These are the books that were first recommended to me when I started financing tech companies.
Here they are in no particular order.
1) Zero to One
by Peter Thiel
This book is a must-read for understanding the psychology behind startups. It is a staple book in the startup community written by one of the Pay Pal Mafia’s original member’s Peter Theil (1). After PayPal, his top investments include Facebook, Palantir and SpaceX.
This book was born from a course he taught at Standford University on entrepreneurship (2). The concept of 0 to 1 is about how to build companies that create new things. The concept starts with the key questions: “What important truth do very few people agree with you on?” and “What valuable company is nobody building?”.
This book is not only for tech finance, it’s also essential reading for anyone involved in startups.
2) The Lean Startup
by Eric Reis
This book is an excellent read and a great way to get introduced to essential concepts in tech, including creating a Minimal Viable Product (MVP), Pivoting to find Product-Market Fit and Iterating continuously to grow a product off of user feedback.
These concepts have helped start many companies and launch products without the need to amass a ton of resources before getting started. I expected this book to hang out around the perimeter on a lot of these concepts but was really impressed with how deep and specific some of the advice is.
The book is a great manual for all aspiring entrepreneurs and tech founders and a great intro for the language and concepts required to finance technology startups.
3) Venture Deals
by Brad Feld and Jason Mendelson
This book has basically become the textbook for understanding venture capital. It’s a deep dive into term sheets, cap tables, and raising venture capital. The Authors, Brad Feld (Co-founder of TechStars and Foundry Group) and Jason Mendelson (Managing Director and General Counsel for Mobius Venture Capital, now Co-founder of Foundry Group) go deep into the details and terminology involved.
The updated version also features a section on Venture debt added by Silicon Valley Bank. I wrote about the Pros and Cons of Equity, Debt and Bootstrapping here and have a post on venture debt coming up that will dig into more of the concepts from this chapter (3).
The book is a must read for companies that are on the venture capital route or that plan to raise capital and create a venture scale company.
4) Disrupted
by Dan Lyons
This is an amazing read on a writers “misadventures” in joining a tech startup, Hubspot (4). The amount of irony in it is exceptional. I still can’t decide if the irony was intentional or not. The most amazing part of this book is that the author throughout the entire book seems to lack the self-awareness to realize that he is not actually the protagonist of his own story. If anything, a flawed main character actually added greatly to the read and a window into a hyper-growth tech startup.
The window into the startup world is enjoyable and reading it from a perspective without rose-coloured glasses on is valuable. It’s also not something you get to hear or read about often. As Dan Lyons points out there are a ton of people invested, usually quite literally (ie: financially), in promoting only the good of tech companies. The book looks at a lot of really great points that are not talked about enough at tech startups. Especially the pains that come with scaling quickly, having workforces skewed strongly towards specific demographics, and the chaos that comes from venture scaling a company.
It’s very readable, flows well and keeps you interested with great storytelling. At times it feels like a conversation where a friend is telling you about their crazy experience at their last job over coffee. You sip your coffee and do your best not to judge the company, the industry or your friend too harshly as they speak but are entranced right until the end.
While not directly a tech finance book, understanding the impact of venture capital and the window into a successful venture scaling company is worth the read.
5) The 4-Hour Workweek
by Tim Ferris
Traditionally seen and marketed as a self-help/productivity book, I’ve included it in this list because it introduces the idea of the Lifestyle Business. A lifestyle business in tech is one that is not typically going to reach venture scale but has automated numerous processes and has achieved profitability that supports its owners’ lifestyles.
The productivity tips include the Pareto Principle (80/20 rule) for focusing on your most valuable tasks, clients, activities and D.E.A.L. (Definition, Automating, Eliminating, Liberating) which looks at how to identify and redistribute tasks to liberate yourself or your company. (5)
Since Venture Capital and rapid growth is not the only way to build a successful company, I’ve included this book to highlight the concept of a Lifestyle business. Tim has a great blog and podcast too.
Summary
The list again:
- Zero to One by Peter Thiel
- The Lean Startup by Eric Ries
- Disrupted by Dan Lyons
- Venture Deals by Brad Feld and Jason Mendelson
- The 4-Hour Workweek by Tim Ferris
These were the first 5 books that I read when I started in tech finance and have shaped how I look at deals and tech companies that I work with.
Have I missed any other good ones?
Footnotes
(1) The “PayPal Mafia” is a group of former PayPal founders/employees that went on to found technology startups including Tesla, Inc., LinkedIn, SpaceX, YouTube, Yelp, and Yammer. This was the original photo and article from the November 27 2007 Issue of Forbes.
(2) Competition is for Losers is a YouTube video that gives a great intro into some of the concepts explored in Peter Thiel’s booked from a lecture at Stanford University
(3) A section on Venture debt has recently been added by Silicon Valley Bank. Here is a sample.
(4) While writing this review in 2020, Hubspot is still a top employer and is now worth ~10x what it was at IPO ($HUBS). The owners and investors have all made money and this book is used as a recruitment tool. Dan Lyons has a best-selling book and has worked on an incredible HBO show Silicon Valley for several seasons. Seems everyone made off pretty well.
(5) Pareto Principle is the concept that for many outcomes roughly 80% or more of consequences come from 20% of the causes. It is also called the 80/20 rule.
