Category: Startup Newsletter

Jack Ma blasts minds at the Stanford GSB; here are my notes!

This Jack Ma talk at Stanford’s GSB, given in Mandarin (with great English subtitles!), is minute-for-minute the best tech entrepreneurship lecture I’ve heard this year, maybe last year too.

Here were my notes. They are more copious than usual because there’s so much good stuff here: wisdom, humor, anecdotes, rah-rah. Enjoy!

  • in relating a story about how he tried to stop a group of men who were stealing a manhole cover: if you don’t take action, no one will, and if you take action, you may be the beneficiary
  • his whole life, no one told him he was smart, no one believed he would succeed
  • he was first person in China to conduct business on the Internet
  • he thought, Internet will be something, as long as I’m the last person to survive, I will succeed (wow!)
  • Silicon Valley gave him a lot of inspiration
    • when he started working on the Internet in China, everyone thought he was a trickster, but when he went to SV, all the parking lots were full, rush hour traffic, people were working on the weekends
  • believes he and Alibaba succeeded in Chinese internet for 3 reasons:
    1. no money
      • “when you have too much money, that’s when your real problems start”
      • Alibaba has one of China’s largest cash reserves and that’s part of their culture
      • money is like the armed forces, try not to use it, but if you do, you must win
    2. didn’t understand technology
      • still doesn’t understand what coding is all about, but that doesn’t mean he doesn’t respect it!
      • it’s both a tragedy and a fortune that he’s not a CEO who understands internet; he isn’t looking over his engineers’ shoulders, and has great respect for his technical team
      • “I don’t understand technology, I’m afraid of it, as long as it works I’m happy”, in that way he’s similar to 80% of Alibaba’s users
      • was the company’s #1 tester but part of why he’s stepping down as CEO is because he doesn’t even use his company’s products anymore, he’s too old for the internet, young people are even better testers than he is
      • “without belief, technology is a tool”
      • mentions the need for reverence and respect of technology multiple times
    3. never planned
      • wrote one business plan, VC rejected him and gave detailed feedback, never wrote another one
      • it was 96, 97, if you wrote a plan you were either lying to yourself or to other people
      • could get an MBA to write a detailed, beautiful plan, but would it be useful? no
      • “life is a plan that is slowly unfolding…embrace change”
      • “change is the best plan if you don’t want to lose your sense of direction”
      • “I never plan, that doesn’t mean WE never plan”
  • world’s never been in better place, yet never have people had more complaints; “best of times, worst of times”
  • 30 years ago China was not much better than N Korea
  • “change is what will give young people opportunities”
  • it took him 7 years to finish elementary school
  • he took the college admissions exam (the gaokao) 3 times before he passed!
  • attributes it all to hard work, good friends, and a lot of LUCK
    • luck is like seeds to be sown, it won’t come to you on its own
    • when you have a lot of good luck, it won’t continue forever, your job is to sow other peoples’ seeds, spread it around, and it may even extend your own run
  • some of you believe in God, some in Buddha, I’m still shopping around
  • Alibaba is not a business for consumers, it’s for small businesses
    • things change too fast, too hard to understand consumer tastes, not in our DNA, but small businesses know their customers, so we help them
    • if run out of small business customers, we’ll break up the large ones!
  • we’re not competing with eBay, Google, Yahoo…we’re competing with the previous generation, and with the future

Jason Cohen on the perfect bootstrapped business

*standard caveat that the word “bootstrapped” is misleading and wildly overused

Jason Cohen gave a fantastic talk at Microconf 2013 on the perfect bootstrapped business.

Here is the Vimeo link.

Here are some other notes I found.

Here are my notes with highlights for my big insights; JC = Jason Cohen

  • most companies don’t build something people want
  • most companies don’t build themselves in a way that allows for bootstrapping
  • JC built 4 cos, all made or are making $1M+/year, all bootstrapped
  • now swinging for fences with WPEngine
  • lifestyle and bootstrapped are pejorative terms, Hiten Shah: “let’s call it self-funded”
  • goal: predictable profit every month, $10K+ income per month per founder
  • revenue models
    • recurring revenue is the best way
    • Kevin Kelly’s 1000 True Fans – he actually redacted, after getting feedback from musicians and artists that getting 1000 fans is REALLY hard
    • Jason: get 150 customers; for WPEngine, asked 50 WordPress consultants on LinkedIn for an hour of their time, said he was building something for them, and since they were consultants and time was valuable, he was happy to pay for an hour at their current rate, 48 of them responded positively and NONE of them charged him!
    • goal is to get 50 people to agree to give you $50/mo to solve their problem — even before you’ve built the product!!
    • if you get 150 people paying $100/mo, you’re past $10K/mo
    • cashflow: annual prepaid is key!! (more on annual prepaid here)
      • “2 months free if you sign up for a year”
      • 1/4 of WPEngine signups choose pre-pay
      • infinite marketing budget because cash-in exceeds all marketing spend
      • in general, raise prices
      • hack: have 3-4 price tiers, highlight middle one, have highest one be crazy high; call middle one the “business plan” so people w/ businesses will purchase that one
      • switched from 15 day free trial to 60 day moneyback guarantee; sales went up and people appreciated they “had more time” (Jason doesn’t believe in free trials; in both, a credit card was required)
  • market models
    • almost all Microconf speakers sell b2b
    • don’t do:
      • b2c…app users complain about $1.99 (versus $0.99), Gmail only charges $5/mo, just can’t make money
      • anything real-time – you always need to stay current
      • anything that relies on virality for growth
      • don’t solve a problem that only occurs once in someone’s life — e.g., weddings, events
    • do:
      • focus on naturally recurring problems
      • finance, e.g., invoicing, reporting, billing; asked app developers how much they made – 30% made none; IT-focused apps made $1.5K/mo, finance-focused apps made $6K/mo
      • problems that change over time, e.g. digital marketing like SEO and Adwords, a/b testing
      • customer and technical support
      • build aftermarkets – eg, Apple App Store, Salesforce, Heroku
      • be in a big market
        • not for same reasons as VC, but proof that market exists
        • niches abound
        • can be a “me too” product and not have to be #1
        • have more room to change product, pricing
  • customer acquisition
    • social media sucks – isn’t repeatable, always changing
    • his blog has 40K readers, launch of WP-Engine led to only 2 sign-ups
    • cos like Buffer can do it, have to be really good at it and spend a lot of time on it
    • pay for visits
    • CPC = MRR/25 (if avg $50/month in revenue, pay $2/click) – here’s his blog post on why
  • things are going well ($30-40K in monthly revenues), what happens next?
    • you can sell it
    • his second co, IT Watchdog, built product as contractor, client was making millions more, afraid they were gonna build and sell to other clients (no exclusivity), so client bought them
    • raise prices – but can change clientele
    • Thales – Greek businessman/philosopher, Aristotle regarded him as the first Greek philosopher
      • what is hardest thing? to know thyself
      • what is easiest thing? to give advice

Thanks for reading, y’all!

Jason’s definition of the perfect bootstrapped business: PREDICTABLE ACQUISITION OF RECURRING REVENUE WITH ANNUAL PREPAY IN A GOOD MARKET CREATES A CASH MACHINE

Startup 101 Series: Updated links and what’s next

Just added ~20 new reads to the startup 101s (collections of great startup reads). Removed a few, too:

I’m also working on a simple ebook which will combine these 101s with some new material and an edited collection of my 1-Read-A-Day lessons (you can subscribe here; warning: it’s a lot of content :)

I’ve also started a new, related project — trying to iterate to something truly useful. So far, the feedback has been great. More on that soon. Still startup content, still about saving you time and finding you the best. I love Joe Wikert’s idea of the content concierge.

Would you pay for some combination of curation and summarization? I’d love to know!

18 more startup reads (for the 101 series: Seed Fundraising, CEO, Mistakes & Failures, and Hiring)

Here are the 101s published to date:

Here were my favorite new links for each 101:

Being a CEO: Reid Hoffman’s If, Why, and How Founders Should Hire a “Professional” CEO

To be a successful growth-stage CEO, you need to be ready to manage a 1,000 person organization and devote substantial time to time consuming things like running meetings and other business process. You can’t just do the exciting stuff like making the final call on product and speaking at conferences, while shuffling off everything else to the mythical COO who loves doing all the dirty work and doesn’t want any of the credit.

Hiring: Marc Andreessen’s How to hire the best people you’ve ever worked with

Ethics are hard to test for. But watch for any whiff of less than stellar ethics in any candidate’s background or references. And avoid, avoid, avoid.

Mistakes and Failures: Rand Fishkin’s 7 Unlikely Recommendations for Startups & Entrepreneurs

There’s nothing wrong with finding a great technical co-founder, but there’s a lot wrong with finding a mediocre one, or one who doesn’t work out long-term and creates a messy situation for the fledgling business. One bit of advice that everyone gives that I agree with is that choosing a co-founder must be like choosing a marriage partner – and its breakdown can often spell the end of the company.

Seed Fundraising: Fabrice Grinda’s A SuperAngel’s Investment Guide

An email update or a 5-10 minute phone call once in a while is more than enough to get a sense of how the business is doing. Moreover, rather than having structured times to talk, it’s much better to be available punctually whenever the entrepreneur needs help. This works better for me given it takes less absolute time and is better for the entrepreneur because they get the help they need when they need it. I sometimes don’t talk to an entrepreneur for 6 months or more, but then end up spending a lot of time with them discussing a term sheet they might have received if they are fund raising, etc.

We’re almost to 70 lessons for the 1-Read-A-Day newsletter. Once I reach 100, my next goal is to publish the first edition of the Startup Textbook – based 100% on curated content that I summarize and organize.

The Evan Williams formula for getting rich online

Evan WilliamsFrom a Wired review of an Evan Williams speech.

The main point: Stop creating things cause they’re new and cool. Instead, find something everyone OBVIOUSLY wants, see how they’re currently getting it, and make it easier, faster and cheaper.

…the internet is “a giant machine designed to give people what they want.”

Williams created Blogger and Twitter and will be a billionaire soon…so he knows how to give people what they want.

“We often think of the internet enables you to do new things,” Williams said. “But people just want to do the same things they’ve always done.”

The Internet will become a digital representation of the real world. If you carry that thinking far enough, we may cease to exist as physical organisms (see Tron).

Increasingly, everything that happens and everything we do, everyplace you go and check in, every thought you have and share, and every person who liked that thought… is all connected… and it keeps multiplying relentlessly.”

The Internet is about convenience, and convenience is speed and “cognitive ease”.

In other words, people don’t want to wait, and they don’t want to think — and the internet should respond to that.

See Google (finding things), Amazon (buying things), Apple (communicating things), and Facebook (also communicating things?).

The key to making a fortune online […] is to remove extra steps from common activities as he did with Blogger.

See also Uber (getting somewhere). Chris Sacca calls it closing the loop.

The Internet is not utopia. It’s more like…modern agriculture:

“[Agriculture] made life better. It not only got people fed, it freed them up to do many more things — to create art and invent things.”

Modern agriculture has downsides (eg, animal abuse, overeating, environmental damage) and so does the Internet (eg, mental health, media addiction).

A Dave McClure quote sums it up:

“Great companies do 1+ of 3 things: Get you LAID (= sex). Get you PAID (= money). Get you MADE (= power)”