Archive - November 2013

1
How Mountain Climbing and Negative Churn Are Related
2
The Differences Among Junior & Senior Developers & Architects
3
What Are The Prerequisites For a VC Job?
4
Quote
5
How I Crashed My First Computer Within First Hour Of Owning It
6
Podcast Interview: Bytes Over Bagels
7
What Are The Odds Of Getting A Venture Capital Job?

How Mountain Climbing and Negative Churn Are Related

I am a huge fan of For Entrepreneurs’ seminal work on SaaS metrics. I’ve read it several times over the years, I require our interns to read it and it’s a suggested resource in my class. If you are an entrepreneur running a SaaS business or even considering it, do yourself a favor and stop reading this post and read that post immediately.
One “state” that is mentioned in the post is “negative net churn”, which is when additional monthly recurring revenue (MRR) from existing customers (“expansion MRR”) exceeds MRR that is canceled from customers that are leaving (“churned MRR”) and customers that are downgrading (“downgrade MRR”). There is no doubt that negative net churn is a good thing, after all, the name connotes a negative bad thing (churn) so it must be good, right?  But I’ve heard several entrepreneurs mention negative net churn as the nirvana. That if the company achieves this milestone it will be in great shape and churn will be in check.

The Differences Among Junior & Senior Developers & Architects

Last week I had a conversation with a founder about hiring development talent. It’s no secret that there is a shortage of software development talent in Chicago and throughout the country. A natural response to the constrained supply of developers is to widen your net, increase compensation and/or lower your standards. None of those are fun but it is a reality in today’s world. 
 
We talked about the pros/cons of hiring junior development talent versus senior development talent. The question posed was is it better to hire two junior developers or one senior developer? It occured to me during the talk that the essence of the difference between junior and senior developers is this: an ability to understand tradeoffs. 

What Are The Prerequisites For a VC Job?

I get this question a lot. Usually it comes in the form of “do I need [x] experience to get into VC?

The answer is an unequivocal “no.” If you don’t believe me, do look at the backgrounds of VCs across several firms. You’ll see they are quite varied. There are former journalists and lawyers. My firm includes a number of former floor options traders. So there are no prerequisite experience to break into the industry. This does not mean, however, that there aren’t some backgrounds that are more prevalent. Former entrepreneurs, engineers, and executives are very common. Perhaps those backgrounds may be more in demand, but the point is that the lack of one of these backgrounds does not count you out.

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“A real entrepreneur is somebody who has no safety net underneath them.” — Henry Kravis, Founder KKR

How I Crashed My First Computer Within First Hour Of Owning It

I bought my first computer when I was 13 with my Bar Mitzvah money. I told my parents I was going to use it for homework, but the truth was that I was hopelessly addicted to video games and PCs (or IBM Compatables as we called them in those days) were way ahead of console game systems. The game that really inspired me was Sierra’s King’s Quest. I played it at my friend Jeremy Levine’s house and loved the fact that it was a puzzle game in a fantasy world. Like Zork but with graphics. The worlds were vast and non-linear. 

What Are The Odds Of Getting A Venture Capital Job?

I took a class in business school that fundamentally changed the way I think about a lot of things. The core premise of the class (Managerial Decision Making class taught by Thaler) is that we are subject to a lot of biases by virtue of being humans. 
 
One of these biases is overconfidence. He surveyed the class asking how many thought they would get an above average grade in the class. It was about 75%. He also asked how many thought they would be in the top decile. About 20%. Obviously neither of these situations is possible. This bias holds true outside an MBA classroom (clearly a biased sample). Consider asking people if they are an above average driver. 

Copyright © 2014 Jason Heltzer