The Changing Venture Market In 3 Images

Want to visualize how the venture funding market is changing? Look no further than these 3 slides (from a presentation put together by our friends at Greenspring). I don’t think much commentary is needed here.

  • Average round size at Series A is increasing dramatically.
  • Venture is being increasingly driven by large rounds (especially at the later stages – this is significantly skewing the overall funding numbers that are being reported).
  • IPOs are the new Unicorns (they’re becoming more scarce than their $1BN valued cousins)

What does it mean to be an “executive”?

At Foundry we have active and lively CEO and Portfolio Executives email lists. They are among the things that I love the most about the community we’re creating at Foundry – watching execs across the portfolio (who refer to each other as “Foundry cousins”) help each other out and share ideas. It’s an important reminder that great companies are created not by solo, heroic efforts, but by the collective force of entire communities.

Recently a CEO sent around the following question: what defines an executive (who reports to a CEO)? — especially as different from “a regular manager”. I thought a number of the responses were great and wanted to share them here so they can benefit companies beyond the Foundry portfolio.

What Defines an executive? Especially as different from a manager

The biggest difference is the mental frame you start with when approaching a problem. 

A manager starts

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Friday Fun #4 – Behind the Scenes On Our Latest Video – Bored Meeting

I hope you saw that Foundry released our latest video last week – Bored Meeting. At the time I’m writing this more than 100,000 of you have, which is pretty exciting. Bored Meeting follows on the heels of two prior efforts – I’m a VC and Worst of Times. I’m fortunate to have a really talented partner in Jason Mendelson who writes, performs all the instrumentation for, mixes, edits and produces these songs and videos. It’s a labor of love for all of us – an attempt to bring a little personality and humor to a business that often lacks both.

The process is a blast – from recording the song in Jason’s basement studio to working on costumes to the actual day (or in one case days) of filming. As I hope you can tell from the videos we have a fun time shooting them – often needing to

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Focusing on Actions, not Results

I just had a conversation with an entrepreneur I’ve worked with for decades that resulted in an insight that I thought was worth sharing more broadly. We were talking about managing teams and in this case the challenge of getting some of his exec team focused on broader goals and the end result we’re driving for in the upcoming year (a big growth year for this business). The solution we outlined was to focus on actions (concrete, clear, definable) vs. the more vague set of results that we had been trying to align everyone around. We’re still driving to the same outcomes but the leap was too large in a couple of cases for people to get their hands around. By focusing on actions we moved a strategic conversation to a tactical one that each exec could internalize and the end of year results became the outcome not the driver,

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How Startups Actually Grow

We’ve all seen the growth curve on the left – all successful startups strive for a version of one. But in reality, the notion of a smooth growth curve actually masks how most successful companies truly grow.

Our experience at Foundry suggests that if you blow up the growth curve you’ll find that companies grow linearly and that what creates the log curve is a series of small changes that either change the slope of the growth (it’s still linear, but now growing faster) or that “jump” the growth curve up (growing at the same rate but now from a high base). Examples of things that fit in the first category are changes in sales efficiency, successfully adding to the sales organization, establishing channel relationships that add predictable revenue, etc. Typically these are small and change the slope of growth only a bit at a time. But over time they

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Vote FOR a renewable energy future by voting AGAINST the Boulder muni

I’m really frustrated with the way many from the the pro-muni block in Boulder have misappropriated the idea that being for municipalizing our local utility infrastructure (condemning the Xcel’s local grid and forming a city-owned and operated electric utility) is the only way to move Boulder towards the goal of 100% renewable energy. They’re trying to co-opt the idea that a vote against muni is a vote for fossil fuels and a vote for it is a vote for renewables. I couldn’t disagree with this line of thinking more. In fact I think the opposite is true – a vote to continue the Boulder muni effort is the wrong way to go about pursuing the goal of lessening our dependence on non-renewable energy source.

This weekend I wrote a long note to a local friend who came out in support of municipalization. I thought it was worth sharing to a broader

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Is your sales problem really a product problem?

Not suprisingly when companies are having issues in sales they look to their sales or and sales leadership for the source of the problem. In the cliche example (but one which happens all the time) sales will loop in marketing (“we’re not getting enough leads”, “the leads aren’t high quality enough”).

But typically product is left out of this mix.

To be clear, there are plenty of sales related issues that are directly attributable to poor sales processes, bad training of sales resources, poor time management, etc. But often overlooked is the role product plays in sales challenges. I’m not writing this to offer a ready made excuse for sales teams that aren’t executing but as a reminder to executive teams that when you’re struggling to understand sales challenges be sure to look at closely at product. I’d suggest looking both at how existing customers are actually using your product

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The Feature -> Product -> Company Continuum

I’ve been thinking about the continuum between a feature, product and company a lot recently. Specifically the challenge that companies have as they move across this continuum, how rare that last category really is, and the combination of product idea and market potential that is required for companies to actually make it to Company status.

Most companies begin life somewhere between a feature and a product. They’re started by an entrepreneur trying to solve some problem that s/he finds compelling and generally that problem is a feature of some larger set of problems. At this stage most entrepreneurs are given the advice to “focus”. It’s good advice (and advice I give all the time) but does sometimes perpetuate the feature-ness of the business – you spend your time and effort narrowly on a small number of related features and while you may have some inclination for how these stitch together

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How to value your SaaS company

If you read my blog regularly you know I love (LOVE) metrics.

So no surprise that when River Cities Capital released an overview of SaaS operating and valuation benchmarks, I hung on every juicy detail. It’s chocked full of them – I’d highly recommend your reading the full report. But if you’re too busy for that, below are some of the key take-aways. I’ve added color commentary of my own that’s more relevant to earlier stage companies as well.

The methodology here was great. They took the 92 public SaaS companies and analyzed their key operating metrics. Beyond that, they actually went back in time and looked at the earlier stage periods for these companies so we can track how some of the world’s best SaaS companies performed at revenue levels more akin to a typical Series B business.

The “Rule of 40” is important. The rule of 40

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How to value your SaaS company

If you read my blog regularly you know I love (LOVE) metrics.

So no surprise that when River Cities Capital released an overview of SaaS operating and valuation benchmarks, I hung on every juicy detail. It’s chocked full of them – I’d highly recommend your reading the full report. But if you’re too busy for that, below are some of the key take-aways. I’ve added color commentary of my own that’s more relevant to earlier stage companies as well.

The methodology here was great. They took the 92 public SaaS companies and analyzed their key operating metrics. Beyond that, they actually went back in time and looked at the earlier stage periods for these companies so we can track how some of the world’s best SaaS companies performed at revenue levels more akin to a typical Series B business.

The “Rule of 40” is important. The rule of 40

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Drowning

I’m struggling and I’ve avoided talking about it.

I’m used to being busy and I’ve often said that what I like most about my job is the constant phase shifting – it fits my personality and, frankly, my attention span. I’m used to a certain amount of chaos and uncertainty. But lately I’ve been feeling overwhelmed by it. I’m not sure if it’s the constant barrage of news from a president I can’t stand and who I think is ruining our country. Or the friend who was just diagnosed with advanced metastatic stage 4 pancreatic cancer. Or the other friend who was diagnosed with stomach cancer. Or the crap that’s going on in tech and venture that makes my stomach turn. Or just the day to day busy life of a family of 5 with school, sports and everything in between. I feel distracted. I think of Matt and Reggie a

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Humility Over Pride

[a version of this was originally posted at Unreasonable.is. i was thinking about it today and wanted to repost it here with some additional commentary. in light of some of what we’re reading about in the tech press it would seem that a remind about this is due]

This advice would seem obvious, if only more people followed it. I was attending a board meeting recently where a company put up the following as one of its core values: “Humility over pride” As I think about how often I interact with people who are so ego-centric and hubris; as I consider how seldom these people show any self-awareness or emotional intelligence; and as I reflect on how universally unpleasant it is to work with people who put themselves first, it reinforces how critically important this principal is.

Reading Your VC Pitch Meeting

I’ve come to realize that many – most – entrepreneurs suck at reading pitch meetings. Frequently what I hear from a company CEO is completely uncorrelated to what I hear from the VC they were pitching. In thinking about why this is, the answer is actually relatively straightforward: VCs are predisposed to give good meetings. AND By being equivocal at the end of a meeting they preserve maximum option value. Parsing this a bit further, VCs take a lot of meetings. And they do so with varied motivations. Sometimes they’re legitimately interested in a market space or even a specific business. Sometimes another VC or entrepreneur asks them to take a meeting and they’re trying to preserve a relationship. Sometimes they weren’t paying close enough attention to your email and said yes when they meant to say no. There are lots of varying reasons why you might find yourself in
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Weighing in on Judge Gorsuch

A number of people have asked me to share my views on Neil Gorsuch in more detail. I’m sure the curiosity stems from the intersection of my personal relationship with Neil and my absolute distain for President Trump. I am aware given the current political climate that views on this are very polarized. And while a SCOTUS pick will always stir up emotion, the combination of the hyper polarized environment along with the backdrop of Merrick Garland not getting even a hearing for the same seat I know many people who are very angry about the prospects of Trump filling what was Obama’s seat to fill.

By way of background and to be completely clear, while I know Neal, I don’t want to overstate our relationship. He lives nearby and we’ve had a chance to spend time socially together. We are friendly, but I wouldn’t describe us as friends. I’ve met his wife

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You can be much more productive. Here’s how.

I wrote a post a few days ago about 2 productivity hacks that I’ve been using that have transformed my work life. I got a great response to that post with a number of people asking me what other tools I’ve found that help make my world more productive. Micah, who works with me at Foundry, put together a list of the tools we’ve been using (or at least experimented with) that I wanted to share. Let me know if you have ones of your own you think I should add to the list.