Before you raise money

Nivi · November 29th, 2010

This is an awesome talk by Naval on what to do before you raise money. I know I say this all the time, but this may be his best talk yet.

Video: Before You Raise Money

This talk is part of a course on Udemy, which lets people “take and build online courses on any subject.” They asked Naval to teach part of a paid course called Raising Capital for Startups. We agreed, as long as they let us give away the part we taught for free.

You can buy the full course from Udemy for $29 here. Use promo code VentureHacks to get $10 off.

Always assume competition

Nivi · November 29th, 2010

Earlier this month, I got this email from a friend:

“Why didn’t you ever tell me about this site? This is exactly what I was trying to create and just spent the last few weeks pulling people together to build me a site. Do you know how they are doing? They never once came up through my competitive intelligence and I just learned about them. Would like to know before I dump anymore money in my venture.”

This was my response:

“I can’t give you any insider information on any of these companies. I know the founders of all of them. It doesn’t matter. It has nothing to do with you. It’s good to know the market but the competition is irrelevant. The market is big. Winning comes by knowing the customer better, executing better, and continuing to work on the problem after sane people have cashed out. If a competitor is going to scare you, you shouldn’t have started a business in the first place. Every big market or successful business will attract competitors anyway. Always assume competition.”

This was originally published on Quora. See my original post and the comments here.

How much money should I raise?

Nivi · October 27th, 2010

We get this question all the time and there’s no right answer. So I started a discussion on Quora to learn more. Here’s my answer:

Raise less if you want to keep your valuation down and keep the option open for an early exit where everyone (investors, employees and founders) makes money.

Raise more if you’re here for the long term and you want to protect your company from poor funding environments or hiccups in your growth. Just try to maintain control, monitor your liquidation preference, and monitor your dilution. Also understand that, if your valuation is high in this round, you will have to make a lot of progress for the next round to be an up round.

In summary, raise too little money and you may go out of business when you run into trouble. Raise too much money and you may make less dough when you exit. Take your pick: disaster vs. dilution.

In either case, try to act like you don’t have a lot of money. The conventional wisdom is that when you have a lot of money, it’s hard not to slow down because you start spending it (which takes time in and of itself) and you start thinking that you have a lot of time left before you die, so what’s the hurry?

Read the rest of my answer on Quora. Also see this old post on Venture Hacks for related quotes from Eugene Kleiner, Bill Janeway, and Marc Andreeessen.

AngelList in real time

Nivi · October 22nd, 2010

There isn’t much to do on AngelList if you’re not an approved angel. Startups can apply, track some basic stats about their application and that’s about it. The angels get all the cool features for now — for example, they get a pretty nice interface for reviewing pitches that I’ll show you sometime.

But until then, check out this real time feed of investor activity on the AngelList home page:

When an investor takes an intro to a startup, invests in a startup, shares a startup, or likes a startup, you’ll see it on the home page. We obviously don’t display the startup’s name. And, of course, angels can go anonymous.

This is the real time pulse of AngelList. We stare at it all day. It’s also a pretty nifty way for angels to get on the home page (we get requests for this all the time). So please let us know how you like it.

"Intros from AngelList were responsible for 54.5% of the $1M we raised"

Nivi · October 21st, 2010

Daniel Odio from AppMakr is chronicling their fundraising in a series of blog posts starting here.

AppMakr used AngelList to close Mitch Kapor, a VPE at Google, Jeremie Berrebi, Pietro Dova, and other folks in the paperwork stage.

And Daniel’s first post includes a long interview with Naval:



Video: Daniel Odio interviews Naval

See Daniel’s post for more details and an invite to the AppMakr party on October 28th. Thanks for putting this together Daniel.

Primo essay on team building

Nivi · October 14th, 2010

Go read Steve Newcomb’s essay on building teams:

Cult Creation

Steve’s the founder of Powerset. This essay is very long and very good. It’s the best article I’ve read on building teams. And team building is 10x more difficult, tedious, and important than raising money.

I love/hate this essay.

I love the fact that Steve is open sourcing his secrets. I hate the fact that high-quality startup advice is the exception and not the norm.

I love that this essay was written in Silicon Valley. I hate that Silicon Valley dominates the world in quality startup advice.

Here’s a sample from Steve’s essay:

Engineers Suck at Negotiating, so Don’t Negotiate, Be Fair –from me, after being pissed off about hiring practices I experienced from bad founders.

Over the years, I have noticed some sort of weird inverse correlation between the talent an engineer has for coding and their ability to negotiate. I’ve seen people that could have hacked into NSA suddenly shit twinkies the second I bring up the topic of their salary. I don’t exactly get it, but it’s there.

Founders, on the other hand, are almost by nature programmed to negotiate everything. In some cases, I have seen founders take advantage of engineers who don’t negotiate well, or who simply hate to negotiate so much that it’s a near-phobic experience.

DO NOT DO THIS! If you do, you’re an ass-hat.

Besides being unfair and a dick move, it is also stupid and even worse yet in my book – it’s illogical.

What inevitably happens is that the engineers, who all have different deals, get drunk one night. Then the shit hits the fan when they tell each other what they all make and what equity they got. Come Monday morning, every engineer’s password is “my_founder_is_a_dick,” several viruses and backdoors are suddenly installed into the code base, and the founder gets the silent treatment – none the wiser of his impending doom. Way to go ass-hat!

If you can’t tell, this one pushes my buttons. I don’t give a frog’s fat ass how good a negotiator an engineer is when I’m interviewing them. I want them to have such pristine code that it makes my other engineers cry. I want them to have a beautiful mind that can use logic and reason to solve the engineering challenges that I hand them. It is completely irrelevant how good they are at negotiating.

Go read the rest.

Free the Firehose

Nivi · October 13th, 2010

That’s a tweet from Albert Wenger at Union Square Ventures. Thanks kindly Albert.

The Firehose is a new feature on AngelList that gives investors unfiltered access to all the startups that want to meet them. Startups tell us who they want meet — if they say they want to meet Albert, they show up in Albert’s Firehose. If not, they don’t.

We still go through the Firehose every day and email the best startups to the investors they want to meet. But every investor has different filters. And they want to find startups before anyone else gets their hands on them. That’s what the Firehose is for. Investors login every morning to see what’s new on AngelList (we get 10-20 new startup applications a day).

We released the Firehose last week and 37 startups have already gotten intros to 12 investors like Thomas Korte (Heroku), Bob Pasker (Mint), Ori Sasson (VMWare), Beau Lasky (Playdom), Auren Hoffman (Meebo), and Peter Chane (iLike).

That’s 37 startups that probably wouldn’t have gotten meetings with investors if they had to rely solely on the Nivi and Naval filter. There’s no reason we should be the only filters on AngelList and we’re working on ways to get the right startups into the hands of the right investors on AngelList.

We’re really excited about this feature — big ups to the law offices of Leonardo, Slayton, and Capone who built this bad boy.

Which startups have been funded via AngelList?

Nivi · October 12th, 2010

I’m working on a Quora thread called:

Which startups have been funded via AngelList?

So far, the thread lists 27 startups that have raised money with AngelList. I think the real number is closer to 40 and I’m still prodding AngelList startups to write responses. Check it out.

Quora makes it fun and easy to create quality content. But that’s not the only reason I used it. Quora lets people answer in their own words, without going through my filter. So readers get to see the raw data. And it opens us up to revision and criticism. We don’t control the environment so the data seems more authentic.

I’m guessing the Quora team shudders at the thought of Quora marketing (I would too) but good marketing is just good communication and education. Everyone who works on a Quora thread is driven by an incentive and talking about your product isn’t a bad one.

The Venture Hacks Newsletter is back

Nivi · October 11th, 2010

The Venture Hacks Newsletter is back baby. It’s a daily digest of our tweets — subscribe via email or RSS. The email version looks pretty sweet:

(The newsletter was broken for a few months and we’ve finally gotten around to fixing it.)

We read all the startup advice on the Web and link to the best stuff on Twitter. If you don’t want to miss a tweet, sign up for the daily digest. Fred Wilson and 2000 other folks have given us permission to invade their inboxes, so it can’t be too bad.

Subscribe via email or RSS — if you hate it, you can unsubscribe with a single click.

What you can learn from The Social Network

Nivi · October 9th, 2010

I’ve been blogging a bit on Quora — here are a couple recent posts.

What you can learn from The Social Network:

The Social Network is an incredibly well made and motivating film.

I don’t care about the facts of the matter — they’re irrelevant. The movie tells a better story about startup life than anything you’ve ever read in the press.

Pretend this is a film about fictional people and a fictional product. Here are a few things you can learn:

Facebook was built on strengths, not weaknesses. Mark, Sean, and Eduardo each have their strengths. If you focus on their weaknesses, they seem like bad apples. It is their strengths that make them effective. You can only build performance on strength — you cannot build it on weakness.

If you’re not in the room while the deal is going down, prepare to get screwed. My favorite line in the movie is when Sean and Mark meet Peter Thiel for a few minutes and Peter concludes the negotiation with, “So, who is this Eduardo Saverin?”

Read the rest…

Why Cleantech is Boring:

Cleantech is boring because it doesn’t attract product designers.

Cleantech problems are engineering problems, not product problems.

Here’s the product design of the best cleantech product ever: lots of clean energy in a very small space, at low cost — the end.

So cleantech attracts engineers who like to solve puzzles instead of product designers who like to build things like iPads and Quoras.

Right or wrong?

See my Quora posts for more masterpieces.