risk, information, time and money (in 20 minutes) by dan milstein

Risk, Information, Time & Money (In 20 Minutes)

Dan Milstein@danmilHut 8 Labs

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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

Tuesday, December 17, 13

Putting Principles Into Practice

@hut8labs

http://blog.hut8labs.com

Tuesday, December 17, 13

Putting Principles Into Practice

@hut8labs

http://blog.hut8labs.com

Tuesday, December 17, 13