Tomorrow's producer (part 5)
← Part 4
Alexis Ringwald ★ is the CEO of LearnUp ★ , a training startup whose clients include Staples ★ and Old Navy ★ . With a fighting spirit and an open smile, she stood in the a16z conference room. “I love to take the first step in dealing with a major problem,” said Alexis, and began the presentation.
“Start from the beginning. Tell me where you grew up, ”began Ben Golovitz. A16z had previously invested some money in Ringwald, but most of the main partners who had to decide if it was ready for Round A knew it not too well. Horowitz habitually forces the founder in front of him to put aside all the workpieces and reorganize. This is such a stress test that allows you to identify a biography, evaluate flexibility and uncover the real story behind the founder.
')
Ringwald thirty-one. Lost in thought for a second, she gradually plunged into fond memories of her early years. She told how she interviewed the unemployed, and how she suddenly realized that the biggest gulf in the country lies between those who have basic skills for employment - the ability to come on time and get dressed decently - and those who do not have such skills. “That is, this is“ My Fair Lady ” ★ in a modern way?” Golovitz inquired ingenuously. Ringwald decisively assured that her process increases her chances of finding a job threefold, and that eighty-two percent of the students of LearnUp outnumber their colleagues in the new place. Later, Golovits shared his impression: “My general conclusion is that it has the proper charisma, will and fury, to be rightfully considered the“ gamel rat-catcher ” ★ ”.
Pitch is a minefield. If a venture investor asks a question: “When you hire hundreds of engineers, does the formation of a corporate culture seem to be a problem or an interesting task?” The correct answer is: “A hundred? I need thousands! ”Reed Hoffman ★ , a venture capitalist from Greylock Partners ★ , co-founded LinkedIn, explains to me:“ I’m looking for someone who has a fleet strategy to capture the coast; army strategy to take over the country; and the police strategy to rule the country afterwards. "
A16z is trying to understand whether the founder has his own secret - a unique insight, obtained from personal experience, about how best to equip this world. And if this new device of the world is ten times better than the old one, then it, perhaps, can attract customers. Balaji Srinivasan introduced the concept of "a labyrinth of ideas": you expect the entrepreneur to spend years thinking about his idea, and - most importantly - also thinking about every possible impasse in the development of this idea. “Although entrepreneurs receive money from us,” explains Andriessen, “naturally, we expect that in response to our questions,“ What if ... ”we get an answer that satisfies us. I love to watch this reaction when they look at you with contempt - like, “you are an idiot” - and then they take you through the whole maze of their ideas, explaining why your proposal is untenable. ” Such checks allow a16z to understand who the founder is: either he is an avid mercenary who wants to sell the company in a few years (which will give only a fivefold increase in invested capital), or he is a missionary, eager to change the world. “But at the same time,” emphasizes Andriessen, “We are not interested in funding Mother Teresa ★ . We are investing in imperial, power hungry people who are determined to crush their rivals. Companies only have a big impact on the world when they themselves become big enough. ”
Ringwald, returning to his plan, promises greatness: “LearnUp will change the job market across America. We will free up human potential and set a new scale to measure national GDP. ” Andrésen adds: “There is a question. Known issue. Why do companies not do everything themselves, as soon as they understand that it works? ”Ringwald replies:“ We will continue to break away from competitors by rapidly developing and collecting more data on the needs of corporate customers. ”
The following question is asked by one of the main partners, Chris Dixon (Chris Dixon ★ ): “Do you create a consumer or corporate company?” For a consumer company, the buyer is a private person, and for a corporate company another business. Ringwald is puzzled. She explains that both individual employees and corporations use her services. In addition, there is a tendency to work remotely.
After the meeting, Andreissen shares with colleagues: “She essentially did not answer Chris's question. If she has a consumer company, she can well protect herself. But if it is focused on the corporate market, it will most likely be cut. ”If Ringwald’s clients are employees who continue to use LearnUp, moving from one company to another, she can try to use the network effect. And if corporations are real clients, they may eventually take over the training of employees or entrust it to another startup. A16z has a very different approach to consumer and corporate markets. The Foundation prefers to enter the enterprises of the corporate market as early as possible, but takes a pause in the case of the consumer sector, because companies of the latter type either take off quickly - everyone suddenly needs Instagram - or they also fall off quickly. Such is the risk aversion method ★ , which allows controlling this risk. In 2013, a16z did not participate in the Oculus VR ★ Round A, preferring to wait and see if it could solve the seasickness problem ★ that virtual reality systems faced. Six months later, Round B was funded. The fund received the same ten percent of the company, which could have been received in round A, but for thirty million dollars instead of six. The internal logic of such an expensive risk-taking is: "We pay for confidence."
Partners began to discuss how to evaluate LearnUp. Estimation, especially on the early rounds, is often based not on tables, but on monitoring the market — what other companies offer — and on the logical modeling of all possible “What if…” If you evaluate the interest of users, the team of leaders, the size of the available market, does Pinterest come to mind, or is it more like ShoeDazzle? One of the partners suggested that LearnUp is “ten past thirty”. That is, a tenth of the company should be bought for thirty million dollars, while the company will be fully valued at three hundred million. "Well no. Rather, ten past fifteen or twenty, ”Golovits retorted, lowering the estimate by half. "Or six for twelve," suggested Andrissen. Shortly after this meeting, Ringwald turned LearnUp into a corporation-oriented company. ▼
To be continued…
Part 1 | Part 2 | Part 3 | Part 4 ← | Part 5 | → Part 6 | Part 7 | Part 8
About the author: Ted Friend has been a regular contributor to The New Yorker since 1998. Author of various reports and investigations, multiple winner of awards in the field of journalism.
Photo: Portrait of Alexis Ringwald from TechCrunch article
PS: In the last paragraph in the original with the numbers going on complete nonsense, which is also noted by other readers . When translating, I had to think out logic so that it was reasonable.
Alexis Ringwald ★ is the CEO of LearnUp ★ , a training startup whose clients include Staples ★ and Old Navy ★ . With a fighting spirit and an open smile, she stood in the a16z conference room. “I love to take the first step in dealing with a major problem,” said Alexis, and began the presentation.“Start from the beginning. Tell me where you grew up, ”began Ben Golovitz. A16z had previously invested some money in Ringwald, but most of the main partners who had to decide if it was ready for Round A knew it not too well. Horowitz habitually forces the founder in front of him to put aside all the workpieces and reorganize. This is such a stress test that allows you to identify a biography, evaluate flexibility and uncover the real story behind the founder.
')
Ringwald thirty-one. Lost in thought for a second, she gradually plunged into fond memories of her early years. She told how she interviewed the unemployed, and how she suddenly realized that the biggest gulf in the country lies between those who have basic skills for employment - the ability to come on time and get dressed decently - and those who do not have such skills. “That is, this is“ My Fair Lady ” ★ in a modern way?” Golovitz inquired ingenuously. Ringwald decisively assured that her process increases her chances of finding a job threefold, and that eighty-two percent of the students of LearnUp outnumber their colleagues in the new place. Later, Golovits shared his impression: “My general conclusion is that it has the proper charisma, will and fury, to be rightfully considered the“ gamel rat-catcher ” ★ ”.
Pitch is a minefield. If a venture investor asks a question: “When you hire hundreds of engineers, does the formation of a corporate culture seem to be a problem or an interesting task?” The correct answer is: “A hundred? I need thousands! ”Reed Hoffman ★ , a venture capitalist from Greylock Partners ★ , co-founded LinkedIn, explains to me:“ I’m looking for someone who has a fleet strategy to capture the coast; army strategy to take over the country; and the police strategy to rule the country afterwards. "
A16z is trying to understand whether the founder has his own secret - a unique insight, obtained from personal experience, about how best to equip this world. And if this new device of the world is ten times better than the old one, then it, perhaps, can attract customers. Balaji Srinivasan introduced the concept of "a labyrinth of ideas": you expect the entrepreneur to spend years thinking about his idea, and - most importantly - also thinking about every possible impasse in the development of this idea. “Although entrepreneurs receive money from us,” explains Andriessen, “naturally, we expect that in response to our questions,“ What if ... ”we get an answer that satisfies us. I love to watch this reaction when they look at you with contempt - like, “you are an idiot” - and then they take you through the whole maze of their ideas, explaining why your proposal is untenable. ” Such checks allow a16z to understand who the founder is: either he is an avid mercenary who wants to sell the company in a few years (which will give only a fivefold increase in invested capital), or he is a missionary, eager to change the world. “But at the same time,” emphasizes Andriessen, “We are not interested in funding Mother Teresa ★ . We are investing in imperial, power hungry people who are determined to crush their rivals. Companies only have a big impact on the world when they themselves become big enough. ”
Ringwald, returning to his plan, promises greatness: “LearnUp will change the job market across America. We will free up human potential and set a new scale to measure national GDP. ” Andrésen adds: “There is a question. Known issue. Why do companies not do everything themselves, as soon as they understand that it works? ”Ringwald replies:“ We will continue to break away from competitors by rapidly developing and collecting more data on the needs of corporate customers. ”
The following question is asked by one of the main partners, Chris Dixon (Chris Dixon ★ ): “Do you create a consumer or corporate company?” For a consumer company, the buyer is a private person, and for a corporate company another business. Ringwald is puzzled. She explains that both individual employees and corporations use her services. In addition, there is a tendency to work remotely.
After the meeting, Andreissen shares with colleagues: “She essentially did not answer Chris's question. If she has a consumer company, she can well protect herself. But if it is focused on the corporate market, it will most likely be cut. ”If Ringwald’s clients are employees who continue to use LearnUp, moving from one company to another, she can try to use the network effect. And if corporations are real clients, they may eventually take over the training of employees or entrust it to another startup. A16z has a very different approach to consumer and corporate markets. The Foundation prefers to enter the enterprises of the corporate market as early as possible, but takes a pause in the case of the consumer sector, because companies of the latter type either take off quickly - everyone suddenly needs Instagram - or they also fall off quickly. Such is the risk aversion method ★ , which allows controlling this risk. In 2013, a16z did not participate in the Oculus VR ★ Round A, preferring to wait and see if it could solve the seasickness problem ★ that virtual reality systems faced. Six months later, Round B was funded. The fund received the same ten percent of the company, which could have been received in round A, but for thirty million dollars instead of six. The internal logic of such an expensive risk-taking is: "We pay for confidence."
Partners began to discuss how to evaluate LearnUp. Estimation, especially on the early rounds, is often based not on tables, but on monitoring the market — what other companies offer — and on the logical modeling of all possible “What if…” If you evaluate the interest of users, the team of leaders, the size of the available market, does Pinterest come to mind, or is it more like ShoeDazzle? One of the partners suggested that LearnUp is “ten past thirty”. That is, a tenth of the company should be bought for thirty million dollars, while the company will be fully valued at three hundred million. "Well no. Rather, ten past fifteen or twenty, ”Golovits retorted, lowering the estimate by half. "Or six for twelve," suggested Andrissen. Shortly after this meeting, Ringwald turned LearnUp into a corporation-oriented company. ▼
To be continued…
Part 1 | Part 2 | Part 3 | Part 4 ← | Part 5 | → Part 6 | Part 7 | Part 8
About the author: Ted Friend has been a regular contributor to The New Yorker since 1998. Author of various reports and investigations, multiple winner of awards in the field of journalism.
Photo: Portrait of Alexis Ringwald from TechCrunch article
PS: In the last paragraph in the original with the numbers going on complete nonsense, which is also noted by other readers . When translating, I had to think out logic so that it was reasonable.
Source: https://habr.com/ru/post/292862/
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