startupljackson

[startupljackson]

Request For Hacks

Today Product Hunt launched a hackathon, which I will be a mother fuckin’ judge of. As such, I’m going to suggest a few projects I am highly confident would be judged as awesome.

DeEchoChamber For Twitter - Diversity Index (Crowdsourcing/Mechanical Turk)

Twitter has an interesting social graph and I’ve personally benefited from seeking out a diverse set of perspectives. I think about proactively following more women and minorities in technology and investing, but also try to find more academics, great technology journalists, intellectual conservatives/liberal economists, etc.

I would love to see someone build an app that gives individuals a score, but also that maps out orgs (e.g. executives at company, investors at a venture firm, etc) and scores the diversity of perspectives experienced at the tops of organizations. As they say, you can’t improve what you don’t measure.

This app could then be used to recommend interesting people to someone who might have a diverse perspective that’s relevant to them. So, if you are in tech, we can cluster the tech people and highlight diverse voices on a number of axes.

You occasionally see people do manual lists that are useful, but I think we could of way better both in terms quantifying interestingness, expanding the kinds of lists we see, personalizing recommendations, and making a UI that makes it easy to form your own opinion (e.g. showing a few sample tweets, common connections, top followers, etc).

My suggested implementation for this would be to use a combination of crowdsourcing and mechanical turk.

The crowd could suggest organizations/people to score and bucket them into organizations. I’d start with unicorn tech companies and venture capital firms, but that’s my jam, so…

The app could then pull in their ‘followed’ list, or take a random sample for folks following large numbers of people where that’s impractical.

Mechanical turk could be used to annotate accounts. For example, we might ask MT to suggest a race, gender, sexual orientation, political bent, industry, etc.

Now we can answer questions like, “which venture firms’ partners have the most diverse following set?” or “who are interesting URM founders I might want to follow?”

This is a little bit crowdsourcing, a little bit AWS, a little bit of ML/likeness algorithm work, but nothing too crazy.

I will figure out how to pay for the mechanical turk for this if somebody builds it.

—————————

FreedomHatingTruthMachine - Scoring Journalism (Machine Learning/NLP/Big Data/Web Crawling)

It’s a shame we talk about fake news, which is a frame oriented around the product of media rather than the process, and allows us to argue about a specific controversy within a news cycle. Are these facts real? Did Trump say X? Is Hillary a Y?

I’m much more interested in a conversation around the process of journalism and what constitutes good journalism. Are we reading good journalists? Does this article meet journalistic standards? As technology platforms, are were biasing towards promoting propaganda and suppressing by omission (e.g. feeds) informative journalism covering sensitive topics? Are we amplifying via discovery (e.g. trending topics) 4chan propaganda laundered through irrefutable media masquerading as journalism?

I believe an input to any solution addressing the “fake news” problem will involve using technology to track and score media, giving publications, authors (named and pseudonymous), and individual articles a “journalism score.” We know humans can do this reasonable well. Now we’re just debating whether we can do this with computers, which I suspect we can.

Inputs to this score might be things like:

Using Politifact and other sources that use humans to assess the veracity of specific claims, and then using NLP to understand the extent to which articles discuss false statements critically, or support them narratively. 

Using the social graph of reputable journalists to understand what articles, authors, and publications they deem high-value. Note: this might also require NLP to avoid the quote tweeting of morons problem.

Using the providence of claims made, i.e. understanding if a source is doing direct reporting (best), reporting claims from reputable sources (good), or shilling for 4chan (bad).

Scoring articles based on the journalistic code of ethics (https://www.spj.org/ethicscode.asp)

Other more awesome things that come out of thinking about this more deeply, collecting inputs from smart people, and working on the problem.

Collecting this data will involve a combination of analyzing information graphs, and will involve some very tricky decisions around how to match objective data (info graphs, “factual” providence) with human/subjective data (e.g. politifact) in a way that’s easy to explain, understand, and debate. In some sense this is a proof of concept and the methodology is the most important part.

Bold claim: With an intellectually honest approach, it should be possible to build a system that roughly rates publications, journalists, and maybe articles in terms of their journalistic quality without biasing against particular ideologies (unless your ideology is lies).

Bold claim #2: This kind of system is inevitable and will be a critical input when Facebook (et al) decide eventually that “real journalism” is critical to vibrant democracy and that “fake news” is an existential threat that requires they (transparently, carefully, etc) build an immune system for political facts into their currently defenseless platforms.

It would be best if this system were build to be open both in terms of code and data.

———————

MagicCoin - (blockchain/games)

We have collectable card apps like PepeCoin, but in addition to being racist they’re also boring. You can’t do anything with them. I’ve long thought that one of the coolest token apps you could build with bockchain would be a collectible card game similar to Magic the Gathering, Hearthstone, etc.

You could just even clone the MTG rules and build a simple starter set, and then fork Cocatrice and use it as an initial client for the token network.

This is not just your average blockchain project though. It has some really hard problems and will require some interesting design decisions in the governance model. These games involve printing new sets of cards (inflationary?), reprinting cards (inflationary!) to manage the price on a per-card basis (fed!), errata, and other economic factors that require careful thought.

There is likely to be some centralization in game mechanic design that would be taken on by the “foundation” supporting the game, or maybe not. This is your call. Maybe you can make an entirely decentralized rules engine off blockchain and standards will emerge.

But, given the scarcity properties of the blockchain, this seems like a perfect and fun application. I would love to be able to buy a set of awesome/fun tokens, pick a client that works for me, then take them to a game server that plays by the rules I like (Magic supports ~5 official formats & infinite kitchen table versions), and just have fun.

I am available for beta testing and game design input. Please also airdrop me some bomb-ass tokens if you make this.

[startupljackson]

How to get rich in tech, guaranteed.

Today’s NYT article on how employees sometimes lose out is a great read. Employees who like that, might also like Hunter’s article from last week on (not) getting rich at startups. This is the follow up I intended to write for the latter.

I talk to people looking for their next gig on a regular basis. It’s fun to match awesome people who don’t want to found companies up with companies who need awesome people. One question I get asked over and over again in various forms is, do you think I’ll get rich from startup X?

My first piece of advice for startup job seekers is that equity, all things equal, you can’t pick ‘em. On a risk-adjusted basis, startups are likely to be about the same. If there is information that a company has significantly de-risked, it will be priced in. Despite the market often being very wrong, you are unlikely to outsmart it.

If you want to get rich, your best bet on a risk-adjusted basis is to join a profitable and growing public company. Google for short. Make $200-500k all-in a year, work hard and move up a level every 3-5 years, sell options as they vest (in case you joined Enron), and retire at 60, rich. This plan works every time.

Beyond the sub-market salary you’ll receive for joining a startup, there are no financial guarantees. Your equity is probably worthless. The whole damn thing might fall apart any time. The hours are long. A lot of shit won’t work right. Etc.

But, as far as I know, startups are the only way to get 20 years of experience in five. The reason to join a startup is because you are awesome, you’re willing to work hard, and you don’t want to wait 20 years to be making decisions that impact the business.

And if you go in with this mentality, even when startups fail, you succeed. If you put five years into building a company and team, you will end up with a great network of talented and motivated people, lots of first-hand experience, and often some management experience as well.

Worst case, your next step could be going into Google at the VP level it would’ve taken you 15 years to get to joining out of college to “inject some startup DNA,” and catch up on salary within a few years. Unless this internet thing is a fad, that job will always be there for you.

But for all that is good and holy, don’t join a startup for the fucking money.

Sundry advice on picking a startup:

Be clear on what you want. Do you want to join pre product-market fit, or post? Do you need a salary, if so, how much? Do you care about vertical or role? Location? Travel? Etc. Most people that end up in the wrong job didn’t think through what their ideal job was before looking.

Run a process. Most people fail at this. Startups are interviewing you, but you’re interviewing them too. Write down your criteria. Look at 200 startups, contact 50, do first interviews with 20, move forward with 5, pick between 2-3 good options. If you’re passive, or only talk to a few companies, you’ll be choosing between limited options. You can get 200 plausible startups in a couple hours.

Focus on good people/culture. Above all else, my observation is that when you find good people (high-integrity, smart, hard working, etc) and a compatible culture, you end up happy, even if the company fails. When you ignore suboptimal people fit because you think the product is sexy or you’ll make money, you end up sad.

Accept fair comp. Many people are unrealistic on comp. They want an early-stage experience with Google salaries. It doesn’t work that way, and startups often suck at explaining that. Talk openly with startups about what they can pay you, what they’ve raised, what your needs are, and what milestones will lead to higher salary. Keep in mind, you might be the first person to take a salary and the founders might have been working for two years. Sure, it’s a 50% haircut for you, but for them it’s a big chunk of their first round.

Expect to earn it. Some startups will hire a dev and call them CTO. That doesn’t make them a CTO. If you want to be a CXO, say so up front, but expect to earn it. Entering a startup is a lateral move with unlimited upside. Tell the startup where you want to be, and set milestones that give you what you want that make the company successful. Now you’re a CXO.

Discount the vertical. With a few role exceptions, what you’re actually making isn’t that important. Assuming the company is making something people want and you’re delivering a ton of value, most people can be as happy making enterprise cloud infrastructure as social networking tools. Business development is business development. Do it with/for people who do not suck.

Understand the basics of the business. You shouldn’t try to become an expert, but you can ask some basic questions. What is the valuation of the company, and what’s the valuation for your purposes? How much has the company raised to date? How much money does the company have in the bank, and what is the net burn rate? What milestones does the company need to hit to get to the next round?

This is good to know so you can roughly assess the business. But it’s also a great way to understand how you fit in. Can you help with the core problems the company needs to solve?

Bias towards transparency. Companies can’t be expected to share every single detail with employees, especially potential hires. But, in general bias towards companies that give employees info to make informed decisions You should, for example, know what percent of the company you own. Trust is a two way street, and if the company lies to it’s employees, it’s hard to maintain that trust. Life is too short to watch your back inside the building.

[startupljackson]

Thinking Outside of Pandora’s Box

“And you ain't get a coin, [Nas], you was getting fucked then I know who I paid, God - Serchlite publishing Use your (brain)” - Jay-Z, Takeover

Pandora, it turns out, is an awful business. While it’s unclear what Spotify’s unit economics look like and it may be better position, it’s currently losing a lot of cash as it grows and admits that its margins are lower than they need to be. The core issue for these companies, as well as anyone else who wants to create a mass-market music service, is that you you need the labels to get scale, and they take all the profits.

While I generally think this is a shitty business, today I’m going to play devil’s advocate and suggest there may be hope for them yet.

Consider that more music is recorded today annually than ever in the past. If you looked at a graph of music industry profits vs recordings over the last 20 years, you’d conclude that they were inversely related. As it turns out, they’re completely uncorrelated, but you get the idea. Great music is being recorded that is making no one money today, because no one is hearing it.

But we still all listen to the same stuff from the same record labels. Why?

As it turns out, music has a network effect. Check out this amazing article from the NYT, which describes an attempt to test how hits become hits. You may also find this Planet Money piece on hit making interesting. From the NYT piece:

In all the social-influence worlds, the most popular songs were much more popular (and the least popular songs were less popular) than in the independent condition. At the same time, however, the particular songs that became hits were different in different worlds, just as cumulative-advantage theory would predict.

Put differently, some artists are better than others, but within the realm of good music, the hits that you need to have to make a platform work are somewhat arbitrary. We like music our friends like. We want to go to the club and hear a song we know.

The advantage the record labels have had even to date, is that they have controlled discovery in the form of radio (yes, it still matters), and therefor been able to monopolize as a group — if not strictly control — what becomes a hit. Internet nerds forget the scale of terrestrial radio and its importance even today. Ask Macklemore.

But the demographics of radio aside, tech music companies have achieved amazing scale today. Spotify and Pandora have on the order of 80M users each. Apple will likely catch up in the next 1-2 years. These platforms are arguably much better positioned than record labels + radio to make the hits.

You can see this in the power of Spotify’s and Apple’s Discover features. These are compelling features for users and have the ability to put unknown music and artists in front of millions of users.  And given their current scale, it’s almost certainly the case that digital music companies at scale can make their own hits.

If I were one of these platforms, I would make the following deal with unsigned artists. Put your music on our platform and sign a non-exclusive, perpetual, royalty-free deal with us for all your future music. In return, we will pay you 100% of all profits for the first 10M plays with no middle man.

I would then start testing tracks from my stable of Macklemores, trying to find those that work for certain segments. With that as a baseline, I would have my editors attempt to create hits/stars via Discover (et al). And while my streams of Taylor help her grow her empire at near zero profit, I would be free to take 100% of the profit on these tracks, increasing my blended margin while continuing to keep the label’s back catalogs and paying them the profits on those.

And if that worked, I’d start helping my new stars complimentary products. Find service providers. Sell your merch. Book a show. Market to fans. You’re a (small) business, man. Let us help. Who needs a label? I bet there’s great margin in helping artists monetize their brands.

Is this a win for the artist? It depends whether you’re Tay Tay, or Tay-Tay-living-in-obscurity.

Is it a win for art? Probably. You make a lot more filling a bar with people who have heard of you than streaming online. No bar is too small for most artists. And the less power incumbents sitting on back catalogs have, the more innovation we’re likely to see in tech. That’s a good thing. It’s not clear more profit for labels has any impact on the quality or quantity of music.

Is it a win for music platforms? Obviously so. If current market dynamics continue, music will become a loss leader. You see it with YouTube and Apple, and it’s likely Pandora and Spotify will end up acquired if they can’t find a business with real margins. You can’t give 100% of your profits to other companies forever, regardless of scale.

The only losers here are the record label. And fuck them.

I’ll close with your obligatory reminder that artists don’t make money on recorded music, never have, and never will.

[startupljackson]

The Solution to the Problem With the Solution to Twitter’s Problems

Like most nerds, I’ve played a bit with Moments this week to see what Twitter has been up to. At the risk of being the one millionth person to give Twitter product advice, here are a few thoughts I haven’t heard discussed much in the analyses I’ve seen this week.

But first, let me say that we should keep in mind that it is a v1.0 and I should be looking for potential, not perfection. We should also keep in mind — as many have rightly pointed out — that people who already like Twitter aren’t the target audience, so it doesn’t matter if we love it.

The Problems

Twitter’s fundamental problem is that it is not big enough. They have a few hundred million users, which while impressive, is not big enough to be highly profitable given their business model. Advertisers need them to have more users, which means Wall St needs to see them grow.

Why Moments? Because they can’t grow Core Twitter. They have been trying for years and it has not worked. In part, this is a limitation of the product. Frankly, I thought it would never work outside of SoMa, so 300M users is pretty fucking good. They’ve now saturated a very large niche.

A second related problem, is the Twitter brand. There are no new users to go find. After almost 10 years, a billion users have tried Twitter and most of them had a bad experience. There are 700M people who think “Twitter” is not for them. Twitter has been trying to reacquire these customers for a while. Moments is an acknowledgement that this will not work.

The Solution

If Core Twitter is too complicated for the next 300M users, Twitter needs an app or apps that appeal to these users. They have begun branching out with Vine and Periscope already, and they’ve been pretty successful with these efforts. But Moments is the big bet.

Moments is an attempt to take the content that makes twitter appeal to addicts, and package it up in a way that appeals to Buzzfeed users. It’s something that if it works could make your mom finally say, “Wow, Twitter is pretty cool. I love the neat stuff I find there.”

Conceptually, I think most agree this is the right kind of solution to the problem. Now the open question is, will it work? Will users come back to Twitter for Moments?

The Problem With the Solution

My belief is that Moments is destined to fail as implemented today for one simple reason. The users Twitter expects to use Moments don’t like Core Twitter. How do you market a new feature in the app to these users? “Hey, I know you think you know what Twitter is and have already tried it, but we added a feature that makes it awesome and if you just give us another shot you’ll love it.” That is a hard sell.

Someone in my twitter feed suggested Twitter go all out advertising on Moments. I’m not sure that’s prudent, but again, what do you say to people who’ve already made up their minds about your product? How many of them can you really acquire?

Meanwhile, you do have 300M users to not alienate. This means you’re constrained in terms of changes you can make to the core interface. Secret could scrap their whole app and replace it because they had nothing to lose. Twitter doesn’t need 300M different users. They need 300M more users.

So today you have an app with a tab for novice users. It’s not bad for a v1 and I could see it becoming amazing. But it doesn’t solve the acquisition problem.

I lack the imagination to see any solution to this and have not heard one articulated. Believing people will just show back up now is magical thinking.

The Solution to the Problem With the Solution to Twitter’s Problems

Moments should be a standalone app. Period. It can still use the Twitter namespace and shared login. Be made by Twitter, etc. But Twitter needs something it can market to users that is not Twitter.

By making it a standalone, Twitter can avoid all of the problems that exist with implementing it as a tab. There is no dual onboarding experience, no @mentions, no main feed to educate the user on, no DMs, etc. Just great content and an occasional invitation to “join the conversation” or “follow all of Bieber’s posts” at just the right time. See graphic representation below.

“Have you tried Moments? It’s like Snapchat stories meets Buzzfeed. It’s my new go to on the train.”

Moments is in a sense a big bet that’s not big enough. They’ve added a tab that doesn’t offend the core user without removing the pieces that alienate the new users.

Furthermore, Moments is fundamentally different than Twitter in some ways that create friction. Moments has editors, and editors create bias (or minimally the perception). Editorial is slow, twitter is real time. Twitter is a tech platform, editors can piss off media subjects who use Twitter. Twitter is an uncurated social content network. Moments is a curated content consumption product.

Arguably, to make the best media product, Twitter needs to create a clear separation between these teams. You can see them struggling with this already, as genius Jay Yarrow points out in his pretty decent weekly podcast. This will almost certainly require them to firewall off the editorial team or to eliminate Twitter-employed human editors. Treating Moments as a separate property has the nice effect of solving this problem as well.

Then again, what do I know? I just tweet shit.

[startupljackson]

defaulting to positive

“Don’t care what they may say We got that attitude.” - Attitude, Kool AD

I got this uplifting note in my inboxes this morning. No doubt you received it as well.

What I love about Silicon Valley—what I believe makes it a special place—is that the default is to give encouragement. Whether you’re starting company to share what you had for lunch, or your jam is to make art from garbage, the default response you get from friends is some version of “I am into the idea of you being into your idea. Go do it!” Encouragement is the default.

This, in my mind, is Silicon Valley’s single most important cultural asset, accepting failure being the more often discussed compliment. It’s why we have more startups than anywhere in the country, more not-for-profits, and why this town ended up with a weeklong naked group vacation in the desert (hey, some things are the cost of doing business).

The cost of this optimism is relatively small. By definition, the people who “don't have what it takes” rarely get past bootstrapping, bad ideas rarely make it past seed funding, and in the end the experience and perspective gained by these founders makes them great contributors in other startups. Nobody has empathy for a founder’s struggles like someone who’s been there.

Most people have a chief hater inside their heads telling them they’re doomed. It costs you exactly zero to tell them how you think they could get their crazy idea to succeed, instead of the ways they will probably fail. If you’ve ever quit a job to work on a startup and had your mom tell you it was a bad idea, you know how meaningful a bit of encouragement can be.

Besides, maybe you’re just fucking wrong.

[startupljackson]

Twitter’s Product is Fucking Fine

It seems all the rage to write thought pieces on Twitter’s product problems. Hardcore users think they know the perfect ways to make it finally work. The point they miss is that there is no way to make Twitter (the product) a public market success. Twitter (the company) likely knows this, and is presumably working on a much more intelligent strategy.

Let’s review Twitter facts and core problems. Twitter had approximately 300M users, though as some have suggested that number is likely fairly inflated by bots/automatic integration, non-human account, etc. I would presume the real number of engaged humans is 150-200M (pulled out of ass). This is not a large enough social network for advertisers. They need more aggregate eyeballs.

Problem two, over 1B people have tried Twitter, formed an opinion, and left. The suggestion that increasing the amount of text you can plug in, or “open” is going to get these users to un-form their opinions is magical thinking. A strategy of re-activation has been tried (if you have an inactive account, you’ve seen the emails) and has not worked. Twitter’s brand is something very different to your cousin who set up an account in 2012 for a shot at free concert tickets than it is to power users. These users are never coming back to (product) Twitter.

Problem three, Twitter is worth too much damn money. It’s valued at $20B on ~$2B in revenue. An acquisition would likely need to be at $25-30B. Or, the stock price would have to drop to a point where it became rational to buy the thing as-is. People suggest Google and/or Facebook as buyers. While either could monetize Twitter better than Twitter, neither needs it strategically, and they likely couldn’t monetize it well enough to justify a purchase near this price.

The scenario in which Twitter becomes cheap enough to be bought given it’s current team/product is a scenario that plays out over too long a period to retain talent, in which case it arguably stays undesirable even at a lower price. Translation: Yahoo! buys them. Twitter needs to fix itself, in public. And they need to do it on vesting schedules while managing internal morale and improving external perception.

I’m pretty sure Twitter knows all this. My observation is that they are focused on improving engagement in Core Twitter (still important), while building/acquiring a suite of next-gen social products (Vine, Periscope, etc) that can be bootstrapped with Core Twitter. Don’t be surprised if you see some of the better Saccagestions spun out into standalone apps. Twitter’s core user base and existing content are sufficient to bootstrap more or less any kind of social product, and they have proprietary access to this asset. If I were them, I’d build, buy, and potentially invest in promising companies that could benefit from proprietary access to the graph/content.

You can’t go back in time and capture those 700M users who think Core Twitter is not for them, but many may give Sporter a shot, or TVitter. Again though, Twitter isn’t stupid, they get this. No doubt they’re working on finding the right focus internally and we’ll see new apps over the next year. The but is that most social apps fail (RIP Twitter Music) regardless of talent, and building them in public is a curse. And the ones that win, win slowly. Forced hypergrowth is a cancer that kills social products (RIP Google Plus).

So, as much as you’ve thought about Twitter’s product problems, Twitter employees have thought much more about them. And given the current state of the company, the core question we should be asking ourselves isn’t who the right CEO is to fix the product. The core question should be, who is the right CEO to buy the team enough time to get the strategy working and demonstrate to Wall St that Twitter the company is bigger than Twitter the product.

[startupljackson]

Now That’s What I Call Tweeting Volume 1

Someone on the twitters ask me where they could find a list of top SLJ tweets. As far as I know, there's not a service that does this. A few hours of coding later (not including rate limiting :/), here you go.

This is an approximate list of the top 100 SLJ tweets by engagement going back to 2011, weighted by date (to approximate follower count). Since the API doesn't allow you to do very much, and I suspect the web search (which you have to scrape for tweets beyond the last 3,000) purposefully returns incomplete results, we'll all have to live with the idea that the best stuff is still out there.

Enjoy...

Blessed is he who, in the name of profit, shepherds the user through the funnel, for he is truly his user's keeper.

— Startup L. Jackson (@StartupLJackson)

August 13, 2011

And you will know I am going to IPO when I lay my financials upon you.

— Startup L. Jackson (@StartupLJackson)

August 13, 2011

I suspect that most people suggesting college is overrated were still virgins when they graduated.

— Startup L. Jackson (@StartupLJackson)

August 26, 2011

I love the smell of funnel optimization in the morning.

— Startup L. Jackson (@StartupLJackson)

October 12, 2011

Surreal artists ship. pic.twitter.com/yrqGwmbs

— Startup L. Jackson (@StartupLJackson)

January 25, 2012

You refer to the prophecy of The One, who will bring 100x returns to the fund. You believe it's this boy?

— Startup L. Jackson (@StartupLJackson)

February 17, 2012

Loser: If it ain't broke don't fix it. Winner: This is a medeocre piece of shit. Let's make something awesome. Be a fucking winner.

— Startup L. Jackson (@StartupLJackson)

February 29, 2012

Fact: pumping Jay-Z into your startup an hour a day will increase hustle 20%. #cantknockthehustle

— Startup L. Jackson (@StartupLJackson)

March 2, 2012

America is broken when I need to be accredited to invest in startups and some guy living in poverty can gamble his kid's edu $$ on lotto.

— Startup L. Jackson (@StartupLJackson)

March 31, 2012

A good founder plays where the Zuck is. A great founder plays where the Zuck is going to be.

— Startup L. Jackson (@StartupLJackson)

April 13, 2012

Demand! Design, delusion, demo. Dinero, dilution. Develop, Demo. Denial, double down. Deactivate, dénouement. Do over. #startupcycle

— Startup L. Jackson (@StartupLJackson)

April 24, 2012

Ask not what my platform can do for you, but what your app can do for my platform.

— Startup L. Jackson (@StartupLJackson)

April 25, 2012

And even after all my logic and my theory, I add a 'motherfucker' so you ignant startups hear me.

— Startup L. Jackson (@StartupLJackson)

June 22, 2012

Every startup needs a belligerent asshole asking "why the fuck aren't we shipping this thing today?"

— Startup L. Jackson (@StartupLJackson)

June 24, 2012

Ask not for what users can do for your business model, but what your business model can do for users.

— Startup L. Jackson (@StartupLJackson)

June 25, 2012

Don't be telling me about social media. I'm the social media fucking master.

— Startup L. Jackson (@StartupLJackson)

June 26, 2012

The most formidable enterprise I ever saw was a startup in San Francisco.

— Startup L. Jackson (@StartupLJackson)

June 26, 2012

Loser: If it ain't broke don't fix it. Winner: This is a medeocre piece of shit. Let's make something awesome. Be a fucking winner.

— Startup L. Jackson (@StartupLJackson)

August 27, 2012

Dear sport-jacket-over-company-t-shirt guy, there are exactly zero events for which you are appropriately dressed. Pick a fucking side.

— Startup L. Jackson (@StartupLJackson)

September 25, 2012

99 Startups, the new hit single. http://t.co/ZLr4HFq8

— Startup L. Jackson (@StartupLJackson)

October 11, 2012

Be the synergy you wish to leverage in the world.

— Startup L. Jackson (@StartupLJackson)

November 15, 2012

Startup evolution: no office -> shared office -> tiny office -> office with a ping pong table -> not allowed to play ping pong -> enterprise

— Startup L. Jackson (@StartupLJackson)

December 11, 2012

Step 1: Quit job. 2: Update LinkedIn title to entrepreneur. 3: Network until cash runs out. 4: Declare yourself a veteran. Seek mgmt role.

— Startup L. Jackson (@StartupLJackson)

December 16, 2012

VCs taking credit for a startup success is like the salt taking credit for the chicken tasting good.

— Startup L. Jackson (@StartupLJackson)

December 28, 2012

Name your price for a copy signed by Bezos. https://t.co/re9TyRLw

— Startup L. Jackson (@StartupLJackson)

December 29, 2012

If you haven't been hacked by the Chinese you got to ask yourself, does the shit you're doing really even matter?

— Startup L. Jackson (@StartupLJackson)

February 2, 2013

We call them startups because if we called them fuckups Mom would like the concept of us quitting our day jobs even less.

— Startup L. Jackson (@StartupLJackson)

February 11, 2013

I will be selling a new cologne called Elon's Musk. It will make you smell like a fucking badass. #sxsw

— Startup L. Jackson (@StartupLJackson)

March 9, 2013

The greatest trick the devil ever pulled was convincing the world that ideas are property.

— Startup L. Jackson (@StartupLJackson)

April 23, 2013

Well behaved startups seldom make history. #leanin

— Startup L. Jackson (@StartupLJackson)

April 26, 2013

The economics of building a social network: focus only on growth until the old people move in, then monetize aggressively as it slowly dies.

— Startup L. Jackson (@StartupLJackson)

May 2, 2013

A Tesla is not a car. It's an iPhone you can drive, made for people who fucking hate cars.

— Startup L. Jackson (@StartupLJackson)

May 20, 2013

When talking to VCs always remember that flattery is the sincerest form of traction.

— Startup L. Jackson (@StartupLJackson)

July 1, 2013

Startups are just religions with riskier business models.

— Startup L. Jackson (@StartupLJackson)

August 9, 2013

That awkward moment @TED when @sherylsandberg leaves @ericries hangin on a high five & he realizes that Lean In wasn't about #leanstartup.

— Startup L. Jackson (@StartupLJackson)

September 8, 2013

Stop trying to find 10x engineers and start trying to engineer a 10x team.

— Startup L. Jackson (@StartupLJackson)

September 24, 2013

Rap is the soundtrack of the successful entrepreneur. Country is a much better fit the other 90% of the time.

— Startup L. Jackson (@StartupLJackson)

September 25, 2013

My tombstone will read: I'm really sorry I never replied to your email. That day was crazy.

— Startup L. Jackson (@StartupLJackson)

September 29, 2013

You've got 99 developers and a woman ain't one. No shit you're having culture problems, I don't feel bad for you son.

— Startup L. Jackson (@StartupLJackson)

October 26, 2013

The Uberfication of everything is turning San Francisco into an assisted living community for the young. #youngisthenewold

— Startup L. Jackson (@StartupLJackson)

December 4, 2013

An infinite number of founders, with an infinite supply of ramen and an infinite number of pivots, will eventually disrupt everything.

— Startup L. Jackson (@StartupLJackson)

December 12, 2013

Some companies do team retreats. I recommend instead scheduling team attacks. Always be on offense, bitches.

— Startup L. Jackson (@StartupLJackson)

January 11, 2014

Be the hustle you wish to see in the world.

— Startup L. Jackson (@StartupLJackson)

January 16, 2014

Hipsters who are really serious about software should make their own kombucha.

— Startup L. Jackson (@StartupLJackson)

January 19, 2014

Startups, hiring someone who went to Brown doesn't count as "prioritizing diversity."

— Startup L. Jackson (@StartupLJackson)

January 26, 2014

If a VC asks a hard question just say "Great question, we've been debating that. What do you think?" They'll always be happy w the answer.

— Startup L. Jackson (@StartupLJackson)

January 31, 2014

When people say "X is dead" remind them that Elvis made $55M last year.

— Startup L. Jackson (@StartupLJackson)

May 17, 2014

Your grandparents didn't have running water growing up & they beat the Nazis. You've got Uber and can't even get your ass to work on time.

— Startup L. Jackson (@StartupLJackson)

May 19, 2014

Startups are like kids, as soon as they mature enough to not keep you up all night, you start telling yourself doing it again could be fun.

— Startup L. Jackson (@StartupLJackson)

May 22, 2014

Finished my screenplay about two Google devs who secretly pair program despite a disapproving culture. I call it, Brokeback Mountain View.

— Startup L. Jackson (@StartupLJackson)

June 1, 2014

Execution is the only moat.

— Startup L. Jackson (@StartupLJackson)

June 2, 2014

You either sell a hero or you stay independent long enough to see yourself become the company doing layoffs.

— Startup L. Jackson (@StartupLJackson)

June 18, 2014

Tag clouds are the mullets of Silicon Valley. Everybody had one back in the day, but it's an unspoken rule that we never talk about it.

— Startup L. Jackson (@StartupLJackson)

June 30, 2014

Inexperience is temporary. Stupid is forever. #hiring

— Startup L. Jackson (@StartupLJackson)

July 18, 2014

Oh I'm sorry, did I break your concentration? pic.twitter.com/4WgAtTahqm

— Startup L. Jackson (@StartupLJackson)

July 26, 2014

Bad lawyers are unbelievably expensive. Good lawyers, by contrast, just charge a high hourly rate.

— Startup L. Jackson (@StartupLJackson)

August 2, 2014

The data does not share your opinion.

— Startup L. Jackson (@StartupLJackson)

August 4, 2014

It is a little known fact that the plural of unicorn is actually portfolio.

— Startup L. Jackson (@StartupLJackson)

August 13, 2014

"If I’d asked my customers what they wanted, they’d have said DON'T CHANGE ANYTHING." — Henry Ford

— Startup L. Jackson (@StartupLJackson)

September 5, 2014

Marketers: Capitalists Designers: Socialists Engineers: Libertarians Really Weird Engineers: Objectivists

— Startup L. Jackson (@StartupLJackson)

September 20, 2014

"That's what I love about these startups, man. I get older, they stay the same stage." pic.twitter.com/pFONlSrS89

— Startup L. Jackson (@StartupLJackson)

September 27, 2014

You can tell a lot about a person by what they name their wifi network.

— Startup L. Jackson (@StartupLJackson)

October 6, 2014

Silicon Valley '08: "I never even use my iPhone as a phone anymore." Silicon Valley '14: "Answering calls from my Mac is *amazing*!"

— Startup L. Jackson (@StartupLJackson)

October 21, 2014

Most successful startups are overnight success. That night is usually somewhere between day 1000 and day 3500. https://t.co/hVNKIXn5HD

— Startup L. Jackson (@StartupLJackson)

October 25, 2014

VCs want you to pitch something new. Customers want you to pitch something they already buy, but better. Don't confuse the two.

— Startup L. Jackson (@StartupLJackson)

October 29, 2014

Daylight Savings, your semi-annual opportunity to learn who on the dev team thought off-the-shelf date/time libraries were "too complicated"

— Startup L. Jackson (@StartupLJackson)

November 2, 2014

The Counterintuitive Thing About Counterintuitive Things. http://t.co/VlPo1soAFw

— Startup L. Jackson (@StartupLJackson)

November 9, 2014

#1: Do you guys have an integration for that? #2: No, but we have an API! #1: Did you just tell me to go fuck myself? #2: Pretty much.

— Startup L. Jackson (@StartupLJackson)

December 9, 2014

10x better = hard to build, easy to sell. Marginally better = easy to build, hard to sell.

— Startup L. Jackson (@StartupLJackson)

December 20, 2014

"Learn to speak Mandarin in our six week course & become a professional interpreter!" This is what your coder school marketing sounds like.

— Startup L. Jackson (@StartupLJackson)

January 24, 2015

Startups for programmers: def startup(heart,soul) if(no_demand) die! elsif(cant_execute) die! elsif(unlucky) die! else win!

— Startup L. Jackson (@StartupLJackson)

January 30, 2015

Imitation is the sincerest form of market validation.

— Startup L. Jackson (@StartupLJackson)

February 3, 2015

"There's too much money!"—Journalists "There are too many funds!" —VCs "There's too much competition!"—Startups "So many choices!"—Consumers

— Startup L. Jackson (@StartupLJackson)

February 25, 2015

Don't let anyone tell you reinventing the wheel is a stupid idea. These people would be content pulling a wooden cart behind a horse.

— Startup L. Jackson (@StartupLJackson)

April 2, 2015

If you can't get enough product to sell with four engineers, you either don't understand the problem or need better engineers.

— Startup L. Jackson (@StartupLJackson)

April 6, 2015

Started from a modem now we here.

— Startup L. Jackson (@StartupLJackson)

April 7, 2015

My favorite new emoji in iOS 8.3: the Wesley Snipes Demolition Man emoji. 👱🏿👍🏿. pic.twitter.com/46oHYurJuc

— Startup L. Jackson (@StartupLJackson)

April 8, 2015

There are rules to startups like there are laws to physics. Learn them, understand them, and when you discover quantum mechanics, fuck 'em.

— Startup L. Jackson (@StartupLJackson)

April 14, 2015

In Silicon Valley it doesn't matter if you're a college dropout*. *Warning: wisdom may not apply to colleges other than Stanford & Harvard.

— Startup L. Jackson (@StartupLJackson)

April 23, 2015

Whenever someone tells me "coding is the new literacy" because "computers are everywhere today" I ask them how fuel injection works.

— Startup L. Jackson (@StartupLJackson)

May 1, 2015

Ain't no party like an API party, 'cause an API party don't---Rate limit exceeded!

— Startup L. Jackson (@StartupLJackson)

May 4, 2015

Teams that don't ship code weekly ship code weakly.

— Startup L. Jackson (@StartupLJackson)

May 13, 2015

If you can't find a rap quote to support your idea, is it even worth blogging?

— Startup L. Jackson (@StartupLJackson)

May 26, 2015

Friends don't let friends start companies to address infrequent use cases.

— Startup L. Jackson (@StartupLJackson)

May 27, 2015

I'm often tempted to liken Silicon Valley to Logan's Run, but fear nobody here is old enough to get the comparison.

— Startup L. Jackson (@StartupLJackson)

May 29, 2015

We should just start making fake kickstarters for amazing thing that should exist and then wait for China to send them to us for $15.

— Startup L. Jackson (@StartupLJackson)

June 9, 2015

You can't sell privacy, but fear sells like fucking hot cakes.

— Startup L. Jackson (@StartupLJackson)

June 12, 2015

Committed founders burn the boats. Smart founders sell the boats and invest the capital in their pivot to land operations.

— Startup L. Jackson (@StartupLJackson)

June 13, 2015

Ads are the only type of micropayment that has ever worked.

— Startup L. Jackson (@StartupLJackson)

June 14, 2015

Done is better, then perfect.

— Startup L. Jackson (@StartupLJackson)

June 23, 2015

I have this theory that people who feel compelled to constantly RT praise for themselves & their companies weren't held enough as children.

— Startup L. Jackson (@StartupLJackson)

June 23, 2015

"Literally everyone I know has this problem!" — Founders building platforms for founders because everybody they know is a founder.

— Startup L. Jackson (@StartupLJackson)

June 26, 2015

How about a Mario game where the Princess saves a couple of helpless plumbers?

— Startup L. Jackson (@StartupLJackson)

June 30, 2015

I would back the shit out of a kickstarter for an AI bot that argues with people on Twitter using just statements from their past tweets.

— Startup L. Jackson (@StartupLJackson)

July 1, 2015

The irony is that if you want your money to go directly to a musician your best bet is to tip baristas well. pic.twitter.com/VJSFtbmnI8

— Startup L. Jackson (@StartupLJackson)

July 9, 2015

Maslow's Unicorn. pic.twitter.com/hweY74Wkxh

— Startup L. Jackson (@StartupLJackson)

July 23, 2015

Startup math: positive unit economics + fast growth = short-term negative cash flow + long-term profits

— Startup L. Jackson (@StartupLJackson)

August 5, 2015

The percentage of t-shirts in my closet from now-defunct startups is asymptotically approaching 100.

— Startup L. Jackson (@StartupLJackson)

August 8, 2015

To anger 1/2 of SF, suggest that a private co might do something better than government. To anger the other 1/2, suggest it be regulated.

— Startup L. Jackson (@StartupLJackson)

August 27, 2015

Always read the release notes. pic.twitter.com/yp3UdFDHNF

— Startup L. Jackson (@StartupLJackson)

August 28, 2015

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[startupljackson]

Choose Your People Wisely

If you work in tech startups, you likely have the privilege to choose who you work with or for. No company will be perfect, and even the most talented people will have flaws, often huge. Everyone is a package deal, as Mrs. Jackson often likes to remind me. 

But in business, I’ve found that the one thing to never compromise on when choosing people is morality. Not because immoral or amoral people can’t succeed in business -- they often do -- but because these people will fuck your coworkers, they will fuck customers, and they will fuck you as soon as it is in their best interest. 

They will do it in little ways (stretching the truth to close a deal), and in big ways (washing out departed co-founders for their own benefit in an exit). And afterwords, they will quickly move on without a second thought, telling themselves that it’s “just business.”

I don’t know about you, but doing great work takes all my energy. I don’t have any left to watch my back, regardless of the potential upside. I need a team that defines success as everybody winning (founders, employees, customers, etc), and when things get tough -- which they almost always do at some point -- does the right fucking thing.

Fortunately, I’ve found that there are plenty of great people out there to work with. And with a little effort, you can usually figure out who the other ones are pretty quickly.

Choose your people wisely.

[startupljackson]

Music Labels are to culture what patent trolls are to business

“No one will give you a better offer than us" - Macklemore as Jimmy Iovine, “Jimmy Iovine”

"Mm-hm," I replied, "I appreciate the offer Thought that this is what I wanted Rather be a starving artist Than succeed at getting fucked" - Macklemore, “Jimmy Iovine”

Apple released a streaming service today. In case you missed it, don’t worry, it’s more or less the same as every other service out there. Apparently they couldn’t even set their own prices even after buying Jimmy and Dre for $3B.

If we ever want music technology to reach its full potential, we need to admit a few things:

Music technology sucks - As Apple pats itself on the back for a job well done, it’s time we admit we live in a relative dark age. Consider for a moment that a small team of teenagers unconcerned with legalities could build a better digital music experience in a weekend than is available on the market today.

Music lives inside walled gardens or isn’t available at all online, is hard to share, is hard to consume with others, and it’s nearly impossible to use existing music to create derivative works and new experiences.

The music business is a cartel - The music industry is effectively run by three corporations. Three. These corporation hold the rights to enough music that they can collude to prevent innovation and maintain artificially high prices for consumers. While the effects may be obvious, it’s time to start using the word cartel, which as a specific legal meaning.

When asked for permission, they resist progress, and when it is forced upon them they sue. Labels are to culture what patent trolls are to business.

Artists will never make money recording music - Musicians, with the handful of exceptions in the history of the planet, have by-and-large never made money selling recorded music, and they never will. If there wasn’t money for musicians with the current regime in the 90s, it’s silly for anyone to suggest there could be today or going forward, or to feign outrage when people consume music in some new way that doesn’t get artists paid.

It’s time to stop pretending that morality requires a societal transfer of wealth to music labels in the name of artists. Our current legal regime does not result in artists making money in any meaningful way, and it will not without massive changes.

[startupljackson]

Thoughts on the Secret Whatnot

Thoughts on the Secret Whatnot

First, I tweeted some wrong numbers and it got Grubered. I’d edit them, but can’t. Thanks, Twitter.

Now that that’s out of the way, some quick thoughts...

1) The Secret founders built an amazing app. They are talented designers and failed the way all social apps fail, by not randomly working (more on that another day). I loved the app. I used it a bunch. From a UX perspective, it was best in class.

Their big issue was that they were Silicon Valley famous before product-market fit, which meant the failure was public and the hype cycle inescapable. That may have been their fault, may not have been. Journalists can sort that out. Other founders: don’t ever do this.

2) We’re discussing who got screwed in a VC deal. I think the thing you have to start with here is that all VC firms do is VC deals. Many have been in business for decades. They are experts. Founders have at most done a few deals. It’s fair to say that one side of every term sheet is an expert and one side is a novice.  So, if a deal becomes acrimonious it’s either because the VC used their savvy to screw the founders (founders get angry), the founders operated in bad faith/were deceptive (VCs get angry), or the VCs did something imprudent (buyer’s remorse). This seems to be the latter. It’s hard to argue the founders have any fault in all this.

3) An $8M A round (~$10M total) for a pre-product market fit social startup is probably overkill, but I get it. These were talented product people in an emerging category that promised to be huge. On a risk-adjusted basis this wasn’t all that crazy.

4) The “bad” part of Secret’s financing was the B round, which from the outside looked like over-eager investors trying to cram money into a category they perceived to be hot and founders they saw were talented. They did this by over-financing and by paying the founders to let them do it. No innocents were harmed in the financing of Secret’s Ferrari(s).

5) Google Ventures is a good firm. They put a small amount of money (for fund size) into the seed and A rounds of an early company, then sat out the imprudent B. Solid work, guys. Carry on.

6) If I were the Secret founders, I wouldn’t feel bad about keeping the money VCs paid me to cram money into my company, but I might consider giving it to the Kapor Center.

[startupljackson]

An Open Letter to YC Founders on Demo Day Eve

It’s YC fundraising season and the perennial discussion about valuations has begun. It’s frankly kinda tired. Smart investors will do fine investing in YC companies at “exorbitant” pricing, and crappy investors will lose money, probably at any price. The end.

That said, there’s a perennial problem that is worth discussing, which is how founders should go about raising their seed rounds in a feeding frenzy environment, which YC Demo Days clearly are. This is some free advice for YC founders. You’re about to raise the most important money your company will ever take. It has the more potential than any other financing to kill your company if done poorly. And done well, will give you the resources and support you need to grow your business.

Note: I have no idea what advice YC gives founders on fundraising. They run a great program, are smart folks, and the few companies I am aware of in the current batch are very impressive. To the extent that some of their founders are not sophisticated fundraisers (or bad at anything else), it’s unfair to blame YC. This is a compilation of advice I’ve given founders (YC and not) over the years, not a critique of YC.

Know What Your A Looks Like

If you are a successful company, this is unlikely to be the last money you ever raise. Most of you probably plan to raise an A. The first question you should be asking yourself is what metrics you’ll need to do so.

Determine which metrics you think you’ll be judged on at your A, e.g. revenue, unit economics, growth, etc. Guess at what you think “good” numbers are, and then share these with advisors and investors. You can’t have a good plan if you’re wrong about the goals.

Now, figure out who you need on your team to get you there. Do you have them? Probably not. Budget to hire to fill out the team. Focus on investors and advisors who fill the gaps.

What do you need for marketing? Do you need firm CACs by the A? If so, have you budgeted to figure them out? What is your marketing strategy? MIT super-nerds are often surprised how much Scotch it takes to get a BD deal done even in Silicon Valley.

Next, figure out how long you think it’ll take you to get there. It’s hard to go fast for extended periods of time. Be realistic about that ski-slope graph you made in YC. It might not last for the next 24 months.

Now, take your budget and pad it by 50%. Shit happens, particularly in startups.

Once you’ve completed this exercise you can go to investors and say “We see our Series A happening in X months, when we hit Y metrics. We believe we need Z dollars to hire A-C, grow with D strategy.” This turns out to be a great way to figure out if investors are smart. Good ones will help you build a better plan and you’ll be better for it. Bad ones will have poor feedback or just ask you where to send the check.

Raise the Right Sized Round

Broadly speaking, the biggest mistake investors make is overemphasizing valuation in hypergrowth investments. 100x vs 500x are all the same. The biggest mistake founders make is optimizing for dilution.

I OH a YC founder at a cafe last week talking about raising $500k on $10M. While $500k may be enough to make progress, if you’re raising above $10M in the A round, you’ll probably need some decent metrics. If you can get there in $500k you are an outlier. This company is probably fucking up.

The most likely scenario is that this company will need to raise again, and probably soon. It won’t always be as easy or fast as Demo Day fundraising. Raise enough that if things go well you can get to the A.

Money is easy today and valuations are high. It may not always be this way. Raise enough that your business is “real” by the time you have six months or less of cash. What that means will depend on your business, but you will never again be able to raise on a dream. The worst possible thing you can do to your business is raise just enough money to throw up mediocre metrics right around the next round, especially with a high valuation you can’t back off of.

Hire VCs Like Employees

Ask your investors how they invest. Do they follow on? What are their expectation for the A? If you raise a second seed, do they want to participate in that? Make sure their goals align with your plans.

You won’t have a problem raising money, but raising money that comes with good people attached takes a lot of time. If you take three days so you can “get back to work” you should expand your definition of work.

The one structural criticism I have of the YC process is the mandate (so I hear) to founders to actively avoid talking to investors until right before Demo Day. I’d recommend (hi Sam) they amend this to avoid taking money until that window. I assume this mandate comes from a desire to see the companies building product, and that’s a great sentiment, but it puts you as a founder in a position where you have to make decisions on your team (VCs) very quickly.

Founders should vet VCs over weeks or months. Ideally you’d interview them, check references, and even get some free labor out of them as you’re getting to know one another. If you take checks after a half hour call with a VC one of you is making a bad decision, it’s just not clear who.

You deserve the VCs you hire.

Plan B

Think about what will happen if things don’t go well and how you’ll raise additional capital. Consider raising from investors who will follow on if you need more money to get to an A. New investors, angels, and unsophisticated folks will usually rather invest in the new shiny shiny than stick with you. Investors you have built a relationship with who can see past the metrics and are willing to double down because the believe in you are an underappreciated asset.

Post Demo Day, make sure you’re asking your VCs for help regularly and working with them. They are usually smart people (or you fucked up hiring, see above), and free labor. The startup that treats their investors like a bank and only calls when they run out of cash is missing opportunities.

Sundry

Advisory Shares - Advisory shares are bull shit. All investors should be value add. If the price is wrong, fix it. The bar for advisory shares should be very high and probably you shouldn’t be using them with investors.

Dilution - Most startup outcomes are binary. Optimizing for the size of your slice is almost never a good idea if the pie is big. Raise enough to bake a big pie.

Ego - It’s tough to raise at $6M when all your peers are raising at $12m+. But not all companies are at the same stage and not all companies are worth $12M at Demo Day. The founders that optimize for ego end up hurting when they can’t raise or when they do get $500k at $12M and then can’t raise again in 12 months.

Value Add - Everybody says they’re the best. Press VCs on specific things they will do for you. Make sure you understand where they fit in. Maybe try a variant on the Handshake Protocol.

Conclusion

If you found this post helpful, please send me advisory shares via the blockchain. I’m sure there’s a company in the batch that can help with that.

[startupljackson]

The Counterintuitive Thing About Counterintuitive Things

There is a great (as in large) memes swirling around the startup world these days which posits that the best ideas our counterintuitive, running startups is counterintuitive, investing is counterintuitive, etc, etc, etc. Counterintuition is the new intuition!

You could be forgiven as a young founder for reading all of this and resolving very cleverly to list out everything you know about the way the world is and how it works, and then proceed to build a startup that assumes the opposite. As an aside, if you do decide to do this, please blog your experiences.

It is true that it is easy to be dismissive of great ideas and most people are, but this frame that great ideas are counterintuitive is at best helpful in not dismissing out of hand good ideas when they come to you. And you’re a VC that might help you get a few more wins, or a tech worker looking to get into the Next Big Thing early. But, if you’re a founder looking to start a great company, it is a passive mindset that doesn’t get you very far.

If your goal is to build a startup, you need a more proactive strategy; a way to develop a novel thesis and amass the information you will need to execute against it. Think about your worldview—the thing which drives your intuition—as a framework or ruleset which is never fully complete. Intuition is how you apply this ruleset to new sets of facts. 

The best way to develop a better framework than others is to approach the task consciously, and to work constantly at it. While others will often suggest the best thing you can do as a founder is learn to code, this is in fact one of the worst uses of your time (unless you enjoy puzzles, in which case it's great). Most important software startups in 2014 are fundamentally about solving big human problems within the context of human systems with boring technology. If you accept this premise, your time is best spent developing insights into human needs and behaviors that existing frameworks (conventional wisdom) do not account for.

Ask everyone you meet what they believe, and why. When you’re talking to your Cousin Eddie, ask him about his favorite apps. How does he buy stuff? Does he watch YouTube? How does he find new restaurants or plan his travel? How does he advertise his small business? Does he use Groupon? He loves Groupon because it helps with cash flow? That's Interesting.

When you meet other founders, ask them how their business works. Treat them as experts with insights that can help you improve your framework. Who are their customers? What do their customers love about the product? What have they tried that customers hated? How do they explain the product to customers? They’re building a marketplace, cool! How much do providers have to make to stay engaged? How many uses before a buyer sticks?

You can do this with academics, teenagers (teens are fucking weird), VCs, etc. Everybody knows something you don’t. Take it. By approaching every conversation as an opportunity to learn about the world, you’ll not only develop a better model of the world and therefore better intuition, but people will probably like you a lot more. “He was really interested in me and my perspective. What a good guy!”

And read. Certainly read the tech press and industry experts. There is genius buried within the echo chamber and sifting through it all is the cost of doing business. But also read outside of tech. Founders would build better consumer experiences if they understood psychology and evolutionary biology. They would be more effective expanding internationally if they understood history and studied languages. They would develop better pricing and engagement mechanics if they had a firm grasp of behavioral economics.

And if you have an area you're working, talk to customers. Every day. Talk to users of your product, active, inactive, new, and old. Talk to people who don't want to use your product. Talk to people who are using a competitor's product. Talk to customers of products in adjacent markets. Now, reread this paragraph and replace talk with listen. Understand how customers see the world. They don't know the solutions, but they know the problems well. If you haven't talked to a customer today, you're doing it wrong.

The simple fact is that the majority of great software startups today (slightly dated) required no technical insight to start, and you can always hire experts to help you scale. The driver of these innovations is an uncommon understanding of what the customer (aka humans) wants or how to deliver an understood solution it in a better way. Note that the latter is typically a business model rather than technical innovation (aka creating win-win situations for participants in a transaction). While it may be unintuitive to outsiders, it’s intuitive to the founders because they developed a better way of thinking about their corner of the world.

So, the next time someone suggests to you that great startup ideas are counterintuitive, tell them that while that may seem to be the case, counter to their intuition, good ideas are usually obvious.

[startupljackson]

What would you say you do here, Hachette?

1st Bob: What you do as a publisher is you take the books from the authors and give them to the reader?

Hachette: Yes, yes that’s right.

2nd Bob: Well then I just have to ask why can’t the authors send them directly to reader?

Hachette: Well, I’ll tell you why… because… authors are not good at dealing with business.

1st Bob: So you physically take the books from the author?

Hachette: Well… No. They email it… or they’re upload it to a 3rd party website.

2nd Bob: So then you must deliver them to the reader through your site?

Hachette: Well… No. ah sometimes. But https://www.hachettebookgroup.com is a long URL to type and people don't know about it. And it's hard to get the book onto a Kindle that way.

1st Bob: What would you say you do here?

Hachette: Look we already told you, I deal with the @#$% business so the authors don’t have to. I have business skills! We are good at dealing with business, can’t you understand that? WHAT THE HELL IS WRONG WITH YOU PEOPLE?!

[startupljackson]

HTML-first

There’s a raging debate on the twitters about whether it makes sense to build for Android vs iOS first. The real answer is that it depends on the problem you're solving and the user's context. But most of the time, neither is correct. Most startups should be be building for the web. In a mobile-dominated world of 2014.

The Android vs. iOS debate is one hinges around whether you think it makes more sense to target a (perceived) larger market, or target one that the technorati favor. But why choose? Building a good responsive web app has a series of benefits, the primary one being that you target users on every platform with one app. Every user. Every platform. All the time. Release whenever you want. A/B test with ease. Go, go go.

Your primary job as a startup is to learn. The primary threat to your business is that nobody gives a shit about the thing you built and you would have been better off sitting in Dolores Park for three months. Keep that in mind next time VCs and journalists are debating the merits of various platform strategies. That shit matters to them. It doesn’t matter to you. At least, not when you’re pre-product-market fit.

And remember, once you think that shit is working and do decide to go native, you'll still need a great web experience for user acquisition. The first experience most users have with your product will usually be when they land on it in browser. If your app is amazing, but the web app is half assed, potential users will only see your app as half assed.

The clear exception to this is when you can’t build something with the web. If you literally can’t, because you need hardware access you can’t get on the web, build native. If you're selling something digital, go native. If you don’t believe web is a valid test of the interactions you think matter you’re probably wrong, but go ahead and build native. 

The vast majority of the time, that app you think is an amazing idea isn't. Or it kinda is, but you need to find the right pivot. When you great native apps, you don't see all the work it took to get there. And for every great app, there are hundreds that never got to product-market fit, abandoned because the team ran out of time to find it. It doesn't fucking matter which platform they chose.

Bonus Rant: Android Second

If/when you do go native, you should probably start with iOS. Here are a few reasons Silicon Valley companies shouldn’t be Android-first. These may or may not apply to your startup if it’s not in Silicon Valley, targets a specific demographic that is primarily Android, or you’re past product-market fit and the name of the game is scale.

You are developing in English for the Play store, so Android’s global market penetration is irrelevant.

Apple devices get used more, and apple users install more apps.

Development will be slower, because Android is fragmented both in terms of OS versions and devices.

Features will either not work on all Android devices, or you’ll be forced to dumb down to address more devices.

It’ll be harder to get press, because nobody at TechCrunch uses Android.

It’ll be harder to hire, because potential employees mostly use iOS.

It’ll be harder to test premium services, because Android users are less affluent. All Uber for X apps start as premium services.

You won’t be able to test monetization easily, because Android users don’t monetize well.

You own an iPhone.

Peace.

[startupljackson]

a framework for pricing bitcoin

I'm a big fan of crypto "currency." I am convinced that Bitcoin or a similar system will afford a new class of open infrastructure apps. These apps will be profoundly disruptive, driving down costs for consumers and devastating incumbents' revenue streams. They will do for payments—and possibly other categories—what open source has done to enterprise software over the last 15 years.

A few days ago, Fred Ehrsam’s excellent piece on Bitcoin in Recode. Fred observes that Bitcoin will eat the payments industry (one can hope) and suggests one method for valuing bitcoin:

In the present, the value of bitcoin as a currency can be viewed as the sum of the cost savings of using the bitcoin network for payments rather than alternative payment networks. 

I don't think this is right. This is the upper bound on the value of bitcoin, but not the lower bound. If Coinbase owned bitcoin and could control the value, they'd price it to lower costs by 50%, kill Visa et al, make $250M a year, and buy yachts. But they don't.

A better way to arrive at a valuation is by looking at how it would be used to facilitate payments at scale, and asking what the value would need to be. Bitcoin is volatile fuel for financial transactions. Because of this, institutions who were only interested in using it for payments (and not stored value) would have as little as possible on hand at all times.

Eventually it’s likely users of bitcoin would buy and sell it in realtime on efficient exchanges to meet transaction demand. This suggests that the long-term price will be a function of realtime demand.

If this is the case, the price of bitcoin will ultimately settle at the value of fiat currency (C) that needs to move somewhere per minute, multiplied by the average number of minutes needed to clear a transaction (M), over the average number of bitcoins available for trading (A). That’s: C*M/A.

Let’s break that down and get a little more precise and try to plug some numbers into this formula. First, on currency, let’s assume that Bitcoin becomes as big as Mastercard. Mastercard represent about two trillion dollars transferred annually, or around $4M per minute.

An interesting property of the Bitcoin protocol is that it takes around 10 minutes to verify a transaction on average. Assuming transactions are evenly distributed, the average transaction takes about five minutes to clear.

The final variable above (A) is the number of Bitcoins in circulation. The theoretical maximum this can be is 21 million bitcoins, but this isn’t the number that matters. We care about the number “in play.” Since bitcoin are lost forever when someone loses their key, hard drives crash, or are temporarily out of play as speculators and Liberatarians hold them, etc. it’s likely that the practical number will be much lower. Let’s use 10M to make the math simple.

So, in the example above, if you replaced the Mastercard payment system with bitcoin, each bitcoin would have a value of $4M * 5 / 10M, or $2. If you add in Visa, Diner’s Club, Discover, and American Express the number jumps to around $6.

I couldn’t easily find numbers on interbank (et al) transfers, so we’ll let the HackerNews figure out how that factors in. Assuming it's 10x the payments number, this still puts the long-term value of bitcoin at $60, an order of magnitude less than it's trading at today. 

Of course there could be other applications for bitcoin outside of payments that further increase demand. However, payments is the killer app and it's hard to see how bitcoin maintains a utility value anywhere near current prices.

[startupljackson]

Hey Look, Software Just Ate VC!

Remember when Sacca was buying Twitter stock like a boss because the founders preferred him to VCs? There’s now an app for that. 

Recently AngelList quietly started testing Syndicates. Syndicates allow you to raise any amount of money on behalf of a startup and take 20% of the carry. 

If you’re a hot startup you can now buy advisors without stock. Instead of issuing them advisory shares, just grant them an allocation and let them pimp it on AngelList. You get fewer investors to deal with and more help from people you like.

If you’re awesome at helping startups and/or you’re good at hyping startups publicly, you are now a walking VC fund. Just make a deal to advise the startup, get your allocation, and fill it up. When you help the company succeed you make bank.

If you’re an accredited investor who thinks they can pick ‘em, you can now get access to deals without VC management fees. That saves you ~20% off the top. And since you’re giving up 20% of carry (or more) anyway with a fund, that’s a sweet fucking deal. 

If you’re a VC you should be thinking really hard about AngelList right now. You’re either going to make this shit useful or start losing deal flow. I’d also suggest you start working on your personal brand. It might come in useful.

And did I mention, AngelList takes a cut of the carry? Well played Naval. Well. Fucking. Played.

* Note: Image above from the game Syndicate. If you're too young to remember this click here.

[startupljackson]

Don't Let the Money Make You

Of course I want dubs and a candy painted 'lac Watch the videos and get the girls in the back But if that's what I believe in, and the reason that I rap Uncle Sam is my pimp when he puts me on the track - Macklemore, Make the Money

We all want the money. You get the exit, fucking enjoy it. And don't forget to call me when you get your boat. Seriously Mike, what up?

But, if you're in this shit for the money, your strategy is misaligned with your goals. You're filling a chair someone else should be sitting in. Money is not a sufficient motivator and people like you quit when it gets hard anyway, so get the fuck out now.

Click here to exit. No hard feelings.