This relentless pursuit of new ideas is generally found in the DNA of entrepreneurs in environments that don’t have quarterly earnings targets. (Jeff Bezos almost called Amazon Relentless and www.relentless.com
still reroutes to Amazon.com).
Henry Ford understood that the desire to move—to have freedom of mobility—is enduring and universal. As economies grow, and even as human beings grow, the first thing they want to do is move. It is a powerful vision—opening up the world’s highways so that everyone can have freedom of mobility, and can access the opportunities for growth that those experiences can offer. - Alan Mulally, CEO of Ford Motor Company
A major factor contributing to Uber’s growth is its potential… Michael Wolfe, an entrepreneur and frequent technology commentator explains:
If you think of Uber as a town car company operating in a few cities, it is not big.
If you think of Uber as dominating and even growing the town car market in dozens of cities, it gets bigger. (Data point: there are now more Uber black cars in San Francisco than there were ALL black cars before Uber started).
If you think of Uber as absorbing the taxi markets, it gets pretty huge.
If you think of Uber bringing taxis to parts of the world that did not have them before because of insufficient density, it gets even larger.
If you think of Uber as a personal logistics service that can drive your kids to school and back, take you to work, pick up your parents at the airport, drive you to date night so you can get your drinks on, it gets very very large.
If you think of Uber as delivering both people as well as things (packages, dry cleaning, groceries) it gets even larger.
If you think of Uber as a replacement for your car, it gets even larger.
If you mix in a fleet of self-driving cars, orchestrated by Uber, it grows again.
If you think of Uber as a giant supercomputer orchestrating the delivery of millions of people and items all over the world (the Cisco of the physical world), you get what could be one of the largest companies in the world.
99% of startups sell for less than $30 million, many for less than $10 million. Entrepreneurs think that raising money at a high valuation or with a high cap is a badge of honor, but raising money at a high valuation prices you out of exits and makes it harder to raise follow-on capital. There is so much frothiness in the seed market today that it’s not uncommon to see startups raising on convertible notes with $5-10 million caps. Given the Series A crunch and the difficulty of raising follow-on money, we are seeing startups with $5 million in revenues raising at $5-10 million pre. As a result if we deem the seed valuation too high, we just wait for the Series A.
Let’s say you’re in Glasgow, Scotland, trying to start a technology-driven business. Many would view this as a competitive disadvantage, but I don’t. In fact, I think there are a tremendous number of wins to be had from the outsider status:
- Your costs—all of them—will be lower.
- If you have any degree of success, you’ll automatically be a big fish in a small pond, which will give you an amazing emotional boost and make an entire community invested in your success.
- There is no echo chamber. If you’re building a product that people want, you’ll know, and if you’re chasing unicorns, you’ll know that, too.
- If you gain traction, your business will become an excuse for investors, startup folks, speakers, and partners to visit.
- You’ll have a much easier opportunity to attract the best and brightest in your region rather than having to constantly compete with hundreds of other companies, big and small, for talent.
Don’t dismiss the power of being far away from California. Silicon Valley is a state of mind, not so much a physical place.
So we should be looking to today’s generation, who people often refer to as Millennials, to predict how we will all live and connect 10+ years from now. This generation has grown up differently than everyone who came before it (including me). They have grown up in a world of constant mobile connectedness. They are as different from prior generations as were Baby Boomers who grew up with the first televisions, and earlier generations who grew up with the very first cars or electricity. They have never really known a world without Internet, mobile devices or social media.
I think the beauty of what you’re seeing now is the emergence of creativity everywhere. Where in the past you had to travel to the centers of finance and technology to get things done, now you don’t have to.
A founder who can just do “sales” in the traditional sense isn’t going to cut it anymore. So much of the “selling” these days is in the design and the user experience of the product that the full-stack marketer must be able to push pixels with the best of them. The “seller” founder who can design is able to eliminate the gap between product and marketing and narrow the wait time between generating ideas and executing on them.
Founders should be married to a thesis about the world — not a specific product concept. For example, when Jonah Peretti founded BuzzFeed it was with the belief that social networks were fundamentally changing the way news and information spreads. The product itself came later, and after many, many experiments. Similarly, Evan Williams recently founded Medium because he believes that publishing tools have barely evolved since he founded Blogger over a decade ago, and it is still too hard for most people to get their ideas out into the world. Both Jonah and Evan started companies out of conviction in their theses, not the specific implementations that would capitalize on them. This approach provides the freedom to explore and experiment (and get things wrong), within the creative constraints of a guiding belief.
Investing in the networks that light up the sharing economy, like Airbnb, Lyft, Sidecar, and many others certainly looks like a good idea. But they may just be opening up a massive new investment market in physical assets that produce income. We are seeing lenders move their money from banks and bonds to peer lending markets like our portfolio companies Lending Club, Funding Circle, and Auxmoney. I think in time investors will move their capital into the assets that power the sharing economy as well. And that may turn into a very large capital asset class.