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      "memo": "Hello Friend , Promote your new post with big-whale . Your post will be more popular and you will find new friends . big-whale provide \"Resteem upvote and promo \" services . Resteem to more then 18,000+ Followers , Min 135+ Upvote from different accounts , big-whale Upvote with 100% power . Send 1 SBD or 2.5 STEEM to @big-whale ( URL as memo ) Service active.(send 30 SBD for monthly subscription)",
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      "author": "steemitboard",
      "body": "Congratulations @mattward! You received a personal award!\n\n<table><tr><td>https://steemitimages.com/70x70/http://steemitboard.com/@mattward/birthday2.png</td><td>Happy Birthday! - You are on the Steem blockchain for 2 years!</td></tr></table>\n\n<sub>_You can view [your badges on your Steem Board](https://steemitboard.com/@mattward) and compare to others on the [Steem Ranking](https://steemitboard.com/ranking/index.php?name=mattward)_</sub>\n\n\n###### [Vote for @Steemitboard as a witness](https://v2.steemconnect.com/sign/account-witness-vote?witness=steemitboard&approve=1) to get one more award and increased upvotes!",
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{
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      "body": "Congratulations @mattward! You received a personal award!\n\n<table><tr><td>https://steemitimages.com/70x70/http://steemitboard.com/@mattward/birthday1.png</td><td>1 Year on Steemit</td></tr></table>\n\n<sub>_[Click here to view your Board](https://steemitboard.com/@mattward)_</sub>\n\n\n**Do not miss the last post from @steemitboard:**\n<table><tr><td><a href=\"https://steemit.com/steem/@steemitboard/steemwhales-has-officially-moved-to-steemitboard-ranking\"><img src=\"https://steemitimages.com/64x128/https://cdn.steemitimages.com/DQmfRVpHQhLDhnjDtqck8GPv9NPvNKPfMsDaAFDE1D9Er2Z/header_ranking.png\"></a></td><td><a href=\"https://steemit.com/steem/@steemitboard/steemwhales-has-officially-moved-to-steemitboard-ranking\">SteemWhales has officially moved to SteemitBoard Ranking</a></td></tr><tr><td><a href=\"https://steemit.com/steemitboard/@steemitboard/steemitboard-witness-update-2019-01-07\"><img src=\"https://steemitimages.com/64x128/http://i.cubeupload.com/7CiQEO.png\"></a></td><td><a href=\"https://steemit.com/steemitboard/@steemitboard/steemitboard-witness-update-2019-01-07\">SteemitBoard - Witness Update</a></td></tr></table>\n\n> Support [SteemitBoard's project](https://steemit.com/@steemitboard)! **[Vote for its witness](https://v2.steemconnect.com/sign/account-witness-vote?witness=steemitboard&approve=1)** and **get one more award**!",
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{
  "block": 22496865,
  "op": [
    "comment",
    {
      "author": "mattward",
      "body": "<img src=\"https://thesyndicate.vc/wp-content/uploads/2018/05/1_x6ui__LxS2wrLhbvys-Bdg-300x171.jpeg\" alt=\"\" width=\"963\" height=\"549\" class=\"alignnone wp-image-1427\" />\n\nThere are two ways to interpret that: outrage and intrigue. The best headlines do both.\n\nThe world is a game of selling, especially in business. VCs sell money to founders, founders sell dreams to investors, businesses sell to clients, and on and on.\n<blockquote>Everyone is constantly selling, but most people do this wrong. They think about themselves first and others second.</blockquote>\nPeople are inherently self-centered, on both sides of the equation. <strong>Appealing to your own interests first is a surefire way to lose a prospect or potential investor.</strong>\n<h3>Stop talking about yourself</h3>\n<p>The focus should be on the target. Consider dating? The guy that is always praising himself and dominating the conversation doesn’t get the girl. The beauty of any relationship (not just personal), is that it is two-sided.</p>\n\n<strong>The best give before they take.</strong> Being genuinely interested in someone else is rare these days. Taking time to listen and try to help is even more uncommon.\n<blockquote>And the best founders, investors, advisors… the best people in EVERY field understand this. It isn’t about talking. It is about listening and acting.</blockquote>\n<p>Richard Branson does very little in his businesses. Instead he asks key employees how things are going and how he can help. Then rather than doing the work himself, he finds the one or two people perfectly suited to assist — he is a facilitator, and employees love him for it.</p>\n\n<p> The best investors and CEOs do the same. They delegate power and help their team win, anyway they can. The spotlight isn’t important, the results are. </p>\n\nJust implementing that one change can have a dramatic impact on your life.\n<h3>Headspace</h3>\nHave you ever read Dale Carnegie’s <em>How to Win Friends and Influence People</em>? If not, you should (listen<a href=\"https://soundcloud.com/larry-amos-jr/how-to-win-friends-influence\" target=\"_blank\" rel=\"nofollow noopener\">here</a>)\n<blockquote>To summarize this potent weapon, <strong>the best way to get what you want is to position it as what other people want.</strong></blockquote>\n<p>There is no better sales advice. Period.</p>\n\nThis mindset alone will transform your interactions with people, especially in business. Think about their motivations. Think about their goals and desires.What drives this person?\n\nIn essence, this is first principle thinking applied to individuals.\n<h3>Understanding VCs</h3>\nAn example: venture capitalists. What do VCs want? They want returns. They want big exits. They want liquidity.\n\nBut why do they want all that? Compensation of course. VCs are paid on a 2 and 20 model, earning 2% management fees per year plus 20% of the carry.\n\nStartup Fundraising 101: The Pros and Cons of Angels, VCs, Angel Groups and Syndicates\n\nFor VCs with large funds, management fees become incredibly meaningful. For micro-VCs, the majority of their cash comes as carry.\n\nImmediately that reveals several important things:\n<ol>\n \t<li>Most VCs want to increase fund size (to increase management fees)</li>\n \t<li>Smaller VCs are more incentivized to focus on success, and individual companies</li>\n</ol>\nBut there are other incentives at play as well. In addition to reputation, which allows VCs to raise larger and larger funds and attract top startups, there is a major ego play as well.\n\nThis plays out both in terms of fund size, portfolio track record and fund ROIs.\n\nBut even some firms are semi-competitive with their other GPs. There can be an “<em>I told you so</em>” culture, both for the winners and the losers. And in a high stakes game of wealth and reputation, these things matter.\n\nSome firms even compensate GPs based on the startups they source. This seems both smart and short-sighted. By incentivizing partners based on “their” startups, VCs are more likely to favor their “own portfolio” companies over those of other GPs.\n\nWouldn’t this create conflicts in allocating funding and resources…?\n\nIn a supposedly team sport, this can complicate things.\n\n[LIKE THIS ARTICLE SO FAR? THEN YOU’LL REALLY WANT TO SIGN UP FOR MY NEWSLETTER <a href=\"https://thesyndicate.vc/subscribe/\" target=\"_blank\" rel=\"nofollow noopener\">OVER HERE</a>— AND GET SOME FREE BONUSES!]\n\n<h3>Applying 1st principle thinking</h3>\nUnderstanding an individual’s motivation is the best way to sell. Seeing things through the customer’s eyes allows founders to find the logic hooks that work and result in sales. And in a game like this, <strong>aligning incentivizes is always important.</strong>\n\nThis type of thinking can lead to radically new business models and transformational companies. This is the driving force behind the direct to consumer companies of today. Companies like Casper spotted issues in a existing market and by understanding the wants and desires of the customers, created a new, category defining company that is disrupting the common mattress manufacturers everywhere.\n<h1 name=\"8fb5\" id=\"8fb5\" class=\"graf graf--h3 graf-after--figure graf--title\"><a href=\"https://thinkgrowth.org/the-broken-business-of-ecommerce-and-why-porn-and-prostitution-can-fix-it-6aac8cfa51dd\">The Broken Business of Ecommerce and Why Your Startup Won’t Be The Next Casper</a></h1>\n<h3>The Good and the bad</h3>\nThe ability to manipulate is both incredibly powerful and dangerous. And the ethics question is on display today (look to social media’s struggle on Capitol Hill).\n\nHere is hard to judge however. What determines right and wrong when it comes to business?\n\nMcDonald’s convinced America that fast food and french fries were a fun family meal. Was that wrong? The consequences for the country’s healthcare is certainly an obvious issue. And as waistlines bulge and American’s eat themselves further and further into obesity, the problem becomes more and more prevalent.\n\nBut it is more complicated than that. Poorer families cannot afford healthy options. Few easy meals are cheaper than McDonalds. And when you’re struggling to put food on the table, anything is better than nothing right?\n\nIt gets harder when you consider shareholders. Since January 1970, McDonald’s stock price has soared over 113,700%. Yes, you read that number right. Over 1000x, an ROI most venture capitalists dream of\n<div class=\"slate-resizable-image-embed slate-image-embed__resize-full-width\"><img data-media-urn=\"urn:li:digitalmediaAsset:C4E12AQHMuSXd87BKag\" data-li-src=\"https://media.licdn.com/dms/image/C4E12AQHMuSXd87BKag/article-inline_image-shrink_1500_2232/0?e=2125872000&amp;v=beta&amp;t=x8mxG8ezFdLwglSCcwuvkJros7Hv_S9GzeTzgMdxAA0\" src=\"https://media.licdn.com/dms/image/C4E12AQHMuSXd87BKag/article-inline_image-shrink_1500_2232/0?e=2125872000&amp;v=beta&amp;t=x8mxG8ezFdLwglSCcwuvkJros7Hv_S9GzeTzgMdxAA0\" /></div>\n<p>Source: MacroTrends.net, McDonald’s Historical Stock Price</p>\n\n<p>McDonald’s has created wealth for many and employed millions, likely tens of millions. Their employee count today stands at ~375k people.</p>\n\nThe company that brainwashed the burger into America certainly understood their customers, and took full advantage of this to build a worldwide, universally recognizable chain and brand.\n<h3>Think different</h3>\nWhat is the one thing every person grows up believing, even if they are afraid to acknowledge that belief?\n\nI am special.\n\nThis is the last childhood dream to die. To our graves, we take with us the notion of us. <strong>There is only one me.</strong>\n<div class=\"slate-resizable-image-embed slate-image-embed__resize-full-width\"><img data-media-urn=\"urn:li:digitalmediaAsset:C4E12AQFbw2x4EBI1Lw\" data-li-src=\"https://media.licdn.com/dms/image/C4E12AQFbw2x4EBI1Lw/article-inline_image-shrink_1000_1488/0?e=2125872000&amp;v=beta&amp;t=SQovIcMLXGa7GI4V8TGH1ArZ-Kkxxpx31B-2cJw3xVQ\" src=\"https://media.licdn.com/dms/image/C4E12AQFbw2x4EBI1Lw/article-inline_image-shrink_1000_1488/0?e=2125872000&amp;v=beta&amp;t=SQovIcMLXGa7GI4V8TGH1ArZ-Kkxxpx31B-2cJw3xVQ\" /></div>\n<p>Apple understood and artfully crafted a marketing campaign around individuality. They appealed to a certain subset of the market, the creators and innovator — ie those most in touch with their inner child.</p>\n\nPerhaps without realizing or meaning to, Apple stumbled upon the driving force behind all of us, creatives especially. This sense of individual and difference drives Apple to this day (plus a healthy dose of wanting to be cool and sex appeal).\n<blockquote>Ever notice how Apple fans always say “my iPhone”, “my Mac”, “my Airpods” etc… And non-Apple folks just say my phone, my laptop, my headphones…</blockquote>\n<p>That is no mistake.</p>\n\nThe brand is the differentiation.\n\nPeople buy the products to make them special, to make them different.\n\nBecause in the 80s, 90s and even 2000s, Apple was different. Apple users were early adopters, hipsters, trendy, cool… they were all the things the majority was not. That sense of individuality and rebellion drives the brand today.\n<h1 name=\"d46e\" id=\"d46e\" class=\"graf graf--h3 graf--leading graf--title\"><a href=\"https://hackernoon.com/the-death-of-google-and-end-of-apple-1922d9d256bf?gi=4ab6db475532\">The Death of Google and End of Apple</a></h1>\n<h3>Closing thoughts</h3>\nI am not advocating lying anywhere in this article. Instead understand what individuals want to hear, and frame your product and pitch in terms of how it helps them reach their goals. Do this right and people will say\n<blockquote><em>“Shut up and take my money”</em></blockquote>\n<p>Conversely, fail here and your business is likely to go bust… sales sell.</p>\n\n<p>I considered including a sales and copywriting guide at the end of this post but opted not to.</p> \n\nThe art of copywriting can take pages and the concepts, while basic, often do best with examples. I will save this for a future post.\n\nWould love to hear your thoughts on the article. I know many people preach these concepts, but how often do you actually think this through before sending an email?\n<blockquote>It isn’t about you. It is 100% about the customer.</blockquote>\nIf you enjoyed this article and learned a lot, please click through to the original Medium<a href=\"https://thinkgrowth.org/want-results-just-tell-people-what-they-want-to-hear-e17228cc0d70\" target=\"_blank\" rel=\"nofollow noopener\">post</a>and Clap it up to help reach and educate a larger audience.",
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      "body": "<p name=\"4100\" class=\"graf graf--p\">Profits accrue to people on top. That’s the way most markets work, especially those with strong network effects <strong><a href=\"http://thesyndicate.vc/5-types-network-effects-hack\">(<em class=\"markup--em markup--p-em\">for more on 5 types of network effects and how to hack them, see this post</em></a></strong>).</p>\n<p name=\"b8b3\" class=\"graf graf--p\">As an angel investor, my job is to spot startups and trends looking to disrupt incumbents and create massive new markets and help them.</p>\n<p name=\"508c\" class=\"graf graf--p\">But disruption isn’t only a technological leap. Instead, often the very ideas and framework that holds businesses together are the easiest and most lucrative to disrupt. This is the basis of Clayton Christensen’s Disruption Theory.</p>\n\n<h3 name=\"466f\" class=\"graf graf--h3\">Disruptive innovation</h3>\n<p name=\"e88f\" class=\"graf graf--p\">The reason incumbents always die and even Rome fell, is entropy — the lack of order or predictability in the natural world that ultimately leads to disorder.</p>\n<p name=\"4588\" class=\"graf graf--p\">It is one of the governing forces of our world, and it certainly applies to business.</p>\n<p name=\"0d91\" class=\"graf graf--p\">The world is full of randomness. Red hair, blue eyes, lactose intolerant — these are all mutations. Something random and unexpected happened and we “evolved” because of it. Traits that promote survival prevail, others eventually die out.</p>\n\n<h3 name=\"5a9d\" class=\"graf graf--h3\">Survival of the fittest</h3>\n<p name=\"a88b\" class=\"graf graf--p\">As in nature, business is a life or death battle. While the world is not a zero sum game, most businesses compete pretty directly to survive.</p>\n<p name=\"15be\" class=\"graf graf--p\">In nowhere is this more true than the scrappy startup. Small startup teams with little money fight tooth and nail to take their seat at the table. And the very best like Uber and Airbnb create entirely new markets.</p>\n<p name=\"58ae\" class=\"graf graf--p\">But even in market creation, incumbents suffer. Uber is killing car ownerships and taxi companies. Airbnb took a chunk out of hotel and hostel revenue. Both have irreversably damaged old, storied industries. But, there’s a bigger reason.</p>\n<p name=\"58ae\"></p>\n\n<h3 name=\"fb99\" class=\"graf graf--h3\">Happier customers</h3>\n<p name=\"89cc\" class=\"graf graf--p\">Both Airbnb and Uber took previously crappy customer experiences and made them magical, using technology.</p>\n<p name=\"02f0\" class=\"graf graf--p\">Ever called a cab, waited 10–20 minutes and they didn’t even show? Or paid $30 for a 5 minute ride? The experience is horrible. And the backs of cabbies cars were never pretty. “<em class=\"markup--em markup--p-em\">Wonder what happened back here…?</em>”</p>\n<p name=\"a406\" class=\"graf graf--p\">The mobile app revolutionized this. Suddenly two clicks and your ride was scheduled, allowing you to monitor and review the driver every step of the way. Forget calling or needing to hail a cab.</p>\n<p name=\"ac9d\" class=\"graf graf--p\">And the economics are better too. Because ride sharing apps like Uber and Lyft better optimize driver time, drivers are able to make more money and spend more time driving (and chatting with passengers), as opposed to taxis who just sit and expect business to show up. (<strong><a href=\"https://thesyndicate.vc/uber-going-0-benchmark-knows/\"><em class=\"markup--em markup--p-em\">That said Uber has a massive business model problem, here’s why</em></a></strong>)</p>\n<p name=\"231b\" class=\"graf graf--p\">Don’t forget the driver either. In NYC (and many cities around the world), the medaillon system is archaic. Taxi drivers, or companies must purchase “the right” to be taxis in the city.</p>\n<p name=\"76b5\" class=\"graf graf--p\">In 2011 a medallion for a NYC cab fleet cost upwards of $1M. And even in 2016, individual taxis wishing to operate under their own license need $500,000.</p>\n<p name=\"c0fd\" class=\"graf graf--p\">…to drive a taxi… are you kidding me?</p>\n\n<img class=\"graf-image\" data-image-id=\"1*hl9l_5_MiGoX_5gFbDl6kg.jpeg\" data-width=\"800\" data-height=\"489\" src=\"https://cdn-images-1.medium.com/max/1600/1*hl9l_5_MiGoX_5gFbDl6kg.jpeg\" width=\"641\" height=\"392\" alt=\"\" /> Source: Carpe Diem\n<p name=\"3ebe\" class=\"graf graf--p\">This is why Uber and Lyft took off. The system was so broken that any innovation, specifically saving time and money for everyone but the government was the way to go.</p>\n<p name=\"1a05\" class=\"graf graf--p\">The same is more or less true for Airbnb. Owning a hotel (or even a rental property) is expensive. Airbnb empowered anyone to be a landlord, unlocking an enormous, previously untapped portion of the market for short term rentals.</p>\n<p name=\"cd99\" class=\"graf graf--p\">With drastically increased supply and marginally increased demand, pricing power fell to consumers, liberating travelers from hotels price gauging tactics.</p>\n\n<h3 name=\"121b\" class=\"graf graf--h3\">The incumbent dilemma</h3>\n<p name=\"0169\" class=\"graf graf--p\">Increased competition and smaller margins suck. At the same time, this alone doesn’t doom incumbents. The real problem is the cost structure.</p>\n<p name=\"b4f4\" class=\"graf graf--p\">Look at Airbnb and Uber, neither own tangible assets. The most valuable real estate and transportation companies own almost nothing.</p>\n<p name=\"e358\" class=\"graf graf--p\">How can legacy players with automobiles and taxi medallions or tons of hotels and staff compete? They can’t.</p>\n<p name=\"6a92\" class=\"graf graf--p\">When startups truly disrupt the incumbents, they win because of these effects. Their business models are not predicated on a previous era and thus remain nimble enough to maneuver the changing landscape and position their startup for success.</p>\n<p name=\"5ebd\" class=\"graf graf--p\">To compete, incumbents would literally need to burn the boats (and everything and everyone else) to reduce overhead enough to compete on pricing. This rarely happens.</p>\n<p name=\"d845\" class=\"graf graf--p\">Look at Apple. They are happy getting fat off the iPhone. Creating true innovation could disrupt these core businesses and ultimately shorten their span at the top.</p>\n\n<img class=\"graf-image\" data-image-id=\"1*IjjZKCjT9mK-pkFxIHNPZQ.png\" data-width=\"1057\" data-height=\"655\" src=\"https://cdn-images-1.medium.com/max/1600/1*IjjZKCjT9mK-pkFxIHNPZQ.png\" width=\"775\" height=\"480\" alt=\"\" /> Source: Seeking Alpha\n<p name=\"fd2b\" class=\"graf graf--p\">This may sound shortsighted, and it is, but when every company comes and goes, it is critical to ride the wave as long as you can (<strong><a href=\"https://thesyndicate.vc/death-google-end-apple/\"><em class=\"markup--em markup--p-em\">for more on Apple and why the company is in trouble see this post</em></a></strong>).</p>\n\n<h3 name=\"cc34\" class=\"graf graf--h3\">Stick your head in the sand</h3>\n<p name=\"28f9\" class=\"graf graf--p\">Market leaders facing disruptive innovation usually die. Other than greed, explained above in the Apple situation, the commonly agreed upon mantra is that:</p>\n\n<blockquote name=\"af7f\" class=\"graf graf--pullquote graf--startsWithDoubleQuote\"><em class=\"markup--em markup--pullquote-em\">“The battle between every </em><strong class=\"markup--strong markup--pullquote-strong\"><em class=\"markup--em markup--pullquote-em\">startup</em></strong><em class=\"markup--em markup--pullquote-em\"> and </em><strong class=\"markup--strong markup--pullquote-strong\"><em class=\"markup--em markup--pullquote-em\">incumbent</em></strong><em class=\"markup--em markup--pullquote-em\"> comes down to whether the </em><strong class=\"markup--strong markup--pullquote-strong\"><em class=\"markup--em markup--pullquote-em\">startup</em></strong><em class=\"markup--em markup--pullquote-em\"> gets </em><strong class=\"markup--strong markup--pullquote-strong\"><em class=\"markup--em markup--pullquote-em\">distribution before</em></strong><em class=\"markup--em markup--pullquote-em\"> the </em><strong class=\"markup--strong markup--pullquote-strong\"><em class=\"markup--em markup--pullquote-em\">incumbent</em></strong><em class=\"markup--em markup--pullquote-em\"> gets </em><strong class=\"markup--strong markup--pullquote-strong\"><em class=\"markup--em markup--pullquote-em\">innovation”</em></strong></blockquote>\n<p name=\"bd2b\" class=\"graf graf--p\">This is true, but only to an extent. The bigger battle lies not in the innovation, but the ability to think outside the box and the willingness to act.</p>\n<p name=\"b425\" class=\"graf graf--p\">Think about Kodak. Kodak employee Steve Sasson invented the digital camera in 1975. When Sasson brought the product to execs,</p>\n\n<blockquote name=\"f741\" class=\"graf graf--pullquote graf--startsWithDoubleQuote\">“they were convinced that no one would ever want to look at their pictures on a television set. <em class=\"markup--em markup--pullquote-em\">Print had been with us for over 100 years, no one was complaining about prints, they were very inexpensive, and so</em>” — Sasson in a NY Times interview</blockquote>\n<p name=\"efda\" class=\"graf graf--p\">The company couldn’t see the future. They could not get out of their own way (as leaders of the film industry) and see a change coming. Instead execs saw a problem that could cannabalize their film business and tabled it.</p>\n<p name=\"5ac4\" class=\"graf graf--p\">Kodak has been reeling ever since (pun intended).</p>\n<p name=\"1cc9\" class=\"graf graf--p\">[LIKE THIS ARTICLE SO FAR? THEN YOU’LL REALLY WANT TO SIGN UP FOR MY NEWSLETTER <a href=\"https://thesyndicate.vc/subscribe/\" data-href=\"https://thesyndicate.vc/subscribe/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\">OVER HERE</strong></a> — AND GET SOME FREE BONUSES!]</p>\n\n<h3 name=\"8bde\" class=\"graf graf--h3\">Trying to be cool, and failing</h3>\n<p name=\"8a68\" class=\"graf graf--p\">The other contraction to the rule is Microsoft. Microsoft’s dominant monopoly of the 90s was one of history’s most powerful and profitable. The software company that defined over a generation of computing was arguably in the perfect position to continue rolling.</p>\n<p name=\"51c0\" class=\"graf graf--p\">Then the iPhone changed everything.</p>\n<p name=\"e0cb\" class=\"graf graf--p\">After Jobs revealed Apple’s smartphone to the world, Microsoft saw the light. They realized mobile would be a thing and had to make their play.</p>\n<p name=\"f74b\" class=\"graf graf--p\">So they reverse engineered the PC and plopped it into a palm sized device — the Windows Phone. The software was easy and compatible with Windows PCs and seemed the perfect competitor to Apple, right?</p>\n<p name=\"513d\" class=\"graf graf--p\">Wrong. The problem is the paradigm shift. Mobile is inherently different than a PC. People use smartphones in completely new ways. It wasn’t all about the word doc, spreadsheet and search browser anymore. Suddenly apps started to dominate mobile usage, simplifying the experience for users.</p>\n<p name=\"d9f6\" class=\"graf graf--p\">Apple adapted and thrived, Microsoft failed to see the future.</p>\n<p name=\"7f9f\" class=\"graf graf--p\">Because Microsoft meant well, the failure was bigger. It took until 2017 for Microsoft to officially shut down Windows phone for good and admit defeat.</p>\n\n<h3 name=\"fe3b\" class=\"graf graf--h3\">When paradigm shifts happen, you need new people</h3>\n<p name=\"0502\" class=\"graf graf--p\">We are the average of the 5 people we spend the most time with.</p>\n<p name=\"50b7\" class=\"graf graf--p\">When disruptive change is on the rise, corporations NEED help. The businesses, ideas and leadership that got you here won’t take you to the next level.</p>\n<p name=\"375b\" class=\"graf graf--p\">The best leaders build an innovation hit squat, combining top notch players from different areas of the company to create the strategy for the new paradigm. <strong class=\"markup--strong markup--p-strong\">NOTE:</strong> Innovators should work offsite. It creates less pressure to conform.</p>\n<p name=\"2ae9\" class=\"graf graf--p\">And when strong CEOs see a change happening, they commit. Zuckerberg is a great example.</p>\n<p name=\"bd6b\" class=\"graf graf--p\">When Facebook mobile was just a webapp, Mark paused 100% of the work on Facebook.com to focus on mobile. The team cranked for over a year and finally emerged with a solid, high performance mobile product. And as of 2016, 90% of Facebook’s users access it daily via mobile…</p>\n\n<img class=\"graf-image aligncenter\" data-image-id=\"1*HuurhyiZXweBFiuNIaYluQ.jpeg\" data-width=\"960\" data-height=\"684\" data-is-featured=\"true\" src=\"https://cdn-images-1.medium.com/max/1600/1*HuurhyiZXweBFiuNIaYluQ.jpeg\" width=\"491\" height=\"349\" />\n<p name=\"6bab\" class=\"graf graf--p\">Companies NEED to focus on the future. Leaning on the past is a surefire way to miss the mark going forward.</p>\n\n<h3 name=\"85e8\" class=\"graf graf--h3\">Acqui-hiring awesomeness</h3>\n<p name=\"c9a2\" class=\"graf graf--p\">The acqui-hire has become more common with our recent crop of tech leaders, buying small innovative teams and bringing them onboard.</p>\n<p name=\"802d\" class=\"graf graf--p\">Facebook is arguably the best and most prolific at this. Their acquisitions of Instagram, Oculus, TBH, PushPopPress and many more turned potentially dangerous teams and technologies into Facebook’s core strength.</p>\n<p name=\"cbf0\" class=\"graf graf--p\">This helps tech companies keep up with trends and innovation to prevent disruption.</p>\n<p name=\"1e5a\" class=\"graf graf--p\">I wrote in an article recently that this practice of early acquisition alone could make today’s monopolies: Amazon, Google and Facebook unstoppable. (<strong><a href=\"https://thesyndicate.vc/network-effects-unbreakable-unregulatable-monopolies-today/\"><em class=\"markup--em markup--p-em\">For more on this theory, see this post</em></a></strong>)</p>\n<p name=\"4cb6\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">NOTE:</strong> Most acquisitions fail. The ones that succeed typically stay standalone business units. Leaders like Bezos and Zuckerberg recognize the importance of unencumbered innovation and allow teams to stay together and operate with near full autonomy. Keeping creative, innovative cultures together is key to driving disruption and future growth.</p>\n<p name=\"e078\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">NOTE: </strong>Most investors (VCs especially) are not fans of the acqui-hire. If Facebook or Amazon offers to buy you early, it likely means they feel threatened by your startup. Pushing just a bit further could be the difference between a 4x and a 40x multiple. As founder that’s the difference between a well paid job and life changing money. Remember that VCs need to shoot for the moon to make the economics work. If you’re acqui-hired early for under $25–50M, many VCs may oppose the sale.</p>\n\n<h3 name=\"0bb4\" class=\"graf graf--h3\">Playing catch up</h3>\n<p name=\"f9ae\" class=\"graf graf--p\">It seems most market leaders miss the next wave. The structures of their businesses, team, sales staff, incentives… everything causes companies to miss out. Luckily for them, this isn’t always a make or break scenario. While most miss what is coming, the best recover and ride the next wave.</p>\n<p name=\"3c02\" class=\"graf graf--p\">Again look at Microsoft. From PC monopoly to Windows phone flop, it would be easy to see how the company could struggle towards oblivion. Instead they are pushing forward and defining new paradigms.</p>\n<p name=\"1541\" class=\"graf graf--p\">Between doubling down on the cloud with Azure and Windows 365 and the Surface notebook which is everything the iPad isn’t, Microsoft is starting to outdo Apple. Their performance, aesthetics and reliability from 2016 and 2017 are arguably better than the almighty Apple and the price points are all significantly more manageable.</p>\n<p name=\"65df\" class=\"graf graf--p\">Thus as the world moves to web apps and cloud experiences, Microsoft is miles ahead of Apple in both of these areas.</p>\n\n<blockquote name=\"60af\" class=\"graf graf--pullquote graf--startsWithDoubleQuote\">“<em class=\"markup--em markup--pullquote-em\">…it ain’t about how hard you hit. It’s about how hard you can get hit and keep moving forward; how much you can take and keep moving forward. That’s how winning is done!</em>” — Rocky Balboa</blockquote>\n<h3 name=\"e830\" class=\"graf graf--h3\">Wrapping things up</h3>\n<p name=\"2e59\" class=\"graf graf--p\">Innovation from the top is hard. Market leaders rarely create new, disruptive changes and trends, especially those that threaten their core business.</p>\n<p name=\"8f32\" class=\"graf graf--p\">Instead the best approach incumbents can take to defeat disruption is strategic, early acquisitions. And while most acquisitions fail, the trend of early acquisitions and relative autonomy is creating a class of entrepreneur and tech giant that rarely stumbles and continually grows and innovates at alarmingly successful rates.</p>\n<p name=\"c028\" class=\"graf graf--p\">Working in corporate America? Is this pretty much spot on? What are your thoughts on the matter?</p>\n<p name=\"77af\" class=\"graf graf--p\">What about with startups? How do you see your role in the world of innovation?</p>\n<p name=\"a230\" class=\"graf graf--p\">And before you go, who are your favorite and most innovative companies of today? If you had to put your money on someone other than Facebook, Amazon, Netflix, Google or Apple, who would it be? And why?</p>\n\n<h3 name=\"7227\" class=\"graf graf--h3\">Before you go…</h3>\n<p name=\"1df7\" class=\"graf graf--p\">If you got something actionable or valuable from this post, share the article on Facebook and Twitter so your friends can benefit from it too.</p>\n<p name=\"f6d8\" class=\"graf graf--p\"><strong>BONUS:</strong> My money is on Amazon. Here is why:</p>\n\n<div name=\"56f2\" class=\"graf graf--mixtapeEmbed\"><a href=\"https://thesyndicate.vc/the-amazon-apocalypse-of-ecommerce/\" data-href=\"https://hackernoon.com/the-amazon-apocalypse-of-ecommerce-7096ce3c6aa5\" class=\"markup--anchor markup--mixtapeEmbed-anchor\" title=\"https://hackernoon.com/the-amazon-apocalypse-of-ecommerce-7096ce3c6aa5\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">The Amazon Apocalypse is Killing Ecommerce</strong></a></div>\n<div name=\"56f2\"></div>\n<div name=\"56f2\" class=\"graf graf--mixtapeEmbed\">\n\n<a href=\"https://thesyndicate.vc/amazons-acquisition-whole-foods-gameover-groceries/\" data-href=\"https://hackernoon.com/amazons-acquisition-of-whole-foods-gameover-groceries-71098afa07c9\" class=\"markup--anchor markup--mixtapeEmbed-anchor\" title=\"https://hackernoon.com/amazons-acquisition-of-whole-foods-gameover-groceries-71098afa07c9\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">Game Over, Groceries: Inside Amazon’s Acquisition of Whole Foods</strong></a>\n\n--\n\nOriginally posted on <a href=\"https://medium.com/p/56a0bd98cf08\">Medium</a>\n\n</div>",
      "json_metadata": "{\"tags\":[\"techgiants\",\"startups\",\"google\",\"apple\",\"uber\"],\"image\":[\"https://cdn-images-1.medium.com/max/1600/1*hl9l_5_MiGoX_5gFbDl6kg.jpeg\",\"https://cdn-images-1.medium.com/max/1600/1*IjjZKCjT9mK-pkFxIHNPZQ.png\",\"https://cdn-images-1.medium.com/max/1600/1*HuurhyiZXweBFiuNIaYluQ.jpeg\"],\"links\":[\"http://thesyndicate.vc/5-types-network-effects-hack\",\"https://thesyndicate.vc/uber-going-0-benchmark-knows/\",\"https://thesyndicate.vc/death-google-end-apple/\",\"https://thesyndicate.vc/subscribe/\",\"https://thesyndicate.vc/network-effects-unbreakable-unregulatable-monopolies-today/\",\"https://thesyndicate.vc/the-amazon-apocalypse-of-ecommerce/\",\"https://thesyndicate.vc/amazons-acquisition-whole-foods-gameover-groceries/\",\"https://medium.com/p/56a0bd98cf08\"],\"app\":\"steemit/0.1\",\"format\":\"markdown\"}",
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      "author": "cheetah",
      "body": "Hi! I am a robot. I just upvoted you! I found similar content that readers might be interested in:\nhttps://thinkgrowth.org/google-vs-uber-the-battle-for-the-autonomous-os-2c817828425",
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      "author": "mattward",
      "body": "<img class=\"graf-image\" data-image-id=\"1*tvRDvdrRMsVOIIbyrI52lA.jpeg\" data-width=\"770\" data-height=\"470\" src=\"https://cdn-images-1.medium.com/max/1600/1*tvRDvdrRMsVOIIbyrI52lA.jpeg\" width=\"501\" height=\"306\" alt=\"\" /> Source: IqbalPost\n<p name=\"1688\" class=\"graf graf--p\">Uber’s the most successful pre-IPO startup in history. Google is insanely profitable as the operating system of the internet.</p>\n<p name=\"eb32\" class=\"graf graf--p\">Both these tech giants overcame huge odds to get to today. Yet both may be on the verge of extinction.</p>\n<p name=\"d52f\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">NOTE:</strong> <em class=\"markup--em markup--p-em\">I have covered these topics extensively. Rather than reiterate old point, below are links to the related articles.</em></p>\n\n<div name=\"3188\" class=\"graf graf--mixtapeEmbed\"><a href=\"https://thesyndicate.vc/uber-going-0-benchmark-knows/\" data-href=\"https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-knows-it-1566fb51b308\" class=\"markup--anchor markup--mixtapeEmbed-anchor\" title=\"https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-knows-it-1566fb51b308\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">Uber is Going to 0, and Benchmark Knows It!</strong></a></div>\n<div name=\"3188\"></div>\n<div name=\"3188\" class=\"graf graf--mixtapeEmbed\"><a href=\"https://thesyndicate.vc/death-google-end-apple/\" data-href=\"https://hackernoon.com/the-death-of-google-and-end-of-apple-1922d9d256bf\" class=\"markup--anchor markup--mixtapeEmbed-anchor\" title=\"https://hackernoon.com/the-death-of-google-and-end-of-apple-1922d9d256bf\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">The Death of Google and End of Apple</strong>\n<em class=\"markup--em markup--mixtapeEmbed-em\"></em></a>In essence, Uber’s issue is unit economics and local rather than global networks. As such, Uber is surrounded by an army of well funded competitors, turning transportation into a race to the bottom — ie: never profitable. And while markets have sustained, pouring a combined $22.1B into the company since 2009, eventually all wells dry up. To compete against unlimited competitors requires unlimited resources. This along with other key challenges places Uber in a precarious position.</div>\n\n\n<img class=\"graf-image\" data-image-id=\"1*fJV055blP0JDDE1ufDSMAg.png\" data-width=\"910\" data-height=\"661\" src=\"https://cdn-images-1.medium.com/max/1600/1*fJV055blP0JDDE1ufDSMAg.png\" width=\"659\" height=\"479\" alt=\"\" /> Source: CB Insights\n<p name=\"a011\" class=\"graf graf--p\">Google on the other hand is innovating away their business. Their success with voice technology will soon make most search advertising irrelevant. The question is, how to replace the revenue? Unfortunately ads are awful on voice, meaning unless Google plans to innundate users with audio ads, they need to reinvent their business.</p>\n\n<h3 name=\"20e4\" class=\"graf graf--h3\">An autonomous future</h3>\n<p name=\"32e3\" class=\"graf graf--p\">Experts agree, in the not so distant future autonomous vehicles will replace human drivers. As this occurs, car ownership will decline, likely leading to managed fleets.</p>\n<p name=\"792a\" class=\"graf graf--p\">(<a href=\"https://thesyndicate.vc/ai-autonomous-vehicles-future-cities-live-streamed-roundtable/\" data-href=\"https://thesyndicate.vc/ai-autonomous-vehicles-future-cities-live-streamed-roundtable/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\"><em class=\"markup--em markup--p-em\">For more on possible AI/autonomous scenarios, watch this roundtable on the subject</em></strong></a>)</p>\n<p name=\"4a4e\" class=\"graf graf--p\">This will be a huge shift in human history, freeing up approximately ~52 minutes per day for the average American (just commuting for work). What will we do with all this time? Netflix? News? Facebook? Higher education?</p>\n<p name=\"e9cb\" class=\"graf graf--p\">I for one am not hugely optimistic. I believe people pretty much are what they are. For proof, ride a train or bus in Europe. Most are on smartphones, just killing time. The majority check social media, watch cute cat videos or listen to music — nothing productive.</p>\n<p name=\"cf88\" class=\"graf graf--p\">As a culture, our collective attention span is decreasing. Learning, reading, deep work… these things take motivation and focus. And from where I’m sitting, I see autonomous vehicles amplifying our individual tendencies. The motivated and productive will learn, build and produce while the vast majority will merely consume.</p>\n<p name=\"48bf\" class=\"graf graf--p\">While this may be demoralizing from a humanistic sense, it is exciting for entrepreneurs.</p>\n\n<h3 name=\"e356\" class=\"graf graf--h3\">Detroit dies, again</h3>\n<p name=\"c31a\" class=\"graf graf--p\">Hardware is hard, expensive and has low ROIs relative to other industries. This is why every major auto manufacturer is focused on AI. Companies like Ford Motor Company, General Motors and Mercedes are terrified.</p>\n\n<blockquote name=\"e3db\" class=\"graf graf--pullquote\">Let me ask you a question. Your last Uber ride, what type of car was it?</blockquote>\n<p name=\"9828\" class=\"graf graf--p\">Odds are you don’t know, and you don’t care. When individuals don’t own or drive the cars, who cares about the brand. Prestige and horsepower are suddenly irrelevant.</p>\n<p name=\"743e\" class=\"graf graf--p\">Transportation is becoming commoditized. And commodities are interchangeable, just like toilet paper.</p>\n<p name=\"199a\" class=\"graf graf--p\">In a world of fleets, the automotive industry changes from heavily B2C to B2B. Suddenly businesses (or cities/governments) own and operate entire fleets, charging individuals for true TaaS (transportation as a service).</p>\n<p name=\"a518\" class=\"graf graf--p\">That changes things…</p>\n<p name=\"a518\">\n<h3 name=\"7752\" class=\"graf graf--h3\">The platform play</h3>\n<p name=\"a805\" class=\"graf graf--p\">Rather than selling rides to consumers, the business of the future is that of fleet management. And as the old adage says, it is easier to sell shovels than it is to mine for gold (<a href=\"http://thesyndicate.vc/santa-marauding-capitalist-subtle-art-manufacturing-market\" data-href=\"https://medium.com/p/7ad6bc145542\" class=\"markup--anchor markup--p-anchor\" target=\"_blank\" rel=\"noopener\"><strong class=\"markup--strong markup--p-strong\">for more, see this post</strong></a>).</p>\n<p name=\"5914\" class=\"graf graf--p\">Consider fleets. As more players enter the market, <a href=\"https://thesyndicate.vc/uber-going-0-benchmark-knows/\" data-href=\"https://medium.com/read-think/uber-is-going-to-0-and-benchmark-knows-it-1566fb51b308\" class=\"markup--anchor markup--p-anchor\" target=\"_blank\" rel=\"noopener\"><strong class=\"markup--strong markup--p-strong\">the same issues with Uber’s localized network effects apply</strong></a>. This leads to two possible, logical conclusions: 1) city or state owned autonomous fleets or 2) numerous fleet providers with relatively low margins.</p>\n<p name=\"4e13\" class=\"graf graf--p\">Neither scenario is ideal for entrepreneurs. The operating system however, that is always interesting. Regardless of who wins, the company that allows fleets to autonomously, effectively deploy cars and transport passengers will win.</p>\n<p name=\"524d\" class=\"graf graf--p\">And unlike hardware, here the network effects are substantial. The data and insights from managing multiple fleets would be invaluable.</p>\n<p name=\"1351\" class=\"graf graf--p\">Plus there is something even better, we’ll get there soon.</p>\n\n<h3 name=\"2658\" class=\"graf graf--h3\">The operating system of autonomous</h3>\n<p name=\"578e\" class=\"graf graf--p\">Let’s assume we go full autonomous. Besides added “free” time, what are the other implications.</p>\n<p name=\"a490\" class=\"graf graf--p\">Think about flights. We go from here to there, and occasionally even sleep. The airplane is your transportation, food and accomodation, letting individuals sleep their way to new cities.</p>\n<p name=\"56d8\" class=\"graf graf--p\">There is no reason to assume this won’t happen with cars as well. This means the entire interior of the automobile will need to be redesigned. Instead of forward facing chairs, why not a table and chairs, a meeting room, a kitchen, a bed… the options are endless.</p>\n<p name=\"29ce\" class=\"graf graf--p\">As autonomous vehicles become mainstream, our social structures around space will be redefined. And as of today, our lives in transit are up for the taking, hence the Uber vs Google debate.</p>\n\n<h3 name=\"c710\" class=\"graf graf--h3\">Likely first steps</h3>\n<p name=\"62f0\" class=\"graf graf--p\">As we ride into an autonomous world, there are several easy to predict scenarios/use cases.</p>\n<p name=\"d5e8\" class=\"graf graf--p\">Much like laptops and phones provide constant connectivity, voice based control and entertainment at our fingertips, these will soon be standard on all cars.</p>\n<p name=\"aa3a\" class=\"graf graf--p\">Whoever provides and controls this will profits. That is the point of thisarticle.</p>\n<p name=\"3181\" class=\"graf graf--p\">As we spend more and more of our lives traveling in autonomous vehicles, what services will we interact with.</p>\n<p name=\"2047\" class=\"graf graf--p\">Want to watch Orange is the New Black, Facetime the fam or even troll through Reddit. These are all easy analogies for today. And the OS that controls the cars and connections will control the advertising and make a fortune.</p>\n\n<h3 name=\"af78\" class=\"graf graf--h3\">One step further</h3>\n<p name=\"8728\" class=\"graf graf--p\">When your hands are free, new possibilities emerge: from video games or VR experiences to piano lessons, 5 course meals and sex at 60mph… the opportunities are endless.</p>\n<p name=\"47e9\" class=\"graf graf--p\">And the number and magnitude upsells exponentially increases. Nearly every human need could suddenly be serviced on the go (including housing). The implications are enormous, spanning everything from real estate to entertainment, tourism to food services and everything in between.</p>\n<p name=\"6a86\" class=\"graf graf--p\">This is the true “mobile” home.</p>\n\n<h3 name=\"01a1\" class=\"graf graf--h3\">Internet level disruption</h3>\n<p name=\"5534\" class=\"graf graf--p\">Just as the internet and connectivity transformed the world and industries of old, autonomous vehicles will have similar implications. And while 3% of the US workforce employed as drivers will be replaced, the other changes will be more significant.</p>\n<p name=\"3342\" class=\"graf graf--p\">The internet made the world a much smaller place, blurring the borders that separate us. Autonomous vehicles will amplify this.</p>\n<p name=\"99c7\" class=\"graf graf--p\">If your car is home, where do you pay taxes? And what about businesses that operate out of vehicles?</p>\n<p name=\"2c16\" class=\"graf graf--p\">When the tangible fabric constraining society is constantly shifting, where does that leave governments.</p>\n\n<h3 name=\"c37a\" class=\"graf graf--h3\">Finally, Back to Uber and Google</h3>\n<p name=\"85a7\" class=\"graf graf--p\">Today there many contenders in the autonomous space. And while few would argue that Google’s in the lead, there is still a long way to go.</p>\n<p name=\"e5aa\" class=\"graf graf--p\">Uber has transformed how we think about car ownership. Access and not ownership is winning. I want to get from point A to point B. What is the cheapest, fastest, most convenient way to do it?</p>\n<p name=\"cf8c\" class=\"graf graf--p\">So why is this article focused on Google and Uber?</p>\n<p name=\"62a4\" class=\"graf graf--p\">Both businesses are potentially in trouble and also leading candidates to win the autonomous race.</p>\n<p name=\"57c7\" class=\"graf graf--p\">And as we have clearly highlighted, driverless cars will disrupt society, creating massive opportunities, many we have yet to even conceive.</p>\n<p name=\"6916\" class=\"graf graf--p\">Much like Google owned the internet with the best search engine, OS and platform, the autonomous industry is up for the taking.</p>\n\n<h3 name=\"0eed\" class=\"graf graf--h3\">Cornered</h3>\n<blockquote name=\"2090\" class=\"graf graf--pullquote graf--startsWithDoubleQuote\"><em class=\"markup--em markup--pullquote-em\">“…don’t know what to do when their back against the wall, so they just start shootin’” — TI</em></blockquote>\n<p name=\"1b0e\" class=\"graf graf--p\">While Uber is cornered, Google still has options. Thanks to Google’s massive balance sheet and numerous moonshot projects, Alphabet has lots of irons in the fire.</p>\n<p name=\"ed41\" class=\"graf graf--p\">That said, 86.5% of Alphabet’s revenue still comes from their advertising business. Google needs something to land or eventually voice will erode their business.</p>\n\n\n<img class=\"graf-image\" data-image-id=\"1*l457yGRdwH6-JUrOWCcpMg.png\" data-width=\"1280\" data-height=\"720\" src=\"https://cdn-images-1.medium.com/max/1600/1*l457yGRdwH6-JUrOWCcpMg.png\" width=\"804\" height=\"452\" alt=\"\" /> Source: Mike Murphy, Quartz\n<p name=\"2bb3\" class=\"graf graf--p\">And Uber is betting everything on autonomous. If someone else scales first, Uber’s business model is bust. The cost basis of paying drivers in a driverless world would kill Uber’s competitive pricing.</p>\n<p name=\"1fe9\" class=\"graf graf--p\">In a world of faster, better, cheaper, that is not acceptable. Hence the Uber-Waymo lawsuit (<em class=\"markup--em markup--p-em\">Waymo is Alphabet’s autonomous vehicle division</em>),which will probably cost Uber $2.6B plus the legal fees once all said and done.</p>\n<p name=\"c9e4\" class=\"graf graf--p\">And to be honest, is under the table acquisition surprising here? Uber’s track record of breaking the rules has been on public display for most of 2016 and 2017.</p>\n\n<h3 name=\"b50b\" class=\"graf graf--h3\">Who wins?</h3>\n<p name=\"ad78\" class=\"graf graf--p\"><a href=\"https://thesyndicate.vc/uber-going-0-benchmark-knows/\" data-href=\"https://medium.com/read-think/uber-is-going-to-0-and-benchmark-knows-it-1566fb51b308\" class=\"markup--anchor markup--p-anchor\" target=\"_blank\" rel=\"noopener\">For all the reasons outlined here</a>, it is hard to see a scenario where Uber wins. Even if Uber pulls off perfect autonomy and beats Tesla Motors, Lyft, Google, GM and dozens of others to market with autonomous Ubers, it still has inherent challenges — primarily capital expenditures.</p>\n<p name=\"455e\" class=\"graf graf--p\">For Uber to win here, I believe they need to develop and license the tech and kill their core business. Nothing short of burning the boats would set Uber up to win this battle.</p>\n<p name=\"980d\" class=\"graf graf--p\">The operating system and not the operator is where the money is at…</p>\n<p name=\"1a66\" class=\"graf graf--p\">Google on the other hand is perfectly positioned to win, assuming they don’t screw up. Google has the best autonomous experts and technology and the most experience. Plus they are fleet agnostic and they own a decent chunk of Lyft.</p>\n<p name=\"2c13\" class=\"graf graf--p\">And let’s not forgot Google’s background building and monetizing operating systems. Android saved Google billions per year in Apple taxes. And Chrome, Google Docs, Gmail and Search serve as the basis for the entirety of most users internet experience.</p>\n<p name=\"102d\" class=\"graf graf--p\">An OS for autonomous vehicles could be similarly structured, monetizing riders with advertising and services while simultaneously licensing the tech to fleet service providers — double dipping at its best.</p>\n<p name=\"4a44\" class=\"graf graf--p\">Despite their dominance, autonomous is incredibly dangerous for Google. To date, their performance on hardware is horrible. If Alphabet were to try and own the manufacturing, the results could be catastrophic.</p>\n<p name=\"bbe6\" class=\"graf graf--p\">And let’s not forget, Google also has a tendency to drop the ball. Google allowed Facebook to become a dominant advertising force and failed to see the threat of Amazon before it was too late. In both instances they played nice when they should have tried to kill the competition. Now Google has major competitors in almost every industry.</p>\n\n<h3 name=\"5c64\" class=\"graf graf--h3\">What do you think?</h3>\n<p name=\"13f7\" class=\"graf graf--p\">Autonomous vehicles will transform society. We didn’t realize the implications of the iPhone until it happened.</p>\n<p name=\"cc2d\" class=\"graf graf--p\">What will happen this time?</p>\n<p name=\"b2b7\" class=\"graf graf--p\">What are your thoughts? Opinions?</p>\n<p name=\"3b6b\" class=\"graf graf--p\">Where do you see the future of transportation going? Got any bold predictions?</p>\n\n<h3 name=\"ce41\" class=\"graf graf--h3\">Learned something? Click the 👏 to say “thanks!” and help others find this article.</h3>\n--\n\nPreviously posted on <a href=\"https://medium.com/p/2c817828425\">Medium</a>",
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      "body": "<img class=\"graf-image\" data-image-id=\"1*F0PqsSKVjMFL9g5Pow1DxQ.jpeg\" data-width=\"1024\" data-height=\"438\" data-is-featured=\"true\" src=\"https://cdn-images-1.medium.com/max/1600/1*F0PqsSKVjMFL9g5Pow1DxQ.jpeg\" width=\"777\" height=\"332\" alt=\"\" /> Source: The Elevator Pitch (Sundance)\n<p name=\"a406\" class=\"graf graf--p\">Those words terrify entrepreneurs. You get one chance to make a first impression.</p>\n<p name=\"53cd\" class=\"graf graf--p\">And fear of failure often ruins that. Overconfidence is equally harmful though.</p>\n<p name=\"bb13\" class=\"graf graf--p\">And one way or another, most startups screw this up. It isn’t easy. It isn’t hard either though.</p>\n<p name=\"1611\" class=\"graf graf--p\">Short, sweet and to the point. That is what you should be aiming for.</p>\n<p name=\"b89b\" class=\"graf graf--p graf--startsWithDoubleQuote\">“I help startups grow, scale and find funding.”</p>\n<p name=\"3eb9\" class=\"graf graf--p\">… that is okay. It gets the point across. But it isn’t quite specific enough. You need to do better.</p>\n\n<h3 name=\"9a3c\" class=\"graf graf--h3\">Who is your target customer?</h3>\n\n<p name=\"2f36\" class=\"graf graf--p\">Identify them. There are NO mass market products or problems. Trying to please everyone pleases no one.</p>\n<p name=\"c945\" class=\"graf graf--p\">You NEED an initial base of target customers or you won’t succeed.</p>\n<p name=\"e839\" class=\"graf graf--p\">For me, I advise and invest in early stage tech startups… But every company is kind of a startup. Heck, Gmail was in beta mode for years.</p>\n<p name=\"678c\" class=\"graf graf--p\">So when does a startup stop being a startup and start being a company? Is Airbnb a startup? Google? Uber…</p>\n<p name=\"f4c8\" class=\"graf graf--p\">You need to be specific. You need to be something for someone or you are just nothing for everyone.</p>\n<p name=\"77a1\" class=\"graf graf--p\">Find your niche and fill it. Become a badass in that space, then and only then can your company think of expanding to serve a larger market.</p>\n\n<h3 name=\"54a5\" class=\"graf graf--h3\">How you help is important too</h3>\n<p name=\"e672\" class=\"graf graf--p\">Con artists overpromise. Entrepreneurs do the same. In essence we are all salesmen.</p>\n<p name=\"b754\" class=\"graf graf--p\">But to sell, you can’t smell like bullshit. Bold claims better be backed up by something cause these days investors won’t fall for anything.</p>\n<p name=\"71a1\" class=\"graf graf--p\">An idea and fancy pitch deck won’t get you funded. This isn’t the 90s. A catchy idea needs a clear business model and strong team to back it up.</p>\n<img class=\"graf-image alignleft\" data-image-id=\"1*0yLK9uOoRIP2o6TiRpnF-A.jpeg\" data-width=\"440\" data-height=\"395\" src=\"https://cdn-images-1.medium.com/max/1600/1*0yLK9uOoRIP2o6TiRpnF-A.jpeg\" width=\"348\" height=\"312\" />\n<p name=\"50bc\" class=\"graf graf--p\">How do I help startups? How do you help your customers?</p>\n<p name=\"7986\" class=\"graf graf--p\">That is the question every startup MUST answer in their pitch. The devil is really in the details. You could take 10 minutes to explain your company, or you could take 10 seconds.</p>\n<p name=\"c48a\" class=\"graf graf--p\">Attention spans being what they are, you need to hammer home fast. You have 10 seconds to grab my attention, 30 seconds to wow me… What is your plan?</p>\n\nSource: MindfulMooves\n<h3 name=\"955e\" class=\"graf graf--h3\">Elevator Pitch Examples:</h3>\n<p name=\"5289\" class=\"graf graf--p\">Slack — We help businesses and organizations communicate with a simple chat interface.</p>\n<p name=\"8ae1\" class=\"graf graf--p\">Uber — We help individuals get from A to Z with a simple ride sharing app.</p>\n<p name=\"a7bc\" class=\"graf graf--p\">Amazon — We help people buy and sell things online.</p>\n<p name=\"9c1a\" class=\"graf graf--p\">Facebook — We help individuals stay connected and share experiences online.</p>\n<p name=\"37bf\" class=\"graf graf--p\">It can be that simple. <strong class=\"markup--strong markup--p-strong\">We help X achieve Y.</strong></p>\n<p name=\"7e80\" class=\"graf graf--p\">That is the formula to start any pitch. It grabs your attention and instantly explains your business. It isn’t overly detailed but it covers the basics, who and how.</p>\n<p name=\"ca56\" class=\"graf graf--p\">Your pitch should change depending on your audience.</p>\n\n<h3 name=\"ac45\" class=\"graf graf--h3\">What about Why?</h3>\n<p name=\"deb6\" class=\"graf graf--p\">Why you are building this business is often key. Why determines whether investors and employees get on board.</p>\n<p name=\"c966\" class=\"graf graf--p\">And fyi, to make a lot of money isn’t a good reason. It does not drive emotions, only dollars. And WHY is what drives you.</p>\n<p name=\"c638\" class=\"graf graf--p\">Passionate entrepreneurs solving personal or large scale problems are more driven and motivated to win. They deal with the highs and lows of entrepreneurship and keep fighting. Folks looking for the quick cash don’t.</p>\n<p name=\"3d8c\" class=\"graf graf--p\">As an investor/advisor, I avoid the latter. The money matters. It matters a lot. But without a bigger driver your business will almost surely stall. And burnout can be a big problem.</p>\n<p name=\"43c8\" class=\"graf graf--p\">[LIKE THIS ARTICLE SO FAR? THEN YOU’LL REALLY WANT TO SIGN UP FOR MY NEWSLETTER <a href=\"https://thesyndicate.vc/subscribe/\" data-href=\"https://thesyndicate.vc/subscribe/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\">OVER HERE</strong></a> — AND GET SOME FREE BONUSES!]</p>\n\n<h3 name=\"7ca5\" class=\"graf graf--h3\">Your company should be a mission.</h3>\n<p name=\"e018\" class=\"graf graf--p\">What is your vision of the world? What are you working to create?</p>\n<p name=\"4f9c\" class=\"graf graf--p\">This captivates people. It pulls them into your brand. And investors look for that fire.</p>\n<p name=\"de8b\" class=\"graf graf--p\">For me it is freedom. Corporations and governments have failed. A desk job would kill me.</p>\n<p name=\"4999\" class=\"graf graf--p\">And I believe entrepreneurs change the world. Not countries. Not corporations. Those dinosaurs care only for self preservation, everyone else be damned. Innovation isn’t exactly their forte.</p>\n<p name=\"2a53\" class=\"graf graf--p\">I work with founders looking to change the world and make a ton of money in the process. Startups are exponential. Helping a founder creates a company, a mission, employs people, creates wealth and distributes prosperity in ways nothing else can.</p>\n<p name=\"b968\" class=\"graf graf--p\">That is my mission. That is what drives me as an investor, advisor and writer.</p>\n<p name=\"a7b7\" class=\"graf graf--p\">What drives you?</p>\n\n<h3 name=\"4ef8\" class=\"graf graf--h3\">Okay, okay. But what about the money?</h3>\n<p name=\"8c53\" class=\"graf graf--p\">Small opportunities aren’t exciting. Money is the ultimate drug. Use it aggressively. But also be careful.</p>\n<p name=\"e681\" class=\"graf graf--p\">Unrealistic market sizes and comparables can cripple your pitch. You NEED to be on point here. Be specific. Explain your reasoning.</p>\n<p name=\"291a\" class=\"graf graf--p\"> Here is what I mean.</p>\n<p name=\"49e4\" class=\"graf graf--p\">Frequently founders pitch a market. The professionally managed global real estate market is about $7 trillion dollars. The total real estate market estimates top $217 trillion however.</p>\n<p name=\"c88a\" class=\"graf graf--p\">That is a big difference.</p>\n<p name=\"c221\" class=\"graf graf--p\">If you are building an app to help professional real estate companies manage their portfolios, your maximum possible TAM is about $7 trillion (technically much lower unless you look to own the real estate assets themselves).</p>\n<p name=\"2a94\" class=\"graf graf--p\">But $217 trillion sounds a lot sexier though.</p>\n<p name=\"c979\" class=\"graf graf--p\">Don’t do it. Investors will call you on it. They can see you are full of crap. Either you are lying or too dumb to understand the market potential. Either way you are uninvestable.</p>\n\n<blockquote>\n<p name=\"4d45\" class=\"graf graf--p graf--startsWithDoubleQuote\">“<em class=\"markup--em markup--p-em\">Let me cut you off there. Thanks for your time. We will follow up via email if we are interested..</em>”</p>\n</blockquote>\n<p name=\"9cd3\" class=\"graf graf--p\">Game over. A small slip and your pitch is kaputt.</p>\n\n<h3 name=\"ccd0\" class=\"graf graf--h3\">Why now?</h3>\n<p name=\"3d65\" class=\"graf graf--p\">Investors are sharks. They are looking for opportunities and unfair advantages.</p>\n<p name=\"e6c3\" class=\"graf graf--p\">What makes your startup different? Why will you succeed where others failed? Why is now the perfect time?</p>\n<p name=\"1803\" class=\"graf graf--p\">These are the critical questions that your pitch must answer.</p>\n<p name=\"5fe6\" class=\"graf graf--p\">It is a bit much for 30 seconds. That is okay though. If someone is interested enough, they will keep listening.</p>\n<p name=\"8b16\" class=\"graf graf--p\">So why now? Why is this a now or never opportunity?</p>\n<img class=\"graf-image alignleft\" data-image-id=\"1*tK5natQNFBMIzQGP0XtUvA.png\" data-width=\"448\" data-height=\"241\" src=\"https://cdn-images-1.medium.com/max/1600/1*tK5natQNFBMIzQGP0XtUvA.png\" width=\"346\" height=\"186\" />\n<p name=\"cc54\" class=\"graf graf--p\">Scarcity sells. This is a limited time offer. People are afraid of missing out.</p>\n<p name=\"0fc2\" class=\"graf graf--p\">You are a salesman so sell.</p>\n<p name=\"f850\" class=\"graf graf--p\">Are markets changing? Has a new technology opened up an industry? Is change in legislation creating an opportunity?</p>\n<p name=\"cb4c\" class=\"graf graf--p\">It is now or never. It has to be…. So do not miss out on the next Uber, Facebook, Google, etc…</p>\n\n<h3 name=\"27ba\" class=\"graf graf--h3\">Pitch Perfect</h3>\n<p name=\"022b\" class=\"graf graf--p\">See what I did there…</p>\n<p name=\"961f\" class=\"graf graf--p\">Do not do that in your pitch. Being cutesy and dropping buzzwords is a surefire sign you are out of your league.</p>\n<p name=\"d24d\" class=\"graf graf--p\">So, bringing it all together. What are the keys to a successful elevator pitch?</p>\n\n<ol class=\"postList\">\n \t<li name=\"1bf8\" class=\"graf graf--li\">Who?</li>\n \t<li name=\"ff89\" class=\"graf graf--li\">Why?</li>\n \t<li name=\"0587\" class=\"graf graf--li\">How?</li>\n \t<li name=\"a7a4\" class=\"graf graf--li\">How big?</li>\n \t<li name=\"0f32\" class=\"graf graf--li\">Why now?</li>\n</ol>\n<p name=\"a7d5\" class=\"graf graf--p\">That is it. You do not need anything else.</p>\n<p name=\"350b\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Airbnb helps homeowners rent out rooms to travelers online, disrupting the $427 billion hotel industry without needing to own a single property.</strong></p>\n<p name=\"38e2\" class=\"graf graf--p\">One sentence can do wonders.</p>\n<p name=\"03f6\" class=\"graf graf--p\">Inform. Engage. Excite. These are the keys to a good pitch. And the Airbnb example took me all of 5 minutes.</p>\n<p name=\"0a7b\" class=\"graf graf--p\">What is it for your startup? Answer those 5 questions, add a few minutes perfecting the fit and you will end up with a killer pitch…. assuming your idea is good.</p>\n<p name=\"ee9b\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">For founders:</strong> have you gotten feedback from customers on your product or idea? If not there is no point crafting a perfect pitch. Go talk to users. Get it right. Then and only then can you go find funding.</p>\n\n<h3 name=\"3aa3\" class=\"graf graf--h3\">Closing thoughts</h3>\n<p name=\"e2ca\" class=\"graf graf--p\">What do you think? Have you struggled with the elevator pitch? Anything else you would recommend or do differently?</p>\n<p name=\"d0d2\" class=\"graf graf--p\">Would love to hear opinions below or great elevator pitch examples below.</p>\n\n<h3 name=\"4cf8\" class=\"graf graf--h3\">Before you go…</h3>\n<p name=\"1f31\" class=\"graf graf--p\">If you got something actionable or valuable from this post, share the article on Facebook and Twitter so your friends can benefit from it too.</p>\n<p name=\"1f31\">--</p>\n<p name=\"1f31\">Originally posted on <a href=\"https://medium.com/p/7ffc313dbf40/\">Medium</a></p>",
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      "title": "The Memorable Elevator Pitch that VCs Can’t Ignore"
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      "author": "cheetah",
      "body": "Hi! I am a robot. I just upvoted you! I found similar content that readers might be interested in:\nhttps://medium.com/startup-grind/dont-mine-for-gold-when-you-can-sell-shovels-7ad6bc145542",
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{
  "block": 22196669,
  "op": [
    "comment",
    {
      "author": "mattward",
      "body": "<img class=\"graf-image aligncenter\" data-image-id=\"1*AVI0EhRESkfXIl4YWrFXvA.jpeg\" data-width=\"1000\" data-height=\"185\" src=\"https://cdn-images-1.medium.com/max/1600/1*AVI0EhRESkfXIl4YWrFXvA.jpeg\" />Source: FanArt\n<p name=\"d1c1\" class=\"graf graf--p\">Get rich or die trying — that’s a common mantra among entrepreneurs, gangsters and drug dealers.</p>\n<p name=\"174e\" class=\"graf graf--p\">I know that was my mindset. How can I hustle my way to a million bucks?</p>\n<p name=\"a428\" class=\"graf graf--p\">That was the question I asked myself every day, and night.</p>\n<p name=\"2053\" class=\"graf graf--p\">Looking back, this was the wrong question to ask. But as Kanye says:</p>\n\n<blockquote>“Money ain’t everything, not having it is” — Kanye West</blockquote>\n<p name=\"3626\" class=\"graf graf--p\">When you’re broke and need a quick buck fast, nothing else matters. Food, shelter, survival… these are all dependent on wealth. And the poor rarely plan in advance — it is all hand to fist.</p>\n<p name=\"3626\">\n\n<h3 name=\"b243\" class=\"graf graf--h3\">Short term cash vs. long term success</h3>\n<p name=\"4933\" class=\"graf graf--p\">After graduating college I moved to Southeast Asia to save money. In “digital nomad” hubs like Chiang Mai, Thailand and Ho Chi Minh City, Vietnam, I easily get by on $1000/mo. That drastically increased my runway to figure out what I was doing.</p>\n<p name=\"6759\" class=\"graf graf--p\">Living among hustlers, I quickly learned the world of internet marketing. I saw the fads, the trends, the ups and downs and the “success” of many lifestyle businesses.</p>\n<p name=\"5648\" class=\"graf graf--p\">After building the #1 crowdfunding podcast (only to realize that people looking to raise money couldn’t pay), I subsequently sold the business to an agency. They monetized better, dealing with professional creators looking to raise $100k+. As for me, I’m not an agency guy (not a great manager and hate dealing with clients).</p>\n\n<h3 name=\"f8ce\" class=\"graf graf--h3\">The Amazon “pivot”</h3>\n<p name=\"3859\" class=\"graf graf--p\">It wasn’t exactly a pivot, but I followed the money. I saw folks preaching Amazon FBA (fulfilled by amazon) as the business of the future. Just source and manufacture products, sell on Amazon and you’re set — and here is XYZ course on how to make millions.</p>\n<p name=\"4dd1\" class=\"graf graf--p\">Like many struggling for dough, I was intrigued. While in China designing a convertible laptop case/standing desk hybrid, I decided to give FBA a go. With weeks between finished prototypes, living on the couch with 3 Chinese roommates I’d met online (that didn’t speak any English), I had some free time. I researched the market, found a niche and got started on Amazon.</p>\n<p name=\"3450\" class=\"graf graf--p\">Things went fast. Prior to launch I’d listened to every podcast and read every guide about selling on Amazon (this was spring of 2015).</p>\n<p name=\"5d2e\" class=\"graf graf--p\">After launching my 1st product and pushing the limit on rules and algorithms, my sales started to take off. I was quickly overwhelmed and needed to scale up. What started as an $8k investment in product quickly became a thriving business, fueled by Amazon. I started the FBA ALLSTARS podcast, an avenue to share my story and strategies and get consulting clients. That quickly grew that to a top 3 show.</p>\n<p name=\"3152\" class=\"graf graf--p\">And I needed a tagline, so I said “<em class=\"markup--em markup--p-em\">Step One to 7 Figures.” </em>I set a crazy goal of a 7 figure exit after only a year…. And I somehow pulled it off.</p>\n<p name=\"5d3d\" class=\"graf graf--p\">There was just one problem….</p>\n\n<h3 name=\"71b7\" class=\"graf graf--h3\">The shortsighted gold rush</h3>\n<p name=\"c141\" class=\"graf graf--p\">I thought I had it all figured out.</p>\n<p name=\"fa47\" class=\"graf graf--p\">I’d built a successful, profitable business. I’d built a top podcast that more than covered my expenses (allowing me to re-invest 100% into the business). But I was so dumb…</p>\n<p name=\"7680\" class=\"graf graf--p\">The big money isn’t in the business, it is in the tools.</p>\n<p name=\"cbdd\" class=\"graf graf--p\">As a seller and a podcaster, I used tools to run my business and manage a large operation with a small staff. And I profited as an affiliate, recommending the tools I loved — the money was good.</p>\n<p name=\"b0c7\" class=\"graf graf--p\">But the better business was the software (<em class=\"markup--em markup--p-em\">or scammy make money online courses which I’d never touch</em>).</p>\n<p name=\"e211\" class=\"graf graf--p\">Many of my “friends” in the business built very successful SaaS companies, practically overnight. I helped sellers with SaaS products go from beta to 1000s of monthly paying customers, shortsightedly missing the opportunity.</p>\n<p name=\"bdc1\" class=\"graf graf--p\">And the Amazon opportunity was and is enormous. But I missed the jackpot, because I couldn’t see the big picture….</p>\n<p name=\"894d\" class=\"graf graf--p\">$100, $200, $500k MRR — I know and helped at least a dozen startups hit these and higher milestones.</p>\n\n<h3 name=\"ea1f\" class=\"graf graf--h3\">Horse blinders and thinking bigger</h3>\n<p name=\"2d66\" class=\"graf graf--p\">How do you forgo fast profit for future success? Life isn’t a race. Bank balance isn’t a score card. Don’t get caught up in the hype.</p>\n<p name=\"459d\" class=\"graf graf--p\">Wealth ALWAYS accrues to the facilitators. Companies that assist entrepreneurs and SMBs are the among the most valuable in the world.</p>\n<p name=\"fb29\" class=\"graf graf--p\">Google and Facebook do ads. Stripe and Square handle payments. Amazon and Etsy empower sellers… there are thousands of examples.</p>\n\n<img class=\"graf-image aligncenter\" data-image-id=\"1*ZMEDqvsqEpKQ_Npt2KCpZA.jpeg\" data-width=\"580\" data-height=\"562\" src=\"https://cdn-images-1.medium.com/max/1600/1*ZMEDqvsqEpKQ_Npt2KCpZA.jpeg\" width=\"430\" height=\"417\" />\n<p name=\"6cfe\" class=\"graf graf--p\">Hindsight being 20/20, it is easy to see what I should have done — but I don’t regret it. Live and learn.</p>\n<p name=\"766e\" class=\"graf graf--p\">But when you find yourself in the PERFECT opportunity: for instance investing in Bitcoin or ICOs, keep these constants in mind (for more on ICO froth and future of blockchain, check out this post)</p>\n\n<h3 name=\"bd3e\" class=\"graf graf--h3\">Risk, reward and raising money</h3>\n<p name=\"39dd\" class=\"graf graf--p\">Going big often means going home. Without enough cash, it is hard to keep transformative businesses afloat. Between dev costs and acquiring customers, it takes time and money to reach profitability.</p>\n<p name=\"5d35\" class=\"graf graf--p\">In the past my network was great, but weak in one sense. As an entrepreneur living/traveling in Southeast Asia, South America and South Africa, I had no connections to the venture world and even less of an idea how to raise money. Today is another story.</p>\n<p name=\"baf6\" class=\"graf graf--p\">Founders need to think things through. They NEED to see both sides of the coin and understand which path puts themselves and their business in the best position to succeed.</p>\n<p name=\"b320\" class=\"graf graf--p\">There is no one size fits all.</p>\n\n<h3 name=\"8066\" class=\"graf graf--h3\">The dynamics of successful picks and shovels startups</h3>\n<p name=\"7163\" class=\"graf graf--p\">As an angel investor and startup advisor, a big part of my job is analyzing founders and their vision. And all investors rely at least in part on pattern matching. What have I seen and how did it go?</p>\n<p name=\"09fa\" class=\"graf graf--p\">In terms of picks and shovels, just building a business serving other businesses isn’t enough.</p>\n<p name=\"7894\" class=\"graf graf--p\">Timing is everything. Well timing, plus product.</p>\n<p name=\"0282\" class=\"graf graf--p\">Imagine you are living in SF during the gold rush (no, not the 90s…). Selling picks and shovels years after mining got hot isn’t ideal — competition kills margins and you cannot differentiate.</p>\n<p name=\"4f8f\" class=\"graf graf--p\">But being first IS NOT necessary. Adding value almost always wins.</p>\n<p name=\"62db\" class=\"graf graf--p\">What if you are 1, 2, 5 years late on a trend? How can a startup succeed?</p>\n<p name=\"1b65\" class=\"graf graf--p\">For our example, a map showing previously mined out regions is a good start. Better picks — that’s okay I guess. But what about dynamite, suddenly that is a 10x better solution.</p>\n<p name=\"7bfa\" class=\"graf graf--p\">Switching costs are important too. You don’t buy a new shovel if the old one still works — but dynamite is another story.</p>\n<p name=\"cfe2\" class=\"graf graf--p\">Differentiation and value is the critical.</p>\n\n<h3 name=\"1ffb\" class=\"graf graf--h3\">Winner take all/most markets</h3>\n<p name=\"da2a\" class=\"graf graf--p\">Today selling shovels sucks. There are many brands, and shovels are a commodity — people do not care. If it moves snow, dirt or sand from A to B, it is probably good enough for me.</p>\n<p name=\"f3da\" class=\"graf graf--p\">To be a venture scale opportunity, startups MUST be playing in a winner take most (or all) market. Venture capitalists and angel investors have to shoot for the moon — that is the nature of the power law profile of early stage investing. One or two companies returns the portfolio, the majority die or lurk in obscurity.</p>\n\n<img class=\"graf-image\" data-image-id=\"1*HEbU86-S1j3wM0E5Pq1lqQ.png\" data-width=\"1834\" data-height=\"577\" src=\"https://cdn-images-1.medium.com/max/1600/1*HEbU86-S1j3wM0E5Pq1lqQ.png\" width=\"1600\" height=\"503\" alt=\"\" /> Source: CBInsights\n<p name=\"f4c0\" class=\"graf graf--p\">This is hard. And it is often unfair to startups. Many great companies never get funded because the upside isn’t enough to return the fund. These companies are better off bootstrapping, possibly raising friends and family rounds to help build profitable, scalable businesses.</p>\n<p name=\"1a25\" class=\"graf graf--p\">But this article is about the 1%.</p>\n\n<h3 name=\"0849\" class=\"graf graf--h3\">Founders that find picks and shovels success</h3>\n<img class=\"graf-image alignleft\" data-image-id=\"1*AE5G1Kz_ofamUIfvaATkCQ.jpeg\" data-width=\"500\" data-height=\"362\" src=\"https://cdn-images-1.medium.com/max/1600/1*AE5G1Kz_ofamUIfvaATkCQ.jpeg\" width=\"393\" height=\"285\" />\n<p name=\"71ab\" class=\"graf graf--p\">The best founders are fanatics. They scratch their own itch and build the perfect product for themselves — whether others use it is not important (at least initially).</p>\n<p name=\"4c98\" class=\"graf graf--p\">Finding these founders is key — they are the ones that drive investor returns. The best place to look for outside ROIs: upcoming transformational industries. When you get in early on a trend, you better understand where the world is going and plan accordingly.</p>\n<p name=\"ba81\" class=\"graf graf--p\">Early miners realized quickly that tools trumped mining. Backbreaking work vs selling a shovel, it isn’t rocket science.</p>\n<p name=\"b752\" class=\"graf graf--p\">And the same is true today with cryptocurrencies and Amazon, among other things.</p>\n<p name=\"9b70\" class=\"graf graf--p\">[LIKE THIS ARTICLE SO FAR? THEN YOU’LL REALLY WANT TO SIGN UP FOR MY NEWSLETTER <a href=\"https://thesyndicate.vc/subscribe/\" data-href=\"https://thesyndicate.vc/subscribe/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\">OVER HERE</strong></a> — AND GET SOME FREE BONUSES!]</p>\n\n<h3 name=\"ac88\" class=\"graf graf--h3\">Taking the contrarian view</h3>\n<p name=\"b290\" class=\"graf graf--p\">Go with the flow is a great way to be average. And startup investing in particular is all about the outliers. Go big or go home — that drives returns and funds.</p>\n<p name=\"930a\" class=\"graf graf--p\">So when you are in early on a trend, ask yourself two questions:</p>\n<p name=\"cf0b\" class=\"graf graf--p\"><strong>1. Is this trend transformational?</strong></p>\n<p name=\"b8cc\" class=\"graf graf--p\"><strong>2. What is everyone else (in the industry) doing?</strong></p>\n<p name=\"50ff\" class=\"graf graf--p\">If you believe cryptocurrencies, VR, AR, autonomous vehicles etc… are the future, then tie yourself to that trend. Follow your expertise and intuition and you will be ahead of most.</p>\n<p name=\"bd73\" class=\"graf graf--p\">But avoiding the trap of moderate success is more challenging. Watch what experts say and do the opposite. In 2015 starting a SaaS company for sellers would have been dumb. There were hardly any of them, it was a blue ocean. And I knew folks making millions just selling Amazon. Why shouldn’t I?</p>\n<p name=\"c017\" class=\"graf graf--p\">The answer is human nature. People are followers. Entrepreneurs are fast-followers. They quickly jump on trends and easy money. What today is relatively non-competitive quickly becomes crowded.</p>\n<p name=\"776e\" class=\"graf graf--p\">I saw this in the Amazon world. It is almost impossible to be top dog and keep profits coming when more and more brands undercut pricing. And undercutting is capitalism. It is the nature of competition. It is what protects consumers from monopolistic pricing.</p>\n<p name=\"b087\" class=\"graf graf--p\">But in business I like to bet on monopolies. I am not in the business of offering the lowest price. And thus Amazon’s blue ocean was quickly bloodied.</p>\n\n<h3 name=\"abc4\" class=\"graf graf--h3\">One versus two</h3>\n<p name=\"04e8\" class=\"graf graf--p\">Founders in new markets have three options: 1) service consumers, 2) service providers or 3) service both.</p>\n<p name=\"19e7\" class=\"graf graf--p\">I have often thought on the dynamics of this model, is there a right answer? I strongly believe it depends on the situation.</p>\n<p name=\"7314\" class=\"graf graf--p\">In my case, doing both was doable. Slightly handicapping our brand’s growth to build a SaaS startup would have been smart. But killing two birds with two stones is hard.</p>\n<p name=\"369e\" class=\"graf graf--p\">Focus becomes key. And after F’ing this up enough times, I cannot in good conscience recommend tackling two projects at once. In fact, I won’t invest in founders with any other side projects.</p>\n<p name=\"5116\" class=\"graf graf--p\">Starting a business is your life. It is 100% effort all the time. You live, breath and dream business (at least I did). And when you are raising money and scaling fast it is even worse.</p>\n<p name=\"54d6\" class=\"graf graf--p\">Thus my recommendation for founders is to do one and then the other. Start with serving customers (either as a founder or employee) to learn the industry. As you do, brainstorm the pain points in the process. These make perfect products.</p>\n<p name=\"6cb0\" class=\"graf graf--p\">Once you are ready, the direction is set and an MVP is in progress, jump ship. Whether selling your startup early or quitting a cushy job, golden handcuffs and responsibilities will stop you from succeeding.</p>\n\n<h3 name=\"eadb\" class=\"graf graf--h3\">Closing thoughts</h3>\n<p name=\"6baf\" class=\"graf graf--p\">You only have so many at bats — both as a founder and as an investor. We have all made mistakes. I for one missed enormous opportunities, you likely have as well.</p>\n<p name=\"0edc\" class=\"graf graf--p\">Hopefully this post provides a framework for thinking about opportunities and emerging markets.</p>\n<p name=\"e816\" class=\"graf graf--p\">What’s been your experience? Built a B2B startup? Miss out on a massive trend? Share your thoughts in the comments below. We have all done it. There is no right answer. It comes down to risk and opportunity cost.</p>\n<p name=\"a9d2\" class=\"graf graf--p\">What are sacrificing? Why?</p>\n<p name=\"aa1e\" class=\"graf graf--p\">Understanding your options and their implications helps you make the right choice, even when the world says you are wrong.</p>\n<p name=\"9f80\" class=\"graf graf--p\">So, what trends are you excited about? Where is the world going? What opportunities are on the horizon?</p>\n<p name=\"7e56\" class=\"graf graf--p\">Constantly learning means you are never caught unaware. You are either learning or you are dying… your choice.</p>\n\n<h3 name=\"ee64\" class=\"graf graf--h3\">Before you go…</h3>\n<p name=\"d24d\" class=\"graf graf--p\">If you got something actionable or valuable from this post, share the article on Facebook and Twitter so your friends can benefit from it too. Thanks :)</p>\n<p name=\"d24d\">--</p>\n<p name=\"d24d\">Originally posted on <a href=\"https://medium.com/p/7ad6bc145542\">Medium</a>.</p>",
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      "body": "<p name=\"4d7e\" class=\"graf graf--p\">So you are raising money for your startup. You have a product and a little traction — now you need to grow. Who do you talk to? How do you get the round closed as quickly as possible without screwing your long term prospects?</p>\n<p name=\"75b7\" class=\"graf graf--p\">You don’t know what you don’t know. Let this article be your intro guide to fundraising. The right partners make all the difference.</p>\n\n<h3 name=\"824d\" class=\"graf graf--h3 graf--startsWithDoubleQuote\">“Diamonds are forever”</h3>\n<p name=\"7971\" class=\"graf graf--p\">This is one of the most successful marketing campaigns of all time. De Beers (the evil diamond company from Blood Diamond) convinced women and the world that without a diamond, the marriage wouldn’t last — the man wasn’t serious.</p>\n\n<img class=\"graf-image aligncenter\" data-image-id=\"1*FEHl91xM9badjsVREYw_CA.jpeg\" data-width=\"500\" data-height=\"371\" src=\"https://cdn-images-1.medium.com/max/1600/1*FEHl91xM9badjsVREYw_CA.jpeg\" />\n<p name=\"d97a\" class=\"graf graf--p\">You have to put your money where your mouth is, so to speak.</p>\n<p name=\"7572\" class=\"graf graf--p\">And startups are a bit like marriage. You are “stuck” together for life. And it can be awesome or awful — it depends on the partner. And since the average US marriage before divorce is 8 years, it equates very nicely to the startup-investor relationship.</p>\n<p name=\"3a01\" class=\"graf graf--p\">I am not cynical enough to say you should spend as much time dating investors as seeing a significant other before getting hitched, but keep this in mind.</p>\n<p name=\"e303\" class=\"graf graf--p\">Remember, business partnerships are like marriage, without the sex… they aren’t always fun.</p>\n\n<h3 name=\"575f\" class=\"graf graf--h3\">Sources of funding</h3>\n<p name=\"68a6\" class=\"graf graf--p\">Other than bootstrapping your business, friends and family money and loans or grants, there are 4 main sources of fuel for your startup: angels, VCs, angel groups and syndicates.</p>\n<p name=\"ab4a\" class=\"graf graf--p\">Hopefully are familiar with these four groups. If not, you really need this article.</p>\n\n<h3 name=\"56f0\" class=\"graf graf--h3\">The 4 Sources of Startup Capital</h3>\n\n<h3 name=\"81f2\" class=\"graf graf--h3\">1. Venture Capitalists</h3>\n<p name=\"c7db\" class=\"graf graf--p\">Let’s start with the obvious one: venture capital. Venture capitalists manage large pools of money (think several million to several billion dollars in assets under management (AUM). VCs operate what are called funds, typically with ~10 year lifespans (plus options for an additional 2 years). They fundraise, just like startups, but from bigger, wealthier players. Traditional LPs (limited partners — the people investing in VC firms) include pension funds, university endowments, family offices and ultra-high net worth individuals (UHNWIs). In some regions like the Nordics, Middle East and China, local governments invest in venture as well to both drive ROI and boost the country’s economy.</p>\n\n<h3 name=\"f98d\" class=\"graf graf--h3\">2. Angel Investors</h3>\n<p name=\"3785\" class=\"graf graf--p\">Angels, unlike many VCs, start not as investors but operators in industry. Whether as entrepreneurs or employees, angels are individuals that accrue significant wealth (<em class=\"markup--em markup--p-em\">minimum $1M net worth [excluding primary residence] or greater than $200k per year in income [for at least 2 years]</em>) and reinvest their capital in upstarts. Some angels shoot for returns, others just look to give back.</p>\n<p name=\"95fa\" class=\"graf graf--p\">A wealth of angel investors is the mark of a healthy startup ecosystem. The more successful founders exiting and reinvesting into the next wave, the greater the density of talent, innovation and successful outcomes.</p>\n\n<h3 name=\"a632\" class=\"graf graf--h3\">3. Angel Groups</h3>\n<p name=\"b10b\" class=\"graf graf--p\">As the name suggests, angels often form groups. There is power in numbers. Groups of angels can cut larger checks, get better terms, spread out due diligence and leverage larger networks to help startups succeed.</p>\n<p name=\"c356\" class=\"graf graf--p\">Typically angel groups charge anywhere from $100–1000/yr in dues. These dues help run the network and manage events.</p>\n\n<h3 name=\"0a05\" class=\"graf graf--h3\">4. Syndicates</h3>\n<p name=\"ba52\" class=\"graf graf--p\">Ever since the Jobs act in 2012, the world of investing has been very different. This bill created the ability to form special purpose vehicles (SPVs) to invest in companies. Syndicates use this structure to allow groups of investors (up to 99) to invest in startups via a single SPV — meaning only one addition to the cap table.</p>\n<p name=\"8da3\" class=\"graf graf--p\">This is helps startups keep cap tables clean (a big must for later financing) and reduce legal work. The Syndicate cuts a single large check (rather than lots of little ones from angels/angel group) and still provides a sizable investor base of folks with networks and skillsets that are often willing to get their hands dirty.</p>\n\n<h3 name=\"7c8b\" class=\"graf graf--h3\">Carry and management fees</h3>\n<p name=\"fad8\" class=\"graf graf--p\">One last concept to understand before diving deeper into the pros and cons is the incentivization structure. Knowing investors incentives helps startups level the playing field.</p>\n<p name=\"4a10\" class=\"graf graf--p\">You are probably thinking, “The only thing that matters is massive outcomes, right?”</p>\n<p name=\"13ca\" class=\"graf graf--p\">Wrong.</p>\n<p name=\"ce4e\" class=\"graf graf--p\">Because VCs manage money for you, they typically earn the most. Generally VCs employ a 2 and 20 model, meaning they get 2% management fees and 20% of carry.</p>\n<p name=\"f462\" class=\"graf graf--p\">Management fees are based on AUM (assets under management). For small firm with a $10M fund, that equates to $200k/yr in fees — to run the fund, source companies and support investments. Seems reasonable.</p>\n<p name=\"429e\" class=\"graf graf--p\">It gets more interesting the larger the fund gets. On a $100M fund, it is $2M/yr. $1B fund — $20M per year.</p>\n<p name=\"5b33\" class=\"graf graf--p\">That is the reason VCs are almost always looking to raise larger funds. The bigger the fund, the better the management fees and the bigger their paycheck.</p>\n<p name=\"fe27\" class=\"graf graf--p\">But we can’t forget carry. Carry is the defined as the difference between money in and money out.</p>\n<p name=\"8ca8\" class=\"graf graf--p\">Examples work better here. Let’s say a venture firm invests $1M at a $10M pre money valuation. That means that buy 1/11th of the company (investment divided by pre money valuation plus cash infusion).</p>\n<p name=\"6683\" class=\"graf graf--p\">Now fast forward 10 years. The company is crushing it and is now valued at $1B. And let’s say Facebook buys them because Zuckerberg wants to kill the competition.</p>\n<p name=\"5e46\" class=\"graf graf--p\">Well that is 100x return. If we assume the company never raised more money (just to simplify dilution — note: they probably raised more money), then 100 times $1M is $100M.</p>\n<p name=\"3f35\" class=\"graf graf--p\">The difference between initial investment and result is $99M. The carry, typically 20% is paid off of this.</p>\n<p name=\"1fa5\" class=\"graf graf--p\">So the VC firm earns an additional $19.8M in carry. That is the concept of carry.</p>\n<p name=\"3f01\" class=\"graf graf--p\">Of our four groups, only VCs and syndicates usually charge investors carry — both generally at 20%.</p>\n<p name=\"b23e\" class=\"graf graf--p\">And only VCs have management fees. Now that you know the basics, we are ready to look at this from a startup perspective.</p>\n\n<h3 name=\"7b9a\" class=\"graf graf--h3\">The pros and cons of each investor class</h3>\n<p name=\"77d7\" class=\"graf graf--p\">For an detailed understanding, we should breakdown the important criteria startups have when fundraising. Then we can evaluate VCs, angels, syndicates and angel networks to see how each stack up in terms of founder friendliness.</p>\n\n<h3 name=\"6406\" class=\"graf graf--h3\">The 11 criteria to consider:</h3>\n<ol class=\"postList\">\n \t<li name=\"e24c\" class=\"graf graf--li\">Decision speed</li>\n \t<li name=\"caa6\" class=\"graf graf--li\">Investment size</li>\n \t<li name=\"7394\" class=\"graf graf--li\">Price</li>\n \t<li name=\"e71a\" class=\"graf graf--li\">Control requirements</li>\n \t<li name=\"a373\" class=\"graf graf--li\">Outside help</li>\n \t<li name=\"4924\" class=\"graf graf--li\">Industry experience</li>\n \t<li name=\"d0ac\" class=\"graf graf--li\">Ability to follow on</li>\n \t<li name=\"569a\" class=\"graf graf--li\">Bureaucracy</li>\n \t<li name=\"3673\" class=\"graf graf--li\">Liquidation preferences</li>\n \t<li name=\"af5a\" class=\"graf graf--li\">Common problems</li>\n \t<li name=\"9dee\" class=\"graf graf--li\">Help with future fundraising</li>\n</ol>\n<p name=\"78f2\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Note:</strong> All scores will be generalized across the investment sector. Individual groups, firms, syndicates and angels are all different. We will work off the average.</p>\n\n<h3 name=\"7094\" class=\"graf graf--h3\">1. Decision speed</h3>\n<p name=\"ce74\" class=\"graf graf--p\">As a startup, you NEED money now. Although planning your raise in advance and to have 6 months to prepare and close is ideal, you probably procrastinated. You probably need money and you need it now.</p>\n<img class=\"graf-image alignleft\" data-image-id=\"1*PeIAfi1AXcPTbjxSccKM7w.png\" data-width=\"256\" data-height=\"256\" data-is-featured=\"true\" src=\"https://cdn-images-1.medium.com/max/1600/1*PeIAfi1AXcPTbjxSccKM7w.png\" />\n<p name=\"acc0\" class=\"graf graf--p\">Your burn rate is tough. There isn’t a ton of cash in the bank and even the Ramen is running out. Who do you turn to?</p>\n\n<ol class=\"postList\">\n \t<li name=\"5b0c\" class=\"graf graf--li\">Angels — The fastest investor is almost always the angel. Angels can cut checks after just coffee, it is their money. They can do with it what they want.</li>\n \t<li name=\"7710\" class=\"graf graf--li\">Syndicates — After angels, syndicates come in 2nd. Syndicate leads can quickly decide on deals and share them their investors. Typically syndicates will run 2–4 weeks but hot deals close fast. But as a founder, as long you know the allocation will be met, an extra 2 weeks isn’t a huge deal.</li>\n \t<li name=\"8d66\" class=\"graf graf--li\">VCs — Venture firms are often slow and bureaucratic but can move quickly when motivated to do so. For hot startups and fast moving deals, VCs can push investments through and, pending due diligence, be done nearly as fast as syndicates. Typically however they are a bit slower due to processes in place.</li>\n \t<li name=\"abd1\" class=\"graf graf--li\">Angel Groups — Angel networks are definitely the worst here. While there are some fast moving ones, many groups only have pitch events every few months or quarter, meaning entrepreneurs often need to wait. And even if angel groups are a go, convincing enough members to cut checks can slow the process further.</li>\n</ol>\n<h3 name=\"778e\" class=\"graf graf--h3\">2. Investment size</h3>\n<p name=\"cfc3\" class=\"graf graf--p\">While speed is great, you need runway even more. A $25–50k check might buy you a few months, $500–1M and suddenly you are set until your Series A. And the check size impacts how many investors you need onboard, crowding on the cap table and the number of meetings you need to schedule to complete your close.</p>\n\n<ol class=\"postList\">\n \t<li name=\"eeb9\" class=\"graf graf--li\">VCs — Venture firms usually cut the biggest checks. They typically have ownership % targets they need to make their economics of their fund work. Most VCs want every investment to be able to return the fund. So if that is 50 investments per fund, they need companies that can go 50x. All VCs will vary on check size but most early stage firms cut at least $250k checks, with many going north of a few million.</li>\n \t<li name=\"6932\" class=\"graf graf--li\">Syndicates &amp; Angel Groups — This one is a toss up. It depends on the size of syndicate and angel group. Some syndicates on AngelList like Gil Penchina’s Flight Ventures have close to $10M in backing. They “can” cut big checks. It doesn’t always work that way though. The same is true for angel groups. Here minimum investment size plays a huge role. Many syndicates (<a href=\"http://thesyndicate.vc/join\" data-href=\"http://thesyndicate.vc/join\" class=\"markup--anchor markup--li-anchor\" rel=\"noopener\" target=\"_blank\">ours included</a>) let investors invest just $1k to get in on a deal. This empowers investors to participate but due to the 99 investors clause, this can prevent massive check sizes. Typical max for a syndicate or angel group will be ~$1–2M, with the average closer to $200–300k.</li>\n \t<li name=\"0a2c\" class=\"graf graf--li\">Lone Angels — Unless you are dealing with UHNWIs, most angels cut relatively small checks: $5–100k. It is possible to get more from a single angel but pretty rare. With angel investors, don’t forget legal work required to process checks and update cap tables. Often small investments, under $5–10k don’t make a ton of sense, especially after initial Friends and Family round.</li>\n</ol>\n<h3 name=\"89f3\" class=\"graf graf--h3\">3. Price and Valuation</h3>\n<p name=\"6c50\" class=\"graf graf--p\">Dilution is a big problem for founders, potentially. When negotiating, remember a small piece of a big pie is better than a personal pan pizza. Startups are all about outsized returns. 1% of Uber would still be worth $700M today (<em class=\"markup--em markup--p-em\">unless they crater — <strong><a href=\"https://thesyndicate.vc/uber-going-0-benchmark-knows/\">I think Uber’s in big trouble, here is why</a></strong>).</em></p>\n<p name=\"801e\" class=\"graf graf--p\">In terms of valuation however, startups can get screwed. So let’s look at how each class of investor handles valuations.</p>\n\n<ol class=\"postList\">\n \t<li name=\"7398\" class=\"graf graf--li\">Lone Angels — Angels are often the least price sensitive. Many are involved not for economic reasons but to give back, or even for their ego — “Yeah, I invested in XYZ startup!” Because of this startups can often get higher valuations when negotiating with individual angels as opposed to other groups. The investors have less negotiating power and generally less insight into the industry and comparables. <strong class=\"markup--strong markup--li-strong\">NOTE:</strong> do not take advantage of angels. Raising at too high of valuations can hurt downstream financing opportunities. No one wants to have a downround.</li>\n \t<li name=\"a587\" class=\"graf graf--li\">Angel Groups — Angel networks are more sophisticated than your average angel and often able to lead a round. They will be more realistic about valuations than lone angels as they place a larger focus on returns for their members. And as they cut larger checks, they can negotiate for better terms.</li>\n \t<li name=\"edd4\" class=\"graf graf--li\">Syndicates — Syndicates, even more so than angel groups have pricing power. Because syndicates invest faster, typically with similar or even larger check sizes, they hold more power than angel groups. Syndicates are very focused on returns, especially upside as the carry is the incentive that syndicate leads really benefit from.</li>\n \t<li name=\"4dbc\" class=\"graf graf--li\">VCs — Venture capitalists usually are the most valuation sensitive (although some recent firms like Andressen Horowitz frequently overpay to get in on the best deals). VCs need to provide returns to their investors to increase AUM and subsequent management fees. In the past VC was dirtier, and much less founder friendly. Today however the valuations are not that dissimilar from a syndicate.</li>\n</ol>\n<h3 name=\"0a84\" class=\"graf graf--h3\">4. Control requirements</h3>\n<p name=\"deb7\" class=\"graf graf--p\">Most founders hate giving up control. Between potential conflicts on direction and being forced into unfavorable terms, it makes sense. And if you look at some of the most successful tech companies of today, many like Zuckerberg and Bezos have maintained their control over their companies, allowing them (and not investors or board members) to steer the ship and drive returns.</p>\n<p name=\"8a2b\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">NOTE:</strong> This is not to say governance is bad. Board members can be incredibly helpful, especially for accountability and future focus.</p>\n\n<ol class=\"postList\">\n \t<li name=\"741b\" class=\"graf graf--li\">Lone Angels — Most early angels will not take a board seat or have much in terms of control. They will offer guidance when needed (and occassionally not), but all in all they leaving running of the startup to the founders.</li>\n \t<li name=\"9c62\" class=\"graf graf--li\">Angel Groups and Syndicates — Both angel networks and syndicates require more terms and control than individual angels, but still typically very little. Some may require board seats and most will push for pro rata, information rights and updates — but it is much less of a confrontational relationship. Angels groups and syndicates instead get out of the way and leverage networks and experience wherever possible to help.</li>\n \t<li name=\"9bf0\" class=\"graf graf--li\">VCs — Surprise surprise. Venture capitalists are the most picky when it comes to terms. They have fiduciary responsibilities to their LPs and partners and will do whatever it takes to drive outcomes. Most VCs, especially from Series A onward will require boards and possibly even board seats. This can work out great. It can also result in founders getting ousted. And pretty much any VC will demand pro rata, information rights and other clauses to protect their investment.</li>\n</ol>\n<h3 name=\"6ea4\" class=\"graf graf--h3\">5. Outside help</h3>\n<p name=\"ae2c\" class=\"graf graf--p\">Investors always talk about adding value to founders and being founder friendly. Sometimes this is the case, sometimes it isn’t.</p>\n\n<ol class=\"postList\">\n \t<li name=\"a530\" class=\"graf graf--li\">VCs — At least on paper, VC firms have the most resources to help founders. With management fees, many firms hire advisors and technical specialists work with founders on their business. It can be a very hands on investment and the best VCs (like Social Capital) go to work for their founders. They leverage network and help with hiring and intros, including future fundraising opportunities. That isn’t always the case though.</li>\n \t<li name=\"1703\" class=\"graf graf--li\">Angel Group — I ranked angel networks slightly ahead of syndicates as their members are typically more engaged. Members invest in fewer deals and are often locally present to work with and help founders. This creates strong regional support networks that can be vital to growth.</li>\n \t<li name=\"208b\" class=\"graf graf--li\">Syndicates — Syndicates, like angel groups have large member bases and skills sets. The best syndicates deploy their members’ networks and skills for the greater good of the portfolio. Unfortunately many investors don’t meet their investees. The relationship can still be quite good, tapping networks and helping with growth but has room for improvement.</li>\n \t<li name=\"6d0b\" class=\"graf graf--li\">Lone Angels — Last and certainly least is the individual investor. They will likely tap their network, help where they can and be able to meet for coffee — but two heads are better than one. There is only so much a solo practitioner can do for startups.</li>\n</ol>\n<h3 name=\"ce03\" class=\"graf graf--h3\">6. Industry experience</h3>\n<p name=\"5e16\" class=\"graf graf--p\">Much like outside help, industry experience is essentially the same. The one difference being that syndicates and angel groups would score the same.</p>\n<p name=\"f2dd\" class=\"graf graf--p\">[LIKE THIS ARTICLE SO FAR? THEN YOU’LL REALLY WANT TO SIGN UP FOR MY NEWSLETTER <a href=\"https://thesyndicate.vc/subscribe/\" data-href=\"https://thesyndicate.vc/subscribe/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\">OVER HERE</strong></a> — AND GET SOME FREE BONUSES!]</p>\n\n<h3 name=\"ceba\" class=\"graf graf--h3\">7. Ability to follow on</h3>\n<p name=\"d5ea\" class=\"graf graf--p\">You are probably going to need more money. Investors that follow on fuel growth and make fundraising much easier.</p>\n\n\n<img class=\"graf-image\" data-image-id=\"1*UkcpMBkOG9P8mQcJfF2KEg.jpeg\" data-width=\"1024\" data-height=\"683\" src=\"https://cdn-images-1.medium.com/max/1600/1*UkcpMBkOG9P8mQcJfF2KEg.jpeg\" width=\"552\" height=\"369\" alt=\"\" /> Source: Flickr\n<ol class=\"postList\">\n \t<li name=\"9e75\" class=\"graf graf--li\">VCs — Venture capital portfolios are usually predicated on follow on investments. Funds typically reserved 50–75% of the fund for follow on investments (although this varies by firm). The reason is simple. In a world of power law returns, doubling down on your winners drives the biggest ROI. And because VCs have the biggest chip stack, they can keep doubling down.</li>\n \t<li name=\"3f9e\" class=\"graf graf--li\">Syndicates — Because syndicates are composed of a large pool of investors, there is a lot of capital at play. Syndicates will typically at least exercise pro rata to maintain their equity position. And since every investor only contributes a small percentage of the round, it is relatively easy to raise some follow on funding.</li>\n \t<li name=\"c130\" class=\"graf graf--li\">Angel Groups — Angel networks are less likely to follow on than syndicates. Between the time commitment of pitch events and reduced focus on ROI, many groups will pass on pro rata.</li>\n \t<li name=\"ce6f\" class=\"graf graf--li\">Lone Angels — Individuals investors only have so much cash. And most either do not think through follow on funding strategies or reserve capital. As such it can be hard for founders to get early investors to contribute more or float a bridge round.</li>\n</ol>\n<h3 name=\"6c82\" class=\"graf graf--h3\">8. Bureaucracy</h3>\n<p name=\"2d99\" class=\"graf graf--p\">Raise your hand if you like politics and drama…</p>\n\n<ol class=\"postList\">\n \t<li name=\"bd5f\" class=\"graf graf--li\">Lone Angels — Solo investors definitely win this category. They have no accountability and can cut checks over coffee. Plus there is no politics over who gets funding or carry.</li>\n \t<li name=\"ddc1\" class=\"graf graf--li\">Syndicates — Although not as nimble as lone angels, syndicates are pretty straightforward. A syndicate lead finds deals and offers them up to group. In these instances, often the lead’s reputation plays a big role in how many members invest. The lead also has to encourage their investor base to join, without underselling the risks. This can be tricky, as syndicates only earn carry — meaning reputation aside, they are encouraged to do as many deals as possible.</li>\n \t<li name=\"6897\" class=\"graf graf--li\">Angel Groups — Between the processes of angel networks, dynamics between members and potential rules/guidelines on investment criteria, location etc… angel groups are a bit more complex than syndicates. Often this complexity corresponds to slower investment decisions — not ideal for founders.</li>\n \t<li name=\"adfb\" class=\"graf graf--li\">VCs — Most venture firms are great, but there are certainly politics at play between GPs (general partners — ie managers of the firm). These vary from firm to firm, from how voting occurs to differences in incentives. An obvious example: If part of a GP’s carry/incentives comes from deals they source themselves, clearly there is a conflict of interest. That GP is always more likely to vote to fund their own deal flow… Similar issues can occur with partners having veto power, and/or control of a firm. When raising from VCs, expect a minimum of 3 meetings (and understand how decisions get made). Typically founders won’t get a YES before pitching at full partner meeting.</li>\n</ol>\n<h3 name=\"2c01\" class=\"graf graf--h3\">9. Liquidation preferences</h3>\n<p name=\"3d3e\" class=\"graf graf--p\">You would think that all parties are aligned here — just build a big business and the rest falls into place. Unfortunately it isn’t that easy.</p>\n<p name=\"400e\" class=\"graf graf--p\">There are many classes of stock and terms affecting outcomes. The most important to consider are Preferred and Common classes of stock. In a nutshell, preferred means I get my money out first and usually win (or lose the least) even in bad outcomes.</p>\n<p name=\"6ef4\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">NOTE:</strong> Founders and early employees have Common shares, whereas some investors demand preferred shares (to protect against downside risk).</p>\n<p name=\"ea3b\" class=\"graf graf--p\">That can mean founders sell the business and still end up with nothing. For a more detailed explanation on liquidation preferences and share classes, <a href=\"https://medium.com/@CharlesYu/the-ultimate-guide-to-liquidation-preferences-478dda9f9332\" data-href=\"https://medium.com/@CharlesYu/the-ultimate-guide-to-liquidation-preferences-478dda9f9332\" class=\"markup--anchor markup--p-anchor\" target=\"_blank\" rel=\"noopener\">see this post.</a></p>\n\n<ol class=\"postList\">\n \t<li name=\"5770\" class=\"graf graf--li\">Lone Angels — Individual investors are often least savvy and/or cutthroat when it comes to liquidation preferences and terms.</li>\n \t<li name=\"2a8e\" class=\"graf graf--li\">Syndicates and Angel Groups — Both of these investor networks have more experience and battle scars from past investments. This puts both groups in a good position to both understand risks and leverage capital to receive more favorable terms, and often Preferred Shares. These will be less “preferred” than future Series A Preferred, Series B Preferred etc… shares, but still provide a measure of protection for investors in event of that things go south.</li>\n \t<li name=\"3d27\" class=\"graf graf--li\">VCs — Venture capitalists are the toughest on terms and liquidation preferences. Most will fight the hardest to secure their investments, often with additional icing on the cake in the form of multiples (2x multiple: invest $1M and receive $2M) or participation rights (double dipping — receiving money back plus equity % of leftover capital). As a rule, avoid participation rights, especially pre-Series A. These terms can cripple startups ability to raise and leave founders out to dry.</li>\n</ol>\n<p name=\"ec9d\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">NOTE:</strong> This isn’t legal advice. Talk to a startup attorney, protect yourself.</p>\n\n<h3 name=\"a361\" class=\"graf graf--h3\">10. Common problems</h3>\n<p name=\"97cd\" class=\"graf graf--p\">VCs are the only real troublemaker in the group. Angels almost universally write off investments, assuming every check will go to zero.</p>\n<p name=\"b228\" class=\"graf graf--p\">Unfortunately as VCs have LPs, many venture firms play hardball. Venture funding is fuel, you either take off or get burned.</p>\n<p name=\"8fdd\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Things to look out for:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"ce0e\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">Full ratchet anti-dilution</strong> — Stipulates that investors will retain their equity position while founders/team will suffer all dilution — creates horrible situation where founders lose equity and motivation to continue</li>\n \t<li name=\"4a6b\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">Board seat control</strong> — When VCs or external parties control the board, founders find themselves at mercy of board/investors. This can cause problems, from firing the CEO to acting in the investors (and not founders/company’s) interest</li>\n \t<li name=\"1b6d\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">Unsustainable growth focus</strong> — VCs need investments to be able to return the fund. This can force startups to try and grow at unsustainable rates and ultimately handicap the businesses.</li>\n \t<li name=\"a141\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">Liquidity requirements — </strong>Most VCs operate 10 year funds, with an additional 2 years of optionality.</li>\n \t<li name=\"692c\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">Too much capital raised</strong> — Yes, you read that right. Startups can raise too much money, greatly reducing liquidity options. The more you raise, the more you NEED to be able to sell or IPO for or investors lose.</li>\n</ol>\n<img class=\"graf-image\" data-image-id=\"1*6T5brS_OIAGn11kIF7Xf1Q.jpeg\" data-width=\"400\" data-height=\"264\" src=\"https://cdn-images-1.medium.com/max/1600/1*6T5brS_OIAGn11kIF7Xf1Q.jpeg\" width=\"400\" height=\"264\" alt=\"\" /> <p>Source: SundayTimes Sri Lanka</p>\n<h3 name=\"bffd\" class=\"graf graf--h3\">11. Help with future fundraising</h3>\n<ol class=\"postList\">\n \t<li name=\"0277\" class=\"graf graf--li\">VCs — As full time professional investors with resources and network of the entire firm behind them, VCs are incredibly for future fundraising. Between follow on checks and warm intros to later stage firms, a VC’s business is built on connections.</li>\n \t<li name=\"ae49\" class=\"graf graf--li\">Syndicates and Angel groups— While VCs are typically closer with other VCs, syndicates and angel networks have lots of members, each with their own broad network. And for angels that do this for a living, they focus on building the same connections to later stage funding.</li>\n \t<li name=\"f063\" class=\"graf graf--li\">Lone Angel — You don’t know who you don’t know.</li>\n</ol>\n<h3 name=\"312f\" class=\"graf graf--h3\">The results</h3>\n<p name=\"3fdf\" class=\"graf graf--p\">So, who comes out on top? Adding up the points, here is how they stack up. The fewer points, the better.</p>\n\n<ol class=\"postList\">\n \t<li name=\"7da1\" class=\"graf graf--li\">Tie: Lone Investor &amp; Syndicate: 23 points</li>\n \t<li name=\"a86a\" class=\"graf graf--li\">VC: 24 points</li>\n \t<li name=\"3e45\" class=\"graf graf--li\">Angel group: 25 points</li>\n</ol>\n<p name=\"0229\" class=\"graf graf--p\">If this seems counterintuitive, it is because it is. There is no one best way to define an ideal investor. Each group brings something important to the table.</p>\n<p name=\"b6a9\" class=\"graf graf--p\">Arguably invidual investors will be the earliest and VCs will come in last. From a funding perspective (arguably the most important variable), angel groups, syndicates and VCs are all on par in the earlier rounds (pre-Series A). After that VC money is a must if you need to continue raising.</p>\n<p name=\"a6eb\" class=\"graf graf--p\">Of the two most comparable investor classes: syndicates and angel groups, our analysis would lead us to believe that syndicates are a slightly better funding partner. I would tend to agree. <a href=\"http://thesyndicate.vc/join\" data-href=\"http://thesyndicate.vc/join\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\">As a syndicate lead myself</a>, I see syndicates as the future of investing. SPV’s won’t kill venture, but syndicates will continue to take an increasingly large chunk of early stage investments.</p>\n<p name=\"ed0a\" class=\"graf graf--p\">And as angel groups generally have little to no upside but come with increased complexity for investing, one would assume more and more angel networks will go the syndicate route.</p>\n\n<h3 name=\"1988\" class=\"graf graf--h3\">Closing thoughts</h3>\n<p name=\"dcd8\" class=\"graf graf--p\">Hopefully this breakdown gave you a better understanding of the venture landscape. Knowing the players, how they work and what to look out for is critical to startup success.</p>\n<p name=\"e7cb\" class=\"graf graf--p\">So, look through our list. Which of the 11 are most important? Certain criteria like decision time, investment size and control requirements are often make or break for founders. The same is true for investors.</p>\n<p name=\"5d72\" class=\"graf graf--p\">Pick apart your priorities and plan your fundraise accordingly.</p>\n<p name=\"421b\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">NOTE:</strong> Have good investors in different classes of venture is recommended — don’t put all your eggs in one basket.</p>\n\n<h3 name=\"e1f6\" class=\"graf graf--h3\">Before you go…</h3>\n<p name=\"3ef2\" class=\"graf graf--p\">If you got something actionable or valuable from this post, share the article on Facebook and Twitter so your friends can benefit from it too. And if you haven't subscribed yet, <a href=\"http://thesyndicate.vc/subscribe\">hop on our newsletter!</a></p>\n<p name=\"3ef2\">--</p>\n<p name=\"3ef2\">Originally posted on <a href=\"https://medium.com/@itsmattward/startup-fundraising-101-the-pros-and-cons-of-angels-vcs-angel-groups-and-syndicates-1226fdcec828\">Medium</a></p>",
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      "author": "cheetah",
      "body": "Hi! I am a robot. I just upvoted you! I found similar content that readers might be interested in:\nhttps://hackernoon.com/how-founders-can-avoid-screwing-up-the-equity-equation-game-theory-b3a96db3519d",
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{
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  "op": [
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    {
      "author": "mattward",
      "body": "<img class=\"graf-image aligncenter\" data-image-id=\"1*_kc2O4pHtO7cZ0dEXshX2A.jpeg\" align=\"aligncenter\" data-width=\"450\" data-height=\"253\" src=\"https://cdn-images-1.medium.com/max/1600/1*_kc2O4pHtO7cZ0dEXshX2A.jpeg\" />\n<blockquote><em class=\"markup--em markup--blockquote-em\">“If you’ve got a dream and your dream doesn’t require a team, you need to dream bigger.” </em>— Unknown</blockquote>\n<p name=\"bdd7\" class=\"graf graf--p\">When working with startups (both as an investor and advisor), I like to focus on incentivizes. The more aligned your organization is, the better the performance will be.</p>\n<p name=\"294f\" class=\"graf graf--p\">Commissioned sales people are hustlers. Ever buy a used car? They do anything to get the sale, but they don’t care about the dealership. The majority of their compensation comes from sales. They don’t get a piece of the bigger pie, so why help other salesmen? It is a bit of a dog eat dog world.</p>\n<p name=\"fd6c\" class=\"graf graf--p\">The other extreme (Corporate America) is just as bad.</p>\n<p name=\"6001\" class=\"graf graf--p\">If you are working at a startup, you don’t want just a job. Your goal isn’t simply a paycheck and benefits — you want meaning. And upside.</p>\n<p name=\"ad9b\" class=\"graf graf--p\">Founders are crazy. They have to be to fight to bring something radical new way to the world. And they magnetize others to follow them.</p>\n<p name=\"cb58\" class=\"graf graf--p\">But early startup employees are crazy too. They believe in the vision of building something bigger — but they also “own” the company in a sense. This is their baby, they have a stake and they create the culture from day one.</p>\n<p name=\"f344\" class=\"graf graf--p\">But it isn’t all fun and games…</p>\n\n<h3 name=\"e490\" class=\"graf graf--h3\">A pirate’s life for me?</h3>\n<p name=\"2b52\" class=\"graf graf--p\">Being a pirate is a lot like joining a startup — a rebel on the high seas setting sail into the unknown in search of treasure and adventure. And the seas aren’t smooth, anything but actually. But the rewards can be life changing.</p>\n<p name=\"6a09\" class=\"graf graf--p\">For ships to function, the entire crew must be aligned. Every mate has his (or her) job. Everyone relies on everyone else. There is little room for error, and the opportunities to die are endless.</p>\n\n<h3 name=\"8e74\" class=\"graf graf--h3\">The pirate captain</h3>\n<p name=\"6cae\" class=\"graf graf--p\">Everyone knows the captain’s in charge — at least that’s the myth. The reality, much like any situation is that leaders succeed (and survive), only when their crew permits it. Too much trouble, running out of food, stock price plummeting… mutinies occur. The collective pick the person most able to help them achieve their goals. If it is not you, you are out.</p>\n<p name=\"32b3\" class=\"graf graf--p\">It is a bit like game theory.</p>\n<p name=\"e148\" class=\"graf graf--p\">That is the motivation for this post: the pirate’s riddle. In essence, a captain has 100 gold coins. How does he divide them among the 4 members of crew to maximize his share — keep in mind the majority can throw him overboard if they feel cheated (<a href=\"http://mentalfloss.com/article/500790/can-you-solve-pirate-riddle\" data-href=\"http://mentalfloss.com/article/500790/can-you-solve-pirate-riddle\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><em class=\"markup--em markup--p-em\">here is the riddle if you want to try and solve it</em></a>).</p>\n<p name=\"eb49\" class=\"graf graf--p\">The riddle isn’t important, the consideration of others in the equation, specifically the equity equation is.</p>\n\n<h3 name=\"dfe2\" class=\"graf graf--h3\">Startup equity</h3>\n<p name=\"ef2f\" class=\"graf graf--p\">How much is too much?</p>\n<p name=\"632f\" class=\"graf graf--p\">That is the number one question I get from founders. We are hiring a VP of this or a head of that and I don’t know how much equity to give them.</p>\n<p name=\"2c2c\" class=\"graf graf--p\"><a href=\"http://avc.com/2010/11/employee-equity-how-much/\" data-href=\"http://avc.com/2010/11/employee-equity-how-much/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\">Fred Wilson has a great system here</a>, but says</p>\n\n<blockquote name=\"e476\" class=\"graf graf--blockquote graf--startsWithDoubleQuote\">“<em class=\"markup--em markup--blockquote-em\">for your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula</em>”.</blockquote>\n<p name=\"8654\" class=\"graf graf--p\">Alternatively, Leo Polovets of Susa Ventures <a href=\"https://codingvc.com/analyzing-angellist-job-postings-part-2-salary-and-equity-benchmarks\" data-href=\"https://codingvc.com/analyzing-angellist-job-postings-part-2-salary-and-equity-benchmarks\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\">presents another well thought out, data-supported strategy</a>.</p>\n\n<ul class=\"postList\">\n \t<li name=\"1546\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">At 1–10 person companies, 0.5% — 2.0% is a pretty common range</strong>, though some companies fall outside of this range.</li>\n \t<li name=\"3dc4\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">For 11–50 person companies, 0.1% — 1.0% is typical.</strong></li>\n \t<li name=\"b982\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">For 51–200 person companies, 0.01% — 0.2% is typical.</strong></li>\n</ul>\n<p name=\"2790\" class=\"graf graf--p\">The truth is there is no perfect formula.</p>\n<p name=\"e545\" class=\"graf graf--p\">Instead I encourage founders to consider the pirate example: see things from the other’s eyes. A smaller piece of a big pie still beats a personal pan pizza. But this can get founders in trouble as well. Being too free-wheeling with equity is dilutive and dangerous (<a href=\"https://blog.samaltman.com/employee-equity\" data-href=\"https://blog.samaltman.com/employee-equity\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><em class=\"markup--em markup--p-em\">although Sam Altman of YCombinator recommends being even more generous with equity</em></a>).</p>\n<p name=\"7693\" class=\"graf graf--p\">Investors especially focus on this. I won’t invest if I believe the dilution required from future capital raises will demotivate the founder.</p>\n<p name=\"8818\" class=\"graf graf--p\">At a certain point, you can only give away so much of your company before it doesn’t feel like yours anymore. This is a trap. When founders own too little, the drive to build dies. It becomes a situation of a forced sale (<em class=\"markup--em markup--p-em\">or CEO replacement</em>).</p>\n<p name=\"88e9\" class=\"graf graf--p\">Somehow investors want liquidity. And if the founder isn’t the one to bring the business to the promised land, the board will oust them.</p>\n<p name=\"d5af\" class=\"graf graf--p\">No founder wants that.</p>\n\n\n\n<img class=\"graf-image\" data-image-id=\"1*1s5NnTrhD3vxSPtNyuCD1w.jpeg\" data-width=\"400\" data-height=\"329\" src=\"https://cdn-images-1.medium.com/max/1600/1*1s5NnTrhD3vxSPtNyuCD1w.jpeg\" width=\"400\" height=\"329\" alt=\"\" /> <p>Source: Moziru</p>\n<p name=\"3322\" class=\"graf graf--p\">(<em class=\"markup--em markup--p-em\">For a well thought out growth plan on equity and future employees/dilution, </em><a href=\"http://firstround.com/review/The-Right-Way-to-Grant-Equity-to-Your-Employees/\" data-href=\"http://firstround.com/review/The-Right-Way-to-Grant-Equity-to-Your-Employees/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><em class=\"markup--em markup--p-em\">see this post by Andy Rachleff, CEO of Wealthfront and Partner at Benchmark</em></a>)</p>\n\n<h3 name=\"819e\" class=\"graf graf--h3\">Company culture: more than just equity</h3>\n<p name=\"f616\" class=\"graf graf--p\">Sure shares are great, but ownership of an idea is often better. Employees NEED to feel part of the mission. The best founders create this culture early on. They work the phones, handle customer service, ask employees for advice and suggestions and create relatively flat organizations.</p>\n<p name=\"0a77\" class=\"graf graf--p\">There are many ways to make employees feel empowered. Here are 3 of my favorites:</p>\n\n<ol class=\"postList\">\n \t<li name=\"2a8e\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">Transparency/Company Updates</strong> — Think investors updates but for employees. In a startup, it is easier to trust the captain when you are kept in the loop and see where the ship is headed.</li>\n \t<li name=\"0ee7\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">Epic Job Titles (or none at all)</strong> — Bonobos has Customer Service Ninjas. That feels and sounds significantly cooler and more important than customer service agent (and gets way more applicants). Make every role mission critical.</li>\n \t<li name=\"ba57\" class=\"graf graf--li\"><strong class=\"markup--strong markup--li-strong\">Encourage Brainstorming/Debate</strong> — Ray Dalio of Bridgewater Associates (world’s largest hedge fund with $160B AUM) has a policy of “idea meritocracy”, where everyone has a say and the best decisions win out</li>\n</ol>\n\n<h3 name=\"8f81\" class=\"graf graf--h3\">Game theory and investors</h3>\n<p name=\"f638\" class=\"graf graf--p\">The dynamics above are similar for investors as well. VCs and angel investors invest to make money, and they need returns to stay in the game. By working with your company, they signal that they believe in your startup.</p>\n<p name=\"e9d3\" class=\"graf graf--p\">But not all investors are created equal. As a founder, you must weigh investment offers carefully. All money isn’t good money.</p>\n<p name=\"2c54\" class=\"graf graf--p\">Sure, all cash keeps the ship afloat but specific capital often accelerates progress.</p>\n<p name=\"1f66\" class=\"graf graf--p\">Sequoia or Benchmark can open doors for founders. Simply being funded by the darlings of Silicon Valley will get you meetings and give credibility to the investor community. And it helps with recruiting, and sale. Plus you will probably need more money, and Sequoia leads all VCs , continuing to follow on with 87% of their investments.</p>\n<p name=\"4007\" class=\"graf graf--p\">The network is key too. Different investors run in different circles. And depending on your product and business, certain investors add significantly more value than others. This is especially true for industry specific funds/investors. When a firm has industry experience, complementary portfolio companies and connections to the enterprise buyers, they bring a lot to the table.</p>\n\n\n\n<img class=\"graf-image\" data-image-id=\"1*9phevjy5ilav17_VewTUxg.jpeg\" data-width=\"280\" data-height=\"280\" data-is-featured=\"true\" src=\"https://cdn-images-1.medium.com/max/1600/1*9phevjy5ilav17_VewTUxg.jpeg\" width=\"280\" height=\"280\" alt=\"\" /> <p>Source: Flickr</p>\n<p name=\"9c46\" class=\"graf graf--p\">And accordingly, you think long and hard about their offer, even if it is below market rate. The right partner puts you on a path to a bigger pie.</p>\n<p name=\"ac3c\" class=\"graf graf--p\">But investors are not everything. They are a small piece of the puzzle. And if one specific investor will make or break your company, you have bigger problems. Investors look for entrepreneurs that will succeed on their own, no matter what. We want to add fuel to these fires to help accelerate growth.</p>\n<p name=\"80b2\" class=\"graf graf--p\">[LIKE THIS ARTICLE SO FAR? THEN YOU’LL REALLY WANT TO SIGN UP FOR MY NEWSLETTER <a href=\"https://thesyndicate.vc/subscribe/\" data-href=\"https://thesyndicate.vc/subscribe/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\">OVER HERE</strong></a> — AND GET SOME FREE BONUSES!]</p>\n\n<h3 name=\"3588\" class=\"graf graf--h3\">The bidding war</h3>\n<p name=\"4a5c\" class=\"graf graf--p\">When deals get hot, they can get dangerous. As a founder with a rapidly rising valuation, it is hard to see how you can get burned. You can.</p>\n<p name=\"51d8\" class=\"graf graf--p\">The problem with valuations is expectations. Raise too high and the next round MUST exceed it. No one wants a downround. And $10M pre vs $20M pre have VASTLY different metrics.</p>\n<p name=\"6983\" class=\"graf graf--p\">Work with investors or advisors to plan out future fundraising. They should be able to help you with targets to aim for.</p>\n<p name=\"3cc9\" class=\"graf graf--p\">As a rule of thumb, Series A investors want at least $100k in MRR (monthly recurring revenue). Many founders are shocked by (specifically by the amount of traction needed). But the fact is, if you don’t understand expectations you will come up short and fail to raise — or raise with bad terms.</p>\n<p name=\"bf1c\" class=\"graf graf--p\">Think carefully about this. The valuation isn’t the end game. It isn’t even that important. Equity ownership of a rocketship is. Don’t get seduced by the big numbers…</p>\n\n<h3 name=\"537a\" class=\"graf graf--h3\">The problem with VCs</h3>\n<p name=\"6bf6\" class=\"graf graf--p\">Most venture firms need to own at least X% of the company to make the economics work. This presents problems when you want less money. If you are looking to raise $1M at a $10M pre and Andressen “has to have” 20% of the company to invest, you are looking at 83.3% more dilution.</p>\n<p name=\"df8a\" class=\"graf graf--p\">Here competition can help. The more investors interested in your company, the more leverage you have. If Andressen really wants in and other investors are willing to match your ask, you might be able to negotiate.</p>\n\n<h3 name=\"692d\" class=\"graf graf--h3\">The flip side</h3>\n<p name=\"7c7a\" class=\"graf graf--p\">Raising money at good terms when you can is almost always a good idea. You never know when the capital markets will change or a key aspect of your business will fail. A war chest allows your team to continue or pivot as necessary — without relying on outside capital.</p>\n<p name=\"8516\" class=\"graf graf--p\">And in business, nothing is ever guaranteed.</p>\n<p name=\"abfb\" class=\"graf graf--p\">Many investors are understandably wary of bridge rounds. “Is it a bridge just to nowhere?” That is the question.</p>\n\n\n\n<img class=\"graf-image\" data-image-id=\"1*u73XnbXjEs3-szn5Kjtu3w.jpeg\" data-width=\"500\" data-height=\"323\" src=\"https://cdn-images-1.medium.com/max/1600/1*u73XnbXjEs3-szn5Kjtu3w.jpeg\" width=\"500\" height=\"323\" alt=\"\" /> <p>Source: Wikiality</p>\n<p name=\"4ff9\" class=\"graf graf--p\">But with money in the bank, that isn’t important. An extended runway lets startups figure things out, even make a few mistakes and still have a shot on goal…</p>\n<p name=\"6594\" class=\"graf graf--p\">It is your choice.</p>\n\n<h3 name=\"24ec\" class=\"graf graf--h3\">Riding off into the sunset…</h3>\n<p name=\"b7a6\" class=\"graf graf--p\">The best startups are like special forces — a deadly unit where everybody busts their ass, does the dirty work and keeps fighting until the bitter end.</p>\n<p name=\"6897\" class=\"graf graf--p\">And while developers might not take a bullet, their hardcore obsession with the mission drives disruptive innovation. 100+ hour work weeks are not uncommon — everyone is 100% committed (especially if they have equity…)</p>\n<p name=\"bd49\" class=\"graf graf--p\">And while it is unhealthy, it is often what’s needed to succeed. Startups try to do the impossible — they take on the world, and they win. That takes superhuman effort.</p>\n<p name=\"7867\" class=\"graf graf--p\">You are asking employees to risk everything to make your dream a reality. The best way to accomplish a dream is to help your team accomplish theirs.</p>\n<p name=\"363c\" class=\"graf graf--p\">Look at equity, look at incentives, look at culture — each plays a critical role.</p>\n\n<h3 name=\"78a4\" class=\"graf graf--h3\">Closing thoughts</h3>\n<p name=\"799d\" class=\"graf graf--p\">Pirates are pretty cool. So are startups. But the truth is both are glamorized. It is a hard life filled with ups, downs and uncertainty. The thing is, having an awesome crew can get you through tough times.</p>\n<p name=\"e113\" class=\"graf graf--p\">For founders: How have you handled equity in the past?</p>\n<p name=\"30ea\" class=\"graf graf--p\">For investors: Any advice from portfolio companies?</p>\n<p name=\"b04c\" class=\"graf graf--p\">Would love to hear hear perspectives and opinions from in the comments below.</p>\n<p name=\"f129\" class=\"graf graf--p\">This is a hard balancing act — but getting it right and sets your startup up for success.</p>\n<p name=\"e282\" class=\"graf graf--p\">And remember, 10x employees are irreplaceable. Hire the best and you will always beat the rest.</p>\n\n<h4 name=\"abf5\" class=\"graf graf--h4\">Learned something? Click the share buttons to say “thanks!” and help others find this article.</h4>\n--\n\nOriginally posted on <a href=\"https://hackernoon.com/how-founders-can-avoid-screwing-up-the-equity-equation-game-theory-b3a96db3519d\">Medium</a>",
      "json_metadata": "{\"tags\":[\"startup\",\"businesses\",\"ceo\"],\"image\":[\"https://cdn-images-1.medium.com/max/1600/1*_kc2O4pHtO7cZ0dEXshX2A.jpeg\",\"https://cdn-images-1.medium.com/max/1600/1*1s5NnTrhD3vxSPtNyuCD1w.jpeg\",\"https://cdn-images-1.medium.com/max/1600/1*9phevjy5ilav17_VewTUxg.jpeg\",\"https://cdn-images-1.medium.com/max/1600/1*u73XnbXjEs3-szn5Kjtu3w.jpeg\"],\"links\":[\"http://mentalfloss.com/article/500790/can-you-solve-pirate-riddle\",\"http://avc.com/2010/11/employee-equity-how-much/\",\"https://codingvc.com/analyzing-angellist-job-postings-part-2-salary-and-equity-benchmarks\",\"https://blog.samaltman.com/employee-equity\",\"http://firstround.com/review/The-Right-Way-to-Grant-Equity-to-Your-Employees/\",\"https://thesyndicate.vc/subscribe/\",\"https://hackernoon.com/how-founders-can-avoid-screwing-up-the-equity-equation-game-theory-b3a96db3519d\"],\"app\":\"steemit/0.1\",\"format\":\"markdown\"}",
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      "parent_permlink": "startup",
      "permlink": "startup-pirate-game-theory",
      "title": "Startup Pirate Game Theory"
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    {
      "author": "mattward",
      "body": "<img class=\"graf-image aligncenter\" data-image-id=\"1*qXd7QoPEF5JciW1_pq1jqA.png\" data-width=\"2456\" data-height=\"2196\" src=\"https://cdn-images-1.medium.com/max/1600/1*qXd7QoPEF5JciW1_pq1jqA.png\" width=\"540\" height=\"483\" />\n<p name=\"f0d1\" class=\"graf graf--p\">Both professionally and personally, 2017 has been an amazing year. I set the goal of becoming a full time angel investor and startup advisor after transitioning out of my last business I sold.</p>\n<p name=\"0fb9\" class=\"graf graf--p\">After considering the best ways to learn from and invest with heavy hitters in the space, I settled on a podcast. With the podcast I could not only connect with and learn from some of the top angels and VCs in the space (who I could then send deals to later on), but I could build a platform as well. As I definitely do not have the cash to be an all-in angel and have attractive economics, I started a sidecar syndicate to allow listeners and individuals to invest alongside me in promising early stage deals. The Syndicate podcast and investment have been growing nicely, although I always push myself to grow faster.</p>\n<p name=\"1863\" class=\"graf graf--p\">But stepping into 2018, The Syndicate is in a good place.</p>\n<p name=\"c406\" class=\"graf graf--p\">For this post, I wanted to recap the year through a series of audio interviews. 2017 has been the year of many things, especially ICOs. Most people however have not seen the full picture.</p>\n<p name=\"783b\" class=\"graf graf--p\">This post will be a roundup of the top interviews and panel discussions and posts of the year — all designed to make you think.</p>\n<p name=\"783b\">\n<h3 name=\"6593\" class=\"graf graf--h3\">Top Interview of 2017</h3>\n<p name=\"7934\" class=\"graf graf--p\">The most listened to episode of year honors goes to Gil Penchina, one of the top super angels of all time. Gil’s hit tons of unicorns, investing in Ripple, Brave, Polychain, Paypal, Filecoin, Civic, Linkedin, Cruise, Dollar Shave Club Wealthfront, Discord and Fastly. He now he runs 20+ syndicates on Angellist with millions in backing.</p>\n\n<h3 class=\"post-title\" itemprop=\"headline\"><a href=\"https://thesyndicate.vc/ts-how-gil-penchina-tried-to-lose-money-and-hit-5-unicorns-and-the-future-of-cryptocurrencies/\">How Gil Penchina Tried to Lose Money and Hit 5 Unicorns and the Future of Cryptocurrencies</a></h3>\n<p name=\"1e5c\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"a988\" class=\"graf graf--li\">How Gil invested early in Paypal</li>\n \t<li name=\"6516\" class=\"graf graf--li\">What he looks for in founders and markets</li>\n \t<li name=\"5c2b\" class=\"graf graf--li\">Why Gil is bullish on cryptocurrencies</li>\n \t<li name=\"5ef4\" class=\"graf graf--li\">His exact asset allocation strategy</li>\n \t<li name=\"6521\" class=\"graf graf--li\">How he built a massive network of Angellist syndicates</li>\n \t<li name=\"4d9e\" class=\"graf graf--li\">What blockchain means for society as a whole</li>\n \t<li name=\"3b5f\" class=\"graf graf--li\">How ICOs are affecting all of us</li>\n \t<li name=\"9a42\" class=\"graf graf--li\">What all angel investors need to know about getting started</li>\n</ol>\n\n<h3 name=\"7ac0\" class=\"graf graf--h3\">The top themes of 2017:</h3>\n<ol class=\"postList\">\n \t<li name=\"5e07\" class=\"graf graf--li\">Cryptocurrencies and ICOs</li>\n \t<li name=\"2aa9\" class=\"graf graf--li\">AI and Autonomous Driving</li>\n \t<li name=\"9cec\" class=\"graf graf--li\">The Future of Commerce</li>\n \t<li name=\"f047\" class=\"graf graf--li\">The Future in General</li>\n</ol>\n<h3 name=\"c23c\" class=\"graf graf--h3\">1. Cryptocurrencies and ICOs</h3>\n<p name=\"c241\" class=\"graf graf--p\">There is no denying the frantic excitement of ICOs. Bitcoin’s been blowing up (and crashing) and is up big this year. And according to Coin Schedule, ICOs have raised an unprecendented $3.7B this year.</p>\n<p name=\"06fc\" class=\"graf graf--p\">In June of this year, ICO funding surpassed early stage VC investments, sending the industry industry into a fury over the future of venture.</p>\n<p name=\"3737\" class=\"graf graf--p\">To dig deeper, <a href=\"https://thesyndicate.vc/the-future-of-cryptocurrencies-and-blockchain-roundtable/\"><strong>The Syndicate hosted a Future of Cryptocurrencies and Blockchain roundtable</strong></a> with Joey Krug (Augur and Pantera Capital), Andy Bromberg (CEO of CoinList), Gil Penchina and Lou Kerner. This is a must watch for anyone interested in crypto.</p>\n<iframe width=\"560\" height=\"315\" src=\"https://www.youtube.com/embed/_WjL1s2LpN8?rel=0\" frameborder=\"0\" gesture=\"media\" allow=\"encrypted-media\" allowfullscreen=\"allowfullscreen\"></iframe>\n\n<h3 name=\"a095\" class=\"graf graf--h3\">Blockchain interviews</h3>\n<p name=\"da58\" class=\"graf graf--p\">But plenty of other investor interviews focused heavily on blockchain as well. To add to the narrative and help you and others make informed decisions, I’ll add the best of these below.</p>\n<p name=\"9783\" class=\"graf graf--p\">NOTE: Gil’s interview above was also cited as one of the top cryptocurrency episodes of 2017.</p>\n\n<h3 name=\"6cce\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-cryptocurrencies-icos-and-the-future-of-public-markets/\">Cryptocurrencies, ICOs and the Future f Public Markets with Joey Krug of Pantera Capital</a></h3>\n<p name=\"05aa\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"4712\" class=\"graf graf--li\">Why Ethereum is the cryptocurrency of the future</li>\n \t<li name=\"6303\" class=\"graf graf--li\">What ICOs mean for investors and startups going forward</li>\n \t<li name=\"056f\" class=\"graf graf--li\">Why first is the worst for startup companies</li>\n \t<li name=\"4ec7\" class=\"graf graf--li\">How angel investors should think about Blockchain</li>\n \t<li name=\"92f6\" class=\"graf graf--li\">The big shift happening now in the derivatives market</li>\n</ol>\n<h3 name=\"af0a\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-republics-founder-ken-nguyen-on-angellist-icos-and-equity-crowdfunding-eating-traditional-venture-capital/\">Kendrick Nguyen on Angellist, ICOs and Equity Crowdfunding Eating Traditional Venture Capital</a></h3>\n<p name=\"af19\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"b563\" class=\"graf graf--li\">How Title 3 Crowdfunding is affecting startup fundraising</li>\n \t<li name=\"ba32\" class=\"graf graf--li\">Why traditional VC is being turned on its head</li>\n \t<li name=\"6365\" class=\"graf graf--li\">The future of ICOs and fintech</li>\n \t<li name=\"f11a\" class=\"graf graf--li\">Angellist’s role in disruption</li>\n \t<li name=\"474a\" class=\"graf graf--li\">Why equity crowdfunding can outperform venture capital</li>\n \t<li name=\"55ef\" class=\"graf graf--li\">How startups should view fundraising and taking investor money</li>\n</ol>\n<h3 name=\"50c6\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-offered-14-of-facebook-for-5m-lou-kerner-of-flight-vc-on-israel-social-media-cryptocurrencies-and-future-of-monopolies/\">Offered 1/4 of Facebook for $5M Lou Kerner on Israel, Social Media and Cryptocurrencies</a></h3>\n<p name=\"b101\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"16cd\" class=\"graf graf--li\">The secret story of social media</li>\n \t<li name=\"5822\" class=\"graf graf--li\">What VCs will never tell you about deal flow</li>\n \t<li name=\"d91f\" class=\"graf graf--li\">Why Israeli is the place to invest</li>\n \t<li name=\"1d63\" class=\"graf graf--li\">How Tel Aviv compares to SF</li>\n \t<li name=\"6721\" class=\"graf graf--li\">Why cryptocurrencies are disrupting the world as we know it</li>\n \t<li name=\"4abf\" class=\"graf graf--li\">How Lou invested early in Facebook</li>\n \t<li name=\"b0ca\" class=\"graf graf--li\">Ways to validate traction and market caps</li>\n</ol>\n<p name=\"2ccc\" class=\"graf graf--p\">And I did a lot of writing in 2017. Here are two of the top crypto articles to make you think</p>\n\n<div name=\"6d7c\" class=\"graf graf--mixtapeEmbed\"><a href=\"https://thesyndicate.vc/the-exponential-boom-bust-and-rebirth-of-the-ico-economy-ie-dotcom-bubble-with-dumber-money/\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">The Exponential Boom, Bust and Rebirth of the ICO Economy, ie Dotcom Bubble with Dumber Money</strong></a></div>\n<div name=\"6d7c\" class=\"graf graf--mixtapeEmbed\"><em class=\"markup--em markup--mixtapeEmbed-em\"></em><a href=\"https://thesyndicate.vc/marketplace-monopolies-cult-like-religion-icos/\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">The Cult-Like Religion of ICOs and End of Amazon?</strong></a></div>\n<h3 name=\"6023\" class=\"graf graf--h3\">2. AI, machine learning and autonomous vehicles</h3>\n<p name=\"661a\" class=\"graf graf--p\">The next big theme 2017 brought us was the explosion of driverless, both in terms of startup successes and buzz in the industry.</p>\n<p name=\"4305\" class=\"graf graf--p\">With Trump in office and fear mongering about jobs and society, AI started to become more and more of a hotbed issue.</p>\n<p name=\"e080\" class=\"graf graf--p\">And Universal Basic Income and superintelligence started to become real topics on the public’s mind as more and more, technically forced itself into society.</p>\n<p name=\"1d74\" class=\"graf graf--p\">To dig deeper, <strong><a href=\"https://thesyndicate.vc/ai-autonomous-vehicles-future-cities-live-streamed-roundtable/\">The Syndicate hosted a AI and autonomous driving roundtable</a></strong> and future of society with Zach Coelius (investor in Cruise Automation), Dennis R. Mortensen (founder of x.ai), Clara Brenner (founder of Urban Innovation Fund) and Prateek Joshi (founder of Pluto AI) to discuss the ramifications and future of artificial intelligence. This was a ton of fun and is a must watch for anyone interested in AI</p>\n<iframe width=\"560\" height=\"315\" src=\"https://www.youtube.com/embed/KiR_XteJQT4?rel=0\" frameborder=\"0\" gesture=\"media\" allow=\"encrypted-media\" allowfullscreen=\"allowfullscreen\"></iframe>\n\n&nbsp;\n<h3 name=\"9b0a\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-zach-coelius-on-his-billion-dollar-angellist-exit-and-building-a-top-tier-syndicate/\">Zach Coelius on 1st Billion Dollar AngelList Exit and Building a Top Tier Syndicate</a></h3>\n<p name=\"1e3f\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"b402\" class=\"graf graf--li\">Why it is better to be good and lucky</li>\n \t<li name=\"a3ae\" class=\"graf graf--li\">The value of social proof with co-investors</li>\n \t<li name=\"004d\" class=\"graf graf--li\">How to build a top 10 AngelList syndicate</li>\n \t<li name=\"d613\" class=\"graf graf--li\">The massive opportunity in South East Asia</li>\n \t<li name=\"fb3e\" class=\"graf graf--li\">Why competitive markets kill startups</li>\n \t<li name=\"f73f\" class=\"graf graf--li\">Poker and meeting startup founders</li>\n \t<li name=\"7042\" class=\"graf graf--li\">The way to add value to entrepreneurs</li>\n \t<li name=\"fcde\" class=\"graf graf--li\">How to invest unicorns</li>\n</ol>\n<p name=\"8351\" class=\"graf graf--p\">Unfortunately most of our AI related episodes have not been released to date, so they won’t make it on our 2017 year in review.</p>\n\n<h3 name=\"ae9d\" class=\"graf graf--h3\">3. The future in general</h3>\n<p name=\"458e\" class=\"graf graf--p\">Perhaps it is just the venture industry, or perhaps it is the confluence of industries that are rapidly accelerating towards interdisciplinary progress, either way 2017 had a futurist feel to it.</p>\n<p name=\"81b7\" class=\"graf graf--p\">Between voice and IoT devices coming to market, AR and VR adding to the excitement and decentralization and AI technology transforming everything, it was an interesting year.</p>\n<p name=\"b410\" class=\"graf graf--p\">To dig deeper, <a href=\"https://thesyndicate.vc/the-future-of-consumer-tech-and-humanity-roundtable-with-tim-oreilly-james-allworth-ben-gilbert-and-jeff-morris-jr/\">The Syndicate hosted a consumer tech roundtable</a> with Tim O'Reilly (O’Reilly Media, Author, Futurist), James Allworth (Exponent podcast), Jeff Morris Jr. and Ben Gilbert (Acquired podcast). This was a top notch panel of futurist experts and we <strong class=\"markup--strong markup--p-strong\">attempted </strong>to see the future and how it unfolds. Absolute must watch!</p>\n<iframe width=\"560\" height=\"315\" src=\"https://www.youtube.com/embed/7DTrrllrSvw?rel=0\" frameborder=\"0\" gesture=\"media\" allow=\"encrypted-media\" allowfullscreen=\"allowfullscreen\"></iframe>\n\n<h2 name=\"c7b4\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">BONUS:</strong></h2>\n<h3 name=\"541e\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-ben-gilbert-of-acquired-on-the-end-of-government-the-death-of-apple-and-the-amazon-apocalypse/\">Ben Gilbert of Acquired on The End of Government, The Death of Apple and The Amazon Apocalypse</a></h3>\n<p name=\"9410\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"c2ed\" class=\"graf graf--li\">Why most acquisitions and IPOs fail</li>\n \t<li name=\"b15d\" class=\"graf graf--li\">An unconventional and effective approach to venture</li>\n \t<li name=\"7060\" class=\"graf graf--li\">How to spin out a startup</li>\n \t<li name=\"25d9\" class=\"graf graf--li\">What driverless cars mean for the future</li>\n \t<li name=\"2846\" class=\"graf graf--li\">Why Apple is in trouble and Google’s business model is over</li>\n \t<li name=\"f768\" class=\"graf graf--li\">The future of IPOs and the stock market</li>\n \t<li name=\"51d0\" class=\"graf graf--li\">How Amazon will own everything</li>\n \t<li name=\"48d9\" class=\"graf graf--li\">Why Facebook is the king of acquisitions</li>\n</ol>\n<p name=\"588b\" class=\"graf graf--p\">And on the subject of the future, I did a lot of writing in 2017 and put out a few posts that at least according to the numbers and comments, made the world think.</p>\n<p name=\"3a8d\" class=\"graf graf--p\">I figured I would share these here to hopefully add some food for thought to your new year.</p>\n\n<div name=\"0e30\" class=\"graf graf--mixtapeEmbed\"><a href=\"https://thesyndicate.vc/uber-going-0-benchmark-knows/\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">Uber is Going to 0, and Benchmark Knows It!</strong></a>\n<em class=\"markup--em markup--mixtapeEmbed-em\"></em><a href=\"https://thesyndicate.vc/network-effects-unbreakable-unregulatable-monopolies-today/\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">Network Effects, Unstoppable Monopolies and The End of Innovation</strong></a></div>\n<h2 name=\"0e30\" class=\"graf graf--mixtapeEmbed\"><em class=\"markup--em markup--mixtapeEmbed-em\"></em>4. The future of commerce</h2>\n<p name=\"56ec\" class=\"graf graf--p\">Last but certainly not least was the dominance of Amazon and the detail of retail as a topic that dominated 2017. It was hard to hear about anything else?</p>\n<p name=\"145f\" class=\"graf graf--p\">Where will Amazon’s 2nd HQ go? What happens to all the jobs they automate away?</p>\n<p name=\"8ae9\" class=\"graf graf--p\">Even ToysRUs went bankrupt. That was every kids favorite store. What is the world coming to…</p>\n\n<h3 name=\"6e03\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-semil-shah-on-instacart-amazon-and-the-future-of-retail-and-groceries/\">Semil Shah on Instacart, Amazon and the Future of Retail and Groceries</a></h3>\n<h4 name=\"b217\" class=\"graf graf--h4\">Listen and Learn:</h4>\n<ol class=\"postList\">\n \t<li name=\"5cdf\" class=\"graf graf--li\">How to raise your first venture fund</li>\n \t<li name=\"1bbb\" class=\"graf graf--li\">What product geniuses know about UX/UI</li>\n \t<li name=\"0641\" class=\"graf graf--li\">How Semil invested early in DoorDash and Instacart</li>\n \t<li name=\"5939\" class=\"graf graf--li\">The best way to connect with top investors and influencers</li>\n \t<li name=\"4ecd\" class=\"graf graf--li\">What happens when VCs have kids</li>\n \t<li name=\"3cee\" class=\"graf graf--li\">The future of groceries</li>\n \t<li name=\"ff69\" class=\"graf graf--li\">How Amazon and Facebook are affecting exits and IPOs</li>\n \t<li name=\"80e7\" class=\"graf graf--li\">Which field will dominate startup returns</li>\n</ol>\n<div name=\"4fc0\" class=\"graf graf--mixtapeEmbed\"><a href=\"https://thesyndicate.vc/the-amazon-apocalypse-of-ecommerce/\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">The Amazon Apocalypse is Killing Ecommerce</strong></a></div>\n<div name=\"4fc0\" class=\"graf graf--mixtapeEmbed\"><em class=\"markup--em markup--mixtapeEmbed-em\"></em><a href=\"https://thesyndicate.vc/amazons-acquisition-whole-foods-gameover-groceries/\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">Game Over, Groceries: Inside Amazon’s Acquisition of Whole Foods</strong></a></div>\n<div name=\"4fc0\" class=\"graf graf--mixtapeEmbed\"><em class=\"markup--em markup--mixtapeEmbed-em\"></em><a href=\"https://thesyndicate.vc/the-broken-business-of-ecommerce-and-why-your-startup-wont-be-the-next-casper/\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">The Broken Business of Ecommerce and Why Your Startup Won’t Be The Next Casper</strong></a></div>\n<h3 name=\"3599\" class=\"graf graf--h3\">The best of the rest</h3>\n<p name=\"d1c3\" class=\"graf graf--p\">Themes don’t tell the whole picture. There is a lot happening in the world of venture and throughout the podcast series, we’ve talked to some of the smartest investors around.</p>\n<p name=\"882d\" class=\"graf graf--p\">Here are my favorite theme agnostic interviews of 2017.</p>\n\n<h3 name=\"e420\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-christopher-mirabile-of-launchpad-on-valuations-exits-startup-trends-and-the-future-of-ipos/\">Christopher Mirabile of LaunchPad on Valuations, Exits, Startup Trends and the Future of IPOs</a></h3>\n<p name=\"123a\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"d022\" class=\"graf graf--li\">Why Boston is one of the best US startup scenes</li>\n \t<li name=\"149e\" class=\"graf graf--li\">How a top angel network operates and consistently wins</li>\n \t<li name=\"b1b6\" class=\"graf graf--li\">What investors don’t know about vetting opportunities</li>\n \t<li name=\"6565\" class=\"graf graf--li\">Why active investors outperform passive ones</li>\n \t<li name=\"4fda\" class=\"graf graf--li\">The perfect startup team composition and how to improvise</li>\n \t<li name=\"47a6\" class=\"graf graf--li\">What AI and machine learning mean for venture</li>\n \t<li name=\"4c9a\" class=\"graf graf--li\">Why syndicates and angel networks are disrupting VC</li>\n \t<li name=\"103c\" class=\"graf graf--li\">How to help angel investors succeed</li>\n</ol>\n<h3 name=\"6d0c\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-pascal-levy-garboua-runs-1-4m-angellist-syndicate-top-tech-startup-al-venture-fund/\">How Pascal Levy-Garboua Runs a $1.4M Angellist Syndicate and an AL Venture Fund All At Once</a></h3>\n<p name=\"a0e3\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"c448\" class=\"graf graf--li\">How to run a top syndicate while working a day job</li>\n \t<li name=\"9e29\" class=\"graf graf--li\">Why local commerce is the future</li>\n \t<li name=\"e05d\" class=\"graf graf--li\">The way Angellist funds work</li>\n \t<li name=\"9ed7\" class=\"graf graf--li\">What most angel investors do wrong initially</li>\n \t<li name=\"d239\" class=\"graf graf--li\">How Angellist has evolved in the past three years</li>\n \t<li name=\"4ca0\" class=\"graf graf--li\">Why liquidity is hard to come by</li>\n \t<li name=\"9093\" class=\"graf graf--li\">How the on demand economy is changing commerce as we know it</li>\n \t<li name=\"78c7\" class=\"graf graf--li\">Why cryptocurrency is overrated in the short term and underrated in the long term</li>\n</ol>\n<h3 name=\"45f7\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-teaming-up-with-gil-penchina-to-found-the-flight-vc-saas-syndicate-with-nathan-creswell-and/\">Teaming up with Gil Penchina to Found the Flight.vc SaaS Syndicate with Nathan Creswell</a></h3>\n<p name=\"07e6\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"c96b\" class=\"graf graf--li\">How Gil Penchina built a top Angellist network and syndicate model</li>\n \t<li name=\"8a80\" class=\"graf graf--li\">What investors need to know about enterprise and B2B SaaS</li>\n \t<li name=\"3ee3\" class=\"graf graf--li\">Why cryptocurrency will change almost everything</li>\n \t<li name=\"1f12\" class=\"graf graf--li\">The importance of connections, especially in enterprise investing</li>\n \t<li name=\"9270\" class=\"graf graf--li\">What trumps traction</li>\n \t<li name=\"1c10\" class=\"graf graf--li\">The power of teaming up in investing</li>\n \t<li name=\"8f09\" class=\"graf graf--li\">How to uplevel your networking</li>\n</ol>\n<h3 name=\"a56e\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-nick-moran-of-the-full-ratchet-on-why-iot-is-the-1-startup-sector-and-the-midwest-is-the-best-place-for-companies/\">Nick Moran on Why IoT is the #1 Startup Sector and the Midwest is the Best Place for Companies</a></h3>\n<p name=\"2fe9\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"39c0\" class=\"graf graf--li\">Why the Midwest is the place to be for startups and investors</li>\n \t<li name=\"d1e4\" class=\"graf graf--li\">The future of IoT and why it is the #1 industry to watch</li>\n \t<li name=\"d940\" class=\"graf graf--li\">How to build consistent, vetted deal flow</li>\n \t<li name=\"1a45\" class=\"graf graf--li\">Why podcasting has transformed venture capital</li>\n \t<li name=\"067b\" class=\"graf graf--li\">The differences and dynamics between syndicates and VC funds</li>\n \t<li name=\"e5db\" class=\"graf graf--li\">Why startups are leaving SF to go to Midwest</li>\n \t<li name=\"a7d1\" class=\"graf graf--li\">How corporates and entrepreneurs clash and thrive</li>\n</ol>\n<h3 name=\"5f17\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-women-in-tech-syndicates-vs-vcs-and-the-future-of-enterprise-investing-with-shruti-gandhi-of-array-ventures/\">Women in Tech, Syndicates vs VCs and The Future of Enterprise Investing with By Shruti Gandhi</a></h3>\n<p name=\"8cf2\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"0d73\" class=\"graf graf--li\">The big difference between enterprise and all other industries</li>\n \t<li name=\"871c\" class=\"graf graf--li\">How the venture world works from a woman’s perspective</li>\n \t<li name=\"1a63\" class=\"graf graf--li\">Why enterprise companies take longer to exit</li>\n \t<li name=\"95f2\" class=\"graf graf--li\">The importance of connections, especially in enterprise investing</li>\n \t<li name=\"731c\" class=\"graf graf--li\">Why sourcing deals is still critical</li>\n \t<li name=\"410f\" class=\"graf graf--li\">How podcasts put VCs on the map</li>\n \t<li name=\"69ce\" class=\"graf graf--li\">Why women founders have a harder time fundraising</li>\n</ol>\n<h3 name=\"acb1\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-jeff-morris-jr-on-starting-a-top-angellist-syndicate-while-turning-tinder-into-1-revenue-app-in-world/\">Jeff Morris Jr.on Starting a AngelList Syndicate While Turning Tinder into #1 Revenue App in World</a></h3>\n<h4 name=\"8a5e\" class=\"graf graf--h4\"><strong class=\"markup--strong markup--h4-strong\">Listen and Learn:</strong></h4>\n<ol class=\"postList\">\n \t<li name=\"ff68\" class=\"graf graf--li\">How to angel invest while holding a full time job</li>\n \t<li name=\"8c73\" class=\"graf graf--li\">The biggest mistake angel investors make</li>\n \t<li name=\"dc60\" class=\"graf graf--li\">Why you should always follow your expertise</li>\n \t<li name=\"d548\" class=\"graf graf--li\">The importance of product</li>\n \t<li name=\"735b\" class=\"graf graf--li\">Why sourcing deals is still critical</li>\n \t<li name=\"2e11\" class=\"graf graf--li\">How AngelList works when syndicating investments</li>\n \t<li name=\"a0ea\" class=\"graf graf--li\">Why mobile is still a big deal</li>\n</ol>\n<h3 name=\"d7dc\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/ts-why-vcs-should-be-industry-agnostic-and-avoid-silicon-valley/\">Why VCs Should be Industry Agnostic and Avoid Silicon Valley with Phil Nadel of Forefront Venture Partners</a></h3>\n<p name=\"24d3\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"45cd\" class=\"graf graf--li\">Why Forefront Ventures is industry agnostic</li>\n \t<li name=\"da28\" class=\"graf graf--li\">The reason YC companies and SF in general are overhyped and overpriced</li>\n \t<li name=\"70f3\" class=\"graf graf--li\">How to prevent conflict of interest in syndicate venture</li>\n \t<li name=\"aa2e\" class=\"graf graf--li\">How to vet startup founders for funding</li>\n \t<li name=\"53be\" class=\"graf graf--li\">The way to get great deals on early stage deals</li>\n \t<li name=\"e920\" class=\"graf graf--li\">When to be valuation sensitive</li>\n \t<li name=\"8582\" class=\"graf graf--li\">What to do when deals go south</li>\n \t<li name=\"bf92\" class=\"graf graf--li\">How to build a top angel list syndicate</li>\n</ol>\n<h3 name=\"f1b3\" class=\"graf graf--h4\"><a href=\"https://thesyndicate.vc/sheel-mohnot-with-500-startups-and-the-pitch-on-fintech-fund-size-syndicates-and-exiting-a-startup/\">Sheel Mohnot with 500 Startups and The Fund Size, Syndicates and Exiting a Startup</a></h3>\n<p name=\"b726\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Listen and Learn:</strong></p>\n\n<ol class=\"postList\">\n \t<li name=\"187c\" class=\"graf graf--li\">How founders feel about early exits</li>\n \t<li name=\"857b\" class=\"graf graf--li\">Why fund size isn’t about bigger is better</li>\n \t<li name=\"d4a2\" class=\"graf graf--li\">What to look for in Fintech traction</li>\n \t<li name=\"0639\" class=\"graf graf--li\">Which accelerator should entrepreneurs attend</li>\n \t<li name=\"05fd\" class=\"graf graf--li\">How to handle fintech specific regulations and hurdles</li>\n \t<li name=\"aac7\" class=\"graf graf--li\">Why YCs brand is best but overpriced</li>\n \t<li name=\"1836\" class=\"graf graf--li\">What is the future of blockchain</li>\n \t<li name=\"385f\" class=\"graf graf--li\">How to avoid being “dumb money capital”</li>\n</ol>\n<h3 name=\"a793\" class=\"graf graf--h3\">Closing thoughts</h3>\n<p name=\"b72d\" class=\"graf graf--p\">What were your themes of 2017? Which interviews or posts most stuck out to you?</p>\n<p name=\"e0b2\" class=\"graf graf--p\">What trends are you looking forward to in 2018?</p>\n<p name=\"107f\" class=\"graf graf--p\">As always love to debate and hear other smart people’s perspectives.</p>\n\n<h4 name=\"7095\" class=\"graf graf--h4\">Learned something? Share this around on social to help us reach and impact more investors and startups :)</h4>\n--\n\nOriginally posted on <a href=\"https://medium.com/@itsmattward/venture-investors-year-in-review-cryptocurrencies-icos-ai-the-end-of-uber-and-apple-and-much-4cb947183154\">Medium</a>",
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      "author": "mattward",
      "body": "<p name=\"ff26\" class=\"graf graf--p\">If you haven’t heard, Amazon won ecommerce. Bezos’ juggernaut is the most powerful marketplace and brand the Western world has ever seen (<a href=\"https://thesyndicate.vc/the-amazon-apocalypse-of-ecommerce/\">get my analysis here as an ex 7 figure Amazon seller</a>).</p>\n<p name=\"e622\" class=\"graf graf--p\">But it isn’t the only game in town.</p>\n<p name=\"6a8f\" class=\"graf graf--p\">Every year new startups appear, looking to compete and grab their piece of the pie. As an ex-Amazon seller (and host of a top Amazon podcast), I can say for certain that the majority of the action in ecommerce is on the brand side. It gets easier and easier to source and manufacture product and put your label on it.</p>\n<p name=\"3c16\" class=\"graf graf--p\">These businesses ARE NOT fundable. There is no disruptive innovation, there is no world shattering business or venture scale profits in the pipeline. That is fine.</p>\n<p name=\"7229\" class=\"graf graf--p\">But if you are here, you want to go big. You’re an investor or an operator interested in venture scale ecommerce and looking for an edge.</p>\n<p name=\"680f\" class=\"graf graf--p\">There are two fundable categories of ecommerce: marketplaces and ecommerce brands. To date, the majority of the money and returns have been via marketplaces. Look no further than Amazon, Ebay and Etsy.</p>\n<p name=\"05d7\" class=\"graf graf--p\">(<strong class=\"markup--strong markup--p-strong\">NOTE:</strong> <em class=\"markup--em markup--p-em\">SaaS/Shopify for ecommerce merchants was not included in these categories as it is a B2B SaaS play.</em>)</p>\n<p name=\"1dea\" class=\"graf graf--p\">When it comes to marketplaces, I have covered the topic extensive. I will link to these articles here to avoid repeating myself.</p>\n\n<ol>\n \t<li name=\"34ca\" class=\"graf graf--mixtapeEmbed\"><a href=\"https://thesyndicate.vc/marketplace-monopolies-cult-like-religion-icos/\" data-href=\"https://blog.markgrowth.com/marketplace-monopolies-and-the-cult-like-religion-of-icos-c858813dacd7\" class=\"markup--anchor markup--mixtapeEmbed-anchor\" title=\"https://blog.markgrowth.com/marketplace-monopolies-and-the-cult-like-religion-of-icos-c858813dacd7\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">The Cult-Like Religion of ICOs and End of Amazon?</strong><em class=\"markup--em markup--mixtapeEmbed-em\"></em></a><a href=\"https://blog.markgrowth.com/marketplace-monopolies-and-the-cult-like-religion-of-icos-c858813dacd7\" class=\"js-mixtapeImage mixtapeImage u-ignoreBlock\" data-media-id=\"96c1d2f56ce40997f8f15b260ae79b91\" data-thumbnail-img-id=\"1*ZdcB12TAbsj1Us1T_qSRIw.jpeg\"></a></li>\n \t<li name=\"9af6\" class=\"graf graf--mixtapeEmbed\"><a href=\"https://thesyndicate.vc/network-effects-unbreakable-unregulatable-monopolies-today/\" data-href=\"https://medium.com/p/a5b54745eed2\" class=\"markup--anchor markup--mixtapeEmbed-anchor\" title=\"https://medium.com/p/a5b54745eed2\"><strong class=\"markup--strong markup--mixtapeEmbed-strong\">The 5 Types of Network Effects and How to Hack Them</strong>\n</a><a href=\"https://medium.com/p/a5b54745eed2\" class=\"js-mixtapeImage mixtapeImage u-ignoreBlock\" data-media-id=\"ab9d609cc1a7b27ca524463b90572cb8\" data-thumbnail-img-id=\"0*blguKMqrgSGMRg3a.\"></a></li>\n</ol>\n<p name=\"03e0\" class=\"graf graf--p\">Brand’s business models are getting more interesting, lets take a look.</p>\n<p name=\"95cd\" class=\"graf graf--p\">There are 4 types of disruptive ecommerce businesses:</p>\n\n<ol class=\"postList\">\n \t<li name=\"7c1f\" class=\"graf graf--li\">Direct to consumer brands</li>\n \t<li name=\"347d\" class=\"graf graf--li\">Subscription companies</li>\n \t<li name=\"8a49\" class=\"graf graf--li\">Delivery companies</li>\n \t<li name=\"ef1b\" class=\"graf graf--li\">Experiential commerce companies</li>\n</ol>\n<p name=\"870c\" class=\"graf graf--p\">Let’s look at each of these, their outliers and what the future holds.</p>\n<p name=\"870c\">\n\n<h3 name=\"9485\" class=\"graf graf--h3\">Direct to consumer brands</h3>\n<p name=\"c2d5\" class=\"graf graf--p\">Recently, mega companies have been created by disrupting traditional supply chains.</p>\n<p name=\"d996\" class=\"graf graf--p\">Brands like Casper, @Harry’s and Warby Parker are leading the way. These direct-to-consumer brands cut out the middlemen by selling online and owning manufacturing to give customers better value for their money. So while consumers save a ton; the brands get to boost their margins (fewer mouths to feed), control their supply chain and build defensibility into their business.</p>\n<p name=\"be73\" class=\"graf graf--p\">They all take it a step further as well. The brand becomes the experience.</p>\n<p name=\"1c68\" class=\"graf graf--p\">Casper delivers a mattress in a box. Then it inflates automatically and ready to use. How cool is that.</p>\n\n\n\n<img class=\"graf-image\" data-image-id=\"1*LKueRRNxwuitYkyaIILAzA.jpeg\" data-width=\"600\" data-height=\"353\" src=\"https://cdn-images-1.medium.com/max/1600/1*LKueRRNxwuitYkyaIILAzA.jpeg\" width=\"461\" height=\"271\" alt=\"\" /> <p>Source: Casper</p></figure>\n<p name=\"03f3\" class=\"graf graf--p\">And Harry’s and Warby Parker deliver premium products and a premium experience at pretty affordable price. Their focus on brand keeps consumers coming back because customers love their products. And their NPS and word of mouth work wonders for marketing (Warby Parker — NPS: 91) (Source: NPSBenchmarks.com)</p>\n<p name=\"9500\" class=\"graf graf--p\">But not all DTC brands are successes. The vast majority fail. The reason is the model. Casper isn’t valued at $750M+ because of their mattresses. The company succeeded because the industry was broken.</p>\n<p name=\"34a2\" class=\"graf graf--p\">Buying mattresses is incredibly inefficient. You go to a mattress store, try a ton of beds, spend a bunch of time and have a sleazy salesman trying to sell you. Plus retailers needed a heck of a lot of inventory.</p>\n<p name=\"a10c\" class=\"graf graf--p\">Casper flips the model on its head. There is no distributor/wholesaler and no retail store. By avoiding overhead, middlemen and excess shipping costs, Casper creates a truly unique and valuable experience. And to top it all off, there is a free 100 night sleep trial.</p>\n<p name=\"a43b\" class=\"graf graf--p\">What other company gives you 3+ months to try out a product, especially one you have sex on? Which is another thing the brand does different.</p>\n\n<blockquote name=\"b8c7\" class=\"graf graf--blockquote graf--startsWithDoubleQuote\">“It’s specifically designed and optimized for great sex as well as great sleep” — The Washington Post</blockquote>\n<p name=\"dfc5\" class=\"graf graf--p\">Playing to your strengths with engaging, alternative branding builds buzz — something all of these companies succeeded at.</p>\n\n<h3 name=\"aa81\" class=\"graf graf--h3\">The problem with direct to consumer brands</h3>\n<p name=\"37b6\" class=\"graf graf--p\">Too many startups today try to be Casper for X or Warby Parker for Y… it doesn’t work. Warby was successful because of the broken luxury eyewear market. It was expensive and not democratized. They cut out costs while increasing quality and built a killer company.</p>\n<p name=\"f8ea\" class=\"graf graf--p\">But this approach fails in most areas. If an industry is not “inefficient enough”, a direct to consumer model will not work.</p>\n<p name=\"d4fd\" class=\"graf graf--p\">Startups need a 5–10x improvement to displace the incumbent. Saving Joe Schmo 10% rarely results in unicorns.</p>\n<p name=\"7c62\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Things to look for when starting a DTC brand:</strong></p>\n\n<ul class=\"postList\">\n \t<li name=\"0c6e\" class=\"graf graf--li\">Category with high gross margins and medium to big ticket items — these allow for greater CAC (customer acquisition costs)</li>\n \t<li name=\"6b04\" class=\"graf graf--li\">Category with few entrenched incumbents dominating industry — likely means market costs are inflated with significant room to price cut</li>\n \t<li name=\"8ee3\" class=\"graf graf--li\">Product line where barriers to entry are very large (think massive minimum order quantities or tooling costs)</li>\n \t<li name=\"a436\" class=\"graf graf--li\">Products with some repeat purchasing behavior — reorders really drive LTV</li>\n \t<li name=\"68f1\" class=\"graf graf--li\">Relatively small product line — the fewer skus you sell, the lower the costs and easier it is to focus/improve</li>\n</ul>\n<p name=\"ae98\" class=\"graf graf--p\">If brands don’t check at least 2–3 of those boxes, they will likely will have trouble. The last thing you want with a DTC business is lookalike competition right out of the gate.</p>\n\n<h3 name=\"ea71\" class=\"graf graf--h3\">Subscription companies</h3>\n<p name=\"1ea2\" class=\"graf graf--p\">While DTC companies can also offer subscriptions, the majority of subscription box companies do not own their supply chain.</p>\n<p name=\"34d9\" class=\"graf graf--p\">Throughout 2015 and 2016, subscription businesses were hot. Companies like Blue Apron, Birchbox, Trunk Club and Dollar Shave Club raised~$462M to date, and they are by no means the only ones.</p>\n<p name=\"bf22\" class=\"graf graf--p\">Subscription companies are sexy. The recurring revenue is like SaaS with physical products. This is incredibly rare in retail/ecommerce, hence the excitement.</p>\n\n<h3 name=\"630f\" class=\"graf graf--h3\">The problem with subscription companies</h3>\n<p name=\"eae1\" class=\"graf graf--p\">Lately these companies have come under fire. According to Recode, Blue Apron is the worst performing IPO of 2017, at a valuation just 59% of their previous round.</p>\n\n\n\n<img class=\"graf-image\" data-image-id=\"1*-fg4VVvMM2hWpjhRpLC6iw.jpeg\" data-width=\"865\" data-height=\"549\" src=\"https://cdn-images-1.medium.com/max/1600/1*-fg4VVvMM2hWpjhRpLC6iw.jpeg\" width=\"607\" height=\"385\" alt=\"\" /> Source: BusinessInsider</figure>\n<p name=\"afab\" class=\"graf graf--p\">The problem: churn and unit economics. Delivery businesses are cost intensive, which is why Blue Apron’s raised ~$200M to date (excluding IPO). And all is fine and well when LTV projections hold. But what happens when they don’t?</p>\n<p name=\"ecf6\" class=\"graf graf--p\">The meal kit delivery space is increasingly crowded. Even Amazon is getting in on the action. Even though the company created demand where it previously did not exist, users are switching to cheaper providers or passing on meal kits entirely. That spells trouble.</p>\n<p name=\"1cfa\" class=\"graf graf--p\">A similar problem occurs in fashion. You only need so many shoes. More and more isn’t appreciated and eventually becomes problematic. So how long do you stick around?</p>\n<p name=\"1c0b\" class=\"graf graf--p\">This is where predictable, repeat purchasing comes into play. This is why DSC has been so successful. Men need to shave, it is that simple. Acquire a customer and you can potentially keep him for life (hence why Unilever paid $1B to acquire DSC)</p>\n<p name=\"7811\" class=\"graf graf--p\">Repeat buying behaviors are sacred for subscription companies. Ones that do not tap repeat buying behaviors are toast.</p>\n<p name=\"c716\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Things to look for when starting a subscription business:</strong></p>\n\n<ul class=\"postList\">\n \t<li name=\"53b6\" class=\"graf graf--li\">Product with significant repeat purchasing behavior, <strong class=\"markup--strong markup--li-strong\">ideally consumable in nature</strong></li>\n \t<li name=\"5c68\" class=\"graf graf--li\">Category with few innovations &amp; startups</li>\n \t<li name=\"1681\" class=\"graf graf--li\">Product line where barriers to entry are very large</li>\n \t<li name=\"7432\" class=\"graf graf--li\">Potential upsells and re-monetization strategies</li>\n</ul>\n<h3 name=\"651c\" class=\"graf graf--h3\">Delivery companies</h3>\n<p name=\"8ded\" class=\"graf graf--p\">As an angel investor, I would avoid these. Delivery is a race to the bottom. There is no value and few ways to differentiate. If you get my food here 5 minutes faster or $2 cheaper, I’ll use you every time.</p>\n<p name=\"2304\" class=\"graf graf--p\">Customers do not care who is delivering: Uber, Instacart, Amazon… it is all the same.</p>\n<p name=\"f7ff\" class=\"graf graf--p\">In essence delivery companies are supply and demand aggregators. Companies like Instacart (groceries) and DoorDash (takeout) rush food to you fast.</p>\n<p name=\"26fc\" class=\"graf graf--p\">There is a problem though. Supply is not proprietary. What prevents PizzaHut from offering delivery or adding their menu to GrubHub? (<em class=\"markup--em markup--p-em\">Or Amazon from acquiring Whole Foods, Instacart’s #1 offering — </em><a href=\"https://hackernoon.com/amazons-acquisition-of-whole-foods-gameover-groceries-71098afa07c9\" data-href=\"https://hackernoon.com/amazons-acquisition-of-whole-foods-gameover-groceries-71098afa07c9\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><em class=\"markup--em markup--p-em\">More on the implications of Amazon’s acquisition of Whole Foods here</em></a>)</p>\n<p name=\"4780\" class=\"graf graf--p\">The answer of course is nothing. And a business built on paying to acquire customers without any kind of moat is a sand castle that slowly sinks.</p>\n<img class=\"graf-image aligncenter\" data-image-id=\"1*lSb8TCidx5NKDolArMF3nA.jpeg\" data-width=\"500\" data-height=\"375\" src=\"https://cdn-images-1.medium.com/max/1600/1*lSb8TCidx5NKDolArMF3nA.jpeg\" width=\"316\" height=\"237\" /></figure>\n<p name=\"e033\" class=\"graf graf--p\">These businesses were hot for a time but the unit economics, like subscription startups has failed to follow through. Competitive pressures drive down prices and margins.</p>\n<p name=\"9fc7\" class=\"graf graf--p\">No one wins in a race to the bottom.</p>\n<p name=\"551e\" class=\"graf graf--p\">And even for companies breaking even or making money, what prevents competitors with cash from bidding them into oblivion (<a href=\"https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-knows-it-1566fb51b308\" data-href=\"https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-knows-it-1566fb51b308\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><em class=\"markup--em markup--p-em\">this is the same problem with Uber’s business model, detailed here</em></a>)</p>\n<p name=\"a684\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">BONUS:</strong> For more, h<em class=\"markup--em markup--p-em\">ere is an interview I did with </em><a href=\"https://medium.com/u/3ac9e631c2fc\" data-href=\"https://medium.com/u/3ac9e631c2fc\" data-anchor-type=\"2\" data-user-id=\"3ac9e631c2fc\" data-action-value=\"3ac9e631c2fc\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\"><em class=\"markup--em markup--p-em\">Semil Shah</em></a><em class=\"markup--em markup--p-em\">, investor in Instacart and DoorDash on the future of ecommerce and retail.</em></p>\n\n<h3 name=\"fcda\" class=\"graf graf--h3\">Experiential commerce</h3>\n<p name=\"8b8d\" class=\"graf graf--p\">Last but certainly not least is experiential commerce. In my opinion this is where the money lies. The future isn’t about small changes to the past, it is about reinventing what it means to shop.</p>\n<p name=\"f483\" class=\"graf graf--p\">There are two categories of experiential commerce: local and virtual (both real and virtual), both are interesting.</p>\n<p name=\"19d2\" class=\"graf graf--p\">And many startups are looking into the local commerce concept and applying it to ecommerce.</p>\n\n<h3 name=\"743f\" class=\"graf graf--h3\">Local commerce</h3>\n<p name=\"176c\" class=\"graf graf--p\">Companies like Warby Parker and Amazon are actually building out retail stores as the rest of retail dies. And it makes sense. Being closer to customers allows brands to more efficiently grow with and understand their customers.</p>\n<p name=\"30ec\" class=\"graf graf--p\">This is a flip flop of traditional shopping. Today you go to the store, try out a phone at Best Buy and buy it online, in the store, from Amazon.com. You save 11% and got a chance to try it before you buy it. You are happy, Best Buy isn’t.</p>\n<p name=\"862f\" class=\"graf graf--p\">Why fight customer behavior? Amazon recognizes the value of window shopping and trying things out. Lure a customer into a store with a one-click checkout and average order size will increase.</p>\n<p name=\"4636\" class=\"graf graf--p\">Retail brands need to follow suit. Reduce footprint, increase online stock and start selling. Unfortunately it is not that easy — which is why most will die.</p>\n<p name=\"7127\" class=\"graf graf--p\">This creates an interesting opportunity for startups and investors though. As large companies see the end in sight, they fight tooth and nail to survive. Often that equates to buying startups. Look at General Motors’s $1B acquisition of Cruise Automation or Ford’s investment in Argo AI. The incumbents will pay big bucks to save their skin.</p>\n<p name=\"682e\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Things to look for when considering local retail ecommerce:</strong></p>\n\n<ul class=\"postList\">\n \t<li name=\"c23d\" class=\"graf graf--li\">Products with large cost to size/weight ratios</li>\n \t<li name=\"9612\" class=\"graf graf--li\">Category with high gross margins and medium to big ticket items — these allow for greater CAC (customer acquisition costs)</li>\n \t<li name=\"dba1\" class=\"graf graf--li\">Category with few innovative competitors</li>\n \t<li name=\"156c\" class=\"graf graf--li\">Product line where returns are high without trying product first</li>\n</ul>\n<p name=\"fee3\" class=\"graf graf--p\">But big box retailers can do this too. Cooking classes in Kroger, a senior citizen electronics class at BestBuy, dog care classes at <a href=\"https://medium.com/u/4cee6293aa19\" data-href=\"https://medium.com/u/4cee6293aa19\" data-anchor-type=\"2\" data-user-id=\"4cee6293aa19\" data-action-value=\"4cee6293aa19\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\">Petco</a>… there are ways for retail to save itself. Unfortunately understanding the customer and creating experiences is harder than offering yet another flash sale.</p>\n<p name=\"7905\" class=\"graf graf--p\">Death by a million deals…?</p>\n\n<h3 name=\"99fc\" class=\"graf graf--h3\">Virtual real world commerce</h3>\n<p name=\"8e3b\" class=\"graf graf--p\">The future of commerce surely isn’t all local. Many are betting big on VR and AR for enhanced online shopping.</p>\n<p name=\"030a\" class=\"graf graf--p\">When shopping for furniture, nothing beats seeing the sofa in your home — except a virtual world where you walk through an infinite IKEA from anywhere that seamlessly tailors itself to your tastes.</p>\n<p name=\"06fa\" class=\"graf graf--p\">There are tons of ways these trends can play out with value creation from many angles. As a rule of thumb, I prefer picks &amp; shovels businesses — products or services that help other businesses succeed. As such, I am interested in marketplaces and technologies facilitating virtually enhanced ecommerce. If it improves conversion rates and creates unfair advantages, it is valuable — if it can be applied across a range of businesses it is exponentially so.</p>\n<p name=\"6403\" class=\"graf graf--p\">But AR and VR are not the only types virtual experiential commerce. Brit Morin of Brit + Co is creating a lasting brand by baking real world experiences right into the product.</p>\n<p name=\"108f\" class=\"graf graf--p\">What started as a DIY hobbyist site now sell video classes on a wide range of hobbyist activities like knitting, scrapbooking, handicrafting and more — and they make great money from that. It gets better though.</p>\n\n\n\n<img class=\"graf-image\" data-image-id=\"1*k3LCogm1J8nkgMISlFKgZg.jpeg\" data-width=\"600\" data-height=\"308\" src=\"https://cdn-images-1.medium.com/max/1600/1*k3LCogm1J8nkgMISlFKgZg.jpeg\" width=\"555\" height=\"285\" alt=\"\" /> <p>Source: Brit + Co</p>\n<p name=\"8021\" class=\"graf graf--p\">Brit + Co sells kits too. Want to take our course on sewing? Here is everything you need (at a nice, high margin price point). They built a brand around creative empowerment, started charging for courses and added a significant ecommerce element.</p>\n<p name=\"619b\" class=\"graf graf--p\">That is a defensible business. That is a company killing it with virtual experiences and content driving real world sales.</p>\n\n<h3 name=\"e105\" class=\"graf graf--h3\">Futuristic types of virtual commerce</h3>\n<h3 name=\"b1ac\" class=\"graf graf--h3\">Virtual world commerce</h3>\n<p name=\"3acc\" class=\"graf graf--p\">Freemium is an increasingly popular model for games. Play your favorite MMOG, FPS or RPG game with friends and of course you want bonuses — better armor, more lives, bling… for one reason or another, people PAY for virtual goods.</p>\n<p name=\"bc75\" class=\"graf graf--p\">Expect this trend to continue. If and when virtual reality becomes ubiquitous, more and more commerce will occur with virtual goods.</p>\n<p name=\"bfe7\" class=\"graf graf--p\">In minecraft people build worlds. They spend hundreds of hours perfecting them. Those same individuals (and many more) will want to perfect their virtual experiences — the right sofa, new nikes, an anti-gravity machine… the opportunities are endless.</p>\n\n\n\n<img class=\"graf-image\" data-image-id=\"1*R291sl3VdAo6P8Y7rxIvYg.png\" data-width=\"400\" data-height=\"225\" src=\"https://cdn-images-1.medium.com/max/1600/1*R291sl3VdAo6P8Y7rxIvYg.png\" width=\"400\" height=\"225\" alt=\"\" /><p>Source: VRFocus</p>\n<p name=\"ac8a\" class=\"graf graf--p\">If and when people begin spending more and more time in VR, expect the economies to boom. It will be a goldrush and very likely a blackmarket to begin with. The entire structure of “society” and “commerce” will need to be rebuilt and redefined.</p>\n<p name=\"b0a0\" class=\"graf graf--p\">What are the rules in VR? Is stealing wrong?</p>\n<p name=\"a8a1\" class=\"graf graf--p\">And what about the world’s oldest profession? Surely prostitution, though not typically considered ecommerce, would enter into this realm. In a virtual world, who is harmed?</p>\n<p name=\"31ae\" class=\"graf graf--p\">Look at the porn industry. As vile as it may be, they are some of the earliest innovators and adopters of new technologies. I’d argue porn will likely lead the way on pushing VR.</p>\n<p name=\"7221\" class=\"graf graf--p\">According to The Huffington Post, about 30% of the data transferred across the internet is porn. And in a new world with new rules, who sets the laws? Who enforces them? Virtual prostitution will drive much of the commerce engines and business models of VR. It will create frameworks and opportunities for other service providers to begin offering and monetizing their skills.</p>\n<p name=\"688a\" class=\"graf graf--p\">And all this is incredibly controversial. Are we in West World yet?</p>\n\n\n\n<img class=\"graf-image\" data-image-id=\"1*ed01I94UW-NFDzv6zH7hMQ.jpeg\" data-width=\"1200\" data-height=\"675\" src=\"https://cdn-images-1.medium.com/max/1600/1*ed01I94UW-NFDzv6zH7hMQ.jpeg\" width=\"592\" height=\"333\" alt=\"\" /> <p>Source: MikesMovieCave</p>\n<h3 name=\"57eb\" class=\"graf graf--h3\">And what about 3D printing?</h3>\n<p name=\"da27\" class=\"graf graf--p\">Where do virtual assets you create in the real world land? Will patents on 3D printed designs become mainstream?</p>\n<p name=\"07e9\" class=\"graf graf--p\">Either way society is looking at some shifts. If 3D printing technology FINALLY gets towards what has been overpromised for years, the world’s supply chains would break.</p>\n<p name=\"ce64\" class=\"graf graf--p\">What purpose would manufacturing in China have if I can print an iPhone at home? Surely human workers will be outpaced by machines. When these machines become small enough and ubiquitous enough, the majority of sea shipments would cease to exist.</p>\n<p name=\"c3e0\" class=\"graf graf--p\">But that is betting on a future that 3D printing has failed to deliver to date. Either way, lets forecast the future. Who wins here?</p>\n<p name=\"aeab\" class=\"graf graf--p\">Not manufacturers. Not 3D printer makers either.</p>\n<p name=\"ba74\" class=\"graf graf--p\">3D printing makes supply chains flat. That means vertical integration opposes their very nature. So real money won’t be made by the makers… anyone can do that. And that drives competition in a race to the bottom.</p>\n<p name=\"afb4\" class=\"graf graf--p\">To win the game, you need to own the platform, the marketplace or the IP.</p>\n<p name=\"561e\" class=\"graf graf--p\">Android is a good metaphor for the platform play. You own the operating system, aggregate data and can advertise or upsell as you see fit.</p>\n<p name=\"3782\" class=\"graf graf--p\">For marketplaces, think Amazon. People don’t want to go to a million torrent sites to find the designs, they want fast and easy. A marketplace connecting printers with IP creates value for both parties and a simple commission structure for the marketplace (aggregator of supply and demand)</p>\n<p name=\"2040\" class=\"graf graf--p\">And of course IP. Patent trolls make money. But so do product creators. Consider 3D intellectual property like an ebook —  create it once and continuously sell. Owning the IP is the least scalable of these models but a great option for DIYers and early adopters looking to own a piece of the pie.</p>\n\n<h3 name=\"d871\" class=\"graf graf--h3\">What do you think?</h3>\n<p name=\"c39c\" class=\"graf graf--p\">Lets face it, I don’t have a crystal ball. The world evolves on its own and we can never really predict the future. But we can guess…</p>\n<p name=\"e923\" class=\"graf graf--p\">So what do you guess? What are your thoughts on the article, the future of ecommerce and the implications for society as a whole?</p>\n<p name=\"c6a2\" class=\"graf graf--p\">As always love to debate and hear other smart people’s perspectives.</p>\n\n<h4 name=\"7095\" class=\"graf graf--h4\">Learned something? Click the share buttons on the side to say “thanks!” and help others find this article.</h4>\n--\n\nOriginally posted on <a href=\"https://thinkgrowth.org/the-broken-business-of-ecommerce-and-why-porn-and-prostitution-can-fix-it-6aac8cfa51dd\">Medium</a>",
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      "body": "<p name=\"4846\" class=\"graf graf--p\">Apple and Google are two of the strongest, most profitable tech giants today. But both are in for a kick in the ass, here is why.</p>\n<p name=\"ef98\" class=\"graf graf--p\">Disruption is the name of the game. Great businesses die from one of two main reasons: failure to innovate or a powerful disruption. From my vantage point, both Apple and Google are firmly in those categories.</p>\n\n<h2 name=\"502c\" class=\"graf graf--h3\">An Apple a day and amazing profits.</h2>\n<p name=\"80ba\" class=\"graf graf--p\">Steve Jobs must be rolling over in his grave. From one of the great innovators of all time to one of business’s most logistically efficient conmen, Tim Cook is driving Apple into the ground and grabbing dollars by the fistful.</p>\n<p name=\"8e36\" class=\"graf graf--p\">Everyone understands the pros and cons of short vs long term thinking/gratification. And Apple for one is focused on the short term. Cook’s greatest innovations have been dongles and adapters and connectors and crap designed to milk fanboys for all they are worth. Apple isn’t focused on usability or innovation anymore, they are focused on annoying, high margin accessories that have driven profits and market caps through the roof in recent years.</p>\n\n\n\n<img class=\"graf-image\" data-image-id=\"1*NbXZTfk9oenQ32l3HPEY_Q.png\" data-width=\"1455\" data-height=\"1173\" src=\"https://cdn-images-1.medium.com/max/1600/1*NbXZTfk9oenQ32l3HPEY_Q.png\" width=\"695\" height=\"560\" alt=\"\" /> Source: TheVerge\n<p name=\"e474\" class=\"graf graf--p\">Removing ports, removing headphone jacks, removing all simple functionality to force an additional purchase, all in the name of profit and aesthetics is downright troublesome. And Apple’s flops on new product lines and innovation are awfully embarrassing — the Macbook Pro slider, the Watch, the car, the marginally better iPhone at ever increasing prices…</p>\n<p name=\"1712\" class=\"graf graf--p\">Apple is building fluff features for the sake of showmanship and sales… that is usually a formula for disaster.</p>\n<p name=\"1712\"></p>\n<p name=\"eb83\" class=\"graf graf--p\">The question is how long will Apple fans feel okay being dragged through the dirt and robbed blind by Apple. It isn’t what have you done for me, it is what have you done for me lately… is Apple’s brand of old enough to carry to quick buck appearance of greatness and brand?</p>\n<p name=\"246e\" class=\"graf graf--p\">Rome falls at the pinnacle of it’s opulence and Apple’s $5B spaceship headquarters is arguably the best product since the iPhone. Mhm.</p>\n<p name=\"5913\" class=\"graf graf--p\">Bold prediction: Apple has peaked and short term greed has offset long term growth mindset. This is a company that HAS to buy someone to save their own ass and remain relevant.</p>\n<p name=\"4f7d\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Logical Acquisitions</strong>: Netflix, <a href=\"https://medium.com/u/60a317bb70e4\" data-href=\"https://medium.com/u/60a317bb70e4\" data-anchor-type=\"2\" data-user-id=\"60a317bb70e4\" data-action-value=\"60a317bb70e4\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\">Spotify</a>, AR acqui-hire (and definitely not <a href=\"https://medium.com/u/24413768aadb\" data-href=\"https://medium.com/u/24413768aadb\" data-anchor-type=\"2\" data-user-id=\"24413768aadb\" data-action-value=\"24413768aadb\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\">Tesla</a>)</p>\n<p name=\"e955\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Logical Expansions:</strong> Focus on podcasts and advertising to unseat radio and drive ad dollars through iTunes.</p>\n<p name=\"c3e6\" class=\"graf graf--p\">Podcasting and curated streaming content creates obvious synergies with iPhone and value-add upsells to existing customer base.</p>\n<p name=\"188e\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Hailmary Shot:</strong> Augmented reality could save Apple, if they are smart enough to execute well. Apple is a hardware/software company with raving fans and design aesthetic. If Apple can outperform competitors and create a new category defining product, AR is almost certainly it. Augmented reality will disrupt touch and screen based interfaces. Apple needs to lead from the front, rather than following to keep up and keep the brand relevant.</p>\n\n<h2 name=\"c502\" class=\"graf graf--h3 graf--startsWithDoubleQuote\">“Ok Google, I don’t want to hear another ad”</h2>\n<p name=\"0f20\" class=\"graf graf--p\">Voice is a paradigm shift, especially for Google. And it is ironic. Google is the leader in voice and NLP, clearly outperforming competitors like Alexa, Cortana and Siri (a joke) in the fields of voice.</p>\n<p name=\"6db1\" class=\"graf graf--p\">But that begs a bigger question: what happens to search results and paid ads without the screen interface? Will Google just read ads all day like Billy Mays? Or is there an ounce of integrity left?</p>\n<p name=\"af84\" class=\"graf graf--p\">That is question. Currently Google overloads search results with shitty ads. But in voice, there is no page 2, page 3 or even #2. It is winner take all. You don’t want some device reading out a million options. You want the best option and you want it immediately.</p>\n<p name=\"c5e3\" class=\"graf graf--p\">Which is why Amazon is poised to win. Alexa will be your personal Amazon Basics shopping assistant (<a href=\"https://medium.com/@itsmattward/the-amazon-apocalypse-of-ecommerce-7096ce3c6aa5\" data-href=\"https://medium.com/@itsmattward/the-amazon-apocalypse-of-ecommerce-7096ce3c6aa5\" class=\"markup--anchor markup--p-anchor\" target=\"_blank\" rel=\"noopener\">see more about Amazon engulfing ecommerce here</a>). That spells trouble for Google. Amazon accounts for a huge (yet ever dwindling) portion of Google’s revenue (in 2013 Amazon spent $157.7 million on Google ads, by 2016 their marketing spend was up to $7B — Sources: DigitalStrategyConsulting, BusinessInsider)</p>\n<p name=\"3fe3\" class=\"graf graf--p\">But Amazon no longer needs to advertise on Google. Amazon is organically outranking everything else and has a massive customer base who consistently shop direct via Amazon.</p>\n<p name=\"d2a6\" class=\"graf graf--p\">So if voice disrupts Google core search/ads business, the business fueling their driverless cars, their wifi balloons, Google Ventures and all of Alphabet’s interesting arms, how can the company survive?</p>\n<p name=\"c5b4\" class=\"graf graf--p\">Obviously they have been thinking about this, which explains their weird assortment of products and projects. But it still poses a fundamental question: in a world of voice, what is Google?</p>\n<p name=\"f2ee\" class=\"graf graf--p\">On a related note, Google recently partnered with Walmart.com. Talk about a match made in hell. Both companies could care less about the other and realize the futility of working together but what option do they have? Google NEEDS an ecommerce play. And Walmart can’t figure out acquisition and growth against Amazon. Talk about two drowning men each pulling each other down.</p>\n<p name=\"bf47\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Logical Acquisitions/Partnerships:</strong> Lyft, Blockchain/distributed internet startup (Block.one for instance), Overcast (or other podcasting app/platform)</p>\n<p name=\"1841\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Logical Expansions: </strong>Like Google, Apple has an incredible opportunity to win AR/VR and/or voice. They ARE NOT a hardware company though they are trying to be. If Google can create the infrastructure and tools needed in these new mediums, they might be able retain their role as operating system of the internet.</p>\n<p name=\"3076\" class=\"graf graf--p\"><strong class=\"markup--strong markup--p-strong\">Hailmary Shot: </strong>Google should be working on a blockchain based Internet 4.0. If distributed networks are able to displace incumbent closed systems, all existing internet companies will be in trouble. Google is uniquely suited with their experience building/designing much of how we use the web today to try and create the web of tomorrow.</p>\n\n<h3 name=\"c89f\" class=\"graf graf--h3\">Closing thoughts</h3>\n<p name=\"993d\" class=\"graf graf--p\">Google’s great work in voice and NLP is disrupting their core business. Apple’s short-sightedness insignificant upsells is setting the company up for challenges.</p>\n<p name=\"8e34\" class=\"graf graf--p\">We have two of the greatest tech companies of all time, both put in positions of potential peril. How can they survive, how can they thrive?</p>\n<p name=\"1b40\" class=\"graf graf--p\">Google’s partnership with <a href=\"https://medium.com/u/54708edc644b\" data-href=\"https://medium.com/u/54708edc644b\" data-anchor-type=\"2\" data-user-id=\"54708edc644b\" data-action-value=\"54708edc644b\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\">Lyft</a> is a HUGE plus here. These two can win autonomous, in which case Google will successfully morph its core business and wind up winning anyways.</p>\n<p name=\"0786\" class=\"graf graf--p\">Apple on the other hand has more work ahead of them. Google has been creatively probing the future. Apple has been content to hide and hold profits and build a nest egg.</p>\n<p name=\"344c\" class=\"graf graf--p\">Will both companies survive the next 15 years? Will either? Who?</p>\n<p name=\"0c76\" class=\"graf graf--p\">Would love to hear your thoughts on the future for Google and Apple. What are your favorites from the Big 4?</p>\n<p name=\"55b6\" class=\"graf graf--p\">I got my money on Amazon (<a href=\"https://thesyndicate.vc/the-amazon-apocalypse-of-ecommerce/\" data-href=\"https://medium.com/@itsmattward/the-amazon-apocalypse-of-ecommerce-7096ce3c6aa5\" class=\"markup--anchor markup--p-anchor\" target=\"_blank\" rel=\"noopener\">Here is why Amazon is killing ecommerce</a>).</p>\n<p name=\"9e6d\" class=\"graf graf--p\"><em class=\"markup--em markup--p-em\">If you got something actionable or valuable from this post or enjoyed the debate, </em><strong class=\"markup--strong markup--p-strong\"><em class=\"markup--em markup--p-em\">go ahead share it on social!</em></strong></p>\n<p name=\"9e6d\">--</p>\n<p name=\"9e6d\">Originally posted on <a href=\"https://hackernoon.com/the-death-of-google-and-end-of-apple-1922d9d256bf\">Medium</a></p>",
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      "body": "<p name=\"dc65\" id=\"dc65\" class=\"graf graf--p graf-after--h3\">With great power comes great profit, and then even the innovative get fat and lazy. This was the paradigm pre 2000s. Rome rose and fell. Microsoft’s monopoly was cracked.<a href=\"https://medium.com/@Kodak\" data-href=\"https://medium.com/@Kodak\" data-anchor-type=\"2\" data-user-id=\"27d2ab3136de\" data-action-value=\"27d2ab3136de\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\">Kodak</a>created the digital camera and kept it from customers.</p>\n<p name=\"5f42\" id=\"5f42\" class=\"graf graf--p graf-after--p\">The bigger they are, the harder they fall and the harder they fight. But historically failure was inevitable — no man, country or company ever reigned supreme in perpetuity. Chaos and innovation simply would not allow it.</p>\n<p name=\"0bee\" id=\"0bee\" class=\"graf graf--p graf-after--p\">Fast forward to today. We are entering a world where this may no longer be the case. The companies of today are infinitely more powerful and resourceful than the empires and industry moguls of old.</p>\n<p name=\"1717\" id=\"1717\" class=\"graf graf--p graf-after--p\">Established, valuable networks are nearly impossible to create, replicate or overcome. A 10% upgrade isn’t enough, you need 10x.</p>\n<p name=\"cfb5\" id=\"cfb5\" class=\"graf graf--p graf-after--p\">Historically this was hard but inevitable. New changes and technologies propelled era after era out of existence at rapidly increasing rates (recently much in relation to Moore’s Law).</p>\n\n<h3 name=\"0ba9\" id=\"0ba9\" class=\"graf graf--h3 graf-after--p\">Today is different</h3>\n<p name=\"fb0c\" id=\"fb0c\" class=\"graf graf--p graf-after--h3\">Unlike even 10–15 years ago, tech giants are creating the bulk of the wealth and innovation in the economy. Companies like Facebook, Google and Amazon have more money than most small nations and more control than any one government, should they so choose.</p>\n<p name=\"c36e\" id=\"c36e\" class=\"graf graf--p graf-after--p\">These giants don’t just fight competition, they destroy it. The leaders of today have learned the lessons of old and acquire promising startups often and early to protect their own ass. They have the most talent, the most money, the most data and no moral quandries with flat out copying competitors.</p>\n\n<h3 name=\"a2e0\" id=\"a2e0\" class=\"graf graf--h3 graf-after--p\">Copy and paste</h3>\n<p name=\"8120\" id=\"8120\" class=\"graf graf--p graf-after--h3\">In an era where user experience is everything and data is king, how can startups compete? US Anti Trust laws are dated. They define monopolies not by their power and control, but by negative impacts (specifically price gouging) experienced by customers.</p>\n<p name=\"bc36\" id=\"bc36\" class=\"graf graf--p graf-after--p\">When you search for dinner and Google shows you your favorite restaurants, knows your preferences, suggests a great vegan cafe and books you a table, how can consumers complain. It is seamless, “Google just gets me.”</p>\n<p name=\"d13c\" id=\"d13c\" class=\"graf graf--p graf-after--p\">But Google scraped<a href=\"https://medium.com/@YelpInc\" data-href=\"https://medium.com/@YelpInc\" data-anchor-type=\"2\" data-user-id=\"469a0b267942\" data-action-value=\"469a0b267942\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\">Yelp</a>’s database, showed reviews, cloned an<a href=\"https://medium.com/@OpenTable\" data-href=\"https://medium.com/@OpenTable\" data-anchor-type=\"2\" data-user-id=\"5ff2f5e174ba\" data-action-value=\"5ff2f5e174ba\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\">OpenTable</a>and booked a place, all without leaving your search browser. And guess what, the government does not care.</p>\n<p name=\"89f3\" id=\"89f3\" class=\"graf graf--p graf-after--p\">Let’s not even start on Snapchat and Instagram. Snap’s growth has flatlined and Instagram appears unstoppable.</p>\nhttps://steemitimages.com/DQmQJ7dWsQJLhDFGTtMtQXVjbAJoYam8UPi3Ci5g38Z8gRc/01-300x158.png\n\n<h3 name=\"c0a9\" id=\"c0a9\" class=\"graf graf--h3 graf-after--figure\">Try it before you buy it</h3>\n<p name=\"0fc6\" id=\"0fc6\" class=\"graf graf--p graf-after--h3\">Almost all giants have all been accused of Microsoft like monopolistic tendencies. They lure startups in with talks of acquisition, pick apart the tech, pass on the deal and build it in-house. Then thanks to network effects and enormous, engaged user bases, Facebook, Amazon and Google can deploy and dominate the market — just ask<a href=\"https://medium.com/@davemorin\" data-href=\"https://medium.com/@davemorin\" data-anchor-type=\"2\" data-user-id=\"652de9fe92e3\" data-action-value=\"652de9fe92e3\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\">DAVE MORIN</a>.</p>\n<p name=\"5638\" id=\"5638\" class=\"graf graf--p graf-after--p\">And when Google and Facebook control the channels where startups acquire customers, a small tweak to the algorithm ensures their competitors drift in obscurity.</p>\n<p name=\"8d3e\" id=\"8d3e\" class=\"graf graf--p graf-after--p\">Sounds like anti-trust is in order. But…</p>\n\n<h3 name=\"6af2\" id=\"6af2\" class=\"graf graf--h3 graf-after--p\">More powerful than govt</h3>\n<p name=\"7d28\" id=\"7d28\" class=\"graf graf--p graf-after--h3\">And this is why we find ourselves attending congressional hearings on the alarming power of tech and its ability to influence elections (<em class=\"markup--em markup--p-em\">on a sidenote, America has aggressively influenced dozens if not 100s of elections worldwide so it is hard to really whine about being on the receiving side</em>).</p>\nhttps://steemitimages.com/DQmf8hjjLH4yDBaMYFCUt1m7tqwGfgLPM3KSL9CoV9iGL6q/putin.jpeg\n<p name=\"7d28\">\nSource: Kremlin Press Page</p>\n<p name=\"ca8e\" id=\"ca8e\" class=\"graf graf--p graf-after--figure\">But these hearings and debates are a joke. The regulators assigned do not understand the underlying issue — network effects and user experience.</p>\n<p name=\"0bf8\" id=\"0bf8\" class=\"graf graf--p graf-after--p\">Amazon’s a great example of this. Amazon aims to kill all 3rd party sellers, yet brands CANNOT afford not to sell on Amazon (<a href=\"https://hackernoon.com/the-amazon-apocalypse-of-ecommerce-7096ce3c6aa5\" data-href=\"https://hackernoon.com/the-amazon-apocalypse-of-ecommerce-7096ce3c6aa5\" class=\"markup--anchor markup--p-anchor\" target=\"_blank\" rel=\"noopener\">more on this here</a>). The rewards are too great. Like eating fastfood, it is great in the short term and deadly in the long run.</p>\n<p name=\"c2d2\" id=\"c2d2\" class=\"graf graf--p graf-after--p\">By building the West’s strongest ecommerce marketplace (Alibaba and Taobao in China are actually stronger), Amazon has become untouchable. Brands have to play ball and so do the regulators. Imagine the senator or congressman who costs his district a shot at Amazon’s 2nd HQ? No point running for re-election then. Consumer’s love Amazon. It is fast, easy, cheap and convenient. You can order ANYTHING at the click of a button and have it delivered ASAP.</p>\n<p name=\"3cd0\" id=\"3cd0\" class=\"graf graf--p graf-after--p\">[LIKE THIS ARTICLE SO FAR? THEN YOU’LL REALLY WANT TO SIGN UP FOR MY NEWSLETTER<a href=\"https://thesyndicate.vc/subscribe/\" data-href=\"https://thesyndicate.vc/subscribe/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\">OVER HERE</strong></a> — AND GET SOME FREE BONUSES!]</p>\n\n<h3 name=\"af12\" id=\"af12\" class=\"graf graf--h3 graf-after--p\">Too big to fail</h3>\n<p name=\"fbe3\" id=\"fbe3\" class=\"graf graf--p graf-after--h3\">The banks got bailouts because they screwed consumers, made money on bad loans and were too big to fail. They did everything wrong and were rewarded. At this point Amazon, Facebook and Google are the utilities of today.</p>\n<p name=\"74cc\" id=\"74cc\" class=\"graf graf--p graf-after--p\">Shutdown Amazon and millions of merchants lose their livelihoods. And customers would rebel. How else can I get my subscription toilet paper delivered?</p>\n<p name=\"7b72\" id=\"7b72\" class=\"graf graf--p graf-after--p\">Plus ~70% of internet traffic goes through AWS. Can you imagine the economic ramifications of in essence turning off the internet?</p>\n<p name=\"e3f6\" id=\"e3f6\" class=\"graf graf--p graf-after--p\">And what about Google? Google search accounts for 77–80% of search traffic. Google Chrome is the most popular browser with 44.5–63.6% of all users (depending on source). And Gmail is no different with over 1B monthly active users — email is the lifeblood of most businesses….</p>\n<p name=\"dd54\" id=\"dd54\" class=\"graf graf--p graf-after--p\">Don’t forget Youtube, and Google Maps, and your calendar… oh, and all of Android.</p>\n<p name=\"8f76\" id=\"8f76\" class=\"graf graf--p graf-after--p\">Facebook is the same thing. Families and friends would be literally ripped apart. Experiences lost, billions of family photos forgotten… Between Facebook, Messenger, Whatsapp and Instagram,<a href=\"https://medium.com/@markzuckerberg\" data-href=\"https://medium.com/@markzuckerberg\" data-anchor-type=\"2\" data-user-id=\"c79346ea7c9a\" data-action-value=\"c79346ea7c9a\" data-action=\"show-user-card\" data-action-type=\"hover\" class=\"markup--user markup--p-user\" target=\"_blank\" rel=\"noopener\">Mark Zuckerberg</a>controls billions of individuals and owns ALL of their data.</p>\n<p name=\"c1eb\" id=\"c1eb\" class=\"graf graf--p graf-after--p\">When you get used to a rare luxury, it goes from being scarce to being something you cannot live without. Any of these 3 companies could cripple the internet, the American government and the world economy at large.</p>\n<p name=\"e421\" id=\"e421\" class=\"graf graf--p graf-after--p\">During the Cold War we called this equilibrium Mutually Assured Destruction. Speaking of Russia…\n\nhttps://steemitimages.com/DQmVLHhNpDHhK9FRTzjNdDT7Tzgk8JH15xTQJB58c3N628h/nuke.jpeg\nSource: Wikipedia</p>\n\n<h3 name=\"566b\" id=\"566b\" class=\"graf graf--h3 graf-after--figure\">Social Engineering and News</h3>\n<p name=\"086a\" id=\"086a\" class=\"graf graf--p graf-after--h3\">One of the fascinating effects of social media and our connected world is the rate at which news and information spread. Yet as we’ve seen, facts can be falsified. Propaganda is the use of biased or misleading information to promote a political cause or point of view. And it has never been so influential.</p>\n<p name=\"bd63\" id=\"bd63\" class=\"graf graf--p graf-after--p\">People are inherently lazy. They read the headline and skip the story. And due to the nature of clicks and impressions and the flaws with modern media and “journalism”, we’ve incentivized a culture of click bait and intellectual garbage.</p>\n<p name=\"be80\" id=\"be80\" class=\"graf graf--p graf-after--p\">I don’t have an answer for this. But the algorithms are driving this change. As traditional journalism dies, something MUST take its place. And the terrifying thought concerns the power and control of these colossal companies.</p>\n<p name=\"bbbf\" id=\"bbbf\" class=\"graf graf--p graf-after--p\">Zuckerberg has 2.1B+ MAUs. What happens when a megalith tech company starts to push the limits or censor negative and hateful content? The path to hell is paved in good intentions and absolute power corrupts absolutely (just look at politicians).</p>\n<p name=\"c8eb\" id=\"c8eb\" class=\"graf graf--p graf-after--p\">These social dynamics make Facebook and Google nearly unassailable (<a href=\"https://thesyndicate.vc/death-google-end-apple/\" data-href=\"https://thesyndicate.vc/death-google-end-apple/\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\">here’s Google’s one achilles heel</a>). With the power to “control” the news, feature themselves and their products and billions of times more data, money and manpower, we could have created the ultimate tool to fascism. One man at the helm pulling the strings has more influence than Rupert Murdoch or Donald Trump.\nhttps://steemitimages.com/DQmRNRnC62Ny4fgUUQLer7rMfmbtC5jGN2WB8MKaqtXK5MW/trump.jpeg\n\n<p>Source: FBTutorial</p>\n\n<h3 name=\"a27b\" id=\"a27b\" class=\"graf graf--h3 graf-after--figure\">The big question</h3>\n<p name=\"4751\" id=\"4751\" class=\"graf graf--p graf-after--h3\">Net-net, Facebook, Google and Amazon have been forces for good in the world. They have innovated, increased quality of life, access to information, family, friends, products, entertainment and more.</p>\n<p name=\"a8d9\" id=\"a8d9\" class=\"graf graf--p graf-after--p\">But they are incredibly dangerous and likely not-regulatable. Are these short term problems or long term considerations? When will rubber meet the road?</p>\n<p name=\"9bd7\" id=\"9bd7\" class=\"graf graf--p graf-after--p\">This level of control, wealth and power are not inherently destructive, but every empire eventually inherits an evil heir.</p>\n<p name=\"efc1\" id=\"efc1\" class=\"graf graf--p graf-after--p\">Can you create a conceivable future where this doesn’t go horribly wrong? I can’t.</p>\n<p name=\"ae72\" id=\"ae72\" class=\"graf graf--p graf-after--p\">Would love to hear your thoughts below? We didn’t even touch on AI, but artificial intelligence and it data constraints further strengthens the Trinity of Tech.</p>\n<p name=\"b580\" id=\"b580\" class=\"graf graf--p graf-after--p\">Can blockchain and distributed systems disrupt the history’s most powerful and profitable monopolies (<a href=\"https://buffalobills515.typeform.com/to/rDxcJU\" data-href=\"https://buffalobills515.typeform.com/to/rDxcJU\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\">j<em class=\"markup--em markup--p-em\">oin our Cryptocurrency Round Table</em></a><em class=\"markup--em markup--p-em\">with Gil Penchina, Andy Bromberg of Coinlist, Joey Krug and Lou Kerner on 11/28 @ 11am PST.</em><a href=\"https://buffalobills515.typeform.com/to/rDxcJU\" data-href=\"https://buffalobills515.typeform.com/to/rDxcJU\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\"><em class=\"markup--em markup--p-em\">RSVP today</em></strong></a>)? Have we reached a point of no return? Am I overreacting entirely?</p>\n<p name=\"40f3\" id=\"40f3\" class=\"graf graf--p graf-after--p\">This isn’t about answers, it is about questions and having an informed debate with smart folks focused on the future. So please share your thoughts below.</p>\n<p name=\"553a\" id=\"553a\" class=\"graf graf--p graf-after--p\">And if you liked this article, subscribe to our newsletter to never miss a thing (<a href=\"http://thesyndicate.vc/\" data-href=\"http://thesyndicate.vc\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\">just opt in on the site</a>).</p>\n<p name=\"00c6\" id=\"00c6\" class=\"graf graf--p graf-after--p\">Be sure to share this on social. People need to understand these issues and have a open debate on our future as a society</p>\n\n<h2 name=\"00c6\">Before you go…If you got something actionable or valuable from this post, like this and share the article on Facebook and Twitter so your network can benefit from it too.\n\nLIKE THIS ARTICLE? THEN YOU’LL REALLY WANT TO SIGN UP FOR MY NEWSLETTER OVER HERE (http://thesyndicate.vc/subscribe) — AND GET SOME FREE BONUSES",
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      "body": "Hi! I am a robot. I just upvoted you! I found similar content that readers might be interested in:\nhttps://hackernoon.com/the-amazon-apocalypse-of-ecommerce-7096ce3c6aa5",
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      "body": "![bezos.jpg](https://steemitimages.com/DQmYYM52u1HebRGa3QszkCAtjHz2qTBYUXo9pENkwWDAUB1/bezos.jpg)\nJeff Bezos is the Terminator… and he is killing competition and ecommerce faster than Arnold can say “I’ll be back”\n\nHope you are hooked. Let’s go for a ride.\n\nMy background is ecommerce. Before starting <a href=\"http://thesyndicate.vc\">The Syndicate</a> and investing in early stage disruptors, I cut my teeth in ecommerce, specifically Amazon. I had learned a fair deal about sales and copywriting and after seeing other successful ecommerce entrepreneurs decided to try it myself - this was at the start of 2015.\n\nFast forward a year, and from an $8k investment I scaled our brand (primarily via Amazon) to a successful 7 figure exit. I’d built <a href=\"http://fbaallstars.com\">a top 3 Amazon podcast</a> and somehow solidified myself as an expert on the subject.\n\nAnd here is what I learned…\n\nAmazon are assholes. They do not care about anyone except themselves and customers. And they routinely screw sellers - think million dollar businesses shutdown overnight, for no reason, with no warning. And it gets better.\n\nAmazon also rips off their sellers. Between failing to refund fees and directly copying and cutting out successful products and brands, I have seen everything when it comes to Amazon. They are the 800lb gorilla that couldn’t care less.\n\nAnd every day Amazon gets more and more integrated in everyday life. From 2 day shipping to same day delivery, from in home Alexa to acquiring Whole Foods, Amazon is aggressively eating EVERYTHING.\n\nIt will not stop, it will only get worse.\n\nVoice is a paradigm shift. Customers don’t want options, they want answers. This disrupts Google and crowns Amazon king. Think about it. <i>“Hey Alexa, I need toilet paper, peanut butter, 2lbs of chicken and a new tablecloth”</i>\n\nDo you think for a second Amazon won’t just ship their Amazon Basics products? \n\nMarketplaces die when the creator becomes the competitor. As an Amazon seller, I saw firsthand Amazon’s preference for their own products over all else. And they can afford to sell for less. Your margins are their opportunities.\n\nCombining this with the one and done nature of voice means commodities and CPG game is over. Brands do not realize it but the writings on the wall. Customers trust and are trained to use Amazon. Once Amazon decides your products for you, competition is dead.\n\nThis is incredibly dangerous. Have you seen Wall-E? Amazon is that corporation. Amazon owns the world, we just don’t realize it yet.\n\nThe Whole Foods acquisition amplifies this. Amazon now owns a self-sustaining network of grocery supply and demand (we talk about this <a href=\"https://thesyndicate.vc/ts-ben-gilbert-of-acquired-on-the-end-of-government-the-death-of-apple-and-the-amazon-apocalypse/\">in the recent interview with Ben Gilbert of Acquired)</a>\n\nThere is no longer the problems of overcommitting and products going bad. Amazon’s acquisition gives them hundreds of locations across the US, a raving customer base and the ability to slowly roll out all grocery to Amazon.com customers.\n\nThey don’t need to worry about spoiled milk - a Whole Foods customer will grab it if an Amazon.com one doesn’t.\n\nNetworks are almost impossible to setup and even harder to disrupt. Outside of Alibaba in China, Amazon has arguably the strongest consumer network in the world. And every move they make crushes the competition. They acquired Whole Foods and the market caps of the top supermarkets dropped $13B, the full purchase price. Supermarkets in effect financed the acquisition and killed themselves.\n\n<img src=\"https://thesyndicate.vc/wp-content/uploads/2017/11/The-Amazon-Effect-on-Grocery-Supermarkets-1024x669.png\" alt=\"The Amazon Effect on Grocery Supermarkets\" width=\"622\" height=\"406\" class=\"wp-image-455\" /> Source: Marketwatch\n\nAnd it is happening again in pharma. Amazon announces a pharmacy line and all the top retailers get trashed in the markets.\n\n<img src=\"https://thesyndicate.vc/wp-content/uploads/2017/11/CVS-Stocks.png\" alt=\"\" width=\"622\" height=\"291\" class=\"wp-image-453 size-full\" /> <p>Source: FactSet</p>\n\n<img src=\"https://thesyndicate.vc/wp-content/uploads/2017/11/Walgreens.png\" alt=\"\" width=\"621\" height=\"298\" class=\"wp-image-454 \" /> <p>Source: FactSet</p>\n\nAmazon is a monopoly and will soon be the largest and profitable monopoly in history. When one company controls commerce, who controls that company?\n\nJust look at the bids for Amazon’s 2nd HQ. Cities will do ANYTHING…\n\nI am not pro-regulation but Amazon (not software) is eating the world. In my opinion Amazon should spin out AWS before the government wisens up - that is the only thing that can stop them.\n\nWhat do you think?\n\nAre you investing in ecommerce? What are your thoughts on the future?\n\nJeff Bezos is a bulldozer. Be sure you build a damn good moat.\n\nAnd if you liked this, subscribe to The Syndicate blogcast series on iTunes or via Stitcher now.\n\nand use these links:\n\n<a href=\"http://thesyndicate.vc/blogcastitunes\">on itunes</a>\n\n<a href=\"http://thesyndicate.vc/blogcaststitcher\">via stitcher</a>\n\n--\n\nOriginally posted on <a href=\"https://hackernoon.com/the-amazon-apocalypse-of-ecommerce-7096ce3c6aa5\">Medium</a>",
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{
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      "author": "mattward",
      "body": "![1_IrLd7CkpTt-DCmoUdd5Fbw.jpeg](https://steemitimages.com/DQmSmoJjwUXJErWNUPEuUtP1dUUVdkySGiBnJBJ2xXR1Jtw/1_IrLd7CkpTt-DCmoUdd5Fbw.jpeg)\n<h2 name=\"37dd\" id=\"37dd\" class=\"graf graf--h4 graf-after--h3 graf--subtitle\">How to Build a Powerful, Profitable Platform from Scratch</h2>\n<p name=\"5b38\" id=\"5b38\" class=\"graf graf--p graf-after--h4\">Bezos builds businesses like no one else — and arguably better than anyone. Each of Amazon’s 5 major divisions would be multi-multi billion dollar businesses on its own.</p>\n<p name=\"39f2\" id=\"39f2\" class=\"graf graf--p graf-after--p\">And each followed exactly the strategy.</p>\n<p name=\"3de7\" id=\"3de7\" class=\"graf graf--p graf-after--p\">Let me explain.</p>\n\n<h3 name=\"5dd8\" id=\"5dd8\" class=\"graf graf--h3 graf-after--p\">Platforms</h3>\n<p name=\"a7e8\" id=\"a7e8\" class=\"graf graf--p graf-after--h3\">Amazon is a platform company. They want a small (<em class=\"markup--em markup--p-em\">but ever increasing</em>) piece of all commerce. And to date, things are going according to plan.</p>\n<p name=\"0c79\" id=\"0c79\" class=\"graf graf--p graf-after--p\">(For more on Amazon’s entire business, see this <a href=\"https://thinkgrowth.org/the-big-4-part-one-amazon-the-company-that-consumes-the-world-fb4679f10708\">post</a>).</p>\n<p name=\"0c17\" id=\"0c17\" class=\"graf graf--p graf-after--mixtapeEmbed\">But platforms are pretty damn hard to build — you need to aggregate a ton of users and/or customers. That takes time. And often money, lots of it.</p>\n<p name=\"b7a7\" id=\"b7a7\" class=\"graf graf--p graf-after--p\">You can’t set out to build a platform. That cannot be your first “product.”</p>\n\n<h4 name=\"c673\" id=\"c673\" class=\"graf graf--h4 graf-after--p\">Selling books</h4>\n<p name=\"eaa5\" id=\"eaa5\" class=\"graf graf--p graf-after--h4\">In 1994 Amazon launched not to build a platform, instead to build a better, online bookstore. It was super niche, super targeted.</p>\n<p name=\"0c37\" id=\"0c37\" class=\"graf graf--p graf-after--p\">But this wasn’t the end-all-be-all, it was phase one. It was a product, a battering ram into the hearts, minds and homes of consumers. And it worked. It was easy to understand, affordable and offered a better selection than any library or bookstore.</p>\n\n<blockquote name=\"7b59\" id=\"7b59\" class=\"graf graf--pullquote graf-after--p\">If customers can’t explain what you do in a sentence or two, they won’t try. This is key for any business.</blockquote>\n<p name=\"306b\" id=\"306b\" class=\"graf graf--p graf-after--pullquote\"><strong class=\"markup--strong markup--p-strong\">And as you acquire customers and market share, expansion opportunities present themselves.</strong>But in the early days Amazon sold everything — ensuring great quality and customer service — their main differentiators today.</p>\n<p name=\"af2b\" id=\"af2b\" class=\"graf graf--p graf-after--p\">That wasn’t scalable.</p>\n<p name=\"3d4e\" id=\"3d4e\" class=\"graf graf--p graf-after--p\">Amazon couldn’t afford to offer (ie own) everything. That is way too much capital. It was either compromise on growth (and grow very slowly with only Amazon branded products) or open up the platform (likely the original plan)</p>\n<p name=\"b1a1\" id=\"b1a1\" class=\"graf graf--p graf-after--p\">So in 2000 Amazon started allowing 3rd party sellers to sell on their site — it worked wonderfully. Fast forward to today, there are over 2M 3rd party sellers on Amazon accounting for anywhere from ~79–90% of the total products listed on Amazon as of 2015 (<a href=\"https://seekingalpha.com/article/3962561-amazon-com-third-party-sellers-drive-profitability\" data-href=\"https://seekingalpha.com/article/3962561-amazon-com-third-party-sellers-drive-profitability\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><em class=\"markup--em markup--p-em\">Source</em></a><em class=\"markup--em markup--p-em\">,</em><a href=\"https://www.marketplacepulse.com/stats/amazon/amazon-percent-of-units-by-marketplace-sellers-1\" data-href=\"https://www.marketplacepulse.com/stats/amazon/amazon-percent-of-units-by-marketplace-sellers-1\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><em class=\"markup--em markup--p-em\">Source</em></a>).</p>\n<p name=\"b1a1\">https://steemitimages.com/DQmNtKQv3idPMrsuVy6tqsnW6W3bvjsQB6vsdM7D2afKzz5/0_mMp03d_MeWnbktXR_.jpg</p>\n\n<h4 name=\"3cf2\" id=\"3cf2\" class=\"graf graf--h4 graf-after--figure\">Building infrastructure</h4>\n<p name=\"d1e6\" id=\"d1e6\" class=\"graf graf--p graf-after--h4\">As Amazon grew, so too did its infrastructure needs. The bandwidth and storage required to host and display images and information across Amazon.com ballooned as the marketplace grew.</p>\n<p name=\"66b4\" id=\"66b4\" class=\"graf graf--p graf-after--p\">Bezos bet big on in-house and decided Amazon ought to own the infrastructure. Better still, why not follow the existing Amazon.com strategy — internal and then sell externally?</p>\n<p name=\"bd3e\" id=\"bd3e\" class=\"graf graf--p graf-after--p\">AWS was born out of an internal need and an incredibly well orchestrated, easy to use cloud infrastructure.</p>\n<p name=\"bb20\" id=\"bb20\" class=\"graf graf--p graf-after--p\">That is how Amazon thinks.</p>\n\n<blockquote name=\"9c82\" id=\"9c82\" class=\"graf graf--pullquote graf-after--p\">Solve it once, then sell it — productization 101.</blockquote>\n<p name=\"0a3d\" id=\"0a3d\" class=\"graf graf--p graf-after--pullquote\">Today AWS is far and away the largest cloud service provider powering ~42% of the web — more than double Microsoft, Google and IBM (combined) and bringing in upwards of $4B per quarter.</p>\nhttps://steemitimages.com/DQmePwwemwUPYywXJt4GiQKwqYEC53sTykfU4ckCHGv6SZp/0_Ge-qzh5UGf2Who2I_.png\n![amaz.png](https://steemitimages.com/DQmRZEdLUXgKJrcAFap7nGrHMdESLPSGYMGeJ13Lbg2Rj4N/amaz.png\n<p name=\"0a3d\" style=\"text-align: center;\">Source: Geekwire</p>\n<p name=\"9ef0\" class=\"graf graf--p graf-after--p\"></p>\n\n<h3 name=\"6c58\" id=\"6c58\" class=\"graf graf--h4 graf-after--figure\">Alexa</h3>\n<p name=\"137e\" id=\"137e\" class=\"graf graf--p graf-after--h4\">The way we interact with technology is changing. Amazon (along with many others) wants to own the space/interface.</p>\n<p name=\"e5e7\" id=\"e5e7\" class=\"graf graf--p graf-after--p\">Today Amazon is winning BIG. Alexa is a cross-functional voice assistant/interface which in typical Amazon fashion is compatible with everything. If you are building a voice enabled device, Amazon wants it to be powered by Alexa — an “open” ecosystem — even if it canabalizes hardware sales.</p>\n\n<blockquote name=\"eaa6\" id=\"eaa6\" class=\"graf graf--pullquote graf-after--p\">Amazon gets it — the platform IS the product.</blockquote>\n<p name=\"c8e1\" id=\"c8e1\" class=\"graf graf--p graf-after--pullquote\">Voice may well be the next search, but it may mean even more. By owning the interaction, accumulating data and controlling the customer experience, Amazon is inserting themselves into each and every value-chain (a little piece of every pie).</p>\n<p name=\"3871\" id=\"3871\" class=\"graf graf--p graf-after--p\">In this instance Amazon broke its own rule — they built the platform before the product. And that was okay. Consumers already trusted Amazon’s brand (as did developers), meaning buy-in from both major parties.</p>\n<p name=\"bd34\" id=\"bd34\" class=\"graf graf--p graf-after--p\">In the case of the Amazon Echo and other Amazon branded Alexa products, the goal is attention, not profit. Amazon is crushing Google in terms of smart speakers shipped through a combination of rock bottom pricing and aggressive marketing and PR — flexing their ecommerce (and Whole Foods) muscle to ensure an Alexa device in every home…</p>\n\n<h3 name=\"b0ed\" id=\"b0ed\" class=\"graf graf--h3 graf-after--p\">The 2nd stage of platforms</h3>\n<p name=\"0153\" id=\"0153\" class=\"graf graf--p graf-after--h3\">As platforms grow and expand, their values and needs change. Google, Apple, and Facebook needed 3rd party developers to build the core experience and “hook” for the platform.</p>\n<p name=\"9ef0\" id=\"9ef0\" class=\"graf graf--p graf-after--p\">But as we discussed here, <a href=\"https://thinkgrowth.org/facebooks-mantra-join-us-or-we-will-copy-you-platforms-marketplaces-and-playing-with-fire-8810700c6a\">building on platforms is like playing with fire…</a></p>\n<p name=\"b709\" id=\"b709\" class=\"graf graf--p graf-after--mixtapeEmbed\">Eventually platforms reach scale and existing network effects act as a buffer to competition and value add to existing users. This point platforms no longer “need” you like so many startups, clone your product and push it to their user base.</p>\n<p name=\"e92d\" id=\"e92d\" class=\"graf graf--p graf-after--p\">You never know when the ground will shift.</p>\n\n<h3 name=\"2212\" id=\"2212\" class=\"graf graf--h3 graf-after--p\">Building a better wedge</h3>\n<p name=\"4aa3\" id=\"4aa3\" class=\"graf graf--p graf-after--h3\">You need a use case — “<em class=\"markup--em markup--p-em\">a compelling, have to have this</em>” type use case to build a successful platform. Companies without this will struggle — high CAC (<em class=\"markup--em markup--p-em\">cost of acquiring a customer</em>) and high churn.</p>\n<p name=\"9bca\" id=\"9bca\" class=\"graf graf--p graf-after--p\">Startups seeking funding (as well as investors) need to understand these dynamics.</p>\n\n<blockquote name=\"a8cb\" id=\"a8cb\" class=\"graf graf--pullquote graf-after--p\">It isn’t about the destination, it is about the journey. And for platform businesses specifically, planning the “correct” path is the key to success.</blockquote>\n<p name=\"8b99\" id=\"8b99\" class=\"graf graf--p graf-after--pullquote\">So how do you do it?</p>\n<p name=\"fb7e\" id=\"fb7e\" class=\"graf graf--p graf-after--p\"><strong class=\"markup--strong markup--p-strong\">[LIKE THIS SO FAR?</strong><a href=\"http://thesyndicate.vc/mediumsubscribe\" data-href=\"http://thesyndicate.vc/mediumsubscribe\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\">SIGN UP HERE TO GET MORE PLUS FREE GIFTS!</strong></a><strong class=\"markup--strong markup--p-strong\">]</strong></p>\n\n<h3 name=\"d991\" id=\"d991\" class=\"graf graf--h3 graf-after--p\">The 2+ step rule</h3>\n<p name=\"a677\" id=\"a677\" class=\"graf graf--p graf-after--h3\">It takes at least two steps to build a platform from scratch. Even Amazon with Alexa needed both hardware (Step 1) and software (Step 2) to succeed — the Amazon Echo plus 3rd party developer support.</p>\n<p name=\"45c2\" id=\"45c2\" class=\"graf graf--p graf-after--p\">And even then they seeded Alexa with a set of “skills” designed to kickstart the customer experience (Step 2.5).</p>\n<p name=\"b9a3\" id=\"b9a3\" class=\"graf graf--p graf-after--p\">You only have one chance at a first impression.</p>\n<p name=\"eb54\" id=\"eb54\" class=\"graf graf--p graf-after--p\">If Amazon takes 2.5 steps, startups should take note.</p>\n<p name=\"efca\" id=\"efca\" class=\"graf graf--p graf-after--p\"><strong class=\"markup--strong markup--p-strong\">NOTE:</strong><em class=\"markup--em markup--p-em\">This is true whether you are building a social media site like Facebook or an IoT, connected home platform — it always takes longer and requires multiple hops.</em></p>\n<p name=\"6549\" id=\"6549\" class=\"graf graf--p graf-after--p\">This is all well and good in theory but in practice, how does it work?</p>\n\n<h4 name=\"30bd\" id=\"30bd\" class=\"graf graf--h4 graf-after--p\"><strong class=\"markup--strong markup--h4-strong\">Part 1: Determine end goal (i.e., build the operating system/platform of VR)</strong></h4>\n<h4 name=\"b6c2\" id=\"b6c2\" class=\"graf graf--h4 graf-after--h4\"><strong class=\"markup--strong markup--h4-strong\">Part 2: Determine everything that needs to happen to achieve scale…</strong></h4>\n<ul class=\"postList\">\n \t<li name=\"752b\" id=\"752b\" class=\"graf graf--li graf-after--h4\">X number of VR glasses sold worldwide</li>\n \t<li name=\"4eb5\" id=\"4eb5\" class=\"graf graf--li graf-after--li\">Run your software/OS on Y number of glasses worldwide (where Y &gt; ¼ of X)</li>\n \t<li name=\"35f9\" id=\"35f9\" class=\"graf graf--li graf-after--li\">Get Z number of apps built-in/usable on your platform</li>\n</ul>\n<h4 name=\"0d8e\" id=\"0d8e\" class=\"graf graf--h4 graf-after--li\">Part 3: Create a logical plan to get from point A to point B</h4>\n<ul class=\"postList\">\n \t<li name=\"bc5f\" id=\"bc5f\" class=\"graf graf--li graf-after--h4\"><strong class=\"markup--strong markup--li-strong\">Example #1:</strong>Design OS. Kickstart VR goggles. Begin ecommerce sales. Design enough apps/games. Market like crazy→ owning platform</li>\n \t<li name=\"2829\" id=\"2829\" class=\"graf graf--li graf-after--li\"><strong class=\"markup--strong markup--li-strong\">Example #2:</strong>Design OS. Trial &amp; partner with existing manufacturers (open ecosystem or open source). Build developer support with 3rd party app/game marketplace → owning platform</li>\n \t<li name=\"459f\" id=\"459f\" class=\"graf graf--li graf-after--li\"><strong class=\"markup--strong markup--li-strong\">Example #3:</strong>Kickstart VR goggles. Partner with OS provider. Begin ecommerce sales. Design enough apps/games + onboard new devs. Market like crazy. Design new OS to replace existing one and boot existing OS from your headsets → owning platform</li>\n \t<li name=\"3ce0\" id=\"3ce0\" class=\"graf graf--li graf-after--li\"><strong class=\"markup--strong markup--li-strong\">Example #4:></strong>Design OS. Kickstart VR goggles. Begin ecommerce sales. Design enough apps/games. Launch new VR products: gloves, haptics, foot sensors etc… and force compatibility between all→ owning platform</li>\n</ul>\n<h4 name=\"7f0e\" id=\"7f0e\" class=\"graf graf--h4 graf-after--li\"><strong class=\"markup--strong markup--h4-strong\">Part 4:</strong>Execute and iterate as necessary</h4>\n<p name=\"9fe0\" id=\"9fe0\" class=\"graf graf--p graf-after--h4\">This isn’t an exhaustive list but it illustrates the point. There are a lot of ways to achieve market domination and no perfect path to get there. You have to be able to reach, delight and retain customers/users to build a profitable, defensible platform business.</p>\n<p name=\"c6ee\" id=\"c6ee\" class=\"graf graf--p graf-after--p\">Each market is different but by-in-large, this strategy works across industries and should be emphasized when strategizing your business.</p>\n<p name=\"704e\" id=\"704e\" class=\"graf graf--p graf-after--p\"><em class=\"markup--em markup--p-em\">(Happy to chat more on the topic if you need help, just visit</em><a href=\"http://url/\" data-href=\"http://url\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><em class=\"markup--em markup--p-em\">thesyndicate.vc</em></a><em class=\"markup--em markup--p-em\">or shoot me an email:</em><a href=\"mailto:[email protected]\" data-href=\"mailto:[email protected]\" class=\"markup--anchor markup--p-anchor\" target=\"_blank\" rel=\"noopener\"><em class=\"markup--em markup--p-em\">[email protected]</em></a><em class=\"markup--em markup--p-em\">and lets chat.)</em></p>\n\n<h3 name=\"3156\" id=\"3156\" class=\"graf graf--h3 graf-after--p\">Common platform failures</h3>\n<p name=\"30d7\" id=\"30d7\" class=\"graf graf--p graf-after--h3\">According to the Harvard Business Review, there are 6 primary reasons that platforms fail. Rather than summarizing a well written article,<a href=\"https://hbr.org/2016/03/6-reasons-platforms-fail\" data-href=\"https://hbr.org/2016/03/6-reasons-platforms-fail\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\">you can check it out here</a>.</p>\n<p name=\"f2d4\" id=\"f2d4\" class=\"graf graf--p graf-after--p\"><strong class=\"markup--strong markup--p-strong\">1. Failure to optimize “openness”</strong> — Twitter pulled their APIs and busted profitable businesses</p>\n<p name=\"9cb6\" id=\"9cb6\" class=\"graf graf--p graf-after--p\"><strong class=\"markup--strong markup--p-strong\">2. Failure to engage developers</strong> — means having to build all the apps and usage in-house</p>\n<p name=\"46a7\" id=\"46a7\" class=\"graf graf--p graf-after--p\"><strong class=\"markup--strong markup--p-strong\">3. Failure to share the surplus</strong> — being too greedy (<em class=\"markup--em markup--p-em\">like Facebook is today</em>)</p>\n<p name=\"0057\" id=\"0057\" class=\"graf graf--p graf-after--p\"><strong class=\"markup--strong markup--p-strong\">4. Failure to launch the right side</strong> — who matters more: buyers or sellers</p>\n<p name=\"835c\" id=\"835c\" class=\"graf graf--p graf-after--p\"><strong class=\"markup--strong markup--p-strong\">5. Failure to put critical mass ahead of money</strong> — when do you start advertising or monetizing?</p>\n<p name=\"ef85\" id=\"ef85\" class=\"graf graf--p graf-after--p\"><strong class=\"markup--strong markup--p-strong\">6. Failure of imagination </strong>— not realizing that the platform &gt; the products</p>\n\n<h3 name=\"1402\" id=\"1402\" class=\"graf graf--h3 graf-after--p\">The 7th platform problem</h3>\n<p name=\"2fed\" id=\"2fed\" class=\"graf graf--p graf-after--h3\">Remember Google+? It was all the rage for a while. But G+ was inherently a boring Facebook copycat. There was no unique value, it was only inferior in every way.</p>\n\n<blockquote name=\"b181\" id=\"b181\" class=\"graf graf--pullquote graf-after--p\">The seventh platform problem is competition. You need to be 5–10x better than existing product to get consumers/users to switch.</blockquote>\n<p name=\"f0a4\" id=\"f0a4\" class=\"graf graf--p graf-after--pullquote\">G+ never got off the ground. The same is true of any platform without sufficient differentiation and value add. It has to feel organic, not forced. And usually, but not always, copycats feel pretty forced…</p>\nhttps://steemitimages.com/DQmbrDMcAK9DZ3cbQsY6zWMmWUmPMhbQEJBLPBkarxn2xks/bus.jpg\n<p name=\"f0a4\" style=\"text-align: center;\">Source: <a href=\"http://www.businessinsider.com/google-active-users-2015-1?r=UK&amp;IR=T\" data-href=\"http://www.businessinsider.com/google-active-users-2015-1?r=UK&amp;IR=T\" class=\"markup--anchor markup--figure-anchor\" rel=\"noopener\" target=\"_blank\">Business Insider</a></p>\n<p name=\"f0a4\">Remember, platforms are networks. Network effects matter. For more on the 5 types of network effects and how to hack them, see this <a href=\"https://hackernoon.com/the-5-types-of-network-effects-and-how-to-hack-them-a5b54745eed2\">post</a>.</p>\n\n<h3 name=\"bcab\" id=\"bcab\" class=\"graf graf--h3 graf-after--mixtapeEmbed\">Closing thoughts</h3>\n<p name=\"e2f7\" id=\"e2f7\" class=\"graf graf--p graf-after--h3\">Facebook, Amazon, Apple, Google — today’s most valuable companies are all platforms. That is no coincidence. Platforms have pricing power and aggregate the majority of value.</p>\n<p name=\"f9e9\" id=\"f9e9\" class=\"graf graf--p graf-after--p\">And while many debate the merits and morals of such a monopolistic system, it is the world we are working with.</p>\n<p name=\"87ed\" id=\"87ed\" class=\"graf graf--p graf-after--p\">For a more in-depth analysis on each of above companies, see<em class=\"markup--em markup--p-em\">Gods of the Valley,</em>a series of highly technical, highly researched articles on GAFA’s strengths, weaknesses, future ambitions and likely acquisitions.</p>\n<p name=\"87ed\">Part 1 :</p>\n\n<h1 name=\"e639\" id=\"e639\" class=\"graf graf--h3 graf-after--h4 graf--title\"><a href=\"https://thinkgrowth.org/the-big-4-part-one-amazon-the-company-that-consumes-the-world-fb4679f10708\">Amazon: The Company Consuming Consumers</a></h1>\nPart 2 :\n<h1 name=\"e639\" id=\"e639\" class=\"graf graf--h3 graf-after--h4 graf--title\"><a href=\"https://thinkgrowth.org/the-big-4-part-2-the-future-of-google-a469483533e9\">Google: The God of the Internet?</a></h1>\nPart 3 :\n<h1 name=\"a779\" id=\"a779\" class=\"graf graf--h3 graf-after--h4 graf--title\"><a href=\"https://thinkgrowth.org/gods-of-the-valley-part-3-the-future-of-facebook-zuckerbergs-friends-with-benefits-7a207c91539c\">Facebook: The King of Communication</a></h1>\nPart 4:\n<h1 name=\"b5cf\" id=\"b5cf\" class=\"graf graf--h3 graf-after--h4 graf--title\"><a href=\"https://thinkgrowth.org/gods-of-the-valley-part-4-apples-fading-greatness-52195c8d58ad\">Apple: The Fading Star?</a></h1>\nTo succeed in a platform world, you need to avoid and/or understand the big boys. Hope this helps.\n\nIf you enjoyed this article and learned a lot, please click through to the original Medium <a href=\"https://thinkgrowth.org/product-to-platform-inside-amazons-dominance-bacef9e80585\">post</a> and Clap it up to help reach and educate a larger audience.\n\n<strong class=\"markup--strong markup--p-strong\"><em class=\"markup--em markup--p-em\">Clap 50 times and follow me on Twitter:</em></strong><a href=\"https://twitter.com/itsmattward\" data-href=\"https://twitter.com/itsmattward\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\"><strong class=\"markup--strong markup--p-strong\"><em class=\"markup--em markup--p-em\">@itsmattward</em></strong></a>",
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{
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      "body": "![1_3jW97KcAIKSsZbtPCc-6AQ.jpeg](https://steemitimages.com/DQmWL4NbTHMwenWF2dYMnYaGXpULEp36t88VEcL89oHSrQk/1_3jW97KcAIKSsZbtPCc-6AQ.jpeg)\n<h2 name=\"8101\" id=\"8101\" class=\"graf graf--h4 graf-after--h3 graf--subtitle\">Lessons from Blue Apron, Uber, Amazon, and Facebook</h2>\n<p name=\"80d9\" id=\"80d9\" class=\"graf graf--p graf-after--h4\">Remember the beach? It was always a battle to build the best sandcastle. But inevitably the tides turned and waves washed away your creation… you were devastated.</p>\n<p name=\"f203\" id=\"f203\" class=\"graf graf--p graf-after--p\">I hope you learned your lesson.</p>\n\n<blockquote name=\"ea11\" id=\"ea11\" class=\"graf graf--pullquote graf-after--p\">Moats are the most important aspect of any business. A defensible moat is the difference between lasting value and profitability and being ripped apart by the waves (<em class=\"markup--em markup--pullquote-em\">ie competitors</em>).</blockquote>\n<p name=\"b810\" id=\"b810\" class=\"graf graf--p graf-after--pullquote\">And while every entrepreneur “knows” they are building an unbreakable moat, is that really the case?</p>\n\n<h3 name=\"296c\" id=\"296c\" class=\"graf graf--h3 graf-after--p\">Moats</h3>\n<p name=\"eb16\" id=\"eb16\" class=\"graf graf--p graf-after--h3\">Rats run towards food, founders flock to money. Large opportunities lead to fierce competition — and nothing ruins venture returns quite like competition.</p>\n<p name=\"ea22\" id=\"ea22\" class=\"graf graf--p graf-after--p\">There is a saying among investors.</p>\n\n<blockquote name=\"d3b8\" id=\"d3b8\" class=\"graf graf--pullquote graf--startsWithDoubleQuote graf-after--p\"><strong class=\"markup--strong markup--pullquote-strong\">“Being ‘right’ doesn’t lead to superior performance if the consensus forecast is also right.”</strong> — Bill Gurley</blockquote>\n<p name=\"1051\" id=\"1051\" class=\"graf graf--p graf-after--pullquote\">Consensus never pays.</p>\n<p name=\"7e27\" id=\"7e27\" class=\"graf graf--p graf-after--p\">Competition catches on to obvious ideas (<a href=\"https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-knows-it-1566fb51b308\">hence the issues with Uber’s business model</a>).</p>\n<p name=\"c5b1\" id=\"c5b1\" class=\"graf graf--p graf-after--mixtapeEmbed\">Uber built a business around the “idea” of a moat. Because of local network effects between riders and drivers, Uber was able to build incredibly strong local networks — and raise over $22B to fund their expansion.</p>\n<p name=\"44a4\" id=\"44a4\" class=\"graf graf--p graf-after--p\">I won’t dig into the issues with Uber’s model/assumptions again, but instead want to use their “moat” as an entry into the various moats most businesses employ.</p>\n<p name=\"9863\" id=\"9863\" class=\"graf graf--p graf-after--p\">So, how do you keep competitors at bay?</p>\n\n<h3 name=\"190b\" id=\"190b\" class=\"graf graf--h3 graf-after--p\">Many many moats</h3>\n<p name=\"3243\" id=\"3243\" class=\"graf graf--p graf-after--h3\">In business there are many ways to stand out. And what is defensibility if not a reason to choose one brand over another or to remain a customer.</p>\n\n<blockquote name=\"a0eb\" id=\"a0eb\" class=\"graf graf--pullquote graf-after--p\">A moat either traps customers on your island or makes your castle an attractive destination… both acquisition and retention drive revenue.</blockquote>\n<p name=\"f50b\" id=\"f50b\" class=\"graf graf--p graf-after--pullquote\">It boils down to:<em class=\"markup--em markup--p-em\">What is your unique competitive advantage?</em></p>\n<p name=\"f0b2\" id=\"f0b2\" class=\"graf graf--p graf-after--p\">Without that you don’t have a business. With that, you may have an empire…</p>\n<p name=\"146f\" id=\"146f\" class=\"graf graf--p graf-after--p\">Broadly speaking there are 7 customer acquisition and 3 customer retention moats that power the vast majority of businesses.</p>\n<p name=\"6b7f\" id=\"6b7f\" class=\"graf graf--p graf-after--p\">The best businesses build barriers for both.</p>\n\n<h3 name=\"8b27\" id=\"8b27\" class=\"graf graf--h3 graf-after--p\">Acquisition moats:</h3>\n<ol class=\"postList\">\n \t<li name=\"26c0\" id=\"26c0\" class=\"graf graf--li graf-after--h3\">Brand</li>\n \t<li name=\"6a6d\" id=\"6a6d\" class=\"graf graf--li graf-after--li\">Network effects</li>\n \t<li name=\"1bd6\" id=\"1bd6\" class=\"graf graf--li graf-after--li\">Product</li>\n \t<li name=\"0c82\" id=\"0c82\" class=\"graf graf--li graf-after--li\">Patents and/or proprietary products</li>\n \t<li name=\"b302\" id=\"b302\" class=\"graf graf--li graf-after--li\">Licenses</li>\n \t<li name=\"92d8\" id=\"92d8\" class=\"graf graf--li graf-after--li\">Distribution</li>\n \t<li name=\"d3c5\" id=\"d3c5\" class=\"graf graf--li graf-after--li\">Pricing power</li>\n</ol>\n<h3 name=\"d5a9\" id=\"d5a9\" class=\"graf graf--h3 graf-after--li\">Retention moats:</h3>\n<ol class=\"postList\">\n \t<li name=\"9ffd\" id=\"9ffd\" class=\"graf graf--li graf-after--h3\">Brand</li>\n \t<li name=\"5ca0\" id=\"5ca0\" class=\"graf graf--li graf-after--li\">Network effects</li>\n \t<li name=\"4fd7\" id=\"4fd7\" class=\"graf graf--li graf-after--li\">Switching costs</li>\n</ol>\n<h3 name=\"3997\" id=\"3997\" class=\"graf graf--h3 graf-after--li\">Understanding moats</h3>\n<p name=\"68b5\" id=\"68b5\" class=\"graf graf--p graf-after--h3\">Acquiring customers is sexy. People prefer increasing revenue to cutting costs — it is our shortsighted, ego driven nature. In venture especially, revenue is king. If we can acquire customers and make money, we will figure out the economics eventually. <a href=\"https://thinkgrowth.org/how-to-start-a-series-a-fundable-saas-business-a-15-page-guide-to-acquiring-customers-and-f756b9855ea\">Raise round after round until you figure out profitability, right?</a></p>\n<p name=\"528b\" id=\"528b\" class=\"graf graf--p graf-after--mixtapeEmbed\">Of our acquisition advantages, I’d argue all but network effects are pretty well understood.</p>\n\n<blockquote name=\"6290\" id=\"6290\" class=\"graf graf--pullquote graf-after--p\">You know why you buy Apple (brand), use Comcast (no choice), prefer Netflix (great product) or get the best deals on Amazon (price + selection)… acquisition is relatively easy to understand.</blockquote>\n<p name=\"2b1d\" id=\"2b1d\" class=\"graf graf--p graf-after--pullquote\">The biggest misconception is with network effects, specifically anticipating them.</p>\n<p name=\"1ea4\" id=\"1ea4\" class=\"graf graf--p graf-after--p\">The same is true for retention. It is a nightmare to change your bank and you’ve always voted Democrat (brand) so why switch things up? If it ain’t broke, don’t fix it.</p>\n\n<h3 name=\"dfea\" id=\"dfea\" class=\"graf graf--h3 graf-after--p\">The nuances of network effects</h3>\n<p name=\"21c3\" id=\"21c3\" class=\"graf graf--p graf-after--h3\">Nothing trumps network effects. Businesses without strong network effects (NFx) always struggle, both in terms of growth and profitability.</p>\n<p name=\"b4ba\" id=\"b4ba\" class=\"graf graf--p graf-after--p\">Thanks to business basics and GAFA’s chokehold on the economy (<em class=\"markup--em markup--p-em\">and our attention</em>), we all have at least a basic understanding of network effects. (For more on the 5 types of network effects and how to hack them, see this <a href=\"https://hackernoon.com/the-5-types-of-network-effects-and-how-to-hack-them-a5b54745eed2\">post</a>.)</p>\n<p name=\"13d5\" id=\"13d5\" class=\"graf graf--p graf-after--mixtapeEmbed\">The problem is, by assuming we understand and can anticipate network effects, many entrepreneurs set themselves up for failure.</p>\n\n<h3 name=\"d942\" id=\"d942\" class=\"graf graf--h3 graf-after--p\"><strong class=\"markup--strong markup--h3-strong\">6 misconceptions about network efforts:</strong></h3>\n<h4 name=\"9a58\" id=\"9a58\" class=\"graf graf--h4 graf-after--h3\">1. Word of mouth ≠ network effects</h4>\n<p name=\"4533\" id=\"4533\" class=\"graf graf--p graf-after--h4\">Telling friends about Facebook improves your experience, the same isn’t true for Starbucks. At best Starbucks gets more business, at worst I’m stuck behind more coffee crazed addicts waiting for a fix…</p>\n\n<blockquote name=\"e4b6\" id=\"e4b6\" class=\"graf graf--pullquote graf-after--p\">Word of mouth is a powerful tool, but by itself does not constitute a network effect.</blockquote>\n<h4 name=\"c04f\" id=\"c04f\" class=\"graf graf--h4 graf-after--pullquote\">2. Incentivized referrals ≠ network effects</h4>\n<p name=\"deaa\" id=\"deaa\" class=\"graf graf--p graf-after--h4\">The same holds here. Incentivization is a great acquisition strategy but not a defensible, product enhancing network effect in the majority of instances (cryptocurrencies excluded).</p>\n\n<h4 name=\"46e4\" id=\"46e4\" class=\"graf graf--h4 graf-after--p\">3. Data ≠ network effects</h4>\n<p name=\"fe57\" id=\"fe57\" class=\"graf graf--p graf-after--h4\">Data alone doesn’t define a network effect. While data is incredibly valuable to understanding and influencing customer behavior, it only becomes a product improving network effect once you learn to effectively utilize it. Plenty of companies capture mountains of data — they just don’t know what to do with it. Insights are valuable, noise isn’t.</p>\n\n<h4 name=\"c15d\" id=\"c15d\" class=\"graf graf--h4 graf-after--p\">4. Law of diminishing returns still applies</h4>\n<p name=\"aef6\" id=\"aef6\" class=\"graf graf--p graf-after--h4\">Network effects never die, but the resulting impact on overall defensibly and product has diminishing returns. The 2 billionth person on Facebook did little to improve either social graph connectivity or user behavior patterning…</p>\n<p name=\"c37c\" id=\"c37c\" class=\"graf graf--p graf-after--p\">Network effects, like everything else, operate in an S curve, the question is how high is the ceiling?</p>\n\n<h4 name=\"8d6a\" id=\"8d6a\" class=\"graf graf--h4 graf-after--p\">5. Not all network effects are international</h4>\n<p name=\"6cca\" id=\"6cca\" class=\"graf graf--p graf-after--h4\">Case in point, Uber. Uber’s product improves as local usage increases, but NYC having more drivers and riders, does approximately nothing for my experience in Zurich. That means local networks are secure but also frail as competitors can enter any individual market, outspend incumbents and claw their way to the top.</p>\n<p name=\"aaac\" id=\"aaac\" class=\"graf graf--p graf-after--p\">In the situation of Uber, because ANY city or country can create competitors and any fool (<em class=\"markup--em markup--p-em\">or fund</em>) can fund those upstarts, the competition tends towards infinity. What happens when supply exceeds demand…</p>\n\n<h4 name=\"8da7\" id=\"8da7\" class=\"graf graf--h4 graf-after--p\">6. Scale decreases CAC, ie improves economics</h4>\n<p name=\"19f3\" id=\"19f3\" class=\"graf graf--p graf-after--h4\">See below.</p>\n\n<h3 name=\"bb8d\" id=\"bb8d\" class=\"graf graf--h3 graf-after--p\">Blue Apron’s big problem</h3>\n<p name=\"347e\" id=\"347e\" class=\"graf graf--p graf-after--h3\">We mentioned Uber, but Blue Apron is a more interesting example.</p>\n<p name=\"dcaa\" id=\"dcaa\" class=\"graf graf--p graf-after--p\">Founded in 2012, Blue Apron pioneered the subscription meal kit. Get all the ingredients for an at-home, five star meal — no worry, no hassle.</p>\n<p name=\"2dd2\" id=\"2dd2\" class=\"graf graf--p graf-after--p\">The value prop was obvious: easy, convenient, healthy, home cooked, tasty meals. What family wouldn’t want that? And even though the price was a bit high, Blue Apron targeted the upper middle class anyway — it is a health food thing…</p>\n<p name=\"0c5d\" id=\"0c5d\" class=\"graf graf--p graf-after--p\">Growth was spectacular, it just took off.</p>\nhttps://steemitimages.com/DQmTiYogQvBxAtFaWx7ZB1ZMftbJpjxEVfQ6SbSwGbwRgot/0_0Wmxh63L0lrwFhSw_.jpg\n<p name=\"e764\" id=\"e764\" class=\"graf graf--p graf-after--figure\">And investors ate it up, literally. To date the company has raised just south of $200M (<em class=\"markup--em markup--p-em\">excluding IPO</em>).</p>\n<p name=\"c26a\" id=\"c26a\" class=\"graf graf--p graf-after--p\">On June 1st, 2017 Blue Apron filed for IPO. They were looking to raise $500M from public investors to further growth of the company and hit scale. Interestingly their unit economics were still a bit shaky. But that was okay, plenty of companies had gone public prior to hitting profitability. As long as you were moving towards profitable, everything was on track.</p>\n<p name=\"6586\" id=\"6586\" class=\"graf graf--p graf-after--p\">Unfortunately Blue Apron’s acquisition costs and business model were built around a relatively long payback period and anticipated a decreased CAC (cost of customer acquisition) because of course network effects would spread the service (<em class=\"markup--em markup--p-em\">via word of mouth etc…</em>)</p>\n<p name=\"5a5b\" id=\"5a5b\" class=\"graf graf--p graf-after--p\">It didn’t quite turn out how they planned. Instead customers cancelled at higher rates and it became clear that between market saturation (of high end healthy foodies) and increased competition from other startups, Amazon and even supermarkets, made acquiring and retaining customers much harder and more expensive.</p>\nKN_.jpg]https://steemitimages.com/DQmRjbJ3YdF7PLv8PpwohBUsL74s4zqgutAYDBLWz5kKGJS/0_K_kUDJyCbrFG6-KN_.jpg\n<p name=\"5a5b\">Blue Apron priced their IPO at $15–17 per share. The numbers speak for themselves.</p>\nhttps://steemitimages.com/DQmYQrhMAp81UiWYXU9VinjZdZcbistvT7iaxfy7YYxSQaY/0_Rhd8Lh-B-bS22zd9_.png\n\n<h3 name=\"d2bc\" id=\"d2bc\" class=\"graf graf--h3 graf-after--figure\">Evaluating network effects</h3>\n<p name=\"cc68\" id=\"cc68\" class=\"graf graf--p graf-after--h3\">In hindsight, it is obvious to see the flaws with Blue Apron’s business model. The network effects are little to non-existent and competition kills margins. There is no advantage to me as a consumer when my friends use the service. My food isn’t better, it isn’t cheaper, it isn’t faster… Why tell anyone about it?</p>\n\n<blockquote name=\"87de\" id=\"87de\" class=\"graf graf--pullquote graf--startsWithDoubleQuote graf-after--p\"><em class=\"markup--em markup--pullquote-em\">“Hi, guess what… I’m cooking for my family, but kind of too lazy to do it myself…”</em></blockquote>\n<p name=\"8ce1\" id=\"8ce1\" class=\"graf graf--p graf-after--pullquote\">Someone screwed up here. And while investors made out like bandits (<em class=\"markup--em markup--p-em\">if they sold in time</em>), retail investors were left holding the bag.</p>\n\n<blockquote name=\"79d7\" id=\"79d7\" class=\"graf graf--pullquote graf-after--p\">The question is and will always be, how do you evaluate network effects?</blockquote>\n<p name=\"abb5\" id=\"abb5\" class=\"graf graf--p graf-after--pullquote\">Both as an investor and as an entrepreneur, it is critical to understand the business model and how unit economics and CAC/LTV ratios can change over time.</p>\n<p name=\"fdde\" id=\"fdde\" class=\"graf graf--p graf-after--p\">In Blue Apron’s case they were aggressive with projections. By assuming growth equated with a decreasing CAC and that LTV/retention would remain constant, they set themselves up for failure. The economics could never work.</p>\n<p name=\"d702\" id=\"d702\" class=\"graf graf--p graf-after--p\">But the opposite can be equally as detrimental. This occurs most frequently with bootstrapped startups. When startups grow purely via organic growth (<em class=\"markup--em markup--p-em\">or fail to foresee improving unit economics</em>), they can underspend and forfeit a lead. Plenty of funded companies are willing to burn through cash to close the gap and capture the market — slow down for a second and you can be overtaken…</p>\n<p name=\"871a\" id=\"871a\" class=\"graf graf--p graf-after--p\">Which mistake is worse? It really depends on the market and the competition. But in the world of venture scale returns, both can come back to bite investors — hence the go big or go home mentality.</p>\n\n<h3 name=\"187d\" id=\"187d\" class=\"graf graf--h3 graf-after--p\">Numbers never lie</h3>\n<p name=\"9816\" id=\"9816\" class=\"graf graf--p graf-after--h3\"><strong class=\"markup--strong markup--p-strong\">Blue Apron’s finances were not the problem, the assumptions were.</strong>And while eventually the assumptions are proven incorrect, this isn’t always the case in the short term.</p>\n<p name=\"d5e4\" id=\"d5e4\" class=\"graf graf--p graf-after--p\">In the middle of the hype cycle (ie S curve), it looks like you are going to the moon. The business is taking off, CAC may even be decreasing due to increased exposure in the market and all-in-all the business looks pretty damn good.</p>\n<p name=\"5a50\" id=\"5a50\" class=\"graf graf--p graf-after--p\">But what happens when the ceiling hits sooner than you anticipated or other factors like competition or retention rates begin to change? Suddenly your proven assumptions are shaky, the market reacts and your stock craters…</p>\n\n<h3 name=\"7929\" id=\"7929\" class=\"graf graf--h3 graf-after--p\">Productive pessimism</h3>\n<p name=\"98f9\" id=\"98f9\" class=\"graf graf--p graf-after--h3\">I was interviewing an investor (can’t remember who) for The Syndicate podcast and he said something pretty profound.</p>\n\n<blockquote name=\"e4b4\" id=\"e4b4\" class=\"graf graf--pullquote graf--startsWithDoubleQuote graf-after--p\"><em class=\"markup--em markup--pullquote-em\">“In a room full of optimists, it pays to have at least one pessimist.”</em></blockquote>\n<p name=\"8841\" id=\"8841\" class=\"graf graf--p graf-after--pullquote\">This is important, especially as the stakes become higher. Startups are stupidly optimistic. That is why they take on the world and the impossible and they win. But there comes a time in any company’s lifecycle when a bit of pessimism (plus realism) starts to become beneficial.</p>\n<p name=\"667f\" id=\"667f\" class=\"graf graf--p graf-after--p\">If you are willing to listen to the negative nancy, you might be able to avoid the Blue Apron balloon. Questioning the assumptions and beliefs in their apparent network effects would have saved the company a lot of headache.</p>\n<p name=\"e920\" id=\"e920\" class=\"graf graf--p graf-after--p\">Unfortunately this is a delicate balance.<strong class=\"markup--strong markup--p-strong\">Negativity neuters greatness.</strong>Pessimistic, realistic view points early on can stifle innovation (<em class=\"markup--em markup--p-em\">hence why no one likes lawyers</em>). Move fast and break things is a great motto for a startup.</p>\n<p name=\"bfa0\" id=\"bfa0\" class=\"graf graf--p graf-after--p\">But you need to know when to put on the big boy pants.</p>\n\n<h3 name=\"6c21\" id=\"6c21\" class=\"graf graf--h3 graf-after--p\">Understanding incentives</h3>\n<p name=\"8846\" id=\"8846\" class=\"graf graf--p graf-after--h3\">Founders and VCs both focus on enormous returns. Carry creates a scenario where investors focus on outsized returns over all else (for more on carry and economics of venture investing, see this <a href=\"https://medium.com/@itsmattward/startup-fundraising-101-the-pros-and-cons-of-angels-vcs-angel-groups-and-syndicates-1226fdcec828\">article</a>).</p>\n<p name=\"ee7f\" id=\"ee7f\" class=\"graf graf--p graf-after--mixtapeEmbed\">This can make ventures capitalists a horrible partner/pessimist. It is in the VC’s best interest to push the envelope and their excitement over large returns can cloud judgement.</p>\n<p name=\"99f3\" id=\"99f3\" class=\"graf graf--p graf-after--p\">It is easier to tell someone they have an ugly baby on the bus than at a family reunion. You aren’t tied together for life or even directly associated with the outcome — in other words, you can be brutally honest without subconsciously seeing green (happy to chat if you need advice).</p>\n\n<h3 name=\"c740\" id=\"c740\" class=\"graf graf--h3 graf-after--p\">First principles</h3>\n<p name=\"27d8\" id=\"27d8\" class=\"graf graf--p graf-after--h3\">Questioning assumptions is the best way to pressure test your projections. Keep asking why and eventually you get to the root of the question.</p>\n<p name=\"40e5\" id=\"40e5\" class=\"graf graf--p graf-after--p\">The best founders and investors are able to “see” the future. I’ll leave you with a little Elon.</p>\nhttps://youtu.be/NV3sBlRgzTI\n<h3 name=\"2c08\" id=\"2c08\" class=\"graf graf--h3 graf-after--figure\">Closing thoughts</h3>\n<p name=\"8727\" id=\"8727\" class=\"graf graf--p graf-after--h3\">Nothing beats flywheel network effects — but nothing is harder to conceptualize, create and scale either…</p>\n<p name=\"d08a\" id=\"d08a\" class=\"graf graf--p graf-after--p\">What moats are you most excited about? How have you backed defensibility into your business?</p>\n<p name=\"a9e8\" id=\"a9e8\" class=\"graf graf--p graf-after--p\">Investors look hard at barriers to entry. Well defended castles create kingdoms. Those are the kind of companies<a href=\"http://thesyndicate.vc/investment-thesis\" data-href=\"http://thesyndicate.vc/investment-thesis\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\">our syndicate invests in</a>. And those are the kinds of strategies and tactics I advise startups on.</p>\n<p name=\"8f78\" id=\"8f78\" class=\"graf graf--p graf-after--p\">It doesn’t take genius, it takes first principles thinking and a hell of a lot of effort, analysis and testing.</p>\n<p name=\"7009\" id=\"7009\" class=\"graf graf--p graf-after--p\">Build your business, run like hell but be sure you are building a moat in the process. Snapchat sort of missed the ball here, as did Blue Apron. Both were great outcomes, but both were build on a mountain of sand.</p>\n<p name=\"4cfd\" id=\"4cfd\" class=\"graf graf--p graf-after--p\">Sandcastles have a tendency to wash away.</p>\n\n<h3 name=\"a1dc\" id=\"a1dc\" class=\"graf graf--h3 graf-after--p\">Before you go…</h3>\nIf you enjoyed this article and learned a lot, please click through to the original Medium <a href=\"https://thinkgrowth.org/think-you-understand-network-effects-you-dont-800d79f2de50\">post</a> and Clap it up to help reach and educate a larger audience.</span>\n<p name=\"32f5\" id=\"32f5\" class=\"graf graf--p graf-after--p\"><strong class=\"markup--strong markup--p-strong\"><em class=\"markup--em markup--p-em\">Hold down the clap button 20–50 times</em></strong><em class=\"markup--em markup--p-em\">if you liked the content! It helps me gain exposure.</em></p>\n<p name=\"d267\" id=\"d267\" class=\"graf graf--p graf-after--p\">And while you are on Twitter, give me a follow<a href=\"http://twitter.com/itsmattward\" data-href=\"http://twitter.com/itsmattward\" class=\"markup--anchor markup--p-anchor\" rel=\"noopener\" target=\"_blank\">@itsmattward</a></p>",
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