Episode Summary
Executive Summary: In this 'All Ask Jason' episode of This Week in Startups, Jason Calacanis answers founder questions on building marketplaces, media startups, SPACs, the origin of the All-In podcast, angel investing mistakes, and lifestyle vs. venture-scale businesses. He emphasizes manual scaling for early marketplaces, warns against media investments unless subscription-based, explains SPAC risks, and advises diversification and product-market validation for angel investors.
Main Topics: Building a Marketplace MVP (Priority: 4/5): Jason advises using off-the-shelf software like Squarespace or Shopify, or manually listing items, rather than building custom software, following Paul Graham's 'do things that don't scale' principle. Media Startup Investment Potential (Priority: 4/5): Jason states media is traditionally a terrible investment due to low margins and scale challenges, but subscription-based models (e.g., The Athletic, The Information) are highly investable. SPACs and Their Risks (Priority: 5/5): Jason explains SPACs allow companies to go public faster and earlier, but warns that public investors may face high failure rates (70-80% zeros) typical of venture investing, citing examples like Nikola and Fisker. Origin of the All-In Podcast (Priority: 3/5): Jason shares that Chamath Palihapitiya initiated the podcast due to their chemistry, and David Sacks and David Friedberg were added for expertise on masks and science during the pandemic. The show aims to remain independent but considers a network. Angel Investing Mistakes (Priority: 5/5): The number one mistake is lack of diversification; Jason recommends 20-50 investments for a chance at an outlier. He also advises investing only in companies with a product in market and talking to customers. Lifestyle vs. Venture-Scale Businesses (Priority: 5/5): Jason contrasts lifestyle businesses (e.g., $1M profit with low effort) with venture-scale (e.g., $50-100M revenue requiring investment). He uses a back-of-the-envelope method to assess scalability and stresses the importance of a growth plan.
Key Arguments: For marketplace MVPs, use manual methods or off-the-shelf software instead of custom builds. Media startups are poor investments unless they have a strong subscription model. SPACs bring high-risk venture-style investments to public markets, requiring investor education. Angel investors must diversify across 20-50 deals and invest only in companies with proven product-market fit. Lifestyle businesses can be highly profitable without venture capital; venture-scale requires a clear path to $50-100M revenue. The All-In podcast succeeded due to chemistry and timely topics, with potential for a network of shows.
Data Points: Number of investments needed for diversification: 20-50 - Jason recommends this range for angel investors to have a chance at an outlier return. Outlier return multiple: 25x to 50x - A company returning 25-50x on investment can double the total portfolio if one in 25 hits. Failure rate in early-stage investing: 70-80% - Jason states that 70-80% of early-stage investments go to zero. Revenue threshold for venture-scale: $50-100 million - Jason uses this as the target revenue for a venture-scale business over 10 years. Number of customers for lifestyle business example: 1,000 - 1,000 customers paying $2,000/year yields $2M revenue and $1M profit. Number of customers for venture-scale example: 50,000 - 50,000 customers at $2,000/year yields $100M revenue.
Pivotal Quotes: "If you're going to do a marketplace, there are many different marketplace pieces of software out of the box, but the easiest thing to do is to just make a landing page with a Squarespace type website, put the items up, and you can actually do this manually." — Jason Calacanis: Advising a founder on building a marketplace MVP without custom software. "If a company is worth over a billion dollars before it ships its product, it might, it might be a free. And it might go to zero." — Jason Calacanis: Warning about SPACs and overvalued pre-revenue companies like Nikola and Fisker. "They don't understand diversification, so they make one investment or two investments with their entire chip stack. That's not enough diversification in order to have the chance at an outlier." — Jason Calacanis: Identifying the number one mistake new angel investors make.
Implications: Founders should prioritize manual scaling and subscription models; investors must diversify and validate product-market fit. SPACs introduce venture risk to public markets, requiring caution. The All-In podcast's success suggests independent, chemistry-driven content can build a network.
About This Week in Startups
Jason Calacanis covers startups, tech, markets, media, and all the hottest topics in business and technology. He also interviews the world’s greatest founders, operators, investors, and innovators.