Snapchat is going to reach a billion users thanks to “Gen-S” — the smartphone generation


Snapchat is going to reach a billion users, challenging Facebook, YouTube, and mainstream media, for the attention of “Gen-S” — the smartphone generation.

I know this because this Christmas a bearded, chubby, and jolly fellow showed me the power of Snapchat.

No, not Santa Claus, the hip-hop version of Old Saint Nick — DJ Khaled.

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Every time this one-part Tony Robbins, two-parts Puff Daddy takes the screen, over three million views come pouring in. Yes, you read that correctly, three million views every time a DJ from Miami gets a massage, smokes a stogie, or shows you his shoes.


Kim Kardashian and her clan get just under two million viewers per episode now, down from 2.5 – 3 million they used to pull in.

These are not apples to apples, with Khaled sharing 5-second clips, but it’s fair to say the viewership is similar. Where things diverge is the cost, with the Kardashians signing up for four more years of documenting their lives for $100m — and that’s just their salaries.   

What makes Khaled so watchable is that he is not obsessed with his own success (and what it buys), but his message of hope — he wants you to be as successful as he is. It’s a classic device, but it works.

In another year Khaled will, if he keeps this up, grow his audience by 10x, and have 30 million folks watch him pour Apple Ciroc vodka, “bless up” his audience, and give all of us the “major keys” to success.

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From 2012: There is no Series A Crunch.

I wrote this piece back in December 2012, when folks were in a panic over the “series A Crunch.”

Does/did my argument hold up, three years later?

best @jason

From November, 2012: The “Series A Crunch” refers to the fact that while angel-funded startups (think: $750,000 invested by angels in two founders) have grown five times-plus in the past three years, the number of Series A fundings (think: $3 million invested by a venture capitalist in a 10-person startup) has stayed the same.

I’m telling you right now this is a complete non-issue.

Many folks are obsessing over the supposed “Series A Crunch” because, quite logically, if there is a fixed number of Series A investments to go around and a lot more folks fighting for them, well, many folks will not get one.

Parents fleeing a public school system increase the demand for the (relatively) fixed number of slots in private education, making those slots more and more valuable. In fact, it only takes a percentage of actors to “switch teams” to cause an imbalance.

What these folks, largely journalists, who have no experience in business, fail to realize is that “things” do not always stay the same in an equation — and that founders should be wickedly good at adapting to changing conditions.

Fact one: The number of Series A fundings could dramatically increase.

The number of slots for players in the NBA this year was 435 (29 teams times 15 players). However, when the NBA started 60 years ago, there were only 11 teams, so the number of slots totaled just 165 (assuming 15-man rosters back then).

In the coming years, the NBA will, mark my word, add a half-dozen teams in Europe and Asia. It’s safe to assume there will be a 40-team league some day.

Additionally, after the shortened NBA season last year, fans, players, and the league realized 82 games were not as much fun as a condensed 50 to 60 game season. I believe the NBA will go to two shorter seasons a year: one US-only and one international.

With two seasons and a dozen more teams, it’s possible the number of slots will grow to 500 or 600 — or more.

Bottom line: Capacity increases along with opportunity.

VCs are a greedy lot (and us founders and GPs love you for it), and the world has mountains of money sitting in bonds, gold, corporate stockpiles, and plain old devaluing C-Notes (aka cash).

If 10 companies with the metrics of Fab, Dropbox, Yammer, Uber, or AirBnb were to walk into a VC firm with only the money to fund five, you know what they would do? Raise more money!

Capacity expands all the time, and it could turn on a dime. Look how quickly Marc Andreessen and Ben Horowitz raised fund after fund in the last couple of years.

Television is another wonderful example of capacity increasing.

Just 30 years ago, your chances of being an actor in a TV show was something like 20 shows on each of three different networks with seven characters on each. That means there were 420 slots available (20 shows times three networks times seven characters = 420).

Since that time, the number of channels has grown and therefore the number of shows with slots for actors.

Additionally, shows now have numerous plot twists per shows, which means shows need many more characters. Compare shows like “All in the Family” or “Happy Days” to more recent series like “The Sopranos,” “Game of Thrones,” or “The Walking Dead.” Tons of new characters are introduced into every episode of those later shows. I think you could count on one hand the new characters introduced on “Happy Days”: Pinky Tuscadero, Mork, and Chachi.

TV has experienced a double expansion: more shows and more characters per show.

This would be like the NBA deciding to make the court 20 percent bigger and putting 14 players on the court at a time rather than 10. (Wonder what that would be like?)

Fact two: A Series A is not the only option to grow a business.

Most pre-Series A companies have under 5-10 people and no revenue. Therefore they “burn” about $50,000 to $75,000 a month in my experience (think five people times $75,000 a year equals $375,000 plus $100,000 in other costs).

Here’s an absolutely crazy idea for folks “facing” the Series A Crunch: Make $2,750 a day (about $1 million per year). If you’re burning two or three times that amount, well, cut one-third your costs. VCs will fund any company with a Series A if they are making $2,750 a day.

If you can’t hit breakeven, well, shut your company down and go work for a startup that can. If you can only hit $1,000 a day, merge your company with another one that is making $1,000 a day and cut the bottom one-third of the staff.

Not willing to do that?

Well, if you’re not willing to give up your diapers and put on your big-boy undies, then you need to stay in nursery school for another year. Series A is for folks who don’t make wee-wee in the bed.

Fact three: VCs are not the only source of funding.

If you have some combination of solid growth, decent revenue, a great team, and a sexy product, you can easily — yes, easily — raise money from strategic investors or rich people. Is this ideal? Some have argued strategic money is bad, but those folks are usually VCs who are in competition with the strategics.

VCs really hate strategic money, because it is valuation insensitive and can result in an early exit (e.g., if Home Away had invested in Airnbnb, perhaps they would have been talked into selling in the HomeAway IPO).

If you went to Mark Cuban with a company making $25,000 a month, no or low burn, a big vision and a reasonable valuation, he will put money into it. I know, he invested in my last company — and many others — with that profile. Rich folks are very, very smart and they know that businesses that have money in their bank accounts and customers paying for their product rarely go to zero.

Bottom line: You’re in control of your destiny, and obsessing on the blogger-manufactured “Series A crunch” will only distract you from the work you need to do survive the winter. And winter always comes. Always.

Why I’m bringing back the Open Angel Forum


[ tl;dr: I’m bringing back my angel dinner, the same one Uber & Thumbtack pitched their seed rounds at, at my house on December 2nd, because startups really need help getting past their seed rounds. ]

Back in 2009, I started a dinner party called Open Angel Forum. The goal was to kill the Keiretsu Forum, which charged founders thousands of dollars to (supposedly) pitch angel investors.

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Using the term “supposedly” because many founders told me the only follow-up they got from these payola groups was from service providers who attend them pretending to be angels.

Open Angel Forum alumni include: Uber, Thumbtack, Backupify, Contently, Food52, Signpost, StyleSeat, and countless others. They all raised part of their first round of funding at this wonderful event.

Then AngelList came around and there were many more angels than startups. There was no reason to host Open Angel Forum, at least not in New York, LA, or San Francisco. (They kept doing it in Boulder, actually).

Now I see a need for the Open Angel Forum again, but not because there are predatory scumbags trying to trick unsuspecting founders into paying for access to angels.

The problem today is that there are some great angel-funded startups that are stuck between the angel-funded world and the VC world.

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What I learned from passing on investing in Twitter & Zynga — & saying yes to Uber & Thumbtack


This week I was asked to speak to a dozen billionaires at a secret meeting about putting $100b to work. They wanted me to talk about what I’ve learned over the past five years as an angel investor.

Well, here it is.

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It took me five years, but I’ve learned what the two most important factors are in the success of an angel investor. It’s not being smart, it’s not being diligent, and it’s certainly not being a visionary.

After passing on Twitter and Zynga, I invested in Thumbtack and Uber. Looking back, I knew Ev and Mark were winners, but I didn’t think their ideas — for “updates” and “social poker” — were winners.

I was wrong about their ideas, but I was right about them.  

When Travis and Marco came along with their ideas, I didn’t even try to judge if “on-demand drivers” and “a better craigslist” were winners, because I knew the individuals were winners.

That’s enough information to make a bet.

Which leads me to “Jason’s Law of Angel Investing,” which states:

“You don’t need to know if the idea will succeed — just the person.”

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FIGHT! FIGHT! My response to the CEO of Outbrain

[ tldr: The CEO of Outbrain sent me a choice email regarding AdReplacer, which might — at some point in the future — impact his business in some minor way. Here is my response. I’ll leave it up to him if he wants to publish his email. ]

Thanks for reaching out. Let’s split this into three issues here. First, my support of startups; second, how consumers feel about advertising (and your product); and third, the morality of adblockers.

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In terms of my support of startups, it speaks for itself:

  1. 150 angel investments
  2. almost 600 episodes of This Week in Startups
  3. 20,000 free tickets distributed for my events, Launch Festival, SCALE, etc., this year alone

To the second point, consumers are fed up with overbearing advertising. This is a problem that has been caused by aggressive marketers and the publishers who enable them.

Advertising inventory has exploded, but at the same time, consumers have become much more savvy about avoiding tricky ads. Which then requires marketers to get even trickier and more misleading.

This has resulted in the wholesale destruction of journalism’s famed “Chinese Wall” between editorial and sales, with even the New York Times trying to trick their customers into clicking on “native advertising.” It’s disgusting to anyone who cares about journalism and keeping the public well-informed.

Native ads are perhaps “Peak Deception” in this war between marketers and readers, with Google’s confusing search ads being a close second. (Reports show that up to 40% of Google users don’t know they’re clicking on an ad — something that has caught the attention of even the FTC, which is handing out warnings.)

Publishers will do anything they need to in order to survive. Except, it seems, charge for their content. They’re probably right not to charge, because most consumers don’t want to pay. And so the Cold War continues!

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Dropping some product at midnight tonight!

dropGoing to drop some product tonight at midnight at Join me at 12:01AM for a live Q&A/AMA — bring a chrome browser (pants are optional).

Follow me now at



Don’t bring a knife to a gun fight

Just like a @#$ to bring a knife to a gun fight
— Sean Connery, The Untouchables

We are living in an age of excellence, where the science of product design is churning out wave after wave of exceptionally well-conceived delights for consumers. Product is so important, in fact, that distribution is often drowned out by the popping of champagne corks, as founders watch their babies hit number one on Product Hunt and Hacker News.

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What a thrill it is to hit the top of the charts, a perfect peak, only to humble founders with the eventual and brutal pit of despair they will face in the coming days and weeks, as other products replace them at the top of the App Store.  

Lasting distribution, created by growth-driven teams that have exceptional products, are the big winners today. Airbnb built a killer tool for Craigslist, Uber mastered the referral system and ‘over the shoulder virality’, while Wealthfront took the referral system and content marketing strategies deployed by others to the next level. WhatsApp crushed it using the “phonebook social network” combined with relentless localization.

I’ve been looking through the 400 applications, and still growing, that have come into this year’s LAUNCH Incubator class, and I’m stunned by how many have exceptionally well-created products — with no consideration for distribution.

Great moves all, but with no marketing budget, target audience, titles, or tag lines.

Standing out today with investors requires great products, but that’s table stakes. To really stand out from the pack, bring a killer distribution hack that you refined and can speak about first-hand.

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When should you start meeting with investors?


One of the most frequent questions I get from founders, and one I had myself when I was founding companies, is “When should I approach investors?”

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It’s a tricky question, and the answer would be different in 1990, 1995, 2000, 2005, 2010, and 2015. The benchmark for when “you’re ready for a meeting” changes based on the competition in the overall industry (now at record highs), the profile of the investor you’re meeting with (first year investor vs. year 20 investors), and your track record.

One thing is for sure going into 2016: do not show up at a meeting without a functional prototype (aka an MVP, ‘minimum viable product’).

Simply put, showing up without product today is like showing up without a business plan in 1995 — you simply won’t be taken seriously by most investors.

There are two exceptions to this:

  1. You’re meeting an investor who worked with you previously and you set the meeting in the context of “can I float an idea by you?”
  1. You sold your last company and returned 10x for your previous investors, and you put this meeting in the context of “I sold Weblogs Inc. 18 months after I started it, for 10x the valuation at which Mark Cuban invested. I’m working on my next idea and I want to show you the research.”

[ Note: that is how exactly how I landed Sequoia Capital for Mahalo, and got two other offers from big firms. I showed them my research on search results. Wouldn’t work today. Folks don’t invest millions to make an MVP anymore. ]

The bottom line is, the MVP is the business plan and your resume. It’s the business plan because you can show it to customers and get feedback on it immediately, and it’s the resume because an investor can see if you know how to build a product.

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How to pick an incubator: YCombinator, Techstars, 500Startups, or Launch Incubator

As a follow up to my post on creating the best startup incubator in the world, I made a little video on why you should apply to the Launch Incubator and how we built upon the model of YCombinator, 500Startups, Techstars and others to build what is, far and away, the best incubator in the world.

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* Quick note: TechStars subscribes to my small class size theory as well, with a max of 10 startups per class.

** Quick note: if you’re a startup and you get into YC, TS or 500 you should go — these are all great programs. If you get into those programs and mine? Well, I think you should come to mine, but the best way for you to figure that out for yourself is to:

a) talk to the graduates of both programs

b) ask which partner will be your partner at the program (not just the figure head of the program who you meet 2-3x), and how do they compare to me. If you’re spending 12 weeks with Dave Cohen, PG, McClure, or Sam Altman directly, that’s a tough decision.

The Greatest Incubator Ever Created

For the past 20 years I’ve watched the power incubators have had in technology. I’ve taken notes diligently, spoken to my 100+ portfolio company founders and have been quietly developing what is, hands down, the greatest startup program ever created.

It’s called the LAUNCH Incubator and we’ve graduated 13 startups in the last two classes.

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We studied Bill Gross’ pioneering Idealab, which brought us eToys and PeoplePC, and Paul Graham’s gold-standard YCombinator, with its phenomenal scale and triplet of unicorns in Zenefits, Dropbox, and Airbnb, as well as David Cohen’s innovative Techstars, which has reached across many cities and corporate partners including Disney and Microsoft.

These three programs are all exceptional and we’ve looked at everything they’ve done right, and combined it with our huge platform which includes the LAUNCH Festival (15,000 attendees, the largest startup conference in the world), the SCALE conference (4,000 attendees and 50+ growth speakers) and This Week in Startups (500+ episodes and counting!).

We’ve come to the conclusion that the best incubator in the world needs to focus on five things:

  1. Small class size
  2. Early access for great investors
  3. A curriculum focused on tactical issues
  4. Accepting startups with finished products
  5. Relentless support post demo day

We’ve done two classes so far, and we are accepting applications for three remaining slots in our Winter Class, which starts the week of November 16th. Our first class had 150 applicants and our second class had 350. Our current class will have over 500.

Most people won’t get in, but we’re going to meet with the top 10% in person and give them as candid feedback as we can, in the hopes that we might have them join us for the Spring Class or LAUNCH Festival.

You can apply at (November 10th is the deadline, applications are being reviewed in the order they come in).

Let me explain a little bit about each lesson and share with you what our founders have said.

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