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CoFounder Weekly (January 18, 2019)

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CoFounder Weekly (January 18, 2019)

Unicorns or Zebras?

Greg Kubin
Jan 18, 2019
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CoFounder Weekly (January 18, 2019)

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CoFounder Weekly is a newsletter about startup life. Sections: Tweeter’s Digest, Crossword Puzzle, Founder Stuff, Investor Stuff, Asks & Offers, Weekly Thought. This is not your average newsletter (could be better or worse).

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EDITOR’S NOTE

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If you're the helpful type, we'd love if you could forward this to just one friend this week. It's reaching more awesome readers like you that makes this all worth it.

THANK YOU! 🙏


By: Tanaka Tatsuya (click here to watch GIF)


TWEETER’S DIGEST

Twitter avatar for @scottbelsky
Scott Belsky @scottbelsky
thinking: extraordinary outcomes seldom result from an ordinary path. And yet, we still obsessively look for patterns and leverage proven playbooks. Beware of too much confidence from familiarity...
7:49 PM ∙ Jan 14, 2019
100Likes20Retweets
Twitter avatar for @callmevlad
Vlad Magdalin @callmevlad
The future of startups is: • More remote • More transparent • More community driven • More asynchronous • More profitable • More balanced • More human • More kind • More fun
4:02 PM ∙ Jan 14, 2019
2,315Likes481Retweets
Twitter avatar for @ryaneshea
Ryan Shea @ryaneshea
Today I learned: The body differs in its ability to shift its clock backwards (1 hour / day) and forwards (2 hours / day). Put another way, traveling 3 time zones east takes 3 days to adjust but traveling 3 time zones west only takes 1.5 days.
12:28 AM ∙ Jan 15, 2019
83Likes17Retweets
Twitter avatar for @relatableboss
Denali Tietjen @relatableboss
Rule #1 is you can’t walk into a meeting late holding a Starbucks cup
11:38 PM ∙ Jan 14, 2019
20Likes2Retweets
Twitter avatar for @Kpaxs
Thibaut @Kpaxs
“A bird sitting on a tree is never afraid of the branch breaking, because her trust is not on the branch but on it’s own wings.” — Unknown
5:43 PM ∙ Jan 14, 2019
280Likes86Retweets
Twitter avatar for @ohadsamet
Ohad Samet @ohadsamet
Kinda lost. Do I microdose LSD while intermittently fasting and raising VC to hire the incredible talent in every position? If I enter ketosis while delighting customers is that polyamory? Clue me into current SV must-do
5:39 PM ∙ Jan 16, 2019
Twitter avatar for @jackiehluo
Jackie Luo @jackiehluo
reading between the lines of someone's bio in sf: "led marketing early at [hot startup]" -> interned for a summer, there was no one else on the team "built [super well-known product]" -> thousands of people worked on it "attended harvard" -> took a class in the extension school
2:02 AM ∙ Jan 15, 2019
198Likes7Retweets
Twitter avatar for @msg
Michael S Galpert @msg
I’m still surprised they didn’t go with WeWoke
5:29 PM ∙ Jan 16, 2019
Twitter avatar for @N_Sportelli
Natalie Sportelli @N_Sportelli
marie kondo but for my 26 browser tabs
11:53 PM ∙ Jan 15, 2019
968Likes199Retweets
Twitter avatar for @libovness
Jonathan Libov @libovness
Remember: Every time you misidentify a traffic light in a Captcha, a self-driving car hits a pedestrian
6:36 PM ∙ Jan 4, 2019
18,487Likes5,268Retweets

CAPTION CONTEST

Last week’s contest: describe this scene in only SIX WORDS. Best caption wins a prize and gets printed in next week’s edition.

Winner: “Cracked perhaps... at least no notch.” - Benny Rubin, Brooklyn NY

Runner-up: “Catflix and purrrrr”- a mouse inside my LES apartment

2nd Runner-up: “When the devs take a break”- Sarah McCullough


FOUNDER STUFF

Would you rather be a Unicorn or a Zebra?

This past week there was A LOT of noise around the harsh realities of VC funding sparked by this NYT article. This is a cauldron of mixed opinions that has been waiting to boil over.

Taking VC money is very alluring. However, recent discourse has brought attention to a swelling counter movement of those who are squarely against VC’s main investment thesis — shoot for the moon or die trying.

I empathize with the VC grudge. Startup founders are filled with hopes and dreams of the luxuries that come with VC funding. We daydream about different variations of our hiring plans — the army of engineers to ship, ship, ship and the sea of salespeople who will sell, sell, sell. Dreams of rocket ships and unicorns. 🚀🦄

Twitter avatar for @dmitry140
Dmitry Shevelenko @dmitry140
@semil Receiving VC investment has become one of the most powerful status signifiers in our society. Even if you don’t want VC money & the attached strings, we all chase status in our own ways. Hence the tone of resentment that permeates the NYT article.
7:42 PM ∙ Jan 12, 2019
26Likes1Retweet

The hard truth is that most companies don’t get funded. For every FUNDING SECURED celebratory tweet you see, there’s an iceberg of broken dreams whose dreamers are left looking for different paths.

The reasons to hate on VC are numerous: opaqueness of their decision making (who knows what goes on in those partner meetings, we all wonder), lack of diversity in funded founders (the meme of the white male founder in khakis, gingham, and Patagonia holds water), and sometimes questionable ethics and excess (#metoo #cuddleparty).

Despite all the shade being thrown, the retort from VCs is clear and unified: VC money isn’t appropriate for most companies, taking VC money comes with serious trade-offs and expectations, VC money is a massive gamble for all parties (investors and founders), don’t take VC money if you aren’t 100% committed to building a unicorn or dying trying.

Twitter avatar for @joshk
Josh Kopelman @joshk
Motorcycles are common (2018: Honda sold 18M motorcycles) Jet planes are rare (2018: 806 Boeing planes) VCs sell jet fuel, which doesn't work in motorcycles Bad stuff happens if VCs push jet fuel on a bike owner. Or if a bike owner thinks they can fly. https://t.co/cubYfKksGP
3:59 PM ∙ Jan 11, 2019
1,189Likes335Retweets
Twitter avatar for @bgurley
Bill Gurley @bgurley
100% agree with this article, & have voiced this opinion my whole career. The vast majority of entrepreneurs should NOT take venture capital. Why? Article nails it: it is a binary "swing for the fences" exercise. Bootstrapping more likely to lead to individual financial success.
Twitter avatar for @eringriffith
Erin Griffith @eringriffith
Here it is! After years of VC-worship, startups are rejecting venture capital and exploring other ways to grow their business: https://t.co/0E0R1B1uuv
4:05 PM ∙ Jan 11, 2019
2,406Likes562Retweets
Twitter avatar for @fcollective
Founder Collective @fcollective
The Warning Label That Should Come With Venture Capital https://t.co/N1AjigAhHy
Image
Image
Image
Image
2:34 PM ∙ Jan 7, 2019
8Likes3Retweets

The hard truth is that VC are a very specific kind of investor. They only bet on companies they think can result in >$B exits and they’ll push their portfolio companies to get there or die trying.

Twitter avatar for @speechu
Sundeep Peechu @speechu
1/ Most people don’t intuitively understand venture power laws. Let’s say you raised a $100M fund that invests in 30 seed companies. For simplicity, assume you invest $1M and get about 10% and reserve the rest for follow ons.
3:01 AM ∙ Jan 12, 2019
356Likes92Retweets
Twitter avatar for @speechu
Sundeep Peechu @speechu
2/ A third of them will likely return zero. Another third will likely be money back. Most of the returns are from the top ten companies. Assume that there is no unicorn - 3 are $500M exits, another 3 are $250M and the rest 4 are $100M.
3:03 AM ∙ Jan 12, 2019
31Likes10Retweets
Twitter avatar for @speechu
Sundeep Peechu @speechu
3/ Assuming 10% ownership, that’s 3* $50M + 3* $25M + 3* $10M = $225M. Add another $30M for smaller exits and you haven’t even broken 3x gross return for the fund.
3:05 AM ∙ Jan 12, 2019
35Likes10Retweets
Twitter avatar for @speechu
Sundeep Peechu @speechu
4/ It’s hard to return 3-5x if you don’t have big outliers, hence the focus on very large markets and companies willing to go all the way.
3:07 AM ∙ Jan 12, 2019
62Likes11Retweets

Or as Jason Calacanis put it:

VCs give you the money to take a shot at changing the world. Most of the time it doesn’t work out and that’s OK because when it does work out the world’s greatest companies are built.

The ironic twist is that founders are partly to blame. Founders have been putting steady pressure on increasing valuations and thus lowering average VC ownership, which has gotten us to this place where VC’s need a grand slam to make their math work.

Twitter avatar for @teddiew
Teddie Wardi @teddiew
@danprimack Also founders want to raise money at really high valuations in early stages, but then complain that VCs require unicorn level outcomes..
5:11 PM ∙ Jan 11, 2019

As Bryce from Indie.vc put it

Twitter avatar for @bryce
Bryce Roberts @bryce
@danprimack Unicorns ate seed investing.
4:52 PM ∙ Jan 11, 2019
33Likes2Retweets

For you founders who don’t want to be a hollywood-star-unicorn and would be perfectly content building a real Zebra that bleeds black…

Twitter avatar for @semil
Semil @semil
Re NYT on seeking alternatives to VC, gots lots of DMs from VC. With permission, this stuck out: “VC is a very narrow asset class that has helped some people create outsized wins, wealth, fame, impact. So lots of people want that. Like going to Hollywood & wanting to be a star.”
6:16 PM ∙ Jan 12, 2019
284Likes24Retweets
Twitter avatar for @DavidSpinks
David Spinks @DavidSpinks
@Jason @hunterwalk @eringriffith The truth is not all founders want the current VC model. They’re looking for options that fill the gap. It’s an opportunity innovative investors will fill.
8:25 PM ∙ Jan 12, 2019

Here is a list of all the alternate sources of funding we could find:

PDF: https://www.dropbox.com/s/t8dcqjnmulsorwb/VC%20Alternatives.pdf?dl=0

What do you think? Unicorn or Zebra?

*****

The Ultimate Guide to Remote Work (LINK).

*****

Twitter avatar for @gRamblings
Gautam Gupta @gRamblings
Loved this - from Lazlo Bock’s Work Rules: “Default to open... Assume that all information can be shared with the team, instead of assuming that no information can be shared. Restricting information should be a conscious effort, and you’d better have a good reason for doing so.”
5:23 PM ∙ Jan 11, 2019
5Likes2Retweets

CROSSWORD: UNICORN GRAVEYARD

Do the crossword here: http://cofounder.life/

👉 See the rest of the crossword puzzle here: http://cofounder.life/


By: Sunday Sketch


INVESTOR STUFF

“Measuring the impact of VC Platform Strategy” articulates the difficulty in measuring how investors can add value (LINK). It includes a nifty chart that lays out all the ways investors can add support their portfolio companies though recruiting, networking events, programming, recruiting, etc. But it can be hard to measure.

Twitter avatar for @jasonlk
Jason ✨ 2️⃣0️⃣1️⃣9️⃣ ✨ Lemkin 🦄 @jasonlk
Many of the best VC firms are full-service firms Many of the best VC firms are almost zero-service firms Who knows
5:43 PM ∙ Jan 16, 2019
155Likes19Retweets

But how can founders/doers get support if they aren’t affiliated with a VC with a platform? We’re interested in offering ways to support founders (hence the experiment of our “Ask and Offers” section).


OVERHEARDS

“I can’t make a two year commitment. We’re a startup and may not exist then”. - guy wearing Allbirds, Bonobos, and Warby Parker glasses at WeWork (Flatiron, NYC)

“Do people still, like, buy magazines?” - Ace Hotel lobby (NYC)

Hit reply and send us your favorite overheards or funnies and we’ll include them in next week’s newsletter!


ASKS, OFFERS & EXPERIMENTS

Ask: Looking for freelance graphic designer for designing sales and marketing collateral, sales decks, brochures, etc. you’d highly recommend for a temporary project? - Karthik Sridharan

Ask: Looking for interesting food tech PM roles. Know anyone hiring? - Matt Newberg

Ask: Looking for funny writers and illustrators in tech who want to contribute to CoFounder. Got LOL? - Greg Kubin

Offer: First Round is hiring a Chief of Staff in SF

Offer: Hazel (AI Coach for Managers) is looking for their first sales hire. If you know anyone who’s looking for a new chapter in 2019 who might be a fit, have them email wisam@hazelhq.com. 

Offer: Got any Asks or Offers? Things like cool job opps, asking for feedback, etc. Send them to us and we’ll include it in an upcoming newsletter 🤳🏾


By: Ivan Ehlers


Weekly Thought

Will Baxter was $30k shy of his Kickstarter goal to fund an eco-friendly consumer products brand.

In search for inspiration, Baxter recalled a Will Smith interview . The actor claimed he worked so hard that he was not afraid to die on a treadmill.

Baxter took the concept literally to create a genius fundraising campaign: he would livestream himself walking on a treadmill until he raised the necessary funds.

He bought the domain dontletwilldie.com.

50 hours and 26 minutes later, Will raised $28,411.

This was in 2011, before social media and livestreaming is what it is today. I wonder how much someone could raise with a similar initiative today.

(H/T to CoFounder Weekly reader MJ Coren for sharing the story over drinks at Diamond Lill)

- - - - - - - - - - - - -

Hugs,

Greg & Wisam

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