Colin Barry

Fred Wilson Q&A (LTV, Tuesday, Week 6)


"Competition sucks." -- Seth Klarman, Baupost Group

Hunch-driven vs. data-driven entrepreneurs: Fred Wilson funds both.
Caveat: hunch-driven entrepreneurs usually have a lot of domain experience ==> entrepreneur's hunch usually comes from an "obsessive-compulsive desire to solve a problem his own life"

Failure is usually more instructive than success.
"We've made more money backing entrepreneurs coming off of a failure than backing entrepreneurs coming off of a success." -- Fred Wilson

Virality is not always possible: needs to be some incentive for the user to get others onto the product.
(Comment: I don't think this is true. Hotmail virality was based on footer addendum to all e-mail messages ["This message was sent with Hotmail --- free web-based email" with a hyperlink].)

When to monetize: early vs. late
Monetize early if (1) it makes the user experience better or (2) you have a concrete, well-defined idea about how to monetize.
A common fallacy: Twitter took five years to monetize. Similar stories for Google, Facebook, etc.
Your startup is not Twitter, and you will probably not be able to wait years and years before attempting to monetize.

Partnerships/startup deals with big companies: mixed bag.
Frequently, big-company deals "take forever" and "suck the life out of a company."
Find ways to compete with gatekeepers.
How do you compete with HBS? Go right to the customer (students); avoid partnership.

Why Fred Wilson likes angels and VC co-investment:
-- VCs have deep pockets and can scale the company. Angels usually can't help scale.
-- But angels, especially good ones, will go to bat for you no matter what.

MVP in a B2B startup: market demand.
People saying, "This product is a game-changer and I want to have a business relationship with it."

Question: What kind of startup should you launch?
Answer: I'm not positive, but NOT whatever is super-hot today.
Basic thesis => Anything that CAN become end-to-end digital, but is not currently digital.
Internet models worked well in media and e-commerce. They will penetrate healthcare, education, financial services, etc.

Passing on Airbnb:
"I got caught up in the air mattress thing, and I couldn't get past it." -- Fred Wilson
(Comment: I was very impressed by Fred Wilson's personal modesty/reluctance to make the sort of self-aggrandizing, judgmental pronouncements common among a certain sort of venture investors.)

Do something original. "I very much dislike copycats." -- Fred Wilson