Making Money in Tech
Y Combinator is a program that accepts around 60 startups a year and provides seed money to fledgling companies in exchange for equity, generally around 7 percent. The program has funded companies like Airbnb, Dropbox, and OMGPop, making young founders very rich. Vanity Fair has an excerpt of Randall Stross’s new book about Y Combinator, The Launch Pad, which follows a few young entrepreneurs around as they try to come up with The Next Big Thing.
If you are interested in startups and venture capitalists and money (AND WHY WOULDN’T YOU BE), you must read Erick Schonfeld’s piece on three-year-old venture capitalist firm Andreessen Horowitz. Schonfeld does a really great job of explaining the politics of Silicon Valley, how VC funds work, and how Andreessen Horowitz quickly become one of the top VC firms. One way: “They somehow seem to get into every deal that matters.” Their investments include Skype, Facebook, Instagram, Twitter, Foursquare, Pinterest, Airbnb, Fab, Groupon, and Zynga. HOW DO THEY DO IT? “The underlying thesis behind Andreessen Horowitz’s investing strategy is that in any given year only 15 companies will make up more than 90 percent of the returns. So it pays to get into those companies at almost any price.” Okay then!
A video to watch.
Friend and hero Heidi N. Moore has a super easy-to-understand and also cutting analysis of what went wrong on Facebook’s big day (hint: LOTS). There are some fun things to be learned about how IPOs work, which is good, because we’re all going to need to know what to do and what not to do when our own sick startups go public. Step one: Don’t do secret and illegal things. Step two: Do everything Facebook did, but opposite.
Corey Maass started a service called The Birdy that emails you each day to ask you what you spent .
After a delay, it’s off to the races for Facebook’s IPO. A lot of people just got real rich. Good for them. Follow along here, if you care.
Rich people can’t buy houses in San Francisco, because there are too many rich people and not enough houses.