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#5 Chris Dixon: The State of Venture Capital

Nov 13, 2015 57m 41s 26 insights
In this episode, a16z partner Chris Dixon and I discuss the history of venture capital, artificial intelligence, what makes a great entrepreneur, and why companies fail. *** Go Premium: Members get early access, ad-free episodes, hand-edited transcripts, searchable transcripts, member-only episodes, and more. Sign up at: https://fs.blog/membership/   Every Sunday our newsletter shares timeless insights and ideas that you can use at work and home. Add it to your inbox: https://fs.blog/newsletter/   Follow Shane on Twitter at: https://twitter.com/ShaneAParrish
Actionable Insights

1. Prioritize People Over Ideas

Recognize that success in ventures is overwhelmingly (98%) driven by the quality and capabilities of the people involved, more so than the initial idea.

2. Cultivate Extreme Tenacity

Develop extreme tenacity and resilience, as almost all ventures will face moments of near-failure, and your ability to overcome adversity is crucial.

3. Employ the ‘Idea Maze’ Model

Thoroughly think through all possible scenarios, adaptations, dead ends, and opportunities for your product or business idea, anticipating how the world might respond to changes.

4. Prioritize Long-Term Thinking

Prioritize long-term planning and thinking in your endeavors, as it is beneficial for industries, countries, and the world.

5. Seek Optionality in Ventures

Seek optionality in investments or projects, focusing on scenarios where people or ideas could be disproportionately rewarded, rather than trying to predict an unpredictable future.

6. Strive for Founder-Market Fit

Ensure that you (as a founder) are uniquely suited, through deep technical or domain expertise, to address the specific market you’re entering.

7. Develop Deep Technical Expertise

Prioritize developing deep technical expertise, as it is generally easier to learn business skills on the job than to acquire technical skills later.

8. Leverage Domain Expertise

Use years of experience and deep expertise within a specific industry to identify outdated practices and generate innovative ideas for improvement.

9. Adapt and Pivot When Needed

Develop the ability to adapt and pivot your approach when initial hypotheses about the product or market prove wrong, as this is a hallmark of successful entrepreneurs.

10. Align Incentives for Success

Structure compensation and operations so that your success is directly tied to the success of those you support, rather than short-term gains or fees.

11. Accept High Failure Rates

Understand and accept that high-impact success often comes with a high failure rate; focus on the magnitude of wins rather than just the frequency of success.

12. Avoid Trend-Driven Ventures

Avoid entering the startup world solely for quick money or trendiness, as success requires a deep appreciation for the inherent difficulty and sustained effort.

13. Curate Information Feeds

Curate your social media feeds (e.g., Twitter) with a carefully selected list of experts to leverage them as a primary tool for filtering information and identifying important content.

14. Engage with Diverse Expert Groups

Actively engage with diverse groups of experts, academics, open-source communities, and industry events to stay in the flow of new ideas and developments.

15. Explore VR Beyond Gaming

Explore and develop applications for virtual reality beyond gaming, recognizing its potential to become a predominant way people interact with computers and each other, impacting communication, health, and tourism.

16. Understand AI Accuracy Challenges

When developing AI or automated systems, recognize that achieving the final 10-20% of accuracy is exponentially harder and requires significantly more effort than reaching initial functional levels.

17. Innovate in ‘Backwards’ Industries

Recognize industries like food and healthcare as ‘backwards’ sectors ripe for innovation, particularly in researching and developing healthier, more accessible options.

18. Address Healthcare Inefficiencies

Explore investment and innovation opportunities at the intersection of healthcare and computer science, as this area holds significant potential to address systemic inefficiencies and rising costs.

19. Be Wary of Sugar Consumption

Be mindful of excessive sugar consumption, viewing it as a significant health concern comparable to smoking, and anticipate a future where current dietary practices are seen as alarming.

20. Read Physical Books

Prioritize reading physical books over digital screens to minimize distractions and enhance the reading experience, especially if you find digital devices too tempting for multitasking.

21. Read ‘Gödel, Escher, Bach’

Read ‘Gödel, Escher, Bach’ by Douglas Hofstadter to broaden your horizons and explore the connections between computers, philosophy, and music.

22. Explore Daniel Dennett’s Works

Explore works by authors like Daniel Dennett and Oliver Sacks to delve into topics like consciousness and the human mind.

23. Read ‘Sapiens’

Read ‘Sapiens: A Brief History of Humankind’ for a panoramic ‘big history’ view of homo sapiens, as it is highly recommended and insightful.

24. Read ‘The Three-Body Problem’

Read ‘The Three-Body Problem,’ a science fiction novel by a Chinese author, which recently won the Hugo award.

25. Read ‘The Martian’

Read ‘The Martian,’ a popular book that has been adapted into a movie.

26. Read Elon Musk’s Biography

Read the biography of Elon Musk to gain insights into his life and work.