Navigating Silicon Valley
Career Advice Talk for Elite Meet, August 3, 2017

I want to start by sharing my personal story. The first time I tried to move to Silicon Valley in 2011, I interviewed at a startup, yet despite my efforts, I didn’t get the job. That startup later went bankrupt. The second time I tried to go to a startup accelerator, didn’t work out either. Half a year later, they shut down too. So if any prospective employer is hesitant about hiring you, just tell them, “no worries, but you might just go bankrupt.”
Sorry, all kidding aside, this session will be a quick overview of how to navigate Silicon Valley. I have a quick presentation, but most of the juicy stuff will be in the Q&A with Dan.

Now, we live in an exponential era. Technological progress is happening exponentially. But human brains are terrible at understanding what exponential means.
Take this thought experiment. A king once met a peasant and said “what can I give you?” and the peasant replied “Look at this chessboard. It has 64 squares on it. Give me 1 piece of rice in the 1st square, 2 in the 2nd, 4 in the 3rd, 8 in the 4th and so on, doubling it for each square.” The king agreed. So how many pieces of rice were placed on the final, 64th square?

It’s about 9 quintillion. That’s the power of exponential. And we’ve had the same identical phenomenon in technology. Over the past 120 years, computing power has double every 2 years or so. The little device in your pocket or on your wrist has more computing power than all of NASA when they put a man on the moon.

If the automobile industry followed the same rapid speed of improvements as Moore’s Law, then a 1990 Ford Taurus that cost $20,000 then, would cost less than $1 now and you’d throw it away after every time you drove it.

What’s more, the bloodbath competition in the smartphone industry has dramatically improved camera technology, battery technology, GPS, wifi, etc.

Putting that into dollar terms, the same amount of computing that cost $500 in 1990 now cost a few pennies.

That dramatic improvement in hardware and software has enabled innovation in every industry and product category. It’s awesome. We now have the chance to build products at a size and cost that might have been science fiction just a decade ago. Innovation is happening in robotics. Ask Ashish Aggarwal from Grishin Robotics about this.

Drones and UAVs.

Even in unsexy industries like logistics. You’ll get to hear from Ryan Petersen who started Flexport, a logistics startup that is one of the fastest growing companies. Ever.


Entrepreneurs are also tackling emerging industry like cannabis and you’ll hear Matt King speak on that topic as well.

And food tech as well. Lisa Fetterman and the Nomiku team has been able to turn industry scale sous vide that used to cost thousands into a home product that’s accessible.

I would argue that the granddaddy of them all is machine learning and artificial intelligence. Recently Google’s AlphaGo program beat the world champion in Go. This is one of the most complex games in the world. Many people thought computers couldn’t beat a human player in Go for another few years or a decade.

If we take a 30,000 foot view, there are now hundreds of new startups in just this one category alone.

So what are the specific roles in this landscape? How do you participate in this massive Cambrian explosion of companies and opportunities?

Let’s start with founding your own company.

This is the classic 2 person in a garage founding lore. This is a period where you don’t know what problem you are solving, who your customers are, and how you are going to make money. You are figuring things out from scratch.
The upside is you get to build your vision, pick your teammates and have all the equity, at least when you first start. But it’s stressful, lonely, and most startups don’t succeed in a meaningful way. It’s definitely not glamorous. The media headlines on how cool startups are is mostly fake news, unfortunately. It’s just a ton of hard work for years on end.

Here’s an illustration of what you should think about as a founder. Let’s assume you build a $12M revenue business in 8 years but you had to raise a few rounds of money to get there. At the end of this you may make a significant amount from an exit, but annualize that and it’s really as compelling as it might seem. Plus, the vast majority of startups fail. Most founders who end up building enduring companies do it because it’s their mission and life’s work, not because they are doing some calculation on a spreadsheet of how much their equity might be worth.

If that’s not your risk tolerance level or you want to join a team that already has something, then maybe an early stage company is the right place for you.

These are usually a small group of people and the company has raised a seed round, or maybe a Series A. The company has a working product and is focused on refinements and selling to customers.
You still get to work on a very lean team with lots of responsibility, but you’re getting less equity than the founders of course and probably a below-market salary.

If you are one of the first 10 employees, you might get something like 1–2% equity, but after that it’ll likely fall below 1% equity. Let’s assume you get 0.5% equity, by the time of any exit, it’ll get diluted down. So if the startup gets up selling for $100m, you’ll get $250k from your equity. If the company does well, that translates into a much better personal outcome as well. These are just some scenarios, not an exact science. Every situation is somewhat unique.

The next stage after that we’ll call growth stage.

These are much more mature companies generally clearly several million in revenues. There’s better structure and stability and still retains some economic upside. I think there’s some negative sentiment around joining one of these bigger companies because there’s less freedom and less of a chance to be a gamechanger in a company of 1,000 people. But I also would argue that you’d get the mentorship from people who have significant and meaningful experience.

At this point, you might get 1/10th of 1% equity, which certainly doesn’t sound like much. But if you happen to get going to a company with an extremely outsized outcome like Dropbox at $10 billion or Facebook, you’ll do really well. Just keep in mind, there are only a handful of these companies every cycle.

Here’s a friendly reminder, the 100th employee at Google did much better than the average venture-backed CEO. It’s all about finding the positive outlier companies.

And finally, you can work at a large corporation. While it’s obviously slow moving, you get access to a lot of resources to work on large scale challenges. You might literally work on the next iPhone if you go to Apple or on Chrome if you go to Google.

Finally, you can play a supporting role as an investor, lawyer, or an ecosystem player.

Just a quick look at the venture capital role. You are responsible for investing money from limited partners such as university endowments, pension funds, and ultra high net-worth individuals. It can be a really fun job meeting entrepreneurs from multiple industries and disciplines, but it’s definitely a patient practice. You are supporting founders from the sidelines, but you generally don’t have ultimate control over the outcome.

Let’s take a look at an example. Let’s say you go into venture capital, work for a few years and get enough experience to start your own fund with a few partners. The 4 of you raise an $150m fund and you do pretty well, generating 2.5x cash on cash returns. Your general partner carry of 20% is $45m, split 4 ways, which translates into $1.1m annualized over the 10 year life of a fund. Again, all numbers are illustrative, but this is just to give you an idea of how the economics work. Of course, the real juice if you are doing well is raising and managing multiple funds in sequence and in parallel.

Another example I’ll mention quickly is practicing law. You get to work across many exciting companies, but of course it comes with the hairs of being a corporate lawyer.

One last thing I’ll highlight is you can work as part of the ecosytem. There are numerous programs around Silicon Valley and globally now that support startups through running 3-month long accelerators to running innovation centers and co-working spaces. Essentially these companies provide a service directly to the startups in exchange for monthly rent or mentorship fees and small amounts of equity in the companies.

So how do you go from here to there. Tactically there are a number of resources to help you with the job search process. There’s YC’s job list where you can get access to some of the best early and growth stage companies.

There’s AngelList where you can quickly search for jobs by function, stage, geography, and industry. Each job is clearly described including salary range and equity compensation information. Super useful.

And then there are other more general purpose platforms like Hired where you get exposed to a range of opportunities, but is still fairly selective.

At the end of the day though, it comes down to your hustle and by that I mean systematically and strategically connecting with decision makers at companies. Make a list of companies and people you are interested in and then just find a way to connect with them through LinkedIn, Elite Meet, your church group. Ask for coffee chats and informal mentorship to pick people’s brains. I’ll close with some wisdom from Pitbull:
“Ask for money, get advice. Ask for advice, get money twice.”

