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What They Do Teach You at Stanford Engineering About Spinouts

by Larry Chiang on November 14, 2013

By Larry Chiang 
I read so that I could then leverage OPE (other people’s expertise)
Here is something that I wanted to expand…

Larry Chiang (@LarryChiang)
Spin-outs is absolutely the most underpromoted business maneuver.

I expose things you should be paying attention to because it will alter how things might turn out for you.

Definition. An entity is spun out of another entity. In essence it’s a sequel. Spinout businesses reduce risk. 
Some examples that are legendary spin-outs:
Intel. It spun out of Fairchild Semi
IVP. It spun out of Amex
Chevy spun out of GM or vice versa. (Steve Blank was talking too fast during lecture)
SalesForce spun out of Oracle. 
I forget what Oracle spun out of… Sun? Tom Seibel?
Everything sports spun out of IMG (my mentors company is Intl Mgmnt Group)
Wicked, the play, spun out 30 years after the movie, Wizard of Oz, came out. Err 40.
Capital One spun out of Signet Bank.
Bank. Of. America. is actually the (orphan homeless) bastard child of two bastards: NCNB and C&S Sovran (both spin-outs themselves). They merged to form Nations Bank which eventually bought leftover assets of Bank of America. 

Now you know what I’m paying attention to.
Note: the parent entity sometimes takes an equity stake. Sometimes it does not. Often times a set of “pre-assembled” co-founders were a team at the parent entity.
When the entire pre-assembled team spins out… VCs them
Patternistically, I pattern recognize…
– Josh Elman, VC, recruiting founders to fund from his previous entities (fb, twitter, etc)
– Jon Teo, VC, recruiting founders to fund from his previous entity Google

– Ryan Sarver, VC, recruiting founders to fund from his previous entity Twttr

– Roelof Botha, VC, recruiting founders to fund from his previous entity (PayPal)

And to go OLD SCHOOL!!!!

– Don Valentine, VC, recruiting founders to fund from his previous entity (Intel)

I highly recommend, you the 19 year old sophomore in CS to
– pattern replicate. (PR)
– pattern iterate. (PI)

Patterns are important.

Like Tyler Durden from FIGHT CLUB said: “You’re not a unique snowflake”. 

My opinion: Once you realize you’re a cliche, you THEN have the chance to be something special

Leave the pattern recognition (PR) to a person slightly older that you and mentoring you. All together now, PR + PR + PI = #PRPRPI
That was a hashtag ‘derivation’ THERE WILL BE A QUIZ. Seriously. Study this my CS major padawan,
PRPRPI’s a system my mentor (IMG founder) taught me. (He is the original guy that got paid to learn MBA shitake )
ENGR145’s Anchor Concept: #PRPRPI 
It moves you to the right on the entrepreneur bell curve 
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52 Cards. Two Jokers. What They DO Teach You at Stanford Engineering
Emergency swings and cutting deals as an 9 year old
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