Course "Blitzscaling" Lecture 4.1. Ann Mura-Ko: The Thunder Lizard Theory. Author value

This lecture was given by Ann Mura-Co - one of the co-founders of Floodgate - which later, during the answers to the questions, joined John Lilly.

Lecture 1: Introduction
Lecture 2.1: Stages of growth of a startup, "family stage"
Lecture 2.2: Stages of growth startup, "family stage"
Lecture 3.1. Michael Dearing. A bit of the history of entrepreneurship and management
Lecture 3.2. Michael Dearing. Questions and Answers with Reid Hoffman
Lecture 3.3. Michael Dearing. Questions and Answers with Reid Hoffman
Lecture 4.1. Ann Mura-Ko: The Thunder Lizard Theory. Author value
Lecture 4.2. Ann Mura-Ko: The Thunder Lizard Theory. Product, corporate and categorical value.
Lecture 4.3. Ann Mura-Ko: Questions and Answers with John Lilly




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I. The Thunder Lizard Theory

Thunder lizards are a term coined by Ann Mura-Co and her partner Mike Maples, and which is the fundamental theme of their investment fund, Floodgate. This is their story, which tells about great entrepreneurs and great startups. The story is as follows:

• The term "Thunder Lizard" was inspired by Godzilla, and means entrepreneurs who have reached a huge scale of activity.
• Thunder lizards are born from radioactive atomic eggs, and with these creatures something is wrong from the first days of life.
• Thunder lizard makes a long and tiring journey through the Pacific Ocean, simultaneously overcoming many difficulties. Some of them take a break in Hawaii.
• After some time, the Thunder Lizard reaches the end point of its path - San Francisco, and throws out the accumulated anger and brings chaos into the city. The thunder lizard can shoot laser beams from the eyes, devour trains, ships, etc.
• The thunder lizard grows so large that it completely dominates its territory and negates any attempts to compete with it.

How does all this apply to entrepreneurs:

• There are certain types of founders who can use their advantages and turn them into truly insurmountable power.
• Such founders seek to minimize organizational and technical risk.
• Such founders achieve full compliance with the market - they follow the market trends and have a good sense of their products.
• Such founders love to avoid or destroy competition.

Ii. Rare Beast - Thunder Lizard

Thunder lizards are extremely rare. Between 1980 and 2012, there were 3,000 companies that initially placed their shares on the public market.

And only 17 of them have reached incomes in excess of $ 4 billion. So these companies are truly legendary, but to become one of them is incredibly difficult.

Even an IPO is an incredibly difficult move. Each individual year, only about 25 companies end up with a financial result of more than $ 500 million. This means that the probability of creating a great company is extremely small.

Iii. The value system of companies, "Thunder Lizards"

Ann Mura-Ko and her partner spent a lot of time thinking about how to recognize such companies in the early stages, and what key factors such companies need for further growth and development.

In the process of thinking, they created the so-called “value system”, which helped them evaluate the companies that they considered and analyzed. The system of values ​​includes the following elements:

1. Author value - the main idea of ​​your product
2. Product Value - The product must fit the market.
3. Corporate Value - Business Model and Corporate Culture
4. Categorical value - Creating "your" market

We will work on each of these values ​​separately ( we will consider product, corporate and category value in the next article ).

Iv. Author value

Ann Mura-Ko has spent the lion's share of time on this value, since it is she who is most obvious in the early stages of the company's development. Copyright practices - this is a technical idea, on the basis of which the product and company is built.

For example, one of the companies in their portfolio, Ayasdi, was founded by Gunnar Karlsson, a professor of mathematics at Stanford University. One of his graduates realized his theories in products, after which he turned the products into a company. The company was based on the experience of 25 years of research.

The author's value can come not only from technical innovations, but also from other sources, including:

• Access to a scarce resource - Example: De Beers had access to diamonds.
• Creating high costs associated with a change of supplier - Example: Keurig, after buying a coffee machine, you need to buy coffee capsules.
• Network effects - creates a link between buyers and sellers. Example: LinkedIn has a network effect on your professional identity.
• Unique team - Example: Lyft and the history of the company's foundation. One of the founding professors showed that each period of innovation included a change in the transport industry — trains, canals, highways, etc.

Question from the audience - Today the threshold of entry is relatively low - how does this change your view of technical innovations?

Creating products today is easier than ever before, but as far as the development of technical ideas is concerned, everything is quite the opposite. You need to believe in something that no one else knows or that no one else believes.

For example, the founder of Veeva Systems said that every great startup has one fundamental assumption, which is true with a probability of less than 50%, but gives you a twenty-fold advantage in the market. For Veeva Systems, this rate was that they could create a company worth $ 1 billion based on Force.com (Salesforce platform). Everyone then thought that they were crazy, but they proved their case.

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