Some gems from @MacConwell of @RarebreedVC in Clubhouse right now:

Saturday thoughts on market pull. What is it? How is it different from Total Addressable Market (TAM)? And what ideas tend to have strong market pull?

A thread >>

1) First: "Market pull" != market size.

IMO (and most VCs will disagree!!), market size (TAM) doesn't *really* matter. But market pull DEFINITELY does. For that reason, I've almost never asked a startup about TAM.

Why?

2) First, what is TAM?

TAM is a sizing of how big your market is. A good way to estimate this is - if you can get to all potential buyers and based on how much $$ they are worth to you, how much money can your company make if you took the whole mkt?

3) An example: Say we run an e-commerce site that sells hippo food. TAM in the world:

-1000 zoos have on average 3 hippos = 3000 hippos.
-Each hippo eats $100 worth of food each day
-365 days * $100 * 3000 hippos = $110m per year globally

4) But, we'll come back to this.

Why I don't like TAM - it doesn't take into acct a few things:

A) how hard it is to get customers
B) how much more you can upsell once you have customers
C) how fast the mkt is moving up or down

Today I want to talk about the legal aspects of startups. How to set up? How to think about legal costs?

Fun!

Read on >>

1) Lawyers are expensive -- oof! A startup lawyer can cost you $300-$1k per HOUR! An associate paralegal may be slightly cheaper. But still pricey.

What do you need from a lawyer?

-company setup costs
-doc creation and review for financing rounds
-exit negotiation

2) For the purpose of this thread, we're just going to focus on setup costs, because this is where I see the most mistakes.

Once you get going, you may quickly realize you need a better lawyer - hah - and that generally helps w/ solving for financing rounds and exits

3) If you want to potentially raise money from VCs, you'll want to set up as a Delaware C Corp. If you don't ever want to raise from VCs, an LLC is fine.

Lots of ppl start out as an LLC because you can get tax benefits if you are not profitable.

4) But to me, if you know you want to raise VC money, it feels a bit penny wise / pound foolish, because you will need to spend $$ to convert your LLC to a Delaware C corp.

Some wed night thoughts on investor “value add”:

1) At the end of the day, money is a commodity. That mere fact should make every vc shudder.

It is amazing how many ppl (incl myself) clamor to get into a commodity business!

2) As such, to differentiate, different investors provide other things beyond money. Sometimes it’s community. Sometimes hiring help. Sometimes expertise or sector-focused networks. Etc

3) And some VCs are truly value add! For example, if I had an edtech co, I would hands down raise from @jwdanner - he has been there as an entrepreneur, built schools, and invested in so many hit edtech companies.

4) But at the end of the day, regardless of who invested in you, it’s the founders + team who are doing all the work.

5) when I think about what I’ve done for my own founders, it’s ranged from doing intros (mostly to other investors) to cust acq advice to feedback etc

But the reality is - all of my founders would’ve figured out how to get that intro or that piece of advice w out me

A thread on employee equity in early stage startups -- what are the compensation norms? What every early employee should ask? Some thoughts on whether the structure is fair.

Read on >>

1) First, there are NO NORMS! Hah. I have literally seen everything from giving early employees no equity to giving employee #1s near co-founder level of shares.

But what is more common than not?

2) In the Silicon Valley, if you're hiring your 1st employee, & you've raised NO $$ & are paying very little (e.g $0-$10k / yr or thereabouts), your first employee is basically a co-founder.

And the equity tranche for employee 1 should be closer to a co-founder level.

3) For ex, a friend of mine gave his employee #1 10% (vesting over 4 yrs of course) of the business. This employee was only getting his housing paid for. And this was 10 yrs ago, so it was during the bust.

4) On the flip side, if you have raised some $$ & are paying employee #1 near mkt rate, typically I see around here ppl get 1-5% (w/ vesting).

Caveat - near mkt rate doesn't mean compared to Google or FB salary rates. I mean compared to "normal big cos"

X : Can you apply pace layers to maps?
Me : You can but what is where evolves. However, same rules apply to things, practices, data, knowledge and ethical values. All are forms of evolving capital. In the mapping world, we refer to this with pioneers, settlers and town planners.

X : What's the robot for?
Me : Image from an older presentation slide, don't worry it has no relevance.
X : Is this linked to diffusion?
Me : Not simply. Evolution of a single component can consist of many hundreds of diffusion curves i.e. a virus diffuses but it also evolves.

X : Why have you got DevOps in legacy? We haven't even started yet.
Me : That's not my problem. I would take a look at serverless.
X : DevOps is serverless.
Me : Some of the practices maybe co-opted (see ITIL vs DevOps) but the new faction will decide what it is or isn't.

X : I also disagree with your methods graphic.
Me : Do you mean this? As applied to the following map?
X : Yes. Lean is suitable for innovation.
Me : Ah, that depends upon what you mean by innovation. If you mean Genesis then lightweight XP has it beat.

X : I disagree.
Me : Well, I've had 15 years of people telling me that Agile works everywhere or Lean works everywhere or Six Sigma works everywhere and why all the competing methods don't. I have no interest in the conversation. Use appropriate methods based upon context.

~8yrs ago (Dec’12) I got a job @Google. Those were still early days of cloud. I joined GCP @<150M ARR & left @~4B (excld GSuite). Learned from some of the smartest ppl in tech. But we also got a LOT wrong that took yrs to fix. Much of it now public, but here’s my ring-side view👇

By 2008, Google had everything going for it w.r.t. Cloud and we should’ve been the market leaders, but we were either too early to market or too late. What did we do wrong? (1) bad timing (2) worse productization & (3) worst GTM.

We were 1st to “containers” (lxc) & container management (Borg) - since '03/04. But Docker took LXC, added cluster management, & launched 1st. Mesosphere launched DCOS. A lot of chairs were thrown around re: google losing this early battle, though K8 won the war, eventually 👏

We were 1st to “serverless” (AppEngine). GAE was our beachhead -- it was the biggest revenue source early on but the world wasn’t ready for serverless primitives. We also didn’t build auxiliary products fast enough. Clients that outgrew GAE wanted “building block” IaaS offerings.

1st to hadoop (map-reduce ‘04) but our hosted Hadoop launched in ‘15. AWS EMR was ~200M ARR by then. 1st to cloud storage (GFS ’03), but didn’t offer a filestore till ‘18! Customers were asking for it since 2014. Didn’t launch archival storage or direct interconnect till v. late.

*Thread* - the hack is wack

The Master Life 'Hack' to Solve All Problems

What's easier?

Developing psychology & exerting willpower to not eat a pantry full of your favorite snacks

or

Not having those temptations in the house

Many 'solutions' being presented to people don't work

Designed to cope with the problem instead of resolving it

Darkness is the absence of light

You can't resolve or remove the darkness

You can only add more light

Recent viral obsessions with 'healing', 'being stoic', 'mental models & psychology'

They all serve their place AFTER the root has been handled

Before adding things to increase testosterone, remove what inhibits it

Before adding 'hacks', remove things causing conflict

If a person fears confrontation & is not assertive

Techniques & thinking offer some support, but the real question is

Why is this the default behavior?

Without starting with this question

All solutions are merely Band-Aids to mask & cope with the symptoms

In reality the real root of his fear of asserting himself & confrontation may likely be:

@curaffairs The author doesn't know enough about search to have written that article and the reason he's having those problems is AI algos like Rank Brain and Google's attempts to use natural language processing nothing to do with SEOs.

1/x

YMYL is not evaluated at the site level, but the query level.

Again this is on Google, not SEOs because they want to surface better sites.

And those devaluations are part of Core Updates which SEOs like me recover sites from.

2/

Featured Snippets are not optimized for - you can use certain HTML to be pulled in one but there is no definite use case where Featured Snippets are shown or that your site's will show for it. Also doesn't always come from the #1 result.

& that's Google not the SEO.

3/

Also there are many times when an SEO doesn't want their site in the Featured Snippet cuz it doesn't result in a click to the website. But we have no control over what Google pulls as Feature Snippets except to put in a meta tag to exclude us from them

4/

And Neil Patel is not an SEO. Most senior level SEOs see him as nothing more than a scammer because reportedly he's ripped them off by stealing their content and articles and passing them off as his.

5/

Let's be clear about what @Google, @Apple & @amazon instantly destroying #Parler's ability to be the free-speech version of Twitter is. At its core, this is about the ability to freely communicate one’s thoughts to others — once considered a hallmark of "The American Way." 1/13

What Big Tech is doing is as if Ma Bell in 1973 (ask grandpa) decided what you're saying to a friend on a landline phone was “dangerous." So they cut off the line in the middle of the talk and then sent someone over to physically cut your phone line. That's Stasi shit. 2/13

I realize that a personal conversation is not the same as a public tweet, but the principle is the same. The company that "owns the wires" for your speec — and has special govt rules protecting them due to their position — cuts off your call due to what you are saying. 3/13

If this analogy doesn't work for you, imagine someone tackling and punching you for speaking on a soap box in a public park and then setting your soap box on fire. And the govt being OK with that in a country that has a First Amendment. Moving on ... 4/13

Big Tech shadow banned people for years to just do it "halfway." That way, they could continue to paint an increasingly thin patina on their original govt-protected pledge to promote the free exchange of thought. #freespeech 5/13