I spent 10 years living in Los Angeles, traveling up to the Bay Area every other week, sometimes weekly, to do angel investing.
During that time I learned that SFO is a complete disaster, with Karl the Fog creating all kinds of trouble. Also, I was frequently missing flights with insanely unpredictable traffic patterns in L.A. and the Bay.
When I made a little cheddar, I started treating myself to the fully refundable Southwest Premier tickets, you know the ones, that let you board first and take the aisle seat in row two. The coveted seat that lets you put your bag under the seat in front of you which in turn lets you bolt past the row one customers who are fumbling for their overhead luggage.
The basic premise: share revenue with publishers, Instagrammers/influencers, App developers and anyone else creating content on the platform, just like YouTube, Airbnb, Apple and Google’s App Stores and countless other partnership platforms do.
Right on cue, Facebook does the most misguided, heavy-handed and unsustainable version of sharing the wealth, by sharing $100m a year — .3% of their yearly revenue — in a series of grants.
The cynical take is that these kinds of one-time payoffs, to highly influential media organizations, are designed to silence and tamper criticism — they’re buying off influential people for a pittance.
The most gracious take is that Facebook feels bad for being such a horrible partner to the press and democracy.
Facebook’s self-inflicted wounds come from their founder’s obsession with growth, which at its core was based on three extraordinary tactics: removing friction, staying focused on global growth and stealing other people’s ideas.
If Zuckerberg had not set the tone of “move fast and break things,” the company would have been more thoughtful about their growth, and if they didn’t steal other people innovations so systematically — from Friendster to FriendFeed to Twitter to Snapchat — they would never have dominated the planet.
Of course, that obsession with speed and copying has resulted in — as Zuck himself instructed — the breaking of things, including our privacy and our democracy.
Here is how carry works, briefly: if the Fund invests $2m on behalf of investors and turns it into $22M (11x, cash on cash) the gain would be $20M. The carry would be 20-30% of that gain, depending on the deal with LPs (limited partners), which means $4-6M in gain.
The number one job of a venture capitalist is to stay a venture capitalist.
This might sound cynical but, as a VC, if you don’t return enough money to your LPs (limited partners, a VC’s investors) you will not be able to raise your next fund. If you don’t raise your next fund, you’re not collecting management fees to pay yourself and your team, and you don’t have a chip stack to play in “the big game.”
Once again, the press is here to remind poor, unsuspecting founders that venture capital can — GASP! — result in your startup trying to grow too fast. From today’s New York Times comes the link-baiting title: “More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost:”
The V.C. business model, on which much of the modern tech industry was built, is simple: Start-ups raise piles of money from investors, and then use the cash to grow aggressively — faster than the competition, faster than regulators, faster than most normal businesses would consider sane. Larger and larger rounds of funding follow. The end goal is to sell or go public, producing astonishing returns for early investors. The setup has spawned household names like Facebook, Google and Uber, as well as hundreds of other so-called unicorn companies valued at more than $1 billion.
Today I’m recommending another person I think fits my three criteria, which are, as a refresher:
They’re successful in their field, but not the most successful
The have strong opinions and like to mix it up, but they know how to listen
They don’t care what people think of them, but they want people to tune in
Preet Bharara was the former Attorney General for the Southern District of New York, was fired by Trump and is part of the composite that Brian Koppelman used for the brilliant and sharp-elbowed AG played by Paul Giamatti in the extraordinary “Billions”.
A waiter at Sugar Bowl this weekend recognized me from my podcast, and after a couple of meals in the dining room, got up the nerve to tell me he was a huge fan. This is, for the record, one of the most wonderful things a podcaster can hear.
If you see me out, even if I’m with my family, do not hesitate to say “hello,” give me a fist bump, take a selfie (if so inclined), and let me know what your favorite episode is. I like being a micro-celebrity and I love talking to people–don’t be shy!
Often the best advice is situational, and the situation here in the Bay Area has changed dramatically in the past decade. Today I wanted to detail the two answers a founder would receive to the question, “Should I move my startup to Silicon Valley?” depending on if they asked it in 2009 or 2019.
ShaneRMTanner on Reddit asks: How can I do a MVP for a delivery service I want to start? The basic idea would is this: A delivery service for people who use Offerup and Letgo auction apps. I do and continue to get validation on this idea. It plagues me that I have thought and continue to think about a solution to this problem. Maybe it’s something I’m not seeing, but, I’m driven to find the answer or move on.
Shane: The concept of an MVP (minimum viable product) is to do the LEAST work to answer the HARDEST questions.
There are some serial founders who specialize in starting and handing off startups to exceptional managers; Sky Dayton (who founded Boingo Wireless, EarthLink and other startups) comes to mind, but these individuals are rare.
You need to ask yourself as an angel investor the following two questions when looking at a founder with “founder ADD”:
I recently replaced all but three of the Macs in our office (the ones used for video editing), with ~$800 ACER Chromeboxes and the stunning, ~$900, USB-C powered Dell 38″ monitors (model: U3818DW).
Google’s Chrome OS is an absurdly fast, stable and distraction-free operating system. Over the past seven years of its short existence, it has become world-class.
Here’s why Google has nailed it:
As the world has moved to cloud-based software, running inside of browsers, the need to download client software has disappeared for almost every task. This means software startups don’t have to build clients for every desktop operating system anymore (some do, most don’t).
The Chrome Browser has become the standard for cloud-based apps to be built on — because it has massive market share.
Chrome Extensions are available for everything you need to do, from password management, Grammarly and advanced email with Superhuman
Last month we reached the tragic, and long-dreaded, moment in the history of self-driving cars: the death of an individual who didn’t opt into using self-driving technology. (In this case, it was a pedestrian, but it could have been passengers in a non-self driving car).
Why was I sounding the alarm on Twitter, my podcast, and CNBC, that civilians should be very careful investing in virtual currencies that are unregulated, anonymous, easily manipulated, phenomenally hackable, global, and often run by bad actors or the incompetent?
“To protect people from losing their money?” I answered.
I’ve got a complicated relationship with crypto, having monitored early projects like Bitcoin with enthusiasm.