The Final Close for WLV Fund 1-The Opportunity Costs of Fundraising

The other day, I saw a tweet from my friend Samir Kaji on how much VC’s are paid.  I laughed because it is heavily skewed toward industrial venture capitalists with a series of funds, not micro VCs.  Micro VCs are not in the game for the management fee. We are in it because we are passionate about founders, ideas, and long term returns.

A lot, if not most of the industrial venture capitalists can snap their fingers and generate a new fund full of cash from existing LP’s on their wait list.  It’s not tough. They are going to make a lot of money even if they don’t return their fund.   Micro VC doesn’t have a staff.  You are the bottle washer, the rainmaker, etc.

We aren’t a lot different than the founders we invest in.  They only make money on exits, same with us.

At West Loop Ventures Continue reading "The Final Close for WLV Fund 1-The Opportunity Costs of Fundraising"

The Theatre of the Absurd

Lately our society has become the theatre of the absurd.  I just don’t understand it.  Here are a few things but there are plenty of others.

  • The “okay” sign, you know the one Teddy Roosevelt us rumored to come up with where you touch your thumb and forefinger is not a sign for white power.  Yet, crazies think it is and the fringe believes them.
  • SCOTUS nominee Brett Kavanaugh is being held up for a couple of days because of a he said/she said letter written by someone he knew in high school.  Should we ask him if he played “boys chase girls” in grade school?  Should we think about the actions of Ted Kennedy, President Clinton.  Seems like there is a massive double standard.  No matter what you think of Jeff Flake, he isn’t very intelligent.  Maybe it’s absurd to think people in Congress are at least intelligent.
  • Continue reading "The Theatre of the Absurd"

Make Your Plan Work Your Plan

when I was in sales one of the things they taught us was planning.  You looked at your sales territory and cut it up based on the things you wanted to sell.

You made a plan to attack it

Next step was to get into the car and go makes the face to face retail sales calls you needed to make to work your plan

There were always distractions.  Warehouse people needed stuff or some product would have been shipped and damaged. The same with Mom and Pop jobbers.

If you didn’t go work your plan and put in the retail face to face work you never met your goal.

Entrepreneurs often get distracted by things that don’t matter or little things that can be taken care of later. Few things are more important than being in the face of the customer.

Make a plan. Work it. Make sure it’s Continue reading "Make Your Plan Work Your Plan"

The Fiduciary Rule, Dead? Living?

In the waning days of the Obama administration, he used the Department of Labor to pass what’s known in wealth management circles as, “The Fiduciary Law”.  Because Atlas Shrugged language has become part of our government vernacular, if you only read headlines you will think that investors are now at risk.

They aren’t.

The fiduciary law related to how investment advisors and firms could charge fees to clients.  As soon as it was passed, the finance industry was up in arms.  Why would the government use an agency like the Department of Labor to regulate the financial industry when the SEC or FINRA was the proper place to do it.  This was bureaucratic over reach to the nth degree.  However, the spirit if what the DOL was proposing was not terrible.

In some cases, there were incentives on the part of brokers to charge a lot of commission to clients. Continue reading "The Fiduciary Rule, Dead? Living?"

The Future of Crypto

Yesterday I was at a small private conference in New York that discussed the future of crypto.  I listened to the presentations along with giving one of my own.  Listening to the other presentations a few points became clear.

  1.  The future of crypto is all in securitized tokens
  2.  The future of crypto is all about promise right now.  There is no killer app.
  3.  Some presenters made the case that there isn’t a bubble in crypto
  4.  Hard to transfer assets will be tokenized to unlock value

We are invested and sit on the board of a portfolio company, CFX/OFN, that is well positioned to take advantage of the future of crypto.  What’s interesting to me about the evolution of the space is how closely it tracks with out thought processes back at CME in 1998.  The CME B share is essentially a securitized token.  Our demutualization unlocked a lot of Continue reading "The Future of Crypto"

Presenting Crypto

today I am in NYC at a conference doing a presentation on crypto.  The whole day is devoted to it with a lot of great speakers

Crypto certainly has had some of the lustre fade as the price drops.  Was speaking to a banker yesterday and they are advising clients to stay far away.  The money laundering and nefarious uses of some crypto makes their stomach unsettled

Certainly a lot of exchange operators don’t know hat they are doing.  They are matching engines with no compliance or other safeguards.  Thee is wash trading and sham volume

I am going to open my portion up to the audience for random questions.  What questions would you have?  Do you think it’s a scam?  Or is it real?

The Little Things

Americans have  been dressing down for years now.  Just look at Mens Warehouse.  Place is empty   When you go to a startup event if you don’t have a t-shirt on you feel out of place.  Essentially you should have on some All Birds, be a bit unshaven and maybe even not fresh out of the shower.  Business casual could be flip flops

I don’t like it.  Sometimes I think I should teach a class in etiquette and the fine art of working your way around a place setting but I digress…

I agree, you cannot tell a book by its cover.  Judging someone by their appearance can be short sighted.  The person that looks and smells like a miscreant might be the most incredible entrepreneur ever.  Remember, in business, you need to be able to flow seamlessly from culture to culture.  It pays to remember, it’s “the suits” that Continue reading "The Little Things"

The Great Migration

Was reading some data from the Cato Institute.  It has to do with Tax Reform and Interstate Migration.  The problem is the data is a little too fresh.  Tax reform was only passed in 2017, so 2018 is really the first year that people are feeling the effects of it.

One of the major effects is SALT.  That’s the ability of citizens to deduct state and local taxes from their federal taxes.  In the past, it’s always been allowable.  Now, it is not and high tax states are trying to find an end run around it.  They have even resorted to the courts, trying to characterize taxes we pay for public schools as charities.  Of course, the other tact might be to act responsibly and reduce the tax burden on citizens but who knows a politician that would want to do that? There is no clear relationship between the level Continue reading "The Great Migration"

Who’s The Biggest Anarchist of All-Time?

I was walking through town and had a University of Chicago pullover on. Someone asked me if I went there and I said I was with the capitalists in Chicago Booth. He said he studied math but was an anarchist. I mentioned that the biggest anarchists in human history were capitalists.

By the way, just because you went to Booth doesn’t mean you are a believer in free market capitalism. Plenty of socialists and crony capitalists went to Booth as well.

People don’t see capitalism that way but it is. Free market capitalism can be messy but it works better than any other human system to lift people’s standard of living and build wealth.

Adam Smith, John Locke, JS Mill, anarchists for their time. The signers of the Declaration, anarchists.

We tend to think of anarchists as some of the infamous people from our time. But, anarchists actually put in Continue reading "Who’s The Biggest Anarchist of All-Time?"

Sometimes It Is Just Luck-But You Still Have to Take Risk

When people tell me I am “lucky” I get a bit offended.  I took a lot of personal risk and continue to take a lot of risk.   I worked super hard and put in long hours.  I did stuff few other people would have done at the time.  Who runs orders to a pit and takes the abuse that comes with it, with a business degree from college for three months, no insurance for $150/wk gross?  No one handed me a money tree or a success tree.  Throughout various parts of my life, I have assumed risk.  Especially in my 20’s-50’s.  Outsize stupid risk on some occasions.

To tell you the truth, since 2009 it has been a total grind for me.  I have had a few ups but mostly downs and battled a lot of demons internal and external.  Some people took advantage and were shitty.  I would

Continue reading "Sometimes It Is Just Luck-But You Still Have to Take Risk"

Thank You Notes

Does your company send thank you notes?  If you meet a potential client whether the meeting ended in a sale or not, do you send them a note?  Craig Wortmann in his selling skills class vociferously advocates for thank you notes.  Short, to the point, and with a business card.  It’s like planting a seed that might sprout later.

At WLV, we always try to send thank you’s to potential LPs.  If we didn’t and you are reading this, my apologies.

It says a lot about you if you engage in this practice.  Are your customers just “meat on the hoof” or are you trying to build a long term relationship that is meaningful which helps them solve a problem?  Thank you notes help you change your perspective, reflect on the meeting, and convey an appreciation for someone’s valuable time.

It turns out, there is research around this.  Professor Nick Continue reading "Thank You Notes"

The Judge Kavanaugh Hearing and Tech Policy

The circus that is going on in Washington isn’t too much of an actual hearing.  It’s a circus.  The votes are already counted and none of the Senators are going in with an open mind.   Senators are going in to advocate for or against entrenched positions or they are trying to feather their own political ambitions which is exactly what Cory Booker and Kamela Harris did Thursday.  They are both running for President in case you didn’t realize it.  By the way, Booker had his fundraising website go live prior to the hearing.  Cynical I know but you can’t be too cynical these days.

An aside, I disliked the stupid protestors during the hearings for justices nominated by President Obama and I dislike them now.  I am of the opinion that the room ought to be sealed against anyone from the public and the hearing simply televised.  A court Continue reading "The Judge Kavanaugh Hearing and Tech Policy"

Goldman Pulls Out of Crypto

Goldman Sachs announced they weren’t going to put together a big crypto desk after all.  Predictably, the value of all crypto’s fell.  This is a tell in a lot of ways.

First, crypto markets have basically been tanking since CME/CBOT listed their respective futures contracts at the end of last year.  Futures allowed holders to manage risk and the risk premium that was in the cash contract is slowly finding its way into the futures contracts.  Futures have a way of letting air out of balloons.

Second, it shows that the institutions still aren’t there when it comes to buying, selling and transacting in crypto.   They certainly are interested but because the SEC/CFTC haven’t laid down any hard and fast regulation, they really can’t jump in.  No institutional flow limits Goldman.

Third, it also shows that Goldman couldn’t set up a network.  A lot of the flow for the Continue reading "Goldman Pulls Out of Crypto"

Should You Use Traditional Broadcast Media For Marketing?

For years, the only way to reach consumers was traditional broadcast media.  Radio, Newsprint, Television.  Billboards.  With the rise of social media, a new medium emerged.  Virtually every brand is on social media and it’s super noisy.  When was the last time you bought anything off seeing a billboard?

For most, instead of interacting and leveraging social media they stand on their soapbox and shout.

Ted Wright of Fizz, Inc just wrote a piece on broadcast media.  It’s insightful, but so are some of the comments below.  Ted makes the case that word of mouth marketing (WOMM) is the new power player when it comes to ways to engage with customers.

Broadcast alone doesn’t cut it.

Companies need to contemplate a word of mouth marketing strategy and insert it into their broadcast campaigns so that influencers will see the message and spread it.  Ted says, “the best broadcast campaigns out Continue reading "Should You Use Traditional Broadcast Media For Marketing?"

The Meet And Greet

One of the things that is hard to do is manage your schedule no matter what line of work you are in.  In the investing business, I always used to get coffee at an initial meeting.  However, today, I prefer to do a shorter phone call on an initial meet.  The reason is I might be able to save the entrepreneur or other person a lot of time and money.

If it’s a pitch, usually it works better for me to have a phone call to get to know the person a bit and just hear a little about the company.   If it’s interesting and fits our thesis, then a follow up meeting is warranted.  If not, we can go our separate ways and the entrepreneur saved a lot of time.

Often, a lot of people want to meet to figure out how to get in VC or just Continue reading "The Meet And Greet"

What Should You Learn In College?

I saw this article in the WSJ from a Yale professor about what kids should really learn while at Yale.   It’s a good list.  I remember a few years after I graduated from college I read the book, The Closing of The American Mind, thought I had just wasted four years of my life.  In that book Allan Bloom talked about the American education system and college.  What should kids really be learning?  He made a persuasive case and it stuck with me.  I’d urge anyone to read it today.

Yes, you need to learn a skill.  Don’t major in some stupid major.  Take a science, a business major, an engineering major or something like history or english.  The rest you can find in newspapers and blogs.

I think one thing students should learn to do is handle themselves in business situations no matter what their major. Continue reading "What Should You Learn In College?"

The Promise of Crypto

It’s pretty easy to deride cryptocurrency.  It’s easy to pass it off as a fad that will flame out.  There is enough fraud in the initial cryptocurrency marketplace with charlatans selling bridges to nowhere that a sane person could dismiss it.

It’s not that simple.

In the WSJ Saturday interview George Gilder says, “we’re now in charge of our own information. For the first time in history, really, you don’t have to prove who you are, or what you are, before a transaction.” A blockchain allows users “to be anonymous if they wish, while also letting them keep a time-stamped record of all their previous transactions. It allows us to establish unimpeachable facts on the internet.”

That’s transformative in a lot of ways.

Civics, business, supply chains and almost any transaction will be revolutionized by the blockchain.

I don’t think existing advocates have thought deeply about how blockchain Continue reading "The Promise of Crypto"

School Spirit That Leads to a Cult

Went to the Notre Dame vs Michigan game yesterday.  A good friend of mine went to Notre Dame Law and had tickets.   I love to go to college campuses.  Always have.  It’s always interesting to me and sometimes campuses say a lot about the culture that comes out of the university.  Sometimes, it doesn’t.

For example, if you go to Emory in Atlanta, there are a lot of signals that Coke put a lot of money in that school. The building rock was quarried nearby.  At Davidson, the buildings are very traditional looking and it’s a traditional liberal arts undergraduate experience.  Classic college.

Love or hate them, many schools spawn a cult among their alums.  Both Michigan and Notre Dame are like that.  I am not using the word “cult” in a derogative sense.  I am thinking about it in a positive sense.

Usually, to create a community like Continue reading "School Spirit That Leads to a Cult"

Sometimes Crypto Just Makes You Chuckle

The crypto world is ever changing and some things I find really funny in a George Carlinesque way.  If you don’t know who George Carlin is he was a comic that was pretty funny in the 70’s-early 00’s when he died.  He’d find phrases and words that made sense but when you thought about it made no sense, “jumbo shrimp”.

CME and CBOE are trading cryptocurrency futures, but they settle in US Dollars.

Then there is this article in Wired.  You need a physical vault to store cryptocurrency.  I thought it was upending the banking system?

 

The SEC Takes A Step In The Right Direction

The other day SEC chairperson Jay Clayton said he’d like to find a way for more private investors to gain access to private deals.  This is a good idea and it’s the first time the SEC has recognized that there is a disconnect between private and public markets which has occurred over the last ten to twenty years.  That disconnect has made it harder for average individuals to take risk and build wealth.

If we look at a lot of the money that is raised in crypto markets, I think some of it can be traced back to bad public policy.  When investors who want to invest are shut out of all opportunities, they manufacture their own. A friend told me some stories about crypto and how people who probably shouldn’t be trading it are trading it on their phones.  They work as laborers at a car wash.

On Continue reading "The SEC Takes A Step In The Right Direction"