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Things I Learned from Chris Dixon about Startups (2015)

319 points by vinnyglennon 8y ago

late2part 8y ago
Brilliant article with deep insights - very very good read for founders that articulates a lot of the deeply true and difficult things about starting and building a successful company.
lordnacho 8y ago
The thoughts about ideas and information are particularly relevant. If you're not a domain expert everything you come up with will collapse under efficiency arguments. Such as "if this made sense someone would have done it". Much of expertise is knowing what experts themselves think. That's why you can answer the question of why it isn't already there. I have a question though. If you need to be a domain expert, how can there be so much focus on young founders? Is that a different category of investment, people who happen to have a lead into an emerging industry like social networks?
- so_tired 8y ago
  You really need to realize there are different markets. Young founders are often in B2C and capital-light. They are judged (almost) purely on growth metrics. Series A negotiation can drag on for months, and its hard to fake 100% month-on-month growth. The B2B will usually be more experienced insiders with deep domain knowledge, and excellent references. EDIT: everything is relative. If you are a brilliant PHD in ML then you can be 25 AND a domain expert AND go in to a capital-heavy B2B sector.
  - johnrob 8y ago
    For many consumer ideas, the younger people are the experts.
- southerndrift 8y ago
  I guess because VC is, as the article says, all about providing smart money. Old founders have their network so VCs are focused on young founders.
tyre 8y ago
This is interesting at a meta-level. It's ultimately content marketing for a16z. If Chris Dixon wrote this same article—e.g. "Here are all of the best things I've said"—then it would come off as arrogant or ickily self-promotional. But having someone else write it allows the author to praise the ideas without the same stigma. I don't know whether it was intentional or not, but it's interesting how well the content comes across when the base idea ("writing about smart things our partner was right about") is the type of marketing companies/VCs _want_ to actually say but social norms prevent. The article itself is an example of the advice within the article. A "good idea that people think is a bad idea."
- firasd 8y ago
  The author Tren Griffin has many articles like this on his website, it's his 'genre'. Not sure if this was just cross-posted or newly written: https://25iq.com/featured-individuals/ https://25iq.com/featured-individuals/
- EGreg 8y ago
  This is a very good technique, which we point out in our video to investors: https://www.youtube.com/watch?v=UJfEffq0Yig#t=6m40s https://www.youtube.com/watch?v=UJfEffq0Yig#t=6m40s
  - vertline3 8y ago
    Interesting video, It's used by confidence men. The term I think is a shill. Posing as a satisfied customer.
- cududa 8y ago
  While it looks like it’s content marketing at first glance, this is a regular theme Trenn uses. He runs a wonderful blog called 25iq. He’s been privelaged enough to work alongside the best and have access to the best, and he takes a lot of time sharing the meta-insight. He structures a lot of his thinking in the same way as Charlie Munger. I’d recommend any entrepreneur read as much of his writing as you have time for!
- thesausageking 8y ago
baxtr 8y ago
I’m somewhat tired of these kind of “startup folklore” articles, although I read and bookmark them all. Sure, these people were crazy successful and see many other people being successful. Still, so much of these “insights” feel like they could be exactly the other way around. Many successful founders I have met, have told me: well, no we weren’t the only ones doing this, but we got lucky for this and that reason (e.g. timing). What if the lucky ones wrote the “rules”? I don’t know if it’s possible but I would love to see all these concepts proven by data.
- nostrademons 8y ago
  There's a meta-insight there: what if the lucky ones do write the rules? If that's the case, an optimal strategy might be to take as many convex bets as possible, keep secret all the ones that fail, and then once a low-probability bet succeeds, milk it for all it's worth and convince everyone you're a genius. You can then leverage that for significant financial gain from organizations who seek genius-level insights in the future. Eventually regression-to-the-mean makes you lose your credibility, but in the meantime you can pocket significant amounts of cash and invest them in much more stable revenue-generating assets. A glance at who's been successful since the 3rd millenia started shows that this might not actually be a bad career strategy.
  - dasil003 8y ago
    There's a huge amount of luck and serendipity involved in all things, including of course the outsized returns and hypergrowth that SV worships and today's generation of young social climbers pines over. However I would caution anyone to be careful with the type of optimal strategy you outline. Diversifying within reason is good, but you have to deliver real value somewhere along the line. The luck involved in building a successful business does not occur in a vacuum, if you are not focused and prepared, the rocketship won't leave the ground (or worse explode mid-flight). Those who are more obsessed with the financial or social outcome than the actual job of building a business are the ones you find all glad-handing each other at networking events while the most successful always seem to have (or have had) something more important to do.
gwillz 8y ago
This echos a lot of hard lessons that I had during my time as a founder. While a lot of this is great advice, I'm frustrated by the advice of "if people reject you and things are hard, then things are going well". Because I believe there's more depth to people's rejection of your idea/product/business and they could have valid reasons. My real issue is how to weed out the legitimate feedback from the bad. No one has ever told me how to identify the difference. It's typically, "yay" means you've done well and "nay" also means you're doing well. When really, either of those responses could be a false positive - but which?
- graycat 8y ago
  I suggest that we can tell the difference, evaluate ideas, as they have long been evaluated with good accuracy from the pyramids to the latest fantastic success of the US DoD.
- mdorazio 8y ago
  Having been through this a few times, my personal thinking now is: "I like it" means absolutely nothing by itself. People will tell you they like your idea/demo/whatever all day and have absolutely no intention of ever using it, let alone paying money for it. What you want to hear is "How much does it cost and when can I buy it?" (assuming b2b) or "Can I be a beta tester?" (assuming b2c). Everyone else is fluff. If you're getting nothing but fluff after talking to a bunch of people, your idea is probably also fluff. "No" by itself also means pretty much nothing. You want to be listening for "No because..." and then evaluate the because part. Is it no because they're not the right audience? Is it no because they don't see the market opportunity like you do? Is it no because they've already heard the same thing from 3 other entrepreneurs and yours is thus a me-too play? Is it no because [fundamental reason you didn't think of and have no answer to]? Etc.
  - wpietri 8y ago
    Excellent point. When I'm talking with a first-time founder, they'll ask me what I think of their idea. Sometimes I'll say straight out: you shouldn't ask me that question, because if I answer you shouldn't listen to me. Feedback from people in the target market is hugely valuable, especially if they answer in individual terms. E.g., I will/won't buy because X. But feedback from people not in the target market is rarely useful, especially when it's in theoretical terms. So unless I have some specific expertise, I try to redirect people toward the people they should actually be talking with.
CPLX 8y ago
There seems to literally be a bottomless pit of content-free aphorisms that spew out of the content marketing departments of venture capitalists every year. Like does anyone read this stuff? “[The] business of seed investing, and frankly, early-stage entrepreneurship, is so much about getting good information. And almost all of that information, unfortunately, is not published.” OK cool, thanks. By the way also that's also true of all investing, in anything, ever throughout history. By definition good investment information is unique information, that's the nature of competitive markets. “Ideas …matter, just not in the narrow sense in which startup ideas are popularly defined. Good startup ideas are well developed, multi-year plans that contemplate many possible paths according to how the world changes.” Ideas matter. More thoughtful, well developed ideas matter more. Who knew? Another thing that matters is warm clothing, it's really handy. “What the smartest people do on the weekend is what everyone else will do during the week in ten years.” In ten years everybody will be spending time with their family, apparently. This era of technology, it seems to be the core theme is about moving beyond bits to atoms. Thank god, the whole sub-etha thing has been getting pretty tired. And so on. This article is almost completely devoid of actual analysis or observation, it reads like a fugue on someone's stream of consciousness ramblings
- hnnh44 8y ago
  I actually found a lot of it insightful. Maybe I'm not as priviledged as you are to be exposed to this stuff on a regular basis. Maybe 99% of the population isn't living in this bubble either. It wasn't what you need for your paticular situation, and that's fine. But the general hostility towards this is strange. Why did you feel the need to attack it instead of moving on with your day? Genuinely asking.
  - CPLX 8y ago
    I dunno. Same reason Mike Judge decided to make an entire show making fun of the same people I guess.
JohnJamesRambo 8y ago
I know I'm probably on the wrong website, but I am so incredibly tired of reading and hearing about startups.
graycat 8y ago
The OP has some good ideas. That someone could see the future of smartphones when a mobile phone was a box of 100 pounds in the trunk of a car is a bit much. There WAS a possibility just by (1) talking to the electronic radio engineers about spectrum, bandwidth, propagation, and power, (2) learning about encryption, and (3) talking to the experts in microprocessor lithography and where that field was going. E.g., quite early on, IBM had their eye on line widths small enough to need X-ray wavelengths as a light source and built a cyclotron as an X-ray source. The OP missed the possibly crucial role of original advanced technology, e.g., from applied math, that is difficult to understand, duplicate, or equal. Reasons for the OP to miss this possibility is that (1) they have seen little or no such on Sand Hill Road and (2) are unable to evaluate such technology themselves and unwilling to direct such evaluations by others. That the US DoD, DoE, NSF, NASA, NIH, etc. are willing to evaluate such technology early on and have done so with fantastically good effects is just ignored by Sand Hill Road. My guess is that the main cause is concerns by the institutional investor limited partners. The part about building a demo to prove that the team can build serious software is not good: From all the months I contacted Sand Hill Road, apparently it doesn't much matter WHAT software a team has written in the past or what abilities the team has demonstrated, Sand Hill Road won't invest based on software yet to be written. Writing such as the OP long misled me: I guessed that such considerations would be part of a VCs investment decisions. But after experience, I concluded, NO: Instead IMHO it appears that that the investment decisions are based on (1) traction significant and growing rapidly, (2) in a large market, (3) with little or no current competition, (4) with a team with not much obviously wrong with it, and (5) the team desperate for a check. The rest in the OP might tempt an entrepreneur to send a pitch deck but won't have anything to do with the VC writing a check.
mrhappyunhappy 8y ago
Number one is not a great idea. Of everyone worked on most pressing matters then we’d live in an inconvenient world full of frustrations. Think of how many products and services we rely on that went through a bunch of iterations to become marvels that we take for granted without a thought. The mundane aspects of our lives are full of opportunities for businesses that can turn frustration into delight.
HillaryBriss 8y ago
I stopped reading at "If you can’t sell, starting a business is probably unwise."
- ianamartin 8y ago
  You're not wrong. But that's basically dogma here. Sell first! Making a product before you sell it is bad!!
  - TeMPOraL 8y ago
    Core observation I have about a lot of startups (and other businesses): the ROI for sales and marketing is much better than the ROI for delivering actual value to your customers. Therefore, bullshitters tend to outcompete people who care about the product. "If you can’t sell, starting a business is probably unwise" may be realistic, but it saddens me deeply as a human being.
peteretep 8y ago
> Chris Dixon is saying that the people most likely to know the “a secret” about a business opportunity are people who have deep domain expertise Which unicorns were started by people with deep domain knowledge? Struggling to think of any, but that may be a lack of imagination.
- mikesabat 8y ago
  Twilio
  - peteretep 8y ago
    I guess Fastly is unicorny, and also counts. Does seem to be the exception not the rule though.
gist 8y ago
> #6 “What the smartest people do on the weekend is what everyone else will do during the week in ten years.” “Hobbies are what the smartest people spend their time on when they aren’t constrained by near-term financial goals.” We don't know this actually. What we know is the things that the 'smart' (whatever that is!) people who have succeeded did on the weekends. We not only don't know what the things they did that never went anywhere were or others who are less notable are spending their time on. I hate these types of sugary statements that everyone flocks to.

319 points by vinnyglennon 8y ago

Brilliant article with deep insights - very very good read for founders that articulates a lot of the deeply true and difficult things about starting and building a successful company.

lordnacho 8y ago

The thoughts about ideas and information are particularly relevant. If you're not a domain expert everything you come up with will collapse under efficiency arguments. Such as "if this made sense someone would have done it". Much of expertise is knowing what experts themselves think. That's why you can answer the question of why it isn't already there. I have a question though. If you need to be a domain expert, how can there be so much focus on young founders? Is that a different category of investment, people who happen to have a lead into an emerging industry like social networks?

so_tired 8y ago
You really need to realize there are different markets. Young founders are often in B2C and capital-light. They are judged (almost) purely on growth metrics. Series A negotiation can drag on for months, and its hard to fake 100% month-on-month growth. The B2B will usually be more experienced insiders with deep domain knowledge, and excellent references. EDIT: everything is relative. If you are a brilliant PHD in ML then you can be 25 AND a domain expert AND go in to a capital-heavy B2B sector.
- johnrob 8y ago
  For many consumer ideas, the younger people are the experts.
southerndrift 8y ago
I guess because VC is, as the article says, all about providing smart money. Old founders have their network so VCs are focused on young founders.

tyre 8y ago

This is interesting at a meta-level. It's ultimately content marketing for a16z. If Chris Dixon wrote this same article—e.g. "Here are all of the best things I've said"—then it would come off as arrogant or ickily self-promotional. But having someone else write it allows the author to praise the ideas without the same stigma. I don't know whether it was intentional or not, but it's interesting how well the content comes across when the base idea ("writing about smart things our partner was right about") is the type of marketing companies/VCs _want_ to actually say but social norms prevent. The article itself is an example of the advice within the article. A "good idea that people think is a bad idea."

firasd 8y ago
The author Tren Griffin has many articles like this on his website, it's his 'genre'. Not sure if this was just cross-posted or newly written: https://25iq.com/featured-individuals/ https://25iq.com/featured-individuals/
EGreg 8y ago
This is a very good technique, which we point out in our video to investors: https://www.youtube.com/watch?v=UJfEffq0Yig#t=6m40s https://www.youtube.com/watch?v=UJfEffq0Yig#t=6m40s
- vertline3 8y ago
  Interesting video, It's used by confidence men. The term I think is a shill. Posing as a satisfied customer.
cududa 8y ago
While it looks like it’s content marketing at first glance, this is a regular theme Trenn uses. He runs a wonderful blog called 25iq. He’s been privelaged enough to work alongside the best and have access to the best, and he takes a lot of time sharing the meta-insight. He structures a lot of his thinking in the same way as Charlie Munger. I’d recommend any entrepreneur read as much of his writing as you have time for!
thesausageking 8y ago

baxtr 8y ago

I’m somewhat tired of these kind of “startup folklore” articles, although I read and bookmark them all. Sure, these people were crazy successful and see many other people being successful. Still, so much of these “insights” feel like they could be exactly the other way around. Many successful founders I have met, have told me: well, no we weren’t the only ones doing this, but we got lucky for this and that reason (e.g. timing). What if the lucky ones wrote the “rules”? I don’t know if it’s possible but I would love to see all these concepts proven by data.

nostrademons 8y ago
There's a meta-insight there: what if the lucky ones do write the rules? If that's the case, an optimal strategy might be to take as many convex bets as possible, keep secret all the ones that fail, and then once a low-probability bet succeeds, milk it for all it's worth and convince everyone you're a genius. You can then leverage that for significant financial gain from organizations who seek genius-level insights in the future. Eventually regression-to-the-mean makes you lose your credibility, but in the meantime you can pocket significant amounts of cash and invest them in much more stable revenue-generating assets. A glance at who's been successful since the 3rd millenia started shows that this might not actually be a bad career strategy.
- dasil003 8y ago
  There's a huge amount of luck and serendipity involved in all things, including of course the outsized returns and hypergrowth that SV worships and today's generation of young social climbers pines over. However I would caution anyone to be careful with the type of optimal strategy you outline. Diversifying within reason is good, but you have to deliver real value somewhere along the line. The luck involved in building a successful business does not occur in a vacuum, if you are not focused and prepared, the rocketship won't leave the ground (or worse explode mid-flight). Those who are more obsessed with the financial or social outcome than the actual job of building a business are the ones you find all glad-handing each other at networking events while the most successful always seem to have (or have had) something more important to do.

gwillz 8y ago

This echos a lot of hard lessons that I had during my time as a founder. While a lot of this is great advice, I'm frustrated by the advice of "if people reject you and things are hard, then things are going well". Because I believe there's more depth to people's rejection of your idea/product/business and they could have valid reasons. My real issue is how to weed out the legitimate feedback from the bad. No one has ever told me how to identify the difference. It's typically, "yay" means you've done well and "nay" also means you're doing well. When really, either of those responses could be a false positive - but which?

graycat 8y ago
I suggest that we can tell the difference, evaluate ideas, as they have long been evaluated with good accuracy from the pyramids to the latest fantastic success of the US DoD.
mdorazio 8y ago
Having been through this a few times, my personal thinking now is: "I like it" means absolutely nothing by itself. People will tell you they like your idea/demo/whatever all day and have absolutely no intention of ever using it, let alone paying money for it. What you want to hear is "How much does it cost and when can I buy it?" (assuming b2b) or "Can I be a beta tester?" (assuming b2c). Everyone else is fluff. If you're getting nothing but fluff after talking to a bunch of people, your idea is probably also fluff. "No" by itself also means pretty much nothing. You want to be listening for "No because..." and then evaluate the because part. Is it no because they're not the right audience? Is it no because they don't see the market opportunity like you do? Is it no because they've already heard the same thing from 3 other entrepreneurs and yours is thus a me-too play? Is it no because [fundamental reason you didn't think of and have no answer to]? Etc.
- wpietri 8y ago
  Excellent point. When I'm talking with a first-time founder, they'll ask me what I think of their idea. Sometimes I'll say straight out: you shouldn't ask me that question, because if I answer you shouldn't listen to me. Feedback from people in the target market is hugely valuable, especially if they answer in individual terms. E.g., I will/won't buy because X. But feedback from people not in the target market is rarely useful, especially when it's in theoretical terms. So unless I have some specific expertise, I try to redirect people toward the people they should actually be talking with.

CPLX 8y ago

There seems to literally be a bottomless pit of content-free aphorisms that spew out of the content marketing departments of venture capitalists every year. Like does anyone read this stuff? “[The] business of seed investing, and frankly, early-stage entrepreneurship, is so much about getting good information. And almost all of that information, unfortunately, is not published.” OK cool, thanks. By the way also that's also true of all investing, in anything, ever throughout history. By definition good investment information is unique information, that's the nature of competitive markets. “Ideas …matter, just not in the narrow sense in which startup ideas are popularly defined. Good startup ideas are well developed, multi-year plans that contemplate many possible paths according to how the world changes.” Ideas matter. More thoughtful, well developed ideas matter more. Who knew? Another thing that matters is warm clothing, it's really handy. “What the smartest people do on the weekend is what everyone else will do during the week in ten years.” In ten years everybody will be spending time with their family, apparently. This era of technology, it seems to be the core theme is about moving beyond bits to atoms. Thank god, the whole sub-etha thing has been getting pretty tired. And so on. This article is almost completely devoid of actual analysis or observation, it reads like a fugue on someone's stream of consciousness ramblings

hnnh44 8y ago
I actually found a lot of it insightful. Maybe I'm not as priviledged as you are to be exposed to this stuff on a regular basis. Maybe 99% of the population isn't living in this bubble either. It wasn't what you need for your paticular situation, and that's fine. But the general hostility towards this is strange. Why did you feel the need to attack it instead of moving on with your day? Genuinely asking.
- CPLX 8y ago
  I dunno. Same reason Mike Judge decided to make an entire show making fun of the same people I guess.

JohnJamesRambo 8y ago

I know I'm probably on the wrong website, but I am so incredibly tired of reading and hearing about startups.

graycat 8y ago

The OP has some good ideas. That someone could see the future of smartphones when a mobile phone was a box of 100 pounds in the trunk of a car is a bit much. There WAS a possibility just by (1) talking to the electronic radio engineers about spectrum, bandwidth, propagation, and power, (2) learning about encryption, and (3) talking to the experts in microprocessor lithography and where that field was going. E.g., quite early on, IBM had their eye on line widths small enough to need X-ray wavelengths as a light source and built a cyclotron as an X-ray source. The OP missed the possibly crucial role of original advanced technology, e.g., from applied math, that is difficult to understand, duplicate, or equal. Reasons for the OP to miss this possibility is that (1) they have seen little or no such on Sand Hill Road and (2) are unable to evaluate such technology themselves and unwilling to direct such evaluations by others. That the US DoD, DoE, NSF, NASA, NIH, etc. are willing to evaluate such technology early on and have done so with fantastically good effects is just ignored by Sand Hill Road. My guess is that the main cause is concerns by the institutional investor limited partners. The part about building a demo to prove that the team can build serious software is not good: From all the months I contacted Sand Hill Road, apparently it doesn't much matter WHAT software a team has written in the past or what abilities the team has demonstrated, Sand Hill Road won't invest based on software yet to be written. Writing such as the OP long misled me: I guessed that such considerations would be part of a VCs investment decisions. But after experience, I concluded, NO: Instead IMHO it appears that that the investment decisions are based on (1) traction significant and growing rapidly, (2) in a large market, (3) with little or no current competition, (4) with a team with not much obviously wrong with it, and (5) the team desperate for a check. The rest in the OP might tempt an entrepreneur to send a pitch deck but won't have anything to do with the VC writing a check.

mrhappyunhappy 8y ago

Number one is not a great idea. Of everyone worked on most pressing matters then we’d live in an inconvenient world full of frustrations. Think of how many products and services we rely on that went through a bunch of iterations to become marvels that we take for granted without a thought. The mundane aspects of our lives are full of opportunities for businesses that can turn frustration into delight.

HillaryBriss 8y ago

I stopped reading at "If you can’t sell, starting a business is probably unwise."

ianamartin 8y ago
You're not wrong. But that's basically dogma here. Sell first! Making a product before you sell it is bad!!
- TeMPOraL 8y ago
  Core observation I have about a lot of startups (and other businesses): the ROI for sales and marketing is much better than the ROI for delivering actual value to your customers. Therefore, bullshitters tend to outcompete people who care about the product. "If you can’t sell, starting a business is probably unwise" may be realistic, but it saddens me deeply as a human being.

peteretep 8y ago

> Chris Dixon is saying that the people most likely to know the “a secret” about a business opportunity are people who have deep domain expertise Which unicorns were started by people with deep domain knowledge? Struggling to think of any, but that may be a lack of imagination.

mikesabat 8y ago
Twilio
- peteretep 8y ago
  I guess Fastly is unicorny, and also counts. Does seem to be the exception not the rule though.

gist 8y ago

> #6 “What the smartest people do on the weekend is what everyone else will do during the week in ten years.” “Hobbies are what the smartest people spend their time on when they aren’t constrained by near-term financial goals.” We don't know this actually. What we know is the things that the 'smart' (whatever that is!) people who have succeeded did on the weekends. We not only don't know what the things they did that never went anywhere were or others who are less notable are spending their time on. I hate these types of sugary statements that everyone flocks to.