Category: Entrepreneurship

Inequality In The Internet Age

tl;dr summary here. But you should read the entire post.

Inequality in the Internet Age

Inequality has increased since the 1970s. The share of national income and the total wealth that goes to the top 10%, 5%, 1%, .1% and .001% has has gone up. And it continues to go higher. We haven’t seen levels like this since the Gilded Age.

wealth of top .1%
http://www.economist.com/blogs/graphicdetail/2014/11/daily-chart-2

The top 10% now owns 61.9% of all US wealth, up from about ~50% in 1989, while the next 10% now owns 11.9% and the bottom 80% now owns 26.8%, down from ~37% in in 1989. The top .1% owns the same as the bottom 90%, about 22% of net household wealth for the first time since pre-WWII. We’re experiencing a massive shift in wealth. And it’s getting redistributed up the ladder. (more…)

Doing the Dirty Work

In 18 months since starting Magma, we’ve invested in 18 companies. The biggest predictor of success so far is very simple: does the entrepreneur value doing the dirty work and is he or she willing and able to identify it and then do it.

Paul Graham calls it doing things that don’t scale. Sam Altman’s How to Startup class 8 is devoted to it. Successful entrepreneurs and VCs all have different names for it. But at the end of the day, it’s the same idea: the stuff that takes you from 0 to 1 and then 1 to 2 gets you on the path to validating your business and start to scale it without building software and business processes. (I wrote a blog post about doing the dirty work in an commerce company here.) (more…)

The VAT Trap: Why Is Chile’s VAT System So Poorly Setup?

Chile’s VAT system doesn’t make sense. Once you are in the system, the reporting system is world class and has been ranked in the top five in the world for ease of use. The Chilean IRS’ website works incredibly well, is fast, reliable and makes paying your taxes a breeze. It blows the US system out of the water and it’s not even close.

But getting legally approved by Servicio Impuesto Interno (the Chilean IRS) is a bureaucratic, capricious, time consuming process that doesn’t make any sense. After the long and complicated process to incorporate and get a bank account (that I’ve talked about before), you need to get your boletas (receipts) and facturas (official invoices) so that you can legally sell and pay your taxes. (more…)

Full Stack Startups in Latin America are a Massive Opportunity

Latin America is the perfect market for full stack startups. I’m convinced of it after living and working in Latin America for the past four and a half years and am even more convinced after having met, worked with and reviewed over 600 startups in the past year and a half as managing partner of Magma Partners in Santiago, Chile.

So what is a full stack startup and why am I convinced that Latin American entrepreneurs should be exploring full stack startup business models?

First, lets start with a definition. Chis Dixon coined the term Full Stack Startup in a blog post in March 2014. He says that a full stack startup is a  “…complete, end-to-end product or service that bypasses existing companies.” It bypasses the old, existing hierarchy to be able to control the entire experience. According to Dixon:

Prominent examples of this “full stack” approach include Tesla, Warby Parker, Uber, Harry’s, Nest, Buzzfeed, and Netflix. Most of these companies had “partial stack” antecedents that either failed or ended up being relatively small businesses.

So why are companies following the full stack method instead of the old school method of partnering with large companies? (more…)