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Anatomy of a (un)fundable startup

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Anatomy of a (un)fundable startup

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Description

Naval Ravikant's talk at the 7th Founder Showcase. More at http://angel.co and http://venturehacks.com.

Transcript

  1. Anatomy of a fundable startup Naval Ravikant Venture Hacks / AngelList ✌ angel.co
  2. Anatomy of an unfundable startup Naval Ravikant Venture Hacks / AngelList ✌ angel.co
  3. Exceptional Fundings
  4. Exceptional Outcomes LinkedIn Pandora Facebook You are here
  5. The Age of Free Leverage
  6. The Age of Free Leverage • Capital, Labor, Machines
  7. The Age of Free Leverage • Capital, Labor, Machines • Intellectual “Property” - Code, Books, Movies, Music
  8. The Age of Free Leverage • Capital, Labor, Machines • Intellectual “Property” - Code, Books, Movies, Music • IP Platforms (iOS, S3, LAMP, FB Connect)
  9. The Age of Free Leverage • Capital, Labor, Machines • Intellectual “Property” - Code, Books, Movies, Music • IP Platforms (iOS, S3, LAMP, FB Connect) • Labor Platforms - Mech Turk, Communities (YouTube, Quora, Wikipedia)
  10. The Age of Free Leverage • Capital, Labor, Machines • Intellectual “Property” - Code, Books, Movies, Music • IP Platforms (iOS, S3, LAMP, FB Connect) • Labor Platforms - Mech Turk, Communities (YouTube, Quora, Wikipedia) • Capital Platforms (AngelList, KickStarter, SecondMarket,YC, TechStars)
  11. Traction
  12. Traction You
  13. Traction You Product
  14. Traction You Product Social Proof
  15. Traction You Product Social Proof Market
  16. Traction You Product Social Proof Market High Concept Pitch
  17. Traction You Product Social Proof Market High Concept Pitch Elevator Pitch
  18. Traction You Product Social Proof Market High Concept Pitch Elevator Pitch Presentation
  19. A Note on Location
  20. A Note on Location • Silicon Valley, New York
  21. A Note on Location • Silicon Valley, New York • Seattle, Austin, LA, Boston, Chicago, London
  22. A Note on Location • Silicon Valley, New York • Seattle, Austin, LA, Boston, Chicago, London • Estonia, Chile, India, Croatia, Poland
  23. A Note on Location • Silicon Valley, New York • Seattle, Austin, LA, Boston, Chicago, London • Estonia, Chile, India, Croatia, Poland • Capital is mobile, but capitalists are lazy
  24. A Note on Location • Silicon Valley, New York • Seattle, Austin, LA, Boston, Chicago, London • Estonia, Chile, India, Croatia, Poland • Capital is mobile, but capitalists are lazy • Funding markets develop backwards
  25. Markets and Approaches
  26. Markets and Approaches • Services, multiple products
  27. Markets and Approaches • Services, multiple products • Small Markets (obviously)
  28. Markets and Approaches • Services, multiple products • Small Markets (obviously) • Desktop software / Dead Platforms
  29. Markets and Approaches • Services, multiple products • Small Markets (obviously) • Desktop software / Dead Platforms • Conquered Markets with Network Effects
  30. Markets and Approaches • Services, multiple products • Small Markets (obviously) • Desktop software / Dead Platforms • Conquered Markets with Network Effects • High atom content
  31. Markets and Approaches • Services, multiple products • Small Markets (obviously) • Desktop software / Dead Platforms • Conquered Markets with Network Effects • High atom content • Not too large, not too small
  32. Team?
  33. Team? • “Functional visionary and project manager”
  34. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist”
  35. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy
  36. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy • Sole founder
  37. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy • Sole founder • Part-timers
  38. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy • Sole founder • Part-timers • “High Tech Sales Exec who loves his family and loves to run”
  39. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy • Sole founder • Part-timers • “High Tech Sales Exec who loves his family and loves to run” • 12 years experience in...
  40. Exceptional Team
  41. Exceptional Team
  42. Exceptional Team
  43. Exceptional Team
  44. Team Guidelines
  45. Team Guidelines • No adjectives / opinions of yourself
  46. Team Guidelines • No adjectives / opinions of yourself • Show, not tell
  47. Team Guidelines • No adjectives / opinions of yourself • Show, not tell • Quantitative and precise, not qualitative and vague
  48. Team Guidelines • No adjectives / opinions of yourself • Show, not tell • Quantitative and precise, not qualitative and vague • Branded or measurable output
  49. Team Guidelines • No adjectives / opinions of yourself • Show, not tell • Quantitative and precise, not qualitative and vague • Branded or measurable output • Recruit only the best. And if you can’t, you’re not ready
  50. Product?
  51. Product? • “We will disclose more under NDA”
  52. Product? • “We will disclose more under NDA” • “I am raising money to build the product”
  53. Product? • “We will disclose more under NDA” • “I am raising money to build the product” • “Launching next month”
  54. Product? • “We will disclose more under NDA” • “I am raising money to build the product” • “Launching next month” • “Sign up for the beta here...”
  55. Product? • “We will disclose more under NDA” • “I am raising money to build the product” • “Launching next month” • “Sign up for the beta here...” • “Building second version now”
  56. Exceptional Product
  57. Exceptional Product
  58. Product Guidelines
  59. Product Guidelines • No promises / vision
  60. Product Guidelines • No promises / vision • Show, not tell
  61. Product Guidelines • No promises / vision • Show, not tell • Quantitative and precise, not qualitative and vague
  62. Product Guidelines • No promises / vision • Show, not tell • Quantitative and precise, not qualitative and vague • Something hard with specific knowledge
  63. Product Guidelines • No promises / vision • Show, not tell • Quantitative and precise, not qualitative and vague • Something hard with specific knowledge • Expect competition
  64. Product Guidelines • No promises / vision • Show, not tell • Quantitative and precise, not qualitative and vague • Something hard with specific knowledge • Expect competition • Build only the best. And if you can’t, you’re not ready
  65. Traction
  66. Traction • Markets are efficient - individuals cannot predict traction
  67. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product
  68. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product • Incremental not cumulative
  69. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product • Incremental not cumulative • Know your microeconomics
  70. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product • Incremental not cumulative • Know your microeconomics • If you can’t generate traction, do you really want to raise money?
  71. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product • Incremental not cumulative • Know your microeconomics • If you can’t generate traction, do you really want to raise money? • How much is enough? 10% per month? 20%?
  72. Social Proof
  73. Social Proof • “Get referred to us by someone we know”
  74. Social Proof • “Get referred to us by someone we know” • Entrepreneurs and committed investors best
  75. Social Proof • “Get referred to us by someone we know” • Entrepreneurs and committed investors best • Herd mentality is rational
  76. Social Proof • “Get referred to us by someone we know” • Entrepreneurs and committed investors best • Herd mentality is rational • Why? What did they like that you can’t show in the other metrics?
  77. Real Hacks
  78. Real Hacks • Advisory Round (Notable Founder, Operator)
  79. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously
  80. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously • Easier to pitch a new investor than to convert one
  81. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously • Easier to pitch a new investor than to convert one • Equity, not notes
  82. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously • Easier to pitch a new investor than to convert one • Equity, not notes • Sell an option
  83. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously • Easier to pitch a new investor than to convert one • Equity, not notes • Sell an option • But if you’re having a hard time, re-start, not push
  84. In Summary
  85. In Summary • Get to a funding hub
  86. In Summary • Get to a funding hub • Recruit an exceptional team.
  87. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about
  88. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about • Test it against customers
  89. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about • Test it against customers • Get social and customer validation
  90. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about • Test it against customers • Get social and customer validation • Raise on at least one exceptional characteristic
  91. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about • Test it against customers • Get social and customer validation • Raise on at least one exceptional characteristic • PS - Assume fierce competition

Editor's Notes

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  • Bifurcated fundings - can’t raise money until you’re suddenly oversubscribed.\nIt’s an emotional decision, so you often get funded on the basis of your single best attribute\nNot like college where they weigh everything equally.\nLooking for that one thing that makes you the best in the world\n
  • It’s like the number of times a song gets played. No average outcome - statistically meaningless. Because of network effects, leverage. Winner take all. Graph is of book popularity, only of top 5K books!\n
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  • Description

    Naval Ravikant's talk at the 7th Founder Showcase. More at http://angel.co and http://venturehacks.com.

    Transcript

    1. Anatomy of a fundable startup Naval Ravikant Venture Hacks / AngelList ✌ angel.co
    2. Anatomy of an unfundable startup Naval Ravikant Venture Hacks / AngelList ✌ angel.co
    3. Exceptional Fundings
    4. Exceptional Outcomes LinkedIn Pandora Facebook You are here
    5. The Age of Free Leverage
    6. The Age of Free Leverage • Capital, Labor, Machines
    7. The Age of Free Leverage • Capital, Labor, Machines • Intellectual “Property” - Code, Books, Movies, Music
    8. The Age of Free Leverage • Capital, Labor, Machines • Intellectual “Property” - Code, Books, Movies, Music • IP Platforms (iOS, S3, LAMP, FB Connect)
    9. The Age of Free Leverage • Capital, Labor, Machines • Intellectual “Property” - Code, Books, Movies, Music • IP Platforms (iOS, S3, LAMP, FB Connect) • Labor Platforms - Mech Turk, Communities (YouTube, Quora, Wikipedia)
    10. The Age of Free Leverage • Capital, Labor, Machines • Intellectual “Property” - Code, Books, Movies, Music • IP Platforms (iOS, S3, LAMP, FB Connect) • Labor Platforms - Mech Turk, Communities (YouTube, Quora, Wikipedia) • Capital Platforms (AngelList, KickStarter, SecondMarket,YC, TechStars)
    11. Traction
    12. Traction You
    13. Traction You Product
    14. Traction You Product Social Proof
    15. Traction You Product Social Proof Market
    16. Traction You Product Social Proof Market High Concept Pitch
    17. Traction You Product Social Proof Market High Concept Pitch Elevator Pitch
    18. Traction You Product Social Proof Market High Concept Pitch Elevator Pitch Presentation
    19. A Note on Location
    20. A Note on Location • Silicon Valley, New York
    21. A Note on Location • Silicon Valley, New York • Seattle, Austin, LA, Boston, Chicago, London
    22. A Note on Location • Silicon Valley, New York • Seattle, Austin, LA, Boston, Chicago, London • Estonia, Chile, India, Croatia, Poland
    23. A Note on Location • Silicon Valley, New York • Seattle, Austin, LA, Boston, Chicago, London • Estonia, Chile, India, Croatia, Poland • Capital is mobile, but capitalists are lazy
    24. A Note on Location • Silicon Valley, New York • Seattle, Austin, LA, Boston, Chicago, London • Estonia, Chile, India, Croatia, Poland • Capital is mobile, but capitalists are lazy • Funding markets develop backwards
    25. Markets and Approaches
    26. Markets and Approaches • Services, multiple products
    27. Markets and Approaches • Services, multiple products • Small Markets (obviously)
    28. Markets and Approaches • Services, multiple products • Small Markets (obviously) • Desktop software / Dead Platforms
    29. Markets and Approaches • Services, multiple products • Small Markets (obviously) • Desktop software / Dead Platforms • Conquered Markets with Network Effects
    30. Markets and Approaches • Services, multiple products • Small Markets (obviously) • Desktop software / Dead Platforms • Conquered Markets with Network Effects • High atom content
    31. Markets and Approaches • Services, multiple products • Small Markets (obviously) • Desktop software / Dead Platforms • Conquered Markets with Network Effects • High atom content • Not too large, not too small
    32. Team?
    33. Team? • “Functional visionary and project manager”
    34. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist”
    35. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy
    36. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy • Sole founder
    37. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy • Sole founder • Part-timers
    38. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy • Sole founder • Part-timers • “High Tech Sales Exec who loves his family and loves to run”
    39. Team? • “Functional visionary and project manager” • “I have no ego. Currently my role is visionary / strategist” • Outsourced development, business-heavy • Sole founder • Part-timers • “High Tech Sales Exec who loves his family and loves to run” • 12 years experience in...
    40. Exceptional Team
    41. Exceptional Team
    42. Exceptional Team
    43. Exceptional Team
    44. Team Guidelines
    45. Team Guidelines • No adjectives / opinions of yourself
    46. Team Guidelines • No adjectives / opinions of yourself • Show, not tell
    47. Team Guidelines • No adjectives / opinions of yourself • Show, not tell • Quantitative and precise, not qualitative and vague
    48. Team Guidelines • No adjectives / opinions of yourself • Show, not tell • Quantitative and precise, not qualitative and vague • Branded or measurable output
    49. Team Guidelines • No adjectives / opinions of yourself • Show, not tell • Quantitative and precise, not qualitative and vague • Branded or measurable output • Recruit only the best. And if you can’t, you’re not ready
    50. Product?
    51. Product? • “We will disclose more under NDA”
    52. Product? • “We will disclose more under NDA” • “I am raising money to build the product”
    53. Product? • “We will disclose more under NDA” • “I am raising money to build the product” • “Launching next month”
    54. Product? • “We will disclose more under NDA” • “I am raising money to build the product” • “Launching next month” • “Sign up for the beta here...”
    55. Product? • “We will disclose more under NDA” • “I am raising money to build the product” • “Launching next month” • “Sign up for the beta here...” • “Building second version now”
    56. Exceptional Product
    57. Exceptional Product
    58. Product Guidelines
    59. Product Guidelines • No promises / vision
    60. Product Guidelines • No promises / vision • Show, not tell
    61. Product Guidelines • No promises / vision • Show, not tell • Quantitative and precise, not qualitative and vague
    62. Product Guidelines • No promises / vision • Show, not tell • Quantitative and precise, not qualitative and vague • Something hard with specific knowledge
    63. Product Guidelines • No promises / vision • Show, not tell • Quantitative and precise, not qualitative and vague • Something hard with specific knowledge • Expect competition
    64. Product Guidelines • No promises / vision • Show, not tell • Quantitative and precise, not qualitative and vague • Something hard with specific knowledge • Expect competition • Build only the best. And if you can’t, you’re not ready
    65. Traction
    66. Traction • Markets are efficient - individuals cannot predict traction
    67. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product
    68. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product • Incremental not cumulative
    69. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product • Incremental not cumulative • Know your microeconomics
    70. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product • Incremental not cumulative • Know your microeconomics • If you can’t generate traction, do you really want to raise money?
    71. Traction • Markets are efficient - individuals cannot predict traction • Amount varies by product • Incremental not cumulative • Know your microeconomics • If you can’t generate traction, do you really want to raise money? • How much is enough? 10% per month? 20%?
    72. Social Proof
    73. Social Proof • “Get referred to us by someone we know”
    74. Social Proof • “Get referred to us by someone we know” • Entrepreneurs and committed investors best
    75. Social Proof • “Get referred to us by someone we know” • Entrepreneurs and committed investors best • Herd mentality is rational
    76. Social Proof • “Get referred to us by someone we know” • Entrepreneurs and committed investors best • Herd mentality is rational • Why? What did they like that you can’t show in the other metrics?
    77. Real Hacks
    78. Real Hacks • Advisory Round (Notable Founder, Operator)
    79. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously
    80. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously • Easier to pitch a new investor than to convert one
    81. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously • Easier to pitch a new investor than to convert one • Equity, not notes
    82. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously • Easier to pitch a new investor than to convert one • Equity, not notes • Sell an option
    83. Real Hacks • Advisory Round (Notable Founder, Operator) • Cast a Broad Net, move simultaneously • Easier to pitch a new investor than to convert one • Equity, not notes • Sell an option • But if you’re having a hard time, re-start, not push
    84. In Summary
    85. In Summary • Get to a funding hub
    86. In Summary • Get to a funding hub • Recruit an exceptional team.
    87. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about
    88. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about • Test it against customers
    89. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about • Test it against customers • Get social and customer validation
    90. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about • Test it against customers • Get social and customer validation • Raise on at least one exceptional characteristic
    91. In Summary • Get to a funding hub • Recruit an exceptional team. • Build something that you are passionate and knowledgeable about • Test it against customers • Get social and customer validation • Raise on at least one exceptional characteristic • PS - Assume fierce competition

    Editor's Notes

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  • Bifurcated fundings - can’t raise money until you’re suddenly oversubscribed.\nIt’s an emotional decision, so you often get funded on the basis of your single best attribute\nNot like college where they weigh everything equally.\nLooking for that one thing that makes you the best in the world\n
  • It’s like the number of times a song gets played. No average outcome - statistically meaningless. Because of network effects, leverage. Winner take all. Graph is of book popularity, only of top 5K books!\n
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