
Things I Learned from Chris Dixon about Startups (2015) - vinnyglennon
https://a16z.com/2015/01/18/12-things-learned-from-chris-dixon-about-startups/
======
tyre
This is interesting at a meta-level.

It's ultimately content marketing for a16z. If Chris Dixon wrote this same
article—e.g. "Here are all of the best things I've said"—then it would come
off as arrogant or ickily self-promotional. But having someone else write it
allows the author to praise the ideas without the same stigma.

I don't know whether it was intentional or not, but it's interesting how well
the content comes across when the base idea ("writing about smart things our
partner was right about") is the type of marketing companies/VCs _want_ to
actually say but social norms prevent.

The article itself is an example of the advice within the article. A "good
idea that people think is a bad idea."

~~~
thesausageking
It's completely intentional. a16z is fantastic at marketing, PR, and brand
building. In less than a decade, while generating very unimpressive returns
for LPs, they've built one of the strong VC brands in the world. They're
phenomenal at it. They do it so well that they make it look easy, but it's not
at all.

~~~
keithwhor
This is, without a doubt, the boldest and most impressive backhanded
compliment I've ever read on HN.

I have no idea what A16Z's returns for their LPs are across their funds, but
this could literally be right out of a movie script.

    
    
      **SCENE**
      
      GENERAL PARTNER is chatting with potential LIMITED PARTNER
      over cocktails.
    
      LP: The fund you're raising... the thesis, it's...
          interesting. You've done a great job with your last
          three funds. But I've read similar things from
          Andreessen's team that make me think they have a
          better grasp of the space - wouldn't my money be
          better invested with them?
    
      GP smirks and calmly reaches towards MARTINI GLASS,
      casually picking the toothpick, olive still attached,
      between her thumb and index fingers. She places the olive
      between her teeth to the side of her mouth, grasps, and 
      pulls the olive off the toothpick in one swift motion.
      She carefully places the toothpick in a napkin, stares LP
      in the eye, and pauses just a moment before aggressively
      biting down. She finishes chewing without breaking eye
      contact.
    
      GP: Ah. Yes, they do market themselves as visionaries.
          It's completely intentional. They're fantastic at
          marketing, PR, and brand building. In less than a
          decade, while generating very unimpressive returns,
          they've built one of the strongest VC brands in the
          world. They're phenomenal at it. They do it so well
          that they make it look easy, but it's not at all.
    
      LP: So if I'd like to make money...
    
      GP: You got it. How much are you in for?

~~~
gist
I actually liked what you wrote. Only thing I can add is they were able to
build that brand based on the legacy start power of Marc Andressen. I wonder
what would have happened if he hadn't been involved.

------
baxtr
I’m somewhat tired of these kind of “startup folklore” articles, although I
read and bookmark them all. Sure, these people were crazy successful and see
many other people being successful. Still, so much of these “insights” feel
like they could be exactly the other way around. Many successful founders I
have met, have told me: _well, no we weren’t the only ones doing this, but we
got lucky for this and that reason (e.g. timing)._ What if the lucky ones
wrote the “rules”?

I don’t know if it’s possible but I would love to see all these concepts
proven by data.

~~~
nostrademons
There's a meta-insight there: what if the lucky ones _do_ write the rules?

If that's the case, an optimal strategy might be to take as many convex bets
as possible, keep secret all the ones that fail, and then once a low-
probability bet succeeds, milk it for all it's worth and convince everyone
you're a genius. You can then leverage that for significant financial gain
from organizations who seek genius-level insights in the future. Eventually
regression-to-the-mean makes you lose your credibility, but in the meantime
you can pocket significant amounts of cash and invest them in much more stable
revenue-generating assets.

A glance at who's been successful since the 3rd millenia started shows that
this might not actually be a bad career strategy.

~~~
devonkim
The other part that's insidious is even the most well-meaning and well-
intentioned individuals oftentimes fail to understand the role of luck in
their success. Some psychological studies posted here on HN support that
people that are successful even for completely random reasons start to believe
that they did something different from others. One of the points in the posted
article here indirectly addresses this though that you should listen to those
that failed too because when people fail it's usually much more clear why
compared to the agency of the founders that succeeded. Furthermore, successful
people tend to stick near other successful people - they are insulated
oftentimes from most of the world that is normal out there. Nobody on tech
blogs cares about the insights of a middle manager of a construction company
in Louisiana, but there's so many businesses out there that do perfectly fine
it seems odd to me how little cross-pollination seems to happen.

One of the criticisms of psychological studies historically has been that
we've been studying mostly abnormal behaviors and that it'd be like trying to
determine how a car is built based upon only asking repair shop auto
mechanics. Similarly though, I think we need to invert this for business - we
need to identify commonalities between businesses that fail more than we need
to identify the factors that cause success (the entrepreneurship porn out
there is potentially harmful this way despite the many articles on the dark
side of it). I think the common factors in what causes failures are fairly
static compared to the factors that cause success. This interview[1] is a
great example of what was successful at one point in history can totally fail
later (much greater planning necessary in the early 90s while now we're
focused upon market fit / reactivity today as a trend). My gut feeling is that
some kinds of companies are better off sticking to their guns and churning out
good product independent of the market trends while others need to evolve.

1\. [https://torch.io/interview-series-tim-brady/](https://torch.io/interview-
series-tim-brady/)

~~~
mattkrause
> One of the criticisms of psychological studies historically has been that
> we've been studying mostly abnormal behaviors

I’m not sure this is actually true. There’s tons of data from “normal”
subjects, though normal here mostly means “average behavior of an 18-22 year
old college student.” If anything, psychology would probably benefit from more
focus on individual differences rather than commonalities.

~~~
devonkim
For some more context I was paraphrasing a passage from a psychology textbook
about the position psychology was in several decades ago, in particular about
how languages are processed in the brain and how most of what we've learned
about processing languages came from analyzing people's brains that acquired
disabilities such as through strokes, accidents, etc. I do agree with you to
question the the original validity of the statement in relevance to where we
are now - my point is to question the status quo in business discussions of
primarily studying the survivors when they're the minority for tech businesses
and to ask some more fundamental questions of "are all these business
principles relevant after the survivors talk about it publicly?" or is it
closer to revealing winning lottery numbers after the drawing is over?

I must admit I may be missing some much more fundamentals that are discussed
in academic programs for business (like data structures in CS programs) but am
curious why they're treated as table stakes for merely talking about topics
like market fit and growth projections when engineers do talk frequently about
"basics" like essential data structures.

------
gwillz
This echos a lot of hard lessons that I had during my time as a founder. While
a lot of this is great advice, I'm frustrated by the advice of "if people
reject you and things are hard, then things are going well". Because I believe
there's more depth to people's rejection of your idea/product/business and
they could have valid reasons.

My real issue is how to weed out the legitimate feedback from the bad. No one
has ever told me how to identify the difference. It's typically, "yay" means
you've done well and "nay" also means you're doing well. When really, either
of those responses could be a false positive - but which?

~~~
mdorazio
Having been through this a few times, my personal thinking now is:

"I like it" means absolutely nothing by itself. People will tell you they like
your idea/demo/whatever all day and have absolutely no intention of ever using
it, let alone paying money for it. What you want to hear is "How much does it
cost and when can I buy it?" (assuming b2b) or "Can I be a beta tester?"
(assuming b2c). Everyone else is fluff. If you're getting nothing but fluff
after talking to a bunch of people, your idea is probably also fluff.

"No" by itself also means pretty much nothing. You want to be listening for
"No because..." and then evaluate the because part. Is it no because they're
not the right audience? Is it no because they don't see the market opportunity
like you do? Is it no because they've already heard the same thing from 3
other entrepreneurs and yours is thus a me-too play? Is it no because
[fundamental reason you didn't think of and have no answer to]? Etc.

~~~
wpietri
Excellent point. When I'm talking with a first-time founder, they'll ask me
what I think of their idea. Sometimes I'll say straight out: you shouldn't ask
me that question, because if I answer you shouldn't listen to me.

Feedback from people in the target market is hugely valuable, especially if
they answer in individual terms. E.g., I will/won't buy because X. But
feedback from people not in the target market is rarely useful, especially
when it's in theoretical terms. So unless I have some specific expertise, I
try to redirect people toward the people they should actually be talking with.

------
peteretep
> Chris Dixon is saying that the people most likely to know the “a secret”
> about a business opportunity are people who have deep domain expertise

Which unicorns were started by people with deep domain knowledge? Struggling
to think of any, but that may be a lack of imagination.

~~~
mikesabat
Twilio

~~~
peteretep
I guess Fastly is unicorny, and also counts. Does seem to be the exception not
the rule though.

------
lordnacho
The thoughts about ideas and information are particularly relevant.

If you're not a domain expert everything you come up with will collapse under
efficiency arguments. Such as "if this made sense someone would have done it".

Much of expertise is knowing what experts themselves think. That's why you can
answer the question of why it isn't already there.

I have a question though. If you need to be a domain expert, how can there be
so much focus on young founders? Is that a different category of investment,
people who happen to have a lead into an emerging industry like social
networks?

~~~
so_tired
You really need to realize there are different markets.

Young founders are often in B2C and capital-light. They are judged (almost)
purely on growth metrics. Series A negotiation can drag on for months, and its
hard to fake 100% month-on-month growth.

The B2B will usually be more experienced insiders with deep domain knowledge,
and excellent references.

EDIT: everything is relative. If you are a brilliant PHD in ML then you can be
25 AND a domain expert AND go in to a capital-heavy B2B sector.

~~~
johnrob
For many consumer ideas, the younger people are the experts.

------
CPLX
There seems to literally be a bottomless pit of content-free aphorisms that
spew out of the content marketing departments of venture capitalists every
year.

Like does anyone read this stuff?

 _“[The] business of seed investing, and frankly, early-stage
entrepreneurship, is so much about getting good information. And almost all of
that information, unfortunately, is not published.”_

OK cool, thanks. By the way also that's also true of all investing, in
anything, ever throughout history. By definition good investment information
is unique information, that's the nature of competitive markets.

 _“Ideas …matter, just not in the narrow sense in which startup ideas are
popularly defined. Good startup ideas are well developed, multi-year plans
that contemplate many possible paths according to how the world changes.”_

Ideas matter. More thoughtful, well developed ideas matter more. Who knew?
Another thing that matters is warm clothing, it's really handy.

 _“What the smartest people do on the weekend is what everyone else will do
during the week in ten years.”_

In ten years everybody will be spending time with their family, apparently.

 _This era of technology, it seems to be the core theme is about moving beyond
bits to atoms._

Thank god, the whole sub-etha thing has been getting pretty tired.

And so on. This article is almost completely devoid of actual analysis or
observation, it reads like a fugue on someone's stream of consciousness
ramblings

~~~
hnnh44
I actually found a lot of it insightful. Maybe I'm not as priviledged as you
are to be exposed to this stuff on a regular basis. Maybe 99% of the
population isn't living in this bubble either.

It wasn't what you need for your paticular situation, and that's fine. But the
general hostility towards this is strange. Why did you feel the need to attack
it instead of moving on with your day? Genuinely asking.

~~~
CPLX
I dunno. Same reason Mike Judge decided to make an entire show making fun of
the same people I guess.

------
graycat
The OP has some good ideas.

That someone could see the future of smartphones when a mobile phone was a box
of 100 pounds in the trunk of a car is a bit much. There WAS a possibility
just by (1) talking to the electronic radio engineers about spectrum,
bandwidth, propagation, and power, (2) learning about encryption, and (3)
talking to the experts in microprocessor lithography and where that field was
going. E.g., quite early on, IBM had their eye on line widths small enough to
need X-ray wavelengths as a light source and built a cyclotron as an X-ray
source.

The OP missed the possibly crucial role of original advanced technology, e.g.,
from applied math, that is difficult to understand, duplicate, or equal.
Reasons for the OP to miss this possibility is that (1) they have seen little
or no such on Sand Hill Road and (2) are unable to evaluate such technology
themselves and unwilling to direct such evaluations by others. That the US
DoD, DoE, NSF, NASA, NIH, etc. are willing to evaluate such technology early
on and have done so with fantastically good effects is just ignored by Sand
Hill Road. My guess is that the main cause is concerns by the institutional
investor limited partners.

The part about building a demo to prove that the team can build serious
software is not good: From all the months I contacted Sand Hill Road,
apparently it doesn't much matter WHAT software a team has written in the past
or what abilities the team has demonstrated, Sand Hill Road won't invest based
on software yet to be written.

Writing such as the OP long misled me: I guessed that such considerations
would be part of a VCs investment decisions. But after experience, I
concluded, NO: Instead IMHO it appears that that the investment decisions are
based on (1) traction significant and growing rapidly, (2) in a large market,
(3) with little or no current competition, (4) with a team with not much
obviously wrong with it, and (5) the team desperate for a check. The rest in
the OP might tempt an entrepreneur to send a pitch deck but won't have
anything to do with the VC writing a check.

------
HillaryBriss
I stopped reading at "If you can’t sell, starting a business is probably
unwise."

~~~
ianamartin
You're not wrong. But that's basically dogma here. Sell first! Making a
product before you sell it is bad!!

~~~
TeMPOraL
Core observation I have about a lot of startups (and other businesses): the
ROI for sales and marketing is much better than the ROI for delivering actual
value to your customers. Therefore, bullshitters tend to outcompete people who
care about the product.

"If you can’t sell, starting a business is probably unwise" may be realistic,
but it saddens me deeply as a human being.

------
gist
> #6 “What the smartest people do on the weekend is what everyone else will do
> during the week in ten years.” “Hobbies are what the smartest people spend
> their time on when they aren’t constrained by near-term financial goals.”

We don't know this actually. What we know is the things that the 'smart'
(whatever that is!) people who have succeeded did on the weekends. We not only
don't know what the things they did that never went anywhere were or others
who are less notable are spending their time on.

I hate these types of sugary statements that everyone flocks to.

------
mrhappyunhappy
Number one is not a great idea. Of everyone worked on most pressing matters
then we’d live in an inconvenient world full of frustrations. Think of how
many products and services we rely on that went through a bunch of iterations
to become marvels that we take for granted without a thought. The mundane
aspects of our lives are full of opportunities for businesses that can turn
frustration into delight.

------
JohnJamesRambo
I know I'm probably on the wrong website, but I am so incredibly tired of
reading and hearing about startups.

------
late2part
Brilliant article with deep insights - very very good read for founders that
articulates a lot of the deeply true and difficult things about starting and
building a successful company.

