LinkedIn founder Reid Hoffman’s 10 rules of entrepreneurship

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LinkedIn founder Reid Hoffman’s 10 rules of entrepreneurship

LinkedIn founder Reid Hoffman's 10 rules of entrepreneurship
March 15, 2011 1:28 PM
Anthony Ha

 

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LinkedIn founder Reid Hoffman gave a speech today about how entrepreneurs can “invent the future”. Speaking at the South by Southwest Interactive conference in Austin, he recited a list of 10 rules of entrepreneurship.

Hoffman, who is now a partner at venture firms Greylock Partners, cautioned that he “reserves the right” to change the list later on. But for now, here are his rules:

  1. Try to create “disruptive change” — “It’s got to be something that changes an industry.” As one rule-of-thumb on how to judge whether your idea is disruptive enough, Hoffman said it should take $10 revenue and replace it with $1 of revenue, because that’s creating opportunities for new ecosystems.
  2. “Aim big” — Hoffman argued that it usually takes the same amount of work to run a the small company as it does a big company (except that if you sell the small company early, the work ends sooner). With that in mind, he said entrepreneurs try to build big companies that revolutionize their industry rather than create a startup they “flip” after a couple of years.
  3. Build a network to amplify your company — That network includes investors, advisors, employees, customers, and others.
  4. “Plan for good luck” — Sometimes entrepreneurs are surprised when something good happens, and they must take advantage of it by changing their plans. For example, he noted that PayPal (where he worked) started as an encryption product on mobile phones, then pivoted to a number other products before the founders noticed that it was being widely used at eBay. At first, the team wondered, “Why are these eBay people using us? This is terrible,” then they realized that PayPal could become a payment tool for online merchants.
  5. “Maintain flexible persistence” — “The art is knowing when to be persistent and when to be flexible and how to blend them.”
  6. “Launch early enough that you’re embarrassed by your 1.0 product release.” Hoffman said that “unless you’re Steve Jobs,” entrepreneurs are probably at least partially wrong about their product, and they won’t find out what they’re wrong about until people are using it. He added that when he launched LinkedIn, his co-founders wanted to wait until they launched the “contact finder” feature, but it turns out that wasn’t necessary — LinkedIn still hasn’t added that feature eight years later.
  7. “Always keep your aspirations and aim high, but don’t drink your own Kool Aid”
  8. “Having a great idea for a product is important, but having a great idea for product distribution is even more important.”
  9. “Pay attention to your culture and your hires from the very beginning.”
  10. “These rules of entrepreneurship are not laws of nature. You can break them.” — After all, the nature of entrepreneurship is that you’re doing something for the first time.

Read more at http://venturebeat.com/2011/03/15/reid-hoffman-10-rules-of-entrepreneurship/#d634xmKkHumCr3Y2.99

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Mesolimbic pathway From Wikipedia, the free encyclopedia

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Mesolimbic pathway

From Wikipedia, the free encyclopedia
 
 

Mesolimbic dopaminergic and serotonergic pathways.

The mesolimbic pathway is a dopaminergic pathway in the brain. The pathway begins in the ventral tegmental area of the midbrain and connects to the limbic system via the nucleus accumbens, the amygdala, and thehippocampus as well as to the medial prefrontal cortex. The mesolimbic dopamine system is widely believed to be a “reward” pathway, but that hypothesis is not universally accepted.[1]

Anatomy[edit]

The following structures are considered to be a part of the mesolimbic pathway:

Ventral Tegmental Area
The ventral tegmental area (VTA) is a part of the midbrain. It consists of dopaminergic, GABAergic, and glutamatergic neurons.[2]The VTA communicates with the nucleus accumbens via the medial forebrain bundle.
Nucleus Accumbens
The nucleus accumbens is found in the ventral striatum and is composed of medium spiny neurons.[3][4] It is subdivided into limbic and motor subregions known as the shell and core.[2] The medium spiny neurons receive input from both the dopaminergic neurons of the VTA and the glutamatergic neurons of the hippocampus, amygdala, and medial prefrontal cortex. When they are activated by these inputs, the medium spiny neurons’ projections release GABA onto the ventral pallidum.[2] The release of dopamine in this structure drives the mesolimbic system.
Amygdala
The amygdala is a large nuclear mass in the temporal lobe anterior to the hippocampus. It has been associated with the assignment of emotions, especially fear and anxiety. There are two, one in each temporal lobe, and their functions may belateralized.
Hippocampus
The hippocampus is located in the medial portion of the temporal lobe. It is known for its association with double memory (i.e., bothprocedural and declarative memory).
Bed Nucleus of the Stria Terminalis

Controversy over mesolimbic dopamine function[edit]

There is some controversy regarding dopamine’s role in the reward system. Three hypotheses—hedonia, learning, and incentive salience—have been proposed as explanations for dopamine’s function in the reward system.[1] The hedonia hypothesis suggests thatdopamine in the nucleus accumbens acts as a ‘pleasure neurotransmitter‘. In the late 1970s, it was found that some drugs of abuse involved dopamine activity, in particular in the nucleus accumbens, to cause the “high” or euphoric state. However, not all rewards or pleasurable things involve activation of the reward system, which may suggest that the mesolimbic pathway may not be just a system that works merely off enjoyable things (hedonia).[5] Learning, on the other hand, deals with predictions of future rewards and association formation. Studies have shown that rats that had their ventral tegmental area and nucleus accumbens destroyed do not lose their learning capabilities, but rather lack the motivation to work for a reward.[1] Incentive salience (wanting) stands out as a possible role for dopamine, as it regards this molecule as being released when there is a stimulus worth working hard for, thus making an individual work to get it. This is one of the reasons that dopamine transport has been extensively studied in ADD and ADHD. It is now widely understood that most people suffering from some form of attention deficit disorder most likely lack dopamine stimulation. This also explains why dopamine reuptake inhibitors and stimulants often dramatically improve symptoms of attention disorders. In self-administration studies, animals have been trained to give an operant response (lever press, nose poke, wheel turn, etc.) in order to obtain either a drug or a mate. It has been shown that the animals will continue to perform the required task until the reward is received, or fatigue sets in.[2][5]

Clinical significance[edit]

Since the mesolimbic pathway is shown to be associated with feelings of reward and desire, this pathway is heavily implicated inneurobiological theories of addictionschizophrenia, and depression.[6][7][8] Drug addiction, the loss of control over drug use or the compulsive seeking and taking of drugs despite adverse consequences, with the four major classes of abused drugs (psychostimulants, opiates, ethanol, and nicotine) are due to increased dopamine transmission in the limbic system-each by different mechanisms.[2][9]Like drug addiction, schizophrenia and depression have similar structural changes with dopamine transmission.[6]

Other dopamine pathways[edit]

The other dopamine pathways are:

Why Marketing, Not Sales, Should Get the Big Bucks

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Why Marketing, Not Sales, Should Get the Big Bucks

September 24, 2013 

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Disclaimer: My background is in sales.

According to Forrester Research, buyers are anywhere from two-thirds to 90 percent of the way through the buying process before they ever contact a vendor or sales person.

In many cases, both business-to-business and business-to-consumer buyers wait until the last possible minute to contact a sales representative, relegating sales to mere order takers.

For a moment, just think about your own buying experiences. To what lengths do you go through to avoid talking directly to a sales person?

Consumers today are in complete control of the buying process, and are engaging in information to become smarter at a torrid rate. According to Google’s Zero Moment of Truthresearch, in 2010 the average consumer engaged with five pieces of content before making a buying decision. In 2011, that number doubled to more than 10.

Google is projecting that this number will continue to increase as consumers engage in even more media. Of course it will. According to comScore, in November 2012 the penetration of smartphones moved beyond the 50 percent mark in both the United States and most of Europe. That means the majority of us have content-gathering tools with us at all times. It also means that buyers can increasingly avoid salespeople when and if they want.

To sum up, Forrester analyst Lori Wizdo states that:

Marketing now owns a much bigger piece of the lead-to-revenue cycle.

But if marketing is much more responsible for the buyer’s journey, why do sales get more of the money?

A Mindset Shift

The majority of marketing and sales leaders will not disagree with the research above, but it seems our pay structures need a serious wake-up call. For example:

  • According to Salary.com, the median salary for a sales director in the United States is $140,205 USD, but a marketing position at the pays $119,836 USD, or 15% lower.
  • The top sales executive in a US company makes an average of $233,381. The top marketing executive averages $207,564 USD (a difference of 11%).

So even though marketing is responsible for a conservative 70% of the buying cycle, sales gets a more significant portion of the salary allowance. And think about it…the 70% doesn’t take into the account the post sale nurturing that marketing is responsible for in the form of loyalty, customer retention and brand evangelist programs.

Don’t get me wrong…I’m all for compensating salespeople. And this is not another sales and marketing alignment post. The problem here is that we are using traditional pay scales that have not in any way adapted to the changing nature of the buying cycle and the more critical role that marketing plays today.

No longer are marketers merely “sales helpers” that puts together pretty brochures and brand awareness programs. Marketers, in order to position the brand as a go-to informational resource, to get and keep customers, and to even create better customers, are more critical than ever before.

All I ask is that those in charge of the budgets take a realistic look at the importance of the marketing role in enterprises today. It’s time to get out of the past.

What If You Stopped Sleeping? New Video Explains Health Effects Of Prolonged Sleeplessness

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What If You Stopped Sleeping? New Video Explains Health Effects Of Prolonged Sleeplessness

The Huffington Post  |  Posted: 09/24/2013 7:50 am EDT

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Doctors will tell you that not getting the recommended six to eight hours of shut-eye each night is not good for you, but what would happen if you stopped sleeping completely?

A new video from the popular YouTube series AsapSCIENCE answers that question — starting with how your body would respond the first sleepless night and then what would happen after nearly two weeks of no sleep. Check out the video above.

It turns out that after one night without sleep, the so-called mesolimbic dopamine system of the brain becomes stimulated. There’s an increase in the production of dopamine, a neurotransmitter linked to the brain’s reward and pleasure centers. That brings extra energy and motivation — the body’s attempt to ward off fatigue.

“Sounds appealing, but it’s a slippery slope,” AsapSCIENCE co-creator Mitchell Moffit says in the video. Because after that first night, brain and body eventually succumb to exhaustion. In fact, three days of sleeplessness can trigger hallucinations. Not good.

What’s the longest anyone has stayed awake continuously? Eleven days. And going that long without sleep brought not only impaired concentration, but also irritability and problems with perception.

Surprisingly, going that long without sleep didn’t cause any long-term health problems, according to the video.

“My assumption would have been major brain damage, or other physiological problems that would have been lasting,” Moffit told The Huffington Post. “Pretty crazy that they went back to normal after a few days!”

 

ALSO ON HUFFPOST:

 

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Understanding How Angel Investing is Changing

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September 29, 2013 

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If you track the venture capital industry it would be hard to miss the conversation going on this week over AngelList “Syndicates.”

From the hyperbolic Jason Calacanis weighing in that “The petty VC’s did everything to deride [Naval, the co-founder of AngelList]” as though the industry was collectively shitting its pants that AngelList was going to put us out of business. But Jason is one of the smartest thinkers in our industry so while style points in his eye-poking post might be low, he’s definitely scratching at something important.

My favorite new VC blogger, Hunter Walk, weighed in with some thoughtful comments about how Syndicates might actually pit, “angel vs. angel.”

And even the venerable Fred Wilson weighed in with how people “leading vs. following” in funding rounds played different roles and had different skills.

So there you have it. Many of the good and great of our industry are talking about AngelList.

I had a chance to discuss AngelList Syndicates with Naval at Michael Kim’s Cendana LP/VC conference on a panel with Naval, Roger Ehrenberg (IA Ventures) and Mike Brown, Jr. (Bowery Capital).

Is AngelList Syndicates really such a big deal?

If it gets broader adoption I think it is a big deal. I have a slightly different take on why I find it valuable.

For starters, what is AngelList Syndicates?

AngelList 101: As you know, AngelList is a platform where angels can invest in semi-screened tech deals. It should help some entrepreneurs to better access early-stage capital and should allow some angel investors better access to deal flow. As an angel you can look for the social proof in deals “Dave Morin is investing …” to make your decision. Social proof can be helpful. But it can also be destructive. It certainly shouldn’t be a proxy for good judgment.

AngelList Syndicates 101: While “AngelList Classic” was ‘each angel for himself’, syndicates allows an active angel to form a group of like-minded investors to invest together in a deal or deals. The syndicate lead can then take “carry” on the profits generated from the investment, turning some syndicate leads into MicroVCs.

While VCs usually take 20% carry on their funds (you get no profit until you’ve returned your investment fund and then share 20% of the upside after that), AngelList Syndicate Leads take 15% (AngelList itself takes the other 5%). And the other difference is that AngelList Syndicate leads don’t take any fees on the investment, which should help with returns.

Smartly AngelList requires a Syndicate lead to actually have their own money in the deal so they can’t just be packaging and taking fees – they actually have to put skin in the game. This is the same way with VC firms, by the way. If you know, VCs end up writing sizable checks into their own funds, which is important in better aligning interests.

So What’s the Big Deal?

In Jason’s mind half of the VC industry will now disappear as entrepreneurs flock to him and to Dave Morin for their money

… the bottom half of VCs will now be wholesale replaced by folks like Kevin Rose, Dave Morin and myself. The three of us have $1M in backers in the first week. That means if we collaborated on a project we can do an A-Round after a brief conference call.”

And Fred points out

It also means that they will have to learn to lead and lead well. They will have to step up before anyone else does. They will have to negotiate price and terms. They will have to sit on boards. They will have to help get the next round done. Essentially they will have to work.

… Not everyone is good at this. In fact, very few are. It’s hard to be a great lead investor.

Both are right. Jason, Kevin and Dave can move an order-of-magnitude faster than VCs and sometimes this is a good thing for entrepreneurs.

But as with many people who have a vested interest in fast rounds being assembled, they don’t quite get why it is so important that VCs actually take their time. VCs take their time precisely for the reason Fred articulates – they play the role of “lead investor.”

That means sitting on boards and helping entrepreneurs to handle the most difficult things that pop up like:

  • lawsuits
  • founder fighting
  • lack of traction, lack of downstream financing availability
  • existential threats (Apple announced they are competing directly with you)
  • strategic direction
  • help debating before key negotiations
  • M&A discussions (where your company is buying or being bought)
  • interviewing critical hires at a time where they have 3 other offers

and much more. Call any CEO that has me as a lead and they’ll tell you that I’ve been on midnight phone calls the night before big meetings acting as a sparring partner. Why? I sit on less than 10 boards precisely so that I can be deeply involved when I’m most needed. And I have witnessed this from all of my peer group.

I have watched Jim Andelman blow out his personal life to help build spreadsheet models for one of our co-investments at a critical inflection point. And countless Sunday mornings I’ve had breakfast with Dana Settle away from our families to help our companies at critical moments.

This is what leads do. Less investments, more active. Therefore of course they need to be more selective when writing checks and can’t spread their bets across 75 deals.

It’s different, not better or worse. I know the populist sentiment about VCs is that many want to believe that taking one’s time to make investments is due to 8-weeks’ holiday every summer and not working past 5pm.

I have never experienced a co-investor VC who is a slacker or uncommitted.

Yet I still see Syndicates as an important innovation.

In virtually every deal I do I leave space for angels. If I commit to a $2.5 million round I might write $1.8 – 2.2 million and tell the entrepreneur that they can bring in angels or seed funds for the remaining investment if they want. I don’t mind flexing up the amount available or flexing down (I will gladly take the whole round if needed / desired).

Why?

Kind of obvious. Angels add domain experience. Angels have additional networks. Angels can be helpful champions of the company. I don’t believe that I have monopoly on good ideas for the companies in which I invest so to me, the more the merrier.

Up to a point.

I don’t want 40 angels calling the CEO with their opinions on a regular basis. That would add too much overhead.

I have been involved with rounds of funding where individual angels asked to have lawyers review the next round of financing and slow up deals over what amounts to $25,000 out of a $5 million investment.

I don’t want confidential company information leaking to 40 angels – some of whom may be totally responsible and some of whom may inadvertently or intentionally leak information.

I have committed to some deals where some of the individual angels dragged out their investment decisions because to them $50,000 was a boat load of money (as it is for most people) while I had already wired my $1.85 million and wanted the CEO to get back to running the business. Kind of ironic that in many cases angels can actually be slower.

So Why Do I Love AngelList Syndicates?

Precisely because it helps organize a group of angels in ways that are helpful to entrepreneurs and to VCs. Far from putting us out of business, I believe it will complement our industry.

1. Helpful to Entrepreneurs – The most obvious. Syndicates can move faster in early-stage deals than rounding up 40 individual investors. Awesome.

2. Helpful to VCs – I can have 40 investors but just one signatory on deals. I don’t have to chase down tons of individuals. Helpful because if I know that Jason or others are “fronting” others in a deal I can deal with one person to negotiation in difficult times. Helpful because at the time of rounds we’re not herding cats.

3. Helpful to Angels – But what I find most innovative in AngelList Syndicates is that it is helpful to angels. Of course it’s obvious that it helps the self-interested syndicate lead who gets carry if the investment is successful. But it also helps followers. In most deals angels have few rights. One of the most important rights is “pro-rata” rights to invest in subsequent rounds. With angel money being “packaged” and aggregated into large bundles it makes it easier for angels to ask for rights it might not otherwise have.

The most interesting thing is that this will change early-stage investments in unanticipated ways.

As Hunter astutely points out in his post,

My guess is there are also some angels who were popular when they represented a $25k check but won’t be as sought after if they try to push $300k into a round.”

This is my guess, too.

And of course syndicates unleashes many unintended consequences by creating a new breed of self-promotion amongst angels who previously told you how much they loved their 100 deals because it benefited their equity – now some actually have even more riding as carry – so as always caveat emptor. Of course the same goes with traditional VCs.

We of course have Naval to thank for helping to innovate in our industry. In the end he’s giving us all more tools to do our jobs more effectively. I’ve always been a believer that new competitive dynamics are good for industries because they favor those that are most nimble in responding to the new market dynamics.

AngelList does this. But it doesn’t radically alter our industry as some would have you believe. It enhances our existing working practices.

Mostly I’d like to thank Nivi. Because while Naval rightly gets a lot of credit for helping shake up our industry, Nivi is the co-founder who has always been behind the scene pushing the innovations just as hard and always happy to avoid taking any credit.

Thank you both for enriching what we all do.

Google+ May Finally Matter Thanks To YouTube Comments

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Google+ May Finally Matter Thanks To YouTube Comments

 

 
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You didn’t really need a Google+ account until now. You might have one whether you wanted it or not. But YouTube’s new commenting system requires a presence on Google+. And there’s no real alternative to YouTube for video. Google+ may have mattered before in theory, but now it matters in practice.

Google+ is really a social identity data layerdesigned to help Google personalize all your products and improve ad targeting. The more it knows about you, the better it is at giving you a good experience and making money. Long-term, social is not an option for the search giant. It’s a necessity.

Before Google+, Google knew who you emailed and maybe Gchatted with. Depending on whether you browsed while signed in to a Google account, it would know what you searched for and mapped. If you were on Android or used its other products, it might have known a bit more. But it didn’t know or had to guess about your age, education and work history, interests, and social graph.

So Google+ launched in 2011 under the guise of a social network. That’s a convenient way for a company to get you to volunteer a ton of information about yourself. Personalize a profile with biographical info, add friends and colleagues, follow brands, and +1 and comment on your feed.

Sounds great, seven years late. Facebook and Twitter handled much of this and had already built strong network effects. You could go elsewhere for social networking, so didn’t you need a Google+ account yet and Google wasn’t getting the juicy data it wanted.

Google began requiring a Google+ account to sign up for Gmail at the start of 2012. Many would argue that Gmail is the best email provider, but there are alternatives. And if you did end up with a Google+ account (though not yet required for Gmail users), there wasn’t anywhere it was mandatory to use. Even passively, though, having a G+ account lets Google start tying usage data from across its products to your identity.

Google went a step further pushing G+ when it unified Google Talk (Gchat) with Google+ Messengerinto Hangouts which requires a Google+ account. Still, there’s plenty of other messaging options like SMS, Facebook, and WhatsApp.

 

CAUTION: BAD INVESTORS KILL GOOD COMPANIES

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Caution: Bad investors kill good companies

 
Around Silicon Valley, we all believe that having a good idea is not enough, and it is rather the execution that counts. And myths abound about how savvy investors like Sequoia or Kleiner Perkins can make a difference between a blockbuster success and a lackluster startup. I accept all of that. However, what has been left out of the conversation is an examination of the impact that bad investors have on promising startups. Sadly, few entrepreneurs pay much attention to this issue at the time of fundraising. It is time for some healthy debate on this topic, and here is my first stab at it:

What is a “bad investor”?

Some entrepreneurs assume that the worst that an investor could possibly do is not to add value. That is not true! As I will explain below, a bad investor (like a bad friend) can totally distract, demoralize, and completely ruin the future of your company. More specifically, a bad investor is one without whom your startup would have actually had a better chance of succeeding. 

How to spot a “bad investor”?

Typically, bad investors are those that are disengaged from the startup and the Board when the times are good, but become quite concerned and agitated as soon as the company hits a rough spot (e.g., a key employee departure, a drop in key metrics, appearance of a lawsuit, etc).

What is so “bad” about a bad investor?

The main problem with the behavior described above is that it sabotages your success by putting stress on you when you can least afford it. Here is why:

Every startup goes through ups and downs; it is just a part of the creative process of innovation, as we all know. And “creative” is the operative word here. In a startup, you try things, some work, most fail, and you try to learn and repeat the process with better results next time using as much creativity as you can manage. These creative iterations are to a large part dependent on outside-of-the-box thinking. This is especially true when you need to do some major pivoting work around your business model / customer acquisition strategy / etc. That means you will need to take some major risks. However, whenever you focus on risks, fear enters the picture and your brain literally shuts down its creative parts and goes into defensive/survival mode, which means you become physiologically incapable of finding the creative solutions to your problems. Most of us have first-hand experience of this phenomenon, which is also supported by a growing body of psychology experiments (see, e.g., feeling good increases possibility of insights).

So, here you are, on the verge of losing everything (your reputation, the trust of friends and family who believed in you and perhaps even invested their savings into your company, your employee’s livelihood, and the list goes on and on) while trying to keep calm and not panic. And as a savvy entrepreneur, you may be able to push back the internal fears and stress to come up with some creative solutions and insights. But it becomes an order of magnitude harder to do so when you have, at the same time, one or more investors breathing down your neck, distracting, harassing, and perhaps even threatening you and other investors, second-guessing every move and chewing up your remaining brain cycles. It becomes pretty much impossible to be creative under those circumstances, which unfortunately spells disaster for your company, as you will be unable to find a solution to your predicament, no matter how trivial the solution may seem post mortem.

Lots of great companies were second ideas that rose from the ashes of their predecessors. And more likely than not, the investors in those companies were understanding and supportive during the tough times, expressing something like “Hey, I know you guys have been working really hard and it is okay if the startup doesn’t make it. We knew the risks when we invested and were honored to have been a part of this journey with you.”  And that is the kind of investor you want to have!