Can Business Be Taught? (Pt. 2)

Silicon Valley was where Naval learned his first big lesson in business: trust is everything. After co-founding Epinions, a product review site, Naval and three of his co-founders soon found themselves holding worthless shares of their own company after it went public in 2004. Naval couldn’t believe what happened — how can someone start a company that would later get valued at $750 million, only to receive pennies on the dollar? The answer was buried in the company’s term sheets. When Naval investigated, he realized that one of his co-founders and certain venture backers had misled the rest of the group on the company’s valuation, and it was all hidden in complicated legalese. Too much trust had been put in the wrong people’s hands.

Naval risked his personal reputation by taking the matter to court, and after settling for an undisclosed amount, used the proceeds to start an angel investment fund called Hit Forge. Reflecting on what happened at Epinions, Naval decided to share what he learned in a blog called VentureHacks, with his friend Babak Nivi, so other entrepreneurs could avoid similar mistakes. It was through a combination of writing on VentureHacks and investing through Hit Forge that Naval gained a loyal following, and in 2010, began a newsletter called AngelList—also with Nivi—that highlighted the most exciting startups to invest in. AngelList would go on to become the most well known platform for startups to raise money and find talent. In March 2022 they raised $100 million at a $4 billion valuation, a multiple of what Naval’s former startup had been valued in. This time around, Naval didn’t get screwed.

Naval Ravikant is an interesting case study on the nature versus nurture argument in business. Is business something that can be taught, or are some people more “commercially” inclined than others?

Pt. 3 coming soon.

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