One of the fun things about venture capital is you are constantly learning new ideas and strategies from one business and then applying them to others. Inasmuch as there is a useful purpose to what we do as VCs, I tend to think it’s our duty not only to mentor entrepreneurs and executive teams, but also to learn from them and the others involved. We can then pass on lessons to aid the startup ecosystem and help businesses succeed and grow their impact.*

In this spirit, there were a handful of clever ideas I either learned or applied this week —

Using the 1% to Help the Masses: Luxury Adoption First is Sometimes Necessary

I remember being intrigued by this idea as a middle class schoolchild, and I think people under-rate its importance. Economists have long understood that some sort of inequality has always been necessary to drive progress — capital accumulation is required to create investment ecosystems. Moreover, there are a lot of new great ideas that are only available to the very wealthy at first, but as they become more accessible to the regularly wealthy, and then the middle class, and eventually the poor, we consider them basic necessities. Refrigerators, TVs, and mobile phones all followed this pattern.

Despite this track record, some people still get really offended when you come up with an idea that only the wealthy can currently afford. Maybe it’s because they are angry about all the inequality in the world, and I cannot argue with them that some of what causes the inequality makes me angry too. But it is okay to sell stuff to rich people, and it often leads to good things.

One of my favorite examples of this is Tesla. I don’t know if it’s apocryphal, but I’ve heard that Elon Musk said that he is using the 1% to fund his R&D so that he can create awesome electric cars at prices for the masses.

This subject came up this week as I was explaining a couple of companies to investors. One of the companies that is particularly interesting to me is a liquid biopsy company that we invested in that can detect stage 2, 3, and 4 cancer better and more cheaply than any other solution. Even though it is a new test, over 10% of U.S. oncologists ordered it and use it to quickly and efficiently understand what cancer you have and how it might have mutated. This technology could also be integrated into another business model targeted at high net-worth individuals, who could give a little blood and get screened every few months to find out, with high probability, whether they have mid-stage or later cancer. This could save a lot of lives and is possible today. The idea of excluding a majority of the population from an effective diagnostic tool that could save their life might seem repulsive to some, but within a decade, as the price is driven down, it seems likely that this will become a normal best practice. And, frankly, if you’re part of an HNW family and you are over 40, I think you should be doing this every couple months and if you’re not you should ask your doctor why not [caveat: I am not a doctor and am totally unqualified to give anything resembling medical advice].

Selling to the wealthy is not always the best business model, but — especially with discontinuous innovations that have the potential to change the way we live — it can be an effective way to make revenue while continuing to develop the product. On a personal note, this could have saved my mother’s life, since we unfortunately found her cancer at stage 4 shortly before she passed several years ago. So I think it’s not only a smart business model — it’s an important idea to get moving on.

Price Elasticity Means Markets Might be a lot Bigger than you Think

The liquid biopsy example demonstrates that businesses are sometimes a lot bigger than you think when prices change dramatically. The liquid biopsy described above might have a certain TAM (total available market) if it’s just oncologists ordering it, but their lower costs actually mean it’s something that a lot more people might order all the time in the future. That means the market is maybe 10000X bigger than a model would tell you today. The same is true for Color Genomics, which does genomic screening for women’s health. Leading scientists now agree that the product is inexpensive enough at ~ $300 that every woman in her late twenties or early thirties should find out what actionable information there might be in her genes — not just women who think they are at risk from known family issues.

Not to bring him up too often, but this idea also relates back to Elon. Thanks to Founders Fund, I am a small investor in Space X from before our fund, and was asking my friend Brian at FF why he thought Space X could be worth more than 20–30 billion, as I’d added up the numbers in that market and it didn’t make sense to me. Of course, I hadn’t considered that if you drive down the prices so dramatically, the market is probably somewhat elastic and a lot more people end up wanting to send things to space. It’s hard to model these things, but the intuition that the company might be a lot bigger might be right.

There are tons of examples of this sort of thing, including what happened when semiconductor chips and Internet bandwidth became really cheap. I remember arguing with my teacher in high school, who thought that Internet speed on a 56K modem was fast enough. What he didn’t understand was that raising the speed by an order of magnitude opens up whole new possibilities of what you can accomplish over the web. Demand for bandwidth went up exponentially in response to it being cheaper and available. In retrospect, this was pretty obvious, but as shown by my naiveté around SpaceX, it’s important to remember to apply the idea more broadly. There are a lot more companies in our portfolio where this is relevant.

Moving on into a few other good meetings this week…

Do you know what I mean by “Marketing”? Because I Didn’t at your age

Marketing in the context of our businesses doesn’t just mean branding, talking to people, spreading the word, crafting language, and all that great stuff. Sorry, English majors.

Marketing is your battle plan for the sales team — it’s about defining the landscape. Marketing is doing cohort analysis and understanding exactly what possible customers are out there. It’s understanding not only which customers will respond to what messages, but also how customers will become clients if you include certain product features. It is also really important to consider which customers will adopt today and which customers will follow which others.

This is a longer essay, but the way I see it, there is Product and there is Marketing, and a great CEO better be great at both. Engineering will take their cue from Product but should be intimately involved rather than having a command and control structure. Sales will take their cue from Marketing, but the two organizations should also coordinate closely, and they should learn from each other. Product and Marketing have to be in close touch as well.

Enterprise marketing is completely changing, and a lot of what we are doing with the product is tied to marketing. Marketing ends up having to work closely with product, customer success, and frankly, pretty much everyone. And it requires a ton of strategic thinking. I am not sure anybody at the top up-and-coming enterprise startups should be running marketing who doesn’t have something at least close to a technical background. But this is also a really hard seat to fill, and the CEO usually has to do a lot of it.

One of my favorite new Series A companies that I won’t name has a top engineering team and very bright young CEO, and I realized he had never conceptualized marketing as anything like this, but it was good to get him thinking along those lines. Now he’s fired up to go over the battle plans with one of his lieutenants and me at our next meeting.

Most Enterprise Businesses Aren’t Charging Enough, and you need to Charge more to fund Faster Growth

This one was from Marc Andreessen at a board meeting this week. Peter Thiel always said that we want to signal that we are the quality option by setting our price point high. So I’ve had that beat into me, but I don’t always apply it. With regards to Marc’s note — I don’t know if he’s written about it, and I’m still wrapping my head around it — but in some cases it feels like higher prices could slow you down, especially when you are trying to get breadth and build a community on top of your product. So this is a hard one to figure out. Still, I like his counter-intuitive thinking, and it does make sense from a few things I’ve seen. If you are going to use a sales model, you want to pay people more for sales and provide incentives that make them hungrier. Being able to afford to fund the sales organization and any marketing expenses along with it for each sale means you will expand faster.

There were several more but for the sake of time, this last one is also one of my favorites.

Triangulation as Practiced in BD (Business Development) and Recruiting

This is a great concept that is important to build into a process for engineer-executives who are suddenly forced to care about convincing people of something for the first time in their lives.

Basically, when you sell into a large organization, you don’t just walk up to them. You make sure they hear about you from a couple other respected and credible sources, first. Ideally they think these sources are unrelated. It turns out when people hear something about your company from a couple sources they are much more likely to believe it, and their brain may even convince them that something is common knowledge. All great BD rainmakers understand this and leverage their networks as such.

I tend to think it also matters for recruiting top talent, an area we spend a lot of time on now. I think it’s pretty hard to use this as a simple hack, and it feels a little sketchy so I wouldn’t do that (unless I was really desperate, maybe). There aren’t shortcuts for recruiting. That said, if you spend a lot of time getting to know respected members of the community, getting their advice, and getting them excited about what you’re creating, this can happen naturally. It’s important to get out there and talk to people and to focus on meta-recruiting; not just talking directly to engineers, but inspiring others who are likely to discuss what you are doing with potential talent targets. When you look at it this way, it isn’t really a hack — you’re just sharing the truth and spreading excitement with great people about the wonderful company you are building. And then if top talent ends up hearing about you from a couple of these sources, they are much more likely to be excited to join. I think this dynamic was important at Palantir; maybe this sort of thing also works for a fund.

[As a side note, if you’re an LP, I apologize if this happened to you, but thank you for your support.]

If you enjoyed the blog, let me know. I am happy to put out more. And please feel free to send questions or suggest topics you’d like to hear about. I might try to write a bit more.

Warmly,
Joe Lonsdale

* As a side note, this is one of the reasons we like to invest in businesses with an inspiring mission — not only is it a good sign that it will attract other great people, but as we spend so much of our time trying to help these businesses grow into more successful global enterprises, it would be pretty depressing if we weren’t happy with their impact on the world. There is still a lot to improve, but I tend to think this is one of the reasons that companies that come out of our Silicon Valley ecosystem are more likely to have a positive impact.

This post originally appeared on OpenGov.com

Some people are disappointed with Silicon Valley: “Why don’t we have flying cars?” they ask. Or: “Why haven’t we eradicated poverty?”

Technology is not reaching its full potential, but we think that world-changing applications are closer (and different) than people realize. Information technology has advanced dramatically over the last few decades, and it is starting to revolutionize nearly every industry. Silicon Valley entrepreneurs and their teams are focusing their talents on new areas, because nearly every industry can operate much differently and better than it currently does. The realization of this potential in the coming years will lead to a shift in global prosperity.

In 2011, we started OpenGov after discovering the current state of government technology. The systems in use in nearly 100,000 governments in the U.S. have not seen much change in 20 to 30 years. Few executives or operators could use the systems well, as they belonged to back office workers and IT consultants accustomed to managing accounting and other business practices. This state of affairs contributed to opaque business practices like those that occurred in local California disasters like Bell CA and Stockton CA, and bigger problems like those in Detroit MI. Government executives and other officials want better technology to do their jobs well, gain context, and leverage masses of data.

Modern information technology is changing and with it will change the fundamental processes at these organizations. Changes like this come about through hard work and collaboration between top officials with domain expertise in finance, management, and budgeting, and top engineers and designers who can create new capabilities and refashion old processes to work faster and smarter.

Suddenly, citizens and government decisions makers can more clearly understand where they are spending money, and what are the trade-offs. They can see where different departments compare and differ to peers, and know what is outperforming and where they might spend more effort. They can see where to push back on aggressive vendors, or where new companies might play a larger role in achieving their goals. As the team innovates and further applies modern technology to the “last mile” of transparency and decision-making, new applications and achievements will unfold.

Good government is one of the most important factors in economic growth and social well-being. In the U.S. alone, the types of government organizations that OpenGov works with spend over 7 Trillion dollars per year. The decisions these organizations make influence the very fabric of our society.

Government officials and citizens care about many causes — and they all require resources. For example, I am personally passionate about ending the human trafficking that still occurs within our borders. Zac Bookman, OpenGov CEO, has an interest in criminal justice, including solutions to improve outcomes and decrease costs in the criminal justice system. Helping to allocate billions in financing for these and other causes like education, infrastructure, and safety will impact and improve communities and millions of lives.

We’ll get to flying cars someday (or drones that can carry a person). But we’re optimistic about what our society can do now with the latest IT advancements. And we are proud to be innovating and working to improve government administration to make our modern democracy function better in the meantime.

Real-world innovation is hard — it requires months of painstaking and creative iteration with engineers, city officials, and other experts to create systems that provide meaningful insights, highlight relevant contextual information and trade-offs, and flag real issues. Working with complicated data and developing formats and interfaces that make it easy for stakeholders to access requires special skills. The potential good that can come from helping to efficiently allocate tens of billions of dollars a year may have an even bigger impact than flying cars.

“The most valuable of all capital is that invested in human beings”
-Alfred Marshall, Principles of Economics (1890)

There are hundreds of millions of people around the globe who could safely repay loans but nonetheless do not have access to a line of credit. Financial institutions in developing economies are broken and inefficient, and hard-working people have not been given the chance to establish a credit history. The inability of middle-class people to receive loans in developing countries has had a stifling effect on economic growth and prosperity around the globe.

When I first met Matt Flannery, he was hard at work solving this problem. At the time, Matt was running Kiva, the world’s first peer-to-peer microfinance company. Kiva is a nonprofit organization that allows anyone in the world to make a small loan (usually around $25) to an entrepreneur of his choice in a developing economy. In just eight years, Matt and his team took Kiva to incredible heights, processing $600 million on the platform with a loan repayment rate of 98.73%.

I was inspired by what Matt was working on, and he was also interested in what my co-founders and I were doing at Palantir, and how modern data infrastructure systems and analytics could solve critical challenges across various industries. Matt realized that he could also leverage advancements in data analytics to change the microfinance landscape for the better. As the smartphone was spreading like wildfire across the developing world, Matt understood that he could use the latest Silicon Valley technology, apply what he’d learned at Kiva, and build something even more data-driven and transformative.

That is why 8VC is proud to lead the early-stage round at Matt’s new company Branch. Branch will apply cutting-edge machine learning to the data available on smart phones to safely open up lines of credit to millions of middle-class people in developing markets around the world.

Branch sits on top of mobile payment platforms to make loans and receive payments. Rather than put borrowers through an intense in-person application to receive a loan, Branch lets them prove themselves over their phone. It uses local data generated on the user’s smartphone to make an initial credit decision, taking in factors such as call history and social media presence. Once a borrower has been approved for a loan of between $20–1,000, Branch lets them prove their trustworthiness by tracking their repayment. If they repay the loan on time, the system will alter their risk profile, and they’ll get a better loan the next time. If they repay the second loan on time, they’ll get an even better loan the third time. Branch intends to build a “robot in the sky” that makes the decisions that microfinance loan officers used to make manually.

While there is admittedly some risk that borrowers default on their loan (as is the case with any crediting institution), Branch’s technology minimizes the risk of default. Machine learning is helpful to reduce fraud — Branch can combine several points of data to detect theft in ways that even traditional lending institutions cannot. As of May, Branch has already safely made over a thousand loans in Kenya.

Branch’s business is not possible in Western countries, where incumbent lending institutions have established a web of regulatory barriers to defend against new entrants. Around the world, however, the commoditization of lending represents a positive trend, as it allows more credit to flow to the parts of society that need it the most. A little cash in an inefficient economy can go a long way. Taxi drivers can buy gas so they can serve more customers; store owners can buy in bulk so they can improve their profit margins; families can afford to pay for a wedding in between harvests. $100 may not seem like a lot of money in the Western world, but it can make a huge difference to middle-class families in the world’s emerging markets. Overall, it’s a positive bet on humanity for the market system to use newly-available data to discerningly provide more credit.

We feel strongly that the Silicon Valley elite need a culture of duty. Top technologists have a tremendous capacity — and therefore a tremendous responsibility — to build things that make a positive impact on the world. We have a unique opportunity to solve some of the hardest challenges that humanity faces and create value that extends into all corners of the economy. Our thesis is that the greatest economic opportunities are often those that create the greatest amount of value for society. Branch is a company that shares our aspirations to improve the world through technology. We look forward to working with them to transform the microfinance industry and enhance the lives of millions of people around the globe.

“Though only the generals’ names may be remembered in the history of any great campaign, it has been in a great measure through the individual valour and heroism of the privates that victories have been won. And life, too, is ‘a soldiers battle’–men in the ranks having in all times been amongst the greatest of workers.”
– Samuel Smiles, Self Help, 1882

The Quiet SMB Revolution of the 2010s

There are 5.7 million businesses in the United States, 89.9% of which have fewer than twenty employees. In aggregate, small and medium businesses (SMBs) produce nearly half of GDP and account for roughly 60% of new job creation. They are the lifeblood of the American economy.

The coming decade will see substantial technology disruption in the SMB space. The rise of the mobile ecosystem has opened up a positive feedback loop that is making it easier to scale technology startups in SMB. The result will be a proliferation of smart technologies aimed at improving SMB workflows: everything from sales and marketing to HR and payroll processes will be revolutionized. While these kinds of technologies have been improving for larger companies over the past several decades, startups are increasingly developing software specifically for SMBs, which require lower implementation and maintenance costs and a shorter learning curve — almost a consumer/enterprise hybrid. As SMBs benefit from new data and technology, hundreds of billions of dollars of wealth will be created.

The positive feedback loop cycles between the B2B marketplace, where startups sell technology to SMBs, and the B2C marketplace, where SMBs sell products and services to customers. This loop drives up the quality and quantity of data available on SMBs, drives down the cost of customer acquisition (CAC), and ultimately creates more demand for new technologies while making it cheaper for them to expand. Never before have so many technology startups grown as quickly within the SMB space, and as the positive feedback loops iterate, the pace of growth will increase.

Historical Challenges Of The SMB Space

Selling to SMBs has always been a large part of the U.S. economy, but there have historically been challenges to attaining scale. First, distribution has been a major obstacle. Each business is only a small customer, and it is expensive to engage with each one on an individual level. In previous eras, companies have had to rely on old-line distribution channels, such as spots on the radio or newspaper ads. The CAC was generally too high for a company to be able to attain scale. Without targeted marketing, companies were left with but one strategy to “cross the chasm”: fire enough shots in enough directions to scale by brute force. More often than not, this disjointed strategy led companies to fall through, rather than cross, the chasm.

A few major disruptions in the SMB space did occur before the mobile revolution, but they mostly came from established companies who already had economies of scale. The Microsoft Windows and Microsoft Office platforms enabled players like Intuit’s Turbo Tax to spread to millions of businesses. Intuit’s software was such a vast improvement over previous workflows that it spread like wildfire. For most startups, however, this has been a difficult space to penetrate, and millions of SMBs still perform basic workflows like payroll or ordering by hand or Excel.

THE Mobile Revolution

The rise of the mobile ecosystem changed the game for startups selling to SMBs. This was not just a one-time disruption: the result has been an ongoing positive feedback loop that continues to make it easier for startups to improve how SMBs work. What is commonly thought of as the period of creative disruption that immediately followed the adoption of the smartphone was in fact just the start of this feedback loop.

The first iteration looked like this: with a computer constantly at their fingertips, SMB owners became more comfortable than ever before using technology. Many created a website, a social media presence, an eCommerce presence, or some combination thereof. Simultaneously, customers created a web of data about SMBs through tweets, likes, and shares, and reviews, etc. All of a sudden, there was an explosion in the quantity and quality of structured and unstructured data about SMBs.

In the B2B market, companies began developing tools to help startups leverage these new Internet channels. Facebook and Twitter, for instance, offered companies the ability to do targeted advertising. Other tools allowed companies to improve lead gen and do paid conversion and upsell.

Meanwhile, in the B2C marketplace, applications such as Yelp, OpenTable, and Groupon were developed to help consumers make everyday decisions. SMBs suddenly found themselves pressed to join these and other platforms in order to stay competitive. Competition caused SMBs to increase their digital footprint or risk losing revenue.

Pressures in both the B2B and B2C marketplace led SMBs to deploy a great deal more technology in the last decade than they ever have before, which has led to a greater proliferation of data about SMBs. This has further iterated the cycle.

The Current SMB IT Landscape

While the tools created in the wake of the mobile revolution represented a vast improvement over old-line marketing techniques, they still did not give technology vendors serious insight into their SMB leads. This is because they only had the ability to analyze structured data from a single source — Facebook advertising, for instance, used to only take into account what information businesses and consumers shared on the site.

Today, tools are being built to help technology vendors leverage both structured and unstructured data in ways that were never before possible. Formation 8 has a large stake in Radius, which is emerging as a leader in the SMB data space. Radius’ software plugs into its large corporate clients’ SMB databases and Salesforce accounts and aggregates the data to understand SMBs at scale. Radius is building an incredible data set that every SMB vendor wants to access. The result is a runaway network effect; Radius is becoming the ultimate advisor to companies distributing to these millions of businesses.

Radius and other associated tools in the B2B ecosystem are continuing to drive down the CAC for technology vendors. By providing keener targeted insights about SMBs, Radius is making it possible for startups to capture a foothold in the marketplace.

Datasets like Radius’ are driving down the cost of sales, but the cost to develop and deploy technology has also dropped precipitously. Access to cheap smartphones and tablets and the presence of existing technology frameworks has made it much less expensive to start and grow a company.

As the SMB technology ecosystem matures, we are seeing numerous quickly- growing platforms. Zenefits, for instance, allows SMBs to seamlessly integrate their health insurance, paid time off, and other HR systems into a single dashboard without having to change vendors, plans, or pricing. ZenPayroll, a Formation 8 investment, automates costly and time-consuming payroll processes for SMBs. Paychex and ADP have over 70 billion market capitalization, but their sales-driven models meant their CAC was too high to conquer the SMB long-tail. Over two million SMBs still spend hours each month running payroll by hand or in Excel, and are fined hundreds of millions of dollars a year in total because of mistakes in adhering to thousands of state and federal regulations. ZenPayroll leverages modern distribution channels and makes payroll a source of positive connection to employees and a positive HR tool; it is one of the fastest growing companies we’ve seen in the space.

ZenReach, another Formation 8 investment, uses a WiFi platform to give brick- and-mortar retailers better data about their customers’ activity, which allows them to do more targeted marketing and increase their in-store presence. Online retailers have access to an abundance of information about their customers that brick-and-mortar shops do not presently have: how many times someone visited the site, for instance, and how long they stayed. ZenReach can track customers’ activity at the store and then send them targeted emails based on their recent visits and purchases. What Google did for the click, ZenReach wants to do for the visit. Platforms like ZenPayroll and ZenReach are making it easier for SMBs to grow their businesses without having to worry about the hassle of the back office.

In addition to horizontal platform plays, we are beginning to see companies penetrate vertical SMB marketplaces. One of our investments, Buildzoom, is transforming the home improvement marketplace. Hundreds of thousands of consumers interact with tens of thousands of contractors each month, and Buildzoom makes it easy for customers to find the contractor that best suits their specifications. Another Formation 8 investment, Realscout, is disrupting the real estate space by providing agents with a customizable, branded search site. This allows them to maintain high-touch relationships with their clients. Other examples abound. The emergence of vertical SMB SaaS is evidence that the market is now ready for the spread of smart technologies into disperse corners of the SMB landscape.

As more and more companies scale into the SMB space, there will be an additional erosion of old-line distribution channels. SMB owners have often taken advice on vendors from local service providers such as their local banker, their insurance broker, etc. But emerging technologies are slowly eroding the amount of interaction SMB owners have with these middlemen. Technologists are revolutionizing the banking and lending industry, reducing the need for SMB owners to ever step foot in a bank branch. HR automation platforms are eating away at the need for brokers. Because of these changes, SMB owners will naturally turn to less costly distribution channels, and as their business is increasingly digitalized, it further opens them up to technology-enabled processes and products.

SMBs aren’t just turning to new distribution channels to discover vendors — they’re also turning to consumer-facing channels to increase their digital presence. New applications are being created to help consumers make everyday decisions: everything from StyleSeat to Buildzoom is helping to drive consumer behavior. SMBs are continuing to proliferate data about themselves, which technology vendors are using to market and sell to them in new and interesting ways. The feedback loops are continuing to iterate, which is propelling new technologies into the diffuse nooks and crannies of the SMB landscape.

This is an exciting time to be investing into this space because there are multiple greenfield situations where platforms clearly should exist but don’t yet. Unlike eras past, technologists can easily reach millions of small businesses, and these businesses are simultaneously realizing that paper- and Excel-based workflows are leaving them in the dust. Venture capital thrives on economic shifts like this. Several multibillion-dollar businesses are being built already and are scaling quickly into these newly open areas in SMB.

America needs its small and medium businesses to thrive if our economy is to thrive. Until now, market conditions kept most technologists focused on streamlining workflows and reducing costs in the enterprise while ignoring the problems facing the SMB. But economizing America’s small and medium businesses and helping them leverage data to better engage with their employees and customers raises our nation’s productivity and creates more wealth and prosperity for all of us. We are proud to be backing great entrepreneurs who are leading the charge to bring SMBs into the 21st century technology ecosystem. Thank you for joining us in this quiet but important revolution.

Joe Lonsdale
Partner, 8VC

Reid Spitz
Investor, 8VC

Entrepreneurship isn’t easy but if anyone has made it look that way it is Joe Lonsdale, founder of Palantir. Here is his advice on becoming a great entrepreneur.

What would I advise an aspiring young entrepreneur? Certainly I’d say read the works of great entrepreneurs and investors like Ben Horowitz, Peter Thiel, and many others. But what’s more important is to get real experience at a great startup.

Learn from those that have done it before you

Don’t go to a big company to learn about how to be a great entrepreneur — go to see an example of what you want to do in action.

If you aren’t already obsessed with an idea you have to work on right away, join a successful technology company. Figure out how you can add value and then learn — and remember, a great entrepreneur needs to build strong skills around product (+engineering) or marketing (+sales) or both.

Successful technology companies can be found all over the world, but the highest concentration is in Silicon Valley. It’s not a coincidence that top technology companies are often built in the same area — you learn a huge amount from being part of a top team and seeing a great technology company function firsthand.

There’s no substitute for experiencing ups and downs — seeing how it’s okay that things are overwhelming or broken sometimes and how companies recover from mistakes. You learn how a top engineering team works with a sales team, or how marketing strategy impacts other parts of the organization.

You can learn what types of adviser relationships are helpful, and how to create a culture of transparency — and all sorts of other leadership lessons for attracting and retaining the best people.

If you are able to learn from a successful fast-growing technology company, you can later leverage your colleagues and industry friends and work on something new — ideally with the support of the leaders of your former company, who can be great mentors and investors.

Create success for those around you

One of the best pieces of advice I got in my early twenties was that it isn’t important to make money myself in the near-term, rather, it is important that I create success for people around me — friends, colleagues, and investors.

Great entrepreneurs see the world with a positive sum mindset.

Their higher levels of success come from the people around them whom they have helped in a variety of ways. If you make a million dollars for yourself, you have a million dollars, but if you make $100,000 for ten great people around you, you have several eager allies who are going to support you and bring their friends to add fuel to the fire in whatever you want to do next.

Each success is a platform for your next success, and nothing worth doing works without great allies who trust you and want to see you succeed.

Work on something unique

When it comes to actually building your business, one challenge is to work on something that nobody else is doing. In my experience, some Europeans seem to have more trouble with this aspect of entrepreneurship because their culture is more politically correct or consensus-minded — for example, if everybody says working on a “green business” or “web 2.0” is good, let’s do it!

Unfortunately, if everybody says something positive it’s probably a bad idea for a successful venture — and if you receive a lot of accolades right away, it’s probably a negative indicator.

A great entrepreneur will form their own opinions and doesn’t need accolades — your goal as an entrepreneur is to figure out a way the world is broken and a unique way that you can fix it.

Most of the time this involves something slightly esoteric — and it almost always involves building a really strong technology team and culture, and iterating on hard problems as you figure out the business.

Share your idea early on

Another sound piece of advice I got as an entrepreneur was to share my idea with smart friends and have them challenge it and iterate on it, rather than keep it secret.

Inexperienced entrepreneurs often want to keep their plans secret, but this is never how I’ve seen any of the great companies get built.

Imagine if five people have the same general idea in a space and four of them keep it secret and start trying to build, and one goes and chats with lots of smart people and iterates. Who do you think wins?

Finally, entrepreneurship is really hard — leadership can be lonely. Great mentors help — sometimes they even play the role of therapists — and everybody trying to build something new has ups and downs.

Creating a successful technology company is not a job, it’s an obsession that’s often thankless for years — but the impact and satisfaction you can create is enormous.

This post originally appeared on techcrunch.com.

Early last year, I wrote an article explaining how our team views the concept of duty for leaders in the technology ecosystem. We believe that this duty involves looking beyond conventional startups to study complex industries and using technology to tackle the biggest problems we can find.

Our belief is based on an observation that many of the large industries in the U.S. are in some form of crisis, but few top technologists — and few investors — set their sights on fixing the parts of our economy that could have the greatest impact on overall prosperity and well-being (financial services, healthcare systems, government, education, agriculture, logistics, etc.).

Not so long ago only a few of us in Silicon Valley were building companies in these areas, but now we’re happy to see more and more entrepreneurs applying technology to hard problems in huge industries that will have lasting effects for people across the globe.

We think that Silicon Valley is at the very beginning of this important wave of innovation, and at 8VC we have partnered with dozens of these companies because we believe that improving these industries will enable general prosperity while also providing for the highest returns. Our philosophy is that many companies that present the greatest economic opportunity are also those that create the most value for society.

However, there are clear exceptions to this rule. In certain cases, market incentives fail to align, or even exacerbate an issue — and mission-driven non-profit organizations are needed to solve the problem. Technology is playing an increasingly critical role in these organizations and they are badly in need of our help.

The problem of child exploitation is a glaring example of such a scenario. Economic motivation has created a perverse and underground marketplace where children are bought and sold as slaves. It’s a harsh reality that exists in our own backyards, with thousands of children in the US alone — many from the foster care system or from broken families — being commercially exploited every year.

Many of these individuals are coerced into prostitution as teenagers, long before they are legally old enough to consent to sex. The average age at which girls are forced into this exploitation is 13, and this illicit market is growing and is now second only to drug trafficking, according to research from the Ashton Kutcher-backed non-profit, Thorn. So far, the US government has been just as successful in stopping exploitation as they’ve been with drugs, and they need our help.

As with every other market, the proliferation of the Internet has driven activity online. Today these children are bought and sold on many of the same sites where you can source a roommate, sell your bike or find a job. Further, connectivity has also spurred an explosion in the online trade of child sexual abuse imagery. Peer-to-peer platforms and anonymous networks like Tor allow images and videos of the most egregious types of abuse to be traded globally, continuously re-victimizing these children and creating networks of people who connect with one another to share content and justify their behavior to one another.

There’s no economic incentive in trying to stop the spread of this content or to use the digital trail to identify more victims and stop the abuse, but there’s definitely a moral one.

The team at Thorn has extremely passionate and talented individuals who partner with government organizations and leading software and new media companies, and work with child exploitation experts to save children and attack the problem from multiple angles. Thorn’s partners include Facebook, Palantir, Google, Twitter, Microsoft, Salesforce, Tumblr, Twilio, SV Angel, 8VC, and others.

While the financial support of Ashton and these allies is valuable, their technological expertise is invaluable. From machine learning to detect patterns in perpetrator behavior to complex data integration to the design of simple and useful UX, backed by tools such as semantic classifiers, for law enforcers to prioritize cases on online escort boards that may involve minors, it’s technology that’s providing new tools to fight back against these predators.

Joe Lonsdale (8VC) and Ashton Kutcher (Thorn) are interviewed by Pierre Arys in front of the 25 teams at the anti-child-sex-trafficking hackathon at Twilio in San Francisco on August 23.

8VC recently helped Thorn organize a hackathon, gathering nearly a hundred talented computer scientists at Twilio’s offices in San Francisco to participate in fighting child exploitation.

Joining Ashton and myself other judges included: Del Harvey (VP Trust & Safety at Twitter); Ellen Levy (Managing Director, Silicon Valley Connect); Megan Smith (recently named incoming CTO of the United States); and Ilya Grigorik (Web Performance at Google).

Engineers worked hand-in-hand with Thorn’s subject matter experts to develop a variety of tools that could be potentially used by the National Center for Missing and Exploited Children (NCMEC), law enforcement agencies, and other non-profit or government organizations tasked with working on these sorts of issues.

While there has been some public criticism of faulty statistics around child exploitation and trafficking, after interacting with the experts and others at Thorn and viewing the log data about U.S.-based searches for child-exploitation for context, it was clear to everybody how serious and widespread of an issue this is.

The event was hugely successful, with winning projects including visualization layers of perpetrator activity, databases of ontologies specific to child exploitation, and discovery methods for potential predators using bitcoin to pay for child sexual exploitation content.

These projects, along with many others, can be put to use almost immediately and the energy and creativity we saw these teams bring to bear on this serious issue was inspiring to all of us.

Traditional hackathons are fun and focused on skill and competition, but we believe that events which focus on the positive social impact of technology engage a wider and more diverse set of participants.

Lilli Oetting, who won second place with her partner Bowen Lu said this was the first hackathon she has ever competed in. “Hacking for the sake of hacking isn’t at all motivational to me, but hacking to diagnose a disease or catch terrorists or save a child from sexual exploitation is a great honor as well as an exciting technical challenge. In my experience, many women share the mindset that technology is most interesting in its application to social problems.”

Oetting, who is a rising senior at Stanford studying computer science, noted that this further substantiated earlier observations she had while teaching a class titled Code the Change: Learn Web Development Through Nonprofit Projects. “It was by far the most gender-balanced computer science class I’ve been a part of,” she said. “Over half the students were female.”

We hope we can continue to highlight additional amazing role models in our community who are not only very respected technologists and leaders, but are engaged in great social causes. We want to inspire everyone to recognize the positive social impact they can have if they choose to become technologists.

Ashton’s leadership on this issue continues to be inspiring — at the end of the hackathon he announced that he’s sponsoring three $100,000 fellowships for data scientists and software engineers who want to continue working with Thorn. We’re excited to see what can be accomplished with that kind of team, given how much progress was made in just a weekend.

The reality is technologists hold great power in the world, and not only does big industry need our help right now, but so do a lot of the most important causes. My first company, Palantir, has also engaged in anti-child exploitation technology work pro bono with NCMEC, a variety of anti-human trafficking work, as well as other pro bono technology-enabled causes such as sophisticated disaster relief in Haiti, Philippines, and elsewhere with the Clinton Global Initiative.

I’ve also been inspired by the philanthropy work at Salesforce, Google, and other companies. While it can be overwhelming to realize how many problems there are to solve in the world, it’s always inspiring to see so many talented people willing to spend their time and energy in hopes of making a difference. We are tremendously appreciative of the work our hackathon participants did in hopes of potentially rescuing even just one child from exploitation; we believe the work that was done will save many.

We urge any technologists who might be reading this — and the leaders in our community — to think about what you are working on, and how that is impacting those around you. There are few other communities who have ever had similar potential to create widespread and scalable progress, or to positively impact so many lives.

We might remember an important quote from our civilization’s past: “From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked.”

We sit at a very unique place in history, and I hope that our peers in Silicon Valley will continue to remind and inspire each other about the role we can play in the world.

Special thanks to Del Harvey, Julie Cordua, Claire Schmidt, Drew Oetting and Pierre Ayres in the writing and editing of this article.