The tradeoff Startup founders must never forget


So, we’ve just nailed our MVP and we are getting some real traction.  Next we’re going to raise capital, get some funding. We’ll probably go to the Valley as it’s easier to raise there. The valuations are more generous. We’re super pumped, finally getting our startup off the ground.


I thought you were an entrepreneur? 


What are you talking about? Of course I am – didn’t you hear what I just said?


Yes, but here is what I heard….  That you’ve finally got something people want, you’re probably solving a real problem and you’re on your path creating value for others, and eventually yourself. But in this process, you’ve got caught up in pop culture. You’ve forgotten that a big part entrepreneurship is independence – creating your own path. So, you’re off to raise money and get caught up in someone else’s objective – that of the venture capitalist. The same group of people who’d rather see you fail trying to build a billion dollar company,  than help you build a $10 million company. Their business model you see, is based on the former, not the latter. 

Venture Capital - the downside

If there is anything startup founders should remember it is why it’s worth doing at all. Startups are hard, and rarely a path to riches. Entrepreneurship is more about exploration and freedom than money. If you want to be rich, there’s more chance of that happening being an employee of a company that already has a billion dollar valuation.

In both cases: a funded startup or being employee – you’ll compromise control. In that case you may as well have the certainty of money that goes with stock options and employment. If you want to be answerable to anyone other than your customers that is.

It’s a rare event indeed when the deal terms favour the founder. Real entrepreneurs find ways to make money independently with that anti-modern thing called a profit. For every example of an entrepreneur succeeding with funding, there are 99+ that do not. It’s a bet I’d never take unless the VC came knocking on my door and / or I could maintain total control and independence.

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What do Google and George have in common?

Famed venture capitalist Marc Andreessen is known for doing lots of things; he invented the first graphical web interface, he said software is eating the world, and his motto is that he has ‘strong opinions loosely held’ – which I dig. We all ought to be able to change our mind when new information arrives.

And let’s face it, new information is arriving daily with new possibilities to match. Take this recent quote from Andreessen:

“One guy can now build a self driving car. We recently backed a founder who had built his own self driving car. Literally, one guy can now build a self driving car. Ten years ago this was like a DARPA Funded Grand Challenge Research Project. Five years ago this was a team of a thousand at Google. And now, it’s George. It’s one of those things (AI & machine learning) that looks like it’s about to tip, there is one George today, and a thousand Georges tomorrow.”

George & his self driving car

He was referring to George Hotz above.

The insight for entrepreneurs is that the pace of change is faster than a linear human mind can cope with. That idea or technology that you think is just a little too early probably isn’t. The most important thing in society, economics, business and Government today is the law of accelerating returns. And this is just one example of it in action.

If you you’d like to learn more, there is a rare opportunity to attend Singularity University in the Souther Hemisphere. An SU summit is being held in Christchurch this November. I’ll be there absorbing everything I can – why not join me? More details are here – I imagine it will sell out quick given the 2 year plus waiting in the Silicon Valley Campus.

Heraclitus & startups


“No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.”

These words were spoken by Greek Philosopher Heraclitus. I think we can all agree that what he has said can only be true.


No person can visit the same city twice

No person can have the same idea twice

No business can fail twice.

While a second attempt at a similar business venture may still fail, it was not the same business that failed. And it was not the same founders, regardless of their fingerprints.

The truth behind economics is people and culture, both of which are in a constant state of flux.  And while the past tells a story of what was, it doesn’t always tell the story of could be.

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The type of thinking needed in exponential times

Busy road with fumes

If you could choose a house on a busy road, or a quiet road in the same suburb, and price was not an issue, the choice is simple – the quiet road wins every time. And we all know why – less pollution, less noise, less danger. Oh, and quieter streets are usually nicer to look at. The prices of real estate reflect this. A house of similar quality on a busier road can be as much as 50% cheaper.

So here’s a question worth thinking about: What happens to those property prices when all cars have electric engines, and they don’t have tail pipes? You guessed it – there is almost no noise and no localised pollution. Surely then, the prices of houses in busy streets will go up and bridge the existing pricing gap somewhat. In the next 10 years significant amounts of money will be made in property by arbitraging the positive impact of electric cars.

It’s economic plays like this that are easy to see once we start thinking about the impact of the technology, and not the technology itself.

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Software is eating the world – and surfing

The picture below is of surfboard fins. These days they are not permanently attached to the surfboard, but screw in. This allows surfers to change fin sizes and shape for different surf, it also allows you to travel with out busting them.

3D Printed Surfboard fins

The fins on the left come from a company called FCS and they retail for $140. The fins on the right came off a 3D printer and cost exactly zero dollars, well maybe $3 in raw in materials. In general fins sell for between $100 and $200.

Sure the FCS fins on the left look fancy and are made from carbon fibre, the 3D printed versions above are various plastics, but in many ways they are better. I can print fins quickly and cheaply with varying degrees of flex. I can print fins with more flex at the top and less at the bottom, I can even add other technology to the fins like a GPS, to track my surfing without wearing a bulky watch. I can customise my design on my fins, the colour, create personal branding anything, sell my designs to other surfers….the options are endless, and the cost is negligible. That said, I can print fins in carbon fibres, light metals and pretty much any material I want.

It won’t be long before the days of buying expensive fins are over. 

These fin companies are less than 20 years old, and unless they facilitate 3D printing of their product, they’ll be disrupted – maybe me and my new surfing company Sneaky Surf. Mind you this company (FCS) was recently bought by Surf Stitch for $23.7 million. I hope they get their money back quick or it will be a classic diworsification. If they paid a 10 times price earning ratio, they’ll never get their money back. I reckon within 3 years no one will buy fins again.

If you make any widget like the example above, or buy them, then the time is now to move to 3D printed versions. You don’t even need to own a printer – there are plenty of startups on line who can print your designs for you and ship them to you customers. GO – this opportunity to dematerialise a category (like music was dematerialised) is big. We all know that software is eating the world – Make it happen in your industry.

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The those who can and those who teach lie

free guitar lesson

You’ve heard the saying ‘there are those who can, and those who teach.’ Well, this is the greatest hoax of all time, well, maybe not all time, but it is definitely a hoax.

I’ve known people who are the worlds greatest at something, and can’t teach it.

I’ve known people who can’t do it, but teach it better than anyone who has ever done it.

I’ve known people who can do it, and teach it just as well.

I’ve known people who can’t do, or teach – but for some reason try to do both. (avoid these people where possible).

Here’s the thing, doing and teaching are both important. Two different skill sets. Add to this that two different students might have a completely opposite experience learning from someone…. one might love a teaching method which the other hates.

Arbitrary statements of truth are the real problem here. What works for one person might not work for another. What we need to do, is be smart enough to make up our own minds and forget the cliches, especially when it comes to making personal connections.

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Why the ecosystem is more important than market share


The caterpillar hidden in a tomato from my garden is great news for me as the gardener. While it’s one less tomato to eat, the presence of this little creature is enhancing the ecosystem I’m trying to build. I’ll put that tomato back into the ground. There’ll be more bugs, and butterflies which will make my soil more fertile. In turn they’ll help pollenate the flowers for next season, and they’ll be more tomatoes and resulting nutrition than their was last season.

While it is true that the bugs and competitors reduce my yield now, they increase it later by helping me create more of what I’m trying to grow. The systems approach takes longer, but usually creates more for all participants. This is why market share is never as important as growth. Market share is a me versus you, reductionist measure – it’s very yesteryear. The thing I’m trying to grow is the system. In a world of increasing abundance I want to participate in creating something which means more for everyone. I have little desire to dominate what is already here.

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