The 99% (of startups) • Hacker News Board

Re: The 99% (of startups)

#61

Post by moistgorilla » Thu, Dec 03, 2015, 2:08 AM UTC

minimaxir wrote: post #30

jaz46 wrote: post #25

Earlier quoted context omitted.

Justin is saying that VCs understand what's hot now, but are sometimes bad a predicting future value. So to founders, if you're creating value, keep going even if VCs don't see the light yet. They'll come around.

The haters-gonna-hate philosophy in Silicon Valley is starting to become a problem. There's a lot of luck involved in making a startup, and startups can fail for any number of reasons that no data can predict. The notion that if you do your best, you will succeed, is dangerous to naive entrepreneurs.

>The notion that if you do your best, you will succeed, is dangerous to naive entrepreneurs.

This isn't what he said in the article though. It's more about knowing your audience and the VCs in this case not knowing.

Re: The 99% (of startups)

#62

Post by toephu2 » Thu, Dec 03, 2015, 2:09 AM UTC

perryh2 wrote: post #50

For those that don't know, Justin's new app The Drop is pretty cool. It's like reddit for EDM. https://thedrop.club

wow, layout looks like a total rip off of Product Hunt

Re: The 99% (of startups)

#63

Post by nostrademons » Thu, Dec 03, 2015, 2:13 AM UTC

smt88 wrote: post #45

jacquesm wrote: post #42

Earlier quoted context omitted.

I think that would make for very depressing reading. It would be comparable to making a documentary about everybody who ever played the lottery. For the most part you'll see people that lost. Year after year after year. And then there would be the lottery winners. A couple of them. The middle is quite narrow, it's good money for a relatively large number of people but it is still a very small fraction of the total nu…

Thank you for being (seemingly) the only person on HN who understands that startups are a lottery. A very, very expensive lottery.

But they aren't a lottery. Startups (and business in general) is about unfair advantages - knowing information that other people don't, and acting on that knowledge.

As a founder, your job is to find your unfair advantage and execute on it. Startups that successfully find a valuable secret and exploit it become worth billions. Startups that have no such advantage usually die.

I thought the article was getting at this, but it seems like a lot of the folks here missed it. Twitch succeeded because, as justin.tv, they were in a position to notice rising demand for gaming livestreams. And then when they did, they executed against it very effectively - look at Emmett's user interview lecture for how they systematically gathered feedback from prospective users to convert them to current users. [1]

That's what Justin's talking about when he says "Trust your metrics and your growth." They had an information advantage over VCs - there was very good reason for believing VCs were ignorant there, because in this case, they were.

[1] https://clip.mn/video/yt-qAws7eXItMk

Re: The 99% (of startups)

#64

Post by downandout » Thu, Dec 03, 2015, 2:17 AM UTC

This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. It also shows the the near-impossibility of cashing in private company shares, at least through VC's. In addition to this story, the Sony hack revealed that Evan Spiegel of Snapchat wanted to cash in about $40 million worth of shares just after he spurned Facebook's $3 billion offer. He was also roundly rejected. Had someone bought those shares, they would have been worth around $200 million today.

So anyone thinking that they're going to get much liquidity as a private company founder should think again. If the Snapchat and Twitch guys were rejected, the odds are not good that you will be the exception.

Re: The 99% (of startups)

#65

Post by jacquesm » Thu, Dec 03, 2015, 2:17 AM UTC

nostrademons wrote: post #63

smt88 wrote: post #45

Earlier quoted context omitted.

Thank you for being (seemingly) the only person on HN who understands that startups are a lottery. A very, very expensive lottery.

But they aren't a lottery. Startups (and business in general) is about unfair advantages - knowing information that other people don't, and acting on that knowledge. As a founder, your job is to find your unfair advantage and execute on it. Startups that successfully find a valuable secret and exploit it become worth billions. Startups that have no such advantage usually die. I thought the article was getting at this…

> Twitch succeeded because, as justin.tv, they were in a position to notice rising demand for gaming livestreams.

So, for an alternative view:

This is not an unfair advantage at all. I was in exactly the same position. We however thought that having game sessions streamed was terribly boring (none of the people in our office were gamers), and so, instead of catering to this niche (which I'm sure hit us well before it hit justin.tv simply because we started much earlier) we threw the gamers out and concentrated on the people.

They found another home and Justin absolutely ran with it, he recognized the opportunity that we squandered and I'm very happy that he made it.

There is absolutely nothing unfair about any of this.

And VCs were already funding fantasy sports, casual gaming and other game related activities, they just never made the link with screencasts that Justin did.

But long before then they already won the lottery in the sense that they got more money to work with than anybody in the space up to that point. The biggest deal in that space up to then was probably spotlife, a Logitech / Philips collaboration around the theme of live video, they picked up $30M.

Re: The 99% (of startups)

#66

Post by nrb » Thu, Dec 03, 2015, 2:28 AM UTC

coldtea wrote: post #57

sehr wrote: post #32

Earlier quoted context omitted.

Why would that be depressing?

Well, for people upholding certain cultural values like me, which are not exactly too far-fetched, it's pretty obvious why an era where people watch live gaming in droves is depressing when contrasted with the decline of journalism. I'd rather there was a citizenry that read the Washington Post more than watching others play video games (or NFL or whatever) more. Maybe people would have a better handle of politics, a…

The two aren't mutually exclusive. Humans have pursued leisure for probably as long as there have been humans.

Re: The 99% (of startups)

#67

Post by goldenkey » Thu, Dec 03, 2015, 2:30 AM UTC

coldtea wrote: post #57

sehr wrote: post #32

Earlier quoted context omitted.

Why would that be depressing?

Well, for people upholding certain cultural values like me, which are not exactly too far-fetched, it's pretty obvious why an era where people watch live gaming in droves is depressing when contrasted with the decline of journalism. I'd rather there was a citizenry that read the Washington Post more than watching others play video games (or NFL or whatever) more. Maybe people would have a better handle of politics, a…

If you see inefficiency in the awareness of citizens. Do something about it. Disrupt. Clearly the Washington Post is not catching enough consumers.

Re: The 99% (of startups)

#68

Post by coffeemug » Thu, Dec 03, 2015, 2:33 AM UTC

downandout wrote: post #64

This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. It also shows the the near-impossibility of cashing in private company shares, at least through VC's. In addition to this story, the Sony hack revealed that Evan Spiegel of Snapchat wanted to cash in about $40 million worth of shares just after he spurned Facebook's $3 billion offer. He was also roundly rejected. Had so…

> This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's.

The question isn't whether VCs are brilliant according to some absolute metric. The question is whether they deploy capital better than random chance. The numbers show that top ten VCs consistently do.

Re: The 99% (of startups)

#69

Post by nostrademons » Thu, Dec 03, 2015, 2:35 AM UTC

jacquesm wrote: post #65

nostrademons wrote: post #63

Earlier quoted context omitted.

But they aren't a lottery. Startups (and business in general) is about unfair advantages - knowing information that other people don't, and acting on that knowledge. As a founder, your job is to find your unfair advantage and execute on it. Startups that successfully find a valuable secret and exploit it become worth billions. Startups that have no such advantage usually die. I thought the article was getting at this…

> Twitch succeeded because, as justin.tv, they were in a position to notice rising demand for gaming livestreams. So, for an alternative view: This is not an unfair advantage at all. I was in exactly the same position. We however thought that having game sessions streamed was terribly boring (none of the people in our office were gamers), and so, instead of catering to this niche (which I'm sure hit us well before it…

That's what I'm trying (and apparently failing) to get at:

For Twitch, being gamers who also ran a video streaming site was a huge unfair advantage, because they were in a position to recognize a trend as it just started. There was no reason, if you look at statistics or data, to believe that this was a combination worth a billion dollars - that moment had never happened before in the history of business, and will probably never happen again. There was a lot of reason, if you look at personal experience of them and their early customers, to believe it would be.

Similarly, Mark Zuckerburg was a college sophomore at an elite institution who had also built a machine-learning music player. He had a huge unfair advantage, because he realized what he could do with the personal data of a few thousand students. I was also a college student at the same time, at an elite college, and was (as a volunteer) involved with writing our own campus social network. It never occurred to me that it could be a business, let alone a $300B one, because at the time I thought that software companies were things that sold high-performance databases to Fortune 500 companies for real money.

What other unfair advantages do Hacker News readers have that they don't realize are advantages?

Re: The 99% (of startups)

#70

Post by 6stringmerc » Thu, Dec 03, 2015, 2:38 AM UTC

downandout wrote: post #64

This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. It also shows the the near-impossibility of cashing in private company shares, at least through VC's. In addition to this story, the Sony hack revealed that Evan Spiegel of Snapchat wanted to cash in about $40 million worth of shares just after he spurned Facebook's $3 billion offer. He was also roundly rejected. Had so…

The way you phrase this reminds me of what I studied happening in the hedge fund world, in that some of the 'top performer' funds only out-performed the market due to insider trading. Galleon (Raj - convicted), SAC (sanctioned), and probably a handful more that got spooked out of the avenue of enrichment. It almost seems - almost - like there may be a similar insular community whereby those who feel like piling in will only do so when it's a consensus movement play.

You know, kind of like how Bernie Madoff took hundreds of millions from established, regulated entities because the "word on the street" was he was, well, just front-running. Though illegal, that was an acceptable explanation for the consistent returns that prolonged a dirty business model. Well, we've learned how that all turned out.

Is there a moral to the story? Probably, but I'm not sure the startup culture would like to have to start questioning "angels" and their cohorts. YMMV.