Offshore
Video
Startup Archive
Ben Horowitz tells the story of Slack’s pivot from a failed gaming app into a $28 billion company
Ben recalls investing in Stewart Butterfield’s new company Tiny Speck.
In 2001, Stewart began building an online game, pivoted into Flickr, and the company was acquired by Yahoo in 2005 for $25 million. In early 2009, Stewart decided he wanted to try building the online game again. This time, it would be called Glitch.
Ben tells the story:
“And so he builds Glitch. I love Glitch - it was a marvelous game. But it had two major problems. One, he started it in 2006 and built on Flash before Steve Jobs declared war on Flash. So it wasn’t going to work on the iPhone. And then the other problem was people would finish the game in two days, and so that’s not very good for retention.”
After raising more than $15 million to build Glitch, Stewart called Ben to tell his investor that they only had $6 million left:
“Ben, I’ve got $6 million left. I have no way to raise money because I’ve made really no progress because of these issues. It’s going to cost me more than $6 million to finish the game. So I’ve got three choices. I can pray for rain and try and finish it. I can shut down the company and give you your $6 million back. Or we build this tool that we use in our engineering team to communicate with each other and make engineering work a little better, and I could just put that out as a product.”
Ben replies:
“What? You just like built some tool to talk to each other and you want to put that out as a product? And you’re a consumer guy and you want to become an enterprise software guy?”
Stewart says, “Yeah, I think it’d be a pretty good idea.” And so Ben said, “$6 million isn’t going to make a big difference in my life. If you really think it’s a good idea and you want to do that, go ahead.”
Stewart decided to call the new product Slack, and it soon became the fastest growing enterprise software company of all time before SalesForce acquired it for $27.7 billion in July 2021.
Ben points out an important lesson here:
“A lot of the process is do you have a secret? Do you know something that nobody else knows? And because [Stewart] was pulling his hair out, literally smoking 8 packs of cigarettes a day, trying to get Glitch out the door, he was doing everything to optimize that development, and so he learned where software development was suboptimal… And that’s a really big key. You have to do something really hard if you want to learn something about the world that nobody else knows or is acting on. That’s when you have a breakthrough. But it starts with hard work.”
Video source: @SutardjaCenter (2020)
tweet
Ben Horowitz tells the story of Slack’s pivot from a failed gaming app into a $28 billion company
Ben recalls investing in Stewart Butterfield’s new company Tiny Speck.
In 2001, Stewart began building an online game, pivoted into Flickr, and the company was acquired by Yahoo in 2005 for $25 million. In early 2009, Stewart decided he wanted to try building the online game again. This time, it would be called Glitch.
Ben tells the story:
“And so he builds Glitch. I love Glitch - it was a marvelous game. But it had two major problems. One, he started it in 2006 and built on Flash before Steve Jobs declared war on Flash. So it wasn’t going to work on the iPhone. And then the other problem was people would finish the game in two days, and so that’s not very good for retention.”
After raising more than $15 million to build Glitch, Stewart called Ben to tell his investor that they only had $6 million left:
“Ben, I’ve got $6 million left. I have no way to raise money because I’ve made really no progress because of these issues. It’s going to cost me more than $6 million to finish the game. So I’ve got three choices. I can pray for rain and try and finish it. I can shut down the company and give you your $6 million back. Or we build this tool that we use in our engineering team to communicate with each other and make engineering work a little better, and I could just put that out as a product.”
Ben replies:
“What? You just like built some tool to talk to each other and you want to put that out as a product? And you’re a consumer guy and you want to become an enterprise software guy?”
Stewart says, “Yeah, I think it’d be a pretty good idea.” And so Ben said, “$6 million isn’t going to make a big difference in my life. If you really think it’s a good idea and you want to do that, go ahead.”
Stewart decided to call the new product Slack, and it soon became the fastest growing enterprise software company of all time before SalesForce acquired it for $27.7 billion in July 2021.
Ben points out an important lesson here:
“A lot of the process is do you have a secret? Do you know something that nobody else knows? And because [Stewart] was pulling his hair out, literally smoking 8 packs of cigarettes a day, trying to get Glitch out the door, he was doing everything to optimize that development, and so he learned where software development was suboptimal… And that’s a really big key. You have to do something really hard if you want to learn something about the world that nobody else knows or is acting on. That’s when you have a breakthrough. But it starts with hard work.”
Video source: @SutardjaCenter (2020)
tweet
Offshore
Photo
iinvested
3Q'24 Firebird U.S. Value Fund on $TRV, $AIZ
https://t.co/lRR5HVxN4Z
More fund letters here:
https://t.co/ccjFhSPQ2v https://t.co/B2XJZhQVsH
tweet
3Q'24 Firebird U.S. Value Fund on $TRV, $AIZ
https://t.co/lRR5HVxN4Z
More fund letters here:
https://t.co/ccjFhSPQ2v https://t.co/B2XJZhQVsH
tweet
Offshore
Photo
Investing visuals
Visa $V versus Mastercard $MA: a face-off between two high quality compounders. Which is your favorite? 💎👇 https://t.co/6staXT9lbE
tweet
Visa $V versus Mastercard $MA: a face-off between two high quality compounders. Which is your favorite? 💎👇 https://t.co/6staXT9lbE
tweet
Offshore
Photo
Stock Analysis Compilation
Kingdom Capital Advisors on Net Lease Office Properties $NLOP US
Thesis: NLOP is nearing debt payoff and dividend returns, presenting an undervalued liquidation opportunity with future upside from property sales and lease extensions
(Extract from their Q3 letter) https://t.co/AuV6Ab2AZu
tweet
Kingdom Capital Advisors on Net Lease Office Properties $NLOP US
Thesis: NLOP is nearing debt payoff and dividend returns, presenting an undervalued liquidation opportunity with future upside from property sales and lease extensions
(Extract from their Q3 letter) https://t.co/AuV6Ab2AZu
tweet
Offshore
Photo
Stock Analysis Compilation
Aristotle on American International Group $AIG US
Thesis: AIG’s transformation under its current CEO and focus on divesting non-core divisions position it for improved profitability, making it an attractive investment.
(Extract from their Q3 letter) https://t.co/ripKfDQhEf
tweet
Aristotle on American International Group $AIG US
Thesis: AIG’s transformation under its current CEO and focus on divesting non-core divisions position it for improved profitability, making it an attractive investment.
(Extract from their Q3 letter) https://t.co/ripKfDQhEf
tweet
Offshore
Photo
App Economy Insights
📊 This Week in Visuals:
$KO, $SAP, $IBM, $NOW, $TMUS, $VZ, $T, $LMT, $BA, $TXN, $LRCX, $SNY, $UPS, $FI, $MCO, $GM, $LUV, $AAL, $ALGN, $APPF.
Get up to speed with the latest earnings. 👇
https://t.co/e7P9Ktw1o8
tweet
📊 This Week in Visuals:
$KO, $SAP, $IBM, $NOW, $TMUS, $VZ, $T, $LMT, $BA, $TXN, $LRCX, $SNY, $UPS, $FI, $MCO, $GM, $LUV, $AAL, $ALGN, $APPF.
Get up to speed with the latest earnings. 👇
https://t.co/e7P9Ktw1o8
tweet
Offshore
Video
Startup Archive
Marc Andreessen explains the “Onion Theory of Risk”
“I think the single-biggest thing entrepreneurs are missing — both on fundraising and how they run their companies — is the relationship between risk and cash. I’ve always been a fan of something Andy Rachleff taught me years ago. He calls it the ‘Onion Theory of Risk.’”
You can think of a day 1 startup as having every conceivable kind of risk: founding team risk, product risk, technical risk, market acceptance risk, revenue risk, cost of sales risk, viral growth risk, etc.
A startup is basically just a long list of risks, and as Marc explains:
"The way I think about running a startup is the way I think about raising money. It's a process of peeling away layers of risk as you go."
You raise seed money to peel away the first two or three risks (e.g. founding team risk, product risk, initial launch risk).
You raise the Series A round to peel away the next layer of risks (e.g. recruiting risk, customer risk, revenue risk, cost of sales risk)
And so on.
Basically, you're peeling away risk as you're achieving milestones. And as you achieve milestones, you're both: making progress on your business and justifying raising more capital.
So in terms of fundraising, you should be calibrating the amount money you're raising to the risks you need to pull out of your business for you to raise your next round.
For example, if you're raising your Series A round, the best way to do that is to say to investors: "I raised a seed round then achieved ____ milestones and eliminated ____ risks. Now I'm going to raise $ X for the Series A to achieve ____ milestones and eliminate ____ risks. This will get the company to ____ state for the Series B round. "
This seems fairly obvious, but as Marc points out, it's a much more systematic way of going about things versus just raising as much money as possible, renting fancy offices, and hiring as many people as you can to grow as fast as you can.
The more money you raise, the more you dilute your ownership stake in your business so it pays to be thoughtful.
Raise the capital you will need to achieve the milestones and eliminate the risks required for your next financing round. It also probably makes sense to give yourself some margin as safety because things never go exactly as planned in startup land.
Video source: @ycombinator (2014)
tweet
Marc Andreessen explains the “Onion Theory of Risk”
“I think the single-biggest thing entrepreneurs are missing — both on fundraising and how they run their companies — is the relationship between risk and cash. I’ve always been a fan of something Andy Rachleff taught me years ago. He calls it the ‘Onion Theory of Risk.’”
You can think of a day 1 startup as having every conceivable kind of risk: founding team risk, product risk, technical risk, market acceptance risk, revenue risk, cost of sales risk, viral growth risk, etc.
A startup is basically just a long list of risks, and as Marc explains:
"The way I think about running a startup is the way I think about raising money. It's a process of peeling away layers of risk as you go."
You raise seed money to peel away the first two or three risks (e.g. founding team risk, product risk, initial launch risk).
You raise the Series A round to peel away the next layer of risks (e.g. recruiting risk, customer risk, revenue risk, cost of sales risk)
And so on.
Basically, you're peeling away risk as you're achieving milestones. And as you achieve milestones, you're both: making progress on your business and justifying raising more capital.
So in terms of fundraising, you should be calibrating the amount money you're raising to the risks you need to pull out of your business for you to raise your next round.
For example, if you're raising your Series A round, the best way to do that is to say to investors: "I raised a seed round then achieved ____ milestones and eliminated ____ risks. Now I'm going to raise $ X for the Series A to achieve ____ milestones and eliminate ____ risks. This will get the company to ____ state for the Series B round. "
This seems fairly obvious, but as Marc points out, it's a much more systematic way of going about things versus just raising as much money as possible, renting fancy offices, and hiring as many people as you can to grow as fast as you can.
The more money you raise, the more you dilute your ownership stake in your business so it pays to be thoughtful.
Raise the capital you will need to achieve the milestones and eliminate the risks required for your next financing round. It also probably makes sense to give yourself some margin as safety because things never go exactly as planned in startup land.
Video source: @ycombinator (2014)
tweet
Offshore
Photo
App Economy Insights
What are you watching this week?
• Monday: $CDNS, $F.
• Tuesday: $AMD, $CMG, $EA, $GOOG, $MCD, $PFE, $PYPL, $SOFI, $SNAP, $V.
• Wednesday: $META, $MSFT, $LLY, $ABBV, $AMGN, $BKNG, $COIN, $HOOD, $ROKU, $ETSY, $GPN, $SBUX, $TDOC.
• Thursday: $AAPL, $AMZN, $CMCSA, $INTC, $UBER, $TEAM, $MA, $MCK, $PTON, $RBLX.
All visualized in our PRO coverage next Saturday.
tweet
What are you watching this week?
• Monday: $CDNS, $F.
• Tuesday: $AMD, $CMG, $EA, $GOOG, $MCD, $PFE, $PYPL, $SOFI, $SNAP, $V.
• Wednesday: $META, $MSFT, $LLY, $ABBV, $AMGN, $BKNG, $COIN, $HOOD, $ROKU, $ETSY, $GPN, $SBUX, $TDOC.
• Thursday: $AAPL, $AMZN, $CMCSA, $INTC, $UBER, $TEAM, $MA, $MCK, $PTON, $RBLX.
All visualized in our PRO coverage next Saturday.
tweet
Offshore
Video
Startup Archive
RT @AAkerstein: Excellent way to think about risk - peeling away the layers. Raise enough to peel back 2-3/raise (plus buffer)
tweet
RT @AAkerstein: Excellent way to think about risk - peeling away the layers. Raise enough to peel back 2-3/raise (plus buffer)
Marc Andreessen explains the “Onion Theory of Risk”
“I think the single-biggest thing entrepreneurs are missing — both on fundraising and how they run their companies — is the relationship between risk and cash. I’ve always been a fan of something Andy Rachleff taught me years ago. He calls it the ‘Onion Theory of Risk.’”
You can think of a day 1 startup as having every conceivable kind of risk: founding team risk, product risk, technical risk, market acceptance risk, revenue risk, cost of sales risk, viral growth risk, etc.
A startup is basically just a long list of risks, and as Marc explains:
"The way I think about running a startup is the way I think about raising money. It's a process of peeling away layers of risk as you go."
You raise seed money to peel away the first two or three risks (e.g. founding team risk, product risk, initial launch risk).
You raise the Series A round to peel away the next layer of risks (e.g. recruiting risk, customer risk, revenue risk, cost of sales risk)
And so on.
Basically, you're peeling away risk as you're achieving milestones. And as you achieve milestones, you're both: making progress on your business and justifying raising more capital.
So in terms of fundraising, you should be calibrating the amount money you're raising to the risks you need to pull out of your business for you to raise your next round.
For example, if you're raising your Series A round, the best way to do that is to say to investors: "I raised a seed round then achieved ____ milestones and eliminated ____ risks. Now I'm going to raise $ X for the Series A to achieve ____ milestones and eliminate ____ risks. This will get the company to ____ state for the Series B round. "
This seems fairly obvious, but as Marc points out, it's a much more systematic way of going about things versus just raising as much money as possible, renting fancy offices, and hiring as many people as you can to grow as fast as you can.
The more money you raise, the more you dilute your ownership stake in your business so it pays to be thoughtful.
Raise the capital you will need to achieve the milestones and eliminate the risks required for your next financing round. It also probably makes sense to give yourself some margin as safety because things never go exactly as planned in startup land.
Video source: @ycombinator (2014) tweet