Apple Silicon: The Passing of Wintel


This post is curated by Keith Teare. It was written by Jean-Louis Gassée. The original is [linked here]

by Jean-Louis Gassée

We’re about to enter an exciting, messy transition. Not only will Apple Silicon make better Macs, it will force Microsoft to polish its Windows on ARM act, both hardware and software. In turn, this will cause PC OEMs to reconsider their allegiance to x86 silicon…and that will have serious consequences for the old Wintel partnership.

Why should Intel worry about Apple’s decision to base future Macs on homegrown Apple Silicon SoC (System on a Chip) devices? According to Dataquest and IDC estimates, Apple owns no more than 7% of the PC market. Furthermore, Apple doesn’t buy the expensive Xeon chips, used in millions of Cloud servers, that represent a growing proportion of Intel’s revenue. And the company is a headache: It makes demands and complaints way out of proportion with the amount of revenue it generates. Losing Apple is more symbol than substance.

Not so fast. The impact on Intel — and the entire industry — will be felt beyond Apple’s small share of the PC market.

Apple isn’t simply dropping a proudly designed homegrown CPU in place of an Intel chip on Mac motherboards. Moving to Apple Silicon is an expensive undertaking that affects hardware and software engineering, developer relationships, marketing… If the switch to Apple Silicon were a mere CPU replacement, billions of dollars would burn in a bonfire of vanity.

No. Apple sees its SoC as a means to make the Mac better. Of course, “better” is a dangerously vague adjective that needs some evidence.

We’ll start with power dissipation. My MacBook Pro gets hot…really hot. Apple doesn’t specify the exact chip, but it appears to use this Intel iCore 7 processor that has a 28 Watt TDP (Thermal Design Power; think of it as a “power budget”).

Let’s compare this with the latest iPad Pros that feature an A12Z Apple processor.

According to Geekbench tests, A12Z performance matches or exceeds my MacBook Pro. Apple doesn’t disclose the TDP for the A12Z processor, but we can rely on an indirect number, the iPad Pro’s 18W power adapter output. This gives us an idea of what to expect from Apple Silicon in future Macs: Significantly lower TDP without losing processing power.

Next, throughput. Given what we see with today’s A12Z, one can’t imagine tomorrow’s Apple Silicon Macs providing less than a 25% throughput advantage against corresponding x86 PCs. Admittedly, these are speculative, broad strokes assumption for Apple Silicon Macs — think faster, svelter laptops actually lasting 10 hours on a battery charge. If not, once again, why bother burning the billions?

Next comes the matter of software, one that Apple took pains to handle at last month’s WWDC by demonstrating native versions of big standards (Microsoft Office, Adobe Photoshop…) and showing off the Rosetta 2 emulator. More concretely, Apple immediately shipped large numbers of its DTK (Developer Transition Kit) to help third-party developers port their apps. First impressions of the kit, which provides an Apple Silicon Mac prototype running an A12Z processor inside a Mac mini box, are promising: The hardware is fast and the software tools are more mature than one might have expected at this early stage.

We’ll know more when Apple Silicon Macs ship in a few months, but it appears that the hardware and software transition seems to have been carefully planned and executed.

So how will this affect Intel and the industry?

In 2012, Microsoft started the move away from Intel’s x86 processors with its first Surface machine running on an ARM SoC engine. It didn’t work too well. But Microsoft persisted and, late last year, came up with the Surface Pro X powered by another ARM-based SoC and running Windows on ARM. It was an improvement, but many reviewers still weren’t charmed. To cite but one problem, Microsoft’s bread and butter apps didn’t run in native mode. This was made even more embarrassing when Office on Apple Silicon was demonstrated at last months’s WWDC.

This leaves Microsoft with a choice: Either forget Windows on ARM and concede modern PCs to Apple, or forge ahead, fix app compatibility problems and offer an ARM-based alternative to Apple’s new Macs. It’s a false dilemma, of course. Microsoft will forge ahead…with repercussions for the rest of the Windows PC industry.

Specifically, what are Dell, HP, Asus, and others going to do if Apple offers materially better laptops and desktops and Microsoft continues to improve Windows on ARM Surface devices? In order to compete, PC manufacturers will have to follow suit, they’ll “go ARM” because, all defensive rhetoric aside, Apple and Microsoft will have made the x86 architecture feel like what it actually is: old.

This won’t happen overnight and there will be an interesting mess of x86 and ARM SoC machines fighting it out in the marketplace. Large organizations need continuity and would balk at the prospect of servicing two kinds of Windows machines and apps. As usual, they’ll downplay Apple’s advantage and curse Microsoft for causing trouble. But if the newer machines are actually better, rogue members within these organizations will sneak in new devices and software, they always do.

We now come to Intel’s reaction. Not what they’ll say when the trouble really starts, which could be soon.

Intel execs know they missed the Smartphone 2.0 revolution because of culture blindness. They couldn’t bear to part with the high margins generated by the x86 cash cow; they couldn’t see that lower margins could be supported by unimaginable volume. Now, Intel is facing a more serious problem: The x86 commands high margins not because of the chip, but because of the Intel/Windows duopoly, meaning that, all other thangs being equal, chips not running Windows get lower margins than an x86 CPU. Now, that union, that advantage is about to disappear. Intel will face ARM-based SoCs running Windows on ARM with applications, in PC-like quantities, at lower prices.

This leaves Intel with one path: if you can’t beat them, join them. Intel will re-take an ARM license (it sold its ARM-based XScale business to Marvell in 2006) and come up with a competitive ARM SoC offering for PC OEMs. Margins will inevitably suffer as the ARM-based SoC field is filled with sharp competitors such as Qualcomm and Nvidia, sure to be joined by arch-enemy AMD and others, all ushering in a new era of PCs.

I’ve avoided discussing Intel’s high-margin server chips and if/when/how they will be affected by more power-efficient ARM-based chips such as the AWS Graviton. I don’t know enough about the specifics of Intel’s monster (and electricity-hungry) Xeon chips powering forests of Cloud servers to form an opinion.

Wintel’s passing is a heavy-enough topic for today.

JLG@mondaynote.com


Apple Silicon: The Passing of Wintel was originally published in Monday Note on Medium, where people are continuing the conversation by highlighting and responding to this story.

These Black Founders Succeeded In Spite of Silicon Valley – WIRED


This post is curated by Keith Teare. It was written by "Venture Capital" - Google News. The original is [linked here]

These Black Founders Succeeded In Spite of Silicon Valley  WIRED

Real change or symbolism? What Silicon Valley is – and isn’t – doing to support Black Lives Matter


This post is curated by Keith Teare. It was written by Kari Paul in San Francisco. The original is [linked here]

Platforms from Facebook to Reddit have responded to the national uprising. Here’s what they’ve done so far

Major technology platforms are re-examining how they interact with police forces and regulate hate speech online following the death of George Floyd and the weeks of protests that ensued.

From avatars and hashtags to policy changes and donations, here is what technology companies are saying about #BlackLivesMatter – and what they are actually doing to back up those statements of support.

Continue reading…

‘Too big to fail’: why even a historic ad boycott won’t change Facebook


This post is curated by Keith Teare. It was written by Julia Carrie Wong in San Francisco. The original is [linked here]

The company has survived previous seemingly existential crises with little damage to its monarchical structure

On the evening of 13 July 2013, a few hours after George Zimmerman was acquitted over the fatal shooting of 17-year-old Trayvon Martin, Alicia Garza logged on to her Facebook account and typed a phrase that would change the world: “#blacklivesmatter”. A few minutes later, she posted again: “Black people. I love you. I love us. Our lives matter.”

That Facebook played a small role in the inception of a movement that may have become the largest in US history is the kind of story that the embattled company likes to point to when it makes its case that it does more good than harm. CEO Mark Zuckerberg boasted of the hashtag’s origin on Facebook in October 2019, when he delivered a speech about his view of free expression at Georgetown University.

Continue reading…

The Rise of the Solo Capitalists


This post is curated by Keith Teare. It was written by Nikhil Basu Trivedi. The original is [linked here]

Welcome to issue #9 of next big thing.

A huge thank you for the kind messages many of you sent me last week.

Unsurprisingly, I’m spending some of my fallow time thinking about the future of the venture capital industry.

I plan to write about this topic for the next few weeks.

First up is the fascinating rise of solo capitalists.


Large, Competitive Financings Led by Individuals

When Notion raised a $10 million round of financing in mid-2019 valuing it at $800 million, what I found most interesting was that there wasn’t a venture capital firm leading the round.

Instead, the round was led by Daniel Gross, Elad Gil, and Lachy Groom, with participation from existing investors (Felicis Ventures, First Round Capital, Sherpalo Ventures).

In early 2020, Front CEO Mathilde Collin wrote a blog post announcing the company’s $59 million Series C in which she highlighted that the round was “led by a group of individual investors, as opposed to a traditional venture fund, which is an uncommon feat for a round of this size.”

Fast forward to last week, when a company called NexHealth announced a $15 million Series A round "led by Mino Games founder-turned-angel investor Josh Buckley."

What’s going on here?

Angel investors have been very important members of the fundraising ecosystem for a long time.

But over the last couple of years, there’s been an increase in individuals investing not just at the earliest stages of companies, but at the Series A and beyond.

These individuals aren’t just investing their own capital. They’re raising dedicated funds and special purpose vehicles (SPVs) from traditional limited partners (LPs).

And they aren’t just participating in financings alongside venture firms. These individuals are often competing against venture firms for the right to lead rounds, and signing term sheets before the companies get to pitch the traditional venture partnerships. Most importantly, founders are choosing to work with them, in some cases in lieu of partnering with firms.

I (and others, privately) call these individuals solo capitalists because I view them as a distinct group, separate from angel investors and from venture capital firms, in today’s financing ecosystem.

From Angel Investors to Super Angels to Solo Capitalists

A decade ago, the term super angel was coined to describe investors "who had once been angel investors and subsequently raised small venture capital funds." In this guide by Business Insider, you can see some of the names of these investors.

Super angels like Aydin Senkut, Jeff Clavier, Josh Kushner, Mike Maples, and Roger Ehrenberg grew teams around them to form what are world-class firms a decade later – Felicis Ventures, Uncork Capital, Thrive Capital, FLOODGATE, and IA Ventures, respectively. Others like Manu Kumar, Michael Dearing, and Steve Anderson (who is somehow not named in the BI piece) have remained solo.

The Wikipedia definition also points out that super angels focus on financing rounds that are "smaller than most venture rounds.” But many of the super angels started to move away from this definition over the past decade.

When Twitter went public in 2013, the largest outside shareholder pre-IPO was a relatively unknown entity named Rizvi Traverse, with 17.9% ownership.

It later emerged that the super angel Chris Sacca, who had been an early investor in Twitter, had worked with a friend named Suhail Rizvi and "secretly secured commitments for up to $1 billion" to buy shares from former employees and investors.

As Steve Anderson points out in this piece by Alex Konrad, Sacca "was an innovator with that secondary, structuring a number of vehicles that didn’t really exist like that before."

Sacca was branching out from being a super angel to becoming a solo capitalist, investing $1 billion in Twitter before the IPO by leveraging his access to shares in the company. Those investments returned over $5 billion. That’s the scale of investments and success that the solo capitalists are shooting for.

The Solo Capitalists

What are some of the characteristics that define solo capitalists?

  • They are the sole general partner (GP) of their funds

  • The solo capitalist is the only member of the investment team

  • The brand of the fund = the brand of the individual

  • They are typically raising larger funds and writing larger checks than super angels – i.e. $50M+ funds, and able to invest $5M+ in rounds.

  • They are competing to lead Seed, Series A, and later stage rounds, against traditional venture capital firms

Some of the individuals who I believe fit this definition include Elad Gil, Josh Buckley, Lachy Groom, Oren Zeev (Zeev Ventures), Ray Tonsing (Caffeinated Capital), and Shana Fisher (Third Kind Venture Capital).

Zeev highlights some of the advantages of being a solo capitalist in a recent Twenty Minute VC podcast with Harry Stebbings. They include the ability to make very quick investment decisions (given you are the sole decision maker and don’t have to persuade any partners), to focus your time more effectively on new investments and on helping portfolio companies (because you’re not spending time on managing internal dynamics at the firm), flexibility in ownership and in taking board seats, and more.

What does all this mean for the fundraising ecosystem?

Back to the NexHealth example above, it means that a $15M Series A can be led by Josh Buckley, a solo capitalist, instead of by a traditional venture capital firm.

Semil Shah of Haystack is one of the few who’s publicly discussed this trend. Check out the tweet below and its replies.

There are many solo GPs who have raised capital from LPs, like Semil, who fit some of the attributes of solo capitalists, but not all.

Most have smaller fund sizes than ones that enable them to lead Series A rounds, so they instead focus on pre-seed and seed investing. These investors look much more like the super angels of the past decade.

Others have already gone down the path of building a team around them such that they are not operating solo in the future.

This point highlights one of the key questions solo capitalists face: "how does the model scale?"

As it is, venture capital is a very difficult business to scale. When you’re operating on your own, it’s even harder.

It will be fascinating to watch how many funds and how many portfolio companies the solo capitalists can manage before they run into bottlenecks.

But perhaps the fact that the model doesn’t scale will actually be the source of its success, for in an industry where fund sizes have been increasing, a major attraction to LPs of investing in solo capitalists may just be that their fund sizes have clear upper bounds.

The Biggest Threat to Venture Capital Firms?

I was on a phone call with a very sharp LP several months ago who brought up the solo capitalists and posited that their rise may be the biggest threat traditional venture capital firms have seen in a long time.

Why?

The importance of an individual’s brand has been steadily increasing in venture capital for quite some time. Founders are more often than not picking an individual partner who they want to work in a financing round, based on the relationship built with them, and based on their brand and expertise, instead of the firm’s.

So it’s a logical next step that the firm is the individual, and the brand is the individual, which is the case with the solo capitalists.

Solo capitalists can make much faster decisions than most traditional venture partnerships. Founders only have to interface with one person, which can have its benefits.

Solo capitalists can be more flexible on ownership, on structures like board seats, and more creative in terms as a result of being sole decision-makers.

And because it’s unlikely that their fund sizes can balloon dramatically in size, the solo capitalists may generate higher multiple returns on their funds.

We are in the early days of this evolution, and there’s much more to unpack here.

Why is this trend happening now? Has the proliferation of scout programs by venture firms contributed to the rise of solo capitalists? Are LPs just more amenable to backing individuals given the past decade’s rise of the super angels? Are founders more excited to work with individuals because many firms just look the same? Do founders care less about the “services” that firms offer?

For the angel investors and super angels who are becoming solo capitalists, how will the skillset of investing at the very early stage translate into decision-making at the later stage?

Will the solo capitalists operate like traditional firms when it comes to managing reserves, and investing their pro rata in follow-on rounds? What happens in tough times? Will they provide extensions to rounds and bridge companies to exits?

And how will all of this affect the relationship between individual investors and venture capital firms, which has historically been very collaborative?

Of course several of those who attempt to become solo capitalists will fail, and will be unable to back the most transformative companies, and generate top tier returns.

But some may succeed, and the ones who do could become the next big thing in the venture capital industry.


Thank you to Lachy Groom, Semil Shah, and an anonymous LP for your fantastic feedback.

I started next big thing to share unfiltered thoughts. I’d love your feedback, questions, and comments!

Leave a comment

Sequoia leads $100m financing round for Chinese storytelling app – Nikkei Asian Review


This post is curated by Keith Teare. It was written by "Venture Capital" - Google News. The original is [linked here]

Sequoia leads $100m financing round for Chinese storytelling app  Nikkei Asian Review

Hans Tung and the 16 unicorns: How a global venture capitalist funds billion dollar startups


This post is curated by Keith Teare. It was written by Garry Tan. The original is [linked here]

Hans Tung has funded some of the most iconic billion dollar startups: Bytedance, Airbnb, Wish and Affirm just to name a few. He’s been on the Forbes Midas List for 7 years straight now, this year at #10. He has seen it all, and we discuss war stories (don’t miss the discussion of Alibaba in a global financial crisis and pandemic!), founders, and the future of food tech, software, and robotics.

00:00 Intro 

00:50 Hans’s journey to venture capital 
03:18 Hans met iconic founders very early 
05:00 The Alibaba story in 2003: Pandemic and global financial crisis with 5 months of runway (MUST WATCH) 
08:18 The perseverance of Brian Chesky and Airbnb 
09:23 The perseverance of Peloton 
10:36 Global consumer trends now first emerge outside of the US 
13:06 Software eats the world is a one-time shift 
13:45 Foodtech in China: Darkstores and clean data 
16:14 Global food tech trends: Automation 
17:06 All food distribution will be automated and tech enabled: better, faster, cheaper 
18:20 What Uber did to consolidate taxis (a fragmented, no-tech business) will happen everywhere 
20:19 Software in business: first back-office, then front-office, now whole-office 
21:10 Each successive wave of software is more powerful than the last. We’re on the 5th or 6th wave now. 
21:59 On founder-market fit 
23:36 Max Levchin and founder-distribution fit at Slide 
24:16 Platform shifts create distribution opps that open, then close quickly 
25:02 5G and the future of distributed computing 
25:33 Timing your startup idea 
26:22 WeChat as a growth channel for Pinduoduo 
27:55 Autonomy and our robotic future 
28:53 Characteristics of great founders 
31:24 What Hans wishes he knew at 18 or 22

VCs are cutting checks remotely, but deal volume could be slowing


This post is curated by Keith Teare. It was written by Alex Wilhelm. The original is [linked here]

When COVID-19 began to shutter the United States economy, startups jumped into cost-cutting mode as expectations rose that venture capital was about to get a heck of a lot harder to raise. After all, prior downturns in the broader economy, and tech sector in particular, had taken a bite out of the ability for startups to attract new funds.

PitchBook research shows that, in the wake of the 2008 financial crisis, the amount of money venture capitalists invested fell, with early-stage deal and dollar volume enduring the largest cuts. Late-stage valuations during the same period came under steep pressure. The connection between a slipping economy and a rapidly deteriorating venture capital market, therefore, seems strong.


The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, and now you can receive it in your inbox. Sign up for The Exchange newsletter, which drops every Friday starting July 24.


The historically grounded feeling from startups in Q2, as the stock market sold off and unemployment rose, was one of concern: VCs were about to cut their deal pace, and the number of dollars that they were willing to put into each deal would likely fall as well. That investors would need to shake up their process and do deals remotely was not confidence inspiring.

We don’t have full Q2 VC numbers yet, so it’s too soon to say that Q2 was worse or better than expectations. But what we can say, thanks to a new survey from OMERS Ventures, is that VCs moved with reasonable speed to get over the technology and cultural hurdle of remote deal-making to keep the checks flowing. Indeed, according to OMERS Ventures’ research, 69% of the VCs it surveyed in June were willing to do fully remote deals; for startups worried that the venture class was simply going to pack up its checkbook and take an extended vacation, it’s good news.

But the news isn’t all rosy — most VC firms from the 150 in North America and Europe that the venture group surveyed have yet to actually execute a remote deal. And, there’s some indication that overall deal volume could be slowing, perhaps due to “dwindling supply of companies formally going to market,” according to OMERS Ventures’ Damien Steel, a managing partner.

This morning let’s examine which VCs have been the most active, and the least, to find out which types of firms are still investing, and where investors are seeing more deal flow, and less.

Remote deals, fewer deals

Most VCs have decided that remote deal-making is, at minimum, something that they need to become accustomed to. Only 4% of surveyed VCs said that they would not do remote deals, full-stop. Another 23% said that they were fine with remote deals, albeit with some ability to meet entrepreneurs in person.

Reviewing The CEO’S Performance


This post is curated by Keith Teare. It was written by Fred Wilson. The original is [linked here]

The CEO is an interesting case when it comes to performance reviews. They manage an entire company and they specifically manage the senior leadership team. They do not have a single reporting supervisor. They report to a Board. And that Board may, like the team they manage, have differing views on their performance.

Also, some executives are strong at managing down but weak at managing up. And the reverse is often true, where an exec is great at managing up but weak at managing down.

A failure mode I have seen in CEO reviews is when a Board thinks a CEO is doing well but they are not and that CEO gets a strong review. I’ve seen the opposite when a CEO manages up poorly but down well and they receive a weak review from the Board.

Given all of that, this is what I have learned to do.

1/ Schedule a CEO review cycle with a regular frequency and stick to it.

2/ Review compensation at the same time that performance is reviewed. If performance is reviewed more than once a year it is fine to only review compensation on the annual review cycle. Do not review compensation without doing a performance review at the same time.

3/ Have a third party (a CEO coach or some other skilled facilitator) interview all of the CEO’s direct reports and all of the Board members.

4/ I like to have the facilitator interview the direct reports first and provide that data to the Board prior to interviewing the Board members. This ensures that the CEO’s performance inside the Company informs and colors the Board members’ feedback. This is the best way I have learned to mitigate the “manage up well, manage down poorly” issue.

5/ The third-party facilitator compiles a review report and shares it with one or more Board members. If there is a Board Chair, she should be part of this part of the process.

6/ The Chair and possibly one other Board member (the Comp Chair if there is one) meet with the CEO, go over the performance review in detail, and then address compensation in light of the review.

This is a time intensive process and must be done thoroughly and with care. The stronger and more experienced the third party facilitator is, the better. You cannot skimp on this work. It might be the single most important thing a Board does on an annual basis.

Feedback is so important to ensure that a leader develops in the role and functions at a high level. In my experience, CEO feedback is often an afterthought because no single person owns the responsibility. If there is a Board Chair, she owns this. But otherwise, it can be a shared responsibility that falls through the cracks.

As Board members, we can’t let that happen. We owe it to the CEOs we work with to give them clear, regular, and accurate feedback. And this process (above) works well to do that.


USV TEAM POSTS:

Lauren Young — Jul 9, 2020
Collecting Diversity and Inclusion data for your company

Albert Wenger — Jul 8, 2020
Restoring Discourse (Won’t Be Easy)

Hanel Baveja — Jul 6, 2020
NYC Tech Companies: Please Consider Participating in Summer Bridge

Nick Grossman — Jul 2, 2020
Second Chance Studios

I’ve heard several people say that cancel culture isn’t censorship, because people who get cancelled aren’t prevented from speaking. This is technically correct, but only technically.


This post is curated by Keith Teare. It was written by Paul Graham (@paulg). The original is [linked here]

LocalGlobe and TransferWise’s Taavet Hinrikus back ‘frictionless finance’ startup Radix


This post is curated by Keith Teare. It was written by Steve O'Hear. The original is [linked here]

Radix, a U.K. startup that’s building a decentralised finance protocol on which new financial apps can connect and be built on top of, has raised $4.1 million in new funding.

Backing the company, which counts the Ethereum network and a number of other “DeFi” projects as competitors, is London-based seed-stage VC LocalGlobe and TransferWise co-founder Taavet Hinrikus.

Radix DLT Ltd. — separate from the nonprofit Radix Foundation — had previously raised $1.9 million in equity funding in the form of a SAFE note and will be issued 2.4 billion tokens by the Radix Foundation (see below).

In its own words, Radix DLT is building a decentralised finance protocol that aims to provide “frictionless access, liquidity and programmability of any asset in the world.” The Radix team also claims it has overcome the scalability issue that typically plagues decentralised finance and blockchain-based ledgers.

In a public test of the Radix network last year, it claims to have achieved over 1 million transactions per second, a throughput over 5x higher than the Nasdaq at its peak.

It also positions itself as different from other distributed ledgers and decentralised protocols. Radix is “not trying to be a general purpose platform,” says CEO Piers Ridyard. “Decentralised finance, and by extension, the financial industry, is a highly specialised sector that requires a highly specialised set of tools and incentives. Unlike the general purpose protocols that came before it, such as Ethereum, Radix is building a layer 1 protocol specifically for decentralised finance.”

Benefiting from more than seven years of R&D carried out by founder Dan Hughes, a self-taught coder from the North of England, Ridyard says that Radix’s sole focus on DeFi from the get-go means Radix is lowering the barriers to adoption via integrations with payment rails and consumer applications, and increasing on-ledger liquidity by making it as easy as possible for developers to build new DeFi apps. The latter consists of the Radix Engine, a developer interface that claims to enable quick public ledger deployments using a “secure-by-design” environment.

But what’s the problem DeFi potentially solves?

At the highest level, proponents of so-called DeFi point to the fact that every system in finance is essentially built on its own, proprietary, non-compatible technology stack that still has far too many human processes behind it. For example, the London Stock Exchange, the U.S. Nasdaq and the Shanghai Stock Exchange are all built as “islands.” To trade across them requires centralised technology, protocol and legal integrations with each.

“That is because finance, lending, borrowing, swapping and issuance are all done in these little islands of technology that require legal contracts and Excel spreadsheets sent over email as the connective tissue,” says Ridyard. “APIs are improving this process, but there is no such thing as a standard API; Plaid became a $5.3 billion company for essentially this reason.”

By being decentralised and interoperable from day one, it’s this ability to trade across ledgers and asset classes programatically that DeFi systems such as Radix want to provide.

“This is the core and key difference for assets and services that are built on public ledgers,” explains Ridyard. “As soon as they are built on Radix, they become interoperable. I can seamlessly and programmatically move my assets from the services of one application, built by one company and team, to that of another, built by a different company and team, but issued and launched on the same decentralised public ledger. The public ledger acts as an interoperable platform for many startups to experiment and build better versions of existing products (such as stock exchanges) or entirely new products (such as continuous function market makers) that are just not possible with the current systems.”

Worth noting, Ridyard says that from a consumer point of view, the products and services aren’t likely to change much in their appearance — they’ll still be accessed via mobile apps and will probably be offered via regulated companies as they are today. Instead, he says the consumer-facing upsides will be speed, higher rates on deposits and the seamless ability to swap between asset types without needing to go into cash as the interim asset.

Adds the Radix CEO: “I should also stress that decentralised finance is not about moving existing banks onto public ledgers. It is about unbundling of banking services (borrowing, lending, investment) into applications that can all interoperate on a single public network. Banks are like newspapers coming into the internet age, some will make the transition, but not all.”

Cue statement from LocalGlobe’s Saul Klein (for posterity, if nothing else): “I see the same revolutionary potential in the Radix team as I did with the Skype and Netscape teams at the birth of the internet. We’re excited to join them at the start of a new decentralised network revolution.”

*Radix has two main legal entities: Radix DLT Ltd and the Radix Foundation. Since inception, both have received funding in different forms. The Radix Foundation is a not-for-profit company limited by guarantee, registered in the U.K., and was created to promote the long-term interests of the Radix Public Network as well as help manage the Radix community and ecosystem. Between 2013 and 2017, people from the Radix Community contributed 3,000 BTC in exchange for 3 billion RADIX tokens issued by the Radix Foundation. These tokens arguably have value as they’re needed to pay the transaction fees to use the Radix protocol.

The Future of Remote Work, According to Startups


This post is curated by Keith Teare. It was written by Theras A.G. Wood. The original is [linked here]

No matter where in the world you log in from—Silicon Valley, London, and beyond—COVID-19 has triggered a mass exodus from traditional office life. Now that the lucky among us have settled into remote work, many are left wondering if this massive, inadvertent work-from-home experiment will change work for good.

In the following charts, we feature data from a comprehensive survey conducted by UK-based startup network Founders Forum, in which hundreds of founders and their teams revealed their experiences of remote work and their plans for a post-pandemic future.

While the future remains a blank page, it’s clear that hundreds of startups have no plans to hit backspace on remote work.

Who’s Talking

Based primarily in the UK, almost half of the survey participants were founders, and nearly a quarter were managers below the C-suite.

Prior to pandemic-related lockdowns, 94% of those surveyed had worked from an external office. Despite their brick-and-mortar setup, more than 90% were able to accomplish the majority of their work remotely.

Gen X and Millennials made up most of the survey contingent, with nearly 80% of respondents with ages between 26-50, and 40% in the 31-40 age bracket.

Founders Forum Remote Work Survey

From improved work-life balance and productivity levels to reduced formal teamwork, these entrepreneurs flagged some bold truths about what’s working and what’s not.

Founders With A Remote Vision

If history has taught us anything, it’s that world events have the potential to cause permanent mass change, like 9/11’s lasting impact on airport security.

Although most survey respondents had plans to be back in the office within six months, those startups are rethinking their remote work policies as a direct result of COVID-19.

How might that play out in a post-pandemic world?

Based on the startup responses, a realistic post-pandemic work scenario could involve 3 to 5 days of remote work a week, with a couple dedicated in-office days for the entire team.

Founders Forum Future of Remote Work Perspectives

Upwards of 92% of respondents said they wanted the option to work from home in some capacity.

It’s important to stay open to learning and experimenting with new ways of working. The current pandemic has only accelerated this process. We’ll see the other side of this crisis, and I’m confident it will be brighter.

— Evgeny Shadchnev, CEO, Makers Academy

Productivity Scales at Home

Working from home hasn’t slowed down these startups—in fact, it may have improved overall productivity in many cases.

More than half of the respondents were more productive from home, and 55% also reported working longer hours.

Founders Forum Remote Work Productivity

Blurred lines, however, raised some concerns.

From chores and rowdy children to extended hours, working from home often makes it difficult to compartmentalize. As a result, employers and employees may have to draw firmer lines between work and home in their remote policies, especially in the long term.

Although the benefits appear to outweigh the concerns, these issues pose important questions about our increasingly remote future.

Teams Reveal Some Intel

To uncover some work-from-home easter eggs (“Better for exercise. MUCH more pleasant environment”), we grouped nearly 400 open-ended questions according to sentiment and revealed some interesting patterns.

From serendipitous encounters and beers with colleagues to more formal teamwork, an overwhelming number of the respondents missed the camaraderie of team interactions.

Founders Forum Remote Entrepreneurs

It was clear startups did not miss the hours spent commuting every day. During the pandemic, those hours have been replaced by family time, work, or other activities like cooking healthy meals and working out.

Remote working has been great for getting us through lockdown—but truly creative work needs the magic of face to face interaction, not endless Zoom calls. Without the serendipity and chemistry of real-world encounters, the world will be a far less creative place.

— Rohan Silva, CEO, Second Home

The Future Looks Remote

This pandemic has delivered a new normal that’s simultaneously challenging and revealing. For now, it looks like a new way of working is being coded into our collective software.

What becomes of the beloved open-office plan in a pandemic-prepped world remains to be seen, but if these startups are any indication, work-life may have changed for good.

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The post The Future of Remote Work, According to Startups appeared first on Visual Capitalist.

RT @LydieLivolsi: Where Black Female Founders Can Find Funding, Resources, and More by @lolitataub in @MRKR https://t.co/k7WzZA6av4


This post is curated by Keith Teare. It was written by Lydie Livolsi (@LydieLivolsi). The original is [linked here]

In pandemic era, entrepreneurs turn to SPACs, crowdfunding and direct listings


This post is curated by Keith Teare. It was written by Jonathan Shieber. The original is [linked here]

If necessity is the mother of invention, then new business owners are getting very inventive in the ways in which they access cash. Relying on some long-tested and some new avenues to raise money, entrepreneurs are finding more ways to get public market cash faster than they would have in the past.

Whether it’s from Reg A crowdfunding dollars, Special Purpose Acquisition Companies (SPACs) or direct listings, these somewhat arcane and specialized financing vehicles are making a comeback alongside a rise in new funding mechanisms to get to market quickly and avoid the dilution that comes from private market rounds (especially since those rounds are likely to come at a reduced valuation given market conditions).

Some of these tools have existed for a while and are newly popular in an era where retail investors are driving much of the daily fluctuations of the public markets. Wall Street institutions are largely maintaining their conservative postures with regard to new offerings, so secondary market retail volume growth is outpacing institutional. Retail investors want into these new issues and are pouring into the markets, contributing to huge pops to new public offerings for companies like Lemonade this Thursday and creating an environment where SPACs and crowdfunding campaigns can flourish.

The rise of zero-commission brokerages and the popularization of fractional trading led by the startup Robinhood and adopted by every one of the major online brokers including Charles Schwab, TD Ameritrade, E-Trade and Interactive Brokers has created a stock market boom that defies the underlying market conditions in the U.S. and globally. For instance, daily trades on Robinhood are up 300% year-over-year as of March 2020.

According to data from the BATS exchange, the total trade count in the U.S. was up 71% and May trading was up more than 43% over 2019. Meanwhile, E-Trade daily average revenue trades posted a 244% increase in May over last year’s numbers.

Don’t call it a comeback

The appetite for new issues is growing and if many of the largest venture-backed companies are holding off on going public, smaller names are using SPACs to access public capital and reach these new investors.

Seed Investing Today: What’s Changed, What Hasn’t with Aileen Lee and Jason Lemkin (Video + Transcript)


This post is curated by Keith Teare. It was written by Team SaaStr. The original is [linked here]

What Nobody Tells You About Seed Investing with SaaStr CEO Jason Lemkin and Cowboy Ventures Founder and Partner Aileen Lee

Aileen Lee | Founder @ Cowboy Ventures

Jason Lemkin | Founder @ SaaStr

 

Jason Lemkin:
… founders what, how things really work, what it’s really like. And not only is Aileen one of the investors that many of us all look up to-

Aileen Lee:
Oh, God.

Jason Lemkin:
… but she also… What’s that?

Aileen Lee:
Oh, God.

Jason Lemkin:
Well, we admire, but also she’s very early in the micro VC trend. We won’t talk about it too much today, but we will talk about a little bit. When Aileen founded Cowboy Ventures in 2012…

Aileen Lee:
12, yep.

Jason Lemkin:
2012. Now you open up TechCrunch or StrictlyVC or anything, you’ll see a dozen firms a week literally sometimes. Five or 600 since then, but back then, you could probably count the seed firms on one hand or two hands.

Aileen Lee:
Yep. And I was not the earliest. We can talk about that.

Jason Lemkin:
But you were in the… Let’s call you Gen 1, even though… At this new wave. I think it gives us a perspective that maybe we don’t get in some other places, in addition to many great investments over the years. I thought we could talk about really what’s changed, what hasn’t. And it’s funny, just to kick it off, I’ll tell you we’ve heard two… First of all, two things. We’ll have some time. I know I’m not always great at it. But put your questions in the Q&A and we’ll answer as many as we can, right in the Zoom, put them in.
But what I want to do… Oh, I had forgot about this slide. Oh, hold on. Just one take pause. Sorry, I’ll come back to this. I don’t want to go out of order, but I did want to highlight one thank you and whatnot. We’ve been doing these SaaStr events since 2015, the SaaStr Annual. This is just a funny story. You can learn a lot from people on how they act and treat people backstage. You can learn a lot from the COs that bail the last two weeks and how they quit. They say that they have other issues. Then, you see them heli skiing on Instagram. There’s one like that. Those are the unicorns that always bail.
You can learn what founders think of VCs. I will tell you how many COs I’ve talked to that say, “I’ll come to SaaStr, but I don’t want my series B or series C VC interviewing me,” which is sort of interesting. And then you can learn about the people that are for you and this is maybe too nuanced for some of the folks here, and I want Aileen to do most of the talking, but we had to reschedule SaaStr Annual this year right during COVID-19. It was terrible.
The last speaker I was talking to was Aileen and she was like, “I’m coming. I’m here.” We were going through these slides, and not that many people are troopers and supportive. It sounds minor or technical, but if you want to due diligence on a human being, I get to do it a few 100 times a year. And to see someone that is supportive… Even if it’s something that seems minor, most people don’t do it. Most people don’t don’t go the extra yard, so that meant a lot to me. It’s another reason just to take their money as an aside [crosstalk 00:02:58].

Aileen Lee:
Both of our money, actually. Not just mine. Jason’s, too.

Jason Lemkin:
But it meant a lot to me. I want to talk about this slide. I used it in kind of my breakfast pre warm-up, the crazy times we’re in. But before we even get there, we had two talks today. I sat in on all of them and I heard different opinions. From Satya from Homebrew, we just heard that seed’s at an all time high. People have to deploy money. Deals are getting done left and right. They’ve done four or five deals since March and valuations are down a bit and the bar’s gone up, but seed investors know they only get one bite of the apple.
They can’t do the A or the B if they miss the seed. We heard, in a way, like an 11, right? And then I asked Keith Rabois this morning how it’s doing. He said, “Seed is at 10% of what it was.” So, we’re [inaudible 00:03:48]. If you had to summarize, then I want to talk about this slide, just where are we? On either a scale of 1 to 10 or a percentage basis, where is seed investment?

Aileen Lee:
I would say… I don’t know if I can put a number on it, but also, thank you for having me, Jason.

Jason Lemkin:
Thank you for coming.

Aileen Lee:
And hi, everyone. Thanks so much for coming to hang out with us. When shelter in place started, the conversation we’ve had internally on our team is we have to think of ourselves as Navy SEALs, where we’re at base camp right now, and we’re going to train and we’re going to work on our playbooks and do our research. Obviously, our first priority was working with our portfolio companies, but if you’ve got your investing engine on and you’re rearing to go, it didn’t feel like in February or March or April or May was really the time to deploy. I have that feeling we will get super deployed probably maybe end of summer, this fall, and the winter, because I think a lot of the people who are raising right now are still raising on ideas and plans that were pre-COVID.
And I think we need to give people time to adjust their plans and their mentalities, and also, we also need to give folks time, folks who’ve been laid off who have a little time to decompress, and then they think about an idea and they spend the summer working on it and they’re planning it out. Maybe they’ll come out and raise the fall, but if you look at historical recessions, at least in tech, those are just one of the best times to be an investor and the best times to start a company that people are scrappier, they’re really on a mission, they’re clearly not going to get rich quick, and they attract really great hardworking people who are on the mission with them.
I think that’s going to be an awesome time to invest, but I don’t think we’re quite there yet. Personally, our team has been holding back a little bit. We’re taking a ton of meetings, but I think in terms of quality, the best time will probably be… It hasn’t really started yet.

Jason Lemkin:
Let’s just-

Aileen Lee:
I don’t know. What do you think about that?

Jason Lemkin:
Well, I don’t know the answer. My view… I want to depack your term deploy, because it’s an insider term and I want to explain it to founders and [inaudible 00:06:00] what deploy means, because it’s not obvious. I want to hear more views. My views… First of all, March 15th, today has been utterly exhausting on many levels. The rate of change, right? I think whether it’s doing portfolio triage or learning to take pitches over Zoom or whatever people are doing, it’s hard as human beings. We can only process so much change, and I feel like we’ve been through three worlds since early March. I think everyone needs some stability, whether it’s good, bad, or ugly or in the middle to survive.
So, I’m just trying to learn. What I personally have seen in my little portfolio and the founders I work with is what I call the COVID beneficiaries. The ones that have accelerated since March. I mean, it’s what you see on the BBP cloud on the left. They’re on fire. They are on fire, the ones that have grown faster and I’ve seen, and I want to get your views on this. I’ve seen the folks that are the ones that are even growing a little bit less fast where you would think a VC should take a bet.
Look, okay, let’s say half your business sells to eCommerce, but 20% sells to live events. Okay. Well, do the math in your head. You should still be growing, but growing more slowly. I see those folks struggling, which maybe isn’t totally logical, but if you’re a COVID beneficiary, it’s like the money is there at least from someone you’ve met. At least from someone you’ve met, the money’s there.

Aileen Lee:
But these are also super… I mean, you were talking about growth stage companies where they’ve got strong product market fit.

Jason Lemkin:
Anyone post-revenue.

Aileen Lee:
Yeah, and they’ve got referenceable customers, they’ve got pipeline, they’ve got funnels. Seed is just a totally different game, right?

Jason Lemkin:
Yes.

Aileen Lee:
But I think, yeah, for … I mean, the cloud index is not even post-revenue. That’s way post-revenue.

Jason Lemkin:
Yes.

Aileen Lee:
And so, they’re just way easier due diligence, I think.

Jason Lemkin:
I want to get your thoughts on this slide on the best of times and the worst of times, but when you say deploying capital, let’s just [inaudible 00:08:00] for a minute. How big is your… I was going to tease on this in a later slide, but how big is your current fund?

Aileen Lee:
95 million.

Jason Lemkin:
Okay, 95 million. And you have two GPs, right?

Aileen Lee:
Mm-hmm (affirmative).

Jason Lemkin:
[crosstalk 00:08:11]. You have two partners and one or two other investing?

Aileen Lee:
Yeah. We’ve got two awesome other people on our team, Amanda and [Jamara 00:08:18]. [crosstalk 00:08:19].

Jason Lemkin:
Okay, but roughly that means you and Ted each have 50 million. It could vary, but it doesn’t really matter. 50 million. How long before COVID were you planning to take to deploy that 50 million? Because, that’s what this deploy means. It means over a timeframe. Right?

Aileen Lee:
Yeah, it’s … I mean, my version of deploys is kind of deploy capital, but kind of deploy yourself as an investor. [crosstalk 00:08:40] So, when you think about there are … Sometimes, on work it’s super intense and then you have a little … You have to take advantage of the lulls, because sometimes it gets super intense, whether you’re an operator or you’re an investor.
Sometimes, when it rains it pours, right? There’s just, you’ve got five really interesting companies in diligence and parallel and you think they’re all potentially things that you could invest in and founders you really want to work with, and there’s times that you’re not really seeing things that you think are going to get there on the other side.
And so, I think probably it will be really intense this fall and in the winter in terms of great ideas, new waves. Now, the one thing we don’t have that’s new is … Some of the waves have been because there have been new platform shifts, because of mobile or because of cloud or because of security or because of a bunch of other stuff. We don’t…
That’s not clear what the next big tech platform shift opportunity is, so I think that will dampen the intensity a little bit, but I think in terms of some investors feel anxious, like “I need to be writing checks all the time” or “I need to be making investments all the time”, I don’t think that’s true.
You got to … Sometimes it’s slow and let it be slow, and then sometimes it’s really fast and really intense and you’ve got a lot going on, and that’s when you make your investments and sign up to work with new folks.

Jason Lemkin:
So, traditionally in normal and good times, there is a sort of very slow-paced pressure as a VC, which is to do X deals a year. There’s many types of pressure. As time goes on, it’s how many unicorns, what’s your multiple, what’s your DPI, but in the earliest it’s just if you don’t do enough investments, you just can’t make money, right?

Aileen Lee:
Yes.

Jason Lemkin:
If you do no investments, you’re toast. So, and if you’re … How many investments do you and Ted each do a year, roughly? What’s the target?

Aileen Lee:
It’s a wide range. We might do six to 12 a year.

Jason Lemkin:
Together as a team, right?

Aileen Lee:
Yeah. Mm-hmm (affirmative).

Jason Lemkin:
So, each of you will do three to six.

Aileen Lee:
Yeah.

Jason Lemkin:
Okay, that’s a classic seed portfolio. And then as you get [crosstalk 00:10:37].

Aileen Lee:
It’s probably actually a slower pace than I think. We’re probably on a three, three and a half year fund cycle where we’ll make our initial investments. Whereas, other funds are maybe on two years.

Jason Lemkin:
Got it. So, that’s why you were less, right?

Aileen Lee:
Yeah. Yeah.

Jason Lemkin:
And then later-

Aileen Lee:
We’re definitely more [crosstalk 00:10:51]-

Jason Lemkin:
… it’s one to two.

Aileen Lee:
… hopefully a quality, not quantity kind of a thing.

Jason Lemkin:
And so, usually what happens… Let’s say I’m working at Cowboy and I’m supposed to do three or four a year. We’re coming up on June and I’ve done none. I start to feel pressure, don’t I?

Aileen Lee:
Yeah.

Jason Lemkin:
Even if no one says it.

Aileen Lee:
Totally.

Jason Lemkin:
Do you think that pressure is going to come back at the end of the year and therefore … When you talk about deployment, do you think folks will want to do a lot of deals in the back half of the year because they’ll feel the pressure to hit their quota?

Aileen Lee:
It’s very possible.

Jason Lemkin:
Okay, so let’s talk about this slide for a minute. And you have a broad exposure. You have exposure to segments that are, I call COVID beneficiaries. You have exposure to segments that probably are heavily impacted, right?
How do I … How you get your arms around the fact that cloud stocks on the left are at an all time high and we almost, and California is one of the worst economies in the Western world? How do I … How are you thinking about this?

Aileen Lee:
I mean, the multiples that folks are trading at right now on the left hand, I don’t totally understand it. I think it’ll be interesting to see, because also the numbers, we don’t have Q2 numbers yet. When Q2 numbers come out, for some folks they may be softer because budgets were not really locked up for most of Q1.
And so, I mean, I think if you are Zoom, obviously, or maybe an infrastructure, you probably won’t see a lot of the budget freezes and the layoffs and your sponsor being laid off. But I think for a lot of vertical SAS, they’ll see impacts when the Q2 numbers come out. And so that may change what this chart looks like maybe in July or August.

Jason Lemkin:
Yep. When you look at Main Street versus the cloud index, what are you excited about today? Are you more excited about eCommerce? I mean, what especially non-obvious things are you more excited about?

Aileen Lee:
Yeah. I mean, I think in a bunch of categories like healthcare and distance learning and infrastructure, this recession, which super sucks for a lot of people, it is going to be an accelerator for tech, because businesses are going to rely on technology and are also going to adopt technology faster.
So, it’s like in healthcare, one of my friends who’s a doctor says she feels like she fell asleep in 2020 and woke up in 2030 in terms of …

Jason Lemkin:
Yeah, I bet.

Aileen Lee:
… the industry’s willingness to adopt technology. Because it’s been a fight and it needs to be adopting technology across the board. And so, but now they have to.

Jason Lemkin:
Yes.

Aileen Lee:
And so, I think for a lot of states and regulatory agencies and businesses that have been pushing back to enable remote work, they’re going to have to change a lot of stuff and that’s going to take … A lot of investment’s going to happen in software. It’s not going to be like …
If the question would be like, “Do you feel like we have too many unicorns?”, we are going to have more unicorns. There’s no question in my mind there’s going to be more in the US and more in China, and then an increasing number in Latin America and in India and other markets that are really huge because this is… We’re in a good sector, tech is only going to get more important and more valuable.

Jason Lemkin:
So even if you feel that multiples on the left are a little aggressive, if you’re bullish on unicorns, having coined the term. If you’re bullish on unicorns, what does that mean overall for seed investing and venture investing? If folks feel good about unicorns, does that mean it should still be easier? There’s room for many, many more startups. What does that mean for a founder?

Aileen Lee:
Wait, hold on a second. I have kids in the background.

Jason Lemkin:
Bring them on.

Aileen Lee:
Thanks.

Jason Lemkin:
Lunch time?

Aileen Lee:
Yeah, exactly. It’s lunch break at school. Wait. What was the question?

Jason Lemkin:
What does it mean… So we’re in these weird times, the cloud shares are at an all time high, NASDAQ’s closed, this crazy recession we’re in, but you’re bullish about unicorns. Right?

Aileen Lee:
Yeah.

Jason Lemkin:
Unicorn generation, how does that inform your thinking in terms of types of investments? Pace, valuations, anything? Does it inform your… Does it change your thinking?

Aileen Lee:
Yeah. No, I mean, I think … Look, I was an AEB investor for 12 years and did some growth too and I switched to seed. Partially, I think, for personal reasons. I think it’s a better fit for me and it’s more fun. I’m really passionate about seed investing. And there are lots of really good folks that we partner with at A and B and C and D, who they’re really good at that, and this is the one thing that we want to focus on. We think it’s also a great category for like, you are getting in at the riskiest time where the valuations are lower, but there’s way more upside. It’s also more collaborative as you know.
I had lots of friends in seed who were co-investing with each other and helping each other build companies. Whereas, at A and B and C, you generally, you can be friends with everyone in BC, but you have to beat all of them to win the A or the B. And then you’re carrying the water with the founders for the next decade as a lead board member, and you don’t get a ton of help from other people. So, I love seed and I’m super excited about it.

Jason Lemkin:
So I want to dig into that next, on the next point. But before we leave this slide, do you have any portfolio companies that have benefited from this time that you didn’t expect? Maybe even Zoom, we didn’t fully expect it would be this big. But are there any that folks could learn from they’re like, “Wow, I’m just kind of surprised that one is a COVID beneficiary.”

Aileen Lee:
Not really a surprise. I guess probably one of the more notable companies that we work with is Guild Education. And I think because a lot of the folks that they work with, they basically help hourly workers who work for big companies like Disney and Walmart get high school diplomas or college educations or get vocational training. And I think because there’ve been a lot of layoffs in hourly workers, I think there could be a question about whether that was going to hurt a company like Guild. But it’s turned out that a lot of enterprises who have furloughed workers are suggesting that people who are furloughed use the time to actually get an education.
It’s also being used as an off-boarding benefit. So like, “We’re really sorry, we have to let you go. But we’re going to help you get on a career path, so you can get this benefit of trying to figure out where you’re going to get your next job.” So there’s been a bunch of things that actually have helped accelerate Guild that I think could have been a question. And obviously just the fact that they built this incredible infrastructure for remote learning is great.

Jason Lemkin:
Yeah. It’s an interesting one because on the one hand, it’s remote learning, right?

Aileen Lee:
Mm-hmm (affirmative).

Jason Lemkin:
And very powerful. On the other hand, it’s a benefit, right?

Aileen Lee:
Yeah.

Jason Lemkin:
You know the company much better than I do. But it’s a benefit, that’s where the budget comes from. That’s why it’s done well. But it’s a benefit, and as soon as folks cut at traditional companies and cut people, you would think the benefits … We’ve seen many folks in the benefits space be exactly linearly impacted.

Aileen Lee:
Totally.

Jason Lemkin:
Linearly impacted with layoffs and it’s natural. Right? It’s like cutting back on rent. We’ll cut back on benefits.

Aileen Lee:
Totally. Totally. So that was the one, it was like, “Uh-Oh.” But so far it’s going great.

Jason Lemkin:
That is interesting. What’s your gut? What percent of startups you think are COVID beneficiaries? Have you looked at it? Do you have a sense? What do you think?

Aileen Lee:
I think, unfortunately, it’s a pretty small, it’s a small percentage.

Jason Lemkin:
Yeah. [crosstalk] percent are benefiting.

Aileen Lee:
I’d say 10 to 15. I don’t think it’s …

Jason Lemkin:
10 to 15?

Aileen Lee:
Yeah. What do you think?

Jason Lemkin:
I made up a number just based on a very limited data set. I think it’s, in SaaS, in cloud, if you define it that way, I think it’s about 15 to 20%.

Aileen Lee:
Yeah.

Jason Lemkin:
And it’s more of the folks on the left than we would have thought, which maybe there’s some learning from that. We missed it. We knew Slack would benefit, but actually Atlassian’s benefited much more than Slack. Did we know bill.com would benefit as much as Zoom? I don’t know. If you didn’t analyze its business model, you would think that intuitively. Right?

Aileen Lee:
Yeah.

Jason Lemkin:
But I feel the question, and let’s maybe transition to that. Let’s assume it’s 10 or 15 or 15 or 20, it’s a big delta. But you’re not saying it’s single digits, right?

Aileen Lee:
No.

Jason Lemkin:
For the rest of the year, or at least for the next quarter too, would you only invest in COVID beneficiaries or would you invest in folks in heavily impacted industries? Like how you thinking about that?

Aileen Lee:
It’s a spectrum. I don’t think I’m going to be going to try and find a lot of travel startups right now. But I do think … we’re investors in a company called Homebase that basically sells SaaS for small-medium size businesses to do hourly work management. Like scheduling shifts, paying folks, giving them cash advances, communicating with the manager. Obviously, the majority of the people who they were managing the shifts and the payments for who were working in February, they were not working in March or in April.
But when businesses reopen, I think they are going to rely on technology more than ever before. Some of the older businesses that were a little hesitant about technology, they may not reopen. And the people who start businesses in the next generation are going to be like, “I need a full stack of modern software to run my business, so it’s flexible and it’s nimble and I have good transparency and I can do it from anywhere.” And so they will adopt things like Homebase at a faster rate than businesses that have been around for 30 years. And so I think if you time it right, I mean, you can basically ride the wave of all these businesses reopening.

Jason Lemkin:
For your existing portfolio and new investments, can you model that? I mean, you have to have at least have a position, right?

Aileen Lee:
Yeah.

Jason Lemkin:
Is it six months? 12 months? They just announced today, Disney World’s going to start to reopen.

Aileen Lee:
Wow.

Jason Lemkin:
When will Homebase get back-

Aileen Lee:
When is it going to reopen? Is it going to be like six feet apart and every other? Like on the rollercoaster.

Jason Lemkin:
July. Yeah. They’re going to adopt the Shanghai processes. Attendance will be half. You can’t hug a prince or a princess and you have to get reservations.

Aileen Lee:
Is the price going to be double?

Jason Lemkin:
Well, that’s a question for a lot of things down the road. If the price doesn’t double, I mean, that’s a restaurant question too, right?

Aileen Lee:
Yeah.

Jason Lemkin:
I mean, if prices double, it all works. And obviously Disney can carry a business for a little while. Those are some of the scarier questions for our economy. Is can we adapt to things? Can we adapt to Coachella when we’re 20 feet apart? I mean, I don’t know. I don’t know if Coachella $4,000 a ticket works, does it?

Aileen Lee:
No, but also it was funny. I was in San Mateo County. I think they had a rule that some camps can open, but they have to, you have to sign up for four weeks at a time because they don’t want kids in and out. But it’s like that really disadvantages people who cannot afford four weeks of camp.

Jason Lemkin:
Oh yeah.

Aileen Lee:
It’s not good. Yeah. There’s a lot of challenges.

Jason Lemkin:
A lot of challenges. A lot. And I think a lot of, probably beyond the scope of what can we get into today, but a lot of these flattening things you might… and we can talk about it in deal flow. You might think some flattening helps less advantaged, but I don’t know. Do you think pitching over Zoom helps outsiders more? Do you think it helps the founder that didn’t go to Stanford and didn’t go to YC? Or is it maybe not help as much as you think pitching?

Aileen Lee:
I am hopeful. I mean, I think there’s two things, there’s the pitching, but there’s also, where’s the company going to be based? That’s all up in the air now. So before, I mean, look, when I was at Kleiner, I spent a year spending a lot of time in New York, there was a lot of stuff going on in New York. And when I came back and I was like, “Hey, I found all these cool companies like Mongo and Warby and Stack Overflow.”
And some partners were like, “Why are you wasting your time? No big companies are ever going to be built outside the Bay Area. We clearly didn’t teach you well.” And same thing with HomeAway actually, it was the same thing. It’s like, “Why are you wasting your time?” And so things have changed a lot in the past 10 years, but I am hopeful that I was just on the phone with one of the CEOs we work with today, who is in New York and they’re moving to Denver. I think over the summer, people are going to be moving all over the place and trying to figure out how to run remote or partially distributed or clustered companies. And I think that will advantage founders who are in different places and are not on the coast.

Jason Lemkin:
I think it started like last week.

Aileen Lee:
You think so.

Jason Lemkin:
I think that folks that live in San Francisco, founders and executives that live a crummy lifestyle in San Francisco, in gross parts of the city that have sacrificed that maybe even have families, that have sacrificed a lot, are looking around. Like several conversations I’ve had with looking around, like, “What is the point of being in San Francisco today? I cannot visit Salesforce. I can not visit Twilio. I cannot visit a customer. And I have a baby and a husband or a wife or significant of living in not just a small apartment, but a gross part. I’ve traded off so much.” And I three people I know packed up the minivan and left.

Aileen Lee:
Totally. I agree. Like we had another CEO that we worked with, they packed up their car and they rented an apartment, or a house on a Lake in South Carolina. They had never been there before. They’d never been to the town and they just drove there and they lived there for the past month and a half. And he’s been so much more productive and so much happier. There’s a whole nother thing we won’t get into around mental health and all. Especially if you’re by yourself in a small apartment, it’s not happy making.

Jason Lemkin:
Yep. And how do you think, like, let’s just, maybe this is a, not a good example, but when you invested in Guild, they were based in Denver, right?

Aileen Lee:
No they’re based in Palo Alto.

Jason Lemkin:
Oh, I thought it was based in Denver.

Aileen Lee:
They moved to Denver. It’s funny because Rachel came to us and said like, :Hey, I know we just had a meeting and we discussed, we need to hire a VP of engineering and a VP of product and a VP of marketing. But we also want to move the company in Denver.”
And we were like, “What? How are we going to find those people in Denver?”
And she was like, “Trust me. There are some really good companies there. And some tech like Facebook and Gusto are opening offices. It’s a great place to live. I think I can get people from the east coast and the West coast to move to Denver. Because if you want to have family or if you want to buy a house, you want to send your kids to public school. It’s a great place. And I want to build a company where people can have a family and have a good home life and have a great job.”
And I’m so glad that we were like, “Okay, do it.” Because it was a really smart move in probably three or four years ahead of her time.

Jason Lemkin:
Yeah, it was. So she’s built a unicorn now. And let’s compare today. I mean, you had no choice, but did you have reservations? Did you try to talk her out of it?

Aileen Lee:
Oh, definitely. I didn’t try to talk. But I was like, “Are you sure?” But I mean, I think it gets a lot of the stuff on a slide. Which is we are seed, I would say half the time that we invest, they haven’t built a product yet. There’s no technology, they need money to actually build software. And then half the time they’ve built like some MVP we do about, we’re probably 75% enterprise, 25% consumer, we’re generalists. We usually invest between 500 K to one and a half million. We like to co-leader co-anchor seed rounds and we almost always co-invest with other folks, angels and institutional seed folks like yourself.
And so at Guild, they had basically had an idea for kind of reboot your career boot camps. And they came up with a three hour bootcamp and they posted it on Craigslist. And they rented strip mall, vacant space and they were holding these free three-hour boot camps. And then they were texting the people afterwards asking for. And then they charged 40 bucks and then 80 bucks. But that’s basically what they had when we invested. And so it doesn’t have to be perfect at seed.

Jason Lemkin:
And so I want to make sure we hit the bullets on this slide, but so today let’s fast forward today. So, four years ago when Rachel said, “We’re moving to Denver to build my management.” And now that I understand kind of how raw the vision was in the beginning, I get it. Because it wasn’t technology heavy in the beginning, that’s for sure. So I get it. But today, how are you feeling about not just New York or Denver, how are you feeling about Baton Rouge or Sioux Falls or Tampa? How does that strike you today for new deals? And what would you advise founders that are thinking about leaving the Bay area now?

Aileen Lee:
Yeah. I mean, it’s a better time than ever to both, to start a company in a different part of the United States. People are going to have to be way more purposeful around culture building and about communication. Because it’s still been a rarity to build a really successful scaled company without having formative team members live and work in the same place and be next to each other. A lot of times we recommend for portfolio companies that are opening up second or third office, it’s like you have people all in the headquarters and then you send out people who really understand the culture and how to have a lot of internal credibility and they start the new offices.
In some cases, I’m really curious as like, founders may start companies they’ve never been in the same office when they start the company. When we hear pitches this fall, we’re probably going to hear people who have not seen each other. But SVT Robotics is a company that is based in Virginia, Virginia Beach, actually. And it’s kind of like MuleSoft for warehouse robotics for integrating. If you’ve got a third party robotic arm and you want to integrate it with your conveyor belt or your WMS, you’ll use SVT instead of writing custom code. The founders know warehouses and they know warehouse automation really well. And they’ve lived in Ohio and Pennsylvania and Virginia, and all the places where warehouses are. And we’re super psyched to be investors in that company. And we’d love to find more like them.

Jason Lemkin:
Those are all really interesting examples. Today if you met with a startup and you’re doing seed, so it’s early, but it’s the kind of company that clearly could benefit in a year or two from some Salesforce alums or Box alums or Twilio alums. They’re doing a classic playbook and they want to move to Arkansas or Ohio or Bismarck, is that a no in this flattened world, in this distributed world? Do you think you can get VPs to join a company, Bay Area style VPs, to join nonbearing companies in 2020? Do you think that’ll change?

Aileen Lee:
I think we can do it. It’s funny at Textio, another company that I work with, which is based in Seattle, we tried hard to make the whole team Seattle-based and when we were doing our head of revenue search, we said like, “Maybe we should open it up and look at people who are not based in Seattle.” And we found a great person who’s based in the Bay area. I mean, at the time we had a deal where he was going to spend a week or two in Seattle, a month and then a week or two at home or on the road.
And so we’re fortunate that we had that time together before we wanted to go into shelter in place, but it works. And he’s a huge part of the team and they’re making it work. So I think we’re all learning fortunately or we have been learning over the past couple of years how to make kind of commuter style jobs work and distributed team work which is a good warmup for the next three years we’re about to live through.

Jason Lemkin:
Yeah. Yeah. I think especially for B2B in the next couple of months to watch is can we flatten management teams? Not just the Gitlabs and the Zapier’s, but can bury a type executive, whether they’re based in the Bay area literally or in New York. But folks that come out of the traditional folks where we poach… I mean, once you scale, you want to hire someone to set up [inaudible 00:31:06]. You really do. I mean, everyone that runs Salesforce today came from Oracle and everyone that runs Twilio came from Salesforce. There’s a reason. And if folks in Virginia Beach or wherever it is can hire these folks now is easily, it changes everything. Doesn’t it?

Aileen Lee:
Well, I mean, like internally at Cowboy every other week, we have scenario planning time where we just kind of think about like, “Okay, what if this is 24 months? What if this is 36 months? What if nobody can get on a plane until summer of 2021 the earliest?” From a sales perspective, how is that going to change sales? How’s that going to change marketing? The fact that a lot of our portfolio comes in enterprise, they got a lot of sales done or relationship building done around conferences whether it’s-

Jason Lemkin:
Up in 40%, it turns out yeah. Like 40%.

Aileen Lee:
Like HR Tech Yukon, whatever it is. You may not have been spending a lot of money getting a booth, but like you were hosting dinners, you were meeting up with people and when that doesn’t happen, how is that going to change sales?
I think maybe that’s going to be better for startups because having a lot of money to buy people expensive dinners is not going to be as important and it sounds like COVID has for at least in the folks that we’ve been talking to the past couple of weeks, it’s now a common bond. You make small talk over Zoom for five or 10 minutes about like what’s been hard or how the family time’s been good or whatever, then you get right into the sale process. And the customer on the other end is like, “This sounds really good. I need this. Let’s do it.” And so in some ways, it’s like more efficient, but we’re staying really close to it.

Jason Lemkin:
Yeah. For what it’s worth. And I want to talk about how you’re sourcing deals now. But my personal view just for the conversation is I actually think this selling over Zoom at least for now, is substantially benefiting folks with brands because if I don’t know you yet, and I can actually meet the CEO and I’m meeting [inaudible 00:33:08] over Zoom, don’t get me wrong, but we’re all taking more vendor risks. We’re taking more investment risks. More risks just has to be taken in the shelter world. And it’s comforting to know it’s BOXX. It’s comforting to know that well it’s a unicorn now.
Maybe Gild isn’t as great as Schmild or whatever. I don’t know, but if there’s risks during discovery, maybe I don’t want to take risk today. Now if you’re the only vendor in the space, it’s different, if you’re the notion or tandem, but I wonder if one of the reasons these cloud stocks are going to keep growing is because, “I’ll just stick with JIRA.”

Aileen Lee:
I kind of worry a little bit about whether we’ll move into this like nobody ever got fired for buying IBM for buying certain brands. And I do think like if you are a seed stage founder who is listening to this right now, or you’re pre-seed, or if you’re not a brand, it’s going to be hard to make new sales I think in the next two or three quarters at a minimum.
So being willing to give your product away for free or like changing the packaging so that it’s virtually free for the next six months, and then people pay for it, but getting people to use it and showing that it’s super valuable. And so that when people have budgets again, they’ll buy it. They’ll pay for it and that’s referenceable. I think for a lot of seed stage companies that’s the thing to do because it’s really hard to get new budget, even if you’re an existing brand, but as a new brand, it’s even harder.

Jason Lemkin:
It is harder. Yeah. It is a fun topic we could dig into, but we can if you want. But tell me on this. First, I want to talk about how you find deals and how founders can pitch you. But just the micro topic, say in today’s world, I know you’re slowing down a little bit to learn, but how you’re feeling about being pitched on Zoom? What’s your personal view of not meeting in real life? What’s your [inaudible 00:35:00] one to 10?

Aileen Lee:
I think it’s a bummer on both sides, right? I mean, the benefit is things have been so hot that the velocity of decision making and relationship building was I think untenable. Founders were optimizing for getting it done fast. And I think in many cases, they weren’t really getting to know the people that they were getting married to and who were… Because once you get people on your cap table, you can not get them off.

Jason Lemkin:
Never.

Aileen Lee:
So I was really bummed about how fast the process was happening, where we weren’t really having a chance to get to know people, and they weren’t really getting to know who they were taking out to their cab table. So I think this will actually be better in terms of giving people…
Then we were thinking about, when we moved in shelter in place, “Okay, how are we going to get to know people?” We already had a diligence process, but in marketing, in old fashion marketing, I don’t know if you remember the four P’s? There was price, place, promotion, and product.

Jason Lemkin:
Mm-hmm (affirmative).

Aileen Lee:
Right? So I was thinking about, “Okay, we have our own four P’s that we generally try and figure out.” So our four P’s are people, product, potential, and plan.

Jason Lemkin:
Okay.

Aileen Lee:
So we’ll say to someone, if we kind of have a first meeting and we think it’s interesting and they like us, we’ll be like, “Okay, we have this thing, we’re not going to probably get to meet face to face. So we want to get to know you over a course of meetings and maybe some of them will be dinners,” or something like that. Where we’re like, “We want to get to know the people, where you came from, what you’ve done before, what you’ve learned, what you think of your strengths and weaknesses, your self awareness, where you want to be complimented, what kind of a team you want to build.”
Then on the product, obviously really understanding both, what’s their vision for the product? Competitive landscape, differentiation, how much better it is, the potential. What could this become? Right? Both how big is the market? And if we’re really successful, what are we building? Then the plan.
How much do you want to raise? Valuation range, what are we going to get done during the seed period? Who do you need to hire? All that stuff. So basically just going through those four things is our way of getting to know each other. I think that that’s probably going to be the way we do it first of the year.

Jason Lemkin:
So more time can balance out the lack of the ability to schmooze in person?

Aileen Lee:
Yeah. I think it might, in a way, be better. I mean, obviously in person’s better, but I think a slowing, and I’m also think the velocity and optimizing for speed and just low overhead check… I think there are plenty of founders who will tell other founders that that was a mistake. I think this downturn is hopefully going to give people pause around a lot of… There’s going to be a lot of shitty ups and downs. I want to be careful about who’s going to be helpful to me in a time of a lot of uncertainty.

Jason Lemkin:
Yeah. This morning, the first speaker, I don’t know if you know, Krzysztof Jans from Point Nine Capital?

Aileen Lee:
Hold on one second. Sorry. I just told the kids to go to the other room.

Jason Lemkin:
Oh no, we’re in the lunch session. I don’t know if you know Krzysztof Jans from Point Nine?

Aileen Lee:
I don’t.

Jason Lemkin:
He’s great. His first angel investment, he was the first angel into Zendesk, after he was a CEO. Then he started doing SAS really in the beginning, and we kind of became SAS content buddies before we co-invested.
He’s done half his investments remote since then, because he’s in Berlin. So he couldn’t always get on a plane and pop up for an angel or seed deal. His advice, he had a great… Because he is a veteran, although none of us foresaw shelter, but his point was it’s like anything in sales, but make it easier. So his point was, have the best diligence together, have the references built, do a video, have the best email pitch, if you weren’t going to build the deal room, build the deal room. If folks need more time, bake it in, and just turbocharge the amount of disclosure and transparency you would have to make up for the kind of informal type decisions people are making in those high velocity advice.

Aileen Lee:
Yep. Good. I like it.

Jason Lemkin:
Okay. On this, so just to folks that understand, how do you find… Just some insider stuff to help folks learn. How do you find deals and how do founders pitch you?

Aileen Lee:
Yep.

Jason Lemkin:
Maybe a few case studies from some last deals. How did they find you? How do you discover [crosstalk 00:39:35].

Aileen Lee:
Yep. We get a ton of referrals from angels, from co-investors who we want to work with, from founders, from folks that we know. I think Ted and I, I’ve been doing this for 20 years. Ted’s been in tech for 20 years too.

Jason Lemkin:
Yes.

Aileen Lee:
So we like to say, “Hopefully when you work with us, you’re going to get really experienced, thoughtful, patient, supportive advice, with a huge Rolodex.”

Jason Lemkin:
Yep.

Aileen Lee:
So we get a lot. But also, you and I are both super passionate about using our privilege to try and make tech more equitable and less bro-tastic. So, I’ve been told that the need for the warm intro really disadvantages a lot of people. So we read all of our inbounds. So you can email hello@cowboy.vc. Someone will read it and if it’s a potentially a fit, we will get back to you. You don’t have to get referred to pitch us.

Jason Lemkin:
So let’s break that down for just a second. So if you had a pie chart, number one source of deals, you do is [crosstalk 00:40:39].

Aileen Lee:
Referrals.

Jason Lemkin:
Warm referrals, right?

Aileen Lee:
Yep.

Jason Lemkin:
For better, mostly for better, but for better or worse. Right? They do have some bias and issues associated with them. But the inbound. So the inbound is… Sorry, it’s hello@cowboyventures.com?

Aileen Lee:
Hello@cowboy.vc.

Jason Lemkin:
cowboy.vc.

Aileen Lee:
Yep.

Jason Lemkin:
I got to get this one right, folks.

Aileen Lee:
Yep.

Jason Lemkin:
We’ll layer it on top of the YouTube.

Aileen Lee:
Thank you.

Jason Lemkin:
Hello… Well, it’s probably on the website too. Right?

Aileen Lee:
It is. hello@cowboy.vc.

Jason Lemkin:
If that email is good, if it’s good… If it’s, “Dear cowboy, we’re the team that built the top product at Square. We’re pre-revenue, but we have 10 beta customers. All of them said we’re changing the way finance works. Here’s where we come from. Here’s who we know, here’s our friends.” What are the odds that email gets read and how seriously… I’m just making my…

Aileen Lee:
Well, it’s 100% going to get read.

Jason Lemkin:
100. So let’s [crosstalk 00:41:34].

Aileen Lee:
100% going to get read. Yes.

Jason Lemkin:
Right? I can’t find you. I can’t track you down. I met you at a conference, but that email is going to… This is things founders don’t get, that great email is going to get read isn’t it?

Aileen Lee:
Even a crappy email is going to get read.

Jason Lemkin:
Even a crappy email is going to get read.

Aileen Lee:
Even, “Dear Sir,” gets read.

Jason Lemkin:
Okay. But the good one, if you liked what I just wrote, right? What are the odds someone’s going to read a deck that’s attached? And what are the odds I’m going to get at least a Zoom?

Aileen Lee:
I mean, that email you described is probably a 100% going to get read.

Jason Lemkin:
100% getting read. Yep.

Aileen Lee:
And 95% going to get a, “Hey, let’s have a meeting,” or, “Let’s set up a call.”

Jason Lemkin:
Yeah.

Aileen Lee:
Yeah.

Jason Lemkin:
What percent of emails that come to hello@cowboy.vc are great like that? What percent of these emails are great?

Aileen Lee:
Not that many. I would say we only invest in the US.

Jason Lemkin:
Yeah.

Aileen Lee:
We get some from different countries, and unfortunately we just don’t invest outside the US. But when I was at Kleiner, this is before email was really how we got most pitches, people would mail business plans and pitch decks and the EAs would put them in folders and just put them into giant L.L. Bean bags and just drop them off at my office and I would go home every night and basically order Chinese food and read business plans every night.

Jason Lemkin:
You were like a script reader.

Aileen Lee:
I was single and my girlfriends were making fun. They were like, “Should we buy you cats nor or later?” Because basically my life was just reading business plans. But the business plan for Bloom Energy was a cold inbound from a professor of space technologies at University of Arizona and at the time we had heard about fuel cells and we knew that there was different kinds of fuel cells and we were kind of getting interested in alternative energy and green, and he seemed interesting and so I wrote him and I was like, “Hey, I got your business plan. Do you want to do a call?” Bloom is a public company now and it was a cold inbound.

Jason Lemkin:
Cold inbound. Let’s just finish this because I think this is … It’s not perfect but it does flatten a bit. These emails are going to get read [crosstalk 00:43:44] and you don’t need-

Aileen Lee:
Are you really surprised by this? You sound surprised.

Jason Lemkin:
No, no, no. I’m not surprised. I think founders are surprised and I want to talk about how to hack it because so much of the advice you get on the internet … The fact that warm referrals are your number one source and that a great cold email will get read just seems inconsistent to people, right? I’m happy to share some personal stories. I even published two cold emails that I funded, one of which crossed 100X last… It’s the best made. It’s 100X on a double digit ownership, cold email, and it was an outsider.
There are advantages to being an outsider. You don’t know. You don’t do as much diligence. You don’t have to have gone to Stanford and have done the perfect thing, but I think founders are surprised that investors are so busy. They’ll see you on social media, they’ll see you traveling, they’ll see that you have 20 portfolio companies, and they’ll be like, “How could I get Cowboy’s attention?”
But the reality is there’s only so many great deals a year, and it’s sales for founders and it’s sales for VCs and if the pitch is amazing, the cold email works. Email is profound, and yet people don’t spend enough time on it. They ask you for coffee. “I saw your [crosstalk 00:45:01] on stage. Can we get together some time and talk?” What are the odds you’re going to get coffee?

Aileen Lee:
Right. Yeah, too much coffee.

Jason Lemkin:
Too much coffee, right?

Aileen Lee:
Yeah, or can I pick your brain? That’s one of my-

Jason Lemkin:
Can I pick your brain?”

Aileen Lee:
I do not like that.

Jason Lemkin:
“I have an idea. Can I pick your brain?” Right?

Aileen Lee:
Yeah.

Jason Lemkin:
I think the best founders figure that out but the earlier stage it is, the less they figure it out, right? The less they know, and I think if you write the world’s best email, and it has to be real … It can’t be imaginary but if you even have some hints of excellence, it’s going to get read, isn’t it?

Aileen Lee:
Yeah, yeah. But I do think for years I was kind of fighting the “will read everything” just because I felt like it was the mark of a good founder that knows how to hustle and is a relationship builder and is a talent magnet, that a good founder knows how to somehow get it started. Cold email someone, you, and be like, “Hey Jason, I really admire you. I like this thing that you wrote. I’d love to talk to you about this thing,” and then they didn’t know you but also now you know them and then you introduce them to someone and they introduce you, and then before you know it, the person’s kind of kick started a network of relationships that can be helpful to her or him. And I do think that’s a really valuable skill.
So for years I was like, “Well, if a founder can’t figure out how to get some credible person with some venture capital universe, some founder cred, someone who’s the VP of engineering at a decent company or someone who’s a product manager at a decent company who knows a venture capitalist, maybe it’s going to be harder for them to recruit people or sell customers.” But I’ve kind of let go of that because I think a seed is a really raw stage and I’ve seen founders change over the course of 10 years from where they start to hopefully being a unicorn founder that’s managing thousands of people, and people change.

Jason Lemkin:
Yeah, I used to think that. I used to think… I came up with a simple bar which is a founder that was better than me with more going for them can build a unicorn. And so I felt like if you couldn’t penetrate, if you couldn’t be that aggressive founder that found their way through the door literally by email, physically showing up to Cowboy, whatever it is, if you weren’t that person, you weren’t aggressive enough to build something big. And what I’ve still done, anyone that wants to talk to me, if they want to talk to me about community or SaaStr in general, there’s a million ways to reach me. If they want to reach me about investing, I used to always say, “Well, find my email.” “If you can’t find my email somewhere …” “Then what’s your email, Jason?” “No. How are you going to sell Procter & Gamble or Google if you can’t figure out a prospect’s email?”

Aileen Lee:
Yeah, and it’s also in a way… If you’re in a consumer space, you can be an introvert and just an awesome product person especially if your product has network affects. You can not be able to talk and you can build a huge company. In the enterprise space, I think it’s a little more important that you can talk.

Jason Lemkin:
I think it is. I will say, for what it’s worth, I don’t… Like you said you read more of the emails today. I realize that while that is … It’s too tight a noose. It’s too much of a forcing function. There are other ways to build traction. You can build an incredibly developer-centric product and [crosstalk 00:48:13].

Aileen Lee:
Totally. Exactly, yeah, yes.

Jason Lemkin:
Even if you’re not good at things. And so if you require that almost alpha-esque, put your boot through the door, there’s a lot of privilege and other issues, but you’re also going to miss people, I think [crosstalk 00:48:26].

Aileen Lee:
Totally. I think that’s totally true. I have so many lessons learned about companies that I’ve passed on that I shouldn’t have, but I’ve learned that early on in the process I have to figure out … Or just ask the person if they are more of an extrovert or an introvert.

Jason Lemkin:
It’s a good question, right?

Aileen Lee:
And if they’re an introvert we have a different conversation.

Jason Lemkin:
Yep. All right, we’re going to run out of time [crosstalk 00:48:48].

Aileen Lee:
I know, we have so many questions and we could chat for a long time.

Jason Lemkin:
No, I know. We can do them later if you have the energy but let me just pick a couple because some are tactical. This one’s super tactical but I think it is actually helpful. One attendee asked, “Who would you look for for references?” Talk just a minute about references. What if you don’t have great references? Is that a gating item for folks that come out of nowhere? How important are… especially if yours are funky?

Aileen Lee:
I think it’s important, especially now, like you said. That it’s people that you’ve worked with or worked for, people who’ve worked for you, people who’ve been your boss. We recently did diligence on a company and the founder gave us references and gave us their friends. That was not helpful.

Jason Lemkin:
I used to think that was a no. A close to a no, like such a fail, but I don’t know today.

Aileen Lee:
We’re very … I think as a person, like an immigrant person who has in many ways been underestimated in many different ways in different situations, I have a lot of empathy for being underestimated for giving people chances. And at series B, you got to know this shit. But like at seed, if you never raised money before, sometimes there’s stuff that someone tells you and then you were like, “Oh duh. Yeah, I get it.” And then they move on. So it’s not a no for me, but yeah. I was like, “Hey, don’t give me your friends. I don’t really want to know what your friends think of you. I want to know what you’re like to work with.”

Jason Lemkin:
Yeah. This one’s interesting because it’s not necessarily obvious. This says when you invest seed or pre-seed, what do you expect MRR will be in three to six months? It’s actually not a silly question because you’re not the only VC. You’re betting that someone in the next 12 to 24 months is going to write a check at two to five times the price you did. So what does that have to mean in terms of the window in which you can invest in terms of growth?

Aileen Lee:
Especially right now, that is a really tricky one, right? Because let’s say if you’re going to… We’re basically recommending, in March, we recommend to all of our portfolio companies to basically plan. Come up with a bunch of plans, so that ideally you have money to get you into ’22. 2022.
So either raise money right away, or you’re going to do some cuts because assume that Q2, Q3, Q4 are going to be really hard for new sales and that maybe things will pick up in Q1, but maybe not. Maybe they won’t pick up until Q3 next year. And so you’re going to be going out to raise your A if your seed unpotentially not a lot of revenue growth, especially if you have to go out in the first half of 2021.
And so I think depending on what the product is that you’re selling and what business you’re in, are there other metrics that you can show around customer engagement and customer use or value or, because otherwise you’re going to be competing against people who are starting from scratch in March or in June who are like, “I have no traction, but I just started this thing.”

Jason Lemkin:
That’s a tough thing, right?

Aileen Lee:
Yeah.

Jason Lemkin:
It’s like folks graduating from college this year. It may be a lost generation compared to next year.

Aileen Lee:
Well, I hope not.

Jason Lemkin:
What?

Aileen Lee:
I hope not.

Jason Lemkin:
Well I know, but this may be a year where they don’t get to go through traditional recruiting processes and are impacted. And you’re like, “Well, there’s next year.” But by next year, there’s another-

Aileen Lee:
Yeah. They’re going to be-

Jason Lemkin:
… 50,000 seniors graduating from great colleges and you’re in this weird phase.

Aileen Lee:
Yeah. And the other thing we didn’t get to, I know it was one of your questions was just, there’s so many funds and this is, and that there are multi-stage funds, right? When you look at venture capital, there’s a whole thing going on about how many funds are and how many seed funds there are.
But the other thing that we, I feel like we don’t talk about enough is how many gigantic funds there are and how much of the money is in multi-stage funds that each fund is bigger than $500 million. And so how that changes the ecosystem in terms of when you put someone on your cap table, like we co-invest with multi-stage funds all the time and we partner with them all the time, but you have to be really savvy about when you do take one of those folks on or multiples of them onto your cap table and onto your board it’s a different ball game in terms of their incentives and their portfolios and the size checks they want to write and versus like us simple seed people.

Jason Lemkin:
Yeah. I think for each big fund on the cap table, you need to create $1 to $2 billion in exit value. So once you have four or five of those big names, you’re con is committing to a decacorn.

Aileen Lee:
Yeah, exactly. And that reality is like, I mean, Thomas Jeung has published a thing recently about, I think you’re 26 times more likely to be acquired than to go public, and so the reality is I mean, people can joke about how many unicorns there are, but it’s still extremely hard to build a billion dollar company.

Jason Lemkin:
It is. I keep waiting for your tech crunch article number three.

Aileen Lee:
Are you there?

Jason Lemkin:
I don’t think you put the third one, did you?

Aileen Lee:
I haven’t no. Actually it’s funny because I have, now that we have a little bit more time at home, I’ve gotten back to it actually to kind of get up to speed on the new set and to try and learn where they came from and all that stuff and how it’s different than the original set.

Jason Lemkin:
I think it’s time. I mean, I think-

Aileen Lee:
Oh, thank you. I’m working on it. I’m a really slow writer.

Jason Lemkin:
The first one was like… This is probably the last thing we’ll have to chat about, so maybe it’s a little off topic, but I think it’s helpful. I think the first one was one of the best pieces of venture content marketing ever, right? Which was probably part of the goal. Right?

Aileen Lee:
No, it was completely an accident.

Jason Lemkin:
It was an accident?

Aileen Lee:
Totally. I did not think anyone was going to read it at all.

Jason Lemkin:
Really?

Aileen Lee:
Oh my God.

Jason Lemkin:
Oh, wow.

Aileen Lee:
I worked on it for months just for myself just because I had this new fund-

Jason Lemkin:
Months? Months?

Aileen Lee:
Months. Because I-

Jason Lemkin:
No one had ever assembled that type of data, but now there’s analysts and everyone’s firm does it, but no one had ever seen that whenever the first one was, 2014 or something like that.

Aileen Lee:
2013. Yeah. I did it for myself just because I had this new fund and I was like, “What should I invest in?” If I had to do an analysis of the most successful companies of the past decade, what would they have in common, so I could try and look for those for the next set. And then there was all this stuff that came out of it. I was like, “Oh, actually I think this would be useful for founders and for investors for a bunch of different reasons.”
And so I published it, but I gave it to some friends to read it. I actually was on the way back from the lobby conference and I gave it to a couple of people on the plane to read it. I was like, “Hey, I’m thinking about publishing this blog post, what do you think?”
And they were like, “It’s okay.” Nobody even said like, “Wow, this is really great.” Or like, “This is going to become a thing.” And so it was a big surprise.

Jason Lemkin:
Yeah, the second one was great because it had even more data.

Aileen Lee:
Actually to bring it full circle, when I published it, I was at Disney World, I was at Disneyland with my family, the day that it went up, the Saturday morning it went up and so I’m on line for rides and I was like, “Jason,” my husband’s name is Jason. I was like, “Oh my God, people are liking this and sharing this. This is so crazy.” And he’s like, “Hey, we’re at Disneyland. Focus.” And I’m like, “You don’t understand. People are actually reading this thing.”

Jason Lemkin:
It’s funny, speak from… I mean, it’s the great lesson of all writing, speak for what you’re passionate about. You’re passionate about it because you had to learn how to deploy the fund. So this was your homework and you forced yourself to distill all that work into an article because it was your investment thesis. This was your investment thesis. A piece of it, right?

Aileen Lee:
And also, I mean our industry is huge, right? It manages almost like $500 billion and there was so little data or analysis on our industry. No transparency of… I mean, there’s not even… In universities, there’s no professor on the history of technology who studies the history of the technology business and all the forks in the road of companies, like if you did A instead of B, what happened to the company? I just think it’s fascinating.

Jason Lemkin:
It is. All right. We’re out of time. I’d like to do all these questions.

Aileen Lee:
I know. Sorry.

Jason Lemkin:
Maybe if you’re bored someday, let me know. We’ll do it again on Zoom and answer them together.

Aileen Lee:
Okay. That’d be fine.

Jason Lemkin:
I have time. But I’m looking forward to-

Aileen Lee:
But I always really enjoy chatting with you.

Jason Lemkin:
… the third piece.

Aileen Lee:
Okay.

Jason Lemkin:
I want the third article on TechCrunch. It’s okay if it takes a while. I’ve been waiting for a few years so that’s-

Aileen Lee:
Oh, you’re so nice. Thank you.

Jason Lemkin:
All right. Aileen, thank you for doing this. This was great and we’ll talk to you soon.

Aileen Lee:
Thanks everybody.

The post Seed Investing Today: What’s Changed, What Hasn’t with Aileen Lee and Jason Lemkin (Video + Transcript) appeared first on SaaStr.

Facebook decisions led to serious setbacks for civil rights – report


This post is curated by Keith Teare. It was written by Alex Hern. The original is [linked here]

Two-year audit praises some decisions but criticises lack of action over Trump posts

Facebook’s decisions over the last nine months have resulted in “serious setbacks for civil rights,” according to the damning conclusion of a two-year-long audit commissioned by the social network to review its impact on the world.

The final report, which focuses primarily on decisions made since June 2019, praises Facebook’s move to ban American advertisers from using its tools for housing and employment discrimination, and the company’s belated decision to ban explicit support for white nationalism.

Continue reading…

New and improved board deck template and update doc templates for seed stage founder. Get your investors aligned faster so you can win together! https://t.co/gvZkwL1UuG


This post is curated by Keith Teare. It was written by Rob Go (@robgo). The original is [linked here]

Quoted Tweet:

Doctor On Demand Raises $75M To Grow


This post is curated by Keith Teare. It was written by Christine Hall. The original is [linked here]

Virtual care provider Doctor On Demand secured $75 million in a Series D round of funding Wednesday, led by General Atlantic and undisclosed existing investors.

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The San Francisco-based company provides on-demand and scheduled visits with U.S.-licensed health care providers, in both medical and behavioral health, and said it currently covers more than 98 million lives.

Founded in 2012 by Adam Jackson, as well as Phil McGraw, also known as Dr. Phil, and his son, Jay McGraw, this new investment gives the company total funding of approximately $240 million, according to Crunchbase data. Doctor on Demand has raised new venture-backed funding nearly every year since its inception, previously raising a $74 million Series C round back in April 2018.

“We believe virtual care has reached an inflection point, with significantly increased adoption levels, and that Doctor On Demand is well positioned to capture the sustained growth of the broader industry,” said Robbert Vorhoff, managing director and global head of health care at General Atlantic, in a written statement.

Doctor On Demand said it will use the new capital to invest in growth and expansion of its virtual care model. The company says it saw an increase in utilization in urgent care and behavioral health services during the COVID-19 pandemic.

Hill Ferguson, CEO of Doctor On Demand, said in a written statement that the pandemic unveiled certain benefits of virtual care, such as being able to reach all patient populations and proving quality of care was similar to in-person visits.

In the first half of the year, the company more than doubled the number of covered lives and had its 3 millionth virtual visit. It also rolled out services to 33 million Medicare Part B beneficiaries across all 50 states just weeks after the Centers for Medicare and Medicaid Services expanded coverage to allow for telemedicine reimbursement.

Telemedicine is not new, but adoption was slow prior to COVID-19, as we have reported recently. In addition, Rock Health reported this week that there were record investments in virtual care and behavioral health during the first half of the year—more than $5.4 billion.

Some of the investments on our radar over the same period have included Big Health raising  $39 million in Series B financing for cognitive behavioral therapy, Hinge Health, a digital physical therapy company focused on chronic musculoskeletal conditions, closing on a $90 million Series C round of funding and K Health, a primary care consultant powered by artificial intelligence, raised a $48 million Series C round.

Illustration: Dom Guzman

The People With the Power at Facebook After Chris Cox’s Return


This post is curated by Keith Teare. It was written by Alex Heath. The original is [linked here]

In Facebook’s upper ranks, what’s old is new again.

That’s because Chris Cox, one of Facebook’s most senior executives, recently returned as chief product officer, reporting to CEO Mark Zuckerberg, after a yearlong hiatus. As before, his domain includes the social network’s four main apps, as we show in our updated org chart, which identifies over 150 of the most senior leaders at Facebook.

Four of Zuckerberg’s recent direct reports—the heads of Instagram, Facebook, Messenger and WhatsApp—now report to Cox, though they still work directly with the CEO as well. Facebook’s chief marketing officer, Antonio Lucio, is also now back under Cox instead of reporting to chief operating officer Sheryl Sandberg. This setup is meant to encourage closer collaboration between the marketing and product organizations.

Wow this is a powerful story by @DMikeAsem https://t.co/YEKANX41Jm — I had no idea about this awful fundraising journey @Clarence_Bethea h/t @lalayak for the share


This post is curated by Keith Teare. It was written by Elizabeth Yin (@dunkhippo33). The original is [linked here]