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VC Keith Rabois: 5 Things Every Entrepreneur Should Know

The investor and tech veteran offers his thoughts on time management, raising funding, and whether or not you should care about Bitcoin.
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Throughout his career in Silicon Valley, Keith Rabois has made stops at a laundry list of insanely successful startups. He was chief operating officer at Square, an executive vice president at PayPal, a vice president at LinkedIn, and an early investor and board member at Yelp. Suffice it to say, Rabois knows a thing or too about building great companies.

Now an investor at Khosla Ventures, Rabois recently sat down with blogger and investor Semil Shah to talk about things like time management, major trends in the Valley, and what it takes to land a meeting with investors. Here are a few takeaways:

1. Make sure your priorities match your calendar.

When Rabois invests in a new company, he tells Shah, he always does what he calls a "calendar audit" to make sure business owners are spending most of their time on what's most important.

"Ask a CEO what's their biggest priority, and they'll always say it's recruiting talent," Rabois says. "But pull up their calendar and see what percentage of time they're interviewing people, and it's probably 10 percent. I'm always like, 'You just told me it was your biggest priority. Why isn't it 50 percent?'"

Time, obviously, is the scarcest resource. Rabois says, "Matching your priorities against your time is important."

2. When pitching an investor, address obstacles; don't avoid them.

Rabois says that when it comes to getting an investor's attention, there's nothing better than a strong referral. And yet, not everyone with the potential to be a great entrepreneur has a deep network at their disposal. For those who don't, Rabois says the best way to get his attention is to be straightforward in addressing the challenges your startup is bound to face.

"A great founder can assemble the intellectual maze from here to there and walk through all the traps and tradeoffs," he says. "You're looking for someone who has that in their brain and who can communicate it with this degree of passion like there's nothing that can stop me from going from here to there."

Don't be afraid to send a cold email delineating exactly what you're up against and how you're going to address it. "Someone who sent me an email with two bullets that would actually address the most fundamental challenges with original content? That would certainly get my attention."

3. Choose investors who have your back.

Shah asked Rabois for his take on AngelList, a crowdfunding site for angel investors. His opinion? Sites like AngelList are best used as supplementary forms of funding. The best investors are the ones who have substantial skin in the game and will be there for you when times get rough. "When things go wrong, and you have too many people as investors, none of them are on the hook to help you," he says of the perils on AngelList.

"As a venture capitalist, that's what we do. When we invest it's until death do us part," he continues. "If you have the option, raise money from one lead investor who has the right skill set, background, and temperament to help you."

4. Beware of Bitcoins.

No one is quite sure what will become of Bitcoins these days or whether or not businesses should be taking them seriously as a form of currency, but Rabois says he has a pretty good idea of what might happen. "There's no chance Bitcoin will become successful in the United States, period," he says.

This emphatic opinion is based in Rabois's years of experience at both PayPal and Square, where he discovered just how complicated it is to disrupt the payment landscape. "The government can end this as soon as they want to," he says, recalling the time not long ago that the Department of Justice threatened to indict Yahoo for advertising online gambling. "They can make it illegal to advertise or accept Bitcoin, and there's lots of precedent for this."

Until it's become a mainstream payment method outside the U.S., Rabois suggests treading carefully.

5. Believe the mobile hype.

It's tough to overlook the constant stats on the growth of mobile computing over the last few years, and Rabois insists, it's not just hype. Desktops and laptops, he predicts, are about to go the way of the pager, so businesses should start investing and innovating in the mobile space yesterday.

"The transformation of mobile is going to be more radical and revolutionary than most people realize," he says.

We're at a tipping point, Rabois says, in which people are beginning to view their mobile phones as remote controls for the world. Apps like Uber and HotelTonight are examples of how that's already being done. "People are starting to click on their phone, expecting the world around them to change," Rabois says. The implication: to survive in this new world businesses had better keep up.




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