Real founders get scurvy
The death of Silicon Valley (or lack thereof); cults and culture; meeting LPs; and introducing the cannibal king himself, Sam Altman
|Nov 1, 2020|
🧠Top of mind: Is Silicon Valley Dead?
“I can understand perfectly how the report of my illness got about, I have even heard on good authority that I was dead.” — Mark Twain
Last week, Rob Rhinehart (founder of Soylent, a meal-replacement beverage startup) declared that Silicon Valley is dead, and he’s not the first to say so.
Such reports of Silicon Valley’s death have been greatly exaggerated.
Silicon Valley is still one of the few places in the world that have all of the ingredients necessary to make innovation happen. Many of those ingredients are well-documented: the ready availability of capital, the deep talent pool, the proximity of Stanford and Berkeley, etc. One ingredient that is often overlooked and badly misunderstood by Rhinehart, however, is Silicon Valley’s institutional knowledge.
The second lie [of Silicon Valley is] that all innovation had to look a certain way. Everybody knew innovation was a Delaware C Corporation based in Silicon Valley that sold software, raised Venture Capital, went viral, grew like a cancer, became a unicorn, rented lavish creative office spaces, and got acquired by an advertising company. The truth is, innovation comes in all forms, shapes and sizes.
Something you notice immediately upon diving into the startup world of Silicon Valley is precisely what Rhinehart mentions — that many startups look similar to each other. Many are Delaware C Corps. Many have raised money using SAFEs (a simple, copy-paste agreement for fundraising). Many buy their employees Aeron chairs.
But what to Rhinehart is evidence of oppressive, mindless conformity is, to me, evidence that founders in Silicon Valley have learned to focus on the right things. Why waste your time drafting your own fundraising docs if the SAFE exists? Why waste your precious brainpower thinking about incorporation when you could spend it instead on literally anything else?
Coming from the Midwest, this was my biggest revelation upon entering Silicon Valley: that startup playbooks exist, that they aren’t that hard to follow, and, perhaps most importantly, that entrepreneurship isn’t about taking more risks, it’s about taking fewer, better, bigger risks. Many VCs think about good startups in terms of simple bets. What one trend, if it materializes, would make this company succeed? They don’t want to take multiple, orthogonal (read: independent) risks.
Luckily for Silicon Valley Outsiders, the wisdom of Silicon Valley is starting to find its way to founders all over the world. This esteemed newsletter is one example, Startup School, Y Combinator’s program that teaches founders the basics, is another, and there are so many others out there to be discovered.
Remember: Silicon Valley — as criticized by Rhinehart and loved by your humble author — is far more than a physical place, it’s a set of ideas that help people start companies and change the world. The fact that these ideas are now transcending the physical space is just further evidence that Silicon Valley is far from dead. As long as there are folks still left to discover the power of its institutional knowledge, Silicon Valley will live on.
✨What’s (not-so) new in the Valley
Cults, or Culture?: A nascent trend to watch is new models of group living. While the Hype House full of TikTokkers has received plenty of press, other group homes like The Archive in SF and School 2.0 in Santa Fe have flown largely under the radar. They’re all intriguing answers to the question of how younger generations will combat the rising feelings of disillusionment and isolation that come from living in bigger cities (and in the digital age).
Finding Founders: Gagan Biyani, founder of e-learning startup Udemy, is starting a new company and recruiting a co-founder. In his search, he wrote a great tweetstorm — click to enjoy.
Cryptic Messages: In a post this week titled “Removing the CEO,” Fred Wilson waded into some choppy waters. Wilson is a board member at Coinbase, whose CEO is embroiled in controversy after publishing a memo banning politics conversations at his company then sharing an article about politics last week. The world assumed Wilson was talking about the Coinbase CEO, but Wilson later clarified that his post was in reference to the U.S. Presidential Election. As usually happens, however, his clarification got far less reach than the rumors that followed his original piece.
💸 Define “LP” & “GP”
“Limited Partners” are investors who fund Venture Capital firms.
”General Partners” are the VCs who invest that money in startups.
Most of the dollars that fund startups start off in the bank accounts of relatively risk-averse investors — folks like university endowment funds and pension funds of big corporations. Such investors don’t have the expertise, time, or relationships needed to pick winning startups, but want to diversity their holdings by getting exposure to the boom-and-bust startup world. To do so, LPs hire “General Partners” who run Venture Capital firms and accept their own “Limited” role as largely passive capital funding the whole VC operation.
👦 Someone to know: Sam Altman
Sam Altman is the former President of Y Combinator and the CEO of OpenAI. He has already lived many lives in Silicon Valley, and has left legends in his wake.
As the CEO of Loopt, Altman was so committed to his startup (and so bad at caring about literally anything else) that he got scurvy. When Paul Graham had to find someone to scale Y Combinator in his stead, he chose Altman and gave him perhaps the best endorsement of all time:
When we predict good outcomes for startups, the qualities that come up in the supporting arguments are toughness, adaptability, determination. Which means to the extent we're correct, those are the qualities you need to win.
…Sam Altman has [them]. You could parachute him into an island full of cannibals and come back in 5 years and he'd be the king.
And now, he’s working with Elon Musk and others to make sure artificial intelligence doesn’t end humanity. As one does.
Altman is a sharp, incisive thinker, and exemplifies the ethos of Silicon Valley — ragged determination, execution at all costs, and making your way to the right place at the right time.
Catch you on the outside,