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YCharts Exits to LLM Partners

This post is by Jeff Carter from Points and Figures

YCharts is the best charting service around for professionals to investigate the stock market and find structural holes that they can relay to clients to build wealth.  I am a seed investor.  Last week they exited to a private equity firm and recapitalized the company.

I decided to blog about it because there are a lot of important lessons to be learned about investing in startups from this exit.  I am still going to keep the blog on ice for a little bit though.  I do miss blogging regularly, so at some point it will come back.  Thanks for all your notes.  This blog NEVER received a lot of comments so you never knew how many people were really reading it.  Turns out, a lot.

It is interesting to note that Hyde Park Angels, the angel group in Chicago that I started in April of 2007 has had successful exits with almost all of its first few investments.

  • Shuffletech.com
  • Gradebeam.com
  • UICO.com (still operating and the leader in touchscreen technology)
  • Ycharts.com
  • Brilliant.com

I don’t think any seed investors expected that.  My favorite line on seed investing came from my friend Brian Hand.  Once he said at a presentation, “When you invest in a startup, you might as well take the money to the toilet and flush it away because the odds are you will never ever see it again.”

All of the companies above had positive returns.

One thing I don’t like about the way VC firms present themselves is on exits.  Go to websites and they have little banners that show all these firms as “exited”.  It doesn’t say if they made money or not.

As an old trader, we all know people lose money.  If you don’t lose money, you aren’t taking risk.  I think if you lose money you ought to be transparent about it.  At HPA right around when we invested in Brilliant, we invested in Tap.me and did a very small investment in Noblivity and we lost money on both.  I have lost on more companies than I have made but the trick is to have outsize gains to make up for the losers.  It’s also important to be disciplined about check size, and for a fund to be disciplined about ownership percentage.

I have some thank you’s I want to make publicly.

Personally, I want to thank the original CEO Shawn Carpenter for starting YCharts.  He brought the deal to HPA when we were still a fledgling angel group with not a lot of people and only three investments under our belt.  He pitched it in 2009 and we didn’t invest until 2010.

I also want to thank two HPA people.  Richard Box for illuminating the group on how the back end of YCharts worked.  All the traders I recruited to the group understood the power of the charting.  It was how the guts worked that turned our heads.  RH Bailin for stepping up and being a deal lead and serving on the board until he retired from the group.  They made a difference and you don’t get to exits without a team effort.

I also want to thank Bob Giammanco and Jeff Kleban for picking up the baton and serving as board member and observer after left.

I am very grateful to Sean Brown and want to thank him for becoming the CEO of YCharts.  He took over the company when it was in a very precarious situation.  This doesn’t happen without the above people but it certainly doesn’t happen at all without Sean.  He is a great CEO.   I interviewed him on a podcast and he laid out his philosophy there.  I am grateful to Sean because a lot of people wouldn’t have wanted to accept the challenge.  Sean had just gotten done running a different company, and wasn’t actually looking for a new gig and this one fell into his lap.

Sean built a great team, and culture.   He stayed extremely focused and tight.  I have spoken randomly to wealth managers and they have told me YCharts is indispensable to them.  That’s before they knew I was an investor.

The path to success in startup land is a long and winding road.  Every startup usually goes through at least one moment where they look like they are going out of business.  As a CEO, when it happens keep your head and calmly assess your options.  As an investor, you cannot panic.  You must work to keep your emotions under control so you can be a port in the storm for the CEO.

The path to exit truly is a journey.  At the beginning, you are at the bottom of the foothill on the plains.  You begin to climb and you don’t actually know how you will get to the top.

Exits from LBO funds are going to become a lot more common.  PE has a lot of money to put to work.  I always thought YCharts would sell to another Fin Tech company.  In the other companies I listed, only one sold to a corporate, Gradebeam.  The rest were creative finance and Shuffletech was a patent lawsuit.  All of them are in business in one way or another because the entrepreneurs behind them created something of value that customers wanted.

It is instructional to note that when seed investors like this make money, they plow it back into new startups.  That is how Silicon Valley was built.  This is contrary to the “greedy capitalist” spin that is currently a part of our national conversation.
Many of the initial seed investors in YCharts have left the state due to the corruption in government which has led to Illinois and the city of Chicago being insolvent.  When your sitting governor cheats on his property taxes prior to being elected, you know as a normal person you don’t have a chance.  Will the money YCharts investors earned get reinvested back into Chicago?  It’s not a slam dunk that it will.   The risk is a lot higher today than it was in 2010 because of how screwed up fiscal policy is and expected future tax policy.  Chicago and the state would be better off going through a bankruptcy process to get things straight.
If you are running a business in Chicago reading this, and you aren’t a customer of one of HPA’s companies, why not?  You support the startup community by being a paying customer, not just by investing. You’ll do more for the city by patronizing startup firms based in the city than you will be donating to some non-profit organization.  Every wealth manager in Chicago ought to be using YCharts.  If they aren’t, they are missing data and potentially losing customers to wealth managers that are using YCharts to give great insights to their clients.
It’s also interesting to note that historically, the trading community does things outside of trading in Chicago to build the city.  Traders built the Art Institute.  Ken Griffin is doing it today.  I was a trader and started HPA.  Doug Monieson was a trader who I recruited and was the first chair of the board and now is running UICO.  RH Bailin was a trader who led several deals and invested in several HPA backed companies.  Many other traders were initial or are members of HPA.  Perhaps politicians ought to think about that before they pass a transaction tax on LaSalle Street.
I think Ycharts will continue to grow as a part of LLR Partners.  They have grown this year despite COVID and that is due to the efforts of their entire team.  They are in a space that is growing and from the outside, it looks like the LLR strategy is a good way to attack their target market.

 

 

 

 

 

The post YCharts Exits to LLM Partners first appeared on Points and Figures.

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FinMkt Partners With Porch

This post is by Jeff Carter from Points and Figures

It’s been challenging to get stuff done since the COVID 19 outbreak manifested itself far and wide back in February.  The other goings on made it more difficult.  However, FinMkt and their terrific CEO Luan Cox have been working steadfastly.

FinMkt is a network.  WLV is a seed investor.  Manchester Story led the seed round and Fin Top Capital led the last round.  It’s not something consumers would see, but it is something that consumers benefit from.  Lenders of all stripes like leading banks, credit unions, and non-traditional lenders are part of the FinMkt network.  The network is growing quickly because of the efficiency FinMkt brings, and the high-quality loans that the network gets a look at funding.

Prior to all this going down, they had been working on several partnerships.  They recently launched a partnership with Porch, PenFed Credit Union, and Genesis Financial Solutions.  With Porch, contractors and home improvement outlets can have customers finance purchases through their new link at FinFi.

Here is a video of how it all works.

Great news for consumers, suppliers, and FinMkt.

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Regulating Twitter

This post is by Jeff Carter from Points and Figures

President Trump signed an Executive Order yesterday to put more onus on social media platforms.  He did it because he was unfairly maligned on Twitter.  To be clear, no matter how you feel about Trump, what they did to him was wrong.

To be clear, I am not a huge fan of Executive Orders by the Executive branch of government no matter who is in charge.  It seems so un-Democratic to me and against the process set up by the Constitution.  There are certain things that should be debated, voted on, and brought to the Executive’s desk.  In our times with a very divided people, debate is hard and arduous.  It takes an inordinate amount of time.

However, in a state like Illinois where the state has been gerrymandered, the only reason the legislature takes any time is so they can examine all the angles.  The debate and the vote is just for show.  Similar to China.

I’d rather take the time.

To be clear, Twitter, Facebook, Google, and almost all the social media platforms have a gigantic bias against conservatives.  They encode that bias into their algorithms and it’s either encouraged by their management or their management is so biased themselves they don’t see it.

Here is an example. Yoel Roth is head of integrity at Twitter.

He should be fired.  If you are on the Twitter board, or a shareholder you ought to say something.

Conservatives will rally to Trump’s side on the executive order he signed yesterday. I do not. I don’t think he should have issued it. It’s not that I don’t want to stop the bias by social media platforms but this issue is much thicker and deeper.

The Stigler Center at the University of Chicago has initiated a lot of the legal and economic debate around it. I have blogged about it in the past and I think if you really want to understand both sides of the issue deeply without just opining around the headlines or your personal confirmation bias it is well worth your time to watch the videos.

I can see real places where the population might benefit from some government regulation of social media platforms. I also can see where if the government were to get involved, it would be significantly worse for all of us.  The Wall Street Journal published an editorial today that made some good points, but to be clear was a bit self-serving.

Even though the Executive Order is narrow in its scope, it still will have an effect on platforms other than Twitter.  The WSJ writes,

The executive order that Mr. Trump signed Thursday is aimed in particular at Section 230 of the Communications Decency Act. That 1996 law lets websites moderate posts by users without risking liability for the content. Without this shield, a company like Yelp might be sued by every business that gets a bad review. The Journal might be sued for something in the comments section beneath this article.

For sure, this is all about politics.  We are starting to get into the middle of the stretch run for November.  Trump will use this to help him fire up his base and keep them engaged in the same way Democrats will use the riots in Minnesota to try and help them.  Neither is productive.

 

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Two New Things

This post is by Jeff Carter from Points and Figures

During the lockdown, some businesses had to remain still. They couldn’t do anything. Other businesses had the lockdown challenge their business model. The sales cycle seized up. They had to rethink everything.

We had two businesses in our portfolio that did just that and I’d love you to take a look at what they did and share them with people who might benefit.  One thing we have found is that independent workers are especially vulnerable at times like this.  The US has had a trend toward more independent work over the last eight years as the gig economy has grown.

Kover now is offering income and disability insurance to workers in the gig economy. Big company benefits for the self-employed. Freedom to be your own boss. Benefits to protect your bottom line. It’s the first of its kind insurance. They have a great FAQ on their website.

Holberg Financial just announced a partnership with Fringe.  Fringe offers more than 80+ lifestyle benefits to employees via companies that want to give their employees freedom, flexibility, and choice when it comes to choosing the perks and benefits that they value.  Employees across the country are seeking out financial wellness at work, especially during the COVID 19 lockdown. Holberg Financial seamlessly blends a straightforward and powerful financial wellness technology platform with confidential, unbiased financial coaching. This “one-two punch” builds the financial health of employees which reduces their financial stress and in turn increases loyalty and tenure at the companies they work for – it’s a win for companies, employees, and for Fringe as they give millions of employees access to the lifestyle benefits of their choice.  Financial stress is the #1 concern of employees across the U.S. Holberg’s financial wellness benefit solves it.

Both of these companies are solving big headaches for people and alleviating stress in their lives.  They do it cheaply and efficiently.

 

 

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More Thoughts On The Future

This post is by Jeff Carter from Points and Figures

I am seeing more and more predictions about the future. Most are produced by Captain Obvious.  For example, as a society, we will do more and more online.  Duh.  That trend was happening prior to the Wuhan Flu.

I was chatting with a friend yesterday. In late January, he had a horrible flu. I brought him some chicken soup. I was around him in his house for a bit. Around 8 days later I had a horrible cold. Turns out my friend was on a plane next to a Chinese gentleman who was hacking up a storm. I can’t wait for antibody tests because I may have had it.

It’s pretty easy to say telemedicine will happen.  Great.  We knew that and anyone that invested in telemedicine in the last five years is hopefully reaping a windfall now.

The real hard stuff though happens in structure.  For example, many hospitals are laying off people and closing during this Wuhan Flu crisis.  Crazy right?  Amazing that a health care professional would be out of work during a medical crisis.  Why is this happening?  A lot of the healthcare system runs on elective surgery.  The government bans elective surgery and the revenue driver that holds the health care system up goes away.  Welcome to your taste of single-payer socialized medicine.

We are seeing that the regulatory system our country has for lots and lots of industries is out of whack and when stressors happen the system buckles.  Don’t fall for the “the free market doesn’t work” meme.  The free market does work.  We don’t have a lot of truly “free” markets in the United States.

What if you unbundled the medical system?  Wouldn’t it be more efficient not to have general hospitals but have smaller specialty clinics?  When a crisis happens, the orthopedic surgeon, the plastic surgeon, the dermatologist, the ophthalmologist don’t have to shut down.  They are away from the action.  They just operate as normal.

Wouldn’t it be better not to have single-payer but more price transparency?  We were recently in Nevada.  I asked someone about getting medical insurance there and what were the costs.  It’s amazingly byzantine.  My health care plan that I have had since 1992 in Illinois doesn’t transfer at all.  My plan in Illinois is byzantine too.  Socializing the health care system will only make it worse.  Why not remove all the price floors, price ceilings, mandates and let everyone from insurance companies to providers compete? Why not remove the tax write off for employers to provide insurance so that your insurance isn’t tied to your job?

Oh, scary!  The naysayers will immediately criticize the free market idea because someone is going to make money.  Yup.  That’s how America works.  Will some people get better or more access to care than others?  Yup.  Will there be a baseline of basic care.  Yup, because the market will fill the need for it.

There are plenty of other industries that could be totally blown up and remade through free-market competition.  Insurance, Banking, Distribution, and Mining to name but a few.

What about conferences?  My friend Nilesh posted on his Facebook that software might eat conferences.  I had been thinking about that too.  It also came up on a webinar I was listening too.  If you are an executive and looking at your budget you might be spending millions of dollars to sponsor various events and big conferences around the country-or world.

I have been to a few of these things and generally find them to be a waste of time.  The information is not fresh, and often times it’s been filtered through a legal department.  The “networking” is generally lame.  How do the big conferences change to really add value for participants and sponsors?  I don’t know the answer to that.  But, if they don’t they will go away.

I am seeing protests happening now across the country. People are seeing the death count from the Wuhan Flu and realize it’s not as serious as the faulty models projected. They are ticked as they see their rights trampled on by government that is making decisions based on politics and not science. Michigan’s governor might be the worst but there are plenty of other examples.

Maybe we are waking up. Why is it that I can buy liquor at a grocery store, but some states have closed liquor stores? Why is it that I can get my dog washed at some big box store that might provide that service, but I can’t use a boutique business set up to do the same? How is the government determining what is essential and what’s not essential? Why are we giving the government the power to even do that?  Why is a throw pillow non-essential and a sleeping pillow essential?  Why is my cancer biopsy non-essential?  How about my hip replacement?  Maybe those things are essential to me.

Instead of trying to predict what will happen, maybe we ought to take a really hard look at our regulatory regimes and look at how much power local government has over our lives.  As Thomas Sowell said,

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What’s the History? What’s Next?

This post is by Jeff Carter from Points and Figures

This is a great video for anyone that has a lot of fear around the virus.  If you mostly listen to MSNBC, CNN etc give it a try.  It will confirm some things you might believe, but it might also jostle your confirmation bias.  We all need our confirmation bias jostled.

I post it because I was chatting with someone and they asked the question, “What do you think will be some non-obvious things where businesses will get a win coming out of the situation we are in?”

Great investments are not made when you think along linear lines. For example, if you come out of this and say, “We are going to work a lot more virtually, and I don’t think we need as much CRE office space” that trend was invested in back in 2012. You are too late.

I haven’t thought super deeply about it yet. Just starting to cogitate which is why this video is also so good. At around 30 minutes in, it’s mentioned how Bloomberg in his presidential campaign said that farmers don’t need a lot of gray matter. They just put seeds in the dirt and they grow.

However, from my experience farmers do need A LOT of gray matter. They are incredibly innovative. Plus, if you are going to go to your nice little Manhattan restaurant, maybe you will come away from this crisis with a healthy respect for a farmer, the muscle that harvests, packages, and transports the product from the muddy dusty field to your pristine privileged plate. Not just the chef, waiter, and dishwasher.

One thing that will happen I think.  There are people like Governor Pritzker that are playing political football with the crisis. Already I see Governor Cuomo is holding his press conferences to compete with Trump’s.  Governors that utilize policy to extend the lockdown when the numbers show they shouldn’t will pay a price.  Pritzker saying there should be no summer festivals in Chicago is naive.  Not because I want them-but because it totally is ignorant of data and science.

Maybe a summer festival like Lollapallooza will decentralize to several towns that will have them.  Or, maybe an enterprising state will figure out a way to host a festival like Lolla in a way that meets the public need to feel safe.

Private industry should not wait for the government to mandate something.  Do it themselves.

For example, I would urge airlines to band together to find a way to clean and sanitize planes.  Maybe make passengers wear masks and have their temp taken before they board. Maybe don’t have as many passengers on a plane.  Maybe for some point to point flights, just have an entire plane as business class.

Restaurants should come together to figure out ways to operate their businesses while still paying attention to not being conduits to spread a virus.  Figure it out-then go to the local government and show how you do it.  Then open.  Casinos, theme parks, movie theatres, sporting stadiums should do the same.

Private industry will figure out the way out A LOT faster and more economically than the government will.

Personally, I think this is a serious disease.  A 2-3 week shutdown to get a handle on it is a good idea.  We were fed false data from the Chinese and World Health Organization.  But, clearly the models that predicted dire disease and death were WAY OFF.  It’s not because of the quarantine it’s because they are terrifically hard to build and the builders didn’t input the right denominator and in most cases didn’t input the right numerator.  Also, medical personnel and medical bureaucrats have a different perspective about outcomes that economists might.

I think we will find a fair amount of the things being spread by politicians and the media are in fact just political.  Seeing this story on a phlebotomist testing 400-600 samples of blood daily in south Chicago should open your eyes that you might be being fed something that isn’t for your own good, but instead for extending or forming a political power base to infiltrate more and more of your personal life.  In this part of Chicago, 30% of tests show people already have immunity.  We might already have more immunity in the US than we realize.

Many politicians acted out of fear.  Many out of spite and disrespect for the intelligence and freedom of their constituents.  Many deliberately hid factual numbers so they could spin their own version of events.  Others have been transparent.  In Illinois, politicians are feeding their hungry Union mouths. The mayor of Chicago suspended the Freedom of Information Act.  She’s acting more and more like Nikita Kruschev every day.  Or is it Marie Antoinette?

We have seen the politicization of this and its been there from the very beginning.  An example is the malaria drug.  Trump says it and the knee jerk reaction is that whatever Trump says must be wrong.  So, the partisan media goes into overdrive and tries to fact check the story using their facts.  When they run into a dead end, they accuse Trump of having an investment in the firm.  They prey on confirmation bias to keep their herd in line.

This is not death vs life.  It’s lives versus lives.  In the shutdown, lives are being totally destroyed.  Anxiety, subtance abuse, suicide, meaning and dignity of life not to mention personal finances are all being destroyed.   To me, this looks like a bad flu season.  Not Spanish Flu of 1918, nor the Black Plague.  Maybe 1968 Hong Kong flu.  We never shut our economy down for any of them.

 

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All Good Things Must End

This post is by Jeff Carter from Points and Figures

My wife and I left Chicago for Las Vegas on Feb 8th.  For the past several years, we always leave Chicago in the winter.  Part of it is we are sick of being cold and part of it is we are investigating areas to move to.  Another part of it is we like to experience different parts of the country.

No one could have seen a worldwide pandemic coming then.

We had a lot of plans that fell through in Las Vegas.  No side trips, the parks were closed.  No shows.  We experienced a lot of hiking but like the rest of the country, we have been cooped up in the place we rented.  We have rented three different places in Vegas in three different areas of the city.  I think we have a pretty good idea of what it’s like to live here.

Because of the pandemic and all the rules surrounding it, a lot of places are cracking down on short term rentals.  Our daughter lives in LA and we were going to rent a place in Newport Beach to see her but that fell through.  Neither of us really were excited about returning to April weather in Chicago.  A lot of short term rentals are off the market since no one is renting them.  In addition, a lot of people that live in cold weather climates that can left and did a long term rental somewhere to ride it out.

We found a place in Scottsdale, AZ and we are driving down there to hang out for a couple of weeks to see how this all turns out.  As long as there is an internet connection, you can do basically what you need to do.

Today there are a few articles around the state exactly what I have been saying for a while.  The models are incorrect and overestimated everything.  When I looked at my hometown to see reported coronavirus cases, it’s not that serious.  This graphic allows you to search by zip code.  The most dangerous place is the far south side of Chicago.  Viruses attacking people have nothing to do with race.  However, I think the standard of living and general health prior to an invasion certainly does.

We need to figure out a way to re-open the economy by the end of April.  America needs to get back to business and anyone calling for a 12 to 18-month shutdown isn’t living in reality and might have an ulterior motive besides the health and safety of people.  Good statistical models will be a guide.   Good practices will be essential and my bet is people will practice them.

Sure, this virus is serious but it is not Black Plague and it’s not Spanish Flu.  I remember as a little kid my mother being worried about the Hong Kong Flu of 1968 which went through the world and didn’t die off until 1970.  I suspect this will be like that.

What if we are wrong?

People will get sick.  But based on current statistical data, masses and masses of people will not die.  This thing is tougher in urban areas that are densely populated like NYC.  It’s tough on places that have a lot of multigenerational housing.  It’s tough on people that use public transportation.  It’s not tough on suburbs and rural areas and from the chart in Chicago, it’s not tough on most areas of the city.

Re-opening the economy will allow people to re-establish some normalcy.  There are a lot of businesses that were teetering before this happened.  They will probably die.  A larger example is Boeing.  They were having trouble before the virus and certainly with a mandated government shut down are going to have trouble after.  I read Howard Tullman’s recent article and agree with the spirit and the principle of it, but boy is it awfully hard to execute.  Re-opening the economy might save some money for the US fiscally too.

It will be good for peace of mind and the idea of empowering people as well.

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Killer Companies

This post is by Jeff Carter from Points and Figures

I have watched a few webinars on how to talk to Limited Partners and investors.  What do you say in times like this?  What should you be thinking about?  What should you be thinking about in terms of what is going through your LP’s minds?

All good questions.  By the way, if you are an LP in our fund we have a call coming up.  Make sure you sign up and check your email!  Interestingly, we scheduled our call after we got our audit back not because of any issues around COVID19 or the audit.  It’s something we do every quarter.  But, no doubt, C19 will be one topic of conversation!

One thing that every webinar and a lot of online advice has included is this;  In prior downturns, killer companies were created.

This is true.  However, it’s a bit naive and a lot of pattern matching to think that a killer company is being created today. If it is, it was probably started before the virus, not as a result of the virus.  Certainly, some companies were positioned well to take advantage of the situation.  We have some in our portfolio and I have some in my angel portfolio.  It’s really fun to watch resilient CEO’s work through this kind of problem.

If you are a small fund like ours, you have exactly zero chance of raising another fund now.  The VC industry is going to take a bruising.  I don’t think the floodgates open up again until at least mid to late 2021.  People will want to see the dust clear and who is left standing.  We could see a world where allocations to venture drop.  When the stock market is on sale, it might be smarter for a lot of entities to put money in equities than it is alternatives.  There will be fund of funds that go under too.

I think an advantage our fund has is trading through several downturns.  Gives you a different perspective.

Here is the advice we have given the CEOs in our portfolio:

  1.  We invested in you.  We are confident you can lead your team through this.
  2.  When you talk to your team, be transparent.  Show them the difficulties, but also show them hope.  Teams survive on hope.
  3.  Make sure you worry and execute on things you can control.  There are a lot of uncontrollable variables now.  Don’t think about them or spend time worrying about them.
  4.  If you can open up a line of credit, do it.  If you can apply for an SBA loan, do it.  You might or might not need the money but cash is a nice thing to have.  If you can extend payables and renegotiate some contracts, do it.  If you can bring in receivables quicker, do it.
  5. Have a serious heart to heart chat with your investors.  Know your burn rate and their appetite for supporting you.
  6. If you have interested investors, talk to them about doing a round.  You might get a lower price than three months ago, but if you can take on some money and it doesn’t cost you a boatload of equity the tradeoff is worth it.
  7. There will be companies that fail.  Great talent will be on the sidelines.  You can pick them up but make that great talent prove themselves.  If they are salespeople, they need to go out and sell.  Bring you orders, pay them a rich commission.  Do it again.  Scrappy wins, not credentials.  If they prove themselves, hire them.  That being said, hire carefully!!
  8. There will be opportunities that didn’t exist before that will avail themselves.  Go after them if it doesn’t burn a lot of cash or entails using a lot of cash to support something after you get it.  They probably will be smaller opportunities that could eventually be big.  Make sure the CAC>LTV….and most of all if it isn’t working cut the cord and fail fast.  Live to fight another day.
  9. Some of our companies have cut their pay already.  They are doing without or making it up with options.  It’s extending their burn.
  10. Competitors will go out of business. Grab their customers and earn their business.
  11. Take some time for yourself each and every day.  Go for a walk-no phone on.  Work out.  Stretch.  Do yoga.  Anything to get away for a little bit.  Key in a crisis.
  12. Oh, and if you need us for anything, don’t hesitate to call, email, or text 24/7.  We will actively work for you as we always have.

There will be some killer companies created in the wake of this.  However, I don’t think brand new spanking companies will be created until at least the back half of this year.  I also don’t think the smoke has cleared enough to know what will be huge yet.  Other crisis situations were not as widespread.  In the last downturn, the financial crisis put good people out of work.  However, the mobile phone was the game changer and the surfboard everyone road to smashing success.

Our fund is still actively looking for investments but we are not running around with money burning a hole in our pocket.  We consistently think about our existing portfolio and things we need to be doing to support it.  Sometimes that is being creative about how they find money.  That’s not going to Vito and getting charged a 55% interest rate but it might be reaching out to various non-traditional investors to see if they might want to participate in some way.

There will be funds that might want to sell positions in great companies too in order to provide liquidity to investors.  Figuring out how to help entrepreneurs navigate that is one job we are preparing to do.  It’s also a way for an enterprising fund to grab more equity in an existing portfolio company-or in a company they would like to be a part of.

There are some obvious things we are learning.  For example, distance learning will be huge.  But if you start a company today, you are way late.  However, a private equity-type roll-up of existing distance learning companies to create a big SaaS platform might be interesting.  A lot of people might be looking at different types of manufacturing given we need masks, respirators, ventilators and other specialized equipment.  Why can’t existing companies just expand capacity?  Why won’t governments stockpile?  If it’s obvious, then it’s probably not a good entrepreneurial idea.  Some things that seemed too early might get some traction.  Some things that seemed on point might be dead.

It’s abundantly clear a lot of other things are going to change that entrepreneurs have no control over.

A little humor helps you deal with a crisis too.

 

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We Can’t Go On Forever Like This

This post is by Jeff Carter from Points and Figures

Over the past week, I have listened to two sets of doctors from two different hospitals give similar advice.  Both Rush Chicago and Johns Hopkins doctors said we needed to quarantine to stop the slow of the virus.  The core reason they gave was that we cannot risk overwhelming hospitals.  Once that happens, at-risk people will die in far greater numbers than they would have.

At the same time, we can’t sit in our homes forever.

It’s time to really look at this objectively. That’s hard to do with misinformation and fear permeating a lot of the debate. Here is a thought experiment:

For sure, we don’t want to be in enclosed areas with infected people. However, in many areas of the country they have shut us to the outdoors.  I was looking at the NextDoor.com app for my neighborhood back home and it looked more like NextDoortoStasi.com.  The tattling was intense.  Agree, we shouldn’t have block parties and picnics in the park but just getting outside and moving around isn’t going to spread the virus.

When you go outside and come inside, wash your hands.

Clearly, there has to be a probabilistic way to re-open the economy.  Maybe in the short term, restaurants can’t cram people together.  Maybe in the short term, people who are at risk should stay inside and not circulate through the entire ecoystem.  You know who you are.  It’s time to take responsibility.

Of course, I told my parents to stay inside.  They live in Florida.  They said they were shopping during senior citizen hours and I was thinking in God’s Waiting Room that might be the exact time you don’t want to shop if you don’t want to be around a lot of people.

I was also not shocked to see Instacart workers threatening a strike on Monday.  The unionization of the gig economy is a bad idea.  Even people on the left-wing agree with me on this.  Kind of breaks peace with the “We are all in this together” mantra.  However, anyone should be able to understand their concerns. There is a way to solve them without meeting the demands.  You have to think differently.  The other day I blogged about how Kover is insuring food delivery drivers.  They can do the same thing for Instacart employees.  While that doesn’t get them combat pay, it should help cure their anxiety.

I am going out for a walk.  Behind the place we are renting is a foothill.  It’s been a parade of people walking by. I just hope they don’t mind my dog Archie not being on a leash.

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Disability Insurance for Gig Workers

This post is by Jeff Carter from Points and Figures

One of our portfolio companies, Kover, at West Loop Ventures just rolled out a new product for gig workers.  They are offering it in San Francisco and Bay Area to start.  If it’s successful they will roll it out across the country.  It’s targeted at delivery drivers for companies like GrubHub.

Here are the details:

  • Amid the COVID-19 lockdown, the gig workers are the unsung heroes that keep the city running. Compared to the average San Franciscan, they’re more likely to catch the virus.
  • Their biggest fear about COVID-19 is getting quarantined and not being able to work for a month. Uber/DoorDash have pushed out relief programs, but 2 weeks is not enough.
  • Kover used their decentralized insurance tools to put together a heavily subsidized, crowdfunded COVID-19 relief fund for gig workers in San Francisco.
  • Any gig worker can contribute a small fee ($6 a week) to a pool and be eligible for receiving $1,000 if they catch the virus in the coming weeks.
  • If there is money left over at the end of the COVID-19 crisis, the rest of the money in the pool gets distributed back to the contributors.
  • The Kover team is also working to get contributions from the big Gig Economy players to expand the program to more drivers.

If you are a reporter and interested in learning more, contact Kover directly. If you are a gig economy worker, please go to their website and sign up.  Tell your friends in San Francisco about it.

 

 

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Managing Through A Crisis

This post is by Jeff Carter from Points and Figures

Don’t know about you but this whole COVID19 virus thing has been a lot of fun hasn’t it?  Sort of kidding about the fun part.  However, one thing a leader can never do is lose their sense of fun in a crisis.  It helps keep your team loose-and it helps keep their minds active.

I am not saying to become a big practical joker.  What I am saying is great leaders smile a lot during a crisis.  They physically exhort and encourage their teams.  They just say out loud, “Isn’t this fun?” and smile.   They do things that help give their team a sense of hope.  Hope drives down to determination because without hope, all effort is fruitless and you will fail.

My friend Jeff Minch wrote a little piece on leadership the other day and I wrote one about penalizing failure as well.  However, I am reinforcing it today.  As JLM says, there are no perfect leaders.  Some leaders are great when it comes to confronting a crisis but that same person is not a good leader when things are calm.

One thing I want to stress and point out with emphasis.  When you are managing through a crisis you won’t get “good data”.  It really rubs me the wrong way when I ask someone about their thoughts on something and they say they are a “data dog”.  It’s totally avoiding the question.  When you are managing through a crisis, you need to assess the quality of the data you have but more important is to get great clean “information”.   Information is different than data.  Sometimes you can’t put information in a spreadsheet.

Crisis leaders that wait for good data sit on their hands and don’t do anything.  That’s when the situation overwhelms you and you lose.

Crisis leaders quickly assess risk and reward.  They make decisions that are for self-preservation but sometimes if they see an opening they make decisions that are opportunistic.   There are times to do each and it certainly depends on your condition prior to going into the crisis.

If your business was cash strapped going into the crisis, you aren’t suddenly going to find a new pile of money during it.  Virtually everything you do will be hard.  However, you can create gains if you find the right seam to run down.

One thing you absolutely cannot do in a crisis is be selfish.  Selfish leaders will die upon the sword themselves and it won’t be heroic.  History will not remember you well and you might just be a footnote.  Churchill was an example of a great crisis leader.  If you know how General Mark Clark ran the WW2 battle in Italy, you will have been exposed to a General who made consistently poor decisions.  If you don’t know the legacy of the 442nd, which was sent into horrific unwinnable battles by Clark, learn it.  Here is a little history for you:

When sent to Italy, he was not happy with one General, in particular, Mark Clark, who had rerouted troops in an attempt to seize Rome. Truscott felt that the attack was Clark’s vainglorious attempt to stroke his own ego, demonstrating little regard for the well being of the men, or the bigger picture of the war’s goals. He did not wish to participate in what he deemed to be an exercise in ego.

Recently, Nancy Pelosi intercepted a bipartisan process because she was selfish. Her ego got in the way. She not only crushed hope, but she is trying to leverage her position to attach all kinds of irrelevant ideas to a bailout bill.  It’s a lesson in how not to lead during a crisis.  She will go down in history as a non-functional leader in my opinion.  Contrast that to what Gov. Cuomo is doing in NYC.  Other Governors have been very slow or just do #me-too leadership.  Afraid to take action they say they have experts and are waiting on data but the reality is they are just not great crisis leaders.  They are selfish and their own ego gets in the way.

When I was trading, certain times became crisis management.  You worked differently during that time.  There are decisions that I made during crisis management times that I would never make during regular time.  Given historical data, some of my decisions looked kind of crappy.  But at the time I made them, they seemed like the right decision.  That’s the difference between Crisis CEOs and analysts, consultants, academics and number crunchers.  You don’t have the luxury of a lot of time to act.

As a leader, if you can figure out ways to extend time it gives you a breather.  If you are a small business or startup today, maybe it’s an SBA loan.  Maybe it’s a convertible debt round at what you would normally think is an inferior price? Are their short term things you can do to extend time?  How can you cut your cash burn without long term implications for the business? Taking that sort of action gives you the chance to think clearly about your next action.  When you make a decision, don’t look back.  The time to rehash is once you get to the other side of hell.

Great Crisis CEO’s have a good sense of first principles, but they are willing to apply them in unique ways.  This is how a startup CEO might look at what they are doing through a different lens and find an opportunity.

You are not going to hit home runs.  Don’t swing for the fences.  It’s about Risk/Reward, making decisions that align with your core mission and then executing on them.

Virtually all the CEO’s in our portfolio are doing things during this crisis and not sitting on their hands.  They are utilizing the information at hand and trying to create an opportunity.  They are talking to their teams with a sense of hope, not dread.  I want to give you a few examples.

Megalytics is a company that analyzes commercial real estate risk.  If there is a time when CRE Asset Managers would like to know the risk in their portfolio, now is the time!   However, Megalytics has found a new place to apply their data.  Megalytics recently came up with a new application for COVID-19, using the same technology they have been using for years in other real estate applications.  It turns out, this sort of thing was absolutely a game-changer in China when it came to tracking and controlling the spread of the virus.  As we re-open our economy this tech will be vital.  They can geofence an infected site and track from the date of infection many of the people that were in the same building and where those people live and work, and also where they might have gone before and after leaving the building.  On a recent CNN Town Hall, they mentioned contact tracing as the only way to really get on top of this for community spread and this is the best way to accomplish this.  Although not perfect, it can be used in conjunction with other data sources and can be very good to get on top of things.

Holberg Financial has created an entire program to help companies help their employees deal with financial stress.  No doubt this is happening worldwide today.  It costs you nothing right now.  This crisis has illuminated its mission more than anything that has happened since the company was founded.

Pipit Global moves cash digitally.  I saw in the bail-out bill there was a notion of creating a digital dollar.  Pipit already has the tech so financial institutions can move cash digitally.  It happens fast and it’s cheap.  All financial institutions have to do is plug into their process.  It’s simple to set up.  There are also fears of the virus living on hard cash.  Pipit alleviates that concern because you can have cash, but never touch it.

FinMkt has set up a network where financial institutions can increase their loan volume at low cost. All of a sudden, she has inbound interest from financial institutions to be a part of her network.  If you are a bank, a credit union, or a non-traditional loan provider she can give you easy access to finding good opportunities to extend credit that won’t blow up your business.  In a situation where cash is in high demand, this is a good way for you to meet it.

The CEO’s in my angel portfolio aren’t sitting on their hands either.

Ycharts has set up a whole new dataset with COVID19 stats so you can compare and contrast looking at different financial information as it relates to COVID19.

NuCurrent is hiring!  Their wireless charging technology could be huge in an environment where people are scared to touch things.

Yes, a mandated government shut down sucks for increasing top-line revenue.  But, you cannot stop.  You have to give your team hope.  Finding rays of sunshine to pursue is a way to give your team hope.  Finding low-risk opportunities to capitalize on gives your team hope.  Sitting on your hands and waiting for data that will come when it is too late will kill your firm.

Remember this and let it be a guidepost for you

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Maybe We Will Embrace Capitalism?

This post is by Jeff Carter from Points and Figures

If anything the coronavirus panic ought to illustrate to people, it’s the virtues of capitalism.  Kim Strassel wrote a nice article about it today in the WSJ and you ought to read it.  She illustrates the action of private drug companies to combat the virus.  Another great read is Richard Epstein’s article from Monday.

As Adam Smith said (paraphrased) so long ago, “Private company’s pursuit of self-interest will lead to the public interest – the public good – by the mechanism of the invisible hand.”

We are seeing that play out in real-time when it comes to drug companies.

However, what about other parts of the economy?  Grocery stores?  Paper companies?  They are pursuing private interests which ultimately serve the public good, by the mechanism of the invisible hand.  There is no great Kommissar directing them.  They are being directed by the private market of supply and demand.

This crisis should be illuminating in other ways.  The first is with restaurants.  They are in trouble.  Restaurants are fixed cost heavy and lots of costs go to labor.  Shutting down for two weeks shows how thin their margins are, and how incredibly important constant cash flow is to them.

What if they were in a socialist country and were prohibited from even making a profit?  What happens to a business when it is forced by the government to operate at “break-even” AND it is justified because of the “public good”?

It should be abundantly clear that they wouldn’t be in business.  If it’s not, step back and take a look at it through a different lens that isn’t full of prior confirmation bias.  If it’s still not, then you probably need to take some basic business classes and really understand the concepts of accounting and microeconomics.

As Ms. Strassel says, “Here’s the lesson of the virus so far: Relying solely on government bureaucracy is insane. To the extent America is weathering this moment, it is in enormous part thanks to the strength, ingenuity, and flexibility of our thriving, competitive capitalist players.

The U.S. is working hard to avoid its own worst-case scenario, and the federal and state governments are playing crucial roles in coordinating resources, imposing public-health measures, and keeping the public informed. But the single biggest mistake so far came from the government. The feds maintained exclusive control over early test development—and blew it. The Centers for Disease Control and Prevention’s failure delayed an effective U.S. response, and the private sector is now riding to the rescue.”

Yesterday, I went to the grocery store to pick up one thing, eggs.  The stores here have been out whenever I went.  I got to the store at 7:50 am, it opened at 8 am.   There was already a line winding down the strip mall.  I stood in line.  We all stood around four to six feet from each other.  We were let into the store in groups of ten or so.  That meant a mad dash couldn’t happen.  I walked past the paper products section.  Paper plates and cups in typical supply.  Paper towels, toilet paper, napkins, facial tissue, all out.

I walked directly to the back of the store. Much of the store had cases with no goods in them.  I found the eggs.  There was a sign up nudging people not to hoard.  The good thing about eggs is chickens keep laying them.  I didn’t care if the eggs were organic, pasture-raised, or cage-free.  I just wanted eggs at the cheapest price I could get them.  I bought two dozen.  Normally I would buy one dozen but I knew next week we’d potentially be driving back to Chicago and we might need to hard boil eggs to eat on the trip.

My mind wandered to Iron Curtain societies of the past where people waited in lines for anything.  My mind wandered to Venezuela, where government-imposed socialism has totally destroyed people.  My mind wandered to Cuba, where the standard of living is dreadfully low.

I would rather rely on Kimberly Clark to make sure the toilet paper returns to the grocery store aisle rather than a government agency.  I’d rather rely on capitalism to distribute that toilet paper to make sure those who need it get it.

The policies being espoused by Bernie, and to a large extent Joe Biden and put through the megaphone of an unobjective media are off-key in a situation like we are encountering today.

American capitalism will solve this problem.  It will take time, but we will get there.  It is the best form of societal organization because it transfers deeply wired and embedded human nature into a system that benefits the bulk of us.

 

 

 

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Let’s Take A Breath and Formulate Good Policy

This post is by Jeff Carter from Points and Figures

Watching the daily volatility in the stock market is unsettling.  It’s scary.  It drives fear and panic.  Even when you see a huge one day increase, it’s not settling.

I read a couple of things this morning from some really top economists and will share them with you along with a few ideas that I think could stem the nervousness and panic.

The virus is complex, but the global financial market is very complex too.  So far, it’s been okay based on the things that are going on.  However, we are starting to see the credit spreads fray.  Bid/Asks in the US Treasury futures today were wider, and jumpy.  If you want to gamble, trade it.  Stocks, of course, are getting creamed.

Active traders that are huge are having trouble.  Margin calls, getting stuck with stuff, and trying to provide liquidity is difficult.

When you shut down an economy, it has effects.  You can’t do that in a vacuum.  You must take other measures that might seem super unnatural for a capitalistic economy.  I am not calling for Bernie Bros’ socialism.  Not at all.  But, there are some things we should do.  Cliff Asness had a nice tweetstorm with some thoughts.

Professor John Cochrane wrote a nice piece in the WSJ today.  It’s paywalled.  Here are the highlights.

Money troubles spread like a virus. When a business cannot pay, its creditors, employees, investors and banks are in trouble. And if people worry that banks and other institutions are going to fail, they run to get money out—and we have a crisis.

Lending is better than transfers. Since loans must be paid back, larger amounts can go where needed. Small Business Administration loans are a good start. But most business and most employment is large business. Large firms are often even more cash-poor and in hock to nervous creditors, and they are harder to replace or revive if they fail. Lend with the head, not the heart. “People” might seem more worthy than “corporations,” but we need corporations to hire people when it’s over.

Forbearance is important. Banks and creditors should not immediately shut down a nonpayer. But they have to be allowed to forbear by their regulators, their own creditors, and their own fiduciary responsibility, and to borrow or pass forbearance up the line.

Professor Raghu Rajan had his thoughts in Barron’s.  If the US takes these steps, we will avoid a 2008 like scenario.

So long as it doesn’t trigger large-scale defaults, including among financial-sector firms, it is something definitely survivable—but needs significant government action.

It is when there’s a cascade of defaults and a couple financial firms get into trouble that things look a lot more like 2008. That requires considerable failing on the side of the government in containing this pandemic—[with it taking] not a matter of few weeks but few quarters.

How many firms can see half a year’s worth of business wiped out and not be stressed? We need this brought under control as quickly as possible, and we need direct aid to families suffering—gig economy workers, waiters, cooks. It has to be direct—a check in the mail. Payroll tax relief won’t help someone not on the payroll, and a whole bunch of people are in this in-between land [of gig workers]. 

On bailouts: If you have one set of rules for Carnival and different for restaurants, you are going to see a huge backlash down the line.

I would say work on getting rid of the tariffs [on China]. It will create a much better environment if there’s a sense the world is going to come together.

 The fact that Taiwan, Korea and China have managed to at least curb the spread suggests it is doable. I have no doubt when the U.S. brings all its weight behind it, it will figure out what has to be done. Of course, there will be spillover, but we aren’t in a full-blown crisis.

So, it is pretty clear the Fed has acted correctly.  0% interest rates are the right way.  Figuring out bailouts under pressure like this is a bad idea.  It will set bad policy, and bad precedent.  The biggest thing the government needs to do right now is figure out how to secure the banking system so banks can tell businesses they can delay paying on their debt.
I have some other suggestions.
1.  Shut the stock market down for a couple of days.  Shut down on Thursday and re-open on Monday.  Let the policy makers have time to breathe to do some triage.
2.  A lot of very wealthy people in the US signed a Giving Pledge.  Those wealthy people are giving away their fortunes after they die.  Guess what?  They are getting a chance to do it today.  People that are very wealthy ought to be buying the stock market and saying it publicly.  They ought to be doing private debt to small businesses where they live on terms that are fair to the small businesses.  If they are going to wind up giving away the money after death, why not start today in a crisis.  They have a responsibility to lead since they can.  They also have done very well because our American society is a place that they had opportunity.  Giving back to that society in this way is a good idea.
3.  Delaying all tax payments by individuals and businesses is a good idea.  Allowing businesses to delay payments on rent, debt and other things are a good idea.  They can accrue it.
4.  Getting cash into the hands of individuals is a good idea, but it’s not clear how that should be done and who should get it.  A very wealthy person or a person that has a nice chunk of cash in the bank shouldn’t get a check.
5.  Institute the “uptick rule” and enforce it for all stocks on all platforms.
There are businesses that were teetering on the edge prior to the crisis.  It’s not a good idea to bail them out because in normal times they would have gone under.   I don’t know how to determine which business gets bailed out and which doesn’t.
Reading some studies can make you scared or hopeful.  A lot depends on your situation.  My parents are older, and like other older people have different health problems that they have to deal with. They are a high risk group, and if they get it they will probably not make it.  I am in a lower risk category and I suspect if I get it I will recover.  However, I don’t especially want to see people like my parents get it.
The other good news is people are doing small things to help around the country.   The bad news is that some leaders are using the crisis to play politics like my home state Governor in Illinois.  Not delaying the primary yesterday was a horrible decision based on the situation.  He did it to score political points with the Democratic Machine.  Period. That’s not leadership, it’s being selfish.  Actions like that don’t build trust in leadership, it destroys it.

 

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Uff Da

This post is by Jeff Carter from Points and Figures

Norwegians say Uff Da.  It’s the Jewish Oy vey.  This coronovirus is like that.  Yo-yo.  Hard to follow the news since there is so much bias.  Exogenic shocks that you can’t control are tough to manage.

Here is what we told businesses we are invested in.

  1.  First of all, we believe strongly in our portfolio CEO’s to run and operate their businesses. We invested in them as much as we invested in their business.  Each business is different and a one size fits all policy doesn’t work.  But there are best practices.  We are confident that our portfolio CEO’s will lead their businesses and work through the permutations and do what it takes to weather the storm and be successful.
  2. If a CEO has a novel idea or practice, we will share it with other companies.  My good friend Bryan Johnson of Kernel who sold Braintree to PayPal published a blog post talking about what he is doing.  He is interested in engaging in an online best practices conversation.
  3. Businesses need to go in survival mode, but look for opportunities that avail themselves.  Great battlefield commanders seize opportunity to create advantage when they can.  Opportunities shouldn’t be high risk/high reward, but low risk with a reward.  Sometimes those rewards can lead to larger things.  Here are some examples:  Holberg Financial is dedicated to preserving and teaching employees about financial health.  When things like this happen if your business has HF you might have been better prepared.  Great time to start to put it in for the next crisis which will surely happen.  Megalytics analyzes the credit risk of Commercial Real Estate.  Given what’s happened, any CRE manager that doesn’t engage with Megalytics is committing financial malfeasance in their portfolio.  FinMkt can create a flow of credit.  Kover can insure all kinds of risk.  Pipit can virtually transmit cash.  Ycharts can help you spot opportunities.  Riskalyze helps you create fearless investors.  These are real time things people can engage with to help them get objective information and to help them take control of the situation.
  4. If businesses were engaged in financing or acquisition conversations, keep them going as best you can.  You can’t act like nothing happened but you shouldn’t put a stop to them.  Try to be as objective as you were before the crisis.  It is doubtful new discussions will open up in the next couple of weeks, perhaps even a month.  However, if you see an opportunity, sometimes this is the time to strike.  I don’t think Warren Buffett is sitting on his hands.
  5. As a fund, we continue to do diligence on businesses we were doing diligence on before this hit.  We don’t have any outstanding term sheets, but if we did we would honor them.  We continue to speak with portfolio companies on future financing needs and those decisions are always sort of fluid.
  6. We used Pat Daugherty of Foley and Lardner’s recommendations on board level coronavirus actions.  Basically, we chatted about what businesses are doing and where we could we are setting up a Coronavirus Committee.  We include it in the board notes.  The committee is designed to be short term, and monitors the situation along with bringing best practices to the company.

Everyone is virtual now and our interactions were largely virtual before the crisis hit anyway.  Don’t panic.  Wash your hands. Ignore the mainstream media that just wants to engender fear and get clicks out of you.  Ignore the gyrations of the market, little you can do about it and frankly isn’t affecting you near term but could longer term depending on an outcome you don’t know.

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The Psychology of Winning

This post is by Jeff Carter from Points and Figures

If you want to win, you have to prepare to win.  I just read an article about baseball agent Scott Boras.  Interesting to read about how he approaches the business of sport.  There are parallels to winning at a game and winning in entrepreneurship.  I see parallels to trading too.

Boras says, “This game is not yours,” Boras says, quoting Kissell. “You do not own this game. You are allowed to participate in this game. Understand the game is ever-changing; it is the feather in a windstorm. It’ll come to you and it’ll go away.”

Interesting way to approach stuff mentally.  It keeps you unattached.  This is a hard leap of faith for founders of companies to make but it might be a good one. Players didn’t create the game of baseball.  Traders didn’t create the game of trading.  Founders most certainly came up with an executed on the idea behind their business.  However, they didn’t invent the principles of business so maybe that’s a way to mentally take a step back?

Youngsters don’t know about John Wooden. He was the most successful college basketball coach of the 20th Century by far. When I was a kid, I had his Pyramid of Success on my bedroom wall. Here he is talking about the difference between success and winning. There is a difference.

There are things you can do with psychology that are really powerful. We had an issue with our Continue reading “The Psychology of Winning”

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Happiness? Use Holberg

This post is by Jeff Carter from Points and Figures


In today’s WSJ there is a really nice article about how companies are trying to figure out if their employees are happy or not. There is a fine line between knowing to help employees and intruding into their personal lives.

This is one of the things that our portfolio company Holberg Financial has really figured out.  They are based in Chicago.

Talking about finances with an employer is really difficult.  Holberg creates a way for employers to help employees with stress, and Holberg does it in an unbiased and private way.  The pricing is great too.  If your employees don’t use it, you don’t pay.

Employers get to see data that is anonymous. Employees get the benefit of working on their finances and feeling less stressed about them.  Holberg has kept really good data on the effect using them has on a workforce.  It’s found using Holberg makes employees 64% more productive.  Employees are happier.

I have had small business owners tell me that because employees are happier, they don’t worry as much about employees stealing from them to cover financial situations.

One employee who was in debt and couldn’t figure out a way out started on the Holberg platform.  After a year, they were out of debt and had money in the bank.  They were literally in tears with relief at what Holberg did for them and the company provided it at a very low cost.

This creates a win/win Continue reading “Happiness? Use Holberg”

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Sometimes, You Muddle Through

This post is by Jeff Carter from Points and Figures

Often times you lack the confidence to do something.  Maybe it seems complex.  You go to hire an expert but the expert is too much money.  Another thing about experts, they ask a lot of questions that contribute to your lack of confidence to carry out the task.  Consultants are really good at that.  Then they are really good at building up permanent teams inside your company that continue to charge for value added services.

What do you do if you can’t afford it?

You need to gather information any way you can.  Then, break it down into simple steps.  Ideally, the simple steps take the form of a decision tree which allows you to critically assess at each step how you are doing and whether to proceed or step back or even just quit altogether.

There are a lot of service providers that want to tap into startups.  They often are ill-equipped because of cost structures to deal with startups at an early stage.  If they are interested in building an ecosystem, they need to scrap that cost structure knowing they will take an opportunity cost loss in the short term but hopefully will build a lot of credibility in the long term as the ecosystem grows to reap the benefits.

Lawyers understand this best.

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The Future of Work is Automated

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

If you are as old as I am, you remember doing a lot of things by hand.  Statistical analysis, budgets, technical analysis, corporate finance, and accounting were all done with a pencil and paper.  In the 80s things started to change with Microsoft, Intuit and other online tools.

What’s next to change?

Data processing.  Automating a lot of aspects in the cloud.  Things like that.

One of the last angel investments I made before we raised a fund was in Catalytic.  Sean Chou is the CEO.  He’s done a tremendous job building the company.  Recently, he did an interview and it gives you a glimpse into what the future will look like.

Here is the interview:

Christopher J. Dwyer: Hi Sean, thanks for chatting with us. Tell us a little bit about yourself.

Sean Chou: I’m the CEO and co-founder of Catalytic, a leader in cloud-based automation. You are probably quite familiar with Robotic Process Automation (RPA). We are not RPA, but we integrate and complement those solutions. We provide businesses with an intelligent layer to easily manage complex processes that include people, RPA bots, and an extensive library of services (i.e. OCR, invoice-processing, language services). The platform helps employees focus on higher-value challenges while helping businesses be more profitable, efficient, and compliant.

I started life as a technology consultant but quickly concluded that I wanted to be in software. I got that chance in 2000 when I met Jai Shekhawat, who Continue reading “The Future of Work is Automated”

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The Future of Work is Automated

This post is by Jeff Carter from Points and Figures

If you are as old as I am, you remember doing a lot of things by hand.  Statistical analysis, budgets, technical analysis, corporate finance, and accounting were all done with a pencil and paper.  In the 80s things started to change with Microsoft, Intuit and other online tools.

What’s next to change?

Data processing.  Automating a lot of aspects in the cloud.  Things like that.

One of the last angel investments I made before we raised a fund was in Catalytic.  Sean Chou is the CEO.  He’s done a tremendous job building the company.  Recently, he did an interview and it gives you a glimpse into what the future will look like.

Here is the interview:

Christopher J. Dwyer: Hi Sean, thanks for chatting with us. Tell us a little bit about yourself.

Sean Chou: I’m the CEO and co-founder of Catalytic, a leader in cloud-based automation. You are probably quite familiar with Robotic Process Automation (RPA). We are not RPA, but we integrate and complement those solutions. We provide businesses with an intelligent layer to easily manage complex processes that include people, RPA bots, and an extensive library of services (i.e. OCR, invoice-processing, language services). The platform helps employees focus on higher-value challenges while helping businesses be more profitable, efficient, and compliant.

I started life as a technology consultant but quickly concluded that I wanted to be in software. I got that chance in 2000 when I met Jai Shekhawat, who Continue reading “The Future of Work is Automated”

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Envy, Jealousy and the Relentless Attack on Wealth and Capital

This post is by Jeff Carter from Points and Figures

I’d like you to participate with me in an effort I am leading. I am raising money to dedicate a hotel suite to the Unknown Soldier at the new National World War Two Museum hotel. Any proceeds over and above dedicating that space will go to Museum STEM projects dedicated to helping grade school children across the United States learn STEM.

The attack on the rich and risk-takers continue.  Except, there are carve-outs for real estate since a lot of Americans understand real estate investment or engage in it.  Venture, Private Equity, and Hedge Funds are significantly harder and much riskier.  John Cochrane recently wrote up this on Wealth Inequality and Taxes.  Everyone ought to take the time to read and understand it.

Our tax code is riddled with carve outs and loopholes.  The only way to fix it is a flat tax with no write offs.  Everyone will pay their fair share.  We have one man, one vote; why not one man, same tax?

This proposed carried interest tax illustrated below echoes the transaction tax that Michael Bloomberg proposed.  He isn’t the only Democrat proposing it.  That tax is a useless tax on liquidity and hurts smaller investors.

In this case, it’s a tax that totally misunderstands risk and reward.  If enacted across the country, it will curb investment into innovation and efficiency.  It’s just a grab money tax because people are jealous.  I disagree vehemently with Continue reading “Envy, Jealousy and the Relentless Attack on Wealth and Capital”