tech | growth | venture | Perspectives from an operator turned VC in an underserved market
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One of the inherent risks of investing in companies at the earliest stages is revenue diversification which in turn helps to create operating leverage.  Most startups we meet are dependent on just a few customers, partners, or channels for the bulk of their early growth.  Ideally, these early-stage companies are investing in the business to accelerate and diversify revenue streams.

If executed to perfection, revenues and gross margins are growing faster than operating costs, and operating income (or losses) are increasing (or decreasing) faster than both of them.

But without analyzing a few key metrics, it’s impossible to understand, much less create, operating leverage in the business.  Namely, it’s crucial to know how effectively you turn revenue to actual cash and the contribution margin of each product.

Accounts Receivable – How much cash is owed to you?

Accounts receivable is a great metric to use when validating if revenues are “real” or inflated.  When I use the word real, it’s in the context that the revenues will become cash in a timely manner.  Revenues can easily be inflated by shipping product where payment is not expected or will take a while to collect (more on that in a bit).  Rather on purpose or not, in these scenarios cash will be going down while profits are steady and accounts receivable are growing rapidly.

Book to Bill Ratio – How effective are you at turning bookings into real revenue?

Book to bill ratio is simple to calculate by dividing periodic bookings by the same period’s revenues. If bookings are a lot higher than revenues, that can be a positive sign. But it can also mean that your company is having a hard time getting revenue realized, i.e. you have a higher accounts receivable balance than the peers in your industry or at your stage.

Days Sales Outstanding – How effective are you at collecting revenue?

Another easy metric to calculate is days sales outstanding (ending AR/revenue per day) but instead of tracing how efficient you are at converting bookings, it measures how long it takes on average to collect from customers.  This number provides insights into where contracts can/should be re-negotiated and also the amount of cash needed to finance your business. One quick note, DSO is an average. For a more granular analysis, be sure to highlight AR under 30 days, 30-60 days, and 90+ days outstanding.  This will give you a weighted average which provides more insight into how well the company is actually collecting revenue.

Contribution Margin – Which products/channels are most efficient?

In short, the contribution margin is the window into how each product or channel individually affects the business as a whole. CM highlights what’s available after variable costs to cover fixed expenses and provide profit to your company.  It’s as simple as sales minus variable costs and shows the profit on what you sell before fixed costs.

Variable cost is the key factor in this equation – with revenue or channel concentration these numbers are easy to calculate, but with the diversification comes a new equation for each new product or acquisition channel.

Without understanding your CM by product and/or channel, it’s impossible to make informed decisions about where to invest capital for continued growth, the levers that need to be pulled (pricing, CAC, etc..) to make products more profitable, or if products/channels must be entirely eliminated.

This was a fairly long post full of accounting jargon, but it’s important to understand which metrics translate the effectiveness of the business in creating operating leverage.  As revenues diversify, these calculations become exponentially more complicated with the addition of new products, customers and acquisition channels.  Understanding and tracking them now ensures you’ll have a good grasp on where to allocate new capital when the time comes.


Like many, I listen to podcasts on my commute to and from work.  Yesterday, I came across this podcast from Greentech Media featuring Shayle Kann, SVP of Research and Strategy at Energy Impact Partners.  Shayle had written an article about the future of energy and tied it to the life events of his colleague’s soon-to-be daughter which is due at the end of the year.

The podcast and article are worth your time – and not just for those interested in the future of energy.  Given that we just had a newborn, I thought it would be fun to duplicate the exercise using my son Ian and my thoughts on the “bets” Shayle puts forward.

Bet #1: Ian will control machines with his voice more than with his keyboard.  My answer: False*

My answer comes with a caveat, what’s the timeline?  In the podcast, Shayle discusses the growth in AI-enabled voice assistants over the last 3 years.  While the number of devices being sold is impressive, voice still has a real user-engagement problem.  These devices are primarily used for timers, audio, weather, and news.  I also think voice has a UX issue that most aren’t talking about, it’s hard to remember what all a device can do (your phone has apps you see every day and do not use).  Until voice-enabled devices do almost everything, I think the path to engagement will remain tough.

Bet #2: Ian will never personally drive a car. My answer: False

While there are several converging technologies and business model innovations in the automobile space, I believe purely out of curiosity Ian will drive a car at some point in his life.  AV’s, ride-sharing, and scooters are all disrupting the way we think about transportation, but pure curiosity gets the best of all of us.

Bet #3: By the time Ian buys his first home, especially if he’s in an urban environment, his surroundings will be transformed. My answer: True

A few of the major trends already impacting cities: WeWork, AirBnB, and EV’s.  Up next: drones (robotics), repurposed parking lots, and vertical farming.

Bet #4: By the time Ian shops for his own groceries, >20% of his produce will be grown indoors, up from virtually none today.  My answer: True

Given the current population growth, the impact farming has on climate change, and vice versa this is a given.  We’ll need more food and the way we grow it today isn’t sustainable for the three major reasons listed.  We need more food, it impacts our climate to grow it, and our climate is changing the way we will have to grow it.

Bet #5: Let’s turn to Ian’s house. I bet that in Ian’s first home of his own, more than half of his electricity load will dynamically respond to grid or price signals. My answer: True

I loved Shayle’s answer here because it was concise and spot on.  Control HVAC plus 1 or 2 additional devices and this goal is achieved.  It must happen in the background, consumers don’t know nor care what the impact could be.

Bet #6: By the time Ian reaches 30 (in the year 2048), electricity’s market share of final energy consumption will more than double. My answer: True

Another fairly simple answer, EV’s should change the demand significantly especially if they hit long-haul trucking in the near future.  The industrial applications of storage and efficiency should also play a large role in increasing electricity’s market-share.

Bet #7: More than 50% of Ian’s electricity, as represented by the national breakdown, will come from renewables by the time he’s a sophomore in high school.  My answer: False

It will be close, but I say we fall just short of this goal primarily due to the availability of natural gas.

Bet #8: Ian will live over 200 years, and for most of his life, electricity will be his only food.  My answer: False

So many ethical questions here, though companies are working on products that allow them to download your loved ones’ text (email, text messaging, social media) then build bots that mimic the physical manifestation of them.  Kann makes a compelling case by listing the major inventions of the last 85 years, but the regulatory and ethical hurdles might defeat this one.

There you have it, my take Ian’s future as it pertains to energy and innovation.  Thank you Shayle for writing this piece, it was a neat way to think about the future and possibly gives Ian something to look back on while having a laugh at his old man’s expense.

It’s been almost a month since I’ve posted, having a newborn will do that to you.  But I’m back and hoping to continue writing regularly from here until the end of the year.

During my time away, I traded-in an old MacBook Pro and iPad mini for a new Surface Go.

At least part of the reason I decided to try a Surface is that I love what Microsoft is doing as a company.  I’ve told anyone who will listen for the last 2 years that I am bullish on Microsoft under Satya’s leadership and the Surface is a big part of my reasoning.

The verdict: I’m only a week or so into using my Surface Go regularly, but so far I love it.


  • the keyboard – I love the feel and size even if it takes some getting used to
  • the size – it’s perfect for both tablet uses like reading/browsing and computer use cases like working on email/writing
  • the OS – I like having a full OS instead of a mobile version


  • power – the Surface Go does lag for some heavier tasks even though I purchased the 8GB RAM version
  • battery life – on a full charge the battery lasts only ~5-6 hours which is dismal compared to iPads
  • bezel – this is a minor complaint, but the bezel did not need to be so large with the advancements that have been made in screen technologies over the last few years

It’s not a device I’d recommend as your “daily driver”, but if you have a computer for heavy lifting and are looking for something more portable that is still powerful enough to get basic tasks done then the Surface is definitely worth considering.

I’ve attempted to use an iPad off and on for the last few years but the lack of a mouse kept me from using it as an additional computer.  The touchscreen UX just doesn’t work for me. The new iPads still do not solve this problem and so the Surface still feels like the right choice for most of my use cases.

The addition of the mouse and a great keyboard mean I pick up my Surface Go every chance I get and that means more productivity which is what having a secondary device is all about in my mind.

If you ask most early-stage VCs their number one criteria for investing in a startup, the answer you will get is “team.”  Even market first investors, like us, want to know why the team is best suited to tackle the problem.

In a fundraising environment that is becoming more crowded, differentiation is incredibly difficult and the question I’m often left asking after reviewing a deck is “why you?”  As in why are you the best person to solve this problem?

Yet, for some reason, most of the decks that come across my desk leave the team slide either somewhere in the middle or near the end instead of answering that question early and with clarity.

Team, team, team, market, team. — Mark Suster, General Partner at Upfront Ventures


The one thing that always stands out the most in an early stage startup is the team. We invest quite early in a company’s life; it will usually take 6–10 years for the company to reach giant success. Given that, many things will go wrong and the one mitigating factor for setbacks is a great team.  We spend the most amount of time thinking about the founders and the early team before investing. — David Pakman, Partner at Venrock


The answer can be as simple as the invention serves the need of the inventor.  Our first portfolio company all suffered from the disease they were working to monitor and as a result understood the daily life of their customer.   This has been a guiding force in their product design and cost.

Perhaps you have extensive work experience in the industry and have seen the problems from the inside.  This is especially important in industries that require the careful navigation of regulation, long sales cycles, entrenched incumbents, and/or bureaucracy.

While the best stories in Silicon Valley lore often involve a founder rescuing an industry with innovation from a fresh perspective, the truth is founder-market fit matters and in most cases is a strong advantage.

Be brutally honest with yourself,  are you uniquely qualified to execute on your business?  If so, trying leading with the team first – the risk is low and the rewards could be worth it.

By now you’ve likely seen this week’s The Economist cover story entitled Peak Valley, which features quotes from Claire Haidar.  Claire is CEO of WNDYR, an Intelis Capital portfolio company. The article highlights a mixture of outrageous costs-of-living, poor local government, and high operating costs as the catalysts behind an impending Silicon Valley collapse.


We’re skeptical Silicon Valley is “over.” However, we do see its influence dwindling in the next few decades as a direct result of a technological invasion into new sectors that drive the economies of the regions most dependent on them.


Every Industry is a Technology Industry 


It should come as no surprise by now that almost every industry has come to rely on technology for some core part of its operations.  Yet, there is a large variance in the degree of digitization across sectors that are cornerstones in regional economies outside of the Valley – these sectors have largely been ignored by coastal VCs until the last couple of years.


Industries like energy, agriculture, construction, and manufacturing are lagging behind the innovation curve and represent a multi-trillion dollar opportunity for startups and investors alike.  Their importance to regional economies like Texas, the Southeast, and Midwest can’t be overlooked.



We used the Bureau of Economic Analysis geographical definitions of the Southeast in addition to Texas for our analysis for the graph above.  Sectors such as power utilities (5.2% of SE GDP), oil & gas (2.54%), transportation (3.43%) and construction (4.83%) contribute much more to the regional economy than the US as a whole and while these percentages look may look small, it’s important to note the size of the US economy was $18.5T in 2016 and the region accounts for about 1/3 of total US GDP.


The ability to build software products is without a doubt Silicon Valley’s competitive advantage, made possible by an unmatched density of engineering talent. Yet because the aforementioned sectors are largely un-digitized, only a minimal level of improvement is necessary in order to replace current analog processes. Thanks to the spread of technology the requisite level of engineering talent can now be found, for less money, in most metropolitan areas.


Additionally, distribution of product is sometimes as important, if not more so.   The density of customers and potential partners in other regions provides startups with a ready-made strategy to build revenue from the outset.


These advantages can result in the healthier P&L’s highly-valued by potential acquirers in these sectors, leading to exits that drive ecosystem growth.



Founder / Market Fit


There’s a reason these analog industries have yet to be disrupted.  Often they require highly-skilled and specific knowledge, are encumbered by regulation, have entrenched bureaucracy throughout the entire value chain, or in the worst cases — all three.


Witnessing first-hand the ways an industry is broken is crucial to building the foundation of a big business within them.  More importantly, it removes any naïveté a founder might have and prepares them for the potential roadblocks ahead.  A few obvious and successful examples of this are: Flexport (freight), Robinhood (finance), and Farmers Business Network (agriculture).


Before, entrepreneurs would have had to move to SV to start these companies due to lack of local resources and talent. However, an explosion of cloud-based collaboration and communication software has now made it possible for these executives to tie into specialized talent from the Valley if and when needed.


Moving to the Valley as a contingent of funding is becoming less common distributed work becomes more of an accepted practice, and the rise of new firms focused specifically on not investing on the coasts has given founders more access to capital than ever before. This combination has solved one of the biggest problems of building a business outside of Silicon Valley – access to capital.


It’s clear there are several new sectors and regions are primed for the necessary disruption heading in their direction. Undoubtedly, Silicon Valley will play a direct or indirect role in many of the advances, but for the first time ever that role may not be from the driver’s seat.


Last week Apple became the first company to hit a $1T market-cap.  Lost in the hype of hitting that milestone and their Q2 earnings call was the announcement that they are also launching a $300M cleantech fund in China to “give fund participants greater purchasing power to pivot toward clean energy.”  


This looks eerily similar to a strategy Amazon has used for AWS, except applied to energy. Apple can be the first and best customer for new products and technologies as they’re incredibly large consumers of energy much in the way Amazon was for both data and deliveries.  It’s now a well-worn playbook and it would enable Apple to gain stability in energy consumption while being less exposed to the price volatility of the market… all while subsidizing development via their own purchasing power.


For consumers and startups, this development could be game-changing. In the same way healthcare needs Amazon as a major player because Amazon excels in efficiency and logistics, cleantech needs Apple to help it beat the economics of the alternative, and connect its evangelists to the mass market.  If Apple had superpowers, they would be the ability to create a luxury perception of their products, and the ability to create an ecosystem effect that makes their services sticky.


“It Just Works”
Apple’s DNA, dating all the way back to 1977 when Steve Jobs demanded the Apple II be as easy-to-use as any household appliance, is creating a product consumers can easily interact with on a daily basis.  Much like today’s early cleantech adopters, the tech evangelists of the 1970’s understood the potential impact of the technology to our every day lives, but could not actually figure out how to convince others of this fact until the Apple II was released.  Apple repeated this feat again when it released the iPhone in 2007.  These kinds of innovations add up over time and have created a bond between Apple and it’s consumers. With Apple you can feel safe trying the unknown, and in energy, as with all regulated industries, trust matters…A LOT.


Cheaper, but still expensive
The cost of chips and computer parts began their decline in the 1980’s and the same can be said for cleantech components today.  Solar panels, storage and the sensors are all experiencing some of the steepest price declines since their invention.  Yet, they are still more expensive than their alternatives which includes the status quo.  As it stands, there must be something stronger than economics to serve as the catalyst for massive adoption.  Who better to solve this problem than Apple? Case in point, Apple owns only 18% of the smartphone market and yet earns 87% of all profits and has done so by leveraging usability and lifestyle (i.e. community) to convince customers their most commoditized product is worthy of a price premium.


Tesla: The EV Elephant in the Room
Could a company that will repatriate over $200B in cash be interested in acquiring one that has a market cap of $60B and over $10B in debt?  Tesla is one of the first companies (the other being Nest) that has made an environmentally friendly product “cool.”  At the very least, they’ve provided Apple with a playbook to enter the market from the consumer side if they so choose, but an acquisition begins to make a lot of sense if current trends hold. 


Despite it’s success, Apple has been under increasing pressure to “do something innovative” as most of its hits post-iPhone have been comparatively minor.  AppleTV, Apple Watch, and AirPods are all best-in-class devices, but none of them triggered a major innovation cycle in the way the Apple II and iPhone did.  Could energy be the next step for the first $1T company to become the first $2T company?  Time will tell.



It’s not surprising that pricing plays a large role in the success of a startup.  When asked if he could put any one piece of advice to founders on a billboard in San Francisco,  Marc Andreessen famously said, “raise prices.”

However, pricing is more than what you charge your customer, it also includes how you incentivize engagement and create margin as well.  How does this work in practice for two of the most common pricing structures?

Incentivizing Engagement with Consumer-based Pricing

Consumer-based pricing works well when you are working to create a “sunk-cost” feeling or need your users to change behavior, rather that be from an existing software or workflow.

For example,  we work with startups in industries that still use Excel, or if they are really advanced SQL, for most of their workflows pertaining to data entry and analysis.  Charging these customers on per-use basis would be more likely to result in end-users  giving up on the software at the first sign of complication (i.e. MVP / new features have a higher bar to clear), or never using it again a few weeks after onboarding.

Instead, a per-seat charge or a flat-fee creates a sunk-cost feeling within the organization.  The internal manager or champion who initially went to bat for you is now incentivized to show this new cost isn’t going to waste.

Does this create a higher-barrier to sales?  Maybe, but sales were always going to be important.  More importantly, you now have allies working to ensure engagement with your product in their organization due to the effects you’ve had on the budget and their reputation at the company.

Creating Margin with Consumption-based Pricing

Consumption pricing is charging based on how much or often a consumer uses the product.  The two most obvious examples would be almost any cloud storage provider or Invision’s per workflow product.

This structure is perfect if your product could be accessed by an entire group or division with one login and not lose effectiveness.  In the example above, if pricing was consumer based (per seat) a design team could easily create one log-in to create as many prototypes as needed.

If Invision used a per-seat structure, it’s unlikely they could start pricing at $25/mo.  Instead, it would likely be in the neighborhood of $10/mo.  This structure likely allowed them to charge $15 more per month AND make it feel like a value to the end user.

Pricing often gets overlooked in the foundational aspects of company building.  Yet, when structured correctly, pricing strategy can create incentives that become powerful catalysts for early adoption and create extra margin over the long-term.


Last week, the Council on Foreign Relations released a report on the ways in which blockchain could impact the future of our power grid.

Until recently, access to data on blockchain experiments in the energy sector has been fairly limited.  However, things are starting to change.  Last year, startups raised $300M through both traditional venture capital and ICO’s.  Two of the most heralded fundings came from Drift (consumer-to-generation) and LO3 Energy (peer-to-peer), both of whom are looking to connect consumers to the energy provider of their choice with distributed ledgers.


As I explained in a post earlier this year,  electricity trading transactions are still tracked in Excel or databases that rarely are connected but owned by large corporations.  This system adds millions in additional transaction costs and makes full transparency between market actors almost impossible.


A de-centralized ledger solves almost all of these errors and would empower new entrants (i.e. consumers with excess power capacity due to solar panels)  to enter the market.

Other than the power trading market, we see three major use cases for blockchain technology to impact the grid.


Grid Security and Generation Balancing- According to McKinsey, the connected-home market is growing at a rate of 31% year-over-year with ~30M homes having some form of IoT device installed.  The long-term result will be unparalleled access to data for grid operators and utilities.  Blockchain has the opportunity to help solve the problems of cybersecurity and data management that will come with this new paradigm. Without access to software talent, these service providers will need help from startups to build the capabilities that allow them to take full advantage of technologies like blockchain.  This transition is already underway in Europe where regulators and utilities are generally more forward thinking than their US counterparts.


TenneT, one of the Netherlands largest utilities, is working with Vandebron, a green energy supplier, to encourage owners of electric vehicles to participate in an EV-to-Grid (EV2G) pilot initiative.  Integration of power generation from renewable energy resources such as solar or wind power in combination with storage requires a more granular control to manage supply and demand. The project in the Netherlands is the latest in a long and growing series of technology initiatives to discover new ways of integrating new technologies such as EV and storage on to power grids.


Under this new program, TenneT will be able to store and dispatch power from consumer EV batteries in order to balance grid demand with supply. These EV2G transactions will be recorded and shared on a peer-to-peer (P2P) network using a permissioned Hyperledger blockchain. To encourage customer participation, TenneT and Vandebron will guarantee EV owners’ batteries aren’t victims of hacking in the process which is unlikely given the technology being deployed.



A permissioned distributed system based on the Hyperledger Fabric will allow grid operators real-time insights into distributed battery energy storage capacity across the network, as well as the ability to act on the information instantaneously and, perhaps in the future, automatically.  Eventually, collecting and recording distributed energy transaction data for use in the variety of utility-customer energy applications such as billing.


Infrastructure and Microgrid Financing- The US’ power grid is aging and well behind the rest of the developed world and our current political climate has prevented us from making large investments in infrastructure.  ICO’s could give both individuals and investors the opportunity to participate in the power grid like never before.


The use cases are wide ranging from peer-to-peer EV charging transactions to larger scale generation or transmission projects.  Blockchain could provide the ledger while ICO’s could easily be tied to the amount of power transmitted to the end-user (i.e. return based on output and efficiency).  It is important to note that this one is the most far-fetched of the three as it would require both consumers to become more educated and/or utilities to participate.  Both of which are far from guarantees.


Yet, this is the model that US-based LO3 Energy has experimented with in its Brooklyn Microgrid project without requiring too much engagement from local utilities. Customers can choose to power their homes via a range of local renewable energy sources while their neighbors can sell excess solar power back to them.  LO3 has opted to use a blockchain to keep the transaction record between its customer.  As is the case with all distributed ledger technology, the microgrid’s accounting is decentralised and shared by everyone on the network ensuring that tampering with these records is near impossible since everyone has their own, regularly updated copy of the ledger.


LO3 is now rapidly expanding with a series of other microgrid projects around the world where grid stability issues are a growing problem.  While it may be far fetched to believe the US could have grid stability issues, we should look no further than the recent disaster in Puerto Rico and subsequent landfalls of major hurricanes on the mainland to understand the loss of power for days / weeks is a very real possibility under the right circumstances.

A New REC – These market-based instruments represent the rights to renewable electricity generation.  They contain information such as generation source, the number of megawatt hours generated and delivered to the grid.  The immutable and transactional nature of REC’s makes them the perfect candidate to be placed on a distributed ledger.  Furthermore, the trading of RECs is currently highly specialized and opaque, a publicly available blockchain would open access to consumers and businesses alike.


Earlier this year, WePower, a blockchain-based green energy trading platform announced a successful $40M ICO, making it one of the most demanded projects of the year.

It helps renewable energy producers issuing their own energy “tokens” based on generation connecting consumers directly with the green energy generation and creating an opportunity to purchase energy upfront at below-market rates. This tokenization ensures liquidity and extends access to capital to finance new projects, but also gives the buyers a coin tied to a tangible asset, a fact that isn’t always true in the ICO world. The hope is that this access to a new capital infrastructure will be a bridge from renewable energy producers to new consumers thus making the grid a little greener.

Much like LO3, WePower’s technology creates an opportunity for a transparent accounting through a distributed open ledger, which records when and in what volumes green energy financed on the platform was produced and supplied into the grid. At the moment, such accounting is based on instruments as paper certificates in a similar fashion to RECs.


Of the three potential use cases highlighted here,  the ones that manage the increasing complexity (trading market, generation balancing, and cybersecurity) of the electric grid are the most likely to occur near term.  Utilities are under increasing pressure to better manage their costs and engage their consumers. In a world where devices are connecting to our grid at an exponential pace, it’s both as possible and difficult as ever.



Last week, Slack announced it had reached a deal with Atlassian to acquire its Slack competitors Hipchat and Stride.  First, it’s important to note that as a part of this deal Atlassian made a small equity investment in Slack as well.  Imagine being so far ahead with your business that your competitor sold you their IP and also makes an investment.

While it certainly didn’t generate the headlines of the Slack / Atlassian deal, Facebook acquired Redkix as it looks to take on Slack, Microsoft, and Google in the battle for workplace integration.

Speaking of Google, they announced a new set of features including smart replies to both email and chat as well as grammar suggestions across all of their MS Office competitors. All of this on the heels of Microsoft making a version of Teams free even to those without an Office 365 account.

What does all of this activity mean in the context of our daily work lives:

  • The tools are being developed are the beginning of a movement to free us from the most mundane tasks of our workday
  • A change in focus from email and task completion creating value on a per employee basis

Why does it matter:

  • Industries like energy (47), real estate (48.4), and agriculture (47) all have workforces that are significantly over the national median age of 42.2.  These industries are all large contributors to our GDP and face an impending labor shortage crisis or a large transfer of knowledge to new employees.  Either way, software is going to play a large role.
  • Consumer expectations for industries like healthcare and energy are changing.  We now expect all companies to engage with us and service to be completed as quickly as possible. SaaS companies that increase the efficiency of problem-solving for consumers while making employees happier (employee happiness is correlated with customer engagement) will be big winners in these massive industries.

Three trends worth monitoring:

  • Can Google and Microsoft expand their footprint inside organizations outside of their 3-5 core products?
  • Will Facebook be able to gain market share as it focuses on expanding Workplace in the face of slowing US growth?
  • When will we see these SaaS companies play a role in determining the optimal organizational structure for the large industries that impact us every day but are in desperate need of renovation?

One thing is almost certain, this space won’t begin to slow down anytime soon.  Engaging and making employees more efficient is going to be big business.

Employees have more information and choices than ever, the best talent will go where they are valued more on their impact than email output.  On the other side of the coin, organizational efficiency drives the bottom line which is obviously a decision criteria for any company looking to onboard new software.

Yesterday, I had the privilege of attending my first AUTM conference after being invited by Kerri Smith of the OWL Accelerator in Houston.  The topic of my quick 10-minute talk was “Ethics in Flyover Ecosystems” and it was part of a broader discussion on “Ethical Challenges Facing Startups”.

From their website:  “AUTM is the nonprofit leader in efforts to educate, promote and inspire professionals, throughout their careers, to support the development of academic research that changes the world. AUTM’s community is comprised of more than 3,200 members who work in more than 800 universities, research centers, hospitals, businesses and government organizations around the globe. The core purpose of AUTM is to support and advance academic technology transfer globally.”

Among the speakers were me, Kirsten Leute, SVP for University Relations at Osage University Partners, and Charles Valauskas of Valauskas Corder LLC.

Kirsten used a term – mirrortocracy -to describe the practice of hiring only those who fit a certain profile for a position. It’s possible I’m late to the game with the term, but I definitely plan on using it moving forward as there are so many possible use cases.

Below are the slides I presented, plus an additional one at the beginning which I left out but spoke to in order to create a frame of reference for what can happen when investor ethics turn in entrepreneurs’ favor.  Once a “market” is created for common terms, it puts everyone on an even playing field which benefits all involved.

Universities have a huge role to play in developing startup ecosystems.  They produce ideas, founders, and affordable talent for startups.  They are taking ethics from faculty, students, and outside parties like investors and mentors very seriously.  I really enjoyed being able to play a small role in their process and to give our perspective on the issue.
Thank you Kerri and the AUTM team for having me!

Directionally correct startups could be considered successful depending on the amount of capital raised, but ultimately fail to live up to their potential.  For most, the pull of the market ends early and the next phase of growth requires precise allocation of capital internally.

Subsequently, growth expectations begin to outpace what funding alone can accomplish and a ceiling in valuation is created.  This leaves the company unable to raise more capital, eventually leading to an exit that leaves investors clamoring for what could have been.

My hypothesis is that there are several companies which are acquired for somewhere between $20-$50M that fall into the category of directionally correct (accurate), but did not operate with precision during their early days.

Accuracy (n): the degree to which the result of a measurement, calculation, or specification conforms to the correct value or a standard.

Precision (n): refinement in a measurement, calculation, or specification, especially as represented by the number of digits given.

I’m admittedly still in the early innings and need to see more startups at this stage before coming to a valid conclusion, but I want to have a few key points in writing for reference moving forward.  In no particular order they are:

1)  The difference between these two groups happens during the time period between traction and scale.  That is, 95% (or some number larger than 80%) of the time, scale happens when startups execute with precision in product and marketing after their initial customers are onboarded.

2) The first few customers – the early adopters – were going to love the product and be the easiest to find regardless of how well the company executed.  The result is a lower bar than what most of the market will consider “viable” in an MVP and marketing costs were artificially lowered by initial consumer demand.  Counterintuitively, acquisition costs will actually go up after the early adopter market is completely exhausted.

3) Startups that scale don’t over-estimate the fidelity of the data created by early adopters.  Instead, they create a framework for discovering core product value for users which will be key to both growth and preventing customer churn in the future as they enter new markets or segments.

4) Market size (need) is correlated to the length of time a startup has to build a scalable customer acquisition strategy which is more than finding a blended CAC.  Precise startups understand how to achieve a sustainable ROI and focus on LTV (ex. bookings) acquisition instead of purely growth metrics (ex. customer count).  For example, at CE we knew a customer in TX had a substantially higher LTV than one in CT and adjusted accordingly.

5) Precision is defined as a repeatable process in the most vital parts of the startup like sales, marketing, and product.  Often, investors talk about “playbooks” and this is where they really punch above their weight.  If the market is X then we do Y or if we do A then the result is B are powerful indicators of precise execution.  Chamath Palihapitiya highlights the importance of this in a talk on “growth hacking”.  During his time at Facebook, they discovered if a new user hit 7 friends in 10 days they were hooked and built product focused on hitting this metric.

6) Once a startup crosses this threshold, the solution will have seemed obvious. The reason, getting there requires measuring and testing over and over and in hindsight, it’s easy to feel the data revealed a straight-forward conclusion and to discount the decisions needed to arrive at the right answer.

I’m looking forward to having more opportunities to help growing startups bridge the gap from consistency to precisision in the coming years while measuring the level of truth in the insights to refine refine them moving forward.

Pitchbook has released a new study on startup ecosystems and a few things immediately stand out to me:

1) TX has anemic local capital per venture backed startup. It’s WAY behind states with growing ecosystems like Tennessee, Utah, Michigan, Missouri, and Colorado.

Some might argue the number is artificially low due to the angel ecosystem filling the gap, but outside of Colorado and Utah the states mentioned above have very minimal VC activity. Additionally, the number of startups receiving funding hasn’t proven this to be true, bringing me to my second observation.

2) TX seed start-up density (# of startups receiving seed funding / pop.) is low. TX’s number is around 15 – several states are ~20+. This makes sense given the above – seed rounds are often led by local investors, and if there isn’t enough capital then fewer ideas are funded. However, Texas does beat IL which is a surprise given Chicago’s recent success.

3) Unsurprisingly, the density gap between established ecosystems like CA, MA and NY really grows in early-stage and late-stage funding. However, the gap is MUCH wider than I expected. In some cases, TX trails states with more active startup ecosystems by 5X.

All of these things are evident on the ground and it’s good to see data backing up the assumption more capital is needed in TX. The report highlights the need for startups to seek angel / seed funding that really understands the fundraising process and has a network to connect them to follow on capital.

You can find the study here.

I had the privilege this week of participating in a panel focused on developing startup ecosystems as part of the ITTN Cross Border Technology Summit in Suzhou, China.

The spirit of the conference was to encourage entrepreneurs to think globally about their opportunity and build relationships outside of any and all comfort zones, including geographic ones.

One of the questions asked of the panel was “what is your role in helping your innovation ecosystem think outside of its borders?” Admittedly, it was a question I had to think about for a second.

The answer that came to me most naturally was we encourage our companies to think BIG with their vision. This may seem obvious, especially in dominant ecosystems like Silicon Valley and Shenzhen, where global market share is the goal.

However, developing startup ecosystems are often different and the majority of early funding is provided from angels who have made their wealth in practical, but successful businesses. These investors want to see business plans rooted in the fundamentals leaving little room for ambition. This starts a cycle where founders are encouraged to think smaller with their vision because it’s what local investors want to hear from them.

Yet, these two ideologies aren’t mutually exclusive – you can think big while having an eye on building a sustainable business in the long run. Big, ambitious thinking when balanced with intense focus is a powerful combination.

We always ask ourselves, “if we get lucky and everything goes right, how big could this be?” It’s important to remember that venture capital is a business of maximizing the ceiling, not minimizing the floor.

After the panel, an entrepreneur found me to say he’d faced this problem when starting his startup which focuses on early-stage colon cancer detection. Local investors had told him the dream was too big and the problem too hard, but he kept pushing and found funding elsewhere.

If you’re angel investing in ecosystems that are just getting started, I encourage you to challenge founders to think big. Without your encouragement, society might miss out on the next big breakthrough.


Today, Intelis Capital is excited to announce our seed investment in Wndyr ( \ ˈwən-dər \), a company providing operational clarity to businesses by helping them become more efficient with the tech stack they already have in place.

Socrates is credited with the quote “Wonder is the beginning of wisdom,” and we believe wisdom is exactly what Wndyr will bring to companies who have trouble understanding how they use software.  Below are just a few of the many reasons we are excited to welcome Wndyr to the team.

1) Claire and team

When I first met Claire, I was struck by her experience and clarity of vision when it comes to the future of customer success and change management.  However, I must admit I left our initial meeting a little unsure of what exactly Wndyr did but impressed with Claire.  Wanting to learn more and gain clarity around the product, I asked Claire to come by our offices and present to Jonathan and Kevin; fortunately for us, she accepted.  Over the next 8 weeks, we got to know Claire, her co-founder Tracey, and her team through both direct interactions and speaking with their customers.

Some of the words that were used to describe them: committed, best-in-class, listeners, curious, open to learning, determined, thoughtful and intensely passionate.  In the following weeks, we learned more about the state of SaaS and customer success from the team than I thought was possible. Their vision for the role Wndyr would play in the future of SaaS had us hooked, especially when we saw how they executed against the vision day in and day out.

2) The aging workforce in large industries is a rapidly approaching problem

Industry % of Workforce % Older than Median Age
Utilities 5.3% 7.11%
Real Estate 6.9% 4.69%
Finance 2.1% 4.98%
*US workforce = 154,000,000 people

Several of America’s largest industries are facing the challenge of an aging workforce leaving them with a shortage of employees in crucial roles over the next decade.  This raises four critical questions for those industries: how to capture the knowledge of workers nearing retirement, what skills gaps will be created, can those skills gaps be automated, and do the industries have software to handle the excess capacity of work that could be placed on the remaining workforce?

Unsurprisingly, we believe Wndyr can play a huge role in answering all four of these questions.

Additionally, the US isn’t the only country facing the pressure of an aging workforce.  In the UK alone, over 50% of the workforce in key infrastructure industries such as water, power, and transportation are within 10 years of retirement age.  Given these figures, it’s not surprising businesses in massive industries are seeking solutions to solve this looming problem.

3) Productivity is shrinking in large industries critical to the function of the macroeconomy

The United States, and the world for that matter, appear to have a productivity problem.  US productivity grew a measly 0.1% in 2015.  Perhaps more surprising, that is ABOVE average for both developed nations and the world as a whole.

A deeper dive into the US statistics shows that productivity growth is being dampened by a few of our largest industries which I’ve highlighted in the table below.  The defining characteristic of the industries listed here is they all lag severely behind in the adoption of technology.

These industries will likely be forced to evolve into more digitized businesses over the coming decade much in the way advanced manufacturing and ICT have in the last 5-10 years.  We believe a digital revolution is coming in these fields and tools like Wndyr will be required for deployment scale, speed and accuracy.

Industry GDP Share Productivity Growth (2005-2014)
Healthcare 10.4% -0.10%
Construction 5.2% -1.40%
Public Administration 16.3% 0.20%
*2016 US GDP: $18.6T

4) Businesses are now over-subscribed to and under-utilizing SaaS products

All businesses are now technology companies in one form or another and the result is almost all firms are inundated with an abundance of software that is being either underutilized or unnecessary.  We’ve seen a new wave of companies being built to help manage licenses, increase the likelihood of customer success, and provide analytics to the SaaS companies themselves much in the same way a Mixpanel or Optimizely do for websites.

Given that 1,000 new SaaS companies are formed each year, we believe this opportunity will continue to expand while forcing incumbents to better serve their customers to remain competitive.

The winner in this space will help end-users SOLVE the problem, not just manage it, while still helping SaaS companies perform at their optimal level.

We are proud to partner with Claire, Tracey and the rest of the Wndyr team as they help bring next-generation wisdom to companies navigating today’s cluttered and inefficient SaaS landscape.

Recently, the tweet below from Austen Allred has shown up on a few separate occasions in my feed. One of the responses was from Leo Polovets who is one of my favorite VC’s to follow both on Twitter and at his blog.

His reply led me to this post by another must follow for aspiring VC’s, Charlie O’Donnell, of Brooklyn Bridge Ventures, a pre-seed / seed VC firm in NYC.  Charlie knocks it out of the park on how to execute conviction and the signal it sends to founders as well as other investors so I won’t be attempting to duplicate something that has already been written.

However, I do want to touch on where conviction has manifested itself thus far for us.  As it turns out, conviction isn’t just making (or leading) investments others won’t.  Just as importantly, it includes having enough conviction in your own process to stick with the plan as a firm even when an investment feels like a potential opportunity.

This is a tough balance because it’s also important to remain open-minded to non-obvious opportunities.  It’s early for me, but I think these questions have proven important early-on:

1. Are you willing to pick companies when no one else has yet?
2. Can you stick to a thesis?
3. Will you pass even when a company looks like it could be a good investment?

The first point here is fairly self-explanatory, do you have the conviction to write a check even when others have passed or haven’t yet?  Here, I agree with Charlie, only writing checks when others commit is telling the market “I’m not smart enough to be doing this alone.”

Importantly, this adds more risk to the riskiest stage of VC.  The size of these rounds means there is no guarantee that you’ll be able to get into the round once a lead is established.  Investors who believe early and are willing to take the lead get the deals.

This is common in underserved ecosystems where the seed-rounds are in the $1-2M range. Typically, these rounds only have 2-3 investors comprised of a financial lead and 1-2 investors who write smaller checks but bring additional resources to the table.

Discipline is the sidekick to conviction.  Bearing in mind that opportunistic investments do happen, the challenge becomes remaining convicted in a thesis and/or strategy even when good (not great) deals present themselves.  This is especially when the time between investments is longer than expected or just starting out when the results of the process are to be determined.

As Ray Dalio wrote in Principles, “Maturity is the ability to reject good alternatives in order to pursue even better ones.”  Alternatives, in this case, come in two primary forms: thesis (what I would call industry for us) and stage.

We have two primary objectives at Intelis.  First, we partner with companies that are impacting the slow-change economy.  Second, we invest in the seed-stage meaning if we invest too late it’s possible we are diluted to the point where even a home-run could result in minimal cash-on-cash returns.

It’s common for us to see great businesses in industries where we have little expertise, or within our thesis but later stage preventing us from getting an initial share that makes sense.  It’s easy to fall in love with great founders and businesses, it’s extremely difficult to stay disciplined enough to pass when the fit isn’t perfect.

I’m hopeful our acute awareness of the damaging effects of distraction and indecisiveness from our time as operators continues to translate in this new phase.

Conviction and discipline are so important in practice because they play a large role in the most crucial decision in investing, actually investing.

When we first started thinking about starting Intelis, we found capital was readily available in the locations we wanted to focus. However, it was from angel investors who’d achieved massive success in other industries and most did not want the role of the investor of conviction.

To us, being an investor of conviction goes beyond the capital, it means working alongside founders to hopefully increase the velocity and probability of scale.  We strive to win deals based on founders believing we’re the best partner for them because they’ve found during the diligence process our passion for what we do comes through.

Pre-closing and during diligence we work with founders to set proper “market” legal and financial structures to ensure incentive alignment for all parties.  Often, this means touching on delicate, first-time subjects for them like founder vesting or setting up employee option pools.

However, we approach these matters with the sobriety they deserve and work diligently to make it clear we empathize with the founder’s experience. We encourage them to talk to other founders, investors, lawyers, and accountants to ensure them we have the success of future rounds in mind and aren’t setting expectations outside the norm.

Once we make an investment in a team, we’re all in and make them our first priority.  Post-closing we’ll provide a massive amount of operational, hiring, product and/or business development support. Our job is to support them to the fullest in any and all ways.  That can range from meeting with consultants, closing potential employees, sitting in on product planning, or working on engaging partners.  The goal is to help our companies grow and learn as quickly as possible which means their problems are our problems too.

There are many informal ways in which we engage with founders: text, Slack, Telegram, and calls at any time.  However, we believe the first institutional capital should go beyond the informal and create habits that engage the executive team with investors on a regular basis.  

This means we schedule regular stand-ups, something we greatly benefited from as operators, where we check in on progress and ask which part of the business we can be most helpful.   We understand this isn’t for everyone, so we tailor it to the founder in terms of structure, frequency (no-less than every 2 weeks), and length.

We’re also big believers of the board meeting even in the cases where we are the first outside capital involved.  They are typically very informal at the beginning and evolve over time.  However,  we think this habit accomplishes two major goals: 1) it allows founders the time to step away from the day-to-day and think more strategically at least once a quarter and 2) it sets a foundation for recording progress and process that signals accountability to the next institutional investor.

We understand that this kind of focus on process and involvement at the early-stage is different and often unexpected (if not tedious).  This is especially true during the diligence process, when it’s likely we dig deeper into a business than the founder has experienced up to that point and after when we try to set Series A expecations for internal processes.

However, we think the data suggests this kind of approach works and it’s important to know that our founders are always in control of the agendas and structure.  Time will tell if we are right, but we think founders crave a high-level of engagement from their investors and the results are better because of it.

One of the biggest challenges of building a venture capital firm is putting together a reputation from scratch.   When we first started Intelis, I naively believed that building a reputation would be as easy as blogging regularly and pointing people to the values statement we spent weeks crafting.  As with everything, it’s more about actions than words.

Reputation to Founders

Being in a second or third tier ecosystem is a double-edged sword.  Investors have a chance to be a real agent of change by acting in the best interest of a company and its future investors by constructing term sheets and cap tables that preserve the long-term incentive structure for founders to pursue maximum upside.

However, it’s common (often rightfully so) to have to clear additional trust hurdles with founders, as they may be used to dealing with investors less accustomed to partnering with high-growth startups

At Intelis, we strive to be value-added investors.  Admittedly, almost all VC’s claim to be value added in one form or another so the phrase carries little to no value at this point.  To add another layer of complexity to the conversation, not all additional value is equal.  Jonathan touched on this subject recently on our blog.

The question then becomes how to prove our team adds beneficial and relevant value to a fast-growing startup even before we invest.  We’ve attempted various ways to solve this problem by creating a pipeline of both talent and customers as well as joining team meetings during the diligence process to ensure both sides feel good about the potential fit.

Reputation to Other Venture Firms

The universal answer to the amount of capital needed to scale a startup rapidly is “more.”  Given this requirement, we connect as often as possible with Series A investors to learn more about the metrics and processes that make investments attractive to them.

We attempt to play a small part in the trajectory of our portfolio companies not only through the value adds discussed above but also by setting up regular board meetings for strategic planning and bi-weekly “standups” for tactical discussions.   Setting up these processes early on helps founders become accustomed to the accountability larger institutional investors expect.

Warren Buffet once said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”  I’m hoping the processes we’re putting in place today help us build a reputation that allows us to work with the founders and investors we admire.

I’ve decided to publish a list of books I’ve read in 2018 to remember a key point or two from each.   Since this will be a living post, my hope is that it will be a resource for me and hopefully a few others along the way.  Below is the list of books I’ve finished this year in reverse order.

21. The Systems Thinker – Albert Rutherford

This was a quick read and a little less technical than I had originally hoped.  My goal was to find a book that discussed Systems Thinking in practice instead of generalizing the major concepts.  It’s a great primer for systems thinking but does little to go in-depth.  The big lesson here: don’t focus too much on the little pieces, but instead the connections between them that create the bigger picture.  (AKA seeing the forest through the trees)

20. Think Twice – Michael Mauboussin

I’m not a huge fan of Mauboussin like others seem to be.  However, I enjoyed this book as I am reading on systemic thinking and biases right now.  Each chapter is a different bias and how it works in practice in the real world.  It’s worth the quick read and if anything will make you aware of the common biases that affect our everyday decision making.

19. Financial Intelligence – Karen Berman and Joe Knight

For one reason or another, I’ve always felt relatively weak when it comes to finance.  I think it goes back disliking the subject in school and thus avoiding it and working with people who were absolutely great at the discipline.  This book was a great if high-level, review of operational finance which is rare.  It wasn’t too technical nor too academic and had real-world cases with a refreshing lack of numbers for the subject matter.  Highly recommend if you are looking to brush up on finance.

18. The Truth Machine – Michael Casey and Paul Vigna

Much like all books that approach blockchain from a non-technical stand point, this book left me wanting more.  While the major point in the book are correct – energy, finance, healthcare, government can all be great use cases for the technology – there’s no deeper dive other than the very high-level insights.  I’m still waiting for the book that goes into the pros and cons of each proof of work, the scalability of each current technology platform, etc… that isn’t so technical I can’t comprehend it.

17. Regulatory Hacking – Evan Burfield

My favorite thing about this book is that it could have been formulaic, but Evan does a really nice job working anecdotal stories into the book to avoid falling into that trap.  The biggest takeaway here comes early in the form of “The Power Map” concept, which I think any startup would benefit from reading.  Other tips include selling into governments and other bureaucracies as well as navigating the different forms of influencers.

16. Thinking in Bets – Annie Duke

I was slightly disappointed by this book after it received a solid review by Marc Andreessen.  The first few chapters are really good and then it tails off from there.  The key ideas are great: thinking in terms of “Am I so sure about this I would put money on it?”, using confidence percentages over absolutes, and thinking more about the decision process than the outcome are all covered early.  From there, the book goes on to suggest strategies for putting those insights into action and becomes repetitive.

15. Made to Stick – Chip and Dan Heath

Two main concepts from this book to remember.  SUCCESs (Simple, Unexpected, Credible, Concrete, Emotional, Stories) and Curse of Knowledge.  The first concept is what makes ideas stick and the second focuses on why we don’t use each to make our ideas more sticky to others.  This is a great read for those focused on marketing or sales: i.e. everyone.

14. Everybody Writes – Ann Handley

70+ tips for better writing for everyone.  Because of social media and email, we are all writers rather we admit it or not.  Handley offers tips for all writers and some tips that are specific to the different types of writing.  Highly recommend for anyone looking to sharpen their writing skills.

13. A Guide to the Good Life – William B Irvine

I picked up A Guide to the Good Life after seeing it mentioned by several people on Twitter as a life-changing book.  While that is TBD, I really liked the Stoic concepts discussed in this book.  The biggest takeaway is splitting events into three categories: those we can’t control, those we can, and those we can impact but not control.  Eg. focus on preparing the best you can and don’t be upset if the results are not completely in your control.

12. Talent Wins – Ram Charan, et al.

I recommend this book on the “Critical 2 Percent” tactic alone.  Identifying the highest leverage employees is a no-brainer, but Charan and his co-authors take it to a new level by reframing who the 2 percent are.  (hint: it doesn’t involve titles or salaries)  The book is mostly focused on issues that affect larger organizations however, there are more than a few takeaways for any CEO regardless of company size.

11. Bad Blood – John Carreyrou

I really enjoyed “Hatching Twitter” so I wasn’t shocked that this book had me hooked from the first few pages.  I was amazed at the amount of dysfunction and incompetence that was displayed not only by Theranos but also by executives at publicly traded companies like Walgreens and Safeway.  To say the least, it was shocking.

10. Elements of Eloquence – Mark Forsyth

I was a bit disappointed by this one.  I expected a book that would be a guide to better writing and communication.  Instead, the book is a collection of several figures of speech.  I suspect they will be helpful as a reference moving forward and I will keep the book handy for future writing.  One great thing about the book, Forsyth is a great writer who kept a potentially boring subject from being dull.

9. Skin in the Game – Nassim Nicholas Taleb

My reading slowed down a bit in March & early April, but I did get to finish SITG.  For me, this was NNT’s most readable book yet.  I particularly enjoyed the Intellectual Yet Idiot (IYI) chapter, though I’m now very concerned with avoiding becoming one myself.   One of the more memorable insights from the book was that rigorous, well-executed research that is contradictory should be given special consideration, especially when the person conducting it has skin in the game.  This feels like a great analogy for venture capital, especially at the seed-stage.

8. The Black Swan – Nassim Nicholas Taleb

I re-read The Black Swan due to the fact that I didn’t think I fully appreciated the thinking behind it and in preperation for Skin in the Game also written by NNT.  I won’t spend too much time reviewing since this book has been thoroughly discussed online.  However, I encourage everyone to read this and other books that shed light on our biases and provide the reader with new huersitics for problem solving.

7. Blockchain Revolution – Don and Alex Tapscott

This book is probably a great read for those just starting to learn about blockchain, but if you know anything about the technology it’s likely too much of a beginner’s read.  I was already familiar with how the technology works at a very high level and the potential use cases.  Something I’ll likely write about later on that comes from a concept in this book is how will blockchain impact our workforce, particularly middle management.

6. Reset – Ellen Pao

It’s impossible not to feel for Ellen’s journey in Reset, and her passion for inclusion and lasting change is evident.  I also couldn’t read this book and take a side since it is from one perspective but I do recommend everyone read it.  We could all do better by learning about our conscious and unconscious behaviors which prevent the very best employees from rising to the top regardless of gender, race, or religion.

5.  Sapiens – Yuval Noah Harari

It’s hard to classify this as the best book I’ve read this year because they’ve all been fairly different, but in terms of writing style and readability, Sapiens is hard to top.  I likened Harari’s writing style to that of Carolo Rovelli but for social anthropology.  He takes an incredibly complex subject and makes it extremely enjoyable.  The book is exactly what it says, “a brief history of mankind” and puts into perspective just how insignificant we really are as individuals.

4. Powerful: Building a Culture of Freedom and Responsibility – Patty McCord

Patty McCord is best known for her role as head of HR at Netflix and the corresponding Netflix Culture Deck.  The book does a great job of highlighting the counter-productive nature of today’s HR and examines why companies don’t treat HR problem-solving in the same way they would product or marketing despite how well those strategies work.  My favorite insight from the book came in the form of resource allocation when it comes to salaries.  Most companies are either competitive with compensation or not, regardless of position.  Compensation doesn’t have to be a zero or one problem, startups can compensate the positions they most need well, while paying close to market rates in positions where top-level skill is not needed.

3. Man’s Search for Meaning – Viktor E. Frankl

A powerful book that I was convinced to read after seeing so many successful people recommend it in Tribe of Mentors.  I won’t spoil the one true freedom every man has, but needless to say, it had a big impact on the way I think about things.  I’m not sure there’s a book I’ve read that packs more punch in just a few short pages.

2.  Tribe of Mentors – Tim Ferriss

A quick and skimmable read. Tim asked the same 10 or so questions to a variety of extremely successful people and then put the best answers here. I read most of the interviews but certainly skipped over about 1/3.  The format of the book makes it quite easy for the reader to determine which interviews are worth reading and which may not be applicable.  This book will be a resource over time, especially when it comes to skills like being more diligent with my schedule and for exploring new books.

1.  Principles – Ray Dalio

A must-read for any business professional.  While most of us probably have a loosely defined set of values and norms, Ray has codified his after 30+ years in the investing business.  He encourages the reader to only take the principles they feel apply to them and create their own set of principles.  We could all heed Ray’s advice to be more cognizant and accepting of what we don’t know while being more focused on achieving success rather than appearing successful.

Last week I tweeted what I believe to be one of the best personal growth hacks for anyone looking to advance their career at an accelerated pace.  Find a mentor that is 2-3 steps ahead, which is about 24-36 months, but on a similar career path.


1) Their experience will still be relevant.  The best practices and advice they offer will still be current.

2) They are far enough removed to have seen results from the key decisions you are currently facing or will be soon.

Naturally, the question of “how do I make this happen?” came from one of my followers.  So I thought I’d answer it here in more detail.

Be authentically curious –  One of the best things about working in a startup is the opportunity to interact with multiple co-workers in different functions of the business on a daily basis. I was able to learn about engineering, finance, and marketing just by making it a priority to engage with our team.

I learned early to ask people what surprises them most about our business and what I should look out for in the future. This helped me understand how people thought, reduced my naivete of building a startup and increased my empathy for others which in turn created deeper connections with my co-workers.

Be a magnet for knowledge- Read, write, listen to podcasts, and take online courses to enhance your knowledge base.  The most important thing I came to realize was how little I knew.

However, others tend to take notice when you are learning new skills and attempting to put them to use.  I was naturally given new tasks because I’d learned some simple code or wanted to apply a concept I’d heard or read about to our business.

Give back 10:1 and expect nothing in return- Try to help in every way possible and expect nothing back.  Invest in other’s success and they’ll invest in yours.  Mentorship is no different from any relationship, it’s a give and take.  Attempt to give more than you receive and never expect the return, the right mentor will always repay the favor.

Be someone’s right hand- Find someone and be their go-to for everything possible.  I did this with my bosses and it paid off.  My job became very simple, to make other’s easier.  This helped me gain insights into processes and decisions that I would never have gotten otherwise.

Say yes a lot- This is the opposite of how I have to operate now, but as an operator who aspired to grow into new roles, I said “yes” to almost everything that was asked of me.  This doesn’t just pertain to high-level, “fun” work.  It may mean working 25-50% more, but the pay off is worth it.

Always ask to be challenged – Speak up and ask for the tough assignments.  You’ll get a shot you don’t deserve and you’ll have to make it happen by asking for help.  Asking for help is one of the best ways to connect while learning from those who have skillsets that are complementary or more advanced.  Asking to run the B2B platform at Choose is still what I consider to be one of my bigger breaks.

It’s important to remember that mentorship is a two-way street and not everyone will have the bandwidth or desire to be a mentor.  However, the steps I took above made me better regardless and at the end of the day, that’s was my real goal.  The right people will take notice and when they do it’ll be like adding a multiplier to your career.

In October, we published The Operations of Fundraising (Part 1 and Part 2).  One small section of the series covered how to identify the best potential investors for your startup.  These posts covered the basics like:

1) Average check sizes

2) Industries of interest

3) Understanding fund lifecycles

4) Portfolio construction

5) Building an investor funnel

With all of the revelations coming from Silicon Valley, it’s more important now than ever to research investors more deeply. The last thing any founder wants to do is give influence to an investor who creates more problems than they help solve.

There are two simple, but important, questions that can be answered just by checking a few references.

Are they good partners?

It’s always a smart move to ask potential investors to speak with the founders of their portfolio companies.  However, similar to reference checking employees, it’s important to call the references that aren’t on “the list”.

Don’t be afraid to find the companies they’ve turned down. The incentive to complement a current investor is high, while companies that have been turned down can sometimes provide better insight into the process.  Other avenues for vetting include lawyers and accountants that have worked with the investor in the past.

Obviously, firms that have been turned down by the investor could have a potential bias.  However, the quality and transparency of the interaction is often a leading indicator for decision-making and integrity which become crucial when faced with the inevitable challenges of a growing business.

I’m not suggesting that checking investor references should be only about finding negatives, but it’s important to get a sense of what a future partnership could look like.  This requires having a sense of both strengths and weaknesses of potential investors.  The more information the better.

How will they add value?

Capital is a commodity.  Early-stage startups should look for investors with operational experience.  Find investors who know how to build a team, product, or help with business development; things like finance often rise to importance later on, and even then operational finance still takes precedent.

It helps to know what your needs are, and what parts of the business are easily outsourced without sacrificing quality.  The only exception is when the investor will add value simply by association.

Pay careful attention to what’s not said by CEO’s of portfolio companies when attempting to answer this question.  If the investor has added value regularly and in a multitude of ways, it’s likely the CEO can offer specific examples of when they really made a difference.

Referencing is often tough and time-consuming which likely explains it’s not done more often.  However, learning the strengths and weakness of anyone who will play a major role in the company including investors is well worth the time.