There are two jobs. “To paraphrase the very quotable Silicon Valley venture capitalist Marc Andreessen, in the future there will be two types of jobs: people who tell computers what to do, and people who are told by computers what to do. To take the theory further, computation would no longer fill some hard gap in a human workflow process, such as the calculators used by accountants. Humans would fill the hard gaps in a purely computer workflow process, like Uber drivers.” [pp. 25]
Stop claiming you’re in stealth. “Incidentally, the fastest way you can indicate your level of startup naivete to a VC (or to anybody in tech), is either by claiming you’re in “stealth” — that is, with an idea so secretly valuable you can’t disclose it — or by forcing someone to sign a nondisclosure agreement before you even discuss it. You may as well tattoo LOSER on your forehead instead, to save everybody the trouble.”
You’ve got to be viral. “Marketing is like sex: only losers pay for it.” [pp.74]
Google’s moneymakers. “Think about this in the context of more traditional industries for a moment. Chain restaurants like McDonalds have a best-performing outlet in a particularly busy high-rent district. Automakers have a particularly popular, bestselling model like the Ford Fusion or the Chevy Impala that makes their quarter. Google has the words “insurance” and “loans.” Those are its flagship moneymakers. It is a tech empire built on snippets of words and phrases flitting through people’s minds. You as a mere consumer don’t see it, but how Google ranks keywords and runs the auction determines the fate of billion-dollar companies and industries. As the gatekeeper on buying interest, Google is the bouncer at the door of almost any Internet-enabled business today, and if you as the business owner don’t pay your bouncer well, he’ll shut you down, as Google has done more than once.” [pp. 82]
Post PR on a Tuesday. According to the leading PR mythologies, day-of-the-week posting choice was critical. The media boom would reverberate depending on its magnitude and resonance inside whatever industry echo chamber it was launched. And so you wanted a few full-on workdays after launch to let that echo play out. Monday was too soon, as everyone was still jet-lagged, hungover, or otherwise groggy from the weekend, and too busy catching up on email and meetings. By Thursday, people were already thinking about the weekend, and likely ducking out early for their first happy hour of the week. Friday was for burying news, not announcing it. It’s when people were fired and bad earnings reports came out. We would post on Tuesday, which left the most time for a PR blowup to echo across the Internet, and across all levels of Internet connectedness, from the assimilated Internet cyborg to the grandmother in Kansas. [pp. 99]
Caps aren’t what they used to be. “In the summer of 2010, for the prechosen YC elite, a good cap was in the $6 million range. A stellar cap was around $8 million, and only a really buzzy company like Hipmunk, a travel startup that was a Reddit founder’s second act, got close to that. The middle of the YC pack (where we were) was in the $3 million to $4 million range.” [pp. 116]
Don’t talk to associates. “One quick way to cut through the shit: ask your pretender-to-influence, “Do you have decision-making power?” If he or she even remotely hesitates or hedges, you’re speaking to a lackey (whether he or she acts like one or not). His or her only utility is to get you to the person who does have that power; everything else is so much pig swill. So route around such people if a real investment check is your goal. Arguably (and this is the canonical YC advice) don’t even accept a meeting from someone who can’t answer yes honestly to the above question. You’re wasting your time.” [pp. 129–130]
YC will have your back. “Y Combinator was the sort of unforgiving power player that remembered the names of investors who had crossed portfolio companies in the past, or who had disseminated unflattering portraits of YC, and blacklisted them from any YC dealings, or from the minds of YC founders. This was done with little thought of the size of their funds or their influence in the Valley, leaving more than one self-important VC sputtering at a dressing-down, or left out of a round because the company’s founders had gotten a warning from PG [Paul Graham]. The harsh reality is this: to have influence in the world, you need to be willing and able to reward your friends and punish your enemies.” [pp. 157–158]
Don’t talk to acquirers too soon. “PG was my first email. As expected, he was bearish on the whole thing, calling it a distraction, and advising us to ignore it and to get used to saying no. He was right, in the sense that any decent startup will get a dozen acquisition offers as it rises to prominence… He also advised me privately to shield the boys from any acquisition chatter.” [pp. 187]
The other way acquihires can go. As I was soon to learn, this is a common tactic. You pay a pittance for the company, engineering it such that investors get little, and then pack the real value into the hiring offers for the employees. TechCrunch would carry the news that the company sold for X million dollars, but technically it would sell for 10 percent of X, while the rest went into fat signing bonuses and heavily laden vesting schedules for the founders. [pp. 245]
Perfect is the enemy of good. In general, be it at startups or aggressive companies like Facebook, there should be a cultural bias for launching. The perfect is very often the enemy of the good, and as the Facebook poster screamed from every wall: DONE IS BETTER THAN PERFECT. Very few companies have died due to launching early… [pp. 294]
FB’s data isn’t as valuable as you think. “No user data we had, if fed freely into the topics that Facebook’s savviest marketers used to target their ads, improved any performance metric we had access to. That meant that advertisers trying to find someone who, say, wanted to buy a car, benefited not at all from all the car chatter taking place on Facebook.” [pp. 296]
The right way to be a product manager. “The principal reason for you to be technical is not to help technically design the system under development; if you’re doing that, then you’re PMing wrong. No, you’re technical so you can tell when engineers are bullshitting you, which will be often. At times it’s accidental (as it was with Rong), due to either miscommunication, bad memory, or wishful thinking (engineers are as inclined to it as anybody). Sometimes it’s more stealthy, their passive-aggressive way to disagree with the product direction (“That’ll eat up all our servers”), or laziness (“It’s impossible to build that”). The PM is there to give a sniff test to any such product-killing assertion.” [pp. 321]
FB isnt as smart as you think. “The story usually ran as follows: the journalist, or one of her “sources,” had seen ads for the San Francisco 49ers after her husband’s cousin’s college roommate posted a photo of himself in a 49ers jersey. Were we using uploaded photos in our ads targeting!!?? This was like being accused of fathering Scarlett Johansson’s love child. I wish I could even reasonably be suspected of pulling that off. Almost nothing of what you share on Facebook… is worth anything in commercial terms… Facebook doesn’t sell your data; it buys it. It does this by providing services to advertisers that incentivize them to let Facebook ingest the data you’ve generated outside Facebook.” [pp. 328]
Be your own creative destruction. “The penultimate page captured the spirit best. In white sans serif font, against a stark black background, it read: If we don’t create the thing that kills Facebook, someone else will. “Embracing change” isn’t enough. It has to be so hardwired into who we are that even talking about it seems redundant. The Internet is not a friendly place. Things that don’t stay relevant don’t even get the luxury of leaving ruins. They disappear.” [pp. 343]
Engineer salaries in 2014. “If Facebook engineers coming in right before the IPO had a few years of experience, but were not a “star” with unique skills, they could expect a salary in the $125K to $150K range, with about $500K in equity.” [pp. 358]
Mobile Newsfeed saved FB. “That’s it: ads in News Feed, while the user was on his or her mobile device — that’s what saved Facebook. Like many successful products, News Feed Ads rode to success atop a tsunami-esque wave nobody had predicted, or at least hadn’t predicted to arrive right then and so quickly. In this case, that wave was mobile usage, which in the span of a few months in 2013 suddenly constituted the majority of Facebook usage.” [pp. 483]
Targeting is less valuable with mobile. “The net of all this detailed data discussion is this: while my statements about the questionable value of Facebook data held true on desktop, which already had a mature and mostly respectable data marketplace by the time Facebook showed up peddling Likes, that was emphatically not the case on mobile. On mobile, targeting data was sparse, and bad when it did exist, such that even basic targeting like age and gender was a godsend to data-starved mobile marketers who’d been mostly shooting in the dark.” [pp. 486]
FB’s IPO was brilliant for FB. “Also recall, Facebook’s IPO, unlike Twitter’s, came out at a high price of $38, and then languished for a year around $30, occasionally going so low as $18. The IPO was great for employees and insiders worried about dilution, but not for people wanting to cash out (like me), and walk away from the Silicon Valley casino.” [pp. 496]
sammy@blossomstreetventures.com