Tag: brad feld

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Startup Growth Metrics that will Hocus Pocus an Investor Term Sheet

Founders often ask me what’s the best way to cold email an investor. *in my best TV announcer voice* Do you want to know the one trick to get replies for your cold email startup pitches that investors don’t want you to know? Ok, I lied. No investor ever said they don’t want founders to know this, but how else am I going to get a clickbait-y question? Time and time again, I recommend them to start with the one (at most two) metrics they are slaying with. Even better if that’s in the subject line. Like “Consumer social startup with 50% MoM Growth”. Or “Bottom-up SaaS startup with 125% NDR”. Before you even intro what your startup does, start with the metric that’ll light up an investor’s eyes.

Why? It’s a sales game. The goal of a cold email is to get that first meeting. Investors get hundreds of emails a week. And if you imagine their inbox is the shelf at the airport bookstore, your goal is to be that book on display. Travelers only spend minutes in the store before they have to go to their departure gate. Similarly, investors scroll through their inbox looking for that book with the cover art that fascinates them. The more well-known the investor, the less time they will spend skimming. And if you ask any investor what’s the number one thing they look for in an investment, 9 out of 10 VCs will say traction, traction, traction. So if you have it, make it easy for them to find.

That said, in terms of traction, most likely around the A, what growth metrics would be the attention grabber in that subject line?

Strictly annual growth

A while back, my friend, Christen of TikTok fame, sent me this tweetstorm by Sam Parr, founder of one of my favorite newsletters out there, The Hustle. In it, he shares five lessons on how to be a great angel investor from Andrew Chen, one of the greatest thought leaders on growth. Two lessons in particular stand out:

And…

Why 3x? If you’re growing fast in the beginning, you’re more likely to continue growing later on. Making you very attractive to investors’ eyes – be it angels, VCs, growth and onwards. Neeraj Agrawal of Battery Ventures calls it the T2D3 rule. Admittedly, it’s not R2-D2’s cousin. Rather, once your get to $2M ARR (annual recurring revenue), if you triple your revenue each year 2 years in a row, then double every year the next 3 years, you’ll get to $100M ARR and an IPO. More specifically, you go from 2 to 6, then 18, 36, 72, and finally $144M ARR. More or less that puts you in the billion dollar valuation, aka unicorn status. And if you so choose, an IPO is in your toolkit.

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Source: Neeraj Agrawal’s analysis on public SaaS companies that follow the T2D3 path

For context, tripling annually is about a 10% MoM (month-over-month) growth rate. And depending on your business, it doesn’t have to be revenue. It could be users if you’re a social app. Or GMV if you’re a marketplace for goods. As you hit scale, the SaaS Rule of 40 is a nice rule of thumb to go by. An approach often used by growth investors and private equity, where, ideally, your annual growth rate plus your profit margin is equal to or greater than 40%. And at the minimum, your growth rate is over 30%.

For viral growth, many consumer and marketplace startups have defaulted to influencer marketing, on top of Google/FB ads. And if that’s what you’re doing as well, Facebook’s Brand Collabs Manager might help you get started, which I found via my buddy Nate’s weekly marketing newsletter. Free, and helps you identify which influencers you should be working with.

But what if you haven’t gotten to $2M ARR? Or you’ve just gotten there, what other metrics should you prepare in your data room?

Continue reading “Startup Growth Metrics that will Hocus Pocus an Investor Term Sheet”
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#unfiltered #30 Inspiration and Frustration – The Honest Answers From Some of the Most Resilient People Going through a World of Uncertainty

A few weeks ago, around the time I published Am I At My Best Right Now?, I started noticing more and more that my friends, colleagues, and people that I’ve met since were going through tough times. Two lost a family member. Some were laid off. Two were forced to leave this land I call home. Four broke up. Three burned out. Countless more told me they were stressed and/or depressed, and didn’t know how to escape this limbo. After I published that post, another handful of people also reached out and courageously shared the troubles they are going through now. How it’s been so hard to share with others. And yesterday, while editing this blog post, I found out that one of my high school friends had passed.

Inspiration and Frustration

During this time, I had a thought: Frustration is the absence of inspiration. There were many times in my own life when I was beating myself up because I couldn’t think of a solution. And a small percent of those times, I didn’t even bother to think of a solution since I was so engrossed in my frustration with myself.

In these unprecedented times and inspired by the conversations around me, I decided to show that we’re not alone. So, I asked people who I deeply respect and who could shed light as to what it means to be human. I asked just two questions, but they were only allowed to answer one of them:

  1. What is the one thing that inspires you so much that it makes everything else in life much easier to bear?
  2. What is stressing/frustrating you so much right now that it seems to invalidate everything else you’re doing?

In turn, they responded via email, text, or on a phone call. Of the 49 I asked, so far, 31 responded with their answers. 4 politely turned me down due to their busy schedules. Another one turned me down because she didn’t feel like she could offer value in her answer.

26 responded with what inspires them. 5 with what frustrates them. All of whom I know has been through adversity and back.

Admittedly, the hardest part about this study was how I was going to organize all these responses. Unlike the one about time allocation I did over a month ago, where I knew exactly how to organize the data before I even got all the responses, this one, I really didn’t know how to best illustrate the candor everyone shared. In fact, I would be doing a disservice to them, if reduced their honesty and courage to be vulnerable to mere numbers. So, in the end, below, I let everyone speak for themselves. Sometimes, simplicity is the best.

Thank you to everyone who contributed to making this blog post happen, including Brad Feld, Mars Aguirre, Shayan Mehdi, Thomas Owen, Chris Lyons, Mark Leon, Jamarr Lampart, Christen Nino De Guzman, Louis Q Tran, Sam Marelich, Dr. Kris Marsh, Quincy Huynh, DJ Welch, Jimmy Yue, and many, many more heroes who helped me and the world around us behind the curtains.

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#unfiltered #26 Am I At My Best Right Now?

I’ve been debating for the longest time whether I should put out this post or not. Not only does it require me to “open up about the potholes“, as Jeff Wald puts it, I’m not sure how I should be feeling. Or maybe I do, but I’m just not willing to admit it to myself.

Last week, I read Brad Feld‘s post, “Are You At Your Best Right Now?“. And it was the final push that gave me the courage to write this. After all, this wouldn’t be a member of the #unfiltered series if I wasn’t sharing my raw thoughts.

Am I at my best right now?

I’ve had the long standing belief that if I’m not making any new mistakes, then I’m not taking risks.

And if I’m not taking risks, I’m not improving.

For the past 6 months of quarantine, I haven’t made any mistakes… neither ones I’m proud of nor severely regret. Half of which I believe most people could do without. Though I don’t set myself up for mistakes that I think are foolhardy from the get-go, I am not learning if I don’t make any mistakes at all. I’m not talking about mistakes that I make without a second thought of regret. Like drinking 7 cups of water today, rather than 8. Or forgetting to put up the toilet seat. Or a grammatical error in my writing.

I’m talking about mistakes that have defined, define, and will define my life’s trajectory. Inflection points that draw our life’s story on a once blank canvas.

My pursuit of ‘the best’ prior

In my first two years of college, I made many mistakes as an operator, as a friend, and to my promises. I over-promised and under-delivered. I let a friend I really respected and cared for down. To the organizations I was lucky to be a part of, I juggled too many things at once, thinking multi-tasking was an attribute of pride and prestige.

In my third year of college, I took networking to a new level. And along the way, burned bridges in my persistence and lack of awareness.

In my fourth year, drained from the relentless ego contest, I took a step back to reflect and be more candid than I gave myself the liberty to previously. In my pursuit of honesty, once again but in a different context, I didn’t consider the impact of my words with a handful of friends.

In graduating, I took a risk to not accept the offers I had on the table – some of which I know people would fight for. I chose a path that I felt I wouldn’t regret in the then amazing upside of the economy.

In the years following, I made bets to be at places, to be with people, and to learn from them that I had doubts other platforms would provide. In retrospect, some more foolish than others. Placing trust and hope that some of my friends who knew considered in ill faith.

But every time I learned.

I became a stronger person than when I went in.

Now

These days when friends, colleagues, and strangers ask “How are you doing?” or “How have you been?”, I’ve become my own worst nightmare.

“I’m fine.”

“I’m okay.”

While I’m not lying, I hate myself the moment I utter those words. First how much it’s become a knee jerk reaction. But secondly, and more importantly, how much hasn’t changed since the pandemic.

Like many of my friends and colleagues, and I’m sure, many more on this planet, I had 2020 plans. Plans to take risks and make mistakes. Unfortunately, for one reason or another, many of them have been put on a stalemate. At the same time, I know many of my friends aren’t doing well. From breakups to layoffs to the impending doom of deportation to deaths in the family, I feel like I should be the last person to complain.

In closing

I want to be clear. I’m not looking for pity here. But I want you to know. It’s okay. You’re not alone. While we all are feeling a different magnitude of emotions now, you’re not alone, when “I’m okay” belies what we’re all feeling right now. I can’t speak for others, but I am not at my best right now.

If you need someone to talk to or just someone to listen, I’m here.

Photo by Bruno van der Kraan on Unsplash

#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, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

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v24.0

Photo by Ian Schneider on Unsplash

My parents have always conditioned me to plan each of my ages out. When I was younger, every year I ranked up they would ask me what I want to get done. At the same time, I never felt a strong commitment to New Year’s resolutions. Maybe it was ’cause of the gingerbread cookies. Or the Christmas presents. Or the fireworks and the ball drop. But that lull between the holidays wasn’t conducive to me setting meaningful goals. The “promises” I made carried no weight behind them.

Three years back, after reading Brad Feld’s birthday resolution, I decided to start setting my own birthday resolutions. Outside of a mere date shift, there were 3 reasons I chose to do so:

  1. I had time to recover from the holidays – to get my head straight.
  2. I was motivated watching my friends, family, and coworkers tackle their New Year’s resolutions in the month prior. (Admittedly, more often than not, they lose their initial trajectory, but I only saw the beginning of many of their inverse parabolas.) Motivation is one side of the coin; FOMO is another.
  3. In that motivating January, assuming I haven’t yet completed my previous year’s resolution(s), it motivates me to finish strong – the “last mile” sprint.

That said, this is my first year posting my resolutions publicly. Why? One, it’s to keep me accountable. Two, as Jeff Wald once said, “practice true vulnerability by opening up about the potholes ahead, not just the ones in the rearview mirror.” And one of my resolutions from v23.0 was to become more comfortable being vulnerable. So, what will the new update look like?

Here are the patch notes:

Build ideas from 0 to 1.

This year, I plan to actively help 2 startups go from idea to product-market fit. After 3 years on the venture side of the cap table, the one thing I’ve noticed more and more is that I miss getting my hands dirty, especially in the early stages. I miss the ups and downs. I miss the freaky moments (and the big wins). It may sound a bit weird. But I may have emotionally removed myself from being entrepreneurial and trapped myself in a bird’s-eye perspective only. And I hate it.

More artistically creative outputs.

Two years ago, I started idea-journaling by inspiration from my former college professor. After going through 9.5 idea journals, I realized I’ve spent less than 10% of my ideation space on artistic pursuits. 40% on VC and startups. 40% on personal projects and experiments. 10% everything else. There’s clearly a lack of diversity in my creative space. So, this year, I’m committing to producing one new art piece every week – be it a new drawing, music composition, culinary permutation, or something that’ll surprise myself. My deepest gratitude to my friends who gave me new canvases to explore my creative white space. You can track my progress on my Instagram.

Balancing Social Media.

In the year when many of my peers are unplugging, I’m going to be more active on social media, fine print included. I’m going to explore more by contributing content on this blog, my Instagram (for artistic pursuits), LinkedIn, Medium, Quora, Reddit, and Discord.

I’ve always shied away from social media – not because of some grandiose sense of self-discipline, but rather since I’ve never been able to fully conquer my shell of introversion. After all, my Facebook profile picture and lack of presence is my form of psychological armor.

That said, I still won’t be scrolling through my news feed on social media. But I will aim to respond to every comment and DM that comes my way. I’m a firm believer in responding to the commitment and time people take to write a thoughtful message. Luckily, I’m also at a stage in my life and career when I don’t have more messages/emails than I can manage.

Reconnecting.

Over the past half decade, I’ve grown a lot from reaching out to, learning from, and helping new folks in my network. And, I’m grateful for each and every experience. I wouldn’t be here today if it weren’t for them. But as a result of constant pursuits of new experiences and expanding my network, I haven’t been able to reconnect with friends, mentors, teachers, and acquaintances I’ve had in the past, outside of my annual holiday greetings and thanks. In this new update, I’m committing 10 minutes every day to meaningfully rekindle old flames that I haven’t caught up with in the past 6 months.

Read more.

By virtue of reconnecting with friends from my past, it’s useful to have content and inspiration when reconnecting, but also as a means to widen my own knowledge horizon. Outside of work and my one-book-a-month of reading, I’ll be indulging in a minimum of an hour of diverse reading every day via the ‘Discover’ tab on Pocket.

Sleep and wake earlier.

Ever since college, I’ve been a night owl. It’s weird ’cause in college, students apparently have this ego contest of how many ‘all-nighters’ one can pull and still be ‘alive’. Being young and naive, I joined in the chorus, but I never won. In fact, in my entire college career, I pulled only 2 all-nighters, not even back-to-back, and I was already dead. But it ended up ruining my sleep schedule. I would go to sleep between 12 and 3AM. Sometimes for no reason at all.

After I came back from my holiday Europe trip, mostly due to jet lag, I started sleeping at 9PM every night for the first week. I felt so much more refreshed in the morning and through most of the day than when I didn’t. But also, there’s so much less noise in the morning between 4:30 and 6:30AM – both on social media and in the neighborhood. And I could much of my creative work done. This year, I’m going to sleep at 10PM latest and wake at 4:30AM.

Goal-oriented exercise.

I haven’t necessarily been unfit, but my daily routines seem to drone by without any personal achievement or goal in mind. I have no plans to reach my past physical prowess where I spent 30-40 hours a week spent on exercise. But this year, I’ll stick to 2 goals for health and exercise: sub-5:30 mile and 20 pull-ups. (I’m at a 7:15 and 7 pull-ups at the time of writing this post.)

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It’s going to be an exciting year, and I plan to have plenty of hotfixes before I reach v25.0, hopefully daily. Thank you to my friends for all the birthday wishes, support, and feedback.

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Being Nice vs. Running a Great Business

Photo by Matteo Vistocco on Unsplash

While on my way to see a friend the other day, instead of cancelling, our Uber Pool driver decided to wait for the third rider. After a few exchanges of texts and calls, to the vocally evident dismay of the rider before me, we ended up waiting eight minutes. Therefore, delaying the rest of our arrival times by that same margin. In the ensuing silence that followed, I spent a little time thinking about the fascinating dichotomy between being nice and running a great business.

At the risk of receiving two low-star ratings, our driver opted to be nice and wait for the potential one five-star rating. To his credit, the third rider was incredibly grateful for his patience. In an alternate universe, he would have chosen to cancel the last rider’s request after waiting about two minutes.

The Examples

Social stereotypes might suggest that being nice and running a great business are two polar opposites. The portrayals of Mark Zuckerberg, in The Social Network, and Steve Jobs, in every biographical movie of him, only further perpetuate this motif. But, the truth is they’re not mutually exclusive. Many of the best businesses out there, like TOMS and Salesforce, are purpose-driven and spread positive impact. In the past few years, it should and has been, for many, a priority for building a brand.

Driving positive social impact is beginning to gain traction among a class of notoriously financially-driven individuals: venture investors. Although impact investing is one way, prominent VCs, like Felicis Ventures and Brad Feld, have also committed to founder’s mental health.

The marriage of being nice and running a great business comes in two parts:

  • Transparent and honest communication with your customers,
  • And, follow-through on promises and feedback implementation.

After all, it’s a collaborative effort.

One of my favorite examples is Digital Extremes – the developer for one of the most popular games on Steam, Warframe. Like many other businesses, they donate regularly to charities – from leukemia awareness to children’s health to most recently, the Australian wildfire. But, unlike many others, they engage their users every week through their stellar community management team. In fact, their community director, Rebecca Ford, was recognized in the 30 Under 30 Forbes list this year. Through a weekly permutation of developer streams, forum posts/polls, and social media content, they listen and engage with feedback. And through weekly hotfixes and content updates, which already speaks volumes in the game industry, they incorporate that feedback.

Don’t just take my word for it. Their subreddit serves as an example of one of the most positive and honest communities I’ve ever seen.

In Closing

Of course, no business is perfect. And the business may not always agree with the consumer’s thoughts. But, through transparent communication, radically candor (thank you to the brilliant Kim Scott), and following through, you can be nice and run a great business.

Instead of staying silent, if our Uber driver had asked us if we were in a hurry and agreed on a time limit to how long we’d wait (maybe even offered us a snack during the wait, but that might be stretching it), he might have gotten three five-star reviews.

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My Favorite Quirky Vacation Response

As with most people, when I first learned the how-to’s of communication – be it a resume, cover letter, cold email, college application, or coffee chat, I was taught the tried-and-true rubrics that my predecessors used with reasonable success. I’ve never liked these cut-and-dry templates, but by societal norms, I deemed them necessary. But they not only lack personality, but often times, relevance to whom they’re addressing, on a human level. Of course since then, I changed my whole suite of online, as well as in-person, communication, but I know there are still many means I may have overlooked or taken for granted. In the past two years, I’ve made it my mission to notice and change what isn’t me, and along that path, I stumbled across my old email vacation response.

This post was actually inspired, over dinner, by my friend as she’s gearing up for the holiday season. On the flip side, Brad Feld, a brilliant VC, through his blog post on Feld Thoughts and Nick Kokonas, one of the creative geniuses behind the Alinea Group, in an episode of the Tim Ferriss Show, inspired my current email vacation response that I started using about a year back:

I’m currently out building my first wand, but I can’t seem to find the elusive phoenix for its feathers.

I know I’m supposed to say I won’t be able to respond until I get back on
[date], but the truth is I’ll be lying out of my ass, pardon my French. In always having my phone with me, I will more likely than not see a notification blip pop up on my phone lock screen. And I know that from time to time, I will need to interrupt my vacation to answer something urgent.

That said, I promised myself I’d unplug and enjoy my vacation as best as I can. So, I’m going to run an experiment. I’m going to let you decide:

– If your matter is really urgent, resend the email with your subject line preceded by [URGENT] and I’ll try to respond nimbly.
– Otherwise, I’ll respond when I return to the beautiful SF.

Cheerios and orange juice,

David

As a final commentary, I highly recommend following both Brad and Nick’s work, regardless if you’re in the VC or culinary fields, or not. I’ve been a big fan of both for years, and their insights, outside of email structures, have definitely helped me become the person I am today. As a cherry on top, I find Nick’s Twitter and Medium profile descriptions hilarious.

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