Do You Search For Your Name When You Join a New Slack Group?

Slackenfreude – the joy in knowing that as a Slack group grows, the likelihood of a new member searching their name and finding they’ve been slagged on in earlier conversations reaches 99.9%

There’s increasing punditry consensus that “small group” products will be one of the beneficiaries of the backlash to public, scale social media. There’s a design constraint in these products that I’m curious about how people would approach: how does a participant make decisions around “appropriateness” of topics/comments (and privacy) if the group composition isn’t static? That’s to say, imagine you’re added to a 10-person group to chat about startups. And then you slag on a particular company in a way that you might not do publicly, but then as the group grows to 100 people in size, someone from that company joins and is pissed off at you?

Some product attributes that one would take into play to determine how they use these “smaller, private groups:”

  • Group composition and process for adding new members – is it static from point of creation, or can it change, and how?
  • Default visibility/relationships of any two members in the group – does every group member automatically have the same system-specified relationship with each other or do bidirectional relationships need to be approved
  • Discoverability, persistence of content – is old content available for new members, visible to all members?

“Solving” for this can escalate quickly into complexity that no group wants to deal with so my guess is that different spaces will have consistent, easy to understand rulesets and that users will manage their voices in these spaces accordingly.

For example, there can be products that with persistent, fully visible content to all in the group, but where no new group members can be added after initial creation. Or spaces where, as a new member, you can never see archives, only the content created from the moment you join (these systems would also need to “announce” new members in some way).

Basically I’m interested in how different designers have thought through this issue across different enterprise, consumer products.

3.5 Notes From Our Most Substantial Venture Exit So Far

BuildingConnected, a leading construction tech SaaS startup, was acquired for $275m as part of Autodesk’s push into the vertical. I strongly believe the detailed story of the company’s success is the founders’ one to tell if they choose to do so, but at the risk of excessive inside baseball, I’ll share my perspectives from the cap table.

Solid Example of Why We Picked Concentrated Seed as Our Model For Homebrew: This acquisition is our largest return thus far (on a total cash basis – Cruise Automation’s acquisition by GM beats it on multiple of return). BC sits in Homebrew I, a 20 company fund of $35m with initial investments made 2013 – 2015. We concentrate our time with companies, entering at seed stage and working with them most proactively until ~Series B – in this case that’s when I stepped off of BC’s Board into an Observer role. We tend to spend less 1:1 time with the CEO after this point but continue to lean in and do whatever we can to support the company.

Because we focus our time, we also focus our dollars, typically taking a 10-15% ownership stake during seed and then investing into subsequent rounds, which we did here into BC’s Series A (Crosslink) and Series B (Lightspeed). The combination of a modest fund size and meaningful ownership means we stay very aligned with founders for the formative years of their company and can have great outcomes along a spectrum of outcomes (you can do the math).

The biggest risk to this model of course is that you are able to find great startups and that those founders want to work with you. Power laws drive venture fund outcomes, but your fund size and ownership targets influence how outsized the outliers need to be. While we don’t set a “lower bar” on what we hope a company can achieve (Homebrew I includes three companies with $1b+ valuations – Cruise [realized], Gusto [private], Plaid [private]), it does mirror reality, where “just” a $250-500m outcome can be a fund-mover for us.

A Good Cold Email Beats a Weak Warm One: Our relationship with BuildingConnected began with a cold, inbound email. And I’ve written before about how founders can mistake an intro for a vouch, which is why a Strong Cold Email Always Beats a Warm Weak One.

So founders, please don’t let lack of existing relationships deter you from reaching out to us. Contact info is on our website.

Aligned Cap Tables Are a Godsend: Especially when the founders are considering an early acquisition, aligned cap tables are a godsend. Could an even bigger business been built here? Absolutely. But when an aggressive offer is on the table and for a variety of very legitimate reasons, the founders want to take it, our job is to help them.

Even more that just this single decision, the BuildingConnected cap table was trusting of one another and worked hard across the rounds to support the founders. That’s the way it should be! Thank you to Dave Samuel of Freestyle VC, Omar El-Ayat of Crosslink Capital and Nakul Mandan of Lightspeed Venture Partners. Also Darren Bechtel of Brick & Mortar Ventures was essential on this one.

I Can See Why VC Congrats Twitter Is Horrible: The day the deal was announced there were a lot of inbound and outbound “congrats” tweets. I’m totally guilty. Sorry.

“Generational Transition:” Old Industries Are Changing Because The Youngs Are Taking Over

Once Is Chance, Twice is Coincidence, Third Time Is Truth.

We’re fortunate enough to be working with some intriguing startups serving industries which pre-date the PC – construction, industrial maintenance, agriculture, nautical shipping & logistics. Across multiple independent conversations with these founders, one of the structural reasons they give for their success is a “generational transition” within a meaningful segment of customers.

Namely, privately-owned businesses that were in the hands of a family patriarch are now being passed down to the next generation. This group of 30-50’something men and women have smartphones in their pockets and are more eager to adopt technology than the previous owners. You don’t need to educate the market on why SaaS, sensors, machine learning and so on are good investments. Or why a spreadsheet might not be the most dynamic dashboard available to them in 2018.

Anecdotally we’re seeing an adjacent trend where, when the business isn’t handed down, it’s sold to private equity style buyers who are also very interested in technology as a cost cutting mechanism, so our companies are getting called into these situations as well.

This is all very consistent with my framework that favors problem size over market size. Is this problem large? Is this problem valuable? Is this problem urgent? Urgency catalyzed by a change in ownership structure and demographics is an interesting dynamic and one I hadn’t considered at scale until the past few years.

Some Homebrew Portfolio News

Cribbing from the Homebrew blog to just share some nice portfolio news:

“Proud to have supported this company since their earliest days” is how VCs coyly signal that they were in early before the rocketship company was off the launch pad. Well, three startups that we’re proud to have supported since their earliest days announced substantial financings recently. Yeah, we had conviction years ago. And yeah, they’re all looking like great, savvy picks. But the congrats goes to these teams, not us. From the CEOs on down, these teams have been working incredibly hard to build companies they’re proud of. Durable companies delivering real value to customers. And eventually, outcomes that will change the lives of their teams, not just their investors. Congrats to the teams at Bowery, Plaid and Weave!

Bowery – The Modern Farming Company

Raised $90m Series B

They’re Hiring (NYC/NJ)

Plaid – The Technology Layer for Financial Services

Raised $250m Series C

They’re Hiring (SF and Remote)

Weave – Patient Communication Software

Raised $37.5m Series C

They’re Hiring (Salt Lake City, UT)

NETWORKING: The Intro vs The Vouch (and why the difference matters a whole lot)

My tweets autodelete after 30 days, so when one starts a good discussion, I try to expand/archive it here. 

NETWORKING: The Intro vs The Vouch

So the “intro w/o vouch” is a double-opt in that looks something like “hey, I know you were looking to hire a BizDev lead. This guy is someone I worked with a few years back. Seemed pretty good but we’re not that close, so take a look and if you want intro, just let me know.”

The vouch version of this is more like “I strongly recommend you take a look at this gal for your BD role. Even though she might be on the junior end with regards to years of experience, she’s amazing. Worked for a friend of mine and was the star of their team – in fact, was the one behind the XYZ deal.”

Why Makes Intros At All If They’re Not Vouches?

Because they can still be mutually valuable in many contexts. I just try to tell the person looking for the intro the extent to which I can (or cannot) vouch and let the recipient know if I’m vouching or not (because I expect my vouches to be taken seriously as high signal). 

Are There Types of Intros You’ll Only Do As a Vouch?

Yes, one which comes to mind is the Investor introduction. I won’t make casual intros to investors unless I can speak to the quality of the company I’m intro’ing. I’ll also make a case-by-case judgment based on how valuable I think the intro might be to both sides and the nature of my relationship with each individual. 

I’m Asking For An Intro, How Do I Know If They’ll Vouch For Me?

You can frame it as such: “Hey, I’m looking to get introduced into XYZ because I heard her talk about how their marketing team is hiring an agency to do influencer work with them. I see you two are connected on LinkedIn. Do you know her well enough to make an intro if I forward you a note to pass on? And do you feel like you’ve got enough recent context on my work to endorse us? Thanks, much appreciated.”

Is a Vouch the Same as a Favor?

No, these are different things. For me a Favor is when I need someone to take an intro even though it might not be worth their time or ROI but it would be really meaningful to the other side of the intro. When I’m asking for a favor I’m very specific about it. I’ll also often stress when I’m *not* asking for a favor just so someone doesn’t take action on an intro request simply to please me. 

You Know, Vouching Sounds Like “Sponsorship”

Yes, I was excited to get introduced to this concept via a tweet from Lara Hogan where she links to a 2017 blog post called “What does sponsorship look like?” It’s a very good read and makes the point that most of us don’t get past mentorship when trying to support marginalized or underrepresented groups. I recommend you read it.

Vouch Or No Vouch, Should I Ever Make An Intro Without a Double Opt-In?

Fine, I Get It. Are There Any Good Blog Posts On What a Good Intro Looks Like?

Yes! Here’s one. And here’s another

A Small Change Seed Funds Can Make To Their Websites To Help Founders (and Themselves)

Here at Homebrew, we’re pretty into the idea of constant improvement. Our years of product management experience taught us that often the best insights can come from your customers. In our case customers = founders, and supporting the ones we’ve backed is our firm’s #1 priority. But you can also learn a ton from the folks you didn’t back and sometimes even from the ones you’ve never met!

What do I mean by that last point – how do we learn from people we never talked with during their fundraise? Well, we frequently diligence those deals after the fact – the startups we think we should have seen during their fundraise but for one reason or another – in order to better understand why we didn’t find each other. How are these learnings actionable? They can help direct our proactive networking – ie maybe there’s a university campus where Homebrew isn’t well-known so we try to figure out how to solve that problem. 

Given the work we’ve done understanding the patterns of seed fundraising, we wanted to share an insight to benefit our venture peers: Your Portfolio Page Is Your Thesis – Founders will often look first (and sometimes only) at your website’s portfolio page to assess whether or not you invest in their industry, business model, geography, etc. You might have detailed these ideas lovingly in a blog post or elsewhere on your site but almost all the time, your portfolio page helps teams decide if they should reach out to your or not. 

Given that more early stage startups are staying quiet about their financings (not stealth per se, just not announcing they’ve raised money), there can be a substantial lag between a firm’s investments and the display of these logos on their website, sometimes sending incomplete signals to new founders about what the fund is seeking. “Oh we love Homebrew but looked at your portfolio page and didn’t see any XYZ companies, so didn’t think you’d be interested” was something we heard from a few founders we wished would have pinged us. 

What did we do with this feedback and what do we recommended to our peers? When you make an investment, you can put a placeholder slot on your portfolio page which generally describes the company. For example, here are two examples of “placeholders” we use on our website. 

The only downside we’ve considered is whether any potential founders would see something and erroneously consider it a “competitive investment,” (since our descriptions are so general) but most folks will ask. Or once they share their startup with us, we’ll tell them we’re competitively blocked in the very small number of cases where that occurs.

Just a small thing we’ve done that could be helpful to others out there and make sure founders are finding the best funders for their startups. 

My Virtual Assistants 2018: Nothing New Under The Sun(set)

Time for my annual wrap-up of how I used virtual assistants to augment my productivity in 2018. Overall this year was a real bummer as there weren’t any new services or paradigm-breakers that I encountered as a consumer. And pour one out for Facebook Messenger’s M, which sunset earlier this year. If even a tech behemoth doesn’t want to subsidize my restaurant reservation requests, then our future is grim…

There are some *very* interesting beginnings in the enterprise space beyond just virtual executive assistants and getting into real workflow augmentation, but I’ll save that for a separate blog post, especially since one is portfolio company 🙂

What Virtual Assistants did I rely upon in 2018?

FancyHands – The old man stands alone. While the service hasn’t gotten any new features – heck, I think they pulled their iPhone app at one point it was so janky – FH still delivers for me when I need very basic tasks (make a reservation, set up a car service, find out whether this hotel has non-smoking rooms)  and research completed (what are the five best coffee cafes in Portland, OR) for me. I think you get a discount if you use my referral link. And shout out to my friend Maia who uses FH in creative ways. 

Wonder: I use Wonder for b2b’ish research but they’re pretty solid for any type of research question where you could imagine a subject expert needing 30 min – two hours to pull you together an answer. Think of it as someone who is really good at Googling and has some domain expertise. At latest glance they’ve sunset their a la carte model and now seem to be fully focused on enterprise subscription models, but I’ll keep them on this list since I seem to be grandfathered. 

Fin: The most modern of the services that I’ve seen, Fin’s suggested uses span personal and professional. Do research! Book a dinner! Schedule your client meetings! If you’re price insensitive and want a pay-as-you-go service, this one is probably for you (assuming you don’t want to set up an ongoing remote EA type of deal). Additionally, true to their software roots, they’ve got a nice app that you can even use apart from the service to send quick ToDo notes to yourself (or others). 

What other services am I missing?

Previous Summaries

2017, 2016, 2015

Where’s my Personal Wirecutter? I Want a Place To Talk About The Products I Love!

I want a place to talk about the products I love in a more persistent fashion than a tweet – my favorite notebook, best coffee, preferred blanket and so on. 

I want this place to be the equivalent of Instagram/Medium for Products. What does that mean? Templated to make my creation look beautiful.

Mixture of structured information (such as product SKU, etc where appropriate) and free text. I can upload my own photos or select from ones provided by the item’s creator/manufacturer (or submitted by other users a la Unsplash). I want light grouping mechanisms for my posts, maybe similar to Pinterest Boards. They’re all public with addressable URLs. 

When I’m browsing other people’s posts, I want purchase information to be available when applicable – either from them or from a retailer – but I don’t want the commerce aspect to overwhelm the presentation format. This is about sharing our favorites with love and care, not just p2p transactions or earning affiliate link credit. 

I want light grouping mechanisms for my posts, maybe similar to Pinterest Boards. They’re all public with addressable URLs. This would allow me to create a List of, say, favorite coffees, or ask a question like “What’s your favorite pillow?” and have other users use their own URLs from this platform in response. 

There have been various attempts around this format but they’ve all failed to realize their full potential, or focused more on reviews and discussion forums than visual presentation. 

People love to talk about the gear and goods they use. There’s so much product talk on Twitter and Facebook and Instagram that just gets lost into the feed ether, destined to simply become targeting criteria for ads engines. 

If I had to guess where this product might emerge it’s either Instagram or Pinterest. But I also think there’s a vector for a startup to design something wonderful and independent. If you’re working on something like this – or something unlike this but you want to jam with me on why it’s even better – send me a note – hunter@homebrew.co. 

What Happens When A Founder Wants To Stop Versus Pivot?

Fred Wilson’s ‘Pivot or Fail‘ post earlier this week was especially timely for me. Now that my friend Jason Jacobs shared his own experience of winding down Two Way Labs, I can more easily contribute my opinion with a specific example. As Jason wrote

Across our first 45 core investments (Funds I and II), we’ve had three winddowns which come to mind. One was the result of a cofounder breakup. The other was a combination of struggling to find PMF and the realization by the CEO that she didn’t want to run this type of business. And most recently, Jason’s, which he describes in the link above. All three were very much the right decision.

Only Jason’s was in the “hard pivot” category that Fred describes (“Changing the product, market, and business entirely. Essentially starting over from scratch.”) but we’ve definitely had some “soft pivots” which probably should have just been shutdowns and some “soft pivots” which resulted in tremendous successes. When they’re at seed stage, we’re deferring to the founders’ decisions but also trying to help them understand the challenges associated with a hard pivot if their cap table isn’t supportive of the direction.

Sometimes founders think their VCs want the hard pivot – that the goal is to keep the company alive no matter what – or that if they don’t show ‘grit’ they’ll never get funded again. My opinion? Startups are really hard. If you don’t have a mission or problem you’re passionate about, where investors are aligned on the business, and it’s still early stage, you’re better off returning the cents on the dollar. We’re prepared to take the risk and redeploy. 

At the same time, investors should give the founders some space to figure out if they want to push on or not. A “hard pivot” sometimes requires laying off the rest of the team and getting back to the garage days of idea generation. Doing that for 30, 60, 90, 120 days isn’t a waste if the founders are inspired and want to continue working together. But I’d suggest at the end of that they “re-pitch” their lead investor(s). If they’re not supportive it can be easier to restart the business altogether with the new idea than it is to push onward. 

As a Seed Investor, Do I Want Softbank to Invest In My Best Companies Or Not?

Oh boy, conference season in the venture world and one enduring question this year has been “What to do about the Vision Fund?” It’s been a topic of lobby conversations, off-the-record chats and sometimes even an honest public panel!

What’s my answer to The Softbank Effect? First you need to separate the investments into two categories:

Mature Growth Investments a la Uber: Multi-billion dollar commitments to companies that are already at scale. So far at least these investments seem to contain some secondary sales. Which means as a seed investor, I’m thrilled to see Softbank invest. Yippee, go Masayoshi Son!!! It’s essentially a private IPO where early investors, founders and employees get some liquidity and Softbank gets minority ownership, maybe a Board seat. Cool, cool.

Early Stage Hybrid Buyout a la Wag, Brandless, DoorDash: Softbank becomes the largest investor on the cap table, sometimes clears out the Board, and, if reporting is correct, doesn’t broadly offer secondary to earlier investors. *This* is a more complicated situation for seed investors. You’re basically along for the ride with an investor who has very different incentives than you do – a different time frame, the AUM business vs IRR business, and requiring a scale in outcome that’s just astronomical

What do I think is happening in #2? Vision Fund is selecting categories where they believe a $10-100b company/conglomerate can be built and investing in the tip of that spear. Wag represents pets, Brandless CPG and DoorDash delivery/logistics, OpenDoor home buying, etc. Picking Categories and trying to make Category Killers.

Over time they’ll grow these companies w Amazon-like rapacity. Through internal efforts, through acquisition, through investment. Very exciting if you’re an entrepreneur, perhaps less exciting if you’re a seed fund (or even Series A VC). My guess is obviously don’t do your pro rata into the Softbank round and are left to go along for the ride, hoping to end up owning a very small piece of a very big thing. For the multistage VC it’s more complicated but I bet one reason the Sequoia’s of the world are raising mulitbillion dollar growth funds isn’t to coinvest along Softbank, but to protect their ownership in Sequoia core companies.

From my perspective – and we haven’t been involved in any Vision Fund deals yet – the outcome of a Softbank investment can be inconsistent with our investment model. I want to own a larger piece of a company that we hope can go public but more realistically, in a success scenario, will be bought by another company at a premium. And I worry about the impact of too much capital on a youngish startup. 

What would be the most provocative ‘hot take’ I could write about Scenario #2 above? Probably something like “if you’re a seed investor, you want Softbank to invest in your second best companies, not your best” or “a solid venture investment strategy might be to immediately invest in the strongest competitor to a company that Softbank has funded.” I don’t fully believe this but I’m also not sure it’s pure hyperbole. And I *like* everyone I’ve met on the Vision Fund team. It’s not about people, it’s about models. 

Anyway, that’s just my POV right now from a hallway conversation occurring in lots of halls at the moment.