
Andy Rachleff on 35 years in Silicon Valley, Wealthfront and telling stories - adrian_mrd
http://www.startuplessonslearned.com/2019/06/lean-startup-conference-speaker-andy.html?m=1
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bkohlmann
After two weeks, Andy Rachleff’s class in business school was the only one I
considered dropping in my entire academic history. What made it even worse was
that I had burned one of my two “silver bullets” selecting it.

But I decided to stick it out for one more class...and then one more.

By the end of the course I came to the realization it was one of the most
profound quarters I experienced. He was brash, strict, and a bit arrogant. But
he knew his stuff. He pushed me to think about the world in an entirely
different way.

I still disagree with him on a number of startup related issues (talk about
arrogance on my part!), but he did what the best teachers do - forced me to
take a hard look at preconceived notions and challenged my view of reality.

2+ years later, I still reflect on his lessons and the insights from the
founders he introduced us to. A truly remarkable guy.

~~~
_nhynes
dumb question: what is a "'silver bullet'" in this context?

~~~
nemild
If you use a "silver bullet", you are almost guaranteed to get into the class,
as it puts you at the top of the line. This is a way to ration the highly
desirable classes.

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sjg007
The most important part of this chat is that he told us that it’s the
technology that drives the business.

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GCA10
Lots of savvy insights, but I'd question Rachleff's position that the angel
community took on a "sucker's bet" when it became the main source of early
funding for software startups that hadn't yet established product-market fit.

I think what Rachleff deep down knows -- but didn't want to say -- is that
putting money into a very early-stage software startup is a time-intensive
proposition. The founders are groping their way, and their odds of getting it
right depend, to a large extent, on the quality of never-ending advice and
contacts that they get.

The best angels have the patience and the hands-on knowledge to provide this
guidance. They also make a ton of money selling their expertise in the form of
repeated consults-over-coffee.

For every venture capitalist that's willing to put in the work at the
beginning, there are dozens who would much rather live large, work short
hours, bicker with their partners and concentrate hard on raising the next
fund.

For that group, everything else that Rachleff says is quite true. Mainstream
VCs are very comfortable providing capital (and public promotion!) for 10x
companies going to 500x, or for 100x companies going to 5,000x. It takes a
rare blend of nerve and cheery enthusiasm to pull it off, but it also is much
easier work.

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hhs
Rachleff says:

“Because people, human beings, by their nature, are risk-averse. If I hear
that you didn't build the product for me and that you did it accidentally, I'm
going to have less confidence that buying your product is the right thing to
do. Look how Apple revised history of the iPod and the iPhone. They said they
were Steve Jobs's inventions. They weren't. He had nothing to do with them.
The Apple marketing machine made you believe it, because it made you feel
better about buying them. The true creator of the iPod was a guy named Tony
Fadell, who went on to start Nest as well. He recognized the value of iTunes.
There were a lot of MP3 players back then, but he realized that iTunes on the
Mac, where you could rip your songs, was the ideal tool to deliver a better
digital music experience, and that syncing to iTunes was the key. That's what
he pitched Jobs on, and Jobs funded him to do it, like a venture capitalist.
That's not the story that was told.”

I’m curious if that’s the complete story. Is there more to this?

~~~
Ididntdothis
Whatever I have read is that Jobs invented not much but he was good at looking
at other people’s work and see if there is potential or not. I just read a
book about iPhone development and there it’s the same. The devs are demoing
different stuff to Jobs and he is good at picking the right one. But he
doesn’t create anything.

~~~
victor106
Curious to know what that book on iPhone development is?

~~~
Ididntdothis
[https://www.amazon.com/Creative-Selection-Inside-Apples-
Proc...](https://www.amazon.com/Creative-Selection-Inside-Apples-
Process/dp/1250194466)

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ec109685
Wealthfront didn't start out as a robo investor company:
[https://techcrunch.com/2008/12/15/sec-gives-social-
investing...](https://techcrunch.com/2008/12/15/sec-gives-social-investing-
site-kaching-green-light-to-take-on-mutual-funds/)

I wonder if Andy came in when they pivoted.

~~~
shuckles
Andy goes into this in some detail in the class. He was an investor in the
Facebook game. The Wealthfront pivot - which was indeed the case, since both
depended on APIing the feed and broker layer – was partly inspired by many of
his ex-students becoming rich in Facebook stock and coming to him with
investing advice. He realized there was a generation of wealthy young people
who didn’t want the hassle of an investment manager and couldn’t afford high-
end management advice.

Part of it also came from his exposure to the Ivy investing method through his
role on the endowment investment committee at UPenn.

~~~
sjg007
So he says. A generation of Facebook stock option trustees would have plenty
of money for traditional brokers. This is really a 401k 2.0 play.

~~~
shuckles
The kinds of active managers you want to give your money to request you have a
lot more than just single digit millions of dollars. And as I outline in the
other post, a business fires its initial customers many times over over a
decade-long run.

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decisionSniper
Wealthfront ran into some trouble with the SEC recently.
[https://www.sec.gov/news/press-
release/2018-300](https://www.sec.gov/news/press-release/2018-300)

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lanrh1836
I have worked with someone who used to work at Wealthfront, and said that he
had said to them “do not speak to me unless I speak to you.” They left within
months of starting.

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jrpt
I worked at Wealthfront myself and know Andy personally, and really doubt he
would ever say that. You could and did talk with anyone at the company.

~~~
lanrh1836
I normally wouldn’t raise it if I couldn’t independently verify it happened
myself, but this person is one of the nicest people I’ve ever met, so I
totally believe it. They left a very cushy job to take a job at Wealthfront,
so leaving after a few months had to take something pretty substantive.

~~~
hendzen
Wealthfront isn't a very large company so if you are telling the truth you
have potentially given enough information about your friend for people there
to identify him/her.

