Risk, Information, Time and Money (in 20 Minutes)


Dan Milstein  talking about the first principles underlying leans startups.

First principle = win

1. Opportunity Cost (what are you giving up?)
People are choosing stuff that does not add value to your company and that is opportunity cost. You are doing this is in your startup every day! Don’t work on the wrong stuff. It’s not about how hard people work. The choices of what you work on are the critical factors. You should be terrified about working on the wrong thing. If you don’t know if it’s valuable then STOP.

2. Information & Money
What if the clients hides the rate? Spend a week researching (that week makes us money! – it is worth a lot of money). Making a decision with proper context should be considered money.

3. Risk and Information
Startups never have a single decision. Startups need a sequence of things that need to be true 1) can we build it 2) Will people buy it? (what is the value of these questions).

How do we value information?
Degree of surprise is a way to measure the surprise you get in what you find out. Information is equal to surprise. (SLIDE: Claude Shannon is a boss).

A startup is a startup because it is an information gathering machine.

4. Information and Time
Velocity = distance/time
Revenue = money/time

But you need to think about information = money

So revenue = information/time.

Again, real money

5. Risk, Information and Time
(Here’s where it gets fun!)
If the biggest risk is change, therefore the thing that is going to get you the most information and therefore MONEY, is change. How fast ppl can respond to the changing nature of risks is how well you can make money. This is the competitive advantage.



6. Fear

The most important place that fear lodges is in the head of CEOs. Startups CEO call their fear “vision”. They think they can’t let the team know that this might not work then you will force your team to fail. Go change your org!

Go forth and win!

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