I’ve always said that smart people say/do stupid things and venture capitalist Vinod Khosla is proof of that.
“People under 35 are the people who make change happen,” said, “People over 45 basically die in terms of new ideas.”
The problem is that the data the tech world is so enamored with doesn’t back that up.
Vivek Wadhwa, a Duke University researcher, worked with the Kauffman Foundation in 2009 to explore the anatomy of a successful startup founder. That survey of more than 500 startups in high-growth industries showed that the average founder of a successful company had launched his or her venture at the surprisingly high age of 40. The study also found that people over 55 are almost twice as likely to launch high-growth startups than those aged 20 to 34.
The term “high growth” is key. 2010′s top two fastest-growing tech startups, according to Forbes, were First Solar, founded by a 68-year old, followed by Riverbed Technology, co-founded by entrepreneurs who were 51 and 33 at the time.
He should also inform the Merage Institute, which awards $100K to the top startup by a 45+-year-old founder (more runner-ups at the link).
In 2016 it was iSilla – Movement for people with disabilities
2nd Prize – SonicBone – Bone Age – Ultrasound Device for Bone Age assessment
3rd Prize – Inensto – Aluminum Air Battery
In 2015 they were:
1st Prize – NiNiSpeech
2nd Prize – A new Hydrogen Energy Storage
3rd Prize – Glasses for AMD Macular Degeneration
Brian Acton was 37 when he founded WhatsApp.
Notice that all of them solve a real problem — a problem of which they wouldn’t be aware if they hadn’t faced it directly or indirectly themselves.
Which meant they had real world experience.
Even Mark Zukerberg had real world experience; he wanted an easy way to engage and keep up with his friends. Remember, Facebook was originally started for college kids.
Hence young males created Tinder and its clones to hookup and Match and its clones for something more permanent.
If you look at socially oriented startups, many of their founders, both young and old, saw the need first hand, while volunteering and/or traveling, came home and created a solution that answered that need.
It’s not a matter of age.
It’s a matter of three things
See the need/experience the want/desire what isn’t
Think of a way to solve/provide it
Possess the drive, tenaciousness, guts and slight insanity required to turn an idea into a reality and a reality into a company
And those three things can happen to anyone at any age.
My thanks to KG for reminding me of how important it is to help smash these myths.
Now a Carmine Gallo, a much bigger name than me, has written The Storyteller’s Secret, highlighting the importance of story from building a culture to building a brand or entire company.
Vinod Khosla, billionaire venture capitalist here in Silicon Valley, where I live, tells me that the biggest problem he sees is that people are fact-telling when they pitch him. They’re giving facts and information and he says, “that’s not enough, Carmine. They have to do storytelling.”
When Ben Horowitz, co-founder of Andreessen Horowitz, another big venture capital firm, tells me the most underrated skill is storytelling, or when Richard Branson, who I interviewed, said, “entrepreneurs who cannot tell a story will never be successful”
Of course, what can you expect from generations that don’t read much and think communication is an email or, worse yet, texting?
Every day at the Ritz-Carlton there is a brief morning meeting of housekeeping.
And they ask the question of the employees: “Is there a great customer experience that you’ve been a part of, that you can share with the rest of us? (…)They start sharing stories with one another, and then they start competing for who has better stories. They get recognized publicly.”
Southwest’s success is the result of a masterful storytelling culture.
So they created what’s called a storytelling culture, where every week the HR teams go out, and they take videos of real passengers who have had a struggle, or have maybe almost missed a funeral or a birth, or a life-changing event, and stuff like that. But they were able to do it because of Southwest.
Apple is a giant at storytelling, as is Microsoft and Zappos.
So is Whole Foods, KPMG, every farm-to-table restaurant and even ugly food.
Just don’t kid yourself about why the stories work.
The work because they are real, true, authentic or any other adjective you care to use.
The stories are based on/backed by employee actions, which is what makes them resonate.
That means the CEO and all the executive team not only believes in the importance of customer experience, but also knows that the experience is created and facilitated by their people at all levels — especially the front-line people.
Today we welcome Marc Dorneles, another new voice at MAPping Company Success. Marc is a very untypical commercial insurance broker whose employer won B Corp status (definitely not the norm in his industry), plus he’s extremely knowledgeable about startup needs. (Click About Marc to learn more.)
There it was and here we are, Post Seed Conference SF 2015. There were many pearls of wisdom and insight offered at the event by the likes of John Doerr of Kleiner Perkins and others substantiating its strong attendance. From, Ideas are easy, execution is hard and the notion of challenging thinking to the more precise strategy of Empowering, encouraging OKR’s (Objectives Key Results) because it gets Alignment and Operational Excellence.
It was the place to be if you wanted to hear more about the key ingredients for a leader in the start- up environment. Namely; technical expertise, outstanding leadership, strategic focus on large opportunities, reasonable approach to finances, and having an incredible sense of urgency.
It reminded us that story telling, show and tell, is critical. Equally as instructive; a question to ask yourself when entering any partnership is: do you want to make mistakes with this person? Said another way, can you have the attitude with them that “I’ve got your back, let’s go tackle this problem together.”
There were market insights discussed such as the analysis that there are approximately 200 unicorns in the world, “Americorns” being a substantive number of them. Today’s dollars are a third of what was around at the height of the boom, making it less likely for unicorns to get acquired. Even a little antidotal comedy, like Unicorns are often albatrosses and bottom line focused zingers quoted from the likes Bill Campbell were offered; “all that matters is that we achieve operational excellence.”
The conference identified markets that comprised major opportunities, such as
the online ad market which is at half a trillion dollars. Likewise;
US Healthcare which is bigger than all but some three economies;
Public Education;
Transportation; and
rounding out with batteries (projected to be three time’s better than they are today)
as additional significant opportunity sectors. Overall market perspective was given: downturns are good things because more attention is given to the outstanding startups.
Operational consultation ideas were shared by many veteran experts including Christine Herron of Intel. Ideas such as, don’t over-capitalize, think long term, and have guts or that venture capital is not the end, it’s a means to an end. When looking for funding, don’t worry about the financing market, focus on the business. Don’t worry about unicorns. Consider “Optionality” i.e. keeping options open, looking for those with large upside and little downside. Rounds are taking longer to close. Be patient.
Concerning founders, a big key is learning.
Anticipate pre-launch, scaling issues.
Focus on process and measuring.
Know that rigorous hiring is extremely difficult and that the best talent usually needs to be lured away from other opportunities.
Long term, keep in mind that people who started with small companies don’t necessarily want to be there when they’re bigger.
Four major cities: SF, NY, LA, Boston are the most sought after locals. There’s a significant importance to understanding and adapting to local markets.
Focus on what is needed to prove key initiatives. Questions and actions such as,
How much did you raise?
How much accomplished?
How long is the runway?
Know exactly what the other side means.
Avoid grey areas.
Create your deck around the most effective metric, which is traction!
Keep in mind that investors roughly don’t invest 95% of the time because 40-60% of investments in startups are complete fails but have confidence nonetheless.
Traction = Execution. As soon as you raise equity round, get VC. Never letting company run out of money is the #1 job. Pressure your investors to use their network. “ABR” – always be raising. Don’t be concerned about dilution just raise as much as possible.
Vinod Kholsa generously shared some particularly brilliant insight, imparting the functional dynamic that value equals perception and the perspective to ask what’s valuable about the company. He went on to emphasis that the core business is much more important than valuation which is peripheral to long term success. In addition, to keep in mind, what kind of assets are you adding for long term success? How you approach people – extremely important. Be humble. Where are you today? Is most important. What risks do you need to eliminate or reduce in the next 12 months?
The analogy was made of having a good base camp, meaning a stable business with decent returns. Think big, act small. Think about Everest but plan to get to base camp first. The single biggest help a VC can give is to figure out who you need on your team. A company becomes the people it hires.
Understand the risks you’re taking. Sequencing which risks you prioritize is very important. You want people who will push you to ask the hard, not easy, questions. Talk to as many VC’s as you can. Find out what they think of your risks! Have a plan to eliminate risks one by one.
Wrapping up it was discussed that seed stage investing is both harder and easier than ten years ago because entrepreneurs are more sophisticated, but there are also more VC’s. It also speculated on what the future holds noting the impact of machine learning, which will replace most jobs.
The recognition that there is abundance and income disparity increasing at the same time was also made and that income inequality will have to be addressed. It was speculated that more than 50% of jobs will disappear.
Entrepreneurs have the opportunity to create technology. However, emotional elements can’t be replaced, which is exceptionally valuable knowledge.
The fact that the human element can’t be replaced leads to this article’s concluding point, i.e., why conferences like Post Seed are so valuable!
Chamath Palihapitiya grew up poor, became a billionaire, but found it wasn’t enough.
As a VC, he is building the kind of real legacy he wants by investing in companies like Glooko, a mobile diabetes management company, and Treehouse, a company that trains computer engineers and helps them find jobs.
Compare his attitude to billionaire Vinod Khosla, who blocked access to a previously public beach and now is ignoring a judge’s order to return public access.
Khosla’s actions even spurred passage of a new law that can use eminent domain to force a sale of the property.
Perhaps it’s time to follow an old Roman custom that was used to keep victorious generals’ egos in check; they were required to have a person in their victory chariot who kept repeating “Remember, you are not a god.”
It’s definitely time to rewrite the adage, “money is root of all evil” to a more accurate “ego is the root of all evil.”
Vinod Khosla, the co-founder of Sun Microsystems and now a venture capitalist, considers himself a pragmentalist (pragmatic environmentalist) and his investments reflect that attitude.
“And I’m a firm believer, technology is the real solution. The world will not go backwards. Human beings aren’t made that way. And so you have to come up with different solutions.”
All well and good, but he goes on to say that leaders need to hold opinions based on their own belief system and that if you believe strongly enough you can lead confidently.
The examples he mentions are Steve Jobs and Larry Ellison and therein lies the problem.
It’s a common attitude, cite one of the “good guys” to illustrate so-called leadership qualities and ignore all the bad examples of the same action.
Ellison and Jobs are known for forging ahead based on their own opinion and convictions and damn the torpedoes and analysts. Fortunately, they’ve both been right far more often (not always) than wrong and so are held up as examples of the need to hold to passionately to one’s beliefs.
But what about all the leaders who follow their own belief system and blow up their companies when they damn the torpedoes?
Robert Nardelli at Home Depot; Richard Fuld at Lehman and the rest of the Wall Street CEOs who passionately believed in derivatives and minimized the risk; John Thain at Merrill Lynch; Al Dunlap at Sunbeam; the list is endless and timeless.
Khosla is interesting and obviously successful following his own advice, but I suggest that you look for more than confidence based on a personal belief system when choosing someone to follow.
Entrepreneurs face difficulties that are hard for most people to imagine, let alone understand. You can find anonymous help and connections that do understand at 7 cups of tea.
Crises never end.
$10 really does make a difference and you’ll never miss it,
There it was and here we are, 
Chamath Palihapitiya
