Summary, my other summaries are here
Original posts by Naval Ravikant are here part 1 and part 2
FOUNDERS
- be a founder, employee or investor? if an employee, then you need to be someone who will be called into the first dozens of employees of a rocket taking off, who has already found PMF (product market fit) – uber, dropbox, etc., and then you can get rich on options, because at first they are generous
- founder – creates PMF, angel – creates a portfolio of PMF groping attempts. cool founders are rationally optimistic and create the future, cool angels are skeptical (miss 9 deals out of 10)
- the founder focuses and pumps, the angel – diversifies from the lack of his knowledge in some segment
- Founder is stressful and exhausting. angel – it can be done in part-time mode even at 60-70 years old
- investors at an early stage mainly bet on people, since the company can pivot, this is OK, but someone needs to take it all out. Twitter started as Odeo, Instagram as Burbn, Slack was Glitch, Lyft was Zimride, etc. etc.
- startups are the Olympics of business -> founders need a lot of energy. integrity is more important than being nice. the founder should not be coachable – he has his own internal compass, but just a fast learner / instantly experiment with feedback coming from reality
- first time founders – this is not entirely true: Bill Gates first created Traf-O-Data together with Paul Allen – a company for calculating car traffic data, Zuckerberg played with projects before FB, etc.
- serial founders are cool in execution, but less passionate and start to be afraid of radical experiments (but in tech, where successful companies are winner takes it all – this is necessary). first-time founders take on market risk and create new markets, while repeat founders bet on insights (which they have accumulated) and take on execution risks
- Founder references are useless, investors are wasting their time on this. founders are always unique: compare the creator of the anti-capitalist Craiglist or fintech founders who quickly pitch banks and regulators
ANGEL INVESTING
- you need to move to some kind of tech hub, 25 cities all over the world (each of these cities generates 1-2 unicorns a year), since live networks are much more trustworthy. indicator that the city is a hub – it has regular exits. angels outside the hubs lose money, and in the hubs they make 3-10x on their portfolio per decade
- Naval, like angels / VC, has strong opinions, but he does not cling to them, because opinions often contradict each other, because this is not math or science. the investor always learns to be non-consensus but right. top VC firms always have different opinions about the same (future successful) companies. thinking from first principles + surrounding yourself with the same people will make you unpopular
- portfolio: invest in 100 companies, one will make 1000x -> portfolio = 10x, even if 99 close (fb on the seed round did 10000x, so angels become billionaires)
- it’s not easy to be a good angel: know-how, geo access, capital, risk horizon, patience. but investing in an IPO means you’re already the last one in line. tech from the Sand Hill road created the most wealth in the US last. decades. no need to spread across other asset classes, invest only in talent
- judgment is important and developed, but useless without access to transactions. dealflow and access is the most important thing. the brand is important for the angels, so that when the top VC invests in the founder, the founder agrees to take money from you
- brand = authentic reputation. first created through content, and then through a portfolio of successful companies. authenticity – do not repeat others + be in the media that is comfortable for you: twitter for someone, podcasts for someone. I muddied software for startups – made AngelList
- top VCs do not specialize in narrow verticals, because markets and sectors are constantly changing
- it is critically important for an angel to have pro-rata rights in order to later report money to the companies that have shot
- the best investors do not care about FOMO, it is useless to catch them (I give myself 1 day to cool down if I like some startup)
- you need to understand technologies in order to evaluate in startups whether it is feasible or not