Day 155 and Momentum

Startups don’t really operate on logic, plans or “objectives and key results” to name and shame. Founders and executive teams get really good at planning and strategies only to have it all blow up in their faces. Generating momentum in spite of startups being incredibly resistant to planning is part of the trick.

I’ve been thinking a lot about the emotions that go into that “no plan survives contact with the enemy” reality of startup life. The past two days Alex and I have been enjoying a victory lap after the 1.8B acquisition of his former startup Stack Overflow. It’s a process of mixed emotions and shared experiences with other families that lived it with us.

But one central theme is that nothing changed in our skills, planning, insight or capabilities after we got the market validation. We didn’t suddenly get better and got rewarded overnight. Our plans got exploded like everyone else in startup land, over and over and over again. Till one day it was worth a bunch of money. Now everyone involved looks like a genius. But the reality is that the momentum of startups live a life and logic unto themselves. No one set an OKR for “billions” nor did they plan out a straight line from day 1 on acquiring customers consistently. No one planned out a ten year roadmap for creating enough value or revenue for a substantial exit. No one micromanaged shit for a decade. The momentum just worked itself out eventually.

And yes I’m using the Royal We here but mostly to make a point. Startups and their teams and the entire ecosystem around them are team efforts. Together we turn nebulously ideas into sketchy plans and eventually great things. Don’t get so wrapped up into the need to manage everything so closely.

A graph showing a bell curve distribution. The two outlier “make stuff”

The momentum of making stuff can and should eventually pull you into your goals. So don’t kid yourself all your numbers or plans do shit. Be the Jedi.

Internet Culture Startups

Day 154 and Mixed Feelings

I’ve been in a hazy “did that happen place” emotionally after the news that Stack Overflow, where my husband spent 8.5 years, sold for $1.8B. Obviously it’s a lot of money to just appear into our lives. It’s not the first exit for Alex Miller or me. I’ve had 2 acquisitions for companies I have founded & he’s had an IPO for a company he was early to join. I also lived through multiple exits, financings IPOs & bankruptcies as a kid as I’m the child of a startup family. So why does this hit different?

I think part of it is that our other wins tended to come from “faster” companies. My first acquisition came within 2 years of founding. It wasn’t a lot of money but let me pay off student debt & get more stable. Alex was with Yext for a comparably shorter period and when it IPO’d he’d long ago left for Stack Overflow. And that was only a win because he was lucky enough to be able to borrow money to exercise his Yext options or it would have meant nothing. That happens a lot to early stage employees. They cannot afford to exercise and get nothing when a big exit happens. It happened to me when the company that bought mine exited to someone even bigger. I couldn’t afford to exercise. I never had the heart to calculate how much I would have made.

We’ve had secondaries over the years. Sometimes equity gets taken off the table in later stages financings and it benefits early employees. Those changed our calculus a lot when it happened to us. We put together a financial plan and a future as a family with our startup earnings. We made decisions based on whose turn it was to risk & who to run downside. Being a startup spouse means a constantly balancing act of supporting years of low salaries, long hours and stress. And while it’s not easy to be the wife of an early stage employee it’s probably even harder to be the husband of a founder. Startup families live through a lot together.

Stack Overflow was “the” company in many ways for Alex where he spent the better part of a decade and the majority of our marriage working to build the company up. He was employee 32 when he joined as chief of staff. When he left it was over 300 employees and he was the GM of the SaaS business.

When he left Stack we didn’t expect a payday beyond what salary he had earned and perhaps a bit of secondaries. He’d done good work and built amazing things but when you leave you don’t want have the emotional capacity to think about things like big acquisitions or IPOs. When Alex left Stack it was a deeply emotional process for us. A lot of therapy for both of us. Because startups aren’t just the person it is their family that consents as well to these long journeys. Remember that every executive team member or founder has a family that will live through this startup experience too.

After 8 years I knew Alex needed a change. He had given Stack his all. His absolute best. But leaving was hard. In order to leave a company where you invested your whole self (and your family’s) you have to come to terms with how you feel. We cried. We worried. But Alex made the choice. And we didn’t look back. It’s too painful in some ways. You love your startup

You keep in touch with everyone. Alex remains friends with the entire team. We share hobbies & interests and a million group texts with topics as varied as hydroponic tomatoes m, our crypto portfolios and hunting season. We stay at each other’s homes. The bond is deep in startup teams.

Given that bond it’s almost funny how when you leave your imagination on big outcomes can stop. The thing you dedicated yourself to for years is now growing and thriving without you. It never leaves you even if you need some distance.

When we got the call the number was overwhelming. The distance we had created suddenly evaporated. Alex burst into my room where I was meditating and told me the strike pierce. We did some calculations. We checked them. It couldn’t be? It was. The startup had finally delivered the check. We’d done it. Another startup made it.

I want people to know that this kind of largess is mostly random. Everyone works hard in Silicon Valley. Startups are a choice & a state of mind and those of us that chose to do it willingly go into ideas doomed to failure. Or meant for the stars. And it can feel like a crap shoot. Idiots get enormous paydays and brilliant innovators barely make enough to scrape by. The meritocracy isn’t as real as we think. This isn’t to suggest that the Stack Overflow team doesn’t deserve every penny. They do. We earned the payout. The bad years were hard. Miserable. But everyone believed in the community & the power of software developers. But also no one earns these big paydays. It’s a gift. And we are grateful for it.

Emotional Work Startups

Day 153 and Startup Families

I’ve worked my entire career in startups. I love it. But the work barely compares to being a member of a startup family. My entire life has been lived, literally from the day I was born, in the ecosystem of families that make startups come to life.

I was “in it” from conception and all my success and traumas are in some way tied back to that luck. And I became a startup founder and eventually a startup wife. This post is about what it’s like to live in perpetual uncertainty of creation with the occasional bout of life changing money.

For everyone that has a payday that changed their lives forever, chances are they have spent decades in the shadow of that system of building, scaling, and selling companies. The paydays are sporadic, completely dependent on luck and often extremely unfair. Most of the time the early team sees nothing. I’ve personally had an exit where I got nothing. I’ve had an exit where I couldn’t afford to exercise my options so when the company that bought mine exited I didn’t see a dime. So I know how fundamentally random startup life can be. How unfair it can feel. Because today it is our turn to be the beneficiary of the unwarranted success.

My husband Alex’s long time home Stack Overflow, sold for 1.8B dollars today. And yes we are one of the 61 families that will see more than a million dollars from it. But it’s not all joyful excitement in our house. Because it’s not about not just about money. It never has been. In my family it’s always been about belief. And it’s really hard to reconcile the many competing emotions that come with a liquidity event. It’s the culmination of much work and time from everyone.

My father proudly reminds me that when I was born, he didn’t have a job as he was pitching an education startup. What a blessing to have the energy of one’s life be aligned with risk from the start. And also what a curse. My family had incredible boom years where money wasn’t a concern coupled with devastating financial and emotional ruin as companies went to zero and markets crashed. My father sacrificed so much for his dreams. He saw the value of software and took his wife and children to the promised land of Silicon Valley. And oh it was glorious. And oh how it hurt.

I have fond memories of Comdex, elaborate company cruises and board meetings during “take your daughter to work day.” I also remember my father not being there for birthdays, for dinner, for milestones because he was busy building the future. I don’t remember my parents getting divorced, because I suppressed the memories. Family trauma can be like that. The good and the bad exist at the same time. When my father went bankrupt in the Web 1 crash, I was so angry at him for not being more careful, I didn’t speak to him for years. And then I made the choice to become a founder myself. Despite my fury and sadness and hurt I too decided to live my father’s path. And then I married a man who walks it too. I guess the Bojack Horseman joke got it right.

You inherit your parents’ trauma but will never fully understand it. Haha the cop is a cat.

The day you get news you made life changing money is bittersweet because all the trauma of being a startup family member catch’s you to you. You remember the sacrifice of your whole family going back years. The long nights and missed time together. The choices to prioritize the company over your family. In our case 10 years but of course for me it’s been my entire life.

The entirety of my marriage with Alex and my entire relationship with him before was spent at Stack Overflow. I’ve seen the hard work and the pride. I’ve also seen the exhaustion and the agony when something went badly wrong. The hurt when teammates left and the fear of leaving yourself eventually. People grow up together at startups. Other more practical logistics show that not everyone wins. The hard decisions you make when it’s time to leave and you cannot afford to exercise your options are a unique pain. We just three weeks ago sold something in secondaries to afford the taxes to exercise ours. That’s timing and dumb luck. Almost absurdly so. We could easily not be in the position we are. Exits are the end goal and yet not everyone gets to make it despite equal sacrifices. It’s all random and no one deserves any of it. But it changes your life if it does happen.

Finance Startups

Day 152 and Running The Play

I’m going to put $5,000 into liquidity mining and yield farming to fuck around and, hopefully, find out.

If the last year has been about laying out the primitives of decentralized finance, this summer is going to be the Layer 2 land grab and I need to learn how to stake some claims. I don’t have a clue if it is going to work but I need to start learning how to play the game by tossing the ball around. I doubt I’m going to be whatever the equivalent of a professional player but I want to learn some muscle memory. You can’t very well buy an NFL team without having ever handled a football can you? Yes I am torturing a metaphor.

On a personal psychological note, I wanted to start with a $1,000 but then I realized the difference between losing $1,000 and $5,000 isn’t material to me (which blows my mind but such is the compounded benefit of my various privileges). However, the difference between 10xing $1,000 to $10,000 and 10xing $5,000 to $50,000 is extremely material to me. $50,000 is a a material seed stage check for a company that I may want to place a long bet on.

That is roughly the cost of my medical care for an entire year (not including drugs which roughly doubles it). That is a down payment on a parcel of land to develop over the coming decades. This is a moment to learn and leverage for the benefit of my future self and family if shit goes well. And if it doesn’t no big deal. The real money is better managed than me deciding I want to toss around a ball

My Chaos thesis says it’s time to run the play on the future more generally. It’s hard to argue that I can make good puts on a chaotic future without fully experiencing some of it myself in visceral fashion. I fully expect to lose all of it trying to liquidity mine and yield farm on my own but if I don’t well then I’ve proved something to myself about the future of capital.

I need to remind myself that this isn’t representative of how I allocate capital in a diversified portfolio to preserve my future security nor is it how I’d allocate capital even in a seed stage private venture stage portfolio. But it is a worthwhile amount to put on a 100% risk basis to learn how the fuck the future of capital allocation might work.

Honestly $5,000 is a pretty cheap tuition for a fancy credentialed college class so this seems like a good deal. I will write my way through the learnings and call it an independent study.

Finance Internet Culture Startups

Day 151 and The New Capital Networks

A lack of network has generally meant capital constraints if you were an entrepreneur. Being hooked up with capital allocators was crucial to being a good operator. Access tended to compound over time like interest. Which is why we make “funny because it’s true” jokes about how successful founders usually had a head start in a few areas. I’m not saying that is going away, but decentralized finance is fucking with some of the consensus knowledge around how capital gets raised and deployed.

And what convinced me we are moving towards an inflection point, over the next decade, where capital allocators and operators decouple, wasn’t my tony Silicon Valley network. No, I’ve had access to the minds of those players for years. What clicked my mind into a position to take action? I spent an hour and a half getting a tutorial from one of my anon reply crypto friends on yield farming and liquidity mining. I don’t want to blow up their spot but Alpha Ketchum dropped a lot of knowledge on me today. And it shifted my energy from belief into understanding. From there action will be seen in my investments.

I’m still chewing through a lot of the details but I’m going to make a bet that scaling DeFi is going to require significant institutional capital and the support of experienced operators to realize its full potential. Thats why I’m invested in folks like Cambrian and Martin Green and would love to get my dollars into Arca and David Nage. That’s why, of my four thesis areas I’m pursuing in my own fund Chaotic Capital, two are explicitly dedicated to both organizational and systemic flexibility and how it plays out across new business opportunities.

We’ve seen capital decoupling from traditional centralized authority systems and trust based networks. The perpetual fundraising machine of tokens, coins and market making techniques like yield farming, are funding everything from esoteric art projects and to the next generation of insurance. Thing about that, the innovative companies that drive growth won’t have their capital needs met just on Wall Street or Sand Hill Road. If you don’t believe me look at what has already been built

Exchanges → SushiSwap, Uniswap, Bancor

Insurance → NexusMutual, Cover

Derivatives → Perp Protocol, Opyn,

Credit Markets → Aave, Compound, Maker

Middleware → Chainlink, Grt

Asset Management → Enzyme, Yearn Finance

Aggregators → 1inch and Matcha 

Finance Startups

Day 149 and Optimizing for Outcome

I came across a thread today by Sahil Bloom on human goal setting and the mental models we manipulate. He introduced me to Goodhart’s Law

When a measure becomes a target, it ceases to be a good measure. If a measure of performance becomes a stated goal, humans tend to optimize for it, regardless of any associated consequences. The measure loses its value as a measure! Goodhart’s Law is states “Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.” But the concept was popularized by anthropologist Marilyn Strathern. She generalized the thinking and called it Goodhart’s Law. “When a measure becomes a target, it ceases to be a good measure.”

I am fascinated by this tendency humans have of fixating on the things we think symbolize progress instead of the actual outcome. Sahil names a number of instances in which this has led to bad business outcomes. CEOs managing to short-term stock goals has been one that has long frustrated me.

Startup land is immune from this tendency either. I’ve seen product teams fixate on OKRs such that they never miss a single metric but fail to launch their product on time. Or a venture capitalist will toss out something like an ARR goal for a Series A only to have a founder chase that number for a year and still not get funded when they hit it. We think these goals are the goals in and of themselves. But really launching the product on time and closing the series A are the only thing that matters. As long as we hit our goals who cares what metrics we used?

This is of course set against the classic “what gets measured get managed” which is an apocryphal quote from business theorist Peter Drucker. It may in fact be total bullshit. It may be that measurement actually hinders management. Said rather well by Simon Caulkin

Measures set up incentives that drive people’s behaviour. And woe to the organisation when that behaviour is at odds with its purpose.

Lest you worry this is just a business problem when I was single in my twenties I made a spreadsheet of the various gentlemen I was dating. I felt like I needed a way to make the process more efficient so I starting weighting categories of characteristics that was most important to me. I like intelligent men so I started listing their college degrees. I liked men who were into quantitative thinking so I started noting if they worked in banking or academics. And well you can imagine how this took a turn for the worst. Instead of meeting smart men that likes to look at the world through numbers I met a lot of bankers that went to Harvard. I was optimizing for the wrong outcome.

Next time someone tells you that some metrics or goal is the only thing that matters stop and question if it makes sense for the long term objectives. I’m not saying bankers from Harvard aren’t smart but I’m also not saying that all smart men are bankers from Harvard. And that turns out to be a pretty crucial difference.


Finance Startups

Day 146 and Gossip

Gossip drive the world. The stories we tell about other people reflect a lot. Even if we claim we don’t care what others think what others think moves the world around us. And I would posit that this actually isn’t a bad thing. It can drive closer bonds and increased connection.

There is a concept in evolutionary psychology called indirect reciprocity. Natural selection favors strategies that base the decision to help on the reputation of the recipient. Social interactions in which one actor helps another and is then benefited by a third party are key to cooperative reputations.

This isn’t just a systemic population level issue either. People who are more helpful are more likely to receive help. It’s uneven obviously and people can obscure their reputation. Depending on if you are up or downstream of helping or being helped, you make different calculations. Some people help more but they feel it’s worth the cost. They are downstream. Others accept more help because they are upstream. We are all making trades based on our position and arguably they are fair market trades.

How we decide to cooperate and with whom is driven considerably by reputations and shared value beliefs. Relaying reputation signals to bolster your capacity to connect to others is actually a key part of empathy. We need to establish psychological safety to partner with each other. Gossip helps us find suitable relationships. This is especially true in disciplines which require creativity. Quoting myself on the topic of psychological safety in venture capital.

If entrepreneurs are solving entirely new problems with high chances of failure feeling like they can trust their financial partners should be a top priority. Yet the atmosphere of distrust is pervasive. Venture capitalist and entrepreneur are constantly managing the information flow between each other.

Managing the information flow is a key component of gossip. Showing you understand their context, their fears and their reputations concerns helps you. An act we denigrate in popular culture actually helps you to deepen the relationships as each signifier breaks down space between two people and builds trust. So don’t knock gossip. It has evolutionary, societal and individual benefit. Just remember the ultimate outcome is about bringing people closer.


Day 144 and Scars

I have significant e-commerce, direct to consumer and retail business experience. I’ve managed multi-million dollar P&Ls, worked on iconic billion dollar brands and started my own direct to consumer cosmetics line. You’d think with that experience I would be deeply bullish on my ability to pick up and coming startups in the space. But I don’t particularly want to invest in digital brands or online retail. And I think it’s scar tissue.

I’m not saying flat out“no” I won’t ever invest in a DTC business or an e-commerce startup (I have and I will again) but a little bit of knowledge can make it hard to preserve creativity and imagination. Many founders can come out of a space where they have dedicated years of their lives and simply want space away from their expertise. They know too much. They’ve seen things. The scar tissue that forms to keep you working during the long dark soul of startup pain is still tender.

When I mentioned this lingering pain others pointed me to other areas they struggled to hear pitches or invest because of experience. Rental businesses and neobanks from Maia Bittner, certain e-commerce verticals from Lee Edwards, fitness from Jason Jacobs. It’s a common phenomenon among founders.

I’ve got lots of opinions why certain kinds of businesses won’t thrive or have business models that won’t make the kind of return my own personal investing thesis demands. But the truth is that I now have enough expertise to simply know more than is good for me. Ironically this means I should spend more time as an advisor or consultant on certain kinds of businesses but it takes a special founder to coax it out of me. Because I do have valuable insights and I want to share them.

But the last thing I want to do is pass on the trauma of my own experiences. Founders deserve to have their psychological safety preserved so they can build the company of their dreams. Some painful insights from a founder that came before them might help them avoid some pitfalls, but if they take our traumas too seriously they may never find their own path. And that kind of backward looking “it will never work” or “trust me kid I’ve been around the block” attitude can really bring creativity down. So I will always share my honest experience with anyone who asks but I’m hesitant to ever let anyone take my lessons to close to heart. You very well may be the one that breaks through where no one has before.

So when someone pitches me their new retail startup or DTC brand or cosmetics concept I try to be honest that I may nit be the best fit. I’ve got scar tissue. And if a founder insists that I can help I will try. But remember not all skepticism, fear, distrust or dislike is about you. Sometimes it’s all about the trauma of having lived it before. Asking someone to live it again is the ultimate act of trust. And maybe just maybe we get to firm new scar tissue together.


Day 125 and Working With Startups

One of the most frustrating aspects of startup life is the vendor startup relationship. There are so many pitfalls and disasters that can befall each side. That naturally leads to a lot of dysfunctions as each optimizes for their own needs, a process that unwittingly leads to the disasters we sought to avoid in the first place by trying to prevent issues.

From a startup’s perspective there are two key issues. Established businesses tend to be slow moving. They are slow moving as they have process and documentation. Nothing is more frustrating to a startup than needing a nimble partner that can throw shit at the wall only to get a meticulous vendor that documents all the shit that didn’t work in exacting detail. This isn’t to say that one shouldn’t report (in a remote first culture documentation is even more crucial) but 40 page decks on what happened will send a founder running.

From a vendor perspective startups are frustrating because they never have any of the assets, documentation or processes in place that make your job possible. Anyone who has become embroiled in a mess of half functional SaaS operation software knows what I mean. How are you supposed to deliver on a contract when all the basics you need from a startup are impossible to locate and occasionally contradictory?

The tension between the two workflows is clear. Especially because startups eventually become more process driven and operationalized over time and vendors are always looking for ways to become more nimble and cost efficient. So you’ve got two parties who want to become more like the other, but as they do that risks upsetting the partner that chose them for the opposite virtues. If this were a romantic relationship it would be heading for a breakup. “You’ve changed man!”

My best advice to vendors is to be as flexible as possible with startup clients. The faster you provide an output the more likely it is that the founder will come to rely on you. Most successful startup vendors simply roll up their sleeves and start producing. They don’t scope in too much detail or negotiate contracts that lock them in, no, successful startup vendors know they give themselves security and contract stability simply by giving a founder what they need every day. As you find more needs you act on it. You stay flexible till suddenly you’ve become the crucial partner that gets budget every quarter. As a startup grows becoming the indispensable partner means that you grow along with it. Your goal should be to have your client succeed at the same pace that you are succeeding.

My best advice to founders is to allow your vendors best traits to rub off on you. Paying attention to their competencies allows you to build up teams that support that. That then enables your vendors to perform even better for you as the fluency on expertise develops. Great marketing teams don’t just produce great marketing in-house but rather they allow it to flourish in the entire ecosystem. There is a reason why CMOs have winning agencies and winning agencies have great brands. The truth is that you will always get the most out of your vendors if you respect what they excel at and spend your time and money prioritizing that support.

The danger if you don’t make productive vendor startup relationships is two fold. One startups will waste valuable capital with a partner that was never a good fit. Two vendors will waste billable hours and employee energy on accounts that have a high probability of imploding. It’s a waste of money for both sides. But when it works well lol it’s absolutely money.

Finance Internet Culture Startups

Day 119 and Status Narratives

I’ve mostly worked inside insular industries. There is something about disdaining a club and then slowly forcing it to adapt to me that I find appealing. My handle on Twitter “AlmostMedia” wasn’t actually meant to be a joke about the ephemeral nature of timeline driven content (though it is now) but was an inside joke about my first personal blog.

I wasn’t as comfortable being an outsider when I was younger so a common theme on my blog was about how I “almost” achieved insider totems and status but never quite did it right. I never felt like I was stylish enough, cool enough, rich enough or had enough status symbols. Now I kinda laugh at myself as I realize semiotics is as driven by the out group as the in group. I always had the power to be enough.

But thanks to this insecurity about being “almost” but not quite right I’ve achieved a pretty valuable skill set. I’m able to see what is coming, what will resonate, and most importantly what will have status. I’m not always great at the timing (I’m often too early) but I am very good at nudging narratives into the popular conception. I call this the Thursday Styles problem. Timing what is next is as much about knowing what is coming as when it will hit and doing what you can to control the pace.

I particularly like fashion and startups as as success is often a Thursday Style problem. Status narratives are driven by people who like to show off that they knew something cool was coming. Think of the trope of venture capitalists publishing a post about when they first met a founder timed with a company’s IPO. Music used to be like this too with snobs insisting “I knew them before they were cool” when a band blew up.

Status narratives often revolve around being first. Much of crypto is obsessed with showing off how early they were while also insisting to everyone that “it’s never too late” as they need to drive a status narrative that brings in more adoption. Being early generally only matters if you are also still around when it’s “late” and you always need more people to push you further into early. Even if most of the benefits are seen by late adoption we all want to feel like we won the status game of being early. But it’s important to remember we are all a little too early or too late. We are almost right. Which is enough for plenty of success.