Foreword xiii
Preface xvii
Trust Me, Your Idea Is Worthless 1
by Tim Ferris
Chapter 1 What Is a Startup? 3
How to Use This Book 5
Who This Book Is For 5
Notes 6
Chapter 2 The Democratization of Startups 7
The Cost to Launch Is Approaching Zero 7
The World Is Flat 8
The Path Is Known 9
Access to Capital 10
Chapter 3 Opportunities 13
The Four Criteria for an Opportunity 13
What Is Opportunity Evaluation? 14
What Is the Cost of Poor Opportunity Evaluation? 16
Execution Trumps Opportunity 19
Risk, Uncertainty, and Ambiguity 21
The Issue of Bias 23
Notes 27
Chapter 4 Approaches to Opportunity Evaluation 29
Where Does Opportunity Evaluation Fit into the Overall Startup Process? 29
Overview of Business Model Generation 31
Overview of Customer Development and Lean Startup 33
Overview of the Disciplined Entrepreneur 35
A Modern Version of the Scientific Method 36
Notes 40
Chapter 5 People 43
Team 43
Working Full Time 47
Been There, Done That 47
Passion 48
Coachability 50
Ability to Attract Talent 53
Business Acumen 53
Domain Knowledge 55
Operational Experience 55
Mentors 56
Board of Directors/Advisors 57
Customers 58
Social Capital 59
Notes 60
Chapter 6 Pain 63
Compelling Unmet Need 65
Size 65
Durability and Timeliness 68
Notes 71
Chapter 7 Product 73
The 10× Rule 73
Rate of Adoption 75
Rogers’ (1976) Diffusion of Innovations Theory 75
Intellectual Property 76
Key Asset Access 77
Proof of Concept—Selling Your Product in Advance of Making It 78
Gross Margins 79
Contents ix
Scalability 81
Notes 81
Chapter 8 Market 83
Market Stage 84
Product/Market Fit 87
Disruptive Innovation 90
Industry CAGR 90
Distribution Strength 91
Customer Acquisition Costs 93
Viral Marketing 93
Competition 94
The Goliath Paradox 96
Barriers to Entry 97
Government Regulations 98
Partnership Status 99
Knowing Why You Need to Raise Money 99
Notes 102
Chapter 9 Plan 105
Time to Launch 106
Plan to Scale 107
Reasonable Not Right 108
Get Out of the Building 111
Plan B 112
Notes 115
Chapter 10 Pitch 117
Short Form (Under 10 Minutes) 118
Long Form (30 Minutes) 118
Business Plan—or Not 119
Executive Summary 121
Q&A 121
Notes 124
Chapter 11 Raising Money 125
Building a Relationship with a Potential Investor 126
Who Makes the Ask? 127
Use of Proceeds 127
Raise the Least Amount of Money to Get to the Next Level 128
Ask for Money from the Right Kind of Investor 129
Raise Money When It’s Available 131
You Aren’t an Exception 132
Why Anything Other Than a Yes Is a No 134
Be Realistic about Your Valuation 136
Even Angels Have Investment Committees 137
Notes 141
Chapter 12 Pitfalls 143
Showstoppers and Red Herrings 143
Excessive Valuation 144
Taboo Businesses 145
No Skin in the Game 146
The No Asshole Rule 146
The Key Person Dependency 147
Drinking Your Own Kool-Aid 147
Notes 150
Chapter 13 Don’t Quit Your Day Job If You Aren’t 151
Passionate about the Space 151
Able to Execute the Solution 151
Certain That the Problem Is a Need (as Opposed to a Want) 151
Certain That the Problem Is Shared by a Large (and Growing) Market 151
Able to Offer a Solution That Is 10× Better Than Anything Else
in the Market 152
Ready to “Burn the Ships” 152
Able to Access Potential Customers 152
Able to Spend Six Months without Personal Income 152
Able to Garner Enough People, Users, and Money to Create a
Minimum Viable Product 152
Prepared to Get into the Weeds and Do the Grunt Work 152
Glossary 153
Acknowledgments 159
About the Authors 163
Index 165
Excerpt from Brad Feld’s
Venture Deals, Third Edition 173
