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  • jasoncalacanis 23:26:04 on 2019-03-04 Permalink
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    Why People Don’t Get Wealthy 


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    I threw out a tweet over the weekend titled “reasons people don’t get wealthy,” and I listed nine reasons and asked folks to add their 10th, 11th and 12th.  

    [ Click to Tweet (can edit before sending): https://ctt.ac/3My4V ]

    I didn’t put any thought into the order of the list, since I wrote it in a stream of consciousness style, but I made sure to include factors that people don’t have any control over, such as, what time and the country they were born in because, obviously, if you were born in North Korea today or were Irish (like my ancestors) at the turn of the 19th century, you probably had zero to little chance of changing your station in life.

    Right now I’m very interested in bringing up the topic of wealth, success and achievement in America because a vocal minority of youngsters (I’m old now!) are embracing socialism while advocating for the banning the billionaires.

    I get their frustration with their Boomer and Gen-X parents and, obviously, they have many valid points — even if I disagree with their anti-capitalism stance (this will be another blog post).

    This embracing of socialism, of course, is leading the crazy right to trigger their individual-freedom loving Americans, in order to deride that generation for wanting to be part of the socialist-communist system found in China, Russia, and Venezuela, as opposed to the Nordic Model (whether that’s actually socialist is debatable).

    Putting that aside, I think young people should still aspire to get wealthy — which is different than rich — and be proud of that. Wealthy is a loaded word, and while some careless folks would define it as dollars, the truth is that wealth encompasses so much more, including options, health, happiness and the pursuit of one’s vision of what the world should be.

    Striving to be wealthy, by society’s or one’s personal definition, is what we should all be doing in this life. We should strive to create abundance through innovative products and services, be that creating Khan Academy or Uber/Airbnb or even a lifestyle business. Entrepreneurship has created the greatest gains in our standard of living to date, even if it’s hard to grasp the wild polarization of wealth in society. I don’t see capitalism’s lock on the best operating system for society changing any time soon — the most driven humans drive humanity forward, it’s that simple.

    Conversely, if we pursue free services and money we will drive more power into the hands of a larger and larger incompetent government, and I think we know where that will end up — and it won’t be great for anyone.

    The socialism vs. capitalism debate is just getting started and I’m looking forward to debating it passionately and intelligently with y’all. Comments are open.

    My original list is below:

    Reasons people don’t get wealthy (a partial list):

    1. A lack of skills

    2. Lack of taking risks

    3. Not building a network

    4. Poor work ethic

    5. Not reading books

    6. Giving up after getting beat down

    7. Fear

    8. Being born at the wrong time

    9. Being born in the wrong country

    … and some great responses from Twitter.

    The post Why People Don’t Get Wealthy appeared first on Jason Calacanis.

     
  • jasoncalacanis 20:59:04 on 2019-02-22 Permalink
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    How to Raise Money Instantly for Your Startup 


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    Exterior, San Francisco’s SOMA district, two nerds, walking briskly. Tents, traffic, and garbage — everywhere.

    [ Click to Tweet (can edit before sending): https://ctt.ac/w91C_ ]

    Founder, excited: “JCal, I just got some advice from an advisor that I should call my first round of funding a ‘pre-seed’ round so that the optics are clean when I go for my Seed Round and Series A…”

    Angel: “Hmmm…”

    Founder, more excited: “you know… in case I don’t have product-market fit and investors think we’re a zombie startup… trapped between our Seed and Series A funding.“

    Angel: “It’s irrelevant, all of it.”

    Founder, confused: “My startup? The Pre-Seed Round? The advice? My life?”  

    Angel: “All that matters, is the chart.”

    —————-

    Founders get too much free advice these days, most of it from folks who have never built or invested in a billion dollar company. Any advice you get from someone who has not been involved in a unicorn startup is largely irrelevant if you are trying to build a unicorn startup.

    Candidly, most of what I thought I knew before investing in seven unicorns was wrong or unimportant. If you want to understand what it’s like to climb El Capitan you can interview people who have done it, and as a journalist, conference impresario and podcast host, I did my share of asking questions.

    But what journalists, talk show hosts, and directors know about hanging off the side of a rock is vastly different than what Alex Honnold knows.

    If you want to raise capital for your startup, there are countless books and blog posts for you to read, but you must sort those words into two buckets: folks who have built or invested in unicorns and folks who haven’t.

    After introducing the 200+ founders I’ve invested in to thousands of other investors, here is the number one thing that has lead to them to (a) getting a meeting and (b) getting multiple term sheets: a chart that doubles every three to six months.

    If you have a revenue chart that doubles every six months or less, like Uber, Calm, Thumbtack, Robinhood, Trello, Fitbod and LeadIQ, you will be tripping over all the venture money on your doorstep.

    Are there other reasons than “the chart” that VCs invest? Yes!

    Can you have “the chart” and have VCs pass on investing? Yes!

    Can you use unsustainable growth techniques and fake “the chart?” Yes! (but I don’t advise it)

    Is having a chart that doubles your best chance at raising capital? Yes!

    Best,
    Jason

    PS – The scene above is 100% true, except it’s a composite of three different conversations I had this week that I bundled together and took liberties with.

    PPS – If you have $5,000 to $50,000 in revenue a month and want to 100x it and build a unicorn, email your story and chart to 100@launch.co

    The post How to Raise Money Instantly for Your Startup appeared first on Jason Calacanis.

     
  • jasoncalacanis 07:00:48 on 2019-02-11 Permalink
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    What is a startup vs a lifestyle business (and why it matters for VCs) 


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    There is a lot of misconception around the moniker “lifestyle business,” with many founders thinking it’s an insult, which is understandable since said moniker usually comes from an investor with a pile of money and who is giving a “hard no” to a founder who just spent the time to pitch them — in rejection, comes reaction.

    [ Click to Tweet (can edit before sending): https://ctt.ac/4EXd3 ]

    When people in Silicon Valley call a startup a lifestyle business, they are actually implying that it’s a GREAT lifestyle for the founders, perhaps with a certainty of pulling out a million or two in profits a year, as opposed to the 5-10% chance of waiting a decade to have a greater return.

    VCs tend to be impressed with these lifestyle businesses and their advice is given because it’s in everyone’s best interest — it’s certainly not to diminish founders.

    As I mentioned above, the timing of the lifestyle business assessment is a key issue here. The founders getting this designation from investors want VCs to invest in their businesses, and have poured their hearts out in pitch decks and partner meetings — they believe that they deserve to clear market and they haven’t.

    Many investors don’t have great bedside manners and don’t unpack their choice enough not to invest, based on my experience as a founder, investor and in running an accelerator with almost 100 graduates.

    At LAUNCH, we like to walk founders through our “declining to invest AT THIS MOMENT,” with a lot of details. This acts as a great moment for us to codify our decision-making in a transparent way with the founder and gives the founder the ability to remind us of how stupid we were years later.

    A simple email like this can take the edge off the “no”:

    “Jane & John,

    We really enjoyed hearing your vision for Acme Incorporated. We are going to pass on investing at this time because we are unsure if this can be venture scale. Venture scale today means having a realistic chance of hitting $100M in revenue in under 10 years, with great margins. If we’re missing something, please let us know because we often get it wrong.

    Also, “at this time” is the key phrase in this email, we often invest years after first meeting a founder, so we would love to stay in touch with you. You can send your monthly updates for investors/non-investors to
    updates@launch.co. We read them all and we respond to many.

    Best, Jason”

    If I think it’s a lifestyle business, I will often say to the founder:

    “Most VCs are not going to consider this venture scale in my opinion, because it’s based on low margin service revenue. I wonder if you’ve considered optimizing your business to throw off two million dollars a year for the next ten years.

    If you do that, you will make $20M and still own a great services business you can sell for 2-5x EBIDA at the end of that decade if you want. That will give you $20M in earnings and a final $4-10M sale at the end, if you do sell.

    Most founders never make $25M+ from their startups, so you might want to avoid VC money and go for the sure(r) bet.”

    This tweet was super instructive in regards to how much misconception there is about the lifestyle business designation.

    Venture capitalists are not trying to offend or make founders feel bad by saying they have a lifestyle business. That’s a naive reading of the situation. If a venture capitalist tells you that your business isn’t venture scale, they likely believe it, and are telling you so that you don’t get yourself into a dysfunctional situation, and so you’ll have a better outcome.

    No venture capitalist wants to be on a dysfunctional board with an unhappy founder — that’s literally the worst scenario an investor can be in. They avoid it at all costs.

    Best,
    Jason

    PS – Do you know an awesome lifestyle business that is throwing off $1M in profits and wants to try and 100x it? Email 100@launch.co

    The post What is a startup vs a lifestyle business (and why it matters for VCs) appeared first on Jason Calacanis.

     
  • jasoncalacanis 20:08:51 on 2019-02-10 Permalink
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    How to Predict the Future (Don’t) 


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    Nobody can predict the future.

    Everybody can tell you what’s possible.

    The art is in knowing what’s probable.

    I’ve spent the last 10 years investing in startups, half that time as a hobby and half that time as a career, and in that time I’ve learned that most people are scared, little aliens.

    [ Click to Tweet (can edit before sending): https://ctt.ac/uzlFV ]

    All day long I ask people what they want to happen in the future and what their plan is to make that vision materialize, and the bold and true of heart answer these questions without pause. They have studied their market, talking to customers and doing competitive intelligence on incumbents. They have timelines they’ve built, tests they want to run and a plan B and C in case they run out, or get offered a bucketload, of money.

    However, the majority of tourists I meet in startup land freeze like fragile snowflakes landing on a hardened lake, suddenly paralyzed by the realization that they’re a commodity, both in how they think and who they are.

    They recite the codas of cowards with confidence: “well, nobody can predict the future” and “I guess it’s possible.”

    What a profound realization! “It’s possible” and “no one knows the future,” that’s amazing! How did you come to this realization, and does anyone remember the quick key for the facepalm emoji?

    As a writer, I hate wasted words, and as a (hu)man of action I hate cowardice and telling comrades that which they already know is their height of cowardice.

    The job of elite investors and founders is to look at what’s inevitable and build a plan that accelerates that timeline and capture the value from that compression.

    Self-driving cars are inevitable? It’s possible that humans will not die from car crashes in our lifetime!? That’s obvious, so let’s focus on building a product road map with all the milestones that need to be solved to get us there, that takes into account getting massive funding — from revenue and investors — that allows us to go 10x faster than anyone thought possible, crushing all cowards in our path.

    It’s possible that robots will replace back-breaking manual labor? Fantastic, let’s make a list of the 100 things that haven’t been automated and figure out which ones are most probable to solve now (Roomba for cleaning floors and Cafe X for making coffee), and which ones are most probable after that’s done (drones to clean windows?).

    When I look at an investment I don’t focus on what’s possible, I focus on what’s probable.

    Five years ago I didn’t ask, is it possible the world will embrace meditation and mindfulness, I asked if it was probable that a large number of people would embrace it. It was clear to everyone that smartphones and subscriptions would enable it, and it was clear that a passionate minority were already embracing mindfulness on varying levels, but with tremendous results across the board.

    The fact that it was so probable made it so much easier to make that bet.

    If you catch yourself, or a partner, saying “it’s possible,” that’s an opportunity for y’all to dig in and do the hard work of asking if it’s probable.

    On the podcast, I always ask folks to “set a line” for when we will have some amazing outcome, be it flying cars or general AI, and the resistance I face from intelligent people is just extraordinary.

    Take a moment to “set a line” or put a percentage on your claims and watch how much better you get at this game called “startups.”

    The post How to Predict the Future (Don’t) appeared first on Jason Calacanis.

     
  • jasoncalacanis 00:17:25 on 2019-01-24 Permalink
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    Resolving co-founder conflicts 


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    Related image

    Got a lot of feedback on my post on “How to find a co-founder” yesterday, including founders asking me how they can resolve conflicts with their co-founders.

    [ Click to Tweet (can edit before sending): https://ctt.ac/Gzath ]

    This is one of the hardest questions for me to answer because conflicts are so situational, often personal and if they are hard to resolve they are often complex with multiple resolution paths.

    Before we talk about the conflict at hand, we need to look at the founders themselves and ask, are these emotionally mature founders who are self-aware? Most of the founders I work with are highly-driven, highly-skilled, persuasive and passionate individuals, but often they are young and emotionally inexperienced. Sometimes they are older but not very self-aware.

    Most conflicts I see are a subset of all startup conflicts: the problems co-founders can’t resolve and they bring to a trusted 3rd party, in this case, an investor.

    These conflicts are often not as hard to resolve as they seem, and are driven by the co-founders being under massive pressure and having not done the work to connect deeply with each other.

    Let’s create a scenario. Two founders are debating if they should fire their director of sales, Joe. Joe is a great culture fit and is super positive, but his performance is below average. He misses targets and after two PiPs (performance improvement plans), he hasn’t improved.

    Co-founder John, the product visionary, believes that since they have money in the bank and since Joe is loved by everyone, they should keep working with him. Perhaps there is another role in the company, and Joe was their first hire. Joe recruited three of the best people in the company and he hosts the weekly happy hour. It would be a shock to lose him.

    Co-founder Joanne, the CEO, and operations killer, believes that Joe had his shot, had two PiPs over nine months, and since Joanne has to manage Joe, it’s her call and she believes it’s a waste of time to keep average people around. Besides, Joe can’t even come in on time and is the first to leave, with his jacket on at 5:29 PM. With a gentle transition out — for example, a three-month consulting agreement — we can manage the culture issues.

    Things have devolved to the point at which I’ve been brought in as the angel investor. This is what I would do:

    1. “Joanne and John, let’s take a walk and have lunch.”
    2. “Why don’t you each explain to me your positions?”
    3. “I think I understand the situation… it feels like there are many solutions to this problem. Why do you think it’s come to a head? Are there other uncomfortable issues we need to put out on the table now since we’re hashing everything out so that we can get back to work?”

    In these situations, what I’ve seen is that the issue at hand is almost never the actual issue. All kinds of issues can come pouring out during these sessions, and that’s a good thing. The more you talk about the issues, the less power they have over you.

    I set up this scenario as a coin toss on purpose.

    Was your initial reaction to try to solve the problem?

    Did your mind immediately take John or Joanne’s side?

    In this situation, if the company were Slack or Uber, you could obviously do a coin toss and the company would do just fine taking Joanne or John’s side. What matters here is that the two co-founders take the time to hear each other out and have the emotional maturity — and agility — to say to each other, “this is a coin toss, I trust you and I’m fine with whatever decision we make; let’s just agree to monitor the situation and stay focused on what matters: our customers.”

    If only life were this simple. I’ve seen founders who are dealing with children or serious mental issues (anxiety, depression, bipolar, etc.), as well as founders who simply lacked any self-awareness. Sometimes folks have substance problems, other times their marriages are breaking down or their parent is dying of cancer.   

    Business is very personal, despite what they say in the movies, and co-founder conflicts often require taking that long walk or having that long family-style meal. It might also require calling your investor and admitting that you can’t resolve this conflict, or that the conflict is the smoke and that the fire is a highly personal issue.

    If you have a great investor, they’ve seen it all and they will help you. That’s why we’re here, to help you when things are hard to resolve… send the text, set up the walk and talk and don’t let things fester.

    The post Resolving co-founder conflicts appeared first on Jason Calacanis.

     
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