Note from the Authors: “Creative Entrepreneurship” was born out of the desire, want and curiosity of kbs+’s staff to understand the crazy world of entrepreneurship. “Creative Entrepreneurship” curates the perspectives of leading entrepreneurs and venture capitalists as a guide for people interested in learning more. Each writer graciously contributed their work to create a curated resource for creative entrepreneurs. This book is the teaching and inspirational aid for our kbs+ Ventures Fellows – a highly select group of kbs+ staffers from all levels and areas of the agency – who go through a six-month educational program to immerse themselves in the startup and venture capital world. Share this entrepreneurial inspiration with friends using @kbspvc or #kbspvcbook. If you would like to share any inspiration, thoughts or feedback, please contact us at @kbspvc anytime – we look forward to hearing from you. Thank you for downloading our book!
Darren Herman
Taylor Davidson
Creative Entrepreneurship Darren Herman Taylor Davidson
a kbs+ partner
We have received explicit permission from all authors of the works found in this book. Unless otherwise stated, we do not claim to have written or own any of this work. We are purely aggregating it into a simple book format for the education of anyone who picks up this book. The price of this book is free; if anyone tries to sell this book to you, please report them to us. Hopefully this book inspires you as much as it does us. We do not guarantee you will start the next successful startup after reading this book but we do think it will make you at least one IQ point smarter. Enjoy it and after you are done with it, hand it to someone else to read. Sharing means caring. The author and publisher have taken care in the preparation of this book, but make no expressed or implied warranty of any kind and assume no responsibility for errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of the use of the information or programs contained herein. Contact Info: kbs+ Ventures 160 Varick Street New York, NY 10013 Email us:
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Follow us on Twitter: @kbspVC Visit our Website: http://www.kbsp.vc Copyright © 2012 kbs+ All rights reserved. Printed in the United States of America. A very special thank-you to Lara Fischer-Zernin and Eugenia Koo for their persistence and curiosity that got this book to where it is today.
To a whole new generation of Mad (Wo)Men. Our industry is changing and we have the power to shape it. Let’s not fuck it up. – Darren Herman President, kbs+ Ventures & Chief Digital Media Officer kbs+ The Media Kitchen
Table of Contents FOREWORD By Darren Herman CHAPTER ONE
History & Context Types of Innovation Blake Masters: Peter Thiel’s CS183: Startup – Class 1 Notes Essay The Internet: From Static to Collaborative, What Might Come Next Tim O’Reilly: What Is Web 2.0: Design Patterns and Business Models for the Next Generation of Software Paul Graham: Web 2.0 Theories about Web 3.0 Jay Jamison: Web 3.0: The Mobile Era Groundbreaking Entrepreneurship Sarah Lacy: Inside the DNA of the Facebook Mafia
CHAPTER TWO
The Funding Ecosystem Types of Investors Paul Graham: How to Fund a Startup What Every Startup Should Know About Investors Paul Graham: The Hacker’s Guide to Investors Mark Suster: Angel Funding Advice Why Everyone Does Not Need to Raise Dan Shapiro: Companies That Would Do Best Without Venture Capital CHAPTER THREE
Finance 201 What Is Venture Capitalism? Marc Averitt & Matthew V. Waterman: Venture Capital Basics Convertible Debt Fred Wilson: MBA Mondays: Convertible Debt Preferred Equit