risk, information, time and money (in 20 minutes) by dan milstein
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Risk, Information, Time and Money (in 20 Minutes) by Dan MilsteinTRANSCRIPT
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Risk, Information, Time & Money (In 20 Minutes)
Dan Milstein@danmilHut 8 Labs
Tuesday, December 17, 13
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First Principles = Win
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1. Opportunity Cost
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Hut 8, Two Offers
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Client A:PSD’s -> HTML
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$20/hour
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8 hours of work/day
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Client B:BIG DATA
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$200/hour
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4 hours of work/day
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WHAT DO WE DO?!?
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Math
200 * 4 = 800 20 * 8 = 160
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Opportunity Cost:
$640/day
per person
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This is happening at your startup
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10 people, 1 yearSeries B Valuation:
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$20,000,000
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$20,000,000
or $0
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Opportunity Cost:$8,000/dayper person
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$8,000/day
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Axiom 1: It’s not all luck
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Axiom 2: Teams that fail, work hard
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Be terrified of:
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Working on wrong things
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Don’t worry about:
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Working hard
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EVERYONE GETS THIS WRONG
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2. Information & Money
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What if clients hide the rate?
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Spend a week researching
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That week makes us money
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Like, real money
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Information Decision
Money+
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3. Risk & Information
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Chained Risks
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1) Can we build it?
2) Will people buy it?
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Two Startups
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A) Teleportation
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B) Enterprise CRUD App
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Teleportation:
try to build
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CRUD app:
try to sell
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What is different?
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Degree of Surprise
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Information = Surprise
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Claude Shannon is a boss
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“A startup is a temporary organization formed to search for a repeatable and scalable business model.”
- Steve Blank (also a boss)
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4. Information & Time
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Rates of Change FTW
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Velocity = Meters/Second
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Velocity = Distance/Time
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Revenue = Dollars/Month
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Revenue = Money/Time
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Information = Money
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Revenue = Information/Time
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Again, real money
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5. Risk, Information & Time
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Here’s where it gets fun
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Example: Health IT
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Velocity (aka Revenue):
Organizational response to changing nature of risks
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NOBODY GETS THIS
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In Summary:
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In the presence of extreme uncertainty, you make money by extracting information from reality.
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In the presence of extreme uncertainty, you make money by extracting information from reality.
The most valuable information is that which reduces uncertainty about the largest in a chain of risks.
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In the presence of extreme uncertainty, you make money by extracting information from reality.
The most valuable information is that which reduces uncertainty about the largest in a chain of risks.
To acquire information quickly, the whole team must constantly adjust its understanding of risks.
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6. Fear
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Leaders & Fear
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“Vision”
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Go Forth and Win
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Putting Principles Into Practice
@hut8labs
http://blog.hut8labs.com
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Putting Principles Into Practice
@hut8labs
http://blog.hut8labs.com
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Putting Principles Into Practice
@hut8labs
http://blog.hut8labs.com
Tuesday, December 17, 13