While this hasn’t happened to any of our portfolio CEOs in a while, there’s one reason for a VC passing on a funding round that just sets me off: “I wanted to do the deal but couldn’t convince my partners.” This isn’t an explanation, it’s an excuse.
If you are a check-writing partner at a venture fund and you offer up this sentence to a startup CEO it means one of three things:
a) You blew the process by not enrolling your partnership
b) You didn’t want to put your neck on the line in the face of some resistance
c) You never believed in the first place, and are blaming your partners versus just passing
When I’m on the cap table I can help a founder navigate this to try and avoid going the distance with a potential investor. And if you’re a GP with tough firm dynamics, I can maybe help you navigate those. But if you put founding team through a full diligence and take them to a partner meeting, only to come back with this, RIP. [note: based on some feedback, I wanted to emphasize that I’m NOT saying all deals that go to a partner meeting should get approved. I’m saying that if it goes to a partner meeting and gets rejected, the sponsoring GP should own that rejection and give specific feedback to the CEO why they’re not going to do the deal. Not just apologize and pin it on the partnership.]
On the flip side, I do think it’s is fine for a VC to honestly say things like “we’ve got a lot of institutional scarring around your vertical so I’m going to need a little more time and help to get my partners comfortable.” Or, “I’m not going to be able to move as quickly as you need because of some firm dynamics, so unless you can stretch your timeline a bit, it might not make sense for us to take this forward.”
That’s all part of building trust and visibility for a CEO into the way you operate. And a founder working in an industry that has some hair on it, or is otherwise less understood by the generalist investor, is of course going to need to help their sponsor and her partners. Maybe I’ll write a separate post at some point about the process with investors who have a “prepared mind” for your startup versus those who are still developing their own thesis.
There’s a tiny hole on my resume. Now, 20+ years later you need to squint to see it, but it’s still there. I took the gig because I needed the money while in grad school, and, honestly, because maybe the startup could get public before it and the Web 1.0 bubble popped. And that combination of necessity and greed overwhelmed my better judgment.
It was a B2B Enterprise Software shop that really looked more like a dev team trying to turn services revenue into a scalable product. The employee base was a Venn diagram of (a) folks who knew something was off about the place – mostly in its leadership, but wanted to be part of fixing it, (b) grifters and (c) earnest professionals at the beginning of their careers who probably thought this was just what business was like.
When you’re young you hold every job on your resume so tightly – listing the month you started and the month you finished. “No gaps!” was what I recall the career center telling me. As if a seamless path was the dental equivalent of a glorious white smile and a few awkward career transitions became a boxer’s glove punching into your jaw and leaving bloody teeth in your hand, a pitted grin on your face. So I stayed a little longer at the job than I should have. Negative net worth meet negative self worth.
I don’t recall when I first removed the company from my resume. Did a length of time pass after I stepped away? Or did I just feel confident enough in my trajectory a few years later that no one was asking me about a couple month period between graduation and starting at Linden Lab? Reminds me of this tweet:
Regardless, after I became more understanding when interviewing candidates if there was a pause or a decision that didn’t work out the way they wanted. And perhaps they even had to take a step backwards before moving forward. Gap-toothed resumes have their own beautiful stories to tell.
14 for 14. Homebrew’s first fund (2013-2015) has 20 core investments of which 14 went market for a Series A. All 14 successfully completed this fundraise. The six who didn’t go out for a Series A either (a) shutdown/acquihired prior to this milestone [founder disagreement; lack of product traction], (b) exited due to an early M&A opportunity or (c) in one case, is currently an ongoing concern that hasn’t needed to raise additional capital.
I was thinking about this stat last month while preparing a slide deck for our annual LP meeting. As an industry we often say a startup “failed to raise” when a funding round doesn’t come together and while it’s factually correct, in some ways it strikes me as a downstream implication of a core issue: they didn’t fail to raise, they failed to execute. The company most likely did not accomplish the milestones required to move their business forward. The lack of a funding event was merely the endcap, not the cause.
Why do I raise this distinction? Because as an early stage lead investor one of our responsibilities is to help a company think through its strategy and provide feedback on the pace and quality of execution. If you’re executing well against the right strategy, funding will follow. Yes there’s a funding process and helping founders navigate that successfully is a key part of a venture investor’s value, but a CEO shouldn’t rely on “failing to execute but successfully raising” (even though this happens too).
So it makes me happy to look back and see so many Fund I companies who successfully executed in their early years. On the flip side, we had one team which “successfully executed but failed to raise” during a post-Series A fundraise. I still think about this one a lot because they did their job and the market just turned on them in ways they couldn’t fully control. While their execution wasn’t flawless it felt more than sufficient to get a round done. They “failed to raise” but we’d back that CEO again and again and again.
If you’re worried about fundraising, first worry about executing – and feedback on whether you’re executing on the right things. For the most part that’s under your control and it’s, in my experience, rare for a company that’s executing well to fail to raise a Series A.
I’ve lived in San Francisco long enough to consider myself a Local, if not a Native. But no number of elapsed years or distance can dull my strong attachment to New York City, my birth city. A combination of family and work obligations pull me back at least a half-dozen times annually. That frequency, plus some serendipity, has allowed me to inhabit my hometown during some interesting 21st century moments despite lacking residency. I was walking Manhattan’s streets a few days post-9/11 and the homemade “missing” flyers taped to any surface to which an adhesive would stick, still stands out vividly in my brain. Election nights where the streets were filled with celebration or with quiet resignation. Spontaneous celebrations following sports championships. The memories span all emotions.
In autumn I’m an especially frequent visitor – it’s my birth season, my favorite climate-wise, and the chance to get some last meetings done before the holiday months. So in September 2011 the pull of weather, family and work gave me enough reason to jump on a plane but those were all excuses. What I really wanted to see was Occupy Wall Street.
II. Occupy Wall Street
There hasn’t been much sustained IRL protest movement in America recently. Marches that last a few hours, sure – we’ve attended several since the Trump inauguration. Important displays of anger and resistance in the face of police brutality (St Louis, Baltimore, others). But these are episodic and then everyone returns to their normal day-to-day, often with very little having changed. Occupy Wall Street gripped me for a few reasons – its location was familiar to me, the grievances were varied (at first a feature, then a bug) and the tent city seemed to create actual consternation among public officials on how to proceed.
To refresh/remind folks about the Occupy movement:
Occupy Wall Street protest began on September 17, 2011, in Zuccotti Park, New York City.
The sentiment of uprising that led to the Occupy Wall Street movement in the US has sometimes been attributed to the Tahrir Square revolution that happened in Egypt earlier in 2011.
So about my visit…. while I was suspect that this coalition of randoms – it started to attract anyone who had a progressive-leaning cause – could make a policy impact, I was impressed by the resourcefulness and dedication of those who disrupted their lives to tent up Wall Street. And started me wondering what type of outrage or frustration could catalyze an ongoing Occupy community, one that might even be 10x larger or more durable.
III. Occupy White House
I’m not a fan of the guy at 1600 right now. I’ve written more checks and spent more time on political issues since 2016 but it has all stayed within a box of “nights and weekends.” Funded out of appreciating assets rather than dollars which would impact my daily routine. But I carry a fear that one day I’ll wake up wishing I’d done more to push back against the destructive behavior this administration perpetrates on our institutions, norms and vulnerable peoples.
There are other citizens who share my alarm – some I know personally, some are just talking heads on TV and in the newspapers, some are Twitter accounts that might be real. Or not. But yet no real physical protest of durability has resulted. Day long marches, sure. But no Occupy White House. And certainly nothing at the scale we’ve seen recently in South Korea, where millions of people continued protesting corruption until they saw results.
I don’t have an answer for why there isn’t any meaningful Occupy White House movement that has the potential to minimally display ongoing resistance to this administration and, more hopefully, snowball into a call to action, at least by those who believe impeachment is the right answer. But I’ve ended up with three potential explanations – one Optimistic, one Realistic, one Pessimistic. Note, I’m not advocating for any of these or assuming a POV. Just trying to conceive of why something I’d expect to happen isn’t happening.
Optimistic – the ballot box works and the system isn’t broken (hold aside gerrymandering, voter suppression, $$$ influence and so on)! While the majority of Americans polled disapprove of Trump, the population as a whole haven’t lost trust in democracy, and will express this at the polls in 2020. This explanation gives a lot of importance to the 2018 midterms, when decisive victories by the Democratic party sent a message. Respect the wisdom of the crowd, and the crowd says we’re going to get through this.
Realistic – the average person’s life hasn’t been impacted that much. It is absolutely horrific that there are vulnerable populations put in harms way by this administration. But there’s always some degree of suffering and unfortunately unless it impacts you personally, we’re all just focused on our lives. All politics is local and Trump creates a lot of sound and fury, but it’s superficial and our lives stay the same.
Pessimistic – No one is willing disrupt their own lives to create change any longer. Consumerism, social media and complacency have turned us into apathetic complainers who are willing to tweet but not to cancel our brunch plans, let alone stop showing up for work or SoulCycle to camp outside the White House. And even if we were, what good would it do? Nothing changes anyway. The frog is being boiled because no one has created a red line for themselves to say NO MORE.
Will we see a more enduring movement before the 2020 elections? Something which isn’t *just* about mobilizing people to town halls and the election booths but a growing group of citizens who are willing to disrupt their lives to send a signal? What should I reading, following or listening to, to understand why there seems to be a more decentralized (and virtual) protest movement right now?
I froze my credit file across all three bureaus. I’ve been comped various identity theft and monitoring services which seem to pepper me with really uninteresting updates about their “dark web scans” and erratic increases or decreases to my card limits. And I have Google Alerts set up for my social security number and other personal information that may one day make their way to the public web. These minor frictions aren’t all attributable to the 2017 Equifax breach but that’s the incident which sticks in my mind to this day. Because what do you do about a company like Equifax?
Moody’s just downgraded their outlook, which has real implications for their financial wellbeing (borrowing interest rates, etc). Is the market the ultimate regulator? Businesses and consumers decide that a hacked institution is no longer someone they trust, and Equifax experiences more difficulty hiring, partnering, and so on? Or does government have a bigger role to play in ensuring those companies entrusted with our most valuable personal data be held responsible for its care?
I *want* to say ‘yes, regulators do something punitive!’ but to be honest, I don’t know exactly what happens in situations where there perhaps wasn’t a single individual criminally negligent or culpable, but just a bunch of underspending or underperformance by those put in charge. Slap on the wrist fines not only don’t move the needle but actually do harm, because they erode public faith that their public institutions give a shit about the average person: trivial penalties which prove regulators and CEOs act out punishment theater in public and then hang at the same country clubs on the weekends.
But the other side of the spectrum is also problematic. If you shut down the company or deliver such a set of damages that you are effectively eliminating its ability to compete, who are you really impacting? Most likely the 99% of employees who had nothing to do with the issue at hand. They’re the ones with retirement plans in company stock, pensions at risk. If you want to kill the company, what about the collateral damage?
None of this is even close to my area of expertise but I remain unsatisfied with the answers to questions like “In wake of the Equifax breach, how do we prevent this from happening again and repeatedly?” Because it does all the time.
My obsessive focus on parsing the language of introductions previously resulted in a discussion of “the vouch,” but tbh that’s 101 level stuff. Let’s go deeper….
Introductions 201: The Favor
Another type of email frequently in my inbox is a light request or inquiry from an acquaintance to do something which is basically of unidirectional value for a friend of theirs. Usually around career advice, startup feedback or similar. If it can be fulfilled very quickly my general disposition is to try and help, especially if the FOAF is an URM. But often the ask actually has some effort associated with it – let’s say 15-30m worth (a chat, reviewing a deck and sending comments, trying to find the right person for them within an org I know, etc). I love helping, but that’s time which gets removed from Homebrew or my family, both of which are higher priorities for me. So what to do?
Often, rather than declining outright I’ll ask the requester “is this a favor for you? If so, of course I’m happy to help. But if not, I rather pass at this time.” My hope is two-fold. First, they’ll make sure the requester is going to make good use of my time and reflect well on them. Second, I’m reminding them there’s the potential of reciprocity later. That I might need help back at some point and I would expect they treat that request with an appropriate prioritization.
Now, I don’t mean this in the Godfather way, and I don’t keep a ledger of favors (which totally sounds like the title to an Iron Maiden album!). I just want everyone to remember that time is a valuable resource and we should protect our own and be thoughtful in asking for it from others. A reasonable percentage of responses back do say ‘yeah, it’s a favor for me’ (in which case I jump right on it), while the rest end up not being that important. I really should do more follow-up with those who withdraw the request to make sure they don’t feel judged or sour from the interaction (maybe I’ll just send them this post), but I think I’m directionally correct on this one, if not perfect.
“Ugh, he’s such an asshole,” a friend sighed to me about a mutual acquaintance. I shrugged, and proceeded to explain my complicated relationship with some folks who I know are assholes, or selfish, or blowhards, or any other combination of qualities that can be disqualifying. “Yeah, but he’s consistently an asshole,” I replied, “so you know what you’re getting and he knows he’s an asshole.”
I’ve historically had a bit of tolerance for people who might not display all the character traits that I’d look for in a friend or colleague, but who are self-aware of how they act and predictable in their behavior (can you be a “dependable asshole?). While I might not invite these folks deeply into my life, I probably excommunicate them less frequently than I should. I’ve got an unspoken working agreement with the mild assholes in my life for when our paths do inevitably cross. Note that this is definitely more about transactional relationships with assholes than having them on my teams, etc.
But you know what two types of people I really struggle with? Weathervanes and Grin Fuckers. The former are people who change with the wind – the proclaim themselves champions of whatever idea is trendy at the time, or fall in line behind consensus. The latter are those who smile to your face passive aggressively and then trash you behind your back.
If I were to self-analyze, I think these two are triggering for me because they’re both forms of unpredictability and disingenuousness, which I can’t stand. And I rely on the people in my life to give honest feedback, tell me where they stand and not avoid productive conflict. So I struggle with those who are less able or less willing to default to that type of raw discussion and principles. And when I believe the lack of doing so (productive conflict based on principles) is malevolent, it’s rage-inducing.
Oh and by the way, if you think this post is about you, it’s probably not. But if it is, I’d tell you 🙂
Blog posts, for me, are like kidney stones. Or at least how I imagine kidney stones to be, since I’ve never had them personally. They usually begin with a question or idea, and then tumble around in my head, until crystallizing in a way which compels me to write, for to *not* do so would almost be painful. Hours, days, months can elapse before this moment occurs. Or sometimes it never does — either the topic loses my interest, or even better, someone else covers the same ground and I can just point to theirs. (I say “even better” in these cases but there’s probably a 10% “damn, I wanted to write that myself,” if I was truly being honest).
“Apple and AI and Cameras” was in my list since last autumn. And I’d been saving pictures to accompany the post – of realtor signs, pieces of art, store windows. All examples of pictures where richer data links could be automatically inserted into the metadata or literally overlaid on the photo itself. The static image of the photo roll turned into something where captured phone numbers can be clicked-to-call, prices and ordering information for identifiable items, operating hours and other business info automatically displayed, artist bios and other works inserted as stackable images behind the museum work I snapped.
If cameras are a platform – and I believe they are – I’m surprised how little innovation has occurred in our camera roles. Not auto-organizing and facial recognition but using an understanding of the image contents to supplement with information and applicable actions. Enough utility would even change what we photograph and why (for example, a whole wall of books at a bookstore and then tell me which five I’d like most).
But the post just never came out of me. So I was excited (at least 90% excited that is) when my friend M.G. penned something similar in his newsletter. The Camera as the App Layer says “What I really want in a mobile OS is the ability to fire up the camera, take a picture, and launch apps and/or services from there based on that picture.” Exactly.
I like my coffee. And recently set out to improve my portable consumption experience by finding a better travel mug. My two primary motivations are (a) moving away from disposable cups and (b) preserving/improving the drinking experience versus paper. Secondary considerations -> aesthetics, ease to clean and price.
Non-goals: insulation (I don’t need my coffee to stay hot for hours) and durability (in the sense that I’m not looking for something that will survive a 10 ft drop, or needs to go into a backpack while biking). I also have a bias towards glass or ceramic, believing plastic or metal muddles the taste.
Here’s the three I’m currently enjoying. If you’ve ones you love, tweet them to me please!
The largest of my three and also the heaviest. Base barely fits into car cupholder – which is a negative – but it’s very comfortable in the hand and top feels secure + easy to remove/insert. Dishwasher safe.
Love the design (they also come with just a solid band). Glass doesn’t get too hot. So far I’ve got mixed feelings about the top – it’s easy to put on/off, but doesn’t necessarily feel secure (although I haven’t had any spills). There’s also a slight silicone aroma first few uses, but perhaps will go away. Dishwasher safe.