25iq

My views on the market, tech, and everything else

A Dozen Lessons about Minimum Viable Products

“It’s only cheap to build 2-3 person companies with sweat equity. The minute you start paying engineers you will realize it is quite expensive.” Bill Gurley.  Assume a startup has raised a seed round of ~$2 million. Also assume that what the startup has is a hypothesis that a big market composed of dogs will want to eat the dog food described by the hypothesis. The founders of the startup […]

Continue Reading →

Why has the level of business competition levels been turned up to 11? Or: Why is the lean customer development process important?

The world has been fundamentally changed by digital networks and software. Businesses and customers which are connected by networked digital systems create amplified network effects which means the velocity of business and the level of competition and innovation are higher than they ever been ever been. To survive in this new environment every business, from the largest enterprises to the smallest sole proprietor, must accelerate and fundamentally change their customer […]

Continue Reading →

A Dozen Lessons About Product/Market Fit

The product/market fit (PMF) concept was developed and named by Andy Rachleff (who is currently the CEO and co-founder of Wealthfront, and is a co-founder of Benchmark Capital). The core of Rachleff’s idea for PMF was based on his analysis of the investing style of the pioneering venture capitalist and Sequoia founder Don Valentine.” Why market matters more than anything  “Give me a giant market — always.” “Arthur Rock is […]

Continue Reading →

A Dozen Lessons on Growth

A growth team has the “responsibility to measure, understand and improve the flow of users in and out of the product and business. That’s the role of growth.” “A finance team by definition measures, understands and improves the flow of capital in and out of a business. That’s important because it contributes to all sorts of incredibly important business decisions. Finance uses its knowledge to help the business operate. What’s […]

Continue Reading →

Gross Margin for Fun and Profit – Involves Beer and Music Streaming!

The primary challenge with this blog post on gross margins is to make it interesting enough for people to read. So let’s start out with beer. Who doesn’t like beer!  One way to understand more about the cost of making beer is to look at the financials of Ballast Point Brewing on a percentage basis at the time it filed for an initial public offering. By the last quarter before […]

Continue Reading →

Everyone Poops and has Customer Churn (and a Dozen Notes)

Everyone Poops is the title of the American edition of a Japanese children’s book written and illustrated by Tarō Gomi. This post will explain why every business from Tesla to a hot dog stand has churn, just like everyone poops. I decided to use this analogy because both churn and poop are both inevitable and important parts of an essential process. For example, both individual and business customers all die […]

Continue Reading →

Why is it so Hard to Forecast the Future?

  For most of human history the life experiences of people have been overwhelmingly linear. Human are accustomed to encountering situations that reflect a simple proportional relationship between cause and effect. People expect that when they do X that Y will happen if Y was what happened in the past. This type of linear relationship is comforting to people since it is familiar. Ray Kurzweil believes: “our intuition about the […]

Continue Reading →

Tren’s Advice for Twitter

Jack Dorsey very recently asked for feedback on Twitter. The focus of nearly all of the comments he received was on ways to make Twitter’s service qualitatively better for consumers. If Twitter does not have a great product for consumers, nothing else matters. But having a great product for just one side of a three-sided market is not enough to make Twitter into a successful business. In a deeper analysis below […]

Continue Reading →

A Half-Dozen Ways to Look at the Unit Economics of a Business

  McCaw Cellular Communications sold to AT&T for $12.6 billion in September 1994. And yet the business did not show an accounting profit on its income statement until the second quarter of that year (after the deal was announced on August 17, 1993). The McCaw  Cellular example shows that you can create a tremendous amount of value for shareholders without showing any profit on an income statement. Or not. Here […]

Continue Reading →

What You Can Learn about Business from a Dozen Lines in the Godfather

  1. Michael Corleone:  “I have always believed helping your fellow man is profitable in every sense, personally and bottom-line.” Michael seems to be claiming that he agrees with Charlie Munger who once said: “You’ll make more money in the end with good ethics than bad. Even though there are some people who do very well, like Marc Rich–who plainly has never had any decent ethics, or seldom anyway. But […]

Continue Reading →