Angel: How to Invest in Technology Startups-Timeless Advice from an Angel Investor Who Turned $100,000 into $100,000,000
July 18, 2017
Jason Calacanis is as honest as he is abrasive, and that makes for a great and informative read about heading west to invest in Silicon Valley.
"Go west … and grow up with the country." It was the advice of a newspaper editor in the wake a gold rush that brought hundreds of thousands of immigrants to the American west, pumped new life into the U.S. economy, and put California on a fast-track to statehood. A similar phenomenon is taking place today in California today, but instead of heading to the mountains north of San Francisco, people are flooding to the valley to its south. Jason Calacanis is one of them, and he has struck gold in Silicon Valley.
Calacanis started life in California as a founder who sold his company to AOL for $30 million. He used $25,000 of that money to invest in Uber when it was a black car service worth $5 million. Uber is now being valued near $70 billion. Gold.
His new book, Angel: How to Invest in Technology Startups-Timeless Advice from an Angel Investor Who Turned $100,000 Into $100,000,000, out today, is his attempt to teach you how to do the same thing. Having been a founder himself, he's able to tell stories from both sides of the table, and the book also has a ton of advice to offer founders, so it may be just as valuable to those trying to start a company as it will be to potential angel investors.
Calanacis is most definitely a character. In fact, it has been stated in the pages of The New Yorker that Jason is "The sort of person who is frequently described as a character out of a movie." The blurbs on the book aren't even about the book itself, but about its author. Douglas Rushkoff, a favorite author of ours here, has opined that "Jason would never stab you in the back. He might stab you in the face, though." What that means is that, though he may be "uniquely abrasive" in style—as he himself describes it—he is forthcoming with his opinion and advice. And he doesn't lack for either, nor the ego necessary for sharing them. Reflecting on his own success, he writes:
If you can't tell already, I'm really excited about where I am in life. Sorry if I sound like an obvious narcissist who thinks he's figured it all out—but I actually have.
Well, I suppose the good thing is that he wants to share what he's figured out with us. Another good thing is that he doesn't hide the fact that he's been incredibly lucky:
Most folks think I'm lucky, some will say I'm a complete fraud, and a handful think I'm a brilliant hype man, and I don't agree with any of them—I agree with all of them.
That's why this will be the greatest business book ever written.
So the book is overtly audacious and ostentatious. And, yet, it's also entirely honest, with a clear sense of purpose, loyalty, and an admonition to just do the work. Most of the advice and personal opinion he offers is a reiteration of all that. When talking about the need to research companies and founders, to do your due diligence as an investor, before you even head into a pitch meeting, and the fact that it's just as important that you impress them, as it is for them to impress you, he writes:
Remember, your competition doesn't take meetings with founders seriously because they think, incorrectly, that they have the power.
Your challenge isn't writing the checks, it's convincing the right founders to cash them.
So the braggadocio comes with a healthy dose of humility, as well. Perhaps that's because he is the son of a bartender and a nurse from Brooklyn, and has had to hustle to make it. But even here, even though he feels like he's an outsider, he is keenly aware that he was "a lot closer to an insider than most folks in America, let alone anyone born in the developing world." Sure, he exudes and oozes pomp, but he is also keenly aware of his own privilege:
Let's face it. I was born a white male in New York City at exactly the right time. I owned a thousand-dollar computer with a four hundred baud modem at the age of thirteen, and I was able to pay my way through night school at a decent college based on the skills I learned using that computer. … Someone living in poverty in small town America—without that IBM PCjr—certainly wouldn't have had the head start I did. Those facts don't even address the larger, more complex cultural issues around gender and race in our society that I haven't had to face.
But most of the book is not really about Jason Calanacis. It is about you. It is an attempt to give you a quick and thorough education in the basics of investing in startups at the very center of the startup world—and a new nudge to "Go west … and grow up with the country." Some of that education is super basic—Chapter 5 is literally one word. Some of it feels absurdly close to the HBO's Silicon Valley, which he says is frighteningly accurate in its depiction. When he's in the thick of it, the abrasive personality tends to fade away a bit (even if the opinion does not) and the book becomes more straightforward, a easy-to-understand glossary and field guide to Silicon Valley. You'll get the stories of his experience along the way that help inform those lessons, in which he shows his work, and doesn't hide where he's made mistakes. Not investing in Twitter, and instead lecturing its founders on why it wouldn't work in his pitch meeting with them, was a $50 million mistake. But think about that—Silicon Valley is a place where you can make a $50 million mistake and still potentially live on top of the world. Sure, you may fail, but if you have enough money and the right game plan, the downside won't hurt you as much as the upside could change your life. And, if you don't have the money, you can learn here how to get your foot in the door.
Calanacis will tell you how to build your network, what to look for in a startup, what to avoid, and how you can provide value to a founder as an angel—beyond the money you invest. He introduces you to the idea of angel syndicates, where you can get in and learn the field in $1,000 to $2,500 increments. (He runs one himself.) He'll explain why he bets on people rather than ideas, and why you should, too.
I should probably tell you here that I'm not buying any of it. But that's not because I don't think what he's saying and offering is true and legitimate. I just happen to think that I'd probably have the investing acumen of a Ulysses S. Grant and Mark Twain (i.e., not good), even with the author's help, and I'm as comfortable with financial risk as I am in clown shoes. There is actually a page before the table of contents with a warning reading: "STOP! DON'T READ THIS BOOK IF YOU CAN'T HANDLE LOSING YOUR MONEY INVESTING IN THE RISKIEST ASSET CLASS ON THE PLANET: STARTUPS." Well, I can't, but I had to ignore that warning because it's my job to read this book. And, even though I'm unlikely to act on its advice, it was still worth it. I learned a lot, and having recently binge watched season four of Silicon Valley, I think there are parts of Angel that are just as entertaining.
If you're ready to take on some risk, it could be more than that for you. Just know that it's not always going to go your way, and that you have to stick with it to succeed. It is with this in mind that Calanacis offers up one of my favorite metaphors in the book:
The greatest love story of your life—I'm going out on a limb here—probably had its ups and downs, but the people who stick with it are often rewarded the most.
Alas (as potentially tongue-in-cheek as the author's pronouncement that it is may have been), I personally do not think this is the greatest business book ever written. But you may. If I were a betting man, I'd bet on Jason Calacanis and this book. I believe it has a good heart and the right motivations at its core, and it certainly has the potential to change people's lives. Are you one of them?
We have 20 copies available.