Aug 20 2019

Building A Daily Habit Through Streaks

Insight Timer popped up this message after my daily morning meditation yesterday.

I’ve been meditating on and off for a while. But it’s been an on and off thing, not a daily habit.

In April, after some complex emotional dynamics (how’s that for a euphemism), I decided to start meditating daily. I missed a few days here and there and then in mid-May decided to cut the bullshit with myself and just do it first thing every morning when I woke up.

Last week, both Fred Wilson and Seth Godin blogged about the power of streaks and how they’ve both built daily blogging habits. Fred highlighted the same section of Seth’s post that I’m highlighting below, which is just pure gold.

Streaks are their own reward.
Streaks create internal pressure that keeps streaks going.
Streaks require commitment at first, but then the commitment turns into a practice, and the practice into a habit.
Habits are much easier to maintain than commitments.

I made a conscious decision many years ago that I wouldn’t blog daily, but regularly, partly in reaction to my desire to go off the grid for chunks of time (digital sabbath, weekends, weeks, or even longer in some cases.) I didn’t want the blog to be a habit that I did daily, but then took vacations from.

I’m the same with running. It’s a deeply developed habit that I love, but I know the importance of rest, so I don’t try to run every day.

But, for me, meditation is different. I’m 90 days into a daily routine and it has definitely become a habit. It’ll be interesting to see if the streak lasts 180 days, or 365 days, or 3653 days.

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Aug 15 2019

Venture Deals Online Course – Fall 2019

Techstars and Kauffman Fellows are once again running the Venture Deals online course that Jason Mendelson and I put together several years ago.

If you’re an entrepreneur who wants to raise capital and grow your business, this online course teaches you the basics you need to know for working with VCs. And, if you are starting off as a VC or a lawyer for venture capital deals and you want a refresher on the core issues in a term sheet, this online course is for you.

Venture Deals is a seven-week, collaborative, “learn-by-doing” online course where you will watch videos from us along with doing project work as virtual teams. The workload for the course is about four to six hours per week, includes several live video AMAs with me and Jason, and covers the following topics.

  • Week 1 – Introduction of key players/Form or join a team
  • Week 2 – Fundraising/Finding the Right VC
  • Week 3 – Capitalization Tables/Convertible Debt
  • Week 4 – Term Sheets: Economics & Control
  • Week 5 – Term Sheets Part Two
  • Week 6 – Negotiations
  • Week 7 – Letter of Intent/Getting Acquired

The course is a great accompaniment to our book, Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, which is about to come out in a new and improved 4th Edition that will be available by the time the course starts on September 8, 2019.

It’s free, and you’ll be joining over 23,000 people have taken the course in the past. Sign up for the course here!

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Aug 14 2019

Book: Recursion, Permutation City, and Fall

I didn’t read much last month, but I got an email this morning from someone who mentioned that I’d like Greg Egan’s Permutation City. I read it in April when I was in Japan on my Q219 Vacation with Amy but never really blogged much about it.

When I got the email today, I thought of two novels that I’ve read this year that are in the same vein. They are Blake Crouch’s book Recursion and Neal Stephenson’s book Fall; or, Dodge in Hell.

All three of these books are outstanding. They are all near term science fiction, with extraordinary world-building dynamics, and complex time narratives.

While Neal Stephenson is possibly the best world builder in the entire fiction genre today, both Blake Crouch and Greg Egan are in the same category. Some people find Stephenson’s world-building overwhelming, but as a fast reader, I’ve learned how to skim through parts while absorbing the essence of what is going on. Interestingly, this technique isn’t required for Crouch but occasionally is needed with Egan.

All three books incorporate the concept of recursion in very foundation ways. Everyone studying computer science learns the magic of recursion very early on, often through the factorial example, listed below for fans of Scheme, just to bring back memories of 6.001.

(define (factorial x)
   (if (= x 0)
      1
      (* x (factorial (- x 1)))))

While Crouch hits you over the head with it in the beginning, Egan spends about 100 pages getting you ready for it. Stephenson probably takes about 200 pages before you start getting a feel for it. But, by the last quarter of each book, you are deep, deep, deep, deep, …

I thought each book ended extremely well. For all three, I found myself staying up late reading, which is always a sign the book has grabbed me since my bedtime since I was ten has been 10 pm.

While summer reading time is almost over, you’ve still got a few weeks for one of these if you want to explore the literary equivalent of a Sierpiński triangle.

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Aug 13 2019

Harry Stebbings on the Give First Podcast

Today’s Give First podcast features Harry Stebbings of the 20 Minute VC and a partner at Stride.vc on committing to building a network & giving first.

Harry is probably best known for his podcast, The Twenty Minute VC, the world’s largest media asset in venture capital, with over five million downloads per month. He’s talked with amazing VCs and entrepreneurs on over 2,800 shows.

When he was 13, Harry watched “The Social Network,” the movie about Facebook, and it inspired him to become an entrepreneur and investor. At 18, he set up the Twenty Minute VC podcast.

I was interviewed on Harry’s 65th episode in 2015. It was fun to travel back in time and listen to it. And, I love Harry’s Google Glass picture.

Harry is on episode 11 of the Give First podcast. We’ve made it to double digits which I’ve heard is a milestone for a lot of podcasts that stall out before that. Next step – triple digits. If you missed the last few along the way during my blogging vacation, they include John China (SVB), Sherri Hammons (The Nature Conservancy), and Rebecca Lovell (Create33).

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Aug 12 2019

A Month Off From Blogging

I’m back from a month off from blogging. Like any good vacation, I feel refreshed.

Blogging has been a daily habit for me during the week. I occasionally miss a day and take the weekends off, but the routine has been, in general, a good one for me around my writing.

Amy has an equivalent activity called “morning pages.” This is a private blog using an ancient technology where she uses a writing stylus on bound parchment. She uses it in a similar way that I use my blogging, which is to get words flowing each day, ideas out of my head, and gear up the engine for the rest of the day.

When we got to Aspen earlier this summer, I felt like my writing was stale. The daily blogging was a chore. My efforts around other writing were challenging and I found myself procrastinating on anything that I’d categorize as medium or long-form writing. Basically, I continued to crank out hundreds of emails a day, but anything proactive that was longer than a few paragraphs had become a chore.

In early July, I decided to take a month off from blogging. I did the same with writing and reading. I knew I had an intense work stretch coming and I wanted to give myself some space to get the work done without putting extra pressure on myself. So, I took a vacation from writing and reading.

I feel refreshed. I continued several of my other habits, including meditating and running, both of which are feeling great. But most importantly, I’ve been able to spend a reasonable amount of time with Amy even in the midst of the intense work. While I’m periodically not present in the moment, which elicits a “Brad, be a person” comment (or equivalent) from Amy that snaps me back to reality, the intensity of the work hasn’t overwhelmed me.

I love the Bezos Day One philosophy, so I’ll just end with it. It’s Day One again today.

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Jul 10 2019

Pledge 1% Today

Over the years, I’ve written about my belief in the importance of giving back to your communities and #givefirst. In this spirit, one of the key organizations my partners at Foundry Group have helped create and nurture is Pledge 1%.

In 2007, we were a founding member in the predecessor organization to Pledge 1%, called Entrepreneurs Foundation of Colorado (or EFCO). EFCO started as an experiment here in Boulder, not unlike Techstars and Startup Week/Weekend that got their start in our backyard. In 2014, Pledge1% Global launched as a joint effort between Foundry Group, The Entrepreneurs Foundation of Colorado, The Salesforce Foundation and The Atlassian Foundation which we helped seed financially and continue to support.

Pledge 1% Colorado has now distributed over $8 million back to various organizations in our community. And, the companies that have pledged 1% globally is remarkable.

While all of the Foundry Group partners have been involved, Seth Levine has been spearheading our engagement and the transformation from EFCO to Pledge 1% (he, along with key members of the teams from Salesforce, Atlassian and Ryan Martens are the founders of Pledge 1%). At a partner offsite at the end of last year, we were reflecting on some of the gifts from Foundry Group through our Pledge 1% involvement, which included:

We had some extra money left in our Pledge 1% Colorado account from distributions over 2018 and decided that, rather than saving it up for another larger gift, we’d give a series of modest gifts to a handful of local (and one non-local but nearby) organizations as a surprise holiday gift. Those organizations were:

If you are a co-founder at a startup, leading a company, or an employee at a company and want to learn more, check out the Pledge1% (or here if you’re in Colorado). Or email me or Micah Mador if you want to get involved.

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Jul 9 2019

Why Gross Profit Is More Important Than Revenue

I’ve been thinking a lot about gross profit (and gross margin) lately. Yeah, I know I can be riveting, but stay with me.

When I was in Boston a while ago (it was very cold, so it must have been January), I had a wide-ranging conversation with Eric Paley. This was before the IPO Summer of 2019 when all conventional valuation metrics have entered the land of “suspension of disbelief” which is short-term good and long-term well-we-will-see-…-eventually

One of our conversational threads was about how to value companies. We ended up talking about using Gross Profit, instead of Revenue, to do valuation analysis.

We’ve been doing this for a long time at Foundry Group. Since we invest across a number of different themes, we’ve had to deal with very different revenue and gross margin profiles since the beginning, whether we realized it or not.

For the purpose of clarity, in my world GP (gross profit) is a dollar amount while GM (gross margin) is a percentage.

Revenue is often equated with Net Sales, which is true in many cases, but Net Sales is actually more precise a measure than Revenue in situations where you have Gross Sales or Gross Merchandise Value as the “top level” revenue number. Also, I often see GM listed as GM%, which is fine. Some people also refer to GM as Gross Profit Margin.

This is regularly confused, even in accounting texts, so depending on which business class you took, you are going to call it a different thing. Oh, and if you use Quickbooks, you’ll probably refer to Revenue as Income, unless you have the current version of Quickbooks where this has finally been fixed. Isn’t accounting fun?

Even if a lot of people realize that SaaS companies have a different gross margin profile than hardware companies, many don’t acknowledge it when playing the valuation game. And, this logic – or lack thereof – applies to marketplaces where GMV is different than Net Revenue which is different from Gross Profit, or Adtech companies which have yet a different “Top Number to Gross Profit” calculation. And, it gets really exciting when a company has multiple revenue streams that include services and derivative transaction-based revenue (say, BPS in a fintech company.)

Today, I’m seeing almost all entrepreneurs and investors in growth companies talk primarily about revenue and growth rate. They tend to adjust the multiples to try to align with a group of comparison companies, but these comps rarely have a similar supply/demand economic associated with the equity of the company in question. And, when the comps are mature cash flow positive public companies, the multiple math diverges even more from anything particularly rational.

I’ve started encouraging the companies I’m involved in to focus on Gross Profit and the growth rate associated with their Gross Profit, rather than Revenue. Try the exercise and see how you compare to the companies you think you should compare to. And think about how much more value you could be creating with the same Revenue number but a higher Gross Margin percentage …

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Jul 8 2019

Fund81 Podcast Interview on Mental Health in Venture Capital

I’m a huge fan of Elizabeth Kraus, Sue Heilbronner, and the work they do through MergeLane.

Recently Elizabeth started a platform for the next generation of venture capitalists called Fund81. It includes a podcast, which has both a public section for everyone and a private section for the Fund81 members.

Elizabeth recently interviewed me for Episode 13 where we talked about maintaining mental health in the fast-paced venture capital world while supporting portfolio companies, colleagues, friends, and family wrestling with mental health issues. The public section follows.

Elizabeth and Sue – thanks for everything you and the team at MergeLane do for entrepreneurs and now other VCs.

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Jul 2 2019

Street Level Startups: A 5-Part Series Celebrating Colorado Entrepreneurship

I’m lazy blogging this week as I get ready to go on vacation for the July 4th holiday. So, here’s another set of videos to watch, which is the entire Street Level Startups series from Colorado Public Television. I’ve watched them all now and they are a great history of how the entrepreneurship scene in Colorado has evolved recently, along with a bunch of fun highlights of people and companies.

Street Level Startups: The New Gold Rush

Street Level Startups: When an Idea Strikes – Stories of Inspiration

Street Level Startups: Three Phases of a Startup

Street Level Startups: Mentorship & Integration

Street Level Startups: Startups to Watch

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Jul 1 2019

When Technologists Use Their Powers For Good

Xiao Wang, the founder, and CEO of Boundless, recently gave a speech at the 2019 convocation of UW’s Information School. It was 15 minutes long and I thought it was extraordinary.

Xiao – nice job weaving in a Mary Oliver quote at the end.

Tell me, what is it you plan to do with your one wild and precious life?

I’m honored that I get to work with you.

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