Cut all the subcontractors to the subcontractors to the subcontractors out of the aerospace market to remove dead weight and accumulating cost-plus pricing (where everyone takes 30%)
Reduced cost by a factor of 10
If you ever see a cost-plus model run: they have an incentive to make something as expensive as possible
Green-lighted falcon 9 (9 Merlin engines) before Falcon 1 even succeeded
Engine was brilliantly designed to be modular so this could be possible
Investing 10’s of billions into Starlink - a consortium of 12,000 LEO satellites to provide low-cost internet all over the globe
Traditionally satellite internet has come from GEO satellites and thus is much slower
VC’s - especially Softbank’s vision fund - were willing to dump capital in this because they needed to offload funds and they were securing the assets against office buildings
Softbank inflated value so much since they were the only ones willing to invest, IPO got canceled, terrible terrible management story
Focuses on huge market potential and huge ideas, founders kind of second since they can always supplement help
Refer to investments as partnerships to build great companies with
In the dot-com crash Sequoia refused to let the fund lose money - cutting management fees and devoting a ton of effort to salvaging returns - over a matter of principle
This developed a ton of customer loyalty and a huge respect for the firm
Nailed product/market fit + value proposition -> send messages to people across the globe for $.99 instead of the ridiculous plans telephone providers offered
Text messages were actually limited to 120 characters because that was the extra space available in consistent pings from network towers to cell phones. Therefore text messages offered NO additional cost to the telephone providers
$22 billion acquisition that has yet to be monetized but was a great takeout play by Facebook
Hated advertising on the platform and got in a HUGE fight with Facebook over this, leaving like $800 million on the table
Transformed the way Disney was run and brought them out of their dark days
Acquired Pixar, Lucas Films, Fox, to bring great animation technology and IP into the studio
The Disney flywheel - centering around content creation - allows them to draw a significant amount of extra revenue from merchandising, parks, etc. from their IP.
Team mentality - not a family - if you are not performing they will have to let you go because it’s not fair to the rest of the team
Blockbuster actually had great management but corporate raider Carl Icahn kicked out CEO over comp. dispute and installed new guy who “didn’t believe in internet businesses” and wanted to bring back the hayday of brick and mortar stores lol
Blockbuster online was going to beat Netflix - Netflix even capitulated and offered to sell to Blockbuster - before this self-inflicted wound happened
Theme of companies IPO’ing in the A+ era (2018-2019 ish) is because companies were staying private longer. Where previously it was 3-4 years post-founding until going public, now it is closer to 10-12 years. Thus companies founded post-2008 recession were all IPO’ing around the same time
Travis got scorched on lawsuits before Uber thus leading to his personality
Uber for the first couple years was in the black-car market, Lyft came in and did borderline-illegal peer-to-peer ridesharing which blew up the unit economics
Thus it was a race to outlast each other and raise as much capital as possible so the unit economics could return to profitability
Uber had a massive culture problem in 2017 and Dara Khosrowshahi became CEO and helped fix the culture
Uber’s A+ possibility is having drivers be 100% occupied between Eats/Rideshare, etc. so then they only use Uber and not a competitor ;like Lyft. This will turn the unit economics in their favor.
Theme: constantly be analyzing your business model: paying cable providers vs them paying you
Be the thing that provides value not the commodity
Capital cities buys ABC worth more than their entire company “minnow swallows whale” -> capital cities then becomes ABC
ESPN created value then captured it (March Madness, Sunday Night Football, Monday Night Football are all things they essentially created) then captured it with their network
They didn’t ride the wave, they created it
Business model innovation coupled with riding/creating a wave is key to creating a massive
Theme: don’t be afraid of a large incumbent launching your feature - it will bring you publicity (like when Facebook launching a Snap competitor)
Founders originally stopped working on Snapchat until one of Evan Spiegel’s cousins schools started using it to get around high-school messaging restrictions
He has an incredible story and has done amazingly well in business - even surpassing Bill Gates in wealth at one point during the tech bubble
Once the tech bubble burst he lost more money than anyone in history - $70 billion
Huge on getting in-person meetings: meeting with McDonald’s businessman, meeting with Steve Jobs for phone idea/becoming the exclusive provider in Japan
Masa made a $20 million investment in Alibaba which turned into $60 billion
Could be the most successful investment of all time
Softbank went into broadband, telecommunications, investments, etc. because after the tech bubble burst Masa realized that stable cash flow is really important in building sustainable businesses
Softbank is well-known for its Vision Fund, a $100 billion fund for growth capital
This is by far the biggest fund ever raised
Regardless of how successful it ends up being, this will generate $15 billion in management fees by the end of the 12-15 year lockup period -> stable cash flow
One of the reasons they were so successful in raising this capital is because it is one of the only avenues for massive wealth funds like the Saudi Arabia sovereign wealth fund to generate returns
The original version of Git came after the main distributed version control company revoked its free licenses for the open-source community
Linus built the first prototype of git in like a week
Theme: the wax and wane of technologies - centralized/decentralized, client-server/local, these go through cycles
Theme: It is really important to nail the line for freemium models at the right point where it benefits the overall product
Github: free public repos but paid private repos
The free version which benefits the open-source community and the Github product as a whole. For companies protecting their IP they have to pay. This is a perfect freemium model.
Zoom: free calls up to 40 mins
Free customers can just start another call
The ideal business meeting, however, is 45 minutes thus the 40 minute freemium model, encouraging enterprise users to pay
Growth hacking strategy: make it invite only with the invites coming from other users OR pay to skip the invite
Sean Parker wrote an email to Spotify telling them they had to integrate with Facebook for viral sharing
Iconic email and a masterpiece
Facebook as a distribution vehicle fueled Spotify’s growth
Have a paid user percentage somewhere in the high 40%
Barry McCarthy organized Spotify DL as CFO
Helped lead Netflix too
Theme: Tech companies generally have really high (70-80 ish percent) gross margins since the marginal cost of producing another piece of software is small
Spotify, however, doesn’t have these margins because they have to pay artists. Their gross margins are around 20%
Theme: In emerging marketplaces it’s not about who has the most market share now, it’s about who will have the most marketshare when consumers enter the market
How to get the most out of networking: always invite people to dinner, pick up the check, and introduce people to one another without expecting anything out of it
“Mozilla” -> “mosaic killa” after Marc was pushed out of mosaic
Microsoft licensed spyglass tech (old mosaic code) with a percentage of reveneues but then gave it away for free since it shipped IE with windows. Ruthless
Microsoft licensed on a per cpu basis, not the number of times windows was actually put on a computer
Marc emailed ben and signed off “f*** you, Marc”
Marc was the only one on the Facebook board that told Zuck not to sell for a billion dollars
