Thursday, March 25, 2010

Fat Can Work, But Lean More Often Does


Ben Horowitz: The Case For The Fat StartUp
There are only two priorities for a start-up: Winning the market and not running out of cash. Running lean is not an end..... Sometimes running fat is the right thing to do.....Running fat meant that I laid off zero software engineers so that we could keep on investing in our technology, find our product/market fit, and build a lasting technological advantage..... the only thing worse for an entrepreneur than start-up hell (bankruptcy) is start-up purgatory..... Start-up purgatory occurs when you don’t go bankrupt, but you fail to build the No. 1 product in the space.
Fred Wilson: Being Fat Is Not Healthy
Ben and his partner Marc Andreessen. They have started and built multiple successful businesses and all I do is write checks...... I have never, not once, been successful with an investment in a company that raised a boatload of money before it found traction and product market fit with its primary product.....The very best investments that I have been involved in established product market fit before raising a lot of money. That's how Geocities did it. That's how Twitter did it. That's how Zynga did it..... they had significant user or customer adoption before ramping up hiring and spend..... it is very hard to be nimble and quick when you have hundreds (or even dozens) of engineers and other employees....Ben explains that Loudcloud raised $350mm in four rounds of financing (including an IPO) in the first 15 months of its life. Marc Andreessen and Ben Horowitz can do that. Most of you can not.
Albert Wegner: The Sui Generis Startup
There are extremely few people in the world that can raise money for super high burn businesses on the strength of their vision and reputation.
Ben Horowitz: The Revenge Of The Fat Guy
Fred is one of my favorite VCs .... Product market fit isn’t a one-time, discrete point in time that announces itself with trumpet fanfares....Some companies achieve primary product market fit in one big bang. Most don’t, instead getting there through partial fits, a few false alarms, and a big dollop of perseverance..... I show below that Fred himself didn’t realize that Loudcloud had achieved product market fit even though we had...... We had to rebuild completely and would ultimately find product market fit in a different set of markets altogether....... the best markets are usually the ones in which competition is fierce because the opportunity is big...... Twitter (one of Fred’s brilliant investments) ..... Twitter is more exceptional than Loudcloud or Opsware..... Marc had moved on to found Ning and I was the CEO who nearly ran Loudcloud into the wall.
The real answer to this debate is there is no one size fits all. Fat or thin is right depending on what business cycle the economy is going through, depends on what stage the startup is in, depends on what the eventual size of its market and the startup's share of that market ends up being. There can only be so many Googles, and so many Facebooks. Most startups end up being neither and still succeeding. You can absolutely make the case for fat, but overall it is the lean startup that wins. Fat is few and far between. Some of the fat ones might be some of the biggest winners, but they will still be a numerical minority, a super minority. So if it is about betting, I'd bet on lean. Especially for early stage, definitely go lean. But a startup can start lean and go fat later. There is no one formula.

Loudcloud/Opsware is clearly a fat success story, but that does not make it the norm. The number of lean success stories far outnumber the fat success stories.

Ben and Fred come across as two large size figures in the tech industry who both have much respect for each other. That makes this debate extra interesting. There is this with-all-due-respect deference from both sides. You could argue this whole debate was masterminded by two heavyweights to pay compliments to each other.

Both are right. There is no one formula. The disagreement is in nuances. Ben has done fat well. Fred has done lean well, and many, many times. Can't argue with track records of success. Or maybe you can. Hence the blog posts and counter blog posts.

Ben saying "Twitter is more exceptional than Loudcloud or Opsware" had me chuckling. The statement is so very true.


Reblog this post [with Zemanta]

Wednesday, March 24, 2010

Who Is Andrew Parker?


Blog Daily is Fred Wilson's mantra. Many people know him as a venture capitalist. I know him primarily as a blogger. He is my favorite solo blogger by far. So a few minutes back I showed up at his blog, and this is what I saw.

Fred Wilson: Bidding Andrew Goodbye

That blog post linked over to this one, also written by Fred Wilson.

Union Square Ventures: Bidding Goodbye To Andrew

By the time I was going through the comments at that blog post, I realized I was already following this guy on Tumblr without realizing he worked for Union Square Ventures. I found him through Nina who I found through Scoble.

Andrew Parker: ... Boston Bound, Leaving USV And Next Steps

Fred Wilson, July 2006: Looking For The Right Person
Brad Burnham, August 2006: Welcome Andrew Parker
Charlie O'Donnell, July 2006: Leaving Union Square Ventures: My Other Name Is An Avatar ....

Right now I am in a mood to do round 1 work for my startup part time while working a job. I have sent out a few feelers seeking a social media job of some kind. But that might feel like a deviation from my path. I am not aspiring to be a media guy, social or otherwise. This USV job might be a dream job for someone with my aspirations, but I am not sure they might go for me. And, curiously, I would like to start out by giving them some reasons why they should not hire me.
  1. I am going to be working on my startup idea part time, on the side. I am not walking away from it.
  2. I might stick around for about a year max. So if you are looking for someone who will be with you at least two years, I am not your guy. But when I leave it will be because I have decided to go full time with my startup, there will be no other reason. I'd give you a month's notice.
  3. I don't have a good track record of putting up with authority. I have never really had a corporate job. Even a job has to feel entrepreneurial to me. Can't be a cog.
  4. I am not a white male. There was this group photo somewhere I saw last year, or maybe before, it had all the top young tech entrepreneurs in town. The first thing I noticed was every single one of them was a white guy. I recognized only one, the MeetUp CEO Scott, a friend. Now that I also know Sam Lessin, the Dropio guy, I am pretty sure he was also in there. I have a pretty sophisticated understanding of race. I was one of Obama's earliest people in the city, and I got to become friends with many of the top Obama volunteers in town in all five boroughs, many of them white. But then I am used to not being part of groups with total cultural overlaps with me since I was 10. Makes me very individualistic as a result. I am big on personal space in my own way. In Nepal it was ethnicity in a boarding school environment - talk about The Other, in Kentucky it was race.
Some of the reasons I might like the job:
  1. I a-m looking for a job. If I get it, round 1 feels like so much less pressure. I am not having to pay myself a salary, however low, through my startup. I might even save some money and pump that into my startup. I don't need much.
  2. This would be a dream job.
  3. Going to tech events in town is not cutting it for me no more. I need something stronger.
  4. This USV experience might be the detox I need after a few years of hard core, cutting edge political work.
  5. The tech startup ambience, the people you will meet, the expanded personal network.
  6. Getting a better feel for the NY tech  ecosystem.
  7. Fred Wilson. If I so enjoy interacting with him at his blog, that enjoyment must be greater by so many degrees in person. This guy is as good as they come. In the world of movies, they have Scorsese. In the world of venture capital, they got AVC. This guy is a legend in the making. I have higher regard for him than VCs with more money than him. He is really good at what he does. He was born to be a VC. (Fred Wilson's Insight)
  8. I am on the L line. They are on the L line. It only struck me a few days back that USV is perhaps named after Union Square. For the longest time I thought, so the Square is the square like in geometry, what is Union?
  9. I like it that they are a small team. Three is the Google number. Three seems to be the USV number. Google works on the premise that three is as big as a team should get. 
  10. I absolutely am loving it that they are asking not for a resume but a blog. This blog will do it for them. Well then, here goes. You have this blog. And you can click over to all my social media presences from this blog itself. Give me a job, if not at least give me some page hits. :-) Best, make me an offer. 
This is what I looked like when I showed up in town summer of 2005.




Reblog this post [with Zemanta]