Sam Altman visits UC Berkeley

Sam Altman visited UC Berkeley and took questions from the audience.  Here’s a quick summary of what I found interesting.

What industries are excitable?

  • Software startups still have a long way to go
  • Energy
  • Biotech (cycle times have come down)
Markets
  • YC funds the best startups it can find – even if its the same market it’s backed before
  • You should be skeptical if heaps of people are doing what you’re doing
  • Most successful companies have been the first to their markets, e.g. Facebook was the first college social network (when everyone said you can’t make money of poor college students); Google was the only search engine to launch that year
Traction
  • The best way to get traction is build something people want and will tell their friends about
  • Focus on the product at the beginning –> growth hacking comes later
  • Charge early customers so they give honest feedback
Other random tips
  • You should only ever go to 1 incubator/accelerator (if you’re not accelerated then there’s something wrong)
  • Companies that raise $30m early fail more often than those who raise $300k.  The sense of frugality and resourcefulness early on is super important and set the culture for the company which is really hard to change
  • Founding team should be able to carry the company a long way.  Avoid hiring people for as long as possible
  • YC funds the best founders who have a passion around an idea we like

Hooking up Technical and Business

I was recently asked by a business mind to write a post reflecting on how I found my technical co-founders.  It’s a question I’ve been asked a few times now so I figured I’d do my best to answer based on discussions across both the business and technical fronts.  I’m hoping my thoughts help both business and technical find each other just a little easier.

How did you meet your co-founders?

My particular story is probably not applicable to most.  It relies on a whole bunch of serendipity and blind luck.  I so happen to be the co-chair of LAUNCH – UC Berkeley’s Startup Competition.   It has been traditionally organised solely by MBAs though this made no sense to me.  As part of that role we wanted to include more engineers and undergraduates to the fold.  My other co-chair found a friend through her connections and so I was introduced to a young gentleman who had won awards for his academic efforts.  One day he approached me to discuss some ideas and we set up the time to brainstorm.  We hit it off and now are working several ideas together.  He has since introduced me to a couple of his mates and so the network builds.

Another founder I met through a chase.  I had heard stories about a guy who had won a hackathon, was a great bloke and interested in bitcoin.  I hunted a little until a mutual MBA friend introduced us and we set up a meeting.  Turns out my first co-founder had actually traveled with him and the organizer of that trip was another mutual friend.  We through around a couple of ideas and started working together.

The rest is history.

 

General principles

“Chance favors the prepared” Louis Pasteur – inventor of pasteurization

I suspect most people’s stories on finding co-founders relies on chance or some serendipity.  In my efforts to cultivate such fortune I did several things which I can recommend to others.  Below is a consolidated list based on my experiences and discussions with both sides of the table.

  • Go to events that interests engineers.  Events held at the business school probably aren’t attracting engineers in droves.  General entrepreneurship events, pitch nights or topic specific events e.g. bitcoin probably will.  
  • Be an extrovert – sounds dumb but I go to events and see all the business kids talking to each other, and all the engineering kids hanging together.  Now in this case the engineers are the hot girls at the party, so the business kids need to go over and start the conversation
  • Be  friendly – my mum always said “If you want friends be friendly”  Often I hear the anecdote that a business guy will come by and ask “Can you code” and then pitch their idea.  The plain audacity of this stupidity confounds me.  My rule in life is always ask questions – another Chinese idiom I remember is “You learn a lot more by listening than by speaking” so I will try to engage whoever I’m talking to be an interested in them.  I’ve seen business peeps do this soliloquy time and time again to no avail
  • Prove yourself – to business minds coding is some black box.  To engineers, the business side seems almost pointless – build a great product and they’ll come.  Both are true and false.  I never believe I deserve the respect of someone, I’ll always work to earn it.  That means busting my ass and proving to others (business or engineers) the value I can add.  This work ethic and results build trust and an appreciation of value

I think finding founders is like dating.  I think with a bit of work and humility one can find their better half.  I don’t think any of the above is groundbreaking insight.   I suspect this is common sense.  What is clear though is that it’s much harder to execute.  Go execute!

A day’s thoughts to internalise

1.  Talk to the right person

We studied a case where the protagonist spoke to the “Internal head for magazine development” and got politely told to disappear.  4 months later the protagonist speaks wi the Editor-in-chief and leaves with a term sheet.  Moral of the story: make sure you speak to the right person who has the power and whose interest is aligned.  The internal head probably wants to do it themselves and doesn’t want you to do their job for them.  The editor-in-chief wants the best magazines.

 

2. If someone is willing to give me money, it is NOT necessarily a good idea

In this frothy venture environment, you really only want to be accepting money from experienced investors who can really get you some place.  There’s no point receiving money from someone with no experience to get you to where you need to go.

 

3. Don’t haggle over the terms, focus on people

When VCs/entrepreneurs haggle too much, there’s a sense of mistrust which seeps into the relationship.  This sets up for a bad relationship, the VC doesn’t work hard for you, their network isn’t tapped.  You don’t get the marquee Board, advisors or customers and the likelihood of your failing stays at 99%.  When you search for investors, search for someone you’re willing to be married to for a while.  Focus on the people on the other side of the table, not the money.

Learnings

This time of life is all about learning.  Three thoughts:

1. Incorporate early

Start-ups don’t seem to nearly incorporate themselves early enough.  After hearing two lawyers speak on campus there is one clear takeaway – incorporate as soon as possible.  Get those shares out at 0.0000001 per share and figure out the basics.  It’s hard to try say a company is worth nothing the day before a Term Sheet is signed.

 

2. How to read people’s minds

I heard a great piece of advice from a VC Partner.  There are two things that he has always used to read people’s minds:

– Understand their incentives
– Learn to read body language

The combination of the two throughout a conversation will quickly highlight what someone is truly thinking.  A fascinating piece of wisdom.

 

3.  Don’t over optimise with a short-term view

We studied a case this week where someone over optimised a single point in time and screwed the other guy.  Turns out this came back to bite the guy in the ass as he disenfranchised others within his company and ruined his reputation.  He is now stuck at a mediocre company with no-one wanting to work with him.

Happy New Year!

Three thoughts to bring in the New Year!

1.  Malaysian and Singaporean Hawker Centre

I’ve always thought Malaysian food was the best in the world hands down, and specifically, that of Penang.  It’s the best of multiculturalism – the blend of Chinese, Indian and Malay cuisines makes for an absolute gastronomical explosion.  I’ve also always wanted to ask someone who earns $2USD per dish if they’d send their family guarded recipe overseas and charge $10-15 per dish.  The numbers look good, the quality of life would improve and the best food in the world would starting making headlines and the western world would drool.

Well, Anthony Bourdain got to it first in NYC.  It seems one of the world’s most renowned chefs agrees with me.  http://pagesix.com/2014/01/09/anthony-bourdain-to-open-world-food-market/

Let me know if you want to start it in Australia or San Fran…

2. Bitcoin

I think there’s a tonne of potential in bitcoin.  I think there will continue to be a huge illicit demand from those who wish to move money around without government interference.  But I also think it has HUGE potential if the market becomes a little more efficient and the value less volatile.  One that really appeals –  making remittance extremely cheap?  In my case, I saved quite a lot in bank fees and foreign exchange rates between the AUD and USD.

From current conversations with friends, classmates and family, not everyone shares my optimism.  I suppose we shall see but I’ve got my money where my mouth is.

3.  The decline of the desktop computer

The break gave me a chance to reflect upon my gaming days and how I miss assembling desktops.  It appeals to some inner want to put things together and build something tangible.  There’s something about researching, assembling and troubleshooting till you have this working machine.  However, a quick bit of research clearly showed the decline: there are much fewer computer magazines around and they’ve all intelligently diversified their focus from the desktop to personal computing in general.  Gamers have moved to the consoles and PC games in San Francisco’s Gamestop have been relegated to one shelf in the basement’s corner.

Cheers!

skinnytie

I love all things sartorial.  At the same time, I have a desire for practicality and presentability that limits my forays into the fashion wild.  I also think the art of being a gentleman should not be lost, but that’s a separate matter.

In any case, the logical extension of makemysuit was a foray into the accessories that make men, men!  So became skinnytie, a first push into the world of classic accessories via ties that I would want to wear at a price I would want to pay.

These ties may not be the wildest ties you’ll ever wear but they’ll be perfect for standing out at work whilst staying within the bounds of presentability.  One of my favourite ties below…

 

2 inch navy blue tie

Thanksgiving

The holiday season is my favourite time of year.  I have a romanticised version in my head that the best of humanity comes out during this season: Sinatra over the sound waves, ‘Hi’s from strangers and friends, and generousity seen only during one month of the year.   Unfortunately, I’ve also seen some gnarly pictures of stampedes (Black Friday is at work), but my mind chooses remember the romance of the season.

I am thankful for three things:

1. Time

I’ve been blessed with the easy things in life, and now have the time to explore.  In the meta sense, I get to explore how I can play a part in disrupting the world for good; in the micro sense, the Thanksgiving break gives me time away from the MBA to think, relax and read.  With this time I read “David and Goliath” by Malcolm Gladwell.  He outlines amazingly how the underdogs come to win in many situations by overcoming their disadvantages, playing to their strengths and capitalizing on the weakness of those who should have won.

2. People

I get to meet amazing people every day.  I wake up to an amazing person every morning, go to school with a diverse group of experiences, learn from world class experts and listen to the most successful people in practice.

3. A natural curiousity

As I was reading David and Goliath, I reflected one of my favourite childhood books called “A 100 fantastic facts”.  I decided when I was young to commit these to memory and though I now have no recollection of what’s in there, I remember each fact sparking a research process that allowed me to chase my curiousity.   I then reflected on some of my internet searches this weekend: dyslexia, Rose Bryne, hobbies for a 14 yr old (my brother in law), Huguenots, Automatic millionaire, Logitech G5 mouse, Star Wars Millenium Falcon lego price, makani power, bodega bay and grandview house prices.  A huge spread of interests which I love to keep pursuing.

It means I get to discover a lot of things: Dyslexia is widespread amongst entrepreneurs and innovators (I have it too!); Rose Bryne is Aussie – which means I can be proud!; the Huguenots are pacifists though they have an amazing history for standing up to stupidity – the Nazis for one; my favourite Logitech G5 mouse is getting more and more expensive – just like my Star Wars lego collection; makani power has an amazing invention for harnessing wind energy and one day I’d like to own a house in America.

Reminiscing on a half

My first seven weeks have been a whirlwind of learning, fun and extraordinary life.  I reflect on two learnings currently salient.

Professors are insane

So the lecturers are at a top business school for a reason.  They’ve come from amazing places and for some reason have ended up teaching dim witted neophytes for punishment.

My favourite lecture to date was a Private Equity case walkthrough with Peter Goodson – yep, the CD&R one.  There’s a certain lack of care for what others think about you once you’re in his world and the honesty appeals to the core Australian within – just say it as it is.  Super impressive teacher and backed by a litany of successful experience.

Then there’s the microeconomics professor who previously worked for Obama’s Council of Economic Advisors.  He looks like any professor does then when pressed produces casual photos of the President and him chilling at the White House.  No big deal.

Also, proudly for Berkeley, the next Head of the Federal Reserve will be a proud Berkeley-an.  Yep, we don’t get this kind of calibre back home.

These wins help make up for the football team’s record of 1 win and 10 million losses.

 

 MBAs are just people, and sometimes not that good

One activity which  takes up a more time than initially expected is running bplan – Berkeley’s startup competition.  As part of that, we try to connect up diversified teams amongst the various schools at Berkeley, e.g. engineering and business.  However, we’ve recently found that business students have a less than ideal reputation with the engineers – something we’re working to reverse.

By walking a few miles in the engineers shoes, it’s easy to understand their point of view.  These guys are pushing the boundaries of knowledge in machine learning, voice recognition, search algorithms and robotics.  In contrast, I’ve mainly been pushing boxes around a slide (though amazingly beautiful and insightful thoughts, I might add :).  These guys who have a modicum of business sense probably don’t need an MBA, and especially the kind of Type A personality that the MBA programs tend to attract.

 

Till next time…