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#unfiltered #4 Namedropping and Intros – Why my default is to not to namedrop, Direct/Indirect Consequences, Making/Receiving Intros, and Notes on Friendship

namedropping and intros, fame
Photo by Einar H. Reynis on Unsplash

One of my buds asked me over the weekend why I often don’t namedrop, mostly in respect to this blog. Well, other than the quotes I use that already exist somewhere on the Interweb. It’s not the first time I’ve been asked about namedropping. And I usually my TL;DR response is that I want to respect their privacy and time.

My longer answer is a bit more nuanced. Here are my reasons to why:

  1. If I’m true to my emotions, I would love to namedrop at every opportunity I get. Given that some of the folks that inspire me to write specific pieces are echelons above me, it would help me get exponentially more traffic. And for a minute, I can convince myself that people come to my site for the content. Yet, in reality, there are confounding variables, part of which is whom I’m rubbing my shoulders with.
  2. Although I tell them during our conversation, I send my pieces to the people who inspire me retroactively. In receiving feedback, if existent, after I publish my thoughts, I can truly give a play-by-play cross section of my thoughts at any given time. If I believe the feedback/advice is pertinent, I will compound upon the advice in a future post. After I publish the pieces, if they want to be associated with it, they can, which leads to my third point.
  3. Fame is a fickle thing – a double-edged sword. I’m not saying my blog currently has millions of views every month, nor am I projecting that it’ll ever. Would be nice, but not a priority. But since I do write on a public blog which can be found via various search engines and browsers out there, I am cautious and respectful of people’s comfort levels in the face of the public eye. So, before they decide to have their names on my blog, I send them this incredibly intricate piece Tim Ferriss wrote about fame. On the bright side, social recognition, the opportunity to take on bigger projects, the ability to mingle with people of a similar or greater popularity, and more. On the flip side, stalkers, harassment, extortion, death threats and so on. In understanding the “disclaimers”, then I retroactively put their name up.

Because of these reasons, I’m also, to my friend’s credit, testing the question: Are these people real? The supposed elephant in the room. No matter how much I plead my case, there’s little I can do to convince you these individuals are real. I don’t host a podcast (although I may in the future), nor do I ask them to post on their social media about my content. If you don’t believe they are, they aren’t. If you do, I thank you for your confidence in me. And that’s all I can really say to that question.

Outside of the blog, I try not to namedrop, unless it becomes impossible to explain a conversation topic without using their name. I’ve had such cases before that upon using X person’s name, friends, family, coworkers, and/or acquaintances implore an introduction. After all, as my job entails, I live off of introductions. I live and breathe in a relationship-based industry. And because I do, I’d like to say I have a deep understanding with the value, as well as the risks, a person needs to take:

  • to make an introduction (which I brief in this piece),
  • but also, to receive an introduction.

The person making it is risking social capital, or in other words, their reputation. The person receiving it is risking time (and effort) allocation. And when you’re punching above your weight class, the person receiving it has to weigh the opportunity cost of taking an intro versus the projects they’re currently undertaking, as well as prioritizing a new contact over their existing network. If I do make an intro, I always shoot for a double opt-in, where both sides agree to it.

Early last year, I heard something I don’t know why it didn’t click sooner. As part of the Crazy Gremlin (CG) (long-story short, we couldn’t think of a better name) event series which I help co-host, we get in-person feedback with each and every attendee. Why? We can dig deeper than we can with survey forms, like:

  1. Understand the deeper emotional spectrum,
  2. Ask pertinent follow-up questions,
  3. And, notice macro- and micro-gestures that’ll supplement how forthcoming their answers are (i.e. Does a “9” on the NPS question really mean a “9”?).

For context, the thesis behind CG events is helping strangers become life-long friends overnight.

In that feedback process, one of our attendees told me: “I’m never going to come to your events again.”

I asked, “Why do you say that?”, assuming that we did something terribly wrong.

“You guys didn’t do anything wrong. In fact, you held a better event than I imagined. But in coming to the last event, I realized I would rather prioritize my current close friends than spend time meeting new people, whom I don’t know if I’ll catch up with later.”

He made me realize that:

  1. We failed at bringing people closer together, fundamentally being comfortable with being vulnerable, at that event.
  2. There’s a giant population of folks out there who say they want a social life and to meet new people. But what they really mean is that they’re still looking for that friend or group of friends with whom they can really truly be themselves with.

To this day, I don’t think namedropping or making intros when only one party could benefit is conducive to lasting friendships. So, although it makes me giddy, and you can argue, in a myopically-beneficial sense, I proceed cautiously.

#unfiltered is a series where I share my raw thoughts and unfiltered commentary about anything and everything. It’s not designed to go down smoothly like the best cup of cappuccino you’ve ever had (although here‘s where I found mine), more like the lonely coffee bean still struggling to find its identity (which also may one day find its way into a more thesis-driven blogpost). Who knows? The possibilities are endless.

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

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#unfiltered #3 Plan Bs – Should we have them?

I woke up today with a thought that’s been gnawing at me for years now. Why do we have backup plans – Plan Bs, Plan Cs, etc? Does it inhibit our drive? Or readily prepare us for the worst? At what point are we sacrificing our commitment for safety?

When I started this blog, my writing mentor recommended that I have 10 pieces written and ready before I launch my blog. And I did exactly that. All cards out, I still have 8 of my pieces saved in my backlogs, which as you have already deducted, I’ve used 2 of my pieces already. Why? My mentor told me that, in my commitment to publish content weekly, I will indubitably have dry spells – dry weeks. And I did… twice. So, I regressed to my lowest common denominator and pulled something out of my archives. But during those two weeks, it helped me stay in my comfort zone. That instead of fighting writer’s block (if such a thing exists), I chose to run from it.

Part of the reason I started this #unfiltered series is to help me be content with content. I am guilty of 8/10 times second-guessing my way out of doing something. If I contemplate over something long enough, I’ll realize fears that I never thought possible, and opt for the safer option – not doing it at all.

From when we were young, we’re taught to always prepare backup options. When applying to colleges, we’re told to apply to our 2-3 reach schools, and 10-15 other schools we’re confident about getting into. When applying to jobs, one of my hometown neighbors, 2 years my senior, advised me to apply to 200 jobs, expect 10-20 interviews, another 3-5 for final rounds, and 1-2 offers to choose from. Effectively, asking me to apply to 198 backup alternatives.

I get it. As the saying goes, beggars can’t be choosers. Both high school and my early years of college have drilled that saying into me – by my peers and by my teachers.

A part of me hates it, but a part of me realizes the truth in there. I saw that circumstances played an even larger role for my friends and peers who:

  • are going through tough times in this pandemic and economic downturn,
  • (whose) parents came from a lower income bracket,
  • are POC (people of color),
  • are female,
  • are/were open about their different sexual orientations,
  • didn’t graduate from a 4-year college,
  • lost limbs or appendages due to accidents or conflict,
  • are/were in debt,
  • and much more.

Half a decade back when I set out to meet one new person that drew my insatiable curiosity a week, I realized I’m a goddamn privileged person living in the 21st century. I’m a perfectly healthy, heterosexual Asian male who graduated from a 4-year university. If all hell breaks loose and my net worth goes to absolute zero, I have my parents’ home to go back to and a room and bed to call my own. And as a full disclaimer, the fact I’m contemplating this question in the first place means I’m privileged enough to do so.

And because I’ve had the liberty to do so, I realized that my greatest personal achievements came from when I didn’t give myself the option of a Plan B. For the people I reached out to and am in touch with above my weight class, I either have given it my all or was prepared to do so. For swimming, I treated each competition as my last, meaning I either gave it my all or nothing. And during more nights than I can count, I beat myself up over my inability to reach a milestone.

Yet, now in the land of venture, we learn to hedge our bets and come up with contingency plans. We learn once again to diversify our portfolio, and not put all eggs in one basket. Does that lead to why many investors fundamentally don’t have the conviction to lead deals?

On the founding side, you have it almost flipped. When you are trying to make ends meet, there will be times you have to take that one option and go all in. And you can’t let go until you do everything you can to make it a reality. When you sit in a position of privilege, you can have several contingency plans to hedge your bets. Ben Horowitz, author, founder, and investor, illustrated the dichotomy in his piece (and one of my favorites) about peacetime and wartime CEOs. There’s a part of me that strives to find that sense of urgency, like a wartime CEO. And go all in. Maybe this pandemic is the test where I can find where my values really lie.

To be frank, I haven’t come up with a conclusion to the dilemma. For now, I can only hypothesis-test and keep good track of the data that comes my way. But, so far, I can say that one’s tolerance for risk is positively correlated with one’s free cash flow.

#unfiltered is a series where I share my raw thoughts and unfiltered commentary about anything and everything. It’s not designed to go down smoothly like the best cup of cappuccino you’ve ever had (although here‘s where I found mine), more like the lonely coffee bean still struggling to find its identity (which also may one day find its way into a more thesis-driven blogpost). Who knows? The possibilities are endless.

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

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A Small Nuance with Early Growth Numbers

startup growth
Photo by Ales Me on Unsplash

My friend, Rouhin, sent me this post by a rather angry fellow, which he and I both had a good chuckle out of, yesterday about how VC is a scam. In one part about startup growth, the author writes that VCs only care about businesses that double its customer base.

The author’s argument isn’t completely unfounded. And it’s something that’s given the industry as a whole a bad rap. True, growth and scalability are vital to us. That’s how funds make back their capital and then some. With the changing landscape making it harder to discern the signal from the noise, VCs are looking for moonshots. The earlier the stage, the more this ROI multiple matters. Ranging from 100x in capital allocation before the seed stage to 10x when growth capital is involved. But in a more nuanced manner, investors care not just about “doubling”, unilaterally, but the last time a business doubles. We care less if a lemonade stand doubles from 2 to 4 customers, than when a lemonade corporation doubles from 200 to 400 million customers, or rather bottles, for a more accurate metric.

After early startup growth

Of course, in a utopia, no businesses ever plateau in its logistical curve – best described as it nears its total TAM. That’s why businesses past Series B, into growth, start looking into adjacent markets to capitalize on. For example, Reid Hoffman‘s, co-founder of LinkedIn, now investor at Greylock, rule of thumb for breaking down your budget (arguably effort as well) once you reach that stage is:

  • 70% core business
  • 20% business expansion – adjacent markets that your team can tackle with your existing resources/product
  • 10% venture bets – product offerings/features that will benefit your core product in the longer run

And, the goal is to convert venture bets into expansionary projects, and expansionary projects to your core business.

Simply put, as VCs, we care about growth rates after a certain threshold. That threshold varies per firm, per individual. If it’s a consumer app, it could be 1,000 users or 10,000 users. And only after that threshold, do we entertain the Rule of 40, or the minimum growth of 30% MoM. Realistically, most scalable businesses won’t be growing astronomically from D1. (Though if you are, we need to talk!) The J-curve, or hockey stick curve, is what we find most of the time.

The Metrics

In a broader scope, at the early stage, before the critical point, I’m less concerned with you doubling your user base or revenue, but the time it takes for your business to double every single time.

From a strictly acquisition perspective, take day 1 (D1) of your launch as the principal number. Run on a logarithmic base 2 regression, how much time does it take for your users (or revenue) to double? Is your growth factor nearing 1.0, meaning your growth is slowing and your adoption curve is potentially going to plateau?

Growth Factor = Δ(# of new users today)/Δ(# of new users yesterday) > 1.0

Why 1.0? It suggests that you could be nearing an inflection point when your exponential graph start flattening out. Or if you’re already at 1.0 or less, you’re not growing as “exponentially” as you would like, unless you change strategies. Similarly, investors are looking for:

ΔGrowth Factor > 0

Feel to replace the base log function with any other base, as the fundamentals still hold. For example, base 10, if you’re calculating how long it takes you to 10x. Under the same assumptions, you can track your early interest pre-traction, via a waitlist signup, similarly.

While in this new pandemic climate (which we can admittedly also evaluate from a growth standpoint), juggernauts are forced to take a step back and reevaluate their options, including their workforce, providing new opportunities and fresh eyes on the gig economy, future of work, delivery services, telehealth, and more. Stay safe, and stay cracking!

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

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#unfiltered #2 Culinary Tips – Cook vs. Chef vs. Flavor Mad Scientist- The Carbs, the Proteins, and the Whole Spectrum

unfiltered vc, cooking tips
Photo by Calum Lewis on Unsplash

As a result of my love for food, and eating out, honestly, a bit too much, what started as engaging conversations with chefs at some of my restaurants, and eventually chefs from across the country turned into a passion for cooking. Uhh, well, although I can’t call myself a cook or chef, I have categorized myself as a flavor mad scientist.

  • Cook – someone who can prepare food
  • Chef – someone who can create recipes appreciated by a wider audience (personally, don’t care if they’re a professional or not)
  • Flavor mad scientist – someone who attempts to be innovative and likes experimenting with permutations of flavors and textures (80-90% ‘failure’ rate), aka me

So, I chatted/learned from chefs/cooks, ranging from some of the most prestigious kitchens to my favorite home kitchens. Here are some tips and hacks I got from some of the best:

For the carbs:

  • You can tell if a risotto (or rice in general) is cooked by smearing a rice grain on a flat surface. If it smears without noticeable lumps, you’re good.
  • Add a teaspoon of olive oil in the pasta dough to give it a bit of shine.
  • Flour matters. Don’t just use all-purpose. 00 (double zero) for silkier flour and pasta chewiness. Durum for coarser grinds, longer cook times, and for making flatbreads; some use it for pasta too, depending on the chef. And so on.

For the proteins:

  • Score the fat of a (ribeye) steak before searing, so it’s easier to render the fat. Score is a cross-hatch pattern. More surface area to render.
  • Use tongs to cook steak and a spoon to butter-baste (I swear I used to think it was spelled “butter-basing”)
  • Don’t cook cold proteins (meats/seafood). Let it rest till room temperature before cooking.
  • Allow for meats to rest for as long as you’ve had it in the pan to better absorb the flavors.
  • Before searing proteins, dry with a paper towel or season generously with salt to reduce moisture and splatter once you put it into the pan.
  • Hot pan/hot oil, quick sear and won’t stick to the pan.
  • Brush fish with mayonnaise to prevent them from sticking to the grill. And a great browning too.
  • Use cuts of meat that are rich in marrow and collagen (cartilage) to make stock, like wings, chicken feet, chicken carcass, pork knuckle, etc.
  • If you don’t have a meat thermometer, stick a metal rod (or a cake tester) into the center of the meat. Then place the rod on your lower lip. If it’s cold, more time. Hot, it’s done. If you’ve burnt your lips, well… in gamer terms, GG.

For everything else:

  • If your meats or onions ain’t sizzling in the oil, the oil in your pan isn’t hot enough.
  • To not bruise your herbs when chopping (or chiffonading if you want to be fancy), you need a sharp knife and cut once per cross-section. You can tell if you bruised your herbs by the residue they leave on the chopping block.
  • Lemon juice, ideally fresh, helps fruits from oxidizing (after being cut), so it retains its fresh color.
  • Flavor extra virgin olive oil (EVOO) with herbs (i.e. bay leaves, basil, rosemary, thyme, oregano, etc.) for the “secret” zing to your recipes. You can do the same with white wine that’s used for deglazing the pot/pan.
  • Zest citrus in once in one fluid motion with a zester to prevent mixing in the bitter rind.
  • Use fine grinds for salt and pepper to season pre-cook, and coarse grinds for post-cook/presentation.
  • Buy whole spices and a spice grinder (or pestle and mortar), instead of ground spices. You’ll get fresher and richer flavor that way.
  • Toast spices for more flavor.
  • Under-seasoning is a rookie mistake. (Admittedly, after this tip, I fell under the category of over-seasoning.)
  • Keep your work station clean. Mise en place.
  • Wear short sleeves while cooking, or roll up your sleeves.
  • If you’re a 4-eyes, like me, invest in contacts. Glasses can fog up from the steam, and possibly blur your vision in critical moments.
  • Don’t skimp on costs. Quality cookware and ingredients lead to quality food. (Not saying you can’t otherwise get a good meal, but you’ll notice the difference.)

This post was inspired by a friend’s comment on my Instagram post on February 5, 2020.

culinary tips, unfiltered, plating
You may notice that I just transcribed what I wrote on paper to this blog, with some extra sprinkles on top.

#unfiltered is a series where I share my raw thoughts and unfiltered commentary about anything and everything. It’s not designed to go down smoothly like the best cup of cappuccino you’ve ever had (although here‘s where I found mine), more like the lonely coffee bean still struggling to find its identity (which also may one day find its way into a more thesis-driven blogpost). Who knows? The possibilities are endless.

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The Best Way I’ve Heard to Ask “What did you learn?”

how to say no, learning

Yesterday, I grabbed a coffee with a friend – now a newly-minted manager. Between congratulations and hearing what she’s been up to, we dove into a rabbit hole about performance reviews. And out of everything she shared, there was one question that caught my attention:

What do you say “No” to now that you didn’t say “No” to when you started?

People are inherently loss-averse. We react stronger to losses than gains. Economic prospect theory has taught us that much. Essentialism, probably best popularized by author Greg McKeown, or a methodology that helps us differentiate between external noise and our internal signal, takes it a step further. For example, the questions:

  1. How much do you value an opportunity?
  2. And, How much would you sacrifice to obtain an opportunity?

… carry two different emotions. We take many aspects of our lives for granted. But when we lose any aspect of it – be it a body part, a friend or family member, or a habit – where we once lacked appreciation, we now find true value.

What we say “No” to carries layers of scar tissue – of our past we don’t want to relive. The French language has an incredibly apt way of describing knowledge. Savoir denotes simple knowledge acquisition. Connaître implies a familiarity with knowledge that is deeper and carved into one’s heart. When my friend decided to ask that question, she is looking for what her team members connaissent.

I love it! And I’m gonna steal it (well, with her permission)! For each time frame, we have a new set challenges to ‘pattern-recognize’. Founders have it cut out for them. And just by the nature of their work, they need to learn – fast.

Taking it a step further

Josh Waitzkin, author, chess champion, and martial arts champion, on Episode #412 of the Tim Ferriss Show, puts it quite elegantly:

“When I studied Tai Chi for a year, I thought I knew what I was doing. And I thought I was really started to understand it. But after 2 years, I realized everything I thought after a year was wrong. It was just wrong. But now I understood.

And then after 4 years, I realized everything I thought after 2 years was wrong. And he went on with this story and this pattern, but now I understood. And after 8 years, everything I thought after 4 years was wrong. And now I’ve been training for 16 years; everything I thought after 8 years was wrong. And now, I finally understand…

It’s easy to think we’re in the dark yesterday, but in the light today. But we’re in the dark today too.”

So, in foresight and honest vulnerability, I will take my friend’s question a step further:

What will you say “No” to tomorrow that you aren’t saying “No” to today?

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#unfiltered #1 Urgency – Thoughts on Coronavirus, Innovation, Space Travel, and Love

unfiltered vc urgency

Coronavirus. Candidate primaries. Market crashes. And what motivates us to get shit done. During a bite with one of my buddies from college, we ended up chatting about a myriad of topics. From crying when we scared as a baby to eating when we’re hungry, humans inherently act reactively than proactively.

Let’s put it into perspective:

  • Wildfires in Australia and previously in California brought nature preservation front and center.
  • Because of the coronavirus, China set up a hospital in 10 days. Whereas in SF, it takes years to extend our public metro, BART, to just one more station.
  • In startup land, look how much innovation is being done on the SaaS front. Competition drives progress. A need to be better than your competitors, or perish. On the flip side, innovation at the frontiers of technology are happening at a much slower pace. You’re right in thinking part of it is due to an element of technological risk and mystery. But a large part is also due to funding, awareness, and urgency. I was catching up with another friend, not too long ago, who’s working on the frontiers of AI research. He told me that he’s just not motivated to meet any deadlines. If he misses it, “Oh well.” And if he does reach any milestone, there’s barely a pat on the back.
  • Neil deGrasse Tyson, and I’m paraphrasing here, once said (in one of his StarTalk Radio episodes): we think if we reach commercial viability of space travel or tourism in 50 years, that it’ll be really impressive. But it’s really not. Why? If, hypothetically, aliens from another galaxy contacted us today and said, “We’re going to invade your planet in 50 years”, we will have a different sense of progress. And if in 50 years, we can only just start to commercialize space travel, we’d be sitting ducks.
  • If you have a final in the morning tomorrow and you happen to be a procrastinator (or not), you’re going to be burning the midnight oil. Otherwise, realistically, would you be studying day and night every day?
  • Tim Ferriss asks himself this one question: If in 2 years, you’re set to die. In perfect health, and a perfectly natural death. What do you have to do before you die? What will you regret no having done? So, what really matters? (I lied; it’s not really one question.)

So, how do I induce a sense of urgency? How do I motivate myself when I don’t have any impending time horizons?

One, accountability partners. Friends who keep me (and me them) accountable to my goals, like my birthday resolution. Where in 6 months, upon failure, I lose $100. Or upon success, I get treated to a really nice meal.

Two, something I took from my good friend. I once asked him about how he continues to push himself towards new experiences every month. After all, he’s the kind of person who lives a life that makes me feel as if I’ve done nothing. In response, he said:

“Fall in love.”

“I don’t get it,” I replied perplexed.

“Because it’ll make you want to impress your crush. And when you go on that date every week or every two weeks, you’ll want to show off. And the only way you can show off is if you have something to show off. So, I don’t let my dreams sit. I get shit done.”

#unfiltered is a series where I share my raw thoughts and unfiltered commentary about anything and everything. It’s not designed to go down smoothly like the best cup of cappuccino you’ve ever had (although here‘s where I found mine), more like the lonely coffee bean still struggling to find its identity (which also may one day find its way into a more thesis-driven blogpost). Who knows? The possibilities are endless.

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#unfiltered #0 The Intro

Today, I read a 2017 piece on Nylon about advice from black writers to black writers. And there was one particular quote that caught my eye.

“Don’t edit while writing a draft or else you never finish.” – Terry McMillan

I can’t speak for the writing industry as a whole; I can’t even speak for my friends who are writers. Didn’t ask. But I can speak for myself. For this blog. Admittedly, 70% of all pieces I start writing, I don’t finish. And quite honestly, I almost hate that about myself. Writing for eyes that are more than my own has turned me into a perfectionist. The very thing I once swore to not become.

So, I’m going to try an experiment. More so for myself, in hopes of reducing the friction for me to write more. Every so often, I will post something I will title as “#unfiltered”. It’ll be less of a well-constructed thesis or methodical breakdown, but more of a writing to help me think. In sum, it’ll be a brain barf. It’s not designed to go down smoothly like the best cup of cappuccino you’ve ever had (although here‘s where I found mine), more like the lonely coffee bean still struggling to find its identity. Don’t feel obligated to read it. In fact, if you don’t like brain barfs, don’t click on any of them, prefaced by its own #spoileralert. But if you do like unfiltered commentary and my rough thoughts, stay tuned. 😀

#unfiltered. A series about unfiltered thoughts.

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The Marketplace of Startups

books about startups

Over the past decade, stretching its roots to the dot-com boom, there have been more dialogue and literature around entrepreneurship. In a sense, founding a business is easier than it’s ever been. But like all things in life, there’s a bit more nuance to it. So, what’s the state of startups right now?

Lower Barriers to Entry

A number of factors have promoted such a trend:

  • There are an increasing number of resources online and offline. Online courses and ed-tech platforms. Fellowships and acceleration/incubation programs. Investor office hours and founder talks. YouTube videos, online newsletters, and podcasts.
  • The low-code/no-code movement is also helping bridge that knowledge gap for the average person. Moreover, making it easier for non-experts to be experts.
  • The gig economy have created a fascinating space for solopreneurship to be more accessible to more geographies.

Demand (by consumers and investors) fuels supply of startups, through knowledge and resource sharing. Likewise, the supply of startups, especially in nascent markets, fuels demand in new verticals. So, the ecosystem becomes self-perpetuating on a positive feedback loop. As Jim Barksdale, former Netscape CEO, once said:

“There are only two ways I know of to make money – bundling and unbundling.”

BundlingUnbundling
Market MaturityMarket Nascency
HorizontalizationVerticalization
BreadthDepth
Execution Risk
Bias		Market/Tech Risk
Bias

Right now, we’re at a stage of startup market nascency, unbundling the knowledge gap between the great and the average founder. This might seem counter-intuitive. After all, there’s so much discourse on the subject. There’s a good chance that you know someone who is or have thought about starting a business. But, I don’t believe we’re even close to a global maximum in entrepreneurship. Why?

  1. Valuations are continuing to rise.
  2. Great founders are still scarce.
startup growth
Photo by Isaac Smith on Unsplash

Valuations are shooting up

Valuations are still on the rise. Six years back, $250K was enough runway for our business to last until product-market fit. Now, a typical seed round ranges from $500K-$2M. A decade ago, $500M was enough to IPO with; now it only warrants a late-stage funding round. By capitalistic economic theory, when a market reaches saturation, aka perfect competition, profit margins regress to zero. Not only are there still profits to be made, but more people are jumping into the investing side of the business.

Yes, increasing valuations are also a function of FOMO (fear of missing out), discovery checks (<0.5% of VC fund size), super duper low interest rates (causing massive sums of capital to surge in chase yields), and non-traditional venture investors entering as players in the game (PE, hedge funds, other accredited investors, (equity) crowdfunding platforms). It would be one thing if they came and left as a result of a (near) zero sum game. But they’re here to stay. Here’s a mini case study. Even after the 2018 drop in Bitcoin, venture investors are still bullish on its potential. In fact, there are now more and more specialized funds to invest in cryptocurrency and blockchain technology. Last year, a16z, one of the largest and trendsetting VC players, switched from a VC to an RIA (registered investment advisor), to broaden its scope into crypto/blockchain.

Great founders are scarce

“The only uncrowded market is great. There’s always a fucking market for great.”

– Tim Ferriss, podcaster, author, but also notably, an investor and advisor for companies, like Facebook, Uber, Automattic and more

Even if founders now have the tools to do so, it doesn’t mean they’ll hit their ambitious milestones. For VCs, it only gets harder to discern the signal from the noise. Fundamentally, there’s a significant knowledge delta – a permutation of misinformation and resource misallocation – in the market between founders and investors, and between average founders and great founders.

The Culinary Analogy

Here’s an analogy. 30 years prior, food media was still nascent. Food Network had yet to be founded in 1993. The average cook resorted to grandma’s recipe (and maybe also Cory’s from across the street). There was quite a bit of variability into the quality of most home-cooked dishes. And most professional chefs were characteristically male. Fast forward to now, food media has become more prevalent in society. I can jump on to Food Network or YouTube any time to learn recipes and cooking tips. Recipes are easily searchable online. Pro chefs, like Gordon Ramsay, Thomas Keller, and Alice Waters, teach full courses on Masterclass, covering every range of the culinary arts.

Photo by Brooke Lark on Unsplash

Has it made the average cook more knowledgeable? Yes. I have friends who are talking about how long a meat should sous vide for before searing or the ratio of egg whites to egg yolks in pasta. Not gonna lie; I love it! I’ll probably end up posting a post soon on what I learned from culinary mentors, friends, and myself soon.

Is there still a disparity between the average cook and a world-class chef? Hell ya! Realistically I won’t ever amount to Wolfgang Puck or Grant Achatz, but I do know that I shouldn’t deep fry with extra virgin olive oil (EVOO) ’cause of its low smoke point.

Great businesses are scarcer

The same is true for entrepreneurship. There are definitely more startups out there, but there hasn’t been a significant shift in the number of great startups. And the increase in business tools has arguably increased the difficulty to find business/product defensibility. It’s leveled the playing field and, simultaneously, raised the bar. So yes, it’s easier to start a business; it’s much harder to retain and scale a business.

It’s no longer enough to have an open/closed beta with just an MVP. What startups need now is an MLP (minimum lovable product). Let’s take the consumer app market as an example.

The Consumer App Conundrum

Acquiring consumers has gotten comparatively easier. Paid growth, virality, and SEO tactics are scalable with capital. More and more of the population have been conditioned to notice and try new products and trends, partly as a function of the influencer economy. But retaining them is a different story.

So, consumers have become:

  1. More expensive to acquire than ever before. Not only are customer acquisition costs (CAC) increasing, with smaller lifetime values (LTV), but your biggest competitors are often not directly in your sector. Netflix and YouTube has created a culture of binge-watching that previously never existed. And since every person has a finite 24 hours in a day, your startup growth is directly cutting into another business’s market share on a consumer’s time.
  2. And, harder to retain. It’s great that there’s a wide range of consumer apps out there right now. The App Store and Play Store are more populated than they’ve ever been. But churn has also higher now than I’ve seen before. Although adoption curves have been climbing, reactivation and engagement curves often fall short of expectations, while inactive curves in most startups climb sooner than anticipated. Many early stage ventures I see have decent total account numbers (10-30K, depending on the stage), but a mere 10-15% DAU/MAU (assuming this is a core metric). In fact, many consumers don’t even use the app they downloaded on Day 2.

Luckily, this whole startup battlefield works in favor of consumers. More competition, better features, better prices. 🙂

So… what happens now?

It comes down to two main questions for early-stage founders:

  1. Do you have a predictable/sensible plan to your next milestone? To scalability?
    • Are you optimizing for adoption, as well as retention and engagement?
      • With so many tools for acquisition hacks, growth is relatively easy to capture. Retention and engagement aren’t. And in engagement, outside of purely measuring for frequency (i.e. DAU/MAU), are you also measuring on time spent with each product interaction?
    • How are you going to capture network effects? What’s sticky?
      • Viral loops occur when there’s already a baseline of engagement. So how do you meaningfully optimize for engagement?
    • From a bottom-up approach (rather than top-down by taking percentages of the larger market), how are you going to convert your customers?
    • How do you measure product-market fit?
  2. What meaningful metric are you measuring/optimizing?
    • Why is it important?
    • What do you know (that makes money) that everyone else is either overlooking or severely underestimating?
    • What are you optimizing for that others’ (especially your biggest competitors) cannot?
      • Every business optimizes for certain metrics. That have a set budget used to optimize for those metrics. And because of that, they are unable to prioritize optimizing others. So, can you measure it better in a way that’ll hold off competition until you reach network effects/virality?

Building a scalable business is definitely harder. And to become the 10 startups a year that really matter is even more so. By the numbers, less likely than lightning striking you. In my opinion, that just makes trying to find your secret sauce all the more exciting!

If you think you got it or are close to getting it, I’d love to chat!

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Part-time vs. Full-time Founders

Over the weekend, my friend and I were chatting about the next steps in her career. After spending quite some time ironing out a startup idea she wants to pursue, she was at a crossroads. Should she leave her 9-to-5 and pursue this idea full-time, or should she continue to test out her idea and keep her full-time job?

Due to my involvement with the 1517 Fund and since some of my good friends happen to be college dropouts, I spend quite a bit of time with folks who have or are thinking about pursuing their startup business after dropping out. This is no less true with 9-to-5ers. And some who are still the sole breadwinner of their family. Don’t get me wrong. I love the attention, social passion, literature and discourse around entrepreneurship. But I think many people are jumping the gun.

Ten years back, admittedly off of the 2008 crisis, the conversations were entirely different. When I ask my younger cousins or my friends’ younger siblings, “what do you want to be when you grow up?” They say things like “run my own business”, “be a YouTuber”, and most surprisingly, “be a freelancer”. From 12-yr olds, it’s impressive that freelancing is already part of their vocabulary. It’s an astounding heuristic for how far the gig economy has come.

Moreover, media has also built this narrative championing the college dropout. Steve Jobs and Apple. Bill Gates and Microsoft. And, Mark Zuckerberg and Facebook. There’s nothing wrong in leaving your former occupation or education to start something new. But not before you have a solid proof of concept, or at least external validation beyond your friends, family and co-workers. After all, Mark Zuckerberg left Harvard not to start Facebook, but because Facebook was already taking off.

Honing the Idea

The inherent nature of entrepreneurship is risk. As an entrepreneur (and as an investor), the goal should always be to de-risk your venture – to make calculated bets. To cap your downside.

Marc Benioff started his idea of a platform-as-a-service in March 1999. Before Marc Benioff took his idea of SaaS full-time, he spent time at Oracle with his mentor, Larry Ellison, honing this thesis and business idea. When he was finally ready 4 months later, he left on good terms. Those terms were put to the test, when in Salesforce’s early days, VCs were shy to put in their dollar on the cap table. But, his relationship he had built with Larry ended up giving him the runway he needed to build his team and product.

Something that’s, unfortunately, rarely talked about in Silicon Valley and the world of startups is patience. We’ve gotten used to hearing “move fast and break things”. Many founders are taught to give themselves a 10-20% margin of error. What started off as a valuable heuristic grew into an increase in quantity of experiments, but decrease in quality of experiments. Founders were throwing a barrage of punches, where many carried no weight behind them. No time spent contemplating why the punch didn’t hit its mark. And subsequently, founders building on the frontlines of revolution fight to be the first to market, but not first to product-market fit. Founders fight hell or high water to launch their MVP, but not an MLP, as Jiaona Zhang of WeWork puts it.

In the words of the one who pioneered the idea of platform-as-a-service,

The more transformative your idea is, the more patience you’ll need to make it happen.”

– Marc Benioff

As one who sits on the other side of the table, our job is to help founders ask more precise questions – and often, the tough questions. We act more as godmothers and godfathers of you and your babies, but we can’t do the job for you.

The “Tough” Questions

To early founders, aspiring founders, and my friends at the crossroads, here is my playbook:

  • What partnerships can/will make it easier for you to go-to-market? To product-market fit? To scalability?
  • What questions can you ask to better test product feasibility?
  • How can you partner with people to ask (and test) better questions?
  • What is your calculus that’ll help you systematically test your assumptions?
  • Do you have enough cash flow to sustain you (and your dependents) for the next 2 years to test these assumptions?

Simultaneously, it’s also to important to consider the flip side:

  • What partnerships (or lack thereof) make your bets more risky?
  • How can you limit them? Eliminate them?

And in sum, these questions will help you map out:

At this point in your career, does part-time or full-time help you better optimize yourself for reaching my next milestone?

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What Does Personal Progress Look Like?

In the past two weeks, through conversations on my birthday resolution and what my success metrics are, my friends inspired me to write this post . That’s when you know I’m in Silicon Valley! Or startup Disneyland.

So, how do I measure my progress? This is by no means proprietary or original. In an annual email exchange, my mentor had me ask myself one question:

How ashamed do I feel about myself one year prior?

Although not comprehensive, I find it to be a great litmus test for evaluating personal development. If I don’t scoff at my former self for being dumb, I’ll know I haven’t progressed. At the same time, I put myself in the shoes of my future self, abstracting myself from my status quo, and ask two questions:

  1. What aspects of my past self am I embarrassed to see?
  2. What strengths of my past self would I find extremely unimpressive to show off?

This acts as an ego check and helps me look at myself more objectively.

I started this practice two years ago where I keep a checklist (on Google Keep) of wins I keep track of throughout the year. It included any magnitude of achievement, like:

  • A successful deal close;
  • Joining as a guest on a podcast;
  • An art piece I’m proud of drawing;
  • Cooking a meal that pleased my parents;
  • And, sleeping 8 hours a night.

Then one week prior to my birthday, Google Calendar reminds me to go through that checklist and review what I still feel proud of and what I find to be ‘normal’. I check all the ones I no longer gain contentment from. All that’s left are “My Proudest Moments at Age XX”. Then my goal for the following year is to make those moments feel ‘normal’. I’ll get to this step eventually. But I plan to review the annual lists every 5 years to see if I still feel the same.

In a way, this blog is also designed for me to reflect on earlier iterations of myself through my writing. As much as this one question has enlightened me, I hope it may act as your heuristic for your growth.

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