Startup Quants

As an entrepreneur, one aspect that i enjoy quite often is quantification of various aspect of our business.

• What is the current valuation of our venture?
• How much money should we raise in this round?
• Should i go for fixed size equity round or convertible debt round?
• How much options should i grant to person 'x'?
• What does it take to recruit this interesting guy?
• Why do customer think product 'x' is better than product 'y'?
• How to price our products?
• Is it worth pursuing idea 'x'?
• ....... ........ .......

It is very unlikely that one will find optimal answer to these questions. Certainly there would be very subjective answers to few of these questions.

To find near optimal answers, you may take advise from peers, read about experience of others but it will be your own experiments that will give satisfying answers. My approach has been "Experiment at smaller scale, amplify if the experiment is successful, re-experiment incase of failure" (You should be shameless about your failures, iterate quickly & fail fast).

Beware, when things are incomprehensible, you will treat them as cheap or flout them or think they are magical.

Welcome aboard

Most corporates have some form of induction program to on-board new employees. Startup doesn't have time, energy & man power for such programs.

In corporate environment such program can't be avoided for various reasons,

1) In corporates, it is not uncommon to on-board large group ( > 5 employees) at a time, but in startups it is always cherry picking.

2) Corporates do recruitment based on profile matching and (try to) mould employees to their culture but startups put lot of emphasis on culture & passion while recruiting itself.

3) During induction program, corporates will show what makes their company a unique place to work. But startups count on new employee(s) to make their company unique.

4) In corporates, one should understand structure of the company to escalate issues and get things done. But in startups, things & structure would be fluid.

5) Corporates trust their process more than people, whereas startups trust their people most.

I have also seen backlash from employees when a company transform from startup stage to corporate stage (Things were not like this before, Do we really need a position to take care certain things? etc).

In our startup bitstat technologies, we have introduced "self-experiment-and-use-your-freetime" induction process for new employees. In this process they will execute their own idea, create a simple software product, try to market it and will share their experience with others.

Someday, our startup would be a corporate. But till that time, our experiments will continue.