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Marc Andreessen: the thing startup founders misunderstand about 'risk' "I've always been a fan of what Andy Rachleff taught me, which is called The Onion Theory of Risk. You can think about the startup on Day 1 as having every conceivable kind of risk: founder risk, product risk, technical...

48,726 просмотров • 1 год назад •via X (Twitter)

Комментарии: 6

Фото профиля Overlap: Business & Tech
Overlap: Business & Tech1 год назад

Create viral clips for free on Overlap 👇

Фото профиля Miles Udemezue
Miles Udemezue1 год назад

@arachleff glad this resonates with your mission. fostering diversity brings invaluable perspectives.

Фото профиля Productivity Tool Channel
Productivity Tool Channel1 год назад

@arachleff It’s essential to focus on one risk at a time, leveraging insights and feedback along the way, ultimately leading to a more resilient and successful startup journey.

Фото профиля Neurofauna (volgen = gefist worden)
Neurofauna (volgen = gefist worden)1 год назад

Basically risk is not serially reduced (or increased). Risks often exist in parallel up to the very end of a project. So this an oversimplified model. An interesting question is how good we can get at predicting a person’s (or a team’s) long-term performance. Because humans are very often the least certain factor since they’re largely a black box even after a pretty intensive evaluation. AI tools might be able to help us crack this problem.

Фото профиля Corey Engel †🇺🇸
Corey Engel †🇺🇸1 год назад

@arachleff Very strange way of seeing the world

Фото профиля Rohan Gayen
Rohan Gayen1 год назад

@arachleff We have to think like this for mental health instead of going for endless therapies. Take risks, gain more power, remove root problem behind all worries.

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Q: Should startups always raise as much money as possible? In the clip below, Marc Andreessen shares a framework that Benchmark co-founder Andy Rachleff taught him called "The Onion Theory of Risk". You can think of a day 1 startup as having every conceivable kind of risk: founding team risk, product risk, technical risk, market acceptance risk, revenue risk, cost of sales risk, viral growth risk, etc. A startup is basically just a long list of risks, and as Marc explains: "The way I think about running a startup is the way I think about raising money. It's a process of peeling away layers of risk as you go." You raise seed money to peel away the first two or three risks (e.g. founding team risk, product risk, initial launch risk). You raise the Series A round to peel away the next layer of risks (e.g. recruiting risk, customer risk, revenue risk, cost of sales risk) And so on. Basically, you're peeling away risk as you're achieving milestones. And as you achieve milestones, you're both: making progress on your business and justifying raising more capital. So in terms of fundraising, you should be calibrating the amount of money you're raising to the risks you need to pull out of your business for you to raise your next round. For example, if you're raising your Series A round, the best way to do that is to say to investors: "I raised a seed round then achieved ____ milestones and eliminated ____ risks. Now I'm going to raise $X for the Series A to achieve ____ milestones and eliminate ____ risks. This will get the company to ____ state for the Series B round. " This seems fairly obvious, but as Marc points out, it's a much more systematic way of going about things versus just raising as much money as possible, renting fancy offices, and hiring as many people as you can to grow as fast as you can. The more money you raise, the more you dilute your ownership stake in your business so it pays to be thoughtful. Raise the capital you will need to achieve the milestones and eliminate the risks required for your next financing round. It also probably makes sense to give yourself some margin as safety because things never go exactly as planned in startup land. Follow Startup Archive for more tactical startup advice!

Startup Archive

178,597 просмотров • 2 лет назад

Q: Should startups always raise as much money as possible? In the clip below, Marc Andreessen shares a framework that Benchmark co-founder Andy Rachleff taught him called "The Onion Theory of Risk". You can think of a day 1 startup as having every conceivable kind of risk: founding team risk, product risk, technical risk, market acceptance risk, revenue risk, cost of sales risk, viral growth risk, etc. A startup is basically just a long list of risks, and as Marc explains: "The way I think about running a startup is the way I think about raising money. It's a process of peeling away layers of risk as you go." You raise seed money to peel away the first two or three risks (e.g. founding team risk, product risk, initial launch risk). You raise the Series A round to peel away the next layer of risks (e.g. recruiting risk, customer risk, revenue risk, cost of sales risk) And so on. Basically, you're peeling away risk as you're achieving milestones. And as you achieve milestones, you're both: making progress on your business and justifying raising more capital. So in terms of fundraising, you should be calibrating the amount money you're raising to the risks you need to pull out of your business for you to raise your next round. For example, if you're raising your Series A round, the best way to do that is to say to investors: "I raised a seed round then achieved ____ milestones and eliminated ____ risks. Now I'm going to raise $X for the Series A to achieve ____ milestones and eliminate ____ risks. This will get the company to ____ state for the Series B round. " This seems fairly obvious, but as Marc points out, it's a much more systematic way of going about things versus just raising as much money as possible, renting fancy offices, and hiring as many people as you can to grow as fast as you can. The more money you raise, the more you dilute your ownership stake in your business so it pays to be thoughtful. Raise the capital you will need to achieve the milestones and eliminate the risks required for your next financing round. It also probably makes sense to give yourself some margin as safety because things never go exactly as planned in startup land.

Michael McGuiness

735,589 просмотров • 2 лет назад

Marc Andreessen explains the “Onion Theory of Risk” “I think the single-biggest thing entrepreneurs are missing — both on fundraising and how they run their companies — is the relationship between risk and cash. I’ve always been a fan of something Andy Rachleff taught me years ago. He calls it the ‘Onion Theory of Risk.’” You can think of a day 1 startup as having every conceivable kind of risk: founding team risk, product risk, technical risk, market acceptance risk, revenue risk, cost of sales risk, viral growth risk, etc. A startup is basically just a long list of risks, and as Marc explains: "The way I think about running a startup is the way I think about raising money. It's a process of peeling away layers of risk as you go." You raise seed money to peel away the first two or three risks (e.g. founding team risk, product risk, initial launch risk). You raise the Series A round to peel away the next layer of risks (e.g. recruiting risk, customer risk, revenue risk, cost of sales risk) And so on. Basically, you're peeling away risk as you're achieving milestones. And as you achieve milestones, you're both: making progress on your business and justifying raising more capital. So in terms of fundraising, you should be calibrating the amount money you're raising to the risks you need to pull out of your business for you to raise your next round. For example, if you're raising your Series A round, the best way to do that is to say to investors: "I raised a seed round then achieved ____ milestones and eliminated ____ risks. Now I'm going to raise $ X for the Series A to achieve ____ milestones and eliminate ____ risks. This will get the company to ____ state for the Series B round. " This seems fairly obvious, but as Marc points out, it's a much more systematic way of going about things versus just raising as much money as possible, renting fancy offices, and hiring as many people as you can to grow as fast as you can. The more money you raise, the more you dilute your ownership stake in your business so it pays to be thoughtful. Raise the capital you will need to achieve the milestones and eliminate the risks required for your next financing round. It also probably makes sense to give yourself some margin as safety because things never go exactly as planned in startup land. Video source: Y Combinator (2014)

Startup Archive

63,259 просмотров • 1 год назад

The Onion Theory of Risk by Marc Andreessen: "I think the single biggest thing entrepreneurs are missing, both on fundraising and how they run their companies, is the relationship between risk and cash. The relationship between risk and raising cash, and then the relationship between risk and spending cash. So I've always been a fan of something that Andy Ratcliffe taught me years ago, which he called the onion theory of risk. Um, which basically is, you can think about a startup like on day one, um, as having every conceivable kind of risk, right? And you can basically just make a list of the risks. And so you've got, you know, founding team risk. You know, do the founders, are the founders gonna be able to work together? Do you have the right founders? You're gonna have product risk. You know, can you build a product? You'll have technical risk, right? Which is maybe you need a machine learning breakthrough or something to make it work. Are you gonna be able to do that? Um, you'll have, you know, launch risk. Will the launch go well? You'll have, you know, market acceptance risk. You'll have revenue risk. A big risk you get into in a lot of businesses that have a sales force is, can you actually sell the product for enough money to actually pay for the cost of sale? So you have the cost of sale risk. If you're a consumer product, you'll have a viral growth risk. Well, you get the thing of viral growth. And so, a startup at the very beginning is basically just this long list of risks. And then the way that I always think about running a startup is also the way I think about raising money, which is it's a process of peeling away layers of risk as you go. And so you raise seed money in order to peel away the first two or three risks. The founding team risk, the product risk, and maybe the initial launch risk. You raise the A round to peel away the next level of product risk. Maybe you peel away some recruiting risk because you get your full engineering team built. Maybe you peel away some customer risk because you get your first five beta customers. And so basically the way to think about it is you're peeling away risk as you go. You're peeling away risk by achieving milestones. And then as you achieve milestones, you're both making progress in your business, and you're justifying raising more capital. And so you come in, and you pitch somebody like us, and you say you're raising a B round. The best way to do that with us is you say, okay, I raised a seed round, I achieved these milestones, I eliminated these risks. I raised the A round, I achieved these milestones, and I eliminated these risks. Now I'm gonna raise a B round. Here are my milestones, here are my risks. And then by the time I go to raise a seed round, here's the state that I'll be in. And then you calibrate the amount of money that you raise to spend to the risks that you're pulling out of the business. And I go through all this, in a sense this sounds kind of obvious, but I go through all this because it's a systematic way to think about how the money gets raised and deployed. As compared to so much of what's happening, especially these days, which is just, my God, let me go raise as much money as I can. Let me go build the fancy offices, let me go hire as many people as I can, and just kind of hope for the best."

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188,003 просмотров • 1 месяц назад

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