Investor Startup Quotes

Promise yourself to stop buying into people’s potential. You’re not a start-up investor.

A sociopath is often described as someone with little or no conscience. I’ll leave it to the psychologists to decide whether Holmes fits the clinical profile, but there’s no question that her moral compass was badly askew. I’m fairly certain she didn’t initially set out to defraud investors and put patients in harm’s way when she dropped out of Stanford fifteen years ago. By all accounts, she had a vision that she genuinely believed in and threw herself into realizing. But in her all-consuming quest to be the second coming of Steve Jobs amid the gold rush of the “unicorn” boom, there came a point when she stopped listening to sound advice and began to cut corners. Her ambition was voracious and it brooked no interference. If there was collateral damage on her way to riches and fame, so be it.

The best entrepreneurs are not the best visionaries. The greatest entrepreneurs are incredible salespeople. They know how to tell an amazing story that will convince talent and investors to join in on the journey.

As we said, even the best venture investors have a portfolio, but investors who understand the power law make as few investments as possible.

He bought an existing business with a well-defined business model and one with a long history of operations that he could analyze. This is waaaaaaaay less risky than doing a startup.

Investors are people with more money than time. Employees are people with more time than money. Entrepreneurs are simply the seductive go-betweens. Startups are business experiments performed with other people’s money. Marketing is like sex: only losers pay for it.” “Company culture is what goes without saying. There are no real rules, only laws. Success forgives all sins. People who leak to you, leak about you. Meritocracy is the propaganda we use to bless the charade. Greed and vanity are the twin engines of bourgeois society. Most managers are incompetent and maintain their jobs via inertia and politics. Lawsuits are merely expensive feints in a well-scripted conflict narrative between corporate entities. Capitalism is an amoral farce in which every player—investor, employee, entrepreneur, consumer—is complicit.

But between the founding and the actual PayPal, it was just this tug-of-war where it was like, 'We're trying this, this week." Every week you go to investors and say, "We're doing this, exactly this. We're really focused. We're going to be huge." The next week you're like, "That was a lie.

The goal - at least the way I think about entrepreneurship - is you realize one day that you can't really work anyone else. You have to start your own thing. It almost doesn't matter what the thing is. We had six different business plan changes, and then the last one was PayPal. If that one didn't work out, if we still had the money and the people, obviously we would not have given up. We would have iterated on the business model and done something else. I don't think there was ever clarity as to who we were until we knew it was working. By then, we'd figured out our PR pitch and told everyone what we do and who we are. But between the founding and the actual PayPal, it was just like this tug-of-war where it was like, "We're trying this, this week." Every week you go to investors and say, "We're doing this, exactly this. We're really focused. We're going to be huge." The next week you're like, "That was a lie.

The founders of start-ups as varied as YouTube, Palantir Technologies, and Yelp all worked at PayPal. Another set of people—including Reid Hoffman, Thiel, and Botha—emerged as some of the technology industry’s top investors. PayPal staff pioneered techniques in fighting online fraud that have formed the basis of software used by the CIA and FBI to track terrorists and of software used by the world’s largest banks to combat crime. This collection of super-bright employees has become known as the PayPal Mafia—more or less the current ruling class of Silicon Valley—and Musk is its most famous and successful member.

He now felt like a pawn in a dangerous game being played with patients, investors, and regulators. At one point, he’d had to talk Sunny and Elizabeth out of running HIV tests on diluted finger-stick samples. Unreliable potassium and cholesterol results were bad enough. False HIV results would have been disastrous.

Entrepreneurs often mistake their business plan as a cookbook for execution, failing to recognize that it is only a collection of unproven assumptions. At its back, a revenue plan blessed by an investor, and composed overwhelmingly of guesses, suddenly becomes an operating plan driving hiring, firing, and spending. Insanity.

But market stats are like scripture: anyone can find that they're looking for to support their position if they look long and hard enough.

However, angel investors by definition are not philanthropists or do-gooders in this area of their lives.

The culture that a founder creates is one of the most durable aspects of the company, outlasting the founder itself and carrying on the tradition of the firm.

Those I call Horace are absolutely convinced they’re some sort of social wit. Without a doubt they’re intelligent, and most likely very wealthy, although their wealth will come from a business they were set up in by others from their ‘school.’ They’ll have had no need to go to university. Rich people will have set them up in business, possibly Public Relations or something like that, they’ll have helped them write a business plan, loaned them money, and provided advice and guidance at every step of the way. Money would have been forthcoming from investors until the business was able to run itself. And then Horace will swan about as if he did it all himself.

Zero to One is about how to build companies that create new things. It draws on everything I’ve learned directly as a co-founder of PayPal and Palantir and then an investor in hundreds of startups, including Facebook and SpaceX.

Rule No. 5: No Business Plan Survives First Contact with Customers So Use a Business Model Canvas There’s only one reason for a business plan: some investor who went to business school doesn’t know any better and wants to see one.

The startup’s goal is to find a profitable customer acquisition strategy by spending small amounts of money in a lot of them, measuring results, and then narrowing down the best channels, while performing PDCA for continuous improvement.

For a long time, it was one of these things where—I was really much younger than now—my whole "brand" both to the investors and to our board members was this crazy Russian boy-genius who comes out and sprinkles magic dust on technology and things just work.

When someone tells me they have a founder they want to introduce me to but they’re worried because the person is a wild card, I set that meeting up for the next day. Angel investors are looking for wild cards, because the best founders are typically inflexible and unmanageable, pursuing their visions at the expense of other people’s feelings.

I like innovation. I like ideas. I like people and I like being part of winning teams. I don't gamble, I don't watch sports, I don't do any of those things. What I like to do is bet on people in the innovation business, so as soon as I had the capacity, that’s what I started doing as an individual—writing some small checks, and then some bigger checks.

Michael Arrington, the loudmouth founder and former editor in chief of TechCrunch, is famous for investing in the start-ups that his blogs would then cover. Although he no longer runs TechCrunch, he was a partner in two investment funds during his tenure and now manages his own, CrunchFund. In other words, even when he is not a direct investor he has connections or interests in dozens of companies on his beat, and his insider knowledge helps turn profits for the firm.

Murdoch also derived comfort from some of the other reputable investors he heard Theranos had lined up. They included Cox Enterprises, the Atlanta-based, family-owned conglomerate whose chairman, Jim Kennedy, he was friendly with, and the Waltons of Walmart fame. Other big-name investors he didn’t know about ranged from Bob Kraft, owner of the New England Patriots, to Mexican billionaire Carlos Slim and John Elkann, the Italian industrialist who controlled Fiat Chrysler Automobiles.

This was news to Mosley. He thought the system was reliable. Didn't it always seem to work when investors came to view it? Well there was a reason it always seemed to work, Shaunak said. The image on the computer screen showing the blood flowing through the cartridge and settling into the little wells was real. But you never knew whether you were going to get a result or not. So they'd recorded a result from one of the times it worked. It was that recorded result that was displayed at the end of each demo.

Thinking about what might happen if we ran completely out of money—laying off all the employees that I’d so carefully selected and hired, losing all my investors’ money, jeopardizing all the customers who trusted us with their business—made it difficult to concentrate on the possibilities. Marc Andreessen attempted to cheer me up with a not-so-funny-at-the-time joke: Marc: “Do you know the best thing about startups?” Ben: “What?” Marc: “You only ever experience two emotions: euphoria and terror. And I find that lack of sleep enhances them both.

to begin funding in 2024, India’s National Quantum Mission has allocated a substantial Rs 6000 crores over the next eight years. While this is a significant investment for India, it is the first notable investment into quantum technology in India. In contrast to other nations, India has seen notably much much lower industry investment and investor interest in quantum technology. When it comes to startup funding in this sector, Indian companies have collectively managed to raise less than Rs 50 crores as of December 2023. This sum is minuscule compared to the global quantum computing startup scene, where funding has exceeded this amount by nearly thousand times in the same period.

Less than three months later, the walls began closing in again: on March 14, 2018, the Securities and Exchange Commission charged Theranos, Holmes, and Balwani with conducting “an elaborate, years-long fraud.” To resolve the agency’s civil charges, Holmes was forced to relinquish her voting control over the company, give back a big chunk of her stock, and pay a $500,000 penalty. She also agreed to be barred from being an officer or director in a public company for ten years. Unable to reach a settlement with Balwani, the SEC sued him in federal court in California. In the meantime, the criminal investigation continued to gather steam. As of this writing, criminal indictments of both Holmes and Balwani on charges of lying to investors and federal officials seem a distinct possibility.

The VCs were prolific. They talked like nobody I knew. Sometimes they talked their own book, but most days, they talked Ideas: how to foment enlightenment, how to apply microeconomic theories to complex social problems. The future of media and the decline of higher ed; cultural stagnation and the builder’s mind-set. They talked about how to find a good heuristic for generating more ideas, presumably to have more things to talk about. Despite their feverish advocacy of open markets, deregulation, and continuous innovation, the venture class could not be relied upon for nuanced defenses of capitalism. They sniped about the structural hypocrisy of criticizing capitalism from a smartphone, as if defending capitalism from a smartphone were not grotesque. They saw the world through a kaleidoscope of startups: If you want to eliminate economic inequality, the most effective way to do it would be to outlaw starting your own company, wrote the founder of the seed accelerator. Every vocal anti-capitalist person I’ve met is a failed entrepreneur, opined an angel investor. The SF Bay Area is like Rome or Athens in antiquity, posted a VC. Send your best scholars, learn from the masters and meet the other most eminent people in your generation, and then return home with the knowledge and networks you need. Did they know people could see them?

Patrick Vlaskovits, who was part of the initial conversation that the term “growth hacker” came out of, put it well: “The more innovative your product is, the more likely you will have to find new and novel ways to get at your customers.”12 For example: 1. You can create the aura of exclusivity with an invite-only feature (as Mailbox did). 2. You can create hundreds of fake profiles to make your service look more popular and active than it actually is—nothing draws a crowd like a crowd (as reddit did in its early days). 3. You can target a single service or platform and cater to it exclusively—essentially piggybacking off or even stealing someone else’s growth (as PayPal did with eBay). 4. You can launch for just a small group of people, own that market, and then move from host to host until your product spreads like a virus (which is what Facebook did by starting in colleges—first at Harvard—before taking on the rest of the population). 5. You can host cool events and drive your first users through the system manually (as Myspace, Yelp, and Udemy all did). 6. You can absolutely dominate the App Store because your product provides totally new features that everyone is dying for (which is what Instagram did—twenty-five thousand downloads on its first day—and later Snapchat). 7. You can bring on influential advisors and investors for their valuable audience and fame rather than their money (as About.me and Trippy did—a move that many start-ups have emulated). 8. You can set up a special sub-domain on your e-commerce site where a percentage of every purchase users make goes to a charity of their choice (which is what Amazon did with Smile.Amazon.com this year to great success, proving that even a successful company can find little growth hacks). 9. You can try to name a Planned Parenthood clinic after your client or pay D-list celebrities to say offensive things about themselves to get all sorts of publicity that promotes your book (OK, those stunts were mine).

EVERYBODY SELLS Nerds might wish that distribution could be ignored and salesmen banished to another planet. All of us want to believe that we make up our own minds, that sales doesn’t work on us. But it’s not true. Everybody has a product to sell—no matter whether you’re an employee, a founder, or an investor. It’s true even if your company consists of just you and your computer. Look around. If you don’t see any salespeople, you’re the salesperson.

So we said, "OK, we'll do Apple Computer." In those days there was no money yet in this microcomputer business, and big experienced companies and investors, analysts-those kind of people, that are trained in business and much smarter than we were-they didn't think that this was going to be a real big market. They thought it was going to be a little hobby thing, like home robots or ham radios, that a few techie people would get into and really it wasn't going to go to the masses.

It soon became clear why investors were clamouring to buy a piece of TV18 for Rs 180 a share. The stock market delivered a belated Valentine’s Day squeeze to the company as it listed on the BSE on 16 February 2000. The Financial Express reported that ‘[t]he TV18 stock opened on BSE at Rs 1950, moved to a high of Rs 1990 before closing at Rs 1667.’4 Outlook Money magazine explained what this meant: Last Wednesday’s explosive listing of Television Eighteen’s shares was a spectacular event, even by the standards of a market that has seen plenty of fireworks this past year. Investors who were able to buy shares the company issued in December certainly expected a handsome appreciation from the public offer price of Rs 180. But not a few were stunned when within 15 minutes of commencement of trading in the company’s shares, they were trading at Rs 1990—an astonishing 1006 per cent gain!

Meanwhile, on Raghav’s wish list was a film company. He was a Hindi film buff, but he was not in any way star-struck. He simply thought it was a good business idea, and that the time was right. Vandana, who had a lot of connections in the film industry, was to be a part of the venture. Raghav launched the film company as a personal venture, though TV18 was a minority investor, with a holding of 20 per cent. In June, the Indian Film Company raised Rs 400 crore at London’s Alternative Investment Market, much to Raghav’s amazement. ‘Almost any guy with even half a track record and a gleam of new economy, media or technology in his eye could go to London, float a company which hardly did anything, probably even if revenues were zero, and pick up equity. We did exactly that with our film fund. We had no track record in the film business. Zero.’ But investors were more than willing to throw money around in 2007.

Consider the case of two very similar companies, Twitter and Tumblr. Both had brilliant, product-oriented founders in Evan “Ev” Williams and David Karp. Both were hot social media start-ups. Both grew at a remarkable rate after establishing product/ market fit. Both had a major impact on popular culture. Yet Twitter went public and achieved a market capitalization that peaked at nearly $ 37 billion, while Tumblr was acquired by Yahoo!—another start-up that used blitzscaling to become a scale-up, only to decline and fade away—for “only” $ 1 billion. Was this dumb luck on Twitter’s side? Perhaps. Luck always plays a larger role than founders, investors, and the media would like to admit. But a major difference was that Twitter could draw on numerous networks for advice and help that Tumblr could not. For example, Twitter was able to bring in Dick Costolo, a savvy executive with prior scaling experience at Google. In contrast, even though Tumblr was arguably the most prominent start-up in its New York City ecosystem, it couldn’t easily draw upon a pool of local talent who had experience dealing with rapid growth. According to Greylock’s John Lilly, for every executive role that Tumblr needed to fill, there were less than a handful of candidates in all of New York City.

When Brian Chesky was pitching venture capitalists to invest in Airbnb, one of the people he consulted was the entrepreneur and investor Sam Altman, who later became the president of the Y Combinator start-up accelerator. Altman saw Chesky’s pitch deck and told him it was perfect, except that he needed to change the market-size slide from a modest $ 30 million to $ 30 billion. “Investors want B’s, baby,” Altman told Chesky. Of course, Altman wasn’t telling Chesky to lie; rather, he argued that if the Airbnb team truly believed in their own assumptions, $ 30 million was a gross underestimate, and they should use a number that was true to their convictions. As it turns out, Airbnb’s market was indeed closer to $ 30 billion.

Other big-name investors he didn’t know about ranged from Bob Kraft, owner of the New England Patriots, to Mexican billionaire Carlos Slim

A lot of us asked why we weren't pricing it at a premium. We could have got a premium but Deepak said, "leave money on the table for investors. They will appreciate this in the long term." Today, when we have arguments with our promoters, one of the big lessons I learnt from our float is to price an IPO cheap,' Luis said. 'Should we really scalp the shareholders? This is a start-up company. On what basis are we putting valuations? Today they will put a valuation even on a start-up idea,' Satwalekar was blunt in his assessment.

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Two friends, Matt Gray and Tom Scott, set up a website in 2014 where people could communicate only via emojis—even usernames were strings of emojis. It was a joke, but nonetheless, sixty thousand people signed up; Gray and Scott began taking confused calls from investors who thought their site was an ambitious new tech startup. Meanwhile, a data engineer called Fred Benenson pushed things to nosebleed heights by attempting to translate Moby-Dick into emojis. True to the platform age, Benenson did not do the translation work himself, but crowd-sourced it on Amazon Mechanical Turk, where he had thousands of volunteers each translate a little bit of the text. The finished work—Emoji Dick—can be purchased for $200 in hardcover or $5 as a PDF. Meanwhile, Benenson hopes to build an emoji translation engine that will allow all literature to be turned into digi-glyphs.

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Whether you’re a tiny start-up seeking angel money, a growing company going for a B round, or an IPO candidate, a POV will be the best investor relations tool you’ll ever have.

The only thing that we know about financial predictions of startups is that 100 percent of them are wrong. If you can predict the future accurately, we have a few suggestions for other things you could be doing besides starting a risky early stage company. Furthermore, the earlier stage the startup, the less accurate any predications will be. While we know you can't predict your revenue with any degree of accuracy (although we are always very pleased in that rare case where revenue starts earlier and grows faster than expected), the expense side of your financial plan is very instructive as to how you think about the business. You can't predict your revenue with any level of precision, but you should be able to manage your expenses exactly to plan. Your financials will mean different things to different investors. In our case, we focus on two things: (1) the assumptions underlying the revenue forecast (which we don't need a spreadsheet for—we'd rather just talk about them) and (2) the monthly burn rate or cash consumption of the business. Since your revenue forecast will be wrong, your cash flow forecast will be wrong. However, if you are an effective manager, you'll know how to budget for this by focusing on lagging your increase in cash spend behind your expected growth in revenue.

creating a company for acquisition or IPO is different from building a profitable enterprise; it’s about building a sellable enterprise. Startups are not trying to earn revenue (which is a liability); they are setting themselves up to win more capital. They are not part of the real economy or even the real world but part of the process through which working assets are converted into new stockpiles of dead ones. That’s all they have really accomplished with whatever digital fad they’ve foisted onto the market or sold to yesterday’s tech winners. They thought they were engineering a new technology, when they were actually engineering a reallocation of capital. That’s why digital entrepreneurs who do win often end up becoming the next generation of venture capitalists. Everyone from Marc Andreessen (Netscape) to Sean Parker (Napster) to Peter Thiel (PayPal) to Jack Dorsey (Twitter) now runs venture funds of his own. Facebook and Google, once startups themselves, now acquire more businesses than they incubate internally. With each new generation, firms and investors leverage the startup economy more deliberately, or even cynically. After all, a win is a win.

Egg franchise sector is projected to grow at 10% in coming five years The growth of egg franchise sector in India will be increased due to urbanization, changing lifestyle and consumption pattern. Moreover, people demand more luxurious outlets to enjoy with friends and families while eating delicious egg dishes. A plethora of new egg franchise establishments have contributed towards massive development of egg industry. As per experts, the sector is estimated to grow at 10% in forthcoming years may become leading sector to attract more investors. There are numerous evolving trends in egg industry that are contributing to generating futuristic opportunities. Indore based start-up egg franchise brand, Andeywala has produced amazing business model to provide better infrastructure facilities at low investment. Now it becomes easy to start new business with Andeywala. Besides this, sector is expected to provide employment to millions of people, an increased number of egg restaurants will require employees. Tier 1 and tier 2 cities are crowded with food franchises but none of them exclusively egg dishes.

We know the economics of these startups,” Eb says. “We begin with nothing but the idea. That’s what the NDA is for—to protect your idea. We work on the idea together—put our brainpower into it—and get stock in return. The result of this work is software. The software is copyrightable, trademarkable, perhaps patentable. It is intellectual property. It is worth some money. We all own it in common, through our shares. Then we sell some more shares to an investor. We use the money to hire more people and turn it into a product, to market it, and so on. That’s how the system works,

In 1957, the venture capital industry was just being created. At the time, the investor community in the United States was uninterested in investing in computer companies, as the last wave of computer-related startups had performed poorly and even large companies were having difficulty making money in the computer business. We can envision the frustration of DEC’s cofounders, Ken Olson and Harlan Anderson, as the investors they talked to rejected them and their fledgling idea for a business. We can also imagine their joy when Georges Doriot, the founder of American Research and Development Corporation, offered to fund them. After a number of conversations and meetings, Doriot sent Olson and Anderson a letter expressing his interest in investing, along with his proposed terms. Today, this document is called the term sheet.

Most buyers will go in aloof and reserved. They’ll shoot down ideas and inject cautionary responses at opportune times. They act like a conservative investor who must be convinced to be brought to the table, and if they do, their actions warn, it’s going to be hardball. This is not a trust but verify approach. It’s a prove it and then I’ll consider trusting you approach. There is a time to be a conservative investor during this process. This book, however, is not about how to become a conservative investor; it’s about acquisition entrepreneurship. Any acquisition will obviously include volumes of cautious investing analysis. Buying your first business is usually the largest investment you’ve ever made in your life and you will research accordingly. If there are snakes in the bushes, you will simply walk away later. The best buyers, however, understand that they too are entrepreneurs, just like the seller. The transaction will be completed within a few months after meeting the seller and then the buyer will be in the driver’s seat for the next four to forty years. Acting like an entrepreneur and not a venture capitalist during the interactions with the seller is the key to winning the seller over, getting the best deal outcome later, and behaving like the new CEO of the company—which you may or may not be, but that will be up to you and not them if you play your cards right.

To fill this gap in the capital market, Davis and Rock set themselves up as a limited partnership, the same legal structure that had been used by a short-lived rival called Draper, Gaither & Anderson.[18] Rather than identifying startups and then seeking out corporate investors, they began by raising a fund that would render corporate investors unnecessary. As the two active, or “general,” partners, Davis and Rock each seeded the fund with $100,000 of their own capital. Then, ignoring the easy loans to be had from the fashionable SBIC structure, they raised just under $3.2 million from some thirty “limited” partners—rich individuals who served as passive investors.[19] The beauty of this size and structure was that the Davis & Rock partnership now had a war chest seven and a half times larger than an SBIC, and with it the ammunition to supply companies with enough capital to grow aggressively. At the same time, by keeping the number of passive investors under the legal threshold of one hundred, the partnership flew under the regulatory radar, avoiding the restrictions that ensnared the SBICs and Doriot’s ARD.[20] Sidestepping yet another weakness to be found in their competitors, Davis and Rock promised at the outset to liquidate their fund after seven years. The general partners had their own money in the fund, and thus a healthy incentive to invest with caution. At the same time, they could deploy the outside partners’ capital for a limited time only. Their caution would be balanced with deliberate aggression. Indeed, everything about the fund’s design was calculated to support an intelligent but forceful growth mentality. Unlike the SBICs, Davis & Rock raised money purely in the form of equity, not debt. The equity providers—that is, the outside limited partners—knew not to expect dividends, so Davis and Rock were free to invest in ambitious startups that used every dollar of capital to expand their business.[21] As general partners, Davis and Rock were personally incentivized to prioritize expansion: they took their compensation in the form of a 20 percent share of the fund’s capital appreciation. Meanwhile, Rock was at pains to extend this equity mentality to the employees of his portfolio companies. Having witnessed the effect of employee share ownership on the early culture of Fairchild, he believed in awarding managers, scientists, and salesmen with stock and stock options. In sum, everybody in the Davis & Rock orbit—the limited partners, the general partners, the entrepreneurs, their key employees—was compensated in the form of equity.

Rock and his partner articulated an approach to risk management that would resonate with future venture capitalists. Modern portfolio theory, the set of ideas that was coming to dominate academic finance, stressed diversification: by owning a broad mix of assets exposed to a wide variety of uncorrelated risks, investors could reduce the overall volatility of their holdings and improve their risk-return ratio. Davis and Rock ignored this teaching: they promised to make concentrated bets on a dozen or so companies. Although this would entail obvious perils, these would be tolerable for two reasons. First, by buying just under half of a firm’s equity, the Davis & Rock partnership would get a seat on the board and a say in its strategy: in the absence of diversification, a venture capitalist could manage his risk by exercising a measure of control over his assets. Second, Davis and Rock insisted that they would invest only in ambitious, high-growth companies—ones whose value might jump at least tenfold in five to seven years. To critics who called this test excessively demanding, Davis retorted that it would be “unwise to accept a less stringent one.” Venture investing was necessarily speculative, he explained, and most startups would fail; therefore, the winners would have to win big enough to make a success of the portfolio.[25]

Leverage Integrations as a Service In a start-up, you always need to be on the lookout for shortcuts to save you time and money. Don’t corners that will have a negative effect—just look for ways to triple your productivity. No matter how fast I could build integrations, I could never build them all. But in 2012, a new company called Zapier was building a platform to integrate web services together. This was perfect for WebMerge, as I could essentially build an integration to every one of their connected apps, with one single integration. WebMerge was one of the first 100 apps on Zapier, and it instantly allowed WebMerge customers to integrate their documents with each of those 100 apps. Over the years, Zapier blew up and now has thousands of apps available. Zapier was by far our largest integration partner with over 50 percent of our revenue coming from customers using Zapier. Investing in this early platform was crucial and sped up our integration releases by many years. What’s your Zapier story? Is there a partner out there that can open your business to a whole new market—or just help you get your product in front of new customers years ahead of schedule?

Third, the idea that venture capitalists get into deals on the strength of their brands can be exaggerated. A deal seen by a partner at Sequoia will also be seen by rivals at other firms: in a fragmented cottage industry, there is no lack of competition. Often, winning the deal depends on skill as much as brand: it’s about understanding the business model well enough to impress the entrepreneur; it’s about judging what valuation might be reasonable. One careful tally concluded that new or emerging venture partnerships capture around half the gains in the top deals, and there are myriad examples of famous VCs having a chance to invest and then flubbing it.[6] Andreessen Horowitz passed on Uber. Its brand could not save it. Peter Thiel was an early investor in Stripe. He lacked the conviction to invest as much as Sequoia. As to the idea that branded venture partnerships have the “privilege” of participating in supposedly less risky late-stage investment rounds, this depends from deal to deal. A unicorn’s momentum usually translates into an extremely high price for its shares. In the cases of Uber and especially WeWork, some late-stage investors lost millions. Fourth, the anti-skill thesis underplays venture capitalists’ contributions to portfolio companies. Admittedly, these contributions can be difficult to pin down. Starting with Arthur Rock, who chaired the board of Intel for thirty-three years, most venture capitalists have avoided the limelight. They are the coaches, not the athletes. But this book has excavated multiple cases in which VC coaching made all the difference. Don Valentine rescued Atari and then Cisco from chaos. Peter Barris of NEA saw how UUNET could become the new GE Information Services. John Doerr persuaded the Googlers to work with Eric Schmidt. Ben Horowitz steered Nicira and Okta through their formative moments. To be sure, stories of venture capitalists guiding portfolio companies may exaggerate VCs’ importance: in at least some of these cases, the founders might have solved their own problems without advice from their investors. But quantitative research suggests that venture capitalists do make a positive impact: studies repeatedly find that startups backed by high-quality VCs are more likely to succeed than others.[7] A quirky contribution to this literature looks at what happens when airline routes make it easier for a venture capitalist to visit a startup. When the trip becomes simpler, the startup performs better.[8]

Breaking your rules to co-invest with well-known investors is usually a bad idea, but following your rules when others reject a startup can work out extremely well.

The criteria that I found most valuable when making my decisions were the following: What is the size of the investor community invested in other offerings on the platform to-date? Does the platform accept investments via credit card? For example, about 40% of my crowdfunding investors invested with a credit card. Does the platform allow for campaign extensions (if you fall short of your goal within your campaign period, can you extend the campaign until you reach your goal)? I’ve extended my campaigns multiple times. Does the platform allow for multiple disbursements? I prefer to disburse money from my campaign once a month. However, many platforms don’t allow you to disburse the funds until after the campaign is over What are the fees? Platforms can charge between 5-20% of your raise as fees, with some platforms having complicated fee structures that involve taking some of your Securities as part of the offering. Some platforms require you to pay them cash upfront before launching an offering. Does the platform allow you to set your own terms? For example, some platforms don’t allow you to sell convertible notes. Some others don’t allow you to sell non-voting common stock. Some platforms insist that they set the valuation for your startup in order to launch—the logic being that they know their investors, and they want to provide them with a “good deal.” For many reasons, you want to sell the Security that’s right for your startup. Does the platform allow you to have design freedom on the campaign page? You want to make sure that your brand is well represented. The aesthetics and optimization of the page are highly correlated with conversion (how many people invest after visiting your page). Does the platform support analytics? You need advanced analytics to market your offering. Some platforms, for example, allow you to enter a Facebook Pixel and Google Analytics code into the campaign page, while others do not. Does the platform have a good reputation? You will be driving a lot of potential investors and media folks to this platform, and you want to be sure that your platform of choice hasn’t been involved in anything shady in the past. Does the platform allow you to update your investors and prospective investors with campaign notifications? Some platforms have a built-in functionality where you can post updates right on the campaign, download email, and mailing contact lists of your investors (allowing you to contact them by email and allowing you to build Facebook “lookalike audiences”). Whereas, other platforms don’t even share the email addresses of the folks who have already invested in your startup. Does the platform support or plan to support secondary trading for the Securities that it sells on its platform? Will your investors be able to sell the Securities that they buy from you? The ability to sell Securities in a marketplace brings a lot of liquidity and increases its value significantly. In order to allow for secondary trading, the platform needs to obtain an Alternative Trading System (ATS) approval from FINRA.

The bad news was that the hockey stick went up to only about $8,000 per month of revenue. These numbers were so low that we’d often have investors ask us, “What are the units on these charts? Are those numbers in thousands?” We’d have to reply, “No, sir, those are in ones.

Monica Zent is an experienced entrepreneur, investor, businesswoman, and trusted legal advisor to leading global bMonica Zent is an experienced entrepreneur, investor, businesswoman, and trusted legal advisor to leading global brands, over a period that spans decades. Her most recent venture is the founder and CEO of Foxwordy Inc. She is also the founder of ZentLaw, one of the nation's top alternative law firms. Zent is an investor in real estate & startups and dedicates her time and talent to various charitable causes. She is a diversity and inclusion advocate, inspiring all people to pursue their dreams. rands, over a period that spans decades. Her most recent venture is the founder and CEO of Foxwordy Inc. She is also the founder of ZentLaw, one of the nation’s top alternative law firms. Zent is an investor in real estate & startups and dedicates her time and talent to various charitable causes. She is a diversity and inclusion advocate, inspiring all people to pursue their dreams.

The most successful startups are those that are able to balance the needs of their customers, employees, and investors, while staying true to their vision and values.

My advice for those who are just starting out is define your North Star. Always have your mission in mind, remember why you started, and stay true to your story. Hopefully, you are solving a real problem for a meaningful population. When competition pops up, it’s easy to lose sight of why you started and it can knock you off your game. Sometimes you think you need to change direction or “pivot,” like investors like to say. Or you feel compelled to chase something the competition is doing. You can easily get distracted, and then you create all sorts of fire drills to react to what the competition is doing. In the past, I’ve allowed this to happen. But now we keep our heads down and I take my own advice. It’s made us unstoppable.

It turns out that these two responses are related: The time spent wrestling with the intense emotions engendered by a struggling startup—or avoiding these emotions—leads some entrepreneurs to delay shutting down longer than they should. They are Running on Empty—to the detriment of all concerned. The longer this goes on, the longer employees are wasting time on a lost cause, when they could be moving on to their next act. And the longer a founder hopes in vain that new investors or an attractive acquisition will save the day, the longer he is burning through capital that could be returned to investors.

Promise yourself to stop buying into people’s potential. You’re not a start-up investor.

Make a promise to yourself to stop investing in people’s potential. You’re not a start-up investor.

You can increase your odds of success if you “kill bad ideas fast,” as Dave outlines in the book, rather than “fail fast.” Think of yourself as the first investor in your startup and apply the same discipline to your business that other investors will. Prioritize your resources and your time. Don’t follow your hunch; instead, follow the data.

the definition of entrepreneurial failure that I’ll use in this book: A venture has failed if its early investors did not—or never will—get back more money than they put in. Why early investors? Because, when a startup fares poorly, later investors may get all of their money back while early investors generally receive less than the full amount they invested—or nothing at all.

The diamond-and-square framework provides the answers. The framework’s diamond breaks down the startup’s opportunity—that is, the “horse”—into four constituent parts: its customer value proposition, technology and operations, marketing, and profit formula. The diamond is framed by a square whose corners denote the venture’s key resource providers: its founders (that is, the “jockeys”), other team members, outside investors, and strategic partners.

The fundraising dilemmas confronting Quincy’s founders are echoed in the results of my survey of early-stage startups. Consistent with Quincy’s experience, the startups I surveyed that were struggling or shut down were more likely than their successful counterparts to have missed their targets in their initial round of fundraising. Likewise, the founder/CEOs of these struggling startups were more likely to have been disappointed with the quality of advice they received from their investors and more likely to report frequent, serious, and divisive conflict with investors over strategic priorities.

I learned that the happiest you’ll ever be with an investor is when you sign the term sheet. I now know that if it’s not all rosy then, you should just walk away.

When investors ask about a startup’s “unit economics,” they want to know how much profit the company will earn per unit sold.

The four elements described above—the “diamond” in the diamond-and-square framework—collectively specify the opportunity: what the venture will offer and to whom; its plan for technology and operations; its marketing approach; and how the venture will make money. To capture this opportunity, the venture will need the right resources in the right amounts. The “square” in the diamond-and-square framework specifies the four types of resource providers whose contributions are important for success in most startups. They include the venture’s founders, other team members, outside investors, and strategic partners who may provide key technologies, operational capabilities, or access to distribution channels.

Investors move in herds, and as a result, venture capital is prone to boom-bust cycles. When a sector is hot, VCs scramble to add startups from that sector to their portfolio. But sentiment can turn sour—quickly—and when it does, investors may shun even healthy startups.

Quincy hadn’t assembled the resources required to capitalize on its promising opportunity. As a result, it fell victim to the early-stage startup failure pattern I call “Good Idea, Bad Bedfellows.” In this context, “resources” doesn’t refer simply to capital; we see the Good Idea, Bad Bedfellows pattern play out when a startup with a promising opportunity falters due to deficiencies and dysfunction among a range of key resource providers, including its founders, other team members, investors, and strategic partners.

Rarely discussed in studies of entrepreneurial startups is just how lonely it can be out there with a revolutionary new product, no competition, and a market that doesn't seem to get what you are doing. You can try to hide in an echo chamber of your own team but eventually, you have to go outside and deal with investors, analysts and potential customers. And when all of them are skeptical, even dismissive, it becomes increasingly difficult to maintain the supreme confidence you need to keep going. That's why many of the great entrepreneurs are arrogant and obsessive to the point of megalomania. They sometimes have to be able to take their solitary vision and make it real.

Success is the law of attraction for startups. People want to be part of something bigger than themselves, and they also want to feel like they’re winning in life. If you can authentically share your vision of your startup and what it can achieve, this will help you hire new people, retain talent, get new customers, drive PR, and secure investors.

I am not anti-venture capital. I am anti-everyone-thinking-venture-capital-is-the-only-way-to-start-a-tech-company.” The dream of being picked from a sea of wannapreneurs, anointed as a “real” founder, and handed buckets of money is alive and well in Silicon Valley and other startup hubs around the world. Except there’s something wrong with seeking this narrative . . . It’s lazy. It implies that you need someone else’s permission to build your company. That you’re not a real entrepreneur until an investor tells you that you are. Or maybe you like having an excuse not to ship, and a never-ending quest for funding is a pretty good excuse. There’s a reason the most common piece of advice I give aspiring founders is: Build your business, not your slide deck. Instead of waiting for a basket of money to fall into your lap, go build your business. If you were an author, I would tell you to stop asking publishers for permission and go write your book. Andy Weir (author of The Martian) didn’t wait for approval; he wrote an international bestseller that’s been made into a film starring Matt Damon.

One way to make yourself less vulnerable to copycats is to build a moat around your business. How Can I Build a Moat? As you scale your company, you need to think about how to proactively defend against competition. The more success you have, the more your competitors will grab their battering ram and start storming the castle. In medieval times, you’d dig a moat to keep enemy armies from getting anywhere near your castle. In business, you think about your economic moat. The idea of an economic moat was popularized by the business magnate and investor Warren Buffett. It refers to a company’s distinct advantage over its competitors, which allows it to protect its market share and profitability. This is hugely important in a competitive space because it’s easy to become commoditized if you don’t have some type of differentiation. In SaaS, I’ve seen four types of moats. Integrations (Network Effect) Network effect is when the value of a product or service increases because of the number of users in the network. A network of one telephone isn’t useful. Add a second telephone, and you can call each other. But add a hundred telephones, and the network is suddenly quite valuable. Network effects are fantastic moats. Think about eBay or Craigs-list, which have huge amounts of sellers and buyers already on their platforms. It’s difficult to compete with them because everyone’s already there. In SaaS—particularly in bootstrapped SaaS companies—the network effect moat comes not from users, but integrations. Zapier is the prototypical example of this. It’s a juggernaut, and not only because it’s integrated with over 3,000 apps. It has widened its moat with nonpublic API integrations, meaning that if you want to compete with it, you have to go to that other company and get their internal development team to build an API for you. That’s a huge hill to climb if you want to launch a Zapier competitor. Every integration a customer activates in your product, especially if it puts more of their data into your database, is another reason for them not to switch to a competitor. A Strong Brand When we talk about your brand, we’re not talking about your color scheme or logo. Your brand is your reputation—it’s what people say about your company when you’re not around.

Don’t expect investors to be throwing millions on the table for you to go off and buy a bigger house, get a new car, party half the week away, and generally upgrade your lifestyle.

For example, consider one of Intuit’s flagship products. Because TurboTax does most of its sales around tax season in the United States, it used to have an extremely conservative culture. Over the course of the year, the marketing and product teams would conceive one major initiative that would be rolled out just in time for tax season. Now they test over five hundred different changes in a two-and-a-half-month tax season. They’re running up to seventy different tests per week. The team can make a change live on its website on Thursday, run it over the weekend, read the results on Monday, and come to conclusions starting Tuesday; then they rebuild new tests on Thursday and launch the next set on Thursday night. As Scott put it, “Boy, the amount of learning they get is just immense now. And what it does is develop entrepreneurs, because when you have only one test, you don’t have entrepreneurs, you have politicians, because you have to sell. Out of a hundred good ideas, you’ve got to sell your idea. So you build up a society of politicians and salespeople. When you have five hundred tests you’re running, then everybody’s ideas can run. And then you create entrepreneurs who run and learn and can retest and relearn as opposed to a society of politicians. So we’re trying to drive that throughout our organization, using examples which have nothing to do with high tech, like the website example. Every business today has a website. You don’t have to be high tech to use fast-cycle testing.” This kind of change is hard. After all, the company has a significant number of existing customers who continue to demand exceptional service and investors who expect steady, growing returns. Scott says, It goes against the grain of what people have been taught in business and what leaders have been taught. The problem isn’t with the teams or the entrepreneurs. They love the chance to quickly get their baby out into the market. They love the chance to have the customer vote instead of the suits voting. The real issue is with the leaders and the middle managers. There are many business leaders who have been successful because of analysis. They think they’re analysts, and their job is to do great planning and analyzing and have a plan.

When assessing a startup for funding, investors typically categorize three major risk areas: Technology risk: Will it work? Market risk: Will people buy the product? Execution risk: Is the team able to function and pivot as needed?

The goal - at least the way I think about entrepreneurship - is you realize one day that you can't really work anyone else. You have to start your won thing. It almost doesn't matter what the thing is. We had six different business plan changes, and then the last one was PayPal. If that one didn't work out, if we still had the money and the people, obviously we would not have given up. We would have iterated on the business model and done something else. I don't think there was ever clarity as to who we were until we knew it was working. By then, we'd figured out our PR pitch and told everyone what we do and who we are. But between the founding and the actual PayPal, it was just like this tug-of-war where it was like, "We're trying this, this week." Every week you go to investors and say, "We're doing this, exactly this. We're really focused. We're going to be huge." The next week you're like, "That was a lie.

The sort of candidate who might have benefited from such legislation is Boštjan Špetič, a Slovenian citizen, discussed previously. As founder of Zemanta, Špetič had opened his business in New York in 2009 with an L-1A visa, used to transfer a foreign company's top managers. Zemanta had an office in London and Špetič had moved to the USA from there. After a year, however, he was denied a visa renewal. “The US officers said that we didn’t have enough staff in the United States to justify a senior executive position,” recalls Špetič. “They stated that it was obvious from the organizational chart that we didn’t have an office manager, implying that no one was answering phone calls, and that’s why we could not claim a senior executive transfer. Somewhere in my office I still have four pages of explanations. At that point, I called everybody, the American ambassador in Slovenia, the Slovenian ambassador here, the Slovenian foreign ministry. My investor, Fred Wilson, got in touch with a New York senator, but no one could do anything.” Špetič therefore had to work from Ljubljana for the following three months, when a new attorney finally found the right bureaucratic avenue to obtain an L-1B visa, a specialized technology visa. “Personally, I want to move back home eventually,” says Špetič. “I’m not looking to permanently immigrate to the US. I prefer the European lifestyle. Nevertheless, this is absolutely the best place to build a startup, especially in the media space. It made so much sense to build and grow the company here. I never could have done it in Europe, and that is an amazing achievement for New York City.” For this reason, when other European entrepreneurs ask him for advice, Špetič always tells them to settle in New York, at least for a period of time, to gain American experience. And for them he dreams of creating a co-working space modeled after WeWork Labs: “Imagine a place exactly like this, but with decent coffee, wine tasting events in the evening and only non-US business people working in its offices,” explains Špetič. “There is a set of problems that foreigners have that Americans just can’t understand. Visa issues are the most obvious ones. Working-with-remote-teams issues, travel issues, personal issues such as which schools to send your children to… It’s a set of things that is different from what American startups talk about. You don’t need networking events for foreigners because you want people to network into the New York community, but a working environment would make sense because it would be like a safe haven, an extra comfort zone for foreigners with a different work culture.

Startups often make a fatal assumption when they attend presentations, business plan competitions, or demo days. They assume they are basically invisible until they take their place on the stage. Big mistake. The truth is, investors are observing you. We learn as much from watching your off-stage behavior as your canned presentation. Here’s a good way to go. Resolve that your formal presentation starts the moment team members leave their homes or offices and ends only when the last team member returns. At all other times, you are “on.” Assume the microphones are always on and someone has a camera phone on you at all times. Act like a disciplined team at all times. Watch what you say in the elevator or in the bathroom. You can’t believe the damaging stuff I’ve heard in bathrooms. Wait to debrief until you get back to the privacy of your office.

We are now seeing angels outsourcing due diligence to entities they assume will do it better. In one case, the entity is Y Combinator, the elite accelerator. Yuri Milner’s DST Fund and Ron Conway’s SV Angel fund recently announced that they will invest in every single startup coming out of Y Combinator. The seed rounds will provide $150,000 to every single one of the 40 startups that wants it, without any due diligence on their own part whatsoever. The capital is in the form of convertible debt with no cap and no discount. The loan will convert when and if the startup raises a proper angel or VC capital round at the same valuation that’s set in the round. Most convertible debt has a valuation ceiling and also gets a discount on conversion. The angels are banking on the premise that Y Combinator, in vetting the startups it stewards, has performed satisfactory due diligence. Milner has effectively shut out any other angel investors by offering such attractive terms. It’s almost free money. I’d be surprised if any of the 40 startups in each Y Combinator class decline such an offer.

What’s more important than making a startup attractive to investors in a beauty-contest format is to make them viable in real life.

Every industry has KPIs — if you’re a restaurant owner, it’s the number of covers (tables) in a night; if you’re an investor, it’s the return on an investment; if you’re a media website, it’s ad clicks; and so on.

The company was now the product, and investors were now the customers.

We are living through an unprecedented worldwide entrepreneurial renaissance, but this opportunity is laced with peril. Because we lack a coherent management paradigm for new innovative ventures, we’re throwing our excess capacity around with wild abandon. Despite this lack of rigor, we are finding some ways to make money, but for every success there are far too many failures: products pulled from shelves mere weeks after being launched, high-profile startups lauded in the press and forgotten a few months later, and new products that wind up being used by nobody. What makes these failures particularly painful is not just the economic damage done to individual employees, companies, and investors; they are also a colossal waste of our civilization’s most precious resource: the time, passion, and skill of its people.

What does one sale look like for your company? How much did it cost you to achieve that one sale? How did you scale that one sale to turn into many sales? This is what investors care about.

Josh Miller, 22 years old. He is co-founder of Branch, a “platform for chatting online as if you were sitting around the table after dinner.” Miller works at Betaworks, a hybrid company encapsulating a co-working space, an incubator and a venture capital fund, headquartered on 13th Street in the heart of the Meatpacking District. This kid in T-shirt and Bermuda shorts, and a potential star of the 2.0 version of Sex and the City, is super-excited by his new life as a digital neo-entrepreneur. He dropped out of Princeton in the summer of 2011 a year before getting his degree—heresy for the almost 30,000 students who annually apply to the prestigious Ivy League school in the hope of being among the 9% of applicants accepted. What made him decide to take such a big step? An internship in the summer of 2011 at Meetup, the community site for those who organize meetings in the flesh for like-minded people. His leader, Scott Heiferman, took him to one of the monthly meetings of New York Tech Meetup and it was there that Miller saw the light. “It was the coolest thing that ever happened to me,” he remembers. “All those people with such incredible energy. It was nothing like the sheltered atmosphere of Princeton.” The next step was to take part in a seminar on startups where the idea for Branch came to him. He found two partners –students at NYU who could design a website. Heartened by having won a contest for Internet projects, Miller dropped out of Princeton. “My parents told me I was crazy but I think they understood because they had also made unconventional choices when they were kids,” says Miller. “My father, who is now a lawyer, played drums when he was at college, and he and my mother, who left home at 16, traveled around Europe for a year. I want to be a part of the new creative class that is pushing the boundaries farther. I want to contribute to making online discussion important again. Today there is nothing but the soliloquy of bloggers or rude anonymous comments.” The idea, something like a public group email exchange where one can contribute by invitation only, interested Twitter cofounder Biz Stone and other California investors who invited Miller and his team to move to San Francisco, financing them with a two million dollar investment. After only four months in California, Branch returned to New York, where it now employs a dozen or so people. “San Francisco was beautiful and I learned a lot from Biz and my other mentors, but there’s much more adrenaline here,” explains Miller, who is from California, born and raised in Santa Monica. “Life is more varied here and creating a technological startup is something new, unlike in San Francisco or Silicon Valley where everyone’s doing it: it grabs you like a drug. Besides New York is the media capital and we’re an online publishing organization so it’s only right to be here.”[52]

start-ups are created when a trusted relationship and line of communication is established between the visionary (entrepreneur) and the pattern recognizer (investor) for two-way knowledge transfer.

1. You can create the aura of exclusivity with an invite-only feature (as Mailbox did). 2. You can create hundreds of fake profiles to make your service look more popular and active than it actually is—nothing draws a crowd like a crowd (as reddit did in its early days). 3. You can target a single service or platform and cater to it exclusively—essentially piggybacking off or even stealing someone else’s growth (as PayPal did with eBay). 4. You can launch for just a small group of people, own that market, and then move from host to host until your product spreads like a virus (which is what Facebook did by starting in colleges—first at Harvard—before taking on the rest of the population). 5. You can host cool events and drive your first users through the system manually (as Myspace, Yelp, and Udemy all did). 6. You can absolutely dominate the App Store because your product provides totally new features that everyone is dying for (which is what Instagram did—twenty-five thousand downloads on its first day—and later Snapchat). 7. You can bring on influential advisors and investors for their valuable audience and fame rather than their money (as About.me and Trippy did—a move that many start-ups have emulated). 8. You can set up a special sub-domain on your e-commerce site where a percentage of every purchase users make goes to a charity of their choice (which is what Amazon did with Smile.Amazon.com this year to great success, proving that even a successful company can find little growth hacks).

Try to avoid single-trigger acceleration for nonfounders whenever possible. Not only is it sure to cause issues during M&A (the acquirer will be worried that everyone will vest and leave after the transaction), but an acquirer may make changing these terms a condition of a deal, which just leads to ugliness when you inform people that they no longer are getting the deal that you promised them (or telling the investors that you’re scuttling the sale of your company because Chris in sales wants more money).

The indefiniteness of finance can be bizarre. Think about what happens when successful entrepreneurs sell their company. What do they do with the money? In a financialized world, it unfolds like this: • The founders don’t know what to do with it, so they give it to a large bank. • The bankers don’t know what to do with it, so they diversify by spreading it across a portfolio of institutional investors. • Institutional investors don’t know what to do with their managed capital, so they diversify by amassing a portfolio of stocks. • Companies try to increase their share price by generating free cash flows. If they do, they issue dividends or buy back shares and the cycle repeats. At no point does anyone in the chain know what to do with money in the real economy. But in an indefinite world, people actually prefer unlimited optionality; money is more valuable than anything you could possibly do with it. Only in a definite future is money a means to an end, not the end itself.

The evidence summarized in this matrix may be of some use to venture capital investors, as a general way to frame the riskiness of proposed investments. It suggests that start-ups which propose to commercialize a breakthrough technology that is essentially sustaining in character have a far lower likelihood of success than start-ups whose vision is to use proven technology to disrupt an established industry with something that is simpler, more reliable, and more convenient.

On March 31, 2016, Securities and Exchange Commission chair Mary Jo White said this to the students of Stanford Law School: Nearly all venture valuations are highly subjective. But, one must wonder whether the publicity and pressure to achieve the unicorn benchmark is analogous to that felt by public companies to meet projections they make to the market with the attendant risk of financial reporting problems. And, yes that remains a problem. We continue to see instances of public companies and their senior executives manipulating their accounting to meet various expectations and projections.1 We have reached a point in the world of technology startups where the fervor for building a company with a billion-dollar valuation — the elusive startup unicorn — is overshadowing the creation of real value. It is not the first time we have been here; the world of startups and venture capital has always run in cycles, from optimistic zeal to caution to post-catastrophe introspection and back again. But perhaps it is time that entrepreneurs and investors alike begin waking up to the fact that the “valuation-at-all-costs” model, with its relentless pressure, remote odds of success, and human cost, is not only unsustainable but bad business. At this point in the current cycle, the radically overvalued startup appears to be headed for the endangered species list. That is a good thing. While billion-dollar behemoths will always exist, and the high-wire act of chasing scale while also chasing the cash to fund that scale will occasionally produce a solid company, there are other ways to build a business. There are better ways to build a business.

She reverse engineered a startup based on market conditions, industry trends, and nascent investor fads.

a great business is defined by its ability to generate cash flows in the future. Investors expect Twitter will be able to capture monopoly profits over the next decade, while newspapers’ monopoly days are over.

Globalization replaced technology as the hope for the future. Since the ’90s migration “from bricks to clicks” didn’t work as hoped, investors went back to bricks (housing) and BRICs (globalization). The result was another bubble, this time in real estate.

Driving the move is a focus by Beijing on the Internet and innovation-driven sectors to boost slowing growth by easing listing rules. Another factor is a stock rally that has seen the Shanghai Composite Index climb 43% this year, although it fell 6.5% on Thursday. Meanwhile, Chinese investors are pouring money into funds that target startups. In 2014, 39 angel investment funds were set up in China, raising $1.07 billion, a 143% increase from the previous high in 2012, according to investment database pedata.cn, which is run by Zero2IPO Research in Beijing. Angel investors typically provide personal funds to finance small startups. High valuations and the loosening of listing rules will draw more Chinese companies to their home market, said Jianbin Gao of PricewaterhouseCoopers in China. “We anticipate significant growth in technology listings on domestic exchanges,” he said.

When people gamble, but they don’t tell themselves they’re gambling (as investors do), they need information to justify their decisions, and they need social proof and examples and evidence that they’re doing the right thing.

Product Hunt has become the place for those in the tech world to learn about new products. Investors follow it for ideas about where to put their money; entrepreneurs and developers check on what the competition is up to; and writers and editors use it for story ideas. Startup founders often go to the site to defend their products against criticism or to talk them up. Product Hunt's listings offer a way to control the message about a product because entrepreneurs can respond to questions and critiques. Groupon co-founder Andrew Mason and former Facebook executive Bret Taylor used Product Hunt when launching new companies last year because the executives could get immediate feedback from early adopters.

My premise is that startups and emerging companies should adopt a new, simple approach—start small, stay lean, raise only the funding you really need, grow the business judiciously and then execute an early exit.

Plenty of founders use Lean Startup as an excuse to start a company without a vision. “It’s so easy to start a company these days.” They reason, “the barriers are so low that everyone can do it, right?” Yet having a big vision is important: starting a company without one makes you susceptible to outside influences, be they from customers, investors, competition, press, or anything else. Without a big vision, you’ll lack purpose, and over time you’ll find yourself wandering aimlessly.