Startups and Shit
What would you say you do here, Hachette?

1st Bob: What you do as a publisher is you take the books from the authors and give them to the reader?

Hachette: Yes, yes that’s right.

2nd Bob: Well then I just have to ask why can’t the authors send them directly to reader?

Hachette: Well, I’ll tell you why… because… authors are not good at dealing with business.

1st Bob: So you physically take the books from the author?

Hachette: Well… No. They email it… or they’re upload it to a 3rd party website.

2nd Bob: So then you must deliver them to the reader through your site?

Hachette: Well… No. ah sometimes. But is a long URL to type and people don’t know about it. And it’s hard to get the book onto a Kindle that way.

1st Bob: What would you say you do here?

Hachette: Look we already told you, I deal with the @#$% business so the authors don’t have to. I have business skills! We are good at dealing with business, can’t you understand that? WHAT THE HELL IS WRONG WITH YOU PEOPLE?!


There’s a raging debate on the twitters about whether it makes sense to build for Android vs iOS first. The real answer is that it depends on the problem you’re solving and the user’s context. But most of the time, neither is correct. Most startups should be be building for the web. In a mobile-dominated world of 2014.

The Android vs. iOS debate is one hinges around whether you think it makes more sense to target a (perceived) larger market, or target one that the technorati favor. But why choose? Building a good responsive web app has a series of benefits, the primary one being that you target users on every platform with one app. Every user. Every platform. All the time. Release whenever you want. A/B test with ease. Go, go go.

Your primary job as a startup is to learn. The primary threat to your business is that nobody gives a shit about the thing you built and you would have been better off sitting in Dolores Park for three months. Keep that in mind next time VCs and journalists are debating the merits of various platform strategies. That shit matters to them. It doesn’t matter to you. At least, not when you’re pre-product-market fit.

And remember, once you think that shit is working and do decide to go native, you’ll still need a great web experience for user acquisition. The first experience most users have with your product will usually be when they land on it in browser. If your app is amazing, but the web app is half assed, potential users will only see your app as half assed.

The clear exception to this is when you can’t build something with the web. If you literally can’t, because you need hardware access you can’t get on the web, build native. If you’re selling something digital, go native. If you don’t believe web is a valid test of the interactions you think matter you’re probably wrong, but go ahead and build native. 

The vast majority of the time, that app you think is an amazing idea isn’t. Or it kinda is, but you need to find the right pivot. When you great native apps, you don’t see all the work it took to get there. And for every great app, there are hundreds that never got to product-market fit, abandoned because the team ran out of time to find it. It doesn’t fucking matter which platform they chose.

Bonus Rant: Android Second

If/when you do go native, you should probably start with iOS. Here are a few reasons Silicon Valley companies shouldn’t be Android-first. These may or may not apply to your startup if it’s not in Silicon Valley, targets a specific demographic that is primarily Android, or you’re past product-market fit and the name of the game is scale.

  1. You are developing in English for the Play store, so Android’s global market penetration is irrelevant.
  2. Apple devices get used more, and apple users install more apps.
  3. Development will be slower, because Android is fragmented both in terms of OS versions and devices.
  4. Features will either not work on all Android devices, or you’ll be forced to dumb down to address more devices.
  5. It’ll be harder to get press, because nobody at TechCrunch uses Android.
  6. It’ll be harder to hire, because potential employees mostly use iOS.
  7. It’ll be harder to test premium services, because Android users are less affluent. All Uber for X apps start as premium services.
  8. You won’t be able to test monetization easily, because Android users don’t monetize well.
  9. You own an iPhone.


a framework for pricing bitcoin

I’m a big fan of crypto “currency.” I am convinced that Bitcoin or a similar system will afford a new class of open infrastructure apps. These apps will be profoundly disruptive, driving down costs for consumers and devastating incumbents’ revenue streams. They will do for payments—and possibly other categories—what open source has done to enterprise software over the last 15 years.

A few days ago, Fred Ehrsam’s excellent piece on Bitcoin in Recode. Fred observes that Bitcoin will eat the payments industry (one can hope) and suggests one method for valuing bitcoin:

In the present, the value of bitcoin as a currency can be viewed as the sum of the cost savings of using the bitcoin network for payments rather than alternative payment networks. 

I don’t think this is right. This is the upper bound on the value of bitcoin, but not the lower bound. If Coinbase owned bitcoin and could control the value, they’d price it to lower costs by 50%, kill Visa et al, make $250M a year, and buy yachts. But they don’t.

A better way to arrive at a valuation is by looking at how it would be used to facilitate payments at scale, and asking what the value would need to be. Bitcoin is volatile fuel for financial transactions. Because of this, institutions who were only interested in using it for payments (and not stored value) would have as little as possible on hand at all times.

Eventually it’s likely users of bitcoin would buy and sell it in realtime on efficient exchanges to meet transaction demand. This suggests that the long-term price will be a function of realtime demand.

If this is the case, the price of bitcoin will ultimately settle at the value of fiat currency (C) that needs to move somewhere per minute, multiplied by the average number of minutes needed to clear a transaction (M), over the average number of bitcoins available for trading (A). That’s: C*M/A.

Let’s break that down and get a little more precise and try to plug some numbers into this formula. First, on currency, let’s assume that Bitcoin becomes as big as Mastercard. Mastercard represent about two trillion dollars transferred annually, or around $4M per minute.

An interesting property of the Bitcoin protocol is that it takes around 10 minutes to verify a transaction on average. Assuming transactions are evenly distributed, the average transaction takes about five minutes to clear.

The final variable above (A) is the number of Bitcoins in circulation. The theoretical maximum this can be is 21 million bitcoins, but this isn’t the number that matters. We care about the number “in play.” Since bitcoin are lost forever when someone loses their key, hard drives crash, or are temporarily out of play as speculators and Liberatarians hold them, etc. it’s likely that the practical number will be much lower. Let’s use 10M to make the math simple.

So, in the example above, if you replaced the Mastercard payment system with bitcoin, each bitcoin would have a value of $4M * 5 / 10M, or $2. If you add in Visa, Diner’s Club, Discover, and American Express the number jumps to around $6.

I couldn’t easily find numbers on interbank (et al) transfers, so we’ll let the HackerNews figure out how that factors in. Assuming it’s 10x the payments number, this still puts the long-term value of bitcoin at $60, an order of magnitude less than it’s trading at today. 

Of course there could be other applications for bitcoin outside of payments that further increase demand. However, payments is the killer app and it’s hard to see how bitcoin maintains a utility value anywhere near current prices.

Hey Look, Software Just Ate VC!


Remember when Sacca was buying Twitter stock like a boss because the founders preferred him to VCs? There’s now an app for that. 

Recently AngelList quietly started testing Syndicates. Syndicates allow you to raise any amount of money on behalf of a startup and take 20% of the carry

If you’re a hot startup you can now buy advisors without stock. Instead of issuing them advisory shares, just grant them an allocation and let them pimp it on AngelList. You get fewer investors to deal with and more help from people you like.

If you’re awesome at helping startups and/or you’re good at hyping startups publicly, you are now a walking VC fund. Just make a deal to advise the startup, get your allocation, and fill it up. When you help the company succeed you make bank.

If you’re an accredited investor who thinks they can pick ‘em, you can now get access to deals without VC management fees. That saves you ~20% off the top. And since you’re giving up 20% of carry (or more) anyway with a fund, that’s a sweet fucking deal. 

If you’re a VC you should be thinking really hard about AngelList right now. You’re either going to make this shit useful or start losing deal flow. I’d also suggest you start working on your personal brand. It might come in useful.

And did I mention, AngelList takes a cut of the carry? Well played Naval. Well. Fucking. Played.

* Note: Image above from the game Syndicate. If you’re too young to remember this click here.

Don’t Let the Money Make You
Of course I want dubs and a candy painted ‘lac
Watch the videos and get the girls in the back
But if that’s what I believe in, and the reason that I rap
Uncle Sam is my pimp when he puts me on the track
- Macklemore, Make the Money

We all want the money. You get the exit, fucking enjoy it. And don’t forget to call me when you get your boat. Seriously Mike, what up?

But, if you’re in this shit for the money, your strategy is misaligned with your goals. You’re filling a chair someone else should be sitting in. Money is not a sufficient motivator and people like you quit when it gets hard anyway, so get the fuck out now.

Click here to exit. No hard feelings.

99 Startups

Dear internet, please record this. I’ve done my part.

If you’re having funding problems I feel bad for you son
I got 99 problems but my pitch ain’t one

[Verse One]
I got a app patrol shipping version dos
Foes that wanna take my human capital
Analysts saying “Money, Cash, IPOs”
I’m a visionary what kind of facts are those?
If you came up in the valley watching startups explode
You’d drop out of college and learn to code
So fuck sceptics you can try a different business model
If you don’t like my tweets you can press unfollow
Got a beef with TechCrunch I don’t do Disrupt
They don’t cover my releases, I don’t give a shit SO
Tech blogs try to use my guest posts
So advertisers will buy underperforming display ads…bloggers
I don’t know what you take me as
Or understand the effectiveness of my growth hacks
I went from bootstrapped to hyper-growth I ain’t dumb
I got 99 problems but my pitch ain’t one
Fund me

99 Problems but a pitch ain’t one
If you having funding problems I feel bad for you son
I got 99 problems but my pitch ain’t one
Fund me

99 Problems but a pitch ain’t one
If you having funding problems I feel bad for you son
I got 99 problems but my pitch ain’t one
Fund me

[Verse Two]
The year is 2008 and the good times are gone
In my calendar this week is a big venture boss
I got two choices I can raise cash for growth
Or cancel the round focus on positive cash flow
Now I ain’t trying to limit my market share that way
Plus the market will never be bigger than today
So I…show up in Palo Alto
And I hear “Son, do you know your distribution channel?”
Facebook converts, so does our SEO business
We got network effects and affiliate incentives
Are you going to invest or should I brag some more?
“I need to see more traction to commit for sure’”
“Show me life time value and market size”
“Is this a lifestyle business? What’s my preference look like?”
It’s a billion dollar market, I ain’t flipping this shit
“Well do you mind if we do a little due diligence?”
Well my unit economics are working and my customers numerous
My teams pedigree would have Quora envious
"Aren’t you sharp as a tack, you read Venture Hacks or something?"
"You got advisors or something?"
I ain’t don’t follow @Nivi, but I know a little bit
Enough you gonna reasonably value my shit
"We’ll see how smart you are when Ron Conway comes"
I got 99 problems but my pitch ain’t one
Fund me

[Chorus X2]

[Verse Three]
Now once upon a time not too long ago
We had no customers and the price was low
This is not low in the sense we made no profit
There was validated learning, just limited dollas
I tried to move forward and talk to the board
Explain for em, but rich dudes just gotta perform
You know the type loud as a motor bike
And wouldn’t fly coach or the red eye
So I took a second look made an epic pivot
Early customers were down and they rolled right with it
We raised our  lifetime value by a thousand persentages
While the competition stagnated we developed it iterative
Feature after feature extended our market leadership
There was nowhere my ass could go without our rep proceeding it
Now I’m the press favorite of course the board takes credit
The whole industry is buying just to stay competitive
Don’t think we’re done hustling, it ain’t over yet
We got crazy shit coming, market size is infinite
Quick call to the CEO and the deal is done
I got 99 problems but my pitch  ain’t one
Fund me

[Chorus X3]

Viral coefficient two point some,
I got 99 problems but my pitch ain’t one

You’re one of the crazy ones Rick
It’s your boy