Marc Andreessen (Pmarca)

Hi Paul,

I agree advice varies greatly in value. Bad advice is worth less than zero because it obscures the good.

I think YC's advice is generally quite good. The thrust of my argument was that advice and connections are more commodities than most investors believe.

Naval Ravikant, a YC speaker, says to assume investors are mostly money, as does Marc Andreesen:

http://venturehacks.com/articles/dumb-money

http://blog.pmarca.com/2007/06/the_truth_about_1.html

"Odds are, nothing your VC does, no matter how helpful or well-intentioned, is going to tip the balance between success and failure."

Ironically, because you distribute a lot of advice freely in essays and events, and because YC's connections are high-profile enough to work outside YC, it's less necessary to join YC for them.

To me, the other entrepreneurs in YC are the biggest value-add and worth a premium. I don't argue YC should match angel terms, just come closer to them than 1/10th.

I mention all this because I'm a fan of YC and want to see it succeed. The #1 criticism I hear about YC is the terms.* Investing a bit more is a good way to address that and one that now seems feasible. Otherwise it remains an obstacle to some high-quality founders and a way the increasing number of incubators can compete with you.

To use a mixed metaphor, I know I'm preaching against the choir in the lion's den, so I expect skepticism. I intend it as a friendly perspective.

-Mark

* #2 is that YC ideas aren't "big" enough, but…

Marc Andreessen has talked about this and mentions a quote from Scott Adams (http://blog.pmarca.com/2007/10/the-pmarca-guid.html):

"If you want an average successful life, it doesn't take much planning. Just stay out of trouble, go to school, and apply for jobs you might like. But if you want something extraordinary, you have two paths:

Become the best at one specific thing.

Become very good (top 25%) at two or more things.

The first strategy is difficult to the point of near impossibility. Few people will ever play in the NBA or make a platinum album. I don't recommend anyone even try.

The second strategy is fairly easy. Everyone has at least a few areas in which they could be in the top 25% with some effort. In my case, I can draw better than most people, but I'm hardly an artist. And I'm not any funnier than the average standup comedian who never makes it big, but I'm funnier than most people. The magic is that few people can draw well and write jokes. It's the combination of the two that makes what I do so rare. And when you add in my business background, suddenly I had a topic that few cartoonists could hope to understand without living it."

This is general advice though and doesn't necessarily apply to the question of "what should I work on now that would help my start-up the most?"

There model's not a bad one. Most analysts predictions is that in social networking, two things will happen:

A) There will be a couple of massive players (Myspace, Facebook, etc.)

B) There will be a ton of niche players--you already see this with sites that cater specifically to pet lovers (http://www.petcrash.com/, http://fuzzster.com), expectant fathers (http://www.brandnewdad.com), etc.

Andreessen is betting (probably correctly) that people will be much more interested in using a service like Ning than going out and building their own social networking site from scratch. He can monitize on targeted ads and value-added features, and it seems like B (above) is in fact not only happening, but working well!

Ning passes 200,000 social networks
http://blog.pmarca.com/2008/03/ning-passes-200.html

Some interesting elements:

- "We're experiencing 0.5%+ day-over-day growth of number of networks on Ning, which means that we're adding more than 1,000 new networks per day -- and that's accelerating."

- "Over 70% of the networks on Ning are active, as defined by 'used in the last 30 days'"

It sounds like a terrible deal, but if you need the money you need the money. I'm curious what geographical area you are located in -- you'd never get something like that from a SV VC. Was this a verbal offer made quickly or do you have a term sheet?

These guys are offering a valuation half what YC offers, and they are proposing a board structure that gives them defacto control over the company board and the company. And they aren't YC.

Your response should be "how about convertible debt?" Convertible debt makes a lot more sense than setting up a board of directors that they control and it works out for everyone in the next round.

I would recommend reading http://venturehacks.com in its entirety along with pmarca's relevant blog posts. http://blog.pmarca.com/2007/06/the_truth_about.html, http://blog.pmarca.com/2007/06/the_truth_about_1.html, http://blog.pmarca.com/2007/06/the_truth_about_2.html, and more. After reading pmarca, you should be able to answer the question if you actually want to raise VC money or not. It only makes sense for a very specific type of company.

IMHO

http://betashop.com/ by jason goldberg

http://www.gabrielweinberg.com/blog/ founder of duckduckgo

http://blogmaverick.com/ by Mark Cuban

http://blog.pmarca.com/ Marc Andreesen's blog ( again start from the older posts)

http://avc.com "MBA mondays" by Fred Wilson( i get emailed as chapters via dailylit )

http://www.joelonsoftware.com/

http://onstartups.com/ by dharmesh shah of hubspot

http://www.bothsidesofthetable.com/ by mark suster

"startup site:http://calacanis.com/ " ( on google to find good older posts while Jason Calacanis used to blog )

http://lsvp.wordpress.com

http://www.chubbybrain.com/

http://tom.preston-werner.com/

apart from 37 signals, venturehacks, & lean startup blogs.

~B

If you are giving a product or service away I don’t think you can assert that you have “product/market fit.” You have a very compelling application, but until you figure out who is going to pay you for it, and how much it’s worth to them, I don’t think you can put a check in the box next to “product/market fit” since you don’t pass this test from the same Marc Andreessen post you reference ( http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html ):

And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account.