Author: Brad Feld
I was at a dinner event last night in Denver where, predictably, coronavirus (which I’ve been trying to call Covid-19, but everyone seems to default back to coronavirus) came up.
I’ve tried to avoid being “that person” who has a strong opinion because so much is changing so quickly. Instead, I’ve tried to have a “clear opinion” based on what I currently know and how it’s impacting my world. I was particularly sensitized to this since, at a board meeting earlier in the day where it came up, someone asked me directly, “How do you think coronavirus will impact things?” A few minutes later I realized I was stuck in exactly the kind of rant that I was trying to avoid.
Over the past year, as Ian Hathaway and I worked on our upcoming book The Startup Community Way, I’ve thought a lot about complex systems. We based our conceptual framework on the theory of complex adaptive systems (which we’ve shorted to complex systems in the book for ease of reading) and it has been a really enjoyable intellectual rabbit hole to go down with Ian.
How Covid-19 is playing out is a classic example of a complex system. One of the key attributes that we discuss is contagion – both positive and negative. And, with Covid-19, we are seeing negative contagion at multiple different levels, most notably biological and economic. But, there are several others including one I’ll label hysteria.
Here’s an example. When a large technology company in a city shuts down its offices, cancels all travel, and insists everyone works remotely from home, other large technology companies around the world and other companies in the city pay attention to this. Suddenly, there is a conversation going on everywhere that is the equivalent of “should we do the same thing?” The emotional cadence of this conversation is high, so companies over-index on trying to figure out the right answer, where there isn’t really one given the nature of a complex system. Rational thinking generally aligns with “we’ll do whatever the CDC is suggesting we do”, but anyone who either doesn’t trust the government or authority figures won’t be satisfied with this. They will become more agitated (negative contagion on hysteria), which will generate more conversations and potential actions. Regardless of the actions, the cost of the conversations will be high, generate more uncertainty and agitation, and the negative contagion will continue.
I’m not suggesting that Covid-19 is no big deal. I’m not asserting that companies shouldn’t shut down offices or people shouldn’t work for home. Rather, I’m giving an example of negative contagion on a dimension (hysteria) that is appearing in complex systems that I’m involved in.
Intellectually, it’s fascinating. Emotionally, it’s challenging.
Covid-19. Presidential Primaries. Gyrations in the Stock Market. Global Pandemic. Trisolarians arriving in their droplet to exterminate us.
It’s pretty intense out there right now. Somewhere. But not in my backyard where my dogs roam around.
I was in the hospital recently, attached to those devices they attach you to that monitor everything. I was trying to relax by closing my eyes, breathing deeply and slowly, and meditating. Every 30 seconds or so something beeped. After a few minutes of that, I asked the nurse if he could turn off the beeping. He looked at it and said my HR was going below 60 so that’s why it was beeping. I told him my resting HR is low 50s and could he turn the beeping off. He said he couldn’t turn it off because he needed to be alerted whenever my HR went below 60. I suddenly identified with Kafka.
People conflate worry, stress, and anxiety all the time, but they are different. Worry and stress create anxiety. There are different ways of dealing with each of them, and addressing them individually is better than thinking about them as a big clump of things bundled together. Or, not addressing them at all. But all three get in the way of concentrating on, well, anything.
When I’m worried, I realize that my obsessive worrying has negative value. Instead, I write down what I’m worried about and decide whether I can do something about it. If I can, I do. If I can’t, I don’t and let it go.
When I’m stressed, I focus on understanding what I can and can’t control. I put my energy against what I can control. I let go of what I can’t control. I exercise more and sleep more.
When I’m anxious, I slow things down. I take deep breaths. I sit quietly until the anxiety passes.
I sense an enormous amount of worry, stress, and anxiety around me with many of the people I interact with. I’ve always been a huge absorber of other people’s worry, stress, and anxiety, which is a strength of mine, but at a real cost to me. Figuring out how to continue to be an absorber, without it having as much of a cost to me has been an important part of my last few years. I notice this more as things amp up, and they are pretty amped up right now.
If you are feeling any of this, consider how you are dealing with it and what it is doing to you. Take action on what you can impact and let the rest go.
Her first Marathon. Second place in the Olympic Trials. She’s now heading to the Olympics as part of Team USA.
I don’t know Molly. I first heard about her yesterday when watching a video of the US Olympic Marathon Trials. As I watched her run, I could see both joy and grit on her face.
This is what sportsmanship looks like (Aliphine Tuliamuk cheering on Molly Seidel a few moments after crossing the finish line in first place.)
Molly is incredibly inspirational, not only in this performance but in her return to competitive running. Since I’d never heard of her, the internets helped me learn a lot more about how The Olympic Marathon Trials Are Just the Start of Molly Seidel’s Comeback.
Injuries. Disorded eating. Obsessive compulsive disorder. Two jobs while training. A sacral stress fracture after an event that caused a teammate to say:
“You look like you’re dying,” Seidel remembers her friend saying. “You need to get help.”
The quote from the NYT article that made me smile over and over with inspiration was:
In the hours after her performance, she repeated the same thing a handful of times. “What is happening?” she said, looking upward, shaking her head, struggling to contain the smile stretched across her face.
Molly – count me as a new fan.
Apparently everyone in the US is now talking about the threat of the coronavirus, which really should be referred to as Covid-19 since there are hundreds of different types of coronaviruses.
My guess is the 10% drop in the Dow woke people up. Or maybe it is because of the first known cases in the US.
As I was going through my random Sunday morning reading, I came across several good articles.
The best is by Bill Gates titled Responding to Covid-19 — A Once-in-a-Century Pandemic?
If you are looking for practical suggestions, the NYT opinion Here Comes the Coronavirus Pandemic has a few useful things in it.
If you don’t understand whether Covid-19 is scarier than the flu, read How Does the Coronavirus Compare With the Flu?
Finally, if you care about money and the economy, read Why a Coronavirus Recession Would Be So Hard to Contain.
Venture Deals Online Course – Spring 2020 Registration Is Open
We are running the Venture Deals Online Course again. Registration is now open and it runs from March 8, 2020 – May 1, 2020. It’s produced by Techstars and Kauffman Fellows.
We’ve run the course six times now and have had over 25,000 people take it.
It’s free, although it’s recommended that you have a copy of our book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist. The 4th Edition is out with plenty of new and improved stuff.
The course runs for seven weeks with the following syllabus.
- 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
If you are interested, sign up now and tell your friends who are interested in venture deals.
When I started blogging in 2004, there weren’t many VC bloggers. I followed Fred Wilson and David Hornik’s lead and just started writing what was on my mind about, well, anything that was on my mind.
Today, VC content pieces are everywhere. I’ve become less interested in writing this kind of stuff so my blog has evolved into whatever is on my mind, but a lot less “VC stuff.”
Every now and then I come across a spectacular VC blog post (or article in Techcrunch, or one of the other places VCs now put their content pieces.) As I was procrastinating from what I was working on, I noticed an article titled Mike Volpi on the art of board membership.
It’s a spectacular article. Go read it now. I particularly like the topics he went after.
- Nature of the relationship
- The mirror
- Context
- Network
- What happens in between
- Availability and relevance
- Delivering a message that can be heard
When I wrote Startup Boards: Getting the Most Out of Your Board of Directors with Mahendra Ramsinghani, we tried to include constructive thoughts about how venture-backed boards work and how to improve them, along with plenty of examples. As I’ve been on some great, ok, and terrible boards (and have been an effective, mediocre, and ineffective board member), I find clear articles like Mike’s powerful as I reflect on how I act as a board member.
I ever get around to writing a 2nd Edition, I plan to reach out to Mike and see if I can include some of this. In the meantime, I leave you with his powerful, and well said ending.
Board membership is a privilege and a nuanced responsibility that can have a transformational impact on businesses. Sometimes investors, independents and entrepreneurs forget this. Entrepreneurs should expect a great deal from their boards — not as blind supporters but as true copilots. Likewise, board members should not view board membership as a list of icons on their LinkedIn profile, but as a subtle yet massively impactful role they play in the creation of great businesses. When these relationships function properly, the two parties become true partners in the entrepreneurial journey.
While reading Kim Scott’s book Radical Candor: Fully Revised & Updated Edition: Be a Kick-Ass Boss Without Losing Your Humanity, I came across an anecdote from a discussion she had with Dick Costolo.
One of my favorite stories about Dick and diversity was his effort to eliminate the phrase “you guys” from his vocabulary. I told him a story about my twins—one a boy and one a girl—who were in kindergarten. Both of their teachers were speculating why boys raise their hands more often than girls. Then I attended a class and heard the questions: “OK, you guys, who knows what four plus one is?” No wonder the girls weren’t raising their hands! Children are literal, and girls are not guys. I told Dick that story, and confessed that I’m literal too and feel annoyed whenever somebody addresses a mixed group as “guys,” or “you guys.” Most people look crossways at me when I launch into my “you guys” diatribe, but Dick smacked his forehead. “Of course! There’s nothing worse than being invisible. I can’t believe I never thought of that! There’s no worse way to make a group of people feel excluded than to use language that pretends they are simply not in the room.”
“Yes, like Invisible Man,” I said. Dick and I had recently discussed Ralph Ellison’s novel about an African-American man whose color renders him invisible.
“Yes, exactly! OK, you’ve convinced me. I’m going to start saying you all!” Dick said.
I’m from Texas, so I generally try to say “y’all” instead of “you all”, but I realize that periodically I’ll slip and say “you guys.” Going forward, I’m going to try to reprogram my brain to get rid of “you guys” from my vocabulary. If you catch me saying it, call me on it.
For the past week, I’ve been asked at least once a day (yesterday I was asked several times, with an R0 of 3) about what I think the coronavirus’ impact will be on the global supply chain.
I have a perspective that it’s too early to really know but there are starting to be guidelines about how to think about it, especially as Chinese new year + a week has passed (and we are almost at +2 weeks). Theoretically, factories in China are opening next week, but until they open, they aren’t open …
While there is starting to be some macro analysis on the web, it’s classic generic stuff with big company examples such as Charting the Global Economic Impact of the Coronavirus, Coronavirus shakes centre of world’s tech supply chain, and How China’s novel coronavirus outbreak is disrupting the global supply chain.
I find things like the Johns Hopkins CSSE data set and coronavirus map to be much more interesting than these articles so I sent an email out to our hardware companies last night to see what they were hearing and thinking to collect some quantitative data from startups.
It seems like most people are expecting factories to open on 2/10 as planned. However, the expectation is being set that production will take two weeks to ramp back up to normal. And, there is some concern that larger companies will likely exert pressure to be at the front of the line.
Another problem at this point is movement into and out of China. The Chinese border with Hong Kong is only open at a few places and many are afraid to enter China right now for fear that they won’t be able to leave.
Everyone anticipates a big logistics clog once things start shipping, which will introduce delay and cost, although the magnitude of this is unknown.
Finally, the downstream (or upstream – I never get that right) impact of long lead time items will add another wrinkle once people understand the volume and timing constraints when things settle down.
Of course, the coronavirus is not yet contained and the actual shape of the infection and death curve is still evolving, but at this moment it is clearly worse than SARS, so that doesn’t feel very good.
If you have any additional qualitative data or perspective, I’d love to hear it.
I do a lot of random podcasts and especially like to be an early guest on new ones to help get them started.
001 – Brad Feld
The first five episodes are with me, David Cohen, Susan Conover, Amos Schwartzfarb, and Charlie O’Donnell.
Andrew Waine is the producer. He’s currently a senior at the University of Florida finishing his Bachelor’s degree in the Summer of 2020.
He reminds me of a young Harry Stebbings of the 20 Minute VC who reached out to me early (I was on Harry’s 65th episode in 2015), hustled, and did a fun interview with me where we cover the following topics.
- What is in the new edition of Venture Deals
- My time as an entrepreneur and entry into venture capital
- Advice from Jack Tankersley, an early mentor
- The differences between raising fund I vs. fund II at a VC Firm
- How fund sizes impact investing strategies
- How a startup can weather the storms of an economic downturn and the characteristics of the companies that survived the 2008 recession
- My opinion on USV founder Fred Wilson’s blog post about the importance of follow-on capital
- Why Foundry Group invests capital into other VC funds
- What startup accelerator Techstars looks for in its applicants
- Some resources and advice for a young person looking to gain knowledge about VC and Startups
You will even find out where I learned that “even pigs can fly in a hurricane” around minute six.