Category Archives: business

Ada Developers Academy and Life Pivots

I had the amazing fortune to meet the charter class of Ada Developers Academy students when they took a tour of my office today.

Ada Developers Academy is a tuition-free programming school for women. The only pre-requisite (other than “for women”) is that you can’t already be a programmer.

In other words, every woman I met today woke up one morning and said “I’m going to quit my comfortable job (or education-path) and become a programmer.”

In addition, the software industry is dominated by males (unfortunately, for everybody who uses software), so not only did these folks make a risky life-pivot, they also pivoted into an industry where the deck is stacked against them.

This takes an amount of moxie that I may never comprehend, and meeting the class was very inspirational. It got me thinking about how the metaphor of startup pivots (i.e. a course-correction designed to test a hypothesis about the business) can be applied to life.

The common (and incorrect) definition of a startup’s “runway” is “the amount of time a startup has until it runs out of money.” A more accurate definition is “the number of pivots a startup can make before it runs out of money.” In other words, the number of new things it can try, the number of experiments it can run.

Perhaps the “runway” of your life isn’t the amount of time you have left to live, but it’s the number of interesting, experimental things you can do before your time is up?

Just as a business should structure itself to get to each pivot faster (by finding ways to learn at lower cost and in a shorter time), one should structure one’s life to get to get to the interesting parts faster!

How can you structure your life like this? There are probably countless ways, but here are a few that come to mind:

  1. Have interesting friends (and the harsh corollary: don’t waste your time with boring or uninspiring people)
  2. Live someplace interesting where you can make lots of interesting friends (and do interesting stuff with them)
  3. Double-check your life assumptions every once in a while. Who knows what you’ll find?

PS: Registration for the next ADA program is almost open. Check it out if you’re a female in the Seattle area (or willing to relocate).

(I tried something new on this post and didn’t spend much time editing it. The result is probably more raw and train-of-thought, but also closer to the original vision in my head. What do you think?)

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Twitter IPO and diversifying your portfolio

Good to GrrrrreatYay for the upcoming Twitter IPO and congrats to Buster for being a part of that story!

The stock market is the world’s most profitable money-making engine, and investing in it (as part of a diversified portfolio) is almost a prerequisite for the lazy early-retiree. But if you’re looking for riskier investments or unique ways to diversify, investing directly in early-stage companies seems lucrative.

And whenever a company goes public, or a major acquisition makes headlines, the idea becomes even more salient. For instance, Baylor3217 asks:

I’ve been a pretty avid [twitter] user the last 4 years or so. Had I wanted to invest $100,000 – $200,000 3-4 years ago, could I have done that as a nobody and what could it have entitled me to in the upcoming IPO?

At the $100k level, you’d be considered an angel investor in the tech world, meaning you are investing a relatively small amount of cash into a very-early-stage company. You’d be given equity and expected to advise the company, make connections to potential clients and Venture Capitalists, etc. To put this in perspective, by the end of 2009, Twitter had already raised over $100MM in venture capital, so a $100k investment would have been laughed at, to be honest.

VC rounds usually start at around $1MM. Like with angel investment, VC is not just a money/equity swap. Venture Capitalists sit on the boards of the companies they invest in, so they are expected/required to have decades of relevant business/entrepreneurship experience. Even more importantly, VC is about connections, as startup founders don’t only look at deal terms when comparing VC deals. Since money is the fuel that will propel their company out of “startup mode”, they want the highest octane fuel they can get, meaning a sharp VC who will give good advice, connect them to potential clients, and eventually help them through a liquidity event (acquisition, IPO). It’s called “smart money.”

The answer to “what could it have entitled me” would have been totally up to the terms of the investment deal you made with Twitter. These are some VERY complex arrangements, involving esoteric clauses like liquidation preference and “capped participation”. Google those terms and if you’re not falling asleep reading their definitions, you might make a good angel investor.

Lastly, it’s easy to look at Twitter’s IPO and say, “I should have invested 4 years ago.” What you should really ask yourself is “Do I know what will be making headlines in the business papers 4 years from now, and do I have access to these people?”

If all the above doesn’t deter you from angel investing, you still have that $100-200k, and you wouldn’t mind never seeing it again, you may have what it takes to become an angel investor.

[This content was originally published on the Mr Money Mustache forum]