How to Build a Startup & Understanding Venture Capital
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waterproof bag | waterproof case | waterproof pouch
Many
first-time founders seek advice when thinking about what ideas would be great
for a startup company and receive the wrong advice that you need to focus on a
billion-dollar idea.
There
are very few ideas that are obviously a billion-dollar idea from the start. So
what should you do?
I
advise founders to focus on what I call "basecamp," which is the
first level of success or validation at a startup. Don’t forget to take a
waterproof bag together.Raise only the money you need to arrive at basecamp and
build only the team required to make it there. The advantage of basecamp is
that once acclimatized you can look for the right route up the mountain and
from that vantage point you know a lot better what your options are.
If
you look up and don't see any obvious trails then perhaps it's time to find an
early soft-landing for your business and focus on the next idea. Most people
will start the ascent with the goal of getting to the next local peak and from
there traversing the mountain. The higher you climb the more your realize how
high your goal can be or whether you climbed some false peaks.and waterproof
case can protect your things.
Think
about it: Do you think Uber knew when it started how big the potential of the
business was? I can tell you from insider knowledge there's no way. They
started as an elite black-car service and only once they saw Lyft doing well in
the peer driving market did they launch UberX. And Lyft? Nah. Started as
Zimride, a way for people in Palo Alto to share a ride into San Francisco and
vice versa.
Facebook
was just about college campuses. Twitter was a podcasting company. And so
forth. There are exceptions. And his name is Elon Musk. But unless you are
prepared to compete with NASA for space exploration set your goals on planet
basecamp.
In
picking your market you should focus on "deflationary economics" or
lowering the price, functionality and margin of your business but targeting ever-increasing
market sizes afforded by Internet scale. If you have a great idea and you don't
focus on deflationary economics - somebody else when and you're forked.
And
if you do happen to be lucky and find the right mountain to climb, if you find
that you've started ascending the peak before others have found the right trail
- then venture capital is for you. So don’t left your waterproof bag.
But
you need to understand venture economics. Venture capitalists raise money with
a goal of returning 4x the amount they raise to their Limited Partners (LPs).
And unless they have enormous outcomes it's nearly impossible to hit this goal.