· Summarize — This article was about two fantasy sports sites, DraftKings and FanDuel, that have been extremely popular in the past few years. It began by very accurately capturing the amount of exposure they have gotten and the advertisements that consumers have seen since 2014. It presented readers with some shocking statistics about the amount of money that these companies have spent trying to advertise their startups and take advantage of the gaining momentum. It then went into discussing the legal battles they are facing due to employees winning money on competing sites. It has been speculated that a DraftKings employee who won $350,000 on FanDuel was using company data to gain advantages over other players. Though employees are prohibited from placing bets on their own sites, there were no restrictions against them placing bets on competing sites. According to the article, daily fantasy sports sites, which are exempt from the 2006 Unlawful Internet Gambling Enforcement Act, have hundreds of millions of dollars in financing and are backed by major investors and partners. But these issues are raising questions about the legality of what these companies are doing. Class action law suits filed against them could plummet both their profit and popularity. The companies are arguing even if one had possession of insider information, it would not guarantee an advantage for their employees, as gambling always involves risk. The litigation is ongoing, but the companies have created such buzz and monetary value that it is speculated that “regulation is inevitable.”
· Analyze/evaluate — I found this article very interesting because it was very relevant to both my life and the lives of many people in my generation. These companies are big, and I had heard of both before reading this piece. Articles that connect directly to our lives are more engaging, and cause us to invest in them, which I enjoyed about this article. Although the article was compelling, the title was misleading rather than informative. I did not detect a persuasive argument as to why the companies are cautionary tales for startups. Though the article referred to lawsuits, regulatory difficulties, and a variety of other issues, it never stated why these companies should serve as a warning for startups. This left lingering questions for me as a reader, making me wonder why and if these issues arose solely because these companies were startups.
· Synthesize —Similar to the article about Clear Channel, this article contained important information about the effects of both advertising and regulation. I think that the regulation-free environment in which these companies existed were central to their success. All three of these companies went from small companies, sometimes even from the startup phase, to multi-million dollar empires very quickly because they created a new space that did not have laws or rules. I find this interesting because in many spaces involving technology, the legal and regulatory systems cannot catch up fast enough, causing huge profits in the de-regulated environments. However, will these companies eventually fall to regulations and legislation? For DraftKings and FanDuel that has yet to be seen.
· Connect — Like I mentioned earlier in this post, I find the idea of entering a de-regulated market intriguing. I think it would be extremely profitable and allow for a company to grow at an accelerated speed. However, it makes me question whether or not I would ever want to do that. Would the aftermath of laws and regulations be more of a hassle? Would the quick and substantial profit be worth the potential lawsuits and hardship? These are all questions that I would have to explore as I grow my ideas and potential businesses.
Week 6: Mat Morgan
· Summarize — As a guest speaker, Mat Morgan’s goal seemed to be showing us that sometime’s, even when one has done everything they can to make a startup work, it may still fail. He talked about his company, ShoutAbout, and how he recruited a partner, raised capital from investors, built his company, gained momentum, but then eventually had to dissolve it. We learned about how gaining mentors is just as valuable as gaining investors — sometimes even more so. He said that one of the most valuable assets he had in creating his company was Nicco, who was an advisor as well as an investor. We also discussed how choosing a business partner is very strategic. For example, you should be careful picking a friend as it may ruin that friendship. Mainly, he and Nicco discussed how despite the money raised, the persistence and knowledge of the founders, and the great core idea of the company, the startup ultimately failed. It was a cautionary tale about how sometimes, it just wasn’t meant to be.
· Analyze/evaluate — I found this guest to be one of the best I have had in any class. He was very open and honest about what he did right, wrong, and what happened with his company. I did not find any problems or issues with what he was saying because he was telling us the raw, truthful account of his own experiences and I really appreciated that. Very often we only hear success stories, meeting people who have “made it.” Although in many respects Mat has “made it” and is a success, his company ultimately failed and he was not shy about admitting that. The one thing that I didn’t like was that there was no solid reason. I’m sure both he and Nicco also disliked that. There is no way to alter that because in reality, there was no one reason the company did not succeed. Therefore yes, in my dream world, there would have been a reason we could have pointed to and said “this is why it failed,” but this was an important lesson that in reality, that reason may not alway exist.
· Synthesize — I think that everything that Mat talked about related to what we were learning in class. His journey reminded me of Alex and Matt’s from Startup, specifically, of finding his co-founder and partner. We discussed how that is much like a romantic relationship because you have to be able to work together as well as have chemistry and minds that are compatible. This is exactly what Alex was searching for when he was trying to find a partner for Gimlet Media. He compared it to the exact same situation and I think this experience is the reality of business partners.
· Connect —This cautionary tale both scared me and made me excited to become an entreprenuer. It scared me and challenged my ideas because I saw that even when all signs add up to success, sometimes the stars just don’t align. What if I have a great idea with good investors and powerful advisors but I still can’t make it work? Is it worth the pain and hardship? Mat’s story taught me that yes, it is. He is still standing after a failed company and dream. He has a great job and many other ideas for potential businesses. One failed company does not mean the ultimate end of one’s career. So yes, it scared me, but it also inspired me.
Week 7: StartUp “How to value your startup.”
· Summarize — This episode of StartUp discussed how Alex and Matt L. placed a valuation on their company and with that got an investment from Chris Sacca and Matt Mazzeo for $100,000. The majority of the episode focuses on Alex and Matt L. discussing their valuation and explaining to listeners how they got to $10 million. They then go on to talk to Matt M. and try and convince him that their numbers add up and they are worth the investment, even though they are a pre-revenue company. Matt L. talked about how the team they built, the buzz around the company, the progress they had made, the business model they had, the content they had ready, and the ad deals they had negotiated made them unlike any other pre-revenue, pre-product startup. It made them more valuable. They then were bold in declaring that they understood if the valuation cap was not for everyone but they were standing firm. This strategy paid off in the end because Matt M. called back after discussing with Chris and they had decided to invest in Gimlet. The next part of the episode focused around Alex making the interesting choice of asking Chris why they invested if they did not agree with the set valuation of the company. Chris talked about how there was a bubble right now in tech investment, and Alex explained to listeners how a bubble was created. But in the end, $100,000 was not a significant amount of money for these investors and more than anything else, they believed in Alex and his abilities so they thought that he was someone worth investing in. The last part of the episode was about how they got more investors after the first episode of StartUp was released because it created FOMO for investor, generating capital for the company.
· Analyze/evaluate — This episode was more informative than previous ones. I finished the episode feeling as if I learned about company valuations, how they’re determined, and how investors decide whether or not they are reasonable. However, it was a bit confusing, particularly because I felt as if what Chris was saying versus what he was doing did not line up. Even though he didn’t like the name, didn’t think their $10 million valuation cap was reasonable, and thought the investment bubble would burst, he still invested in Gimlet at that valuation and seemed confident. I understood his faith in Alex as a CEO and in this space, but he contradicted himself again when discussing whether he was doing it for money or for art. Overall, I understood the core reasoning behind Matt M. and Chris’ investment but I think that they could have been much more clear about their thoughts because simply believing in a person but not agreeing with anything they are doing seems like a shaky reason to give them $100,000. Otherwise, however, I thought that this episode was very informative and more interesting than past ones.
· Synthesize — I think that Steve McDermid would disagree with the way Alex and Matt decided to go about asking for investments because he advised against putting a valuation on a startup for the simple reason that it would turn away investors. Though their gamble paid off and they ultimately got the investments that they wanted, they set a very high valuation on their company and almost lost two of their biggest investors because of it. If they had followed McDermid’s advice, however, they also may not have raised the same amount of capital for their business. This leads me to wonder how one should decide if the gamble of placing a valuation, whether it is high or low, is worth the risk.
· Connect —This episode caused me to think about what I would do if I were trying to attract investors and raise money for my startup. Would I be aggressive and stand firm with a high valuation? Would I follow McDermid’s advice and try not to put a valuation on my company, at least for the first round? Or would I follow Professor Mele’s advice to wait as long as possible before raising money and diluting my equity in my company? It has raised very important questions in my mind that I currently don’t know how I will answer but I will keep thinking about them as I pursue different projects and endeavors.