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The DL - Issue #4

July 15 · Issue #4 · View online
The DL
Hey! Welcome to The DL! This is a weekly newsletter about tech, startups, entrepreneurship, and investing in the Pacific Northwest.
If you have thoughts, questions, or comments, hit reply - I’d love to hear from you! 👋 Referred by a friend? Sign up here.

Starting a Startup from Microsoft
Windows 95 launch party 🔥
Windows 95 launch party 🔥
Last week at Madrona, we hosted a lunch and learn with our interns and Brian Saab, the CEO of Unearth, a modern mapping platform. He talked about his journey from Microsoft to startup CEO, and it was a really insightful session. Here are my highlights from Brian’s talk:
Microsoft is a great launching pad for starting a company. Why?
  • There is no shortage of people who want to leave and start a company
  • It’s a great training ground for learning how to run a business, build products, and manage teams
  • You have great visibility into product roadmaps and know what is valuable to large companies like Microsoft and its customers
  • There is a great network of Microsoft alums who want to help, invest, and join you
Three step process for starting a startup
  1. Get the team: Build your network of people who will self-select to join a startup. Look for people who are gritty, resilient, and want to take risks
  2. Get some customers: Invest $10-20K in high-quality mockups that you can show to potential customers and get feedback
  3. Get investment: Building relationships and conviction takes time, so meet with investors early and keep them updated on your progress
How is it going at Unearth?
  • We started with great customers in construction but over time found that the maintenance market is much larger than the new build market, and those customers have a burning need for our product
  • We’re raising money soon, so we are investing time building relationships with a targeted group of investors
Brian’s startup advice is spot on, and I especially love his tactical advice around investing in high-quality mockups to test your conviction in an idea. If you’re not willing to spend a little money on product development, why would someone else buy from you or invest in you?
I also thought Brian had a great take on Microsoft as a training ground for startup founders, and to make the case, here’s a quick list of companies from Kirby Winfield of companies founded by Microsoft alums: Zulily, Convoy, Rover, OfferUp, Docusign, Smartsheet, Outreach, Auth0, Zillow, and Expedia. Geekwire followed up this tweet by publishing an analysis showing that ~25% of the top PNW startups are run by CEOs who worked at Microsoft.
TL;DR – Microsoft is a great place for startup founders. If you have any friends at Microsoft who want to chat about starting a company, send them my way! (if there’s enough interest, I’ll organize a meetup!)
1% Ideas
Businesses for the 1% are great. You don’t need to sell a lot of stuff to generate a lot of revenue, and you get to sell super cool stuff - like a four day astronaut training course that ends with a trip into space.
Virgin Galactic has had 600 people put down reservations to go into space so far, and those reservations are worth a total of $80M. That’s ~$130K per person, and the price going forward will be $250K per person.
One of the most interesting data points from their investor deck was their research shows people are willing to spend 1-1.5% of their net worth for a single discretionary purchase.
This was a really interesting analysis to put in their deck because (1) it’s a fascinating number I had never thought about before and (2) it shows the types of questions investors are always asking companies - i.e., How big is your market?
Other stuff I've been talking about
  • 🎂 Startup success calculator - According to this study, founders of the fastest-growing tech companies are 45 at the time of founding their companies
  • 🙈 7.4 min - Average amount of time it takes someone on a streaming service to find something to watch. Also, older people find stuff quicker. Just another skill that gets better with age? 😜
  • 📺 $9M soap opera blog - I love The Hustle’s daily email, and they just started a podcast. This episode is about a guy who made $9M selling a blog about soap operas, even though he’s never watched a soap opera in his life. It’s a fun headline but turns out the backstory is actually just lots of hard work building expertise in digital marketing
  • 🦄 My Prime Day pick - “I imagine Amazon will be receiving many orders from ours being seen in person”
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About me: I work as an investor at Madrona Venture Group, a Seattle-based venture capital firm that has been early partners with companies like Amazon, Smartsheet, Apptio, and Redfin.
I’m writing this to connect with other people who are interested in what’s going on in PNW tech, so if you have thoughts, questions, or comments, hit reply - I’d love to hear from you! 👋
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