Episode Summary
Executive Summary: In this episode of 'This Week in Startups,' Jason Calacanis answers listener questions on no-code startups, starting a company during an economic crisis, compensating advisors, and more. He emphasizes that no-code is a viable and efficient way to build MVPs, that downturns are ideal for starting companies due to lower competition and costs, and that advisors should be compensated with a mix of cash and equity. He also discusses the importance of personalized investor outreach, the impact of COVID-19 on cloud kitchens and food delivery, and his optimistic view on the economy and gig economy as a safety net.
Main Topics: No-Code Startups and Investor Perception (Priority: 5/5): Jason explains that no-code platforms like Bubble allow rapid iteration and are viewed positively by investors due to capital efficiency. He advises transitioning to custom code only when no-code becomes a bottleneck. Starting a Company During an Economic Crisis (Priority: 5/5): Jason argues that downturns are the best time to start a company due to lower competition for customers, talent, and funding, and reduced customer acquisition costs. Compensating Startup Advisors (Priority: 4/5): Jason recommends a hybrid compensation model of cash and equity, with clear expectations on hours and deliverables. He suggests 0.5-1% equity for high-profile advisors and a mix for those providing specific services. Angel Investor Due Diligence for Small Checks (Priority: 3/5): Jason advises angels writing small checks ($5,000) to scale diligence to the risk, using public information and syndicate leads, and not burdening founders excessively. Impact of COVID-19 on Cloud Kitchens and Food Delivery (Priority: 4/5): Jason predicts cloud kitchens will thrive due to increased demand for delivery and their efficiency, and sees them as a long-term trend that will reshape commercial real estate. Unemployment and the Gig Economy (Priority: 4/5): Jason defends the gig economy as a safety net that provides flexibility and purpose, and argues that the free market and stimulus will lead to recovery, with stronger companies hiring from weaker ones.
Key Arguments: No-code startups are capital-efficient and attractive to investors; transitioning to custom code is only necessary when no-code becomes a bottleneck. Economic crises are ideal for starting companies due to lower competition for customers, talent, and funding, and reduced customer acquisition costs. Advisors should be compensated with a mix of cash and equity, with clear expectations on hours and deliverables; high-profile advisors may receive 0.5-1% equity. Angel investors writing small checks should scale diligence to the risk, using public information and syndicate leads, and not overburden founders. Cloud kitchens are anti-fragile during pandemics and will become the standard, leading to a reclamation of commercial real estate. The gig economy is a vital safety net that provides flexibility and purpose, and the free market will drive recovery from unemployment. Overreaction in quarantine and stimulus is better than underreaction, leading to a brighter future.
Data Points: Slack group size: 3,200 - Number of people in the This Week in Startups Slack group. Revenue growth: 90% month over month for 7 months - Growth rate of EasyUp.com, a startup mentioned by a listener. Net monthly revenue: $7,700 - Recent net monthly revenue of EasyUp.com. Salespeople laid off: 100,000 - Number of salespeople laid off in the last few weeks due to COVID-19. Unemployment rate: 10% - Percentage of the workforce put out of work or furloughed. Potential job losses: 20 million - Potential total number of people losing their jobs. Expected rehiring rate: 35% - Estimated percentage of furloughed workers who will get their jobs back. Advisor equity range: 0.5-1% - Typical equity grant for high-profile advisors.
Pivotal Quotes: "Fortunes are built in the down market, they're collected in the up market." — Jason Calacanis: Explaining why economic crises are good times to start companies. "If you can't even convince one developer to join your team, you're not going to make it as an entrepreneur." — Jason Calacanis: Emphasizing the importance of persuasion and resourcefulness for founders. "The gig economy was letting people set their own schedules, pick two or three different employers, and be beholden to none. That was the beauty of it." — Jason Calacanis: Defending the gig economy as a flexible and empowering option for workers.
Implications: Listeners should consider no-code for rapid prototyping, view downturns as opportunities, and structure advisor compensation carefully. The gig economy and cloud kitchens are poised for growth, and overreaction in policy may lead to a faster recovery.
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.