The Myth of the Young Startup Founder


In February 2004, Mark Zuckerberg famously launched Facebook from his Harvard dorm room at the age of 19. By that summer, Zuckerberg moved himself and the company to Silicon Valley and never looked back.

Over the next eight years, Facebook would attract half a billion users and nearly $7 billion in venture capital investment, on its way to a May 2012 IPO that valued the company at more than $81 billion. Today, Facebook has more than one billion users and is worth more than $500 billion. Zuckerberg is still CEO, and at 35 years old, has an estimated net worth of $65 billion—making him the eighth richest person in the world.

It’s a fascinating story. So fascinating in fact that Hollywood made a feature film about it called The Social Network. And while the story of Mark Zuckerberg and Facebook has undoubtedly inspired an entire generation of young entrepreneurs and


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Europe’s Venture-Backed IPOs and American Exchanges

Last month, my friend Nicolas Colin, a Director at The Family, described Europe’s tech IPOs as “boring” in a newsletter. Among other points, Colin argues the need for a deeper ecosystem that links Europe’s entrepreneurs with capital markets. Large IPOs are a big part of this:

We may have IPOs of companies with a European footprint such as Spotify and Farfetch—and the resulting liquidity. But when a European company goes public in the US we miss out on the positive feedback loop that nurtures an ecosystem of investment bankers, analysts, and institutional investors, which in turn will help more European companies go public. What’s more, those IPOs in the US are dependent on the ups and downs of the (partially uncorrelated) US IPO market—and that’s a problem. Nothing like the WeWork debacle has happened here in Europe, but now our tech companies should shelve their IPOs because Adam


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How to Tell if You Have Product/Market Fit

This is a debate that will never be settled. Plenty has been written about how to define product/market fit. The consensus seems to be: (a) it’s generally easier to identify when you don’t have it, and (b) when you do, it’s hard to objectively point to why. It’s just a hunch. A feeling.

Marc Andreessen’s article from 2007, “The only thing that matters”, is probably the standard-bearer. He writes:

Product/market fit means being in a good market with a product that can satisfy that market.

You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.

And you can always feel product/market fit when it’s happening. The customers are buying the product

Gary Hart with a crowd of supporters. Credit: Associated Press.

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Hidden First Rounds

One of the drawbacks of venture capital databases is that they are dynamic. Information trickles in, often with significant time lags. This is especially true at the earliest stages, where rounds are often unannounced and many startups are too small for anyone to notice. It’s a structural challenge that I’m not sure will ever be fully resolved.

The underreporting and time lags associated with very early deals has become further compounded in recent years. Many startups in Silicon Valley and other leading startup hubs have increasingly relied on unpriced rounds (SAFEs or convertible notes) for their first or even second rounds of financing. Because these rounds are unpriced, they don’t appear in a company’s cap table until after it has raised a priced round later (and further, announced the deal—see above).

Combined, there are structural and cyclical reasons that the underreporting of very early venture rounds is especially acute now


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What Does Your City Say?

This morning a friend reminds of a Paul Graham article from 2008 titled Cities and Ambition. It’s excellent. For those of you who don’t know, Paul is the outspoken founder of Y Combinator—a prominent early-stage startup investor in Silicon Valley.

The general thesis of Paul’s article is simple yet elegant. Cities speak to us. They influence our behavior. They shape who we are. It matters where you live. A lot I would argue. The essay leads with this:

Great cities attract ambitious people. You can sense it when you walk around one. In a hundred subtle ways, the city sends you a message: you could do more; you should try harder.

The surprising thing is how different these messages can be. New York tells you, above all: you should make more money. There are other messages too, of course. You should be hipper. You should be better looking. But


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A Second Nobel Prize in Startup Communities

Last year, I wrote about Elinor Ostrom, an American political economist, who was awarded the 2009 Nobel Prize in Economic Sciences for her work on cooperation and collective action. Ostrom studied how rural communities self-organized to sustainably share scarce natural resources in the absence of formalized governance structures. In her Nobel acceptance speech, she described her work in the following way:

“Carefully designed experimental studies in the lab have enabled us to test precise combinations of structural variables to find that isolated, anonymous individuals overharvest from common-pool resources. Simply allowing communication, or “cheap talk,” enables participants to reduce overharvesting and increase joint payoffs, contrary to game-theoretical predictions.”

In other words: we tend to cooperate with people we know, trust, and frequently engage with, but find it easier to defect against people we don’t. This thinking is central to startup communities (or ecosystems), which rely on flows of ideas,

Screen Shot 2019-10-15 at 10.17.47 AM.png

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WeWork’s Collapsing Valuation in Context

WeWork’s calamitous IPO process may have moved into a new phase on Friday, as news reports claimed that the company is considering a valuation as low as $10 billion. That’s a far cry from an initial target of $47 billion—a figure that would match the company’s post-money valuation at the time of its most recent venture financing in January.

A lot has been discussed about WeWork in recent weeks. There are vocal critics who say that the company is a disaster—that it is massively overvalued, its governance practices are irresponsible, and its pathway to profitability is hopeless. Others say that the WeWork is deeply misunderstood and that the company is a disruptive innovation. Some say WeWork is not even a tech company; others say it is.

There is good reason to believe WeWork has a challenging path to profitability, that the company is overvalued, and that its public offering is


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VC: An American History (Book Review)


Nicholas, Tom (2019),  VC: An American History , Harvard University Press.

Nicholas, Tom (2019), VC: An American History, Harvard University Press.

Seemingly everyone in my network has been busy the last few weeks reading Secrets of Sand Hill Road: Venture Capital and How to Get It, the highly anticipated book by Andreessen Horowitz partner Scott Kupor that published last month. By all accounts, it’s an excellent guide for helping entrepreneurs and other onlookers understand the practicalities of the venture capital business. I look forward to reading it soon.

I, on the other hand, have been focused on a very different type of book on the venture capital industry. VC: An American History is a

Artist depiction of an early 19th century whaling expedition.
 Nicholas (2019),  VC: An American History , Harvard University Press.
 Nicholas (2019),  VC: An American History , Harvard University Press.
 Nicholas (2019),  VC: An American History , Harvard University Press.
The Old Slater Mill in Pawtucket, Rhode Island, founded in 1793 by Samuel Slater (an entrepreneur) and Moses Brown (an industrialist and investor). Their partnership brought the Industrial Revolution to America, and their agreement (detailed in the book), contained many similar elements as modern-day venture capital term sheets.
Laurance Rockefeller
Georges Doriot
 Nicholas (2019),  VC: An American History , Harvard University Press.
 Nicholas (2019),  VC: An American History , Harvard University Press.
William Henry Draper, Jr.
 Nicholas (2019),  VC: An American History , Harvard University Press.
 Nicholas (2019),  VC: An American History , Harvard University Press.
“U.S Eases Pension Investing”,  The New York Times , June 21, 1979.
Arthur Rock
Apple founder Steve Jobs (L) and early investor Mike Markkula (R)
Genentech founders Herb Boyer (L) and Bob Swanson (R)
Nicholas (2019),  VC: An American History , Harvard University Press.
Nicholas (2019),  VC: An American History , Harvard University Press.
Tom Perkins (L) and Don Valentine (R)
Nicholas (2019),  VC: An American History , Harvard University Press.
The “beanbag” conference room at Xerox PARC Computer Science Laboratory
“The Coming Crisis In Home Computers”,  The New York Times , June 19, 1983.
 Nicholas (2019),  VC: An American History , Harvard University Press.
 Nicholas (2019),  VC: An American History , Harvard University Press.
From left to right: John Doerr, Vinod Khosla, Michael Moritz, Doug Leone
Ann Lamont (L) and Ann Winblad (R)
 Nicholas (2019),  VC: An American History , Harvard University Press.
 Nicholas (2019),  VC: An American History , Harvard University Press.
 Nicholas (2019),  VC: An American History , Harvard University Press.
 Nicholas (2019),  VC: An American History , Harvard University Press.
 Nicholas (2019),  VC: An American History , Harvard University Press.
Nicholas (2019),  VC: An American History , Harvard University Press.
Nicholas (2019),  VC: An American History , Harvard University Press.
Nicholas (2019),  VC: An American History , Harvard University Press.

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Platforms versus Pipes

One of the biggest challenges facing startup communities (or ecosystems if you prefer) is the inability of “feeder” organizations—such as governments, economic development authorities, corporations, and universities—to engage with an entrepreneurial mindset. The reason is simple: startups and startup communities are organized through networks. Feeders are structured around hierarchies.

Hierarchical organizations exist in a “complicated systems” paradigm, where input-output relationships are linear, outcomes are relatively stable and predictable, and the path to success is illuminated by rigorous planning, tight control, and flawless execution.

Feeders like control. They like plans. They like programs. They like clear lines between cause and effect, and a return on investment that is reducible to one number. Moreover, feeders often want to be the vehicle for change rather than an enabler of the change agents. But these are not the makings of vibrant startups or startup communities.

Startups and startup communities are “complex

Joe Maruschak, Bill Janeway

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Accelerated Companies at Series A

A friend asks: “what percentage of U.S. startups that raise a Series A do not go through an incubator or accelerator?” That’s a great question that I haven’t thought about before. So, I dug into the data to find out.

The chart here shows the annual number of Series A financings in the U.S. (bars) between 2010 and 2018, broken down by whether the company previously participated in an accelerator (dark bars) or not (light bars). The green line on the right axis indicates the accelerated-company share of Series A financings.


We can observe a steady, linear increase in the share of Series A startups that previously completed an accelerator program—from around just 2 percent in 2010 to 28 percent today. The direction of the line does not surprise me, but I the magnitude does—around one out of every four Series A companies today participates in an


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Over the weekend, I first learned about the Japanese concept “Ikigai” (eee-kee-guy), which translates to “reason for being” or “reason for living.” I don’t recall where I found out about it, but it was through this graphic:


I was immediately captivated by the image and the construct. I just spent all of last week on a work retreat of sorts with two dear friends—Amy Batchelor and Brad Feld—and we talked a lot about deep, life’s purpose kind of stuff. So, my discovery of the Ikigai concept could not be better timed.

After sitting with it today, this framework has given me remarkable and immediate clarity into what is causing me angst in my working life at the moment. At this stage, I have a pretty good sense of what I’m good at and what I can be paid for. However, I’m deeply questioning if the Continue reading “Ikigai”

It’s been a record quarter for European VC investment

This article originally posted at Sifted.

In the first quarter of 2019, European startups raised a record amount of venture capital investment. That’s the key takeaway from this Sifted Chart of the Week.

According to data provider Dealroom, venture capital investments into European startups reached €7bn (€8bn if Israel is included) so far in the first three months of the year; an all-time high. Those capital investments were spread over 690 venture deals (766 when including Israel).


The news comes as European startups raised an all-time record for annual venture investments in 2018 of €24.9bn, according to Dealroom data. That’s up from €23.1bn in 2017, for a gain of 8%.

Some of the biggest deals include $500M into Veeam, the Swiss enterprise security software company, $440M into London-based Fintech company OakNorth Bank, and $300M into N26, another Fintech startup based in Berlin. Other major funding Continue reading “It’s been a record quarter for European VC investment”

If You Want to Better Understand Startup Communities, Read These Three Women

I’m working hard on The Startup Community Way this week with my co-author Brad Feld. As we’re polishing up the meaty part of the book—which draws on a wide range of theory, empirics, frameworks, and just some really brilliant thinking on the part of the many impressive shoulders this work stands upon—a few names keep coming up in the references we’ve assembled.

Three of these names I want to talk about today are intellectual giants in the areas of entrepreneurship, geography, and cooperative social systems. Their work collectively intersects in a way that explains a lot about why startup communities exist. If you want to understand startup communities, you should know their work. Two of them I consider friends, so not only do I get to benefit from their insightful work, I also know there’s a kindness and generosity behind their ideas. The third is not someone I knew, and

Left to right: AnnaLee Saxenian, Maryann Feldman, Elinor Ostrom

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Startup Communities Everywhere in the World

Amy and I are in Knoxville, Tennessee all week. We are with Ian Hathaway (my co-author of an upcoming book titled The Startup Community Way) finishing up the draft of the book.

My plan was to end the week with the Knoxville Marathon on Sunday (marathon #26) but I had a crummy long run on Saturday in Boulder and woke up this morning with a cold. While it could merely be pre-race hypochondria, I feel lethargic enough to consider downgrading to the half marathon. Plus, my resting HR is 60, vs. my normal low 50s, so it’s another indicator that I’m worn out and need to take care of myself. So, we will see.

Recently, Ian and Richard Florida did a large study that culminated in an extensive report on the Rise of the Global Startup City. In addition to the report, there’s a website with a digital

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Silicon Valley VCs are investing more in European startups

This article originally posted at Sifted.

Silicon Valley investors are growing increasingly interested in Europe. That’s the main takeaway from this Sifted Chart of the Week.

Last year was a record year for fundraising by European startups with €20.5bn (£18.1bn) spread over more than 3,300 deals. And it came with an increasingly US flavour.

US firms were present in more deals: Some 7% of venture capital deals into European startups involved at least one Silicon Valley venture capital firm in 2018, up from 3 percent in 2013.

And they invested bigger sums in those deals: 22% of total venture capital invested in 2018 was in deals involving at least one Silicon Valley venture capital firm, up from 12% in 2013 and 8% in 2008.

This indicates that when investing in Europe, Silicon Valley venture capitalists are involved in relatively larger, late-stage deals.

Some of the biggest deals include Continue reading “Silicon Valley VCs are investing more in European startups”

The 1% (of VC)

In the last year, I have written about the increasing size of venture capital deals across the round stages and what it means (here, here, here, and here). Today I’ll take a closer look at that the top of the distribution by examining the share of venture capital dollars in U.S. startups captured by the largest one percent or five percent of deals.

This analysis shows that in spite of the large expansion in venture capital deployment across all deal sizes in recent years, the biggest deals are driving the trend. In fact, the largest five percent of deals now account for more than half of venture capital deployed —twice as much as was the case just a decade and a half ago. In the last few years, the trend has been even more concentrated—driven entirely by the top one percent.

The first chart


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Why Content-Driven Strategy is Smart Business

Nicolas Colin, Co-Founder and Director, The Family

Nicolas Colin, Co-Founder and Director, The Family

My friend Nicolas Colin has an excellent new article out titled “Content-Driven Strategy,” in which he makes a convincing case for thoughtful content as a means of demonstrating and shaping the strategic direction of businesses. Nicolas would know: a robust content-driven strategy has been foundational to the success of The Family—the early-stage investment firm he co-founded with Oussama Ammar and Alice Zagury in 2013. What started out in Paris, The Family is expanding rapidly throughout Europe, with offices in London, Berlin, Brussels, and more surely to follow.

What’s special about The Family in my mind is that they’re investing not only in some of Europe’s most promising early-stage companies, they’re determined to improve the environment around them. The Family is on a mission to change the way people think and behave in the European startup ecosystem, and a strong content Continue reading “Why Content-Driven Strategy is Smart Business”

How Change Happens

Screen Shot 2019-03-14 at 2.13.47 PM.png

I recently picked up a copy of How Change Happens: Why Some Social Movements Succeed While Others Don’t, a book out last year by Leslie Crutchfield. She leads the Global Social Enterprise Initiative at Georgetown University’s McDonough School of Business. I have my friend Bob Litan to thank for the tip.

I immediately became interested by the title because of my upcoming book The Startup Community Way, which will be out later this year. That interest came from the fact that our book (I’m co-authoring it with Brad Feld) is really about a special type of movement-driven social change—one built around local entrepreneurship.

How Change Happens is the product of many years of research by Leslie and her team studying a wide range of social movements in the United States—from gun control, to same-sex marriage, to smoking, to drunk driving, to acid rain reduction, to vaccination, and Continue reading “How Change Happens”

Which cities lead the nation for women founding venture-backed startups?

This article originally posted at the Brookings Institution.

International Women’s Day is this week, and millions around the world are mobilizing to celebrate womanhood and promote women’s rights. Unfortunately, there’s perhaps less to celebrate for women in the venture capital industry and the high-growth startups it supports. In 2017, just 16 percent of venture capital funding in the United States went to startups with at least one female founder, and only 2.5 percent went to companies with all female founders.1 An estimated 9 percent of general partners (the people making investment decisions) at leading U.S. venture capital firms are women.

Compare those numbers to female representation in the workforce (47 percent), business ownership (36 percent), high-tech industry employment (30 percent), or as alumni of the relatively small number of feeder institutions (particular universities, degree programs, or corporations) that tend to dominate the sector (various percentages).2 It quickly becomes


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How venture capital mega-rounds obscure improving gender diversification of startup founders

Last month, I published The Ascent of Women-Founded Venture-Backed Startups in the United Statesa new report for the Center for American Entrepreneurship. I encourage you to read the whole thing, but here’s a summary. I also posted an additional analysis from the underlying data a few days ago.

My report looked at first financings by the gender composition of founding teams. I chose first financings for two reasons. First, I was particularly interested in capturing the number of companies entering the venture-backed pipeline each year. Second, I wanted to track company outcomes over time (follow-on financings and exit rates), which was the main novelty of the study. In order to do this, I had to group them into annual cohorts at the time they raised a first round of venture capital.

Today, I’m going to do something entirely different—analyzing headline numbers of venture capital investments ($) by founder


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