Category: Business

Venture Capital & How to Start a Startup

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Paul Graham offers up two very useful articles:

  • How to Start a Startup:
    You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.
  • A Unified Theory of VC Suckage:
    But lately I’ve been learning more about how the VC world works, and a few days ago it hit me that there’s a reason VCs are the way they are. It’s not so much that the business attracts jerks, or even that the power they wield corrupts them. The real problem is the way they’re paid.

    The problem with VC funds is that they’re funds. Like the managers of mutual funds or hedge funds, VCs get paid a percentage of the money they manage. Usually about 2% a year. So they want the fund to be huge: hundreds of millions of dollars, if possible. But that means each partner ends up being responsible for investing a lot of money. And since one person can only manage so many deals, each deal has to be for multiple millions of dollars.

Fighting Rivals with Efficiency

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Rick Barrett:

“Right now, the Midwest is awash with old, decrepit manufacturing plants,” Mautner said in an interview. “Some of these are factories with century-old equipment, and they?ve seen few improvements over the years. At the same time, China is building all new facilities, with all new equipment, and they?re consuming about half of the world?s oil, and half of the world?s steel and concrete.”
U.S. companies can?t stop China?s industrial revolution, but they can shield themselves from it a little, Mautner said.

Tim Draper on Skype, Telco’s and the VC Business

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Draper is acknowledged as the inspiration behind the term “viral marketing” via his hotmail investment. Interesting interview.

We often list all the problems in society, and the politicians would make you believe that they’re going to solve all those problems.

Generally, I’d say it goes the other way. Businesses solve a lot of the world’s problems. The next big energy breakthrough will happen through a business.

The next big environmental breakthrough similarly could happen through a business. Medicine has been advanced through business. It turns out that it’s the businesspeople that tend to be the ones who solve all this stuff.

Health Exchange

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Victoria Colliver:

One of the main stumbling blocks in the American health care system, many experts say, is the inefficient use of computer technology to manage medical records.

Now, in Santa Barbara County, a network of hospitals, laboratories, pharmacies and doctors is pioneering new technology that will allow medical professionals with different computer systems to share clinical information. The initiative may well be a first step toward the creation of a national patient-care data bank.