Category Archives: Random

Four Deltas: a framework for communicating the impact of coronavirus on your business

I’ve received a lot of communication from founders about the impact of the recent epidemic on their business – some informative, some lackluster. Based on what I’ve seen, I created a rather simple framework to help founders communicate the key pieces of information that an investor (current or prospective) would want to hear.

I call it the Four Deltas.

The first two Deltas are the impact of the market on your business (outside of your control) in the short and long run. The second two Deltas are the impact of your actions on your business.

The First Delta (Δ₁) you need to communicate is the immediate impact of the current environment on your business – either positive or negative. This should start with hard numbers that can be measured. For example, you could start by looking at global (or local) changes in consumer spending specific to your industry, and then highlight the changes in your own KPIs. Each of these Deltas is multifaceted, and an important exercise is considering what few key numbers are most important to an investor.

The Second Delta (Δ₂) is the expected bounce back as things open up and return to “normal”. This is your opportunity to communicate your expectations around the future market dynamics of your business, including how long you expect this to last (should be a range), and relevant behavior changes that you expect will stick. Investors are thinking especially hard about the Δ₂ of business that are seeing sudden growth. For example, the Δ₂ of toilet paper should be equal to Δ₁ – meaning people will buy the eventually buy it at the same rate as they did before. For many industries, the Δ₂ is debated, such as for travel (will people travel the same as they did before?) and remote work (will people go back to the office?). I like Fred Wilson’s suggested baseline of expecting Δ₂ to be 50% of Δ₁ (article). Communicate to your investor your viewpoints on the Δ₂ of your business.

The Third Delta (Δ₃) is the impact of your actions on Δ₁. If your Δ₁ is positive, what are you doing to take advantage of the sudden growth? Considerations around this include the robustness of your infrastructure to handle growth, managing increased burn with fundraising expectations, and sensitivity in communicating positive news. If your Δ₁ is negative, what are you doing to survive? This should include everything from your cost cutting efforts to your fundraising plans. Don’t forget – people are here to help, don’t hesitate to ask for help.

The Forth Delta (Δ₄) is the impact of your actions on Δ₂. This is an opportunity to communicate your ability to strategize for the long-term. If your Δ₁ is positive, you want to communicate to investors how you are planning for the inevitable bounce back, and what you are implementing to minimize this – such as measuring and improving stickiness of your product. If your Δ₁ is negative, this may not be as important – people just want to know you’ll survive – but this is a great opportunity to paint a picture of what you’re doing today, to be one of the few survivors that sees an explosion in growth as things open back up.

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Take a moment to review how you’ve communicated to your investors thus far and make sure you’ve touched on each of these. This is your opportunity to show investors your thoughtfulness as a founder.

If you liked this, maybe follow me on Twitter @yoheinakajima.

COVID-19 discussions for emerging GPs #OpenLP

I continue to be amazed at the content available for emerging GPs. This month, the content comes in the form of blog posts, but also zoom webinars and live audio talk shows.

I first heard Beezer Clarkson from Sapphire Ventures being interviewed on Semil’s Talkshow (listen here) on March 11th.  It was right after on Mar 14th that Samir Kaji posted his article “What I’m hearing in venture right now“, where he touches on fundraising for both startups and VCs. The next day he posted an article specific to Micro VC funding. Two days later, Lo Toney from Plexo Capital did his version of the Sequoia Black Swan article, but for GPs: The Economic Impact of  Coronavirus: What GPs Need to Know. Another two days later, Jim at SVB hosted a Zoom webinar:  Fundraising for Emerging VCs Post-Coronavirus, where he interviews three LPs – Joanna Rupp at University of Chicago, Michael Kim at Cendana, and Lindel Eakman at Foundry Group. I also enjoyed Michael Kim being interviewed on Strictly VC (here – Mar 20) and found Samir’s Emerging Manager Q&A mailbag from March 23rd a nice deep dive. Finally, Connie Loizos at Techcrunch shares wisdom from experienced GPs like Charles Hudson from Precursor, Eva Ho from Fika, and Aydin Senkut from Felicis: ‘A perfect storm for first time managers,’ say VCs with their own shops.

I know that’s a lot, so I’ll summarize a few take aways:

  • It’s a great time to invest. Great startups are founded during recessions. Congrats if you have dry powder.
  • Fundraising will be tough for GPs, especially new ones. Considerations for LPs include general uncertainty, desire for liquidity, allocation (esp. institutional), returning funds, and lack of in person meetings making it tough to build trust.
  • For existing funds, an important time to support portfolio companies, communicate with LPs (esp. around expected capital calls and distributions), and review reserve strategy (eg. what percent of your companies need help, and how many can and should you support if they need a life line).

Change is slow

When looking to permanently change the physical shape of hard materials, it often requires an additional ingredient to be added first (eg. heat, water), then you work the material slowly and gradually, and finally let it rest. If you skip adding the necessary ingredient, work the material too fast, or don’t let it rest, it can break or bounce back.

I often think about how this applies to all forms of change, whether that be in self improvement or social culture.

When I feel impatient about something changing, I remind myself that slow change tends to be more permanent.

Launching askanything.vc – a search engine that only shows results from trusted VCs

When asked questions by founders, I often send them articles from VCs who’ve said it better than I could. I always wished there was an easy way to search just content from blogs by VCs.

When James Augeri told me about his new startup Jingle last Thursday, I asked if he could help set this up, and we did it in a weekend! What’s more amazing is that our Thursday call was the first time we ever talked, after connecting on the Techstars Connect platform online.

This is a true #domorefaster #givefirst project.

Without further ado…

We’re excited to share askanything.vc – a search engine that only shows results from trusted VCs like Brad Feld, David Cohen, and Fred Wilson.

It’s great for searching startup terminology like “option pool”, “founder compensation”, or “valuation”. Check out some of the industry based searches that show interesting results like “autonomous vehicles” or “blockchain”.

No matter what you search, the results are only from a list of 100 or so VC blogs we’ve indexed for this search engine.

We hope founders and VCs alike find this a helpful tool to quickly find trusted information when they need it most.

Tweet us with questions or comments!

Graduation Rate of Seed to Series A in Major US Cities

I randomly became curious about the graduation rate of startups from seed round to Series A round, specifically around the context of cities. I thought this might actually be more interesting to look at than total $ invested, or total number of rounds.

For the analysis, I looked at 6 major cities: SF, LA, Seattle, Boston, Chicago, NY.

I used Crunchbase data to pull all startups who raised a seed round in 2014, 2015, or 2016. I picked these years pretty randomly, but mostly because it felt recent enough, but not too recent.

I defined graduation rate as raising a Series A, anytime between their seed round and today.

Total companies in this list were 5114, with an average graduation rate of %20.3.

Here’s the chart:

Interestingly, Seattle and SF are leading the pack. LA was significantly lower.

Not sure why, but it’s interesting to see this.

Creating Wealth Through Sustainability

In 2017 alone, Bitcoin created massive value for early investors in it – billions of dollars. This made me think – did Bitcoin really create that much value for society? Where does this wealth come from? Can wealth be created?

Or is wealth a zero sum game? My gut says it is.

I leaned on my trusted friend, the internet, and found some good arguments for why wealth is not a zero sum game, that wealth grows – but I found this leaned on two basic premises, that wealth is perceived, not material, and can only be acquired by humans.

Let’s talk about perception first.

One argument for wealth creation goes like this. I have two eggs and you have two apples. We’re likely to trade because I value one apple (which I don’t have any of) more than one egg (which I have two of), and vice versa. Argument goes that wealth is created through this trade on both ends.

Another argument goes like this. If I paint a beautiful painting, you’re likely to pay more for it than if I were to simply sell you the paint and canvas. Thus, I must be creating wealth through my skills.

In both cases, there is no increase in material wealth. In the first case, we start with and are left with two apples and two eggs. In the second case, we start with and are left with paint and a canvas. That being said, there’s no question that perceived wealth does increase.

Now let’s talk about wealth only being acquired by humans.

One argument for wealth creation goes like this. If I walk into a park and find a beautiful rock, pick it up, and take it home, I’ve created wealth. While if you look at me alone, or human society as a whole, I’ve indeed created wealth, but the idea that I’ve actually created wealth assumes that the park cannot possess any.

Another argument is a little more complicated, but goes like this. I’m a farmer, and I start using pesticides that increases the yield of my crop by 20%. This increases wealth as I’m able to feed more people with the same amount of work. I’m not going to pretend I can quantify the value of life to an individual insect, the value of the insect to a frog, or the total effect of pesticide creation on who knows what, but simply stating that I’m creating wealth through increased yield by using pesticides doesn’t sit well with me.

My argument is that if you look at wealth as material, not perceived, and if wealth is not just acquired by humans but can be acquired but all entities, then wealth may very well be a zero sum game. Wealth, like mass, can neither be created nor destroyed – simply altered in form.

The reality though, is that wealth is perceived. The value of an object, physical or digital, is the value we as society place on it.

Perhaps, though, when we use words like wealth, we might consider it as something not only acquired by humans, but by all entities in the universe and the universe itself. This might encourage us to recycle more, eat organic food, and value (or at least consider) sustainable activities not often associated with wealth creation.

Venture Capital News – May 19, 2017

AngelList is funding the minor leagues of venture capital (and giving founders $500,000 to start)

AngelList continues to disrupt the venture capital industry. Here’s how they are turning operators into venture capitalists.

Here’s how likely your startup is to get acquired at any stage

Survival rate and acquisition rate of startups based on fundraising round.

There’s no shame in a $100M startup

Looking at exit values of companies founded previously by today’s top VCs.

Startups, you must raise this much to join the 1%

Percentile curve of total US startup funding.

Venture Capital Partners Strike Out on Their Own

A list of partners from well known VCs who are launching their own funds.

20-somethings managing millions: How venture capital is changing

Looking at the trend of younger VCs.

The Ying and Yang of Love and Hate

I’ve read a lot about love and hate these past few days, as if one is good and the other is bad. Love and hate, however, are two sides of the same coin.

If you hate globalization, you probably love your country. If you love Hillary, you probably hate Trump. If you love love, you probably hate hate.

Hate has a place in this world though. I hate intolerance, you probably won’t judge me for that. I hate unfairness. I also hate when people hate the people who hate the things they love, because that’s intolerance.

We all have different backgrounds that lead us to love and hate different things. I have my opinions on what is good and bad. What I love is good and what I hate is bad.

Are you any different? Is anyone any different?

Stand for what you believe in. Lead by example. But don’t forget to be tolerant, especially of those who believe in different things than yourself.

Balance

Be visionary, yet practical,
liberated, yet grounded,
efficient, yet patient,
organized, yet flexible,
confident, yet humble,
curious, yet content,
critical, yet positive.

100+ Practical Cognitive Exercises

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I use the term cognitive exercise to encompass all activities that “exercise” the brain, including meditation, self-hypnosis, and diary-writing.

The brain is a like a muscle, or a collection of muscles, just like your body. Similarly, you have to train these different muscles with exercise. There are many parallels between physical and cognitive exercise. You have to do it often. You want to hit all the muscles. There are a variety of ways to do it, some will work better for you, others will not. You need to consider your goals and choose the appropriate exercises. There’s a difference between doing it alone and with other people. The list goes on.

I’d like to share with you 100 practical cognitive exercises to strengthen your brain.

Some are quick and easy, some will take a little more time and effort. Some are specifically designed to exercise parts of your brain. Some are things you already do, and for these, just approaching it as a cognitive exercise and tuning into how it effects you amplifies it’s effect. Sounds simple, but it works.

  1. List out things that help you de-stress.
  2. Think about what you want your life to look at in 5 to 10 years.
  3. Think about things you have that others don’t and say thank you.
  4. Exercise
  5. Meditate
  6. Listen to music
  7. Breathing exercises
  8. Stretch
  9. Yoga
  10. Eat. Are you hungry? Feeding your brain is just as important as using it.
  11. Eat indulgently. Something that makes you happy. Ignore health.
  12. Talk to someone you love.
  13. Talk to a family member (you don’t have to love them).
  14. Talk to a relative. (not parent, child, or sibling)
  15. Talk to a semi-close friend.
  16. Think about how when you’re stressed, it’s a chemical reaction. You can mentally separate the feeling of stress from the problem if you practice this.
  17. Sing
  18. Dance
  19. Think about something completely random.
  20. Watch tv. One that’s familiar, that you used to watch a lot.
  21. Watch a movie. One with a main character that inspires you.
  22. Clean your room.
  23. Organize your closet.
  24. Clean around the house.
  25. Draw or paint something.
  26. Sculpt something.
  27. Send a thank you letter.
  28. Take a nap.
  29. Look at old photos.
  30. Write down the names of people you love.
  31. Write an email to yourself one year from now.
  32. Read your diary, or old social media photos.
  33. Visit family.
  34. Take a long bath.
  35. Create a bucket list.
  36. Create an anti-bucket list. That’s a list of things you’ve done that would be on your bucket list if you hadn’t.
  37. Do a body scan. Look it up, it’s a meditation technique.
  38. Cook food for yourself.
  39. Take a walk.
  40. Free write. Don’t stop writing for 5 minutes. Keep moving your hand.
  41. Write down your favorite dishes.
  42. Imagine a perfect future.
  43. Throw things away.
  44. Buy something for yourself.
  45. Buy something for someone else.
  46. People watch. Notice demographics, personality, clothes, mood, emotion.
  47. Approach and talk to a random stranger.
  48. Toss a ball with someone.
  49. Clear your desktop.
  50. Clear your email.
  51. Organize old photos.
  52. Play a board game.
  53. Organize files on your computer.
  54. Measure your heart rate.
  55. Do a color scan. Think “red, red, red…” with your eyes open to notice all red things in sight. Then do orange, yellow, etc.
  56. Read Wikipedia articles.
  57. Watch TED videos.
  58. Learn something new.
  59. Play a game.
  60. Wash your car.
  61. Read a book.
  62. Hang out with friends.
  63. Grab a drink with friends.
  64. Dance with somebody
  65. Dance by yourself.
  66. Discuss politics with a friend
  67. Give to a charity.
  68. Host a game night.
  69. Hug someone
  70. Draw your golden circle (Why, How What).
  71. Drive a different route to work.
  72. Eat alone at a restaurant.
  73. Go on a solo road trip.
  74. Write down a to-do list.
  75. Scan book titles you’ve read and think about them.
  76. Take an artistic picture of something in your house and post it.
  77. Regularly attend a weekly gathering.
  78. Write down the names of people who can make you smile.
  79. Have sex.
  80. Masturbate.
  81. Take a personality test.
  82. Ask people what they think of you.
  83. Tell people what you think of them.
  84. “You are who you’ve met” exercise. Write down a list of all the people who’ve influenced who you are and the most important lesson you’ve learned from them. Include friends, family, and even movie or tv show characters.
  85. Stare at one thing for a really long time.
  86. Volunteer
  87. Pick someone and imagine what it’s like to be them.
  88. Do something for someone.
  89. Get someone to do something for you.
  90. Build an IKEA table.
  91. Build an IKEA table with someone.
  92. Turn off your phone for a day.
  93. Go camping.
  94. Attend a music festival.
  95. Go to a concert.
  96. Watch a musical or play.
  97. Volunteer at an event
  98. Organize a group dinner or happy hour.
  99. Do a “silent night”. Only communicate in hand-written notes.
  100. Cook with someone.
  101. Reconnect with an old friend.
  102. Play or learn an instrument.
  103. Write your own obituary.
  104. Read about the brain.
  105. Do something embarrassing.
  106. Write down your strengths.
  107. Create a vision board.