Every month, some of Silicon Valley’s biggest power players meet at the Palo Alto home of Chamath Palihapitiya, an early Facebook executive who now runs his own venture capital firm Social+Capital.
The guest list reads like a who’s who of Silicon Valley’s true elites: from Yammer founder David Sacks, SurveyMonkey’s Dave Goldberg and Inside.com’s Jason Calacanis to professional athletes and poker players, including the World Series of Poker champion Phil Hellmuth.
But this isn’t for some networking or investment opportunity of a hot startup. They meet for something much more fun: a game of poker.
“It was meant to basically put together 9 or 10 of the most competitive people in Silicon Valley and play poker,” Palihapitiya, who’s been hosting home poker nights for a few years now, told Business Insider. “Once you get this competitive group of people together on the same table, it’s super fun.”
The level of play is far beyond regular amateur tables. For example, Palihapitiya, who often walks off with the most chips, has played in some of the highest stake poker tournaments, including the World Series of Poker, where he finished 101st out of more than 7,000 contestants in 2011.
In fact, according to Hellmuth, a 12-time world champion in Texas Hold’em, the skill level is so high that he was only able to hit break-even in the first three years he played there. “In general, great businessmen are great poker players. There’s a reason these guys made so much money in the real world. Those skills translate to poker,” Hellmuth tells us.
“In general, great businessmen are great poker players. There’s a reason these guys made so much money in the real world. Those skills translate to poker,” Phil Hellmuth says.
Once the game starts, the intensity could easily turn up in a matter of seconds. They play for hours, well past 2AM on some occasions. And while the stakes remain relatively modest, $10,000 bluffs do happen in the most heated moments.
But Palihapitiya says the cash part of the game is mostly irrelevant. It’s rather about the thrill of playing and winning against highly competitive people, and just trying to master every nuance of a game that, he says, “you can learn so easily, but never master.”
Poker has relatively simple rules. In traditional Texas Hold’em poker, each player is first dealt a set of two cards, which are not shown to others, and then a shared pile of five cards on the table. The first three of the five shared cards are dealt at once, and after a round of betting, the fourth card is shown. The fifth card is uncovered after another round of betting.
But, in between each round of betting, there’s intense strategy and mind-games involved that requires a lot of intellect and discipline throughout the game.
That’s what makes poker such a complex — and fascinating — game, Palihapitiya says. There’s a chance of overcoming a poor hand, if you play it smart. Or you could lose everything with a single mistake, just when you thought you were going to win a big hand.
In that sense, Palihapitiya says, there’s a certain element of poker that almost “mirrors life and running a startup.” It’s why so many entrepreneurs love the game. He sums up the similarities in six distinct points:
Depending on how you play each round of betting, you could completely change the outcome of the game — regardless of what cards you are dealt at first. It’s just like being born into terrible circumstances in life but finding ways to overcome that and succeed. Palihapitiya relates to it personally, as he is a classic “rags-to-riches” story, having grown up on welfare as an immigrant in Canada to become one of the most successful tech entrepreneurs around. “That’s a characteristic of this game that very few games have,” he says.
Learning from mistakes:
You make plenty of mistakes in poker. The point is learning from those mistakes and fixing it in the future. “When you misplay your cards and lose a big hand, it’s an unbelievable moment of learning,” Palihapitiya says. It’s one thing not to repeat the same mistake, but it’s also important to know when you win by sheer luck. “Sometimes you just do something and it completely works, and you think to yourself, ‘I must be really good.’ The takeaway should be the exact opposite — you may have just gotten really lucky,” Palihapitiya says.
Knowing how to fake it:
Pretending like you have a strong hand, or “bluffing,” is a huge part of poker; all good players know how and when to use it properly. Palihapitiya says he doesn’t even look at his hand 90% of the time before placing his first bet. Similarly, in startups, it’s important to act confident at all times and believe in your product/vision, as he says, “In a startup, you have to fake it ’till you make it.” This is the same point Salesforce.com’s Marc Benioff says in his book, “Behind the Cloud”: “You have to act confident, even when you’re not.”
Being a “good loser”:
There are moments in poker when you lose big just when you thought you were going to win. It often causes huge emotional tilt and impacts your subsequent decision-making power. “If you can’t keep a clear head, you’re going to start making worse decisions and those decisions will compound,” Palihapitiya says. “Poker’s great because it teaches you how to be mentally disciplined in the face of adversity.”
Getting a better read of people:
The best poker players have an exceptional ability to sense others’ emotional energy. They can read how people feel or think by just looking at their reactions to certain moves or body gestures. Palihapitiya says that ability can help you in everyday life, too, as you become “more emotionally attuned to the people around you.” In other words, you can start understanding others better, coaching people better, and even negotiating better.
Making quick decisions and taking risks:
An average person’s life spans 80 to 90 years. Most startups are on a five-to-seven-year trajectory. A single round of poker, however, happens in a matter of just a few minutes. “Every hand in poker is a microcosm of that entire struggle (of life or a startup),” Palihapitiya says. You have to make quick decisions — and take risks — in a short period of time, with very limited information, and those decisions could have a huge impact on the outcome of the game. It’s why good poker players know how to make the right decisions quickly and take risks when needed.
Palihapitiya, who at age 26 was the youngest VP in AOL’s history, says he doesn’t have enough time to play poker as much as he used to anymore. But he still tries to tell others how great the game is through charity events, which many of his Silicon Valley friends join in together. For example, he donated all of his winnings from the World Series of Poker to the Boys and Girls Club, while he’s been hosting a number of different charity poker games that generate roughly $6 million a year.
“It’s really not about trying to make money – it’s about ‘Can you beat this guy?” Palihapitiya says. “Poker’s just a fascinating game of skill that’s exceptionally difficult to master. It really helps you disambiguate a lot of skills.”
This story originally appeared on Business Insider.
Pitches for early-stage companies that have already released a B2B products typically include a slide full of client logos, which they use as proof of “traction.” Whenever I see this my ears perk up, as it’s no easy feat signing on so many paying customers at an early stage, and my mind starts calculating the probable revenue run rate.
But then, when I ask how much these “clients” are paying to check if my calculations are correct, it’s as if I’ve caught the entrepreneur off guard. Like a deer caught in headlights, they tell me “well, for the pilot/beta phase we are giving a deep discount, but from here on out we’ll be charging $XXX.” When this happens, the credibility and excitement built up to that point leaves the room like air leaving a balloon.
The pitfalls of faking traction
Trying to “fake it till you make it” by exaggerating traction may get you attention in demo days and press releases, but vanity metrics don’t fool serious investors. This form of exaggeration just makes it more difficult for investors to take anything you say at face value.
To avoid creating this doubt, don’t try to gloss over traction by showing off a bunch of impressive logos without any context. Rather than hoping investors won’t ask detailed questions and reactively fumbling through your response, use this slide as an opportunity to build trust and to demonstrate your thought process and plans.
Less logos, more explanation
Be clear on why you are charging current clients much less than your business model indicates, and why you will be able to charge more in the future. Perhaps these were reference clients, or perhaps they were early beta testers who paid less in exchange for providing meaningful product feedback. Whatever the reason, don’t just say you charged them less because it was easier to get them on-board faster, as it won’t be clear why in the future it will get easier to charge everyone a full price that nobody is paying yet.
On the slide itself present this in more of a structured, timeline-driven fashion. Upfront, you can indicate with a pipeline image how many users you have, how many are paying, and how much they are paying. Then, another slide can match your projected improvements on the key metrics to your product roadmap and planned milestones. This sets the groundwork for the later conversation about how much you want to raise and what you plan to achieve.
The best investor pitches are more like conversations than presentations. If you have not yet reached product/market fit, instead of trying to cover this up with impressive but meaningless numbers, use this as an opportunity to discuss your future plans for the product roadmap, business model, and financial projections. Investors will have more confidence in someone who has a firm handle on what needs to be done and how to get there than in someone who is not authentic.
Jonathan Friedman is a Partner at LionBird, an early-stage fund investing in startups that use technology to improve offline processes in healthcare, commerce, and the enterprise. He blogs about the Venture Capital Point of View at VCPOV.com
Uber has just finished the worst public relations week in its history. What once was looked upon as a brilliant and disruptive grass-roots company is now being seen as an arrogant bunch of whiz kids who may be willing to play it fast and loose with the the privacy of its users.
The story, of course, began with Uber executive Emil Michael’s statements a week ago yesterday at a private dinner that his company might use its technology to track the movements of Pando Daily’s Sarah Lacy and other journalists critical of the company. He also said that, in fact, Uber could see the comings and goings of any of its customers using something it calls its “God View.”
But it’s that second thing, the threat to the privacy of Uber users — not the threat to the security of some journalists — that the public really cares about, according to a new media study.
Peter McCarthy and Bob Goodson of Quid used their company’s media analysis tool to measure the volume of media stories about Uber this week, as well as the volume of social media posts about those stories. Quid is a new kind of research software that brings everything together from search through to visualization, allowing the user to make sense of complex events and trends.
The Quid analysis shows, firstly, that this week’s privacy story is the biggest news story ever for Uber. The chart below tracks the volume of media stories about Uber (on all topics) by month from the founding of the company to the present. The orange dots in the current (partial) month to the right of the chart show that stories about “Lacy, targeting journalists, and privacy” dominated the month.
(click on graphics to enlarge)
The chart below, which tracks the number of articles about Uber by week, shows that stories about the company’s privacy policies rocketed upwards this week.
McCarthy’s and Goodson’s study shows that during the past week the media focused its coverage on two related but distinct issues: the threats against Lacy and other journalists, and Uber’s policies toward the privacy of Uber riders.
The chart also shows — by volume of social media posts — that the general public is far more interested in Uber’s privacy policies than its treatment of journalists. Far more articles were written about Uber’s treatment of Sarah Lacy than were written about privacy concerns, yet readers posted and tweeted more of the few pure privacy stories that got published than the Sarah Lacy stories, the study shows.
How can this be explained?
We in the media are attracted to heat and flame. We like stories with drama and pretty people. We think that’s what readers and viewers want. There may be some truth to it. That’s why many of us wrote about the threat to Sarah Lacy.
Journalists may also have been attracted to the story because it’s easy to put ourselves in Sarah Lacy’s shoes, to feel a very real personal threat from some large well-monied company that’s angry about our coverage.
But in this case it seems that reading audiences cared more about their own privacy than that of some media person they don’t know.
I had expected — or feared — that President Obama would once again let Silicon Valley down with his executive order on immigration. But he hasn’t. The president has done practically everything in his power to address the needs of the technology community. The larger problem is that this is a only band-aid. What is worse is that this will likely be the only immigration reform we see in the near future. It will take many years for the wounds to heal from the battles that will now start.
There are more than one million immigrant doctors, scientists, engineers, and teachers who entered the country legally and are stuck in limbo while they wait for permanent resident visas, which are in short supply. It can take decades for people of some nationalities to get a green card, and once the application process has started, they cannot change jobs without getting to the back of the queue.
Employers know that these workers won’t be leaving them, so they often take advantage of the situation by offering lower salary increases and lesser roles. The president’s executive order provides “portable work authorization,” which means that they will be able to change jobs. This is a big deal because it will fix one of the issues that opponents of skilled immigration have complained the most about: The salary differential between people on H-1B visas and American workers. No longer can skilled immigrants be considered “cheap labor.”
As well, this fixes another major problem: the purgatory that spouses of H-1B workers have been placed in. Highly skilled professionals — mostly women — have seen their careers stagnate and been confined to their homes because they were not allowed to work. The administrative order authorizes work visas for the spouses of immigrants who have filed for permanent resident visas. This is a huge step forward.
The president also announced administrative changes to improve the processing of visas, expanded immigration options for foreign entrepreneurs, and extensions to training visas for foreign students. These are all good, but the devil is in the details. It really depends on how the immigration bureaucracy interprets these orders and what additional hurdles are placed in the way of skilled immigrants.
What the president didn’t announce was an increase in the numbers of temporary and permanent resident visas and a proper Start-up Visa. This is a big concern — because these are the core needs of Silicon Valley. It needs more highly skilled workers and tens of thousands of new start-ups.
The extreme wing of the Republican Party is now likely to go on the warpath because the president used his executive privileges and cut them out of the decision process. They will likely spread more misinformation about immigration and poison the waters even more. They will accuse Obama of providing amnesty to the undocumented, say that foreigners are taking American jobs away, and spread false rumors. The truth will be a casualty of these battles and large segments of the American population will rally against all immigration. So this executive order may be the last progress we see on immigration for many years—until the anger has subdued.
The tragedy is that millions of undocumented workers were left out of the executive order and hundreds of thousands of skilled immigrants will still remain in limbo. The tens of thousands of entrepreneurs who would have come to the United States to start their companies will not be able to do so and the brain drain will continue. The only hope now is that sanity does prevail — and that level-headed Republicans work with the Democrats to craft legislation to do what is right for America.
Vivek Wadhwa is a fellow at Rock Center for Corporate Governance at Stanford University, director of research at Center for Entrepreneurship and Research Commercialization at Duke, and distinguished fellow at Singularity University. His past appointments include Harvard LawSchool, University of California Berkeley, and Emory University.
It’s not often you hear that Siri isn’t a very bright girl, but Microsoft thinks its competing Cortana personal assistant is smarter.
Microsoft’s crack advertising team has created a new ad where a Nokia Lumia 830 phone running Cortana points out things it can do that an iPhone 6 Plus running Siri can’t.
Cortana, for example, says it can notify users that they should leave early based on traffic reports it monitors in the background.
Here’s the ad:
Is Siri getting a bad rap here? Well, I just picked up my phone and asked her, and she whispered sexily “Cortana blows.”
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