No sooner had I wracked my startup soul posting about the Zen of startup valuation (basically, that the value of the company doesn’t lie in its ‘plan’ but in its ability to improvise and execute money-making tactics) than I almost inevitably stumbled upon an excellent video of über-angel Mike Maples, for whom even the term “super-angel” seems woefully inadequate. The idea central to Maples’ presentation is that too many angel investors are focusing on continuous low-level / tactical iterations (he flags Eric Ries’ ‘Lean Startups’ and Dave McClure’s ‘AARRR’ model as examples of this), when the really big wins come from high-level strategic leaps, which he (a little confusingly) calls ‘pivots‘.
The confusing thing is that the three high-level ‘pivots’ (ngmoco, Odeo–>Twitter, Chegg) he described seemed to be the product of fairly desperate circumstances rather than conscious opportunism or aggressive competitiveness: so the pattern he describes falls a long way short of being a prescriptive recipe for success in any context other than short-term business failure. Further, his focus on business model diagramming & discovery is all very well, but I utterly fail to see how Twitter could have been diagrammed in any sensible way.
Anyway, the background is Maples’ personal vision for his Floodgate fund: he wants it to invest in as many of the roughly fifteen “thunder lizards” (his term for ‘utterly disruptive startups’) he estimates pop up each year as investment targets: and his message to entrepreneurs is that they should be actively looking for high-level pivots that really transform their industry (no matter how “gut-wrenching” they may be), in order to upscale their (let’s face it, ‘piss-ant’) startup into a Godzilla-type entity, merrily eating incumbents for its breakfast.
The annoying thing is that while I completely agree with so many of the things he says (for example, I recently posted on OpenCoffee about how business plans are dead – Maples thinks that they are “orthogonal to the right mindset”), high-speed low-level pivoting / iterating is all that most companies will ever be able to reach, because of their extraordinarily limited access to high-risk, conceptual-minded investors such as him.
What it all comes down to is that as an entrepreneur, I have a key choice: (a) I can structure my startup based on low-level Eric Ries-style iteration, and patiently pitch it to the many thousands of angels out there; or (b) I can place all my radioactive eggs in one basket and make a high-level, this-changes-everything quasi-conceptual pitch aimed squarely at the handful of balls-of-steel super-angels such as Mike Maples (assuming, of course, I network for a year or two to get to the stage where I can practically meet any of them) or perhaps VCs… but as far as I can see, there’s not really anything resembling a middle path between them. Never mind the business model generation side of things, they’re the two core financing models on offer here.
And yes, I’ve been working on a gut-wrenchingly high-level pivot for my startup for a while, just in case I ever happen to find myself sharing an elevator with Mike Maples. But no, I don’t actually expect ever to get a chance to try it out on him. Should I?