Instead of our typical round table discussion at 106 miles, Naval Ravikant spoke about his new venture Hitforge. Naval has started too many companies to list here, and also did time as a venture capitalist. He is also the creator of the Venture Hacks blog, which I highly recommend.

Naval believes the current venture capital model is incompatible with the current hit driven successes on the web. Current venture works on a four year investment cycle and supports funds that require them to invest large dollar amounts. This locks entrepreneurs into an idea, even if it turns out to be mediocre. Additionally, the large investments almost require the entrepreneurs to hire a huge amount of infrastructure (lawyers, product managers, biz dev, marketing, etc.) which distract them from working on their idea. Naval believes start-up founders should spend their initial period focusing on building a user base, not a business model.

Hitforge is setup as a standard angel fund, but funds people instead of ideas. Entrepreneurs brought into Hitforge are given 90 days to release their idea, and are measured by Google Analytics. A successful product is defined as a product that sees sustained non-linear growth. Products that don’t succeed, are killed, and entrepreneurs move onto the next idea. The equity pool is diversified so if Hitforge finds a hit, everybody benefits. Using a simple, low overhead process for launching product, with a strong Darwinian flavor, Naval believes he will greatly increase his chances of finding a hit.

I found his company extremely compelling, although it should be noted that Naval could sell sand to camels. Obviously the model has its own problems, but starting a company using the typical angel/venture model is riddled with problems a well. Regardless of how you do it, I strongly believe that successful businesses these days are built on iteration and reinvention.