Here’s The Best VC Advice Of The Week


It was a long, long Monday for me…time to get some perspective. Ladies and gentleman, your best VC advice from the past weekend:

“How to Raise Money,” by Paul Graham of Y Combinator: “If you’re an inexperienced founder, the only way to survive is by imposing external constraints on yourself. You can’t trust your intuitions. I’m going to give you a set of rules here that will get you through this process if anything will. At certain moments you’ll be tempted to ignore them. So rule number zero is: these rules exist for a reason. You wouldn’t need a rule to keep you going in one direction if there weren’t powerful forces pushing you in another.”

“Shareholder’s Best Interests,” by Ben Horowitz of Andreessen Horowitz: “Similarly, when I was CEO, I radically changed the direction of my publicly held company in 2002. Nearly all of my shareholders promptly gave me a vote of ‘no confidence’ and sent Opsware’s stock plummeting from $2/share to $0.035/share. By 2007, I sold the company to Hewlett-Packard for $14.25/share. It seems that all of my shareholders voted with their wallets and against their own best interests.”

“Pitching SV Angel: The Executive Summary,” by David Lee of SV Angel“When we receive an email from a referral source introducing us to a founder, we typically ask the founder if they have an executive summary. This may sound tedious and old-school. But it is a quick and easy way for us to decide if a call or meeting is a good use of both parties’ time as a next step. It’s also a decent way to evaluate the founder(s). The ability to communicate your idea concisely and articulately is essential. It not only shows a potential to persuade (i.e., sell) but also shows clarity of thought and priorities.”

“What Your Startup’s MRR Figure Is Hiding,” by Tomasz Tunguz of Redpoint Ventures: “The three words roll off the tongue: monthly recurring revenue (MRR). What’s not to love about subscription models? Negative working capital, predictable revenue growth and an average of 13x market cap to annual revenue in the public markets, with some darlings reaching 50x multiples. The list goes on. But the words recurring revenue belies one small detail. These recurring customers must renew their subscriptions, at which point another three word phrase is uttered: revenue-at-risk, the amount of MRR that might be lost to customers who choose not to re-enlist.”

“How Open Should a Startup CEO Be With Staff,” by Mark Suster of Upfront Ventures“A startup CEO’s job is to absorb stress so the team doesn’t have to. Her job is to turn up every day with enthusiasm even though her boyfriend just broke up with her, she hasn’t spoken to her best friends in weeks and she’s beginning to wonder whether this idea was really so great after all. Startups have to be optimists because no rational person would actually believe you could build Uber into the amazing company that it is today. A rational person would have assumed that the taxi organizations & regulation would have made it impossible.”