I was already planning to write this post today before I knew that the markets would open down sharply (Nasdaq down almost 3% as of 11:30am Eastern). While we are still well off the 52-week lows this shakiness in the markets has very real reasons: Europe has been a mess for a while and the US is rapidly becoming one. The underlying reasons are deeply structural (i.e., we are not talking small fixes) and the existing politicians – and more profoundly – political systems are increasingly seen a...

I was already planning to write this post today before I knew that the markets would open down sharply (Nasdaq down almost 3% as of 11:30am Eastern). While we are still well off the 52-week lows this shakiness in the markets has very real reasons: Europe has been a mess for a while and the US is rapidly becoming one. The underlying reasons are deeply structural (i.e., we are not talking small fixes) and the existing politicians – and more profoundly – political systems are increasingly seen a...

The Internet has experienced an epic set of attacks over the last few months. This has ranged from massive compromises such as Sony’s Playstation Network to the smaller but potentially equally impactful breach of Mt. Gox (a bitcoin exchange that is still trying to recover). The affected entities have included both companies and governments, as in the recent hack of the CIA’s web site. It would be naive to believe that groups such as Anonymous or LulzSec will go away easily or even if they did...

The Internet has experienced an epic set of attacks over the last few months. This has ranged from massive compromises such as Sony’s Playstation Network to the smaller but potentially equally impactful breach of Mt. Gox (a bitcoin exchange that is still trying to recover). The affected entities have included both companies and governments, as in the recent hack of the CIA’s web site. It would be naive to believe that groups such as Anonymous or LulzSec will go away easily or even if they did...

I have always loved the videos illustrating orders of magnitude of scale. It simply seems a marvel that the world around us encompasses all these different scales. It turns out to also be a useful way to think about ability when you are recruiting. Talent comes in orders of magnitude. Before going to recruiting for startups, consider talent in tennis for a moment. At one level I am a decent player in that I can hit the ball reasonably hard and look good doing so (ok so that is subject to inte...

I have always loved the videos illustrating orders of magnitude of scale. It simply seems a marvel that the world around us encompasses all these different scales. It turns out to also be a useful way to think about ability when you are recruiting. Talent comes in orders of magnitude. Before going to recruiting for startups, consider talent in tennis for a moment. At one level I am a decent player in that I can hit the ball reasonably hard and look good doing so (ok so that is subject to inte...

I don’t have the time or interest to look at the latest in the Winkelvoss and Ceglia vs Facebook/Zuckerberg sagas. But even just the headlines serve as good reminders that as an entrepreneur you need to know some things about IP law so that you don’t run afoul of it. In particular, I continue to meet people starting businesses while employed elsewhere without having looked at their employment agreements. That is not a good idea as these run the gamut from letting you do what you want (as long...

I don’t have the time or interest to look at the latest in the Winkelvoss and Ceglia vs Facebook/Zuckerberg sagas. But even just the headlines serve as good reminders that as an entrepreneur you need to know some things about IP law so that you don’t run afoul of it. In particular, I continue to meet people starting businesses while employed elsewhere without having looked at their employment agreements. That is not a good idea as these run the gamut from letting you do what you want (as long...

There is something frequently missed in thinking about the value of common shares in startups. These shares are actually options! The Theory A common share in a startup has the same payout structure as a call option. There is a range of outcomes in terms of total enterprise value at exit for which common shares are worth exactly zero. This range is from no enterprise value (shutdown) to the aggregate value of preference (including, if applicable, participation multiples and dividends) plus an...

There is something frequently missed in thinking about the value of common shares in startups. These shares are actually options! The Theory A common share in a startup has the same payout structure as a call option. There is a range of outcomes in terms of total enterprise value at exit for which common shares are worth exactly zero. This range is from no enterprise value (shutdown) to the aggregate value of preference (including, if applicable, participation multiples and dividends) plus an...

As believers in the singularity are quick (and right) to point out, we don’t do very well as humans when it comes to understanding exponential growth. This is not a new insight as we can see from the much older story about the peasant who wins a chess game against a king and ask as his reward for simply a single grain of wheat/rice/whatever on the first square to be doubled on every subsequent square. It is worth frequently reminding ourselves of our lack of intuitive grasp for exponential gr...

As believers in the singularity are quick (and right) to point out, we don’t do very well as humans when it comes to understanding exponential growth. This is not a new insight as we can see from the much older story about the peasant who wins a chess game against a king and ask as his reward for simply a single grain of wheat/rice/whatever on the first square to be doubled on every subsequent square. It is worth frequently reminding ourselves of our lack of intuitive grasp for exponential gr...

Weekends seem to bring with them at least one or two good blog debates. This last one was no different with Chris Dixon’s post titled “SEO is no longer a viable marketing strategy for startups” and Danny Sullivan’s response “SEO remains a viable marketing strategy for anyone.” I am not going to comment on the merits of SEO per se (check the comments on both posts + twitter for more on that), but rather on the distinction between strategy and tactics. My own history trying to understand strate...

Weekends seem to bring with them at least one or two good blog debates. This last one was no different with Chris Dixon’s post titled “SEO is no longer a viable marketing strategy for startups” and Danny Sullivan’s response “SEO remains a viable marketing strategy for anyone.” I am not going to comment on the merits of SEO per se (check the comments on both posts + twitter for more on that), but rather on the distinction between strategy and tactics. My own history trying to understand strate...

Last week Fred wrote a post on marketing that attracted a lot of comments and replies – in part because it had some “bugs” but more because it was provocative. One thing that seemed missing from the discussion (and given that there was so much I may simply have overlooked it) was the relationship between customer acquisition and network effects. I am going to use the word customer acquisition to mean the entire set of tactics (PR, marketing, advertising and even sales) that results in new cus...

Last week Fred wrote a post on marketing that attracted a lot of comments and replies – in part because it had some “bugs” but more because it was provocative. One thing that seemed missing from the discussion (and given that there was so much I may simply have overlooked it) was the relationship between customer acquisition and network effects. I am going to use the word customer acquisition to mean the entire set of tactics (PR, marketing, advertising and even sales) that results in new cus...

I know that “don’t compete - change the game” can easily be seen as kind of a trite slogan. But I still find myself in many meetings with startups where the strategy can be summed up by: our plan is to do this better than our competitors. While out-executing others is possible and companies succeed with that approach, it is really difficult. It is especially difficult, if one of the competitors is a deeply entrenched incumbent. Because startups are already hard (creating something from nothin...

I know that “don’t compete - change the game” can easily be seen as kind of a trite slogan. But I still find myself in many meetings with startups where the strategy can be summed up by: our plan is to do this better than our competitors. While out-executing others is possible and companies succeed with that approach, it is really difficult. It is especially difficult, if one of the competitors is a deeply entrenched incumbent. Because startups are already hard (creating something from nothin...

Chris Dixon has an intriguing blog post titled “Timing Your Startup” which ends with the following quote:One way to mitigate timing risk is to manage your cash accordingly. If you are trying to ride existing trends you should ramp up aggressively. If you are betting on emerging trends it is better to keep your burn low and runway long. This takes discipline and patience but is also the way you hit it really big.I generally subscribe to the same theory. But I have recently heard some people I ...

Chris Dixon has an intriguing blog post titled “Timing Your Startup” which ends with the following quote:One way to mitigate timing risk is to manage your cash accordingly. If you are trying to ride existing trends you should ramp up aggressively. If you are betting on emerging trends it is better to keep your burn low and runway long. This takes discipline and patience but is also the way you hit it really big.I generally subscribe to the same theory. But I have recently heard some people I ...