product/market fit, most startups will grow faster with a business model (I wrote a post on this earlier).  A business model gives you rational constraints within which you can execute very aggressively – otherwise you are held back by fear that you may be wasting money on paid marketing programs.”

The Startup Pyramid:

“Product/market fit has always been a fairly abstract concept making it difficult to know when you have actually achieved it…

“I’ve tried to make the concept less abstract by offering a specific metric for determining product/market fit. I ask existing users of a product how they would feel if they could no longer use the product. In my experience, achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product. Admittedly this threshold is a bit arbitrary, but I defined it after comparing results across nearly 50 startups. Those that struggle for traction are always under 40%, while most that gain strong traction exceed 40%. Of course progressing beyond “early traction” requires that these users represent a large enough target market to build an interesting business…

“If you haven’t reached product/market fit yet it is critical to keep your burn low and focus all resources on improving the percentage of users that say they would be very disappointed without your product. Avoid bringing in VPs of Marketing and Sales to try to solve the problem. They will only add to your burn and likely won’t be any better than you at solving the problem. Instead, you (the founders) should engage existing and target users to learn how to make your product a “must have.” Sometimes it is as simple as highlighting a more compelling attribute of your product – but often it requires significant product revisions or possibly even hitting the restart button on your vision.”

To Pay Or Not To Pay To Acquire Users?

“I recently heard a VC say that startups “should spend the least amount of money possible on marketing.”  This is a healthier attitude than the opposite prescription of undisciplined land grab, but a better approach is pure ROI marketing.  Marketing opportunities that offer a fast payback with additional profit margin are a key component for reaching your startup’s full market potential…

“If your growth is accelerating, you will attract competition.  And this competition will likely be savvy enough to replicate the customer acquisition and monetization approaches that you worked hard to invent.  So it is important to make it as difficult as possible for them to get traction.  I know some of you are saying “but your recent post told us to ignore the competition.”  My point was not to ignore the competition forever, simply to ignore them while you are figuring out a repeatable, positive ROI way to acquire customers. Competition (especially those that are spending irrationally) will distract you from this critical task.

“But once you have optimized the first user experience and introduced a business model that generates sufficient revenue to fund user acquisition, it’s time to focus your marketing efforts to aggressively build new customer acquisition channels and scaling existing channels – both free and paid.”

I am a fan. And so can you.

We previously posted about the long tail of VC blogs. A few VC blogs capture most of our attention. The rest slog it out in the long tail.

And now, for the first time in the history of mankind, we present the long tail of VC twitterers (click to zoom in):

The underlying data is from Venture Maven’s list of 217 VC twitterers. I removed Chris Sacca, Om Malik, and David Pakman from the dataset because they have too many followers (they were on the Twitter suggested users list).

This widget aggregates all 217 VC twitterers:



(Widget: VC twitterers)

Thanks to Venture Maven for aggregating the underlying data and to Tony Stubblebine and Waldron Faulkner for parsing it.

Many VCs use blogs to share advice, wisdom, and other thoughts. A few of these blogs capture most of our attention. The rest slog it out in the long tail.

This chart shows the Google Reader subscribers of 131 VC blogs (click it to zoom in). The underlying data is from Larry Cheng’s VC Blog Directory.

I’m not sure Guy Kawasaki (the #1 blog) is still a VC but I left him on the list because he’s a nice guy who answers my emails. Also, Venture Hacks would be #4 on the list, if we were on the list.

I’ll make a similar chart for VCs on Twitter if someone can extract the follower numbers from this list of VCs on Twitter. (Update: Thanks to Tony Stubblebine and Waldron Faulkner for sending me this data — post coming soon.)

Naval’s personal blog, Startup Boy, is back. His posts, like The 80-hour Myth and VC Bundling, were an inspiration to me when I first moved to Silicon Valley. His latest post, The returns to entrepreneurship, is a return to form:

“I was at dinner the other night with a group of entrepreneurs. One told the story of a 27-year-old whiz kid whose company will likely exit for $500M – $1B – the business now being less than two years old. You can imagine the effect that this had on the brilliant, hardworking 35+ entrepreneurs in the group, who have had their share of hits, but not at that magnitude and not that quickly.

“These stories are getting more commonplace. It seems that the entrepreneurs who “hit” these days are doing it more quickly, making more money, and doing it at a younger age. Back in the 70s, it took a decade plus to build a company and $10M, even in today’s dollars, was a big victory for an individual. Up until the late 90s dot-com boom, even though these stories existed, they were less common and took longer.

“The storyteller explained that this 27-year-old is more brilliant and more hard-working than the previous entrepreneurs he’s seen.

“That can’t be it. There are only so many hours in the day, and the entrepreneurs of yesteryear worked just as hard as the entrepreneurs of today. And the ones who came before were just as brilliant. Human intelligence has not evolved that dramatically in 10-20 years.

“Rather, I posit that the amount of leverage available to a modern Internet entrepreneur is far, far greater than was available to entrepreneurs of previous generations. The number of entrants has dramatically increased as well. The overall hit rate might be lower, but the ones who win, win bigger and faster thanks to the leverage.”

Read the rest of The returns to entrepreneurship for the exciting conclusion.