Month: June 2017
In October 2015, Pioneer Square Labs launched. We led the financing, and I joined the board to work more closely with Greg Gottesman, Geoff Entress, Mike Galgon, and Ben Gilbert to build a long-lasting and enduring startup studio in Seattle.
Today, Julie Sandler joined Pioneer Square Labs as the fourth managing director. Julie previously was a partner at Madrona Venture Group and is deeply involved in the Seattle startup community. She has also been a leading voice for women in technology as a founding member of the Seattle Entrepreneurial Women’s Network and Startup Weekend Women’s Edition.
Basically, Julie is awesome. And it makes me super excited to get a chance to work more closely with her at PSL.
Foundry Group has a deep connection to Seattle. In addition to currently being investors in Pioneer Square Labs, we are also investors in Boundless, Glowforge, Mighty Ai, Moz, and Rover. Over the years, Techstars has expanded their footprint, now running Techstars Seattle as well as the Alexa Accelerator (powered by Techstars). And, as many of you likely know, Techstars acquired UP Global several years ago, which was headquartered in Seattle.
As I’ve gotten to know Julie over the years, I can’t think of a better person to join the PSL team. The PSL entrepreneur-in-residence program has become an attractor for quality entrepreneurs in Seattle – both experienced and emerging ones. In some cases, entrepreneurs come to PSL to work on a specific idea the PSL team has developed, while others choose to iterate on a product of their own and launch something new with the PSL team.
This has happened in an incredibly short time. If you had told me 18 months ago that PSL would have already spun out six VC-backed companies already, along with building out the now 17 person PSL team, I wouldn’t have believed you and would have suggested a time frame about double that. But the PSL team has achieved that and, with the addition of Julie to the team, is moving even faster on its mission.
Julie – welcome!
I woke up to an email from a close friend of 25 years that his wife had passed away unexpectedly last night. She’d been fighting cancer for several years, had made progress, then had setbacks, and then made progress again. While I knew them both, I’d spent many hours over the years with my friend, so I immediately felt his sense of loss because I know how central his wife was to his life. I just hugged Amy and sent her out into the world for her day with tears in my eyes the phrase “In the end, entropy always wins.”
Last week, when another close friend died of cancer, Amy said to me “We fight the good fight our whole lives, and then we lose.” It wasn’t meant in a negative way but was an acknowledgment that in the end, we die.
Two other lines that always come to my mind in moments like this are “Life is a process of continuous oxidation” and “Life is a fatal disease.” The second is lodged particularly deep in my brain, as a friend told it to me after his child died at age 21.
While this applies to humans, it applies to everything else. I’ve yet to meet an immortal animal or plant. Many of the Built to Last companies have struggled or failed since Jim Collins wrote his iconic book. Granted, while Rome, which wasn’t built in a day, is still around, the Roman Empire had a finite life.
Companies don’t last forever. Institutions don’t last forever. Physical objects don’t last forever. Our planet won’t last forever. Human civilization won’t last forever.
In the end, entropy always wins. Consider that when you make decisions trying to control the outcome of something.
Are you a woman who is an undergraduate or graduate student enrolled full-time at an accredited university in the US, in a STEM field? If you are, you now have an opportunity to apply for a Women Forward in Technology Scholarship.
Distil Networks just led a group of us, including Foundry Group, Techstars, Cooley, Yesware, Help Scout, Cloudability, Kulesa Faul, FullContact, and Anchor Point Foundation, to raise $50,000 to advance female representation in technology.
We will be awarding multiple scholarships of $3,000. The first deadline to submit is August 1st, 2017, and winners will be announced on September 1st, 2017. Interested applicants must complete a 1,000-word essay, present educational transcripts and deliver one letter of recommendation via the Women Forward in Technology application site.
I would love to see many more women involved in computer science, technology, and entrepreneurship. I’m hopeful that the $50,000 we raised for these scholarships is the start of something that can grow much larger. If you are interested in learning how you or your company can contribute to the scholarship fund, email me.
I don’t believe that one starts an apology with the sentence “The past 24 hours have been the darkest of my life.” In my world, the apology is to another person. It’s not a tone setting exercise, or a plea for sympathy, for the one making the apology.
I was fuming after seeing the public apology on Axios from Justin Caldbeck. I could be wrong, but it felt like it was written by a crisis management PR firm. I spent most of Friday evening angry and upset. Embarrassed by the behavior of some men. Proud of the women who broke their silence about the abuse they had been on the receiving end of. But mostly just ashamed of myself for not doing more about the issue of sexual harassment in our industry.
I read Reid Hoffman’s The Human Rights of Women Entrepreneurs and Joanne Wilson’s The Gig Is Up. My partners and I had an extensive conversation over the weekend. Amy and I talked about it over dinner Friday and Saturday night.
And then I read Brenden Mulligan’s Everything I hate about Justin Caldbeck’s statement. I nodded my head all the way through. I knew what I was feeling, which was what Brenden was articulating. His post is an angry one, which he acknowledges, and the fierceness of it makes the point even more powerful.
It takes a lot to get me angry. I continued to stew all day Saturday. I thought about this during my entire run. I tried to process what I wanted to do and how I wanted to respond. Every time I thought about my anger, I reminded myself that this wasn’t about me. I knew that a quick response, driven by my own anger, wasn’t healthy. So I kept talking to my partners and to Amy.
Clarity of thought for me finally came together on my run Sunday. After lunch and a shower, my partners and I co-wrote the post Our Zero Tolerance Policy On Sexual Harassment which appears on our Foundry Group website.
I hope I, and my partners at Foundry Group, am viewed as a safe place for anyone in our industry. Specifically, if anyone ever feels sexual harassed in any context, I offer myself up as a resource for them to try to be a source of good in the universe.
And, a hint for anyone who wants to apologize for anything. The way to do it, as I learned from my mother, is to say, simply, “Joan, I’m sorry.”
I’m a huge Charlie Munger fan. I spent the weekend stewing on a few things, including why human beings do what they do.
Andrew Wilkinson sent me this animated and abridged video of a famous Charlie Munger speech called The Psychology of Human Misjudgment. It’s well worth a quiet 15 minutes of your day to sit and watch it.
https://www.youtube.com/watch?v=7-fe01CA3vc
On May 23rd, I got an email from one of my favorite sci-fi writers (and close friend) Eliot Peper. It was titled “My very first scifi short story” and said:
“David Cohen shared the idea that inspired this story. I drafted it last week. Thought you might enjoy and would love to hear what you think.”
I was in the middle of grinding through my email backlog, so this stopped me in my tracks as I spent the next 15 minutes reading Eliot’s new short story. The first few sentences grabbed me.
“Kamran Tir gazed into the mirror and confronted the fact that his genes had betrayed him. His thick dark hair was carefully groomed, his olive cheeks clean shaven. For someone who worked late so often, he was in reasonable shape.
The problem was his eyes.”
It was stunning. I’ve been reading and responding to Eliot’s writing since he wrote his very first book in 2014 titled Uncommon Stock. It’s a great example to me of the development of a writer and the effort required for mastery of the craft.
The backstory of how this came together, is a fun one. Eliot put it up on Amazon in the From the Author section, but it’s worth repeating to warm you up to the story.
A few months ago, I received an email from my friend David Cohen, “I’ve had an idea for a book for a while. Given what’s going on in America, I thought I’d send it to you because I sure as hell am never going to write it.” David went on to present a thought experiment: what if discrimination targeted eye color instead of skin color or any other trait?
Now, I’ll let you in on a little secret. If you start writing books, your friends will start sending you ideas. Strangers too. You’ll get very good at letting people down easy. After all, you have your own dreams to bring to life.
But David’s premise stuck with me, lurking in the shadows of my subconscious and rearing its head at opportunity moments. It would visit me as I took the dog on a walk or did the dishes. It made me think of my opa whose entire family was murdered by the Nazis and my oma who risked her life every day to fight in the Dutch Resistance. Every time the idea resurfaced, it took on weight and texture, building up creative momentum until I had no choice but to write it.
Speculative fiction has a secret superpower. Imaginative stories invite us to experience plausible realities unlike our own. In doing so, they empower us to confront the myriad hidden assumptions we take for granted in our day-to-day lives. We cannot explore new worlds and return unchanged.
True Blue is a story about the absurdity of discrimination, the importance of being true to yourself, and our irrepressible capacity for overcoming injustice. It’s a story about standing up instead of standing by. It’s a story about finding the courage to stop caring what other people think.
These are truths we need to keep in mind now more than ever. Oh, and next time someone sends me an idea, I promise to pay attention.
Eliot just released True Blue on the Kindle. If you have Kindle Unlimited, it’s free, otherwise, it’s $2.99.
Happy Anniversary Amy.
We’ve been together for 27 years and we’ve been married for 24 of them.
It amazes me that you put up with me.
I look forward to spending as many years together as we get on this planet. And, if we are lucky, some technology will get created before we vanish that allows us to spend infinity together, although I’m not sure I’d wish me on you for infinity.
I’m going to run my next marathon in October. I haven’t chosen it yet, but I’m getting close to deciding which one I want to do. And – I’m looking for some help on my training.
Early this year, we invested in Dick Costolo’s new company, Chorus. Some of you know Dick from Twitter, where he was CEO for four years. But you may not remember that before he was at Twitter, he was at Google, and before that, he was the CEO / co-founder of Feedburner, where we were one of the investors and I was on the board.
I loved working with Dick at Feedburner. When he joined Twitter as COO (and then CEO), I was happy for Twitter but sad that I didn’t get to work with him on a regular basis. If you are connecting the dots, you’ll remember that Twitter bought Gnip, where Chris Moody was CEO. Moody worked for Dick for a year before Dick left Twitter and now Moody and Dick get to work again since Moody has joined Foundry Group.
It’s a delightfully small world.
But – back to the help I’m looking for. I’m interested in having up to 24 people join my marathon team on Chorus. If you are a regular runner who is game to get on a training plan with a goal of running a marathon in October, you qualify. You’ll get to be an early pre-beta Chorus user (it’s somewhere between alpha and beta right now), give feedback on it, and be part of my next marathon gang. Oh, and you need to have an iPhone, as it’s iOS only for now.
If you are interested in being part of my Chorus Marathon Team, email me.
Over the weekend, Mark Suster and Fred Wilson each put up awesome posts discussing the idea of profitability in startups. Mark’s is a master class about how to look at the financial characteristics of a startup and Fred’s discusses what he’s been working on with some of his more mature companies.
They are both worth reading right now. I’ll be here when you get back.
Between the spring of 2000 and the end of 2001, I had the worst, most stressful, and most painful business period of my life. While I’m sure the financial crisis of 2008 was worse for many people, for me it paled in comparison to the misery of this 21-month stretch.
A very simple thing happened that year in my world. The market shifted from rewarding (and funding) growth to rewarding (and funding) profitability. It happened over a few quarters, but with the perspective of time and age, it feels like it happened overnight. I remember the trigger point being a 3/20/2000 article in Barron’s titled Burning Up: Warning: Internet companies are running out of cash — fast. I was on the board of several companies on their list of 100 public companies that would be out of money by the end of 2000 and remember that my reaction to the article was anger, frustration with being maligned, and incredulity that Barron’s would write such an irresponsible article.
My reaction was stupid and immature. Instead, I should have paid attention to the message, thought about it, and taken appropriate action. Instead, I, like many of my colleagues (investors, board members, founders, and CEOs), operated in a state of blissful denial until everything blew up.
I learned that the markets reward growth until they don’t. Then they reward profitability. The trick is to be in a position to make the switch when you need to. Lots of CEOs and boards fantasize about this, but don’t actually have a plan in place to do this as they expect the future – where the switch from growth to profitability – will never come. Or, they hope the exit will happen before this moment.
I was too inexperienced in 2000 to understand this. Given the exuberance, many of my mentors, who had been through other financial cycles, chose to ignore this. The phrase “it’s different this time” echoed broadly throughout the land. I succumbed to the siren song of growth at any cost and paid the price – both literally and figuratively.
Now, I have zero prediction for when the markets will shift from rewarding growth to profitability. Instead, I operate under the assumption that this can happen at any time, and the best companies can grow quickly and either be profitable or be able to become profitable by making manageable modifications to the cost structure within whatever cash constraints they currently have.
Some version of this was on my mind when I wrote the post titled The Rule of 40% For a Healthy SaaS Company in 2015 and the post titled Is 2017 The Year Of Flat Headcount? earlier this year. While I think about this regularly, Mark and Fred’s posts prompted me to pile on to their point and write about it.
There’s a special bonus in Mark’s post, which is in the section titled Revenue is Not Revenue is Not Revenue. He does a nice job of discussing the importance of understanding gross margin and has a line that made me smile.
If you’re shaking your head and thinking, “duh” I promise you that even some of the most sophisticated people I know get off track on this issue of “gross revenue” versus “net revenue.”
I’d add that this includes getting confused about GMV and MRR when talking about revenue and amazingly occasionally confusing revenue with income. It keeps going, when one asks the question “does profitability mean being EBITDA positive, cash flow positive, or net income positive? Or something else?”
If you are a CEO of a company and any of this makes you nervous in any way, I encourage you to grab a few of your investors who have been investing in startups for at least 20 years, take them out to lunch, and talk through these issues with them to understand them better and figure out whether or not to care about this in the context of your company.