Producer of tomorrow (part 5)

Original author: Tad Friend
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Alexis Ringwald Alexis Ringwald is the CEO of LearnUp , astartup, whose clients include Staples and Old Navy . With a fighting spirit and an open smile, she stood in the a16z conference room. “I love to take the first step in dealing with a major problem,” Alexis said, and began the presentation.

“Start from the beginning. Tell me where you grew up, ”Ben Golovits began. A16z had previously invested some money in Ringwald, but most of the main partners who had to decide whether it was ready for Round A did not know it very well. Horowitz habitually forces the founder standing in front of him to put aside all the blanks and rebuild. This is such a stress test that allows you to identify the biography, assess the flexibility and reveal the real story behind the founder.

Ringwald is thirty-one years old. Thinking for a second, she gradually plunged into pleasant memories of her early years. She told how she interviewed the unemployed, and how she suddenly realized that the biggest gap in the country lies between those who have basic skills for employment - the ability to come on time and get decent clothes - and those who do not have such skills. “So it's“ My Fair Lady ” in a modern way? ” - Golovits inquired innocently. Ringwald strongly assured that her process tripled her chances of finding work, and that eighty-two percent of LearnUp students outperformed their peers in a new place. Later, Golovits shared his impression: “My general conclusion is that she has the proper charisma, will and rage to rightfully be considered a“ Hameln Pied Piper ” .”

Pitch is a minefield. If a venture investor asks the question: “When will you hire a hundred engineers, does building a corporate culture seem like a problem or an interesting task?” Correct answer: “A hundred? I need thousands! ” Reed Hoffman , Greylock Partners Venture CapitalistLinkedIn co-founder explains to me: “I’m looking for someone who has a fleet strategy to capture the coast; army strategy to take over the country; and the police strategy to rule the country after that. ”

A16z is trying to understand whether the founder has his own secret - a unique insight, obtained by him from personal experience, about how to better equip this world. And if this new device of the world will be ten times better than the old, then it, perhaps, can attract customers. Balaji Srinivasan introduced the concept of the “labyrinth of ideas”: you expect the entrepreneur to spend years pondering his idea, and - most importantly - also pondering every possible dead end in the development of this idea. “Entrepreneurs, though, get money from us,” Andrissen explains, “naturally, we expect that in response to our questions,“ What if ... ”we get a satisfying answer. I love to watch this reaction when they look at you with disdain - like, "you're an idiot" - and then lead you through the labyrinth of their idea, explaining why your proposal is untenable. " Such checks allow a16z to understand who the founder is: either he is an avid mercenary who wants to sell the company in a few years (which will give only a fivefold increase in invested capital), or he is a missionary eager to change the world. “But at the same time,” Andrissen emphasizes, “we are not interested in financing Mother Teresa . We invest in imperial power hungry people who are determined to crush their rivals. "Companies only have a big impact on the world when they themselves become big enough."

Ringwald, returning to his plan, promises greatness: “LearnUp will change the job market across America. We will unleash human potential and set a new scale for measuring national GDP. ” Andrissen adds: “There is a question. Known issue. Why do companies not do everything themselves, as soon as they realize that it works? ” Ringwald replies: “We will continue to break away from competitors by rapidly developing and collecting more data about the needs of corporate customers.”

The next question is asked by one of the main partners Chris Dixon (Chris Dixon): “Are you creating a consumer or corporate company?” For a consumer company, the buyer is a private person, and for a corporate company, another business. Ringwald is puzzled. She explains that both individuals and corporations use her services. In addition, there is a tendency to remote work.

After the meeting, Andrissen shares with colleagues: “She did not essentially answer Chris’s question. If she has a consumer company, then she will be able to protect herself. But if it is focused on the corporate market, it will probably be cut. ” If Ringwald's customers are employees who continue to use LearnUp, moving from one company to another, she may try to take advantage of the network effect. And if the real clients are corporations, then they can eventually take over the training of employees or entrust it to another startup. A16z has a very different approach to consumer and corporate markets. The fund prefers to enter the enterprises of the corporate market as early as possible, but takes a break in the case of the consumer sector, because companies of the latter type either quickly take off - everyone suddenly needs Instagram - or also fall quickly. This is a way of risk aversion allowing this risk to be controlled. In 2013, a16z did not participate in Oculus VR Round A, preferring to wait and see if it could solve the sea sickness problem that virtual reality systems faced. Six months later, round B was funded. The fund received the same ten percent of the company that it could have received in round A, but for thirty million dollars instead of six. The internal logic of such an expensive risk mitigation is: “We pay for confidence.”

Partners began discussing how to evaluate LearnUp. Evaluation, especially in the early rounds, is often based not on tables, but on market monitoring - what other companies offer - and logical modeling of all possible “What if ...” If you evaluate the interest of users, the team of leaders, the size of the available market, Does Pinterest come to mind, or is it more like ShoeDazzle? One of the partners suggested that LearnUp is "ten for thirty." That is, a tenth of the company should be bought for thirty million dollars, while the whole company will be valued at three hundred million. "Well no. Rather, ten for fifteen or twenty, "objected Golovits, lowering the score by half. “Or six for twelve,” suggested Andrissen. Shortly after this meeting, Ringwald turned LearnUp into a company, corporation oriented. ▼

To be continued ...

Part 1 | Part 2 | Part 3 | Part 4 ← | Part 5 | → Part 6 | Part 7 | Part 8

About the Author: Ted Friend has been a regular contributor to The New Yorker since 1998. The author of a variety of reports and investigations, multiple prize winner in the field of journalism.
Photo: Portrait of Alexis Ringwald from an article on TechCrunch

PS: In the last paragraph in the original with numbers, complete nonsense is happening, which other readers also noted . When translating, I had to think up the logic so that it was reasonable.

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