Just finished The Monk and the Riddle : The Education of a Silicon Valley Entrepreneur by Randy Komisar.
1. That guy has seen a TON. Prolific successes AND failures, and I think that’s what gives the business book such a “zen” feel. But the question throughout is whether the “Deferred Life Plan” is really worth it is insightful. Pushing through something painful so that you can eventually live the life you want to live isn’t a wise method of living according to Randy (essentially saying that anyone in investment banking, management consulting, law or any other profession that requires you to “pay your dues” until you can “get rich” isn’t fulfilling.) The book states that the day where that happens will never come, you eventually resign to doing something you don’t love, pushed by the hope and desire to reach the next rung of the ladder and focused by avoiding the fearful thought of reevaluating whether you want to be on the ladder at all).
The interesting thing is that this happens to start-up types as well. Call it “profit chasers”. Opportunists that see an open, profitable market but don’t feel strongly about it. They are making the same choice as the excel monkey working 90 hours a week – personal profit traded for time and the submission of doing what you really want to do.
2. VCs make decisions based on potential upside. A “hedged bet” isn’t something that is attractive to them at all. They make their money when 20 to 30% of their investments go off to return 10-100x investment. If you aren’t going to dominate a big market in a forceful way, probably not going to generate the interest you need from a VC.
Unfortunately, as Paul Graham puts so well in his book “Hackers and Painters”, when you “dampen oscillations” to protect from downside, you end up shorting your upside as well. I can only assume the opposite holds true that when you go for world domination, the chance to fail, vulnerably, exposed, publicly increases as well.
Summary of this point, VCs may be afraid of an investment that fails terribly, but an investment for something safer, surer, and in a small market doesn’t even fall on their radar.
2a. Market size is huge for this, they’d rather have a half-baked idea for a large market than a half sized market for a spot on idea.
3. Two types of startups – “Better-Faster-Cheapers” and “Brave New World”. BFCs are all about pouring money into the rocket ship to try to gain as much market as possible. BNWs need to be more carefully planned.
4. Often times the method for determining future sales is different from the method of determining market size. You need to be a market leader, and so if you discover your sales represent a much smaller chunk of your market size, you need to determine whether you are being overly optimistic about market size or whether you need to think harder about how you will sell more.
Overall, pretty easy read, and enjoyable. For someone who has done so much, the guy is very unassuming. He comes across as confident but never cocky. Oh, and he has the worlds coolest job, Virtual CEO. He is like an angel investor who invests sweat equity rather than money for a piece fo the company. Cool.