If you’ve been involved in investing or fundraising activities in the past, you’ve likely heard about “TAMs” (total addressable market), as in “So what’s your TAM look like?” The general idea is to determine a metric that communicates in few words the nature of a given market for a product or service. Investors want to know how a company thinks about its market opportunity (investors generally want large ones), and startup founders need to have a sense for what they can realistically target, build for, sell to, and capture to build a business. You may also...
An interesting post from Sandy on the “stealth objection”: when a customer, investor, user, employee — anyone — harbors some resistance to what you’re selling them, but doesn’t make it explicit.
My experience here is mostly in getting users to buy or adopt our product. Anytime you’re showing off what you’ve got and selling them on the concept, some objections are out in the open. “It’s too expensive”. “It doesn’t support SSO”. “I can’t integrate with X”. These ones are on the easy end of the spectrum. At least you know where you stand!
One of my favorite ideas from my friend Sandy Kory is that “great product-led companies create their own TAM”. His latest post is on this topic, that worrying about deep TAM analysis is a distraction for early companies:
Is TAM really that bad? The problem is that at the seed stage, looking for TAM will push a startup towards existing markets & existing budgets. This can take a startup away from finding the best early adopters for a disruptive product. It can also stifle the long-term orientation needed for startup greatness.
The beauty of software startups is their potential...
A classic from Mark Suster on patience and pattern recognition for investors:
The first time I meet you, you are a single data point. A dot. I have no reference point from which to judge whether you were higher on the y-axis 3 months ago or lower. Because I have no observation points from the past, I have no sense for where you will be in the future. Thus, it is very hard to make a commitment to fund you.
For this reason I tell entrepreneurs the following: Meet your potential investors early. Tell...
The construction market for startups (one that I’m fairly involved in, but only as a segment of our market) has been a historically tough nut to crack for technology companies.
This is a great breakdown from Brian Potter on the past couple decades of construction startups and funding amounts, with a useful segmentation by category into slices like builders, materials, energy use, construction software, digital twins, and more.
It wasn’t surprising to see builders taking such a huge proportion of the funding — after all, trying to scale a soup-to-nuts homebuilding company is enormously capital-intensive. Management software scoops in an ~8%...
Brian Potter wonders why work as taxing and seemingly-mechanically simple as brick masonry is difficult to automate:
Masonry seemed like the perfect candidate for mechanization, but a hundred years of limited success suggests there’s some aspect to it that prevents a machine from easily doing it. This makes it an interesting case study, as it helps define exactly where mechanization becomes difficult - what makes laying a brick so different than, say, hammering a nail, such that the latter is almost completely mechanized and the former...
In early 1944, journalist Arthur Koestler was onto the horrors of the Holocaust taking place in Europe. He wrote this essay, originally published in the New York Times, calling attention to the atrocities in a climate where most in media were denying or claiming conspiracy.
At present we have the mania of trying to tell you about the killing, by hot steam, mass-electrocution and live burial of the total Jewish population of Europe. So far three million have died. It is the greatest mass-killing...
Internal memos are insightful resources to look at how organizations work and make decisions.
Bessemer has published an archive of the investment memos that their partners have written to their internal investment committees. A few neat ones:
Daniel Gross has a good list of things that will change post-coronavirus lockdown — patterns of lifesytle, businesses, real estate, and others:
A few notable ones:
The (temporary) end of cities. We might see a temporary exodus to the suburbs until there’s a vaccine. A few realtors have told me interest in SF apartments is down while suburban homes are up.
Trust. Suddenly all humans are suspect of carrying biological weapons. How do you feel when you see a stranger on the street today? The virus increases trust between smaller groups, decreases it towards strangers.
Bessemer maintains this page of companies they passed investing on. I like the idea of publicly acknowledging your big misses or errors as an organizational accountability tool. Some big names here like eBay, Airbnb, Google, and FedEx.
Almost a year ago I shared a link to the first version of Downlink. The main feature added here is you can create your own custom views by putting a bounding box around your area of interest. Then...
A great piece from the Atlantic’s George Packer, a transcript of his acceptance speech for the Hitchens Prize.
At a moment when democracy is under siege around the world, these scenes from our literary life sound pretty trivial. But if writers are afraid of the sound of their own voice, then honest, clear, original work is not going to flourish, and without it, the politicians and tech moguls and TV demagogues have less to worry about. It doesn’t matter if you hold impeccable views, or which side of...
Every great investment is born from decisions that were harder than they appear to an outsider. There are so few exceptions to this. Investors have a fascination with no-brainers, obvious decisions, and easy money. The phrases should be chapter titles in a book on the ease of deluding yourself.
The “edge” is in enduring stress and putting skin in the game:
Finding above-average investments requires either being smarter than others, or willing to endure more discomfort and uncertainty than others. It’s natural to focus on the former, because the industry is full of...
I always enjoy conversations with Marc Andreessen and Ben Horowitz. This interview (conducted by Slack founder Steward Butterfield) reviews their experiences as founders back in the pre-bubble era and compares and contrasts that thematically with the tech landscape today.
Investor Morgan Housel writes here about features that can, at face value, appear to be competitive advantages at one scale, while being destructive disadvantages at another. On being wiped out (local disadvantage) and being forced to start clean (long term advantage):
The two highest costs many companies face are employee compensation and an attachment to sunk costs. Sunk costs are so entrenched that it often takes a disaster to wipe them away. Part of the reason the German military was so powerful in the early years of World War II is because it had to forfeit every gun, tank,...
The latest episode of Shane Parrish’s Knowledge Project podcast is an interview with investor Howard Marks. There’s a ton here on how he thinks about opportunity and risk. I loved the sound beliefs on cycles — people commit excesses to the upside which have to be corrected, leading to overshooting to the downside. And the reason these things happen is because companies and customers, producers and consumers, are all people with emotions:
There’s no such thing as a market… All there is, is people. And people have feelings. And so the emotions tend to get people to buy, buy, buy...
A good overview from YC’s Kevin Hale on how to break down startup ideas:
The “solution looking for a problem” trap is all too easy to fall into, and to justify your way out of even if you fall prey to it. I love the approach here of starting with the end goal ($100M ARR) and backing into what the market size and price point would need to be to hit that target. So simple, but most of us don’t approach...
Interesting work by Ford’s self-driving team on how robotic vehicles could signal intent to pedestrians. You normally think Waymo, Tesla, and Uber with AV tech. But Ford’s investment in Argo and GM with Cruise demonstrates they’re serious.