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CNBC’s Jon Fortt sat down with some heavy hitters in Silicon Valley to discuss entrepreneurship, venture capital and scaling start-ups on Wednesday in conjunction with the “Fortt Knox” podcast series.
The panel includes LinkedIn co-founder Reid Hoffman, who is a partner at venture capital firm Greylock and has served on the boards of companies like Mozilla and Microsoft, and Tim O’Reilly, founder and CEO of O’Reilly Media, a pioneer in trends such as open source software and defining “Web 2.0.”
The discussion comes as “unicorn” start-ups are seeing valuations climb well past $1 billion, and technology giants like Facebook and Amazon continue to compete with upstarts across industries, raising questions on how entrepreneurs can best compete.
“This is a game, it is a horse race by definition one or two players win, and all of the rest of them lose,” O’Reilly said. “They mythology is you have to raise huge amounts of money in order to get to scale. But it’s also possible for small companies to get to scale.”
Hoffman said there are problems with raising a bunch of money: It could wear away a founder’s financial discipline and push the company past what’s sustainable
“If you can raise money at reasonable terms — and that doesn’t necessarily mean nosebleed terms —that capital can help you navigate appropriately,” Hoffman said.”Raise more money than you think you need to be ready for all those things — everything from competition to pivots, to questions of suddenly exploiting opportunities.”