Lecture 3: How to Start a Startup

You are notes in Markdown? What Sir, a mere note?

Most corporations in the US are incorporated in Delaware. Whenever the question of incorporation arises, the answers is always in Delaware as a C-corp. PG's comment was a nod to that.

http://blakemasters.com/post/21742864570/peter-thiels-cs183-... (Look at point #2 - "You Should Be a Delaware C-corp")

> Whenever the question of incorporation arises, the answers is always in Delaware as a C corp.

Yes, if you raise venture money, you will need a Delaware C-corp. But the percentage of companies that are successful in raising venture capital is extremely low. How low? Probably lower than Y Combinator's acceptance rate.

For entrepreneurs serious about building a real business, entity selection should be based on what's best for the business and the founders, not what's going to be required by investors they don't yet have and may never have. Generally speaking, young companies have no legitimate incentive to pay Delaware for the privilege of being incorporated in Delaware.

So what about companies that are successful in raising money? For early stage startups with little to no revenue and assets (read: most startups), it is quite straightforward to revisit entity selection if necessary with minimal complexity and cost, and with few if any tax consequences. Delaware has a statutory conversion that makes it super simple and inexpensive to convert a Delaware LLC to a Delaware corporation. Even conversion of a non-Delaware entity to a Delaware C corporation is a simple task and will not come close to being the most expensive item when you pay your law firm for its work associated with your financing.

Of course, if your company has no assets, you could just dissolve if need be. Which, ironically, is what happens to a lot of those Delaware corporations.

in this instance, you could construe that what pg says is contradictory. on one hand, go to school for things that are interesting to you regardless of how they may apply to a startup. on the other hand, he says an mba is useless for startups.

but if you tease out the strands of advice, you'd see that you shouldn't do an mba if you think that will prepare you for a startup. you could (and i'm extrapolating here) do an mba if the subject matter is genuinely interesting to you (as it was for me). i learned a lot in my mba program that i was genuinely interested in learning.

and if you decide to do an mba, take all the quantitative classes you can. you want to practice and hone skills, not just be versed in theory. also, applied economics might be interesting to you.

> But the hopeless idealist in me asks if it isn't possible to get an MBA to actually try to theorize about customer behavior, economic structure, supply chains, what have you and build part of ones academic foundation around it?

Yes, an MBA will help you understand many of our societal, economic, and business constructs. I did not find an MBA to be particularly helpful in understanding customer behavior, but it's definitely valuable in understanding government and corporate behavior.

And yes, it'll help you understand supply chains/logistics, various process and people optimizations, etc. Think of it like learning algorithms and patterns for solving problems that are commonly found in large human organizations.

> Or is it truly impossible to walk into today's MBA programs wanting to study business as theoretical and societal constructs, without walking out a professional networker and middle manager?

It's a degree. Nothing more. However, I would not get an MBA with a goal of middle management as the focus of most programs is on getting you ready for upper management decision making. For middle management in a large company skills such as project management, people management, scheduling, delegation and communication are more important than high level strategic thinking.