Sentence of the day

“I don’t mean this in a negative way, but Y Combinator is more like a cult than a venture capital fund. And Paul is the cult leader.” – Fred Wilson on Paul Graham‘s Y Combinator

Understanding your business risks

Great lesson from Steve Blank Customer Development Guru on understanding what kind of risk a start-up has

Steve: Big idea here. It’s a big idea, one that I’ve never heard articulated before at all with startups, yet world-class VCs know this on day one. There are some industries where the risk is purely customer in market.

And by purely I just mean, in Silicon Valley we take for granted digital media and web, with all due respect, for the hard work your software engineers are going to do getting it up, it’s not invention.

It’s, gee, did, they do it efficiently or did the Oracle salesman convince them to buy half a million bucks of software they didn’t need. But it’s not invention.

There’s a whole other set of industries where it truly is invention. Where it truly is, we should be so lucky to get this product working. Because if we get an asthma drug or an oncology for cancer curing drug, our only problem is how big is the licensing deal going to be? And not whether customers are going to want this.

Is this distinction clear? When you start a company, question one to self. Memo to self. Am I in a market risk company? Or am I in an invention risk company?

A corrolary of this idea is that if your primary risk is Customer Market risk you better have a very good plan to scale. One of the big reasons that Web 2.0/social networking is so hot is that it has concept of scale built into the application. Unline traditional apps, which have to be sold individually, Web 2.0 apps naturally generate scale.

Rage Against the Dying of the Light

Joel Spolsky’s latest article in Inc. talks about keeping on  fiddling the dials of your start-up till you get it right.

That reminded me of an essay by Paul Graham of how he can predict which start-ups that they invest in will die.

For us the main indication of impending doom is when we don’t hear from you. When we haven’t heard from, or about, a startup for a couple months, that’s a bad sign. If we send them an email asking what’s up, and they don’t reply, that’s a really bad sign. So far that is a 100% accurate predictor of death.

Whereas if a startup regularly does new deals and releases and either sends us mail or shows up at YC events, they’re probably going to live.

So for those folks who are experiencing a near-death experience, we can learn something from this man

and in the immortal words of Dylan Thomas

Do not go gentle into that night

rage, rage against the dying of the light

What makes an Entrepreneur

Excellent article in WSJ on the charateristics of entrepreneurs. This reminded me of the great book Founders at Work. It is a series of interviews with Tech Founders from Sabeer Bhatia founder of Hotmail to Catrina Fake of Flikr. If one theme came across consistently, it is that most of them executed their plans and worried about consequences later.

I think the biggest hurdle of moving from a corporate job to a startup mode is that in the corporate world, employees especially managers have to make extensive plans, budgets, risk migation strategies and in a startup by definition you cannot mitigate the risk. Something either works or it fails and you pick yourself up and start again.

Value of Persistence

A great post on TechCrunch by a New iPhone Developer on how they built the business from scratch.

Money Quote

Our experience has shown that jumping on the App Store bandwagon is relatively easy. Staying on it, sticking with it and reaping the benefits are a whole different ball game. There are at least 15,000 iPhone apps listed in iTunes. For every big winner there are hundreds of underdogs. For every little gem there is a wall of “fart apps” obscuring the view. For every single app there is at least one developer hoping they have guessed this week’s gimmick correctly.

This is true of just about any online business. There is a lot of garbage and to shine needs constant persistence.

Hello World

This is a fresh begining of keeping a track of what I experience, read and just plain like. The blog will also act as an update on happenings in KoinFlip my new venture focused on developing Web Applications.