Insights in Insults: Dave McClure Speaks in Beijing

Both entrepreneurs and investors can probably learn a lot from 500 Startups founder Dave McClure, but it takes a thick skin. He doesn’t pull punches in his criticism. At his presentation in Beijing on Monday night, he indiscriminately berated the audience of more than 100 people, taking stabs at business developers, Instagram, and venture capitalists, among others. To summarize some of his advice, I’ve pulled out a few gold nuggets of brutal honesty from his speech. Steer clear if you don’t approve of profanity.

Dave McClure and the 500 Checklist

“There are engineers fucking everywhere, and they are cheap bastards these days.”

McClure compares the value and ease of finding good engineers versus knowledgeable internet marketers. “If you can’t hire an engineer for a reasonable amount of money, then you are an idiot and I should not give you money.”

“Usually it takes about six months to figure out if they’re idiots.”

When looking for investments, 500 Startups primarily looks at products rather than people, at least at first. McClure says it takes more time to really get to know a team. He adds:

Everybody talks about ‘product, market, team,’ and ‘team is always most important.’ Yeah, that’s true, but you have no fucking idea who that team is.

“The really great companies are way smarter than I am, and I’m a fucking mortgage processor.”

Venture capitalists often think they can somehow contribute to the success of the companies they invest in, but that assumption is usually incorrect.

“There are Michael Jordans out there. You’re probably not one of them. Learn how to fucking pass.”

McClure argues against following Instagram’s avenue to success, saying that sort of scenario only happens about once a year or two. Instead, a scalable path to user acquisition is critical.

“You’re probably spending way too much fucking time learning about your programming language and your Photoshop, and all this other shit, and you don’t know dick about THIS stuff.”

Companies should spend more time learning about things like search engine optimization, marketing campaigns, optimizing local apps for app stores, and other methods for better distribution.

“[Venture capitalists] are just not that fucking smart. It doesn’t matter how dumb I am, if I make a hundred bets, I’m gonna find some success.”

McClure’s explains his investment strategy of making a lot of little bets instead of a few big ones.

“You’re completely full of shit. Ownership does not matter.”

The percent ownership of a company is irrelevant unless you want a seat on the board.

“This is an exercise to find something customers will use and pay for. When you find that, stop! Don’t fucking keep doing it.”

Once a company has a good enough position in the market, they should shift their focus to get customers through more channels, cheaper costs, and bigger scale. Dave adds:

I don’t need to keep infinitely building a better mousetrap. It’s already better enough. What I need to do is figure out how to sell the fucking mousetrap.

There are tons of brick-and-mortar companies out there with really high overhead costs who suck at internet marketing way worse than you do, and you can beat the crap out of them at building their internet-based equivalents … why the fuck don’t you do that? That’s way easier. Every fucking business that’s brick-and-mortar-based with too much overhead, too much inefficiency, and doesn’t do internet marketing — they’re dinosaurs, they’re not going to be able to compete with you, and you can crush them. And you should crush them. Stop fucking building Instagram, and go out there and build a pizza delivery business and beat the crap out of them! You know why? ‘Cause they’re billion-fucking-dollar businesses, and they’re inefficient as shit.

Some of this sounds a little harsh, but McClure can take hits just as well as he can dish them out. He encourages heckling and arguments from the audience. If you’re here in Beijing and want to yell at Dave McClure or listen to more of his profane profundities before he leaves, he’ll be speaking at this Wednesday’s Silicon Dragon conference.