Venture Hacks

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.

The rise of the angels

Nivi · October 8th, 2010

This is Naval’s keynote from Capital Factory‘s demo day. It’s called The Rise of the Angels, but it should be called The Rise of the Entrepreneur. It’s excellent.

Video: The rise of the angels

Here are the slides. Make sure you check out Slide 8 for a draft Entrepreneur’s Bill of Rights. And Slide 20 for Naval’s prediction that spectacular fraud will occur in angel investing.

Slides: The rise of the angels

Some of my favorite quotes from the presentation:

The venture industry has already changed.

Venture capital is a business and is open to attack by startups with disruptive new business models and technologies.

Less meeting; more tweeting.

Thanks to Joshua Baer for inviting us to give the keynote.

Vinod Khosla: "I was much more of a glorified recruiter."

Nivi · October 7th, 2010

Vinod Khosla at TechCrunch Disrupt:

“I think the single, most important fact about doing a startup is being clear about your vision and not letting it get distorted by what pundits and experts tell you.

“But the second most important thing is finding the right team. And that’s really, really hard, because people tend to look for people around them and so it’s the person who they happen to know as opposed to the best possible person to find.

“You know, I was relentless. It took a lot of time. I used to say when I was starting my first company, I was much more of a glorified recruiter than a CEO, or a founder. I really spent probably well over 50% of my time recruiting, and I encourage all entrepreneurs to try and do that.

“It’s also hard because you’ve never hired a marketing person. You don’t what a good marketing person is. You don’t even know what a good developer is. So whose judgment to trust, whose advice to take, is really really hard.”

Corollary: If you can’t recruit a good team, your vision probably needs distortion. Vinod’s quote starts at 19:20 in the video but I encourage you to watch the whole interview.

Welcoming the Kauffman Foundation

Nivi · October 5th, 2010

We’re very happy to announce that the Kauffman Foundation has made a significant contribution to support Venture Hacks. If you don’t know them, Kauffman is a $2B non-profit foundation devoted to entrepreneurship.

How it happened

Update: See Bo’s comment about why they decided to support Venture Hacks.

Earlier this year I got an cold email from Bo Fishback at the Kauffman Foundation:

Hey Nivi —

I’ve been following Venture Hacks for a while and have sent many many people there.

I’m interested in talking to you about sponsorship or support. Can we get on the phone for a super short call sometime in the next couple of weeks? Not this week.

Thanks,

Bo Fishback

After a phone call, I flew to Kansas city to meet Bo and the Kauffman team. I pitched them without a deck. Instead, I built a 1-page outline, Wufoo-style, and “did it live”. If I wanted to show them our analytics, I pulled up Google Analytics. If I wanted to show them our products, I went to our products page. If I wanted to show them testimonials, I went to our Twitter favorites.

When I got home, I got some advice from Steve Blank: when you’re making an enterprise sale, do your sponsor’s work for him. If your sponsor needs a pitch for other people in the organization, build it for him. So I called Solvate and they helped me build a deck which Bo used to make the sale to their grant committee. Here are a few random slides from the deck:

About Kauffman

Kauffman is a $2B non-profit foundation devoted to entrepreneurship — they fund Nobel prize winners. And now they want to reach you — the future founders of high-growth companies.

We’re very happy to bring them on board as a supporter and to welcome them to Silicon Valley.

If only we could raise money

Nivi · October 2nd, 2010

Stop saying:

“If only we could raise money, we could do X.”

Start saying:

“If we do X and we’re lucky, we might be able to raise money.”

(This was quite popular on Twitter — 91 retweets — so I’m reproducing it here. You should follow us on Twitter. There’s a lot of good and bad startup advice coming out these days and we tweet about the best.)

Blogging on Quora

Nivi · September 28th, 2010

I’ve been doing a bit of blogging on a Q&A site called Quora.

Quora makes it fun and easy to write. Sometimes I ask and answer my own questions. Sometimes I answer other people’s questions. Here’s a few of my answers.

How strong does your traction, social proof, product, and team have to be to be accepted to AngelList?

It’s always a good time to apply. You can now continuously update your application and we’ll review it every time.

Here’s how I personally filter the startups:

If you’ve got good social proof, I’m done — I’ll make intros.

If not, then if you’ve got great traction, I’m done — I’ll make intros.

If not, then if you’ve got an awesome demo, I’m done — I’ll make intros.

If not, then if you’ve got a killer team, I’m done — I’ll make intros.

If not, no intros. Go back to work on your startup, improve one of these metrics, and apply again.

But those are just my personal filters. And my filters don’t matter much anymore. Any of the angels on AngelList can now share deals with their followers.

What is good social proof?

Social proof is when you do something because other people are doing it. If you’re walking down the street and everyone is looking up at the sky, you look up at the sky.

In this context, social proof is looking at what other investors, entrepreneurs, and advisors are doing. Customers don’t count.

I’ll disagree with Naval Ravikant on “An investor is choosing not to invest in your company and is making the introduction for you”. I don’t think this is as bad as he makes it out to be.

The primitive part of your brain will probably recoil when a peer sends you their rejects. But the logical part of your brain will ask why the investor is passing. And there’s often a good reason: wrong market, wrong stage, wrong geography, bad chemistry with entrepreneur, some known risks that the investor doesn’t want to take, etc.

Rejecting a deal just because a peer rejected it is mathematically unsound. Here’s the proof. Every deal you ever invested in was probably rejected by a peer at around the same time you made the investment. So, if your criterion is that you will reject deals that peers reject, you will never make any investments

How do I get started in angel investing?

For dealflow, check out Y Combinator and the other incubators that are popping up all over the world. Also check out AngelList.

For how-to, see Paul Graham’s How to be an angel investor, our follow-up How to be an angel investor, Part 2, and the AngelConf videos.

To meet other angels, check out AngelConf (roughly once a year), and introduce yourself to the angels on the AngelList Twitter List.

Who were the first 25 angels on AngelList?

We started with Naval and emailed the angels we knew. It spread and there are about 400 angels on the site now.

1. Naval Ravikant
2. Manu Kumar
3. Dharmesh Shah

See the rest of the list

Go to Quora for more of my questions and answers.

How Udemy got oversubscribed

Nivi · September 10th, 2010

Gagan Biyani, founder of Udemy, tells the story of how he got 2x oversubscribed with a little help from Keith Rabois, Adeo Ressi, AngelList, and many others:

Udemy went out to raise money in February-March 2010. We received more than 30 no’s largely because investors weren’t confident enough in the business to pull the trigger.

Udemy focused hard on traction and launched the product in May 2010. By July, we had some promising numbers and decided to pitch again. We leveraged Adeo Ressi of the Founder Institute heavily before and during the fundraising.

I connected with a lot of friends and great CEO’s before fundraising to get intros. One of the most helpful was Darian Shirazi (CEO of Fwix), who intro’ed us to 3 of our investors. Afterwards, we made him advisor to thank him and because we wanted to keep an ongoing relationship with him.

Keith Rabois, one of the first people we re-met with, agreed to lead the round. In this meeting, we told Keith we wanted to raise $300K-$500K.

We leveraged AngelList to get additional momentum and investors for the round. It was critical to our success.

Within 2 weeks, we had more than $500K committed.

One more week later, we had more than $1M committed. We closed the round at $1M…

We can’t speak higher of AngelList and the value it provided to Udemy’s fundraising process. We received over 25 intro’s to top-tier investors. What other way can you get 25 investors to ask for intros to YOU! AngelList led to investments from Jeremy Stoppelman (CEO of Yelp), Dave McClure (500 Startups), Josh Stylman (Angel Investor, co-founder at Rotomedia and Reprise Media), and Ben Ling (executive roles at Google, Facebook, YouTube). But what was even more important was that AngelList got our round over-subscribed, so we had momentum which helped convince our other investors to make their decisions faster and in our favor.

This is what I like about great startup cities like Silicon Valley: a loosely organized team of investors and entrepreneurs giving their time and money to help get a company off the ground. Read the full post.

AngelList Scouts

Nivi · August 31st, 2010

Update: The most up-to-date list of Scouts is here.

AngelList Scouts find high-quality startups for the angels on AngelList. When a Scout tells us to look at a startup, we pay attention.

Update: Liz Gannes covers this story for GigaOM.

We look at every startup that applies to AngelList — whether or not they have social proof — but a little social proof makes it easier for us to say yes. And the social proof of a Scout is especially interesting to us.

Why? Because the average Joe usually doesn’t get anything when he makes intros for a startup. He might get some advisory shares but that’s rarer thank you think.

The Scouts program is different. First, the Scouts are getting AngelList profiles with badges that display how many high-quality startups they’ve referred to the community. With the startups’ permission, we’ll list the names of the startups too. And most important: the Scouts will be able to send startups directly to AngelList, under their own names, without us in the middle.

Who are the Scouts? Each of these Scouts has sent us one high-quality startup that was good enough for AngelList. And most have sent more.

Los Angeles:

J. Grubb (@jonathangrubb), Founder of Get Satisfaction

Seattle:

Tony Wright (@webwright), Founder of RescueTime

Chicago:

Harper Reed (@harper), Former CTO of Threadless

New York:

David Lifson (@dlifson), CEO of Postling

Silicon Valley:

Rafael Corrales (@rafaelcorrales), LearnBoost

Jamie Quint (@jamiequint), Founder of Snaptalent

Gagan Biyani (@gaganbiyani), Founder of Udemy

Sam Odio (@sodio), CEO of Divvyshot

Jason Putorti (@putorti), Founder of Votizen

Sundeep Ahuja (@sunrock)

Boston:

David Hauser (@dh), Founder of Grasshopper, Chargify

London:

Brendan Baker (@brendanbaker), Oxford MBA

And here’s a Twitter list of the Scouts: @angellist/scouts.

How do you get to be a Scout? Refer one high-quality startup that’s good enough to share with AngelList (tell startups to list you in the referrer field). Then get in touch with us, tell us you want to be a Scout, and we’ll start a conversation. I’m sure we’ll modify these guidelines over time, but it’s a good start.

Questions? Contact our Scout @brendanbaker and cc me @nivi.

If you’re a startup that’s trying to contact the angels on AngelList, consider getting in touch with one of our Scouts. They can help.

How we're recruiting a product designer for AngelList

Nivi · August 25th, 2010

We’re recruiting a product designer for AngelList. Here’s how we’re doing it and what we’re learning. (If you’re interested in working with us, details are at the bottom of this post.)

I didn’t start by putting up a job post. I figured if everybody else is doing it, I need to take a different approach. So I called the smartest designers and entrepreneurs I knew and asked them for advice. Here’s what I’ve learned:

We want a product designer. This job post from Quora defines a product designer as “Extraordinary product, interaction, and visual design talent [with] a curiosity and passion for crafting amazing experiences.” Product design encompasses visual design, interaction design, branding… it’s the whole user experience.
A small team like ours should hire designers who can build what they design. At a minimum, that means building HTML, CSS, perhaps JS, perhaps beyond. See these posts by Jason Putorti and Rebekah Cox for more info. Also read Rebekah’s Early Quora Design Notes.
Quora has the best job postings I’ve seen in a long time — they’re muscular and much better than all the quirky job postings in the world.
Consultants are good if you want to build the product. Full-time people are good if you want to build the team. We want to build the team.

The opportunity for product designers

AngelList is a community of angel investors who make it fast and easy for worthy startups to raise money. These links tell the story better than we ever could:

What do people think of AngelList?
AngelList Twitter Favorites
Fred Wilson covers AngelList

In short, the 250+ angels on AngelList are bringing startup funding online — in fact, they’ve already funded about 40 startups (here’s a few of them). This is a very high-impact and difficult problem… and a giant opportunity to help the industry that funds the startups we know and love: Facebook, Google, Twitter, Apple, you name it.

What’s in it for you? Investors throughout Silicon Valley and the world will use your product daily. You get to lead the product and company by turning vision into product, with no managers in your way. Your title will be the same as everyone else on the team: Venture Hacker. You’ll work with a founding team of investors (Twitter), founders (Epinions), students (life), and advisors (billions served). And you get to push the envelope of what is possible with product design on the Web.

We’re committed to building a high-impact and long-lasting team. If you’re a product designer who’s irrationally interested in this problem and wants to work with us full-time in San Francisco, send us a few links (we don’t need/want anything else), and please let us know if you have any questions.

Xconomy covers AngelList

Nivi · August 20th, 2010

This Xconomy article by Wade Roush does a great job of telling the AngelList and Venture Hacks story:

In Seed Funding Race, AngelList Sorts the “Junk” from the “Maybes”

I hesitated to link to it because these articles always make you look more handsome than you really are. But Wade does a great job of rounding up the state of the art of angel investing and placing AngelList in that context. Here’s a choice quote:

“I think the way to get into angel investing is, first, you obviously have to have money; you have to have a brand, otherwise you are not going to be differentiated and you are not going to see good deals; and you have to have a network of angels to work with, so you can move in packs and find other people to help you with due diligence,” Ravikant says.

It’s only then that AngelList can help. “The final thing is that you need to have good deal flow, so that you can see when the good things come along,” Ravikant says. “We will bring you deal flow, make it easy to syndicate deals, and we’ll show you deals that hopefully over time matches up to your interests.”

Check out the rest of the thoughtful article.