Tag: Venture Capital

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Internet Culture Startups

Day 282 and Stop & Go

I wasn’t born until after stagflation so I can’t tell you what America or Britain felt like in the 70’s but the chattering classes seem to enjoy bringing up the comparison. But there does seem to be a bit of “stop & go” energy in the air. Everyone is raring to go but the energy cannot quite flow freely as we smack into obstacle after obstacle. Demand is pent up but the reality of supply is uglier.

Obviously this perspective of excitement and demand is colored by working in startups where the bias is always towards the excitement of building new things. Crypto is burning with the fire of millions of zealots, all of whom are confident we are building the infrastructure for a better future. Everyone feels like it’s worth investing and higher prices are a good sign. There is more go than stop here.

Of course, I am one of those zealots. I’ve got the optimism of someone who saw how fast previous waves of web1 and web2 changed my entire world. Wealth and creativity was unleashed twice over for the elder millennials who were lucky enough to witness the dot com boom as children and the social media era as their first jobs.

There were massive crashes and financial implosions too. Stop more than go. More of us got hurt than got wealthy. But we saw the possibility even as failure engulfed most of us. So we believe we might be the lucky ones this time. That we might be the ones to win the game. “Red light, green light” seems fun if you can make up ground when everyone is running. Just don’t get hurt too bad.

I feel this energy in my own body. I am excited to push into everything. My portfolio companies are all riding high. There is no way I can do it all in any given day. So when the go energy pushes me sometimes I find myself leaning into stop and simply taking a nap in the middle of the day. It makes me a little jittery to feel the push-me-pull-me of demand grind up against the limited supply of energy and focus. I’d like to feel fully unleashed but I know somehow there are moments where it’s best to stop before I go.

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Finance Startups

Day 275 and Manifesting

I had a really terrific September. Everything just started going my way. Projects that I’d been pushing on had significant breakthroughs. My deals got hot. My focus and health improved. Even when I had setbacks and failures I was able to execute on quick recoveries. But mostly I didn’t give in to past bad habits. And all of that happened without any additional effort on my part.

I’ve been making a really conscious effort to stop pushing myself to always be doing more. Either I am able to find elegant solutions or I ask myself to take a step back till I can. Rather than brute forcing everything I am finding ways get where I am going without sacrificing myself to costly bad trades on my time and energy.

I asked for something really significant from one of my investments (an additional allocation for an special purpose vehicle). The second I asked for it I started to panic. I didn’t have an immediate or simple path to deliver on what I asked for from this founder. Even though I was confident I had the money for the deal it out I panicked that maybe I had bitten off more than I could chew. Immediately it started going through my head about how bad I’d feel if failed this founder. I relived the guilt, shame and punishment I had felt in previous failures to deliver for people that trusted me. I hated feeling like I’d failed people.

And I just decided stopped the cycle of worry then. Like turning off a switch. I told myself I could do it, I knew I could do it or I wouldn’t have asked, and that there was simply no way I was going to let down this founder. But this is where I felt the frown Instead of going into overdrive, I stuck by my schedule. I didn’t change anything. I didn’t push myself to a frenzy by adding in calls, pitches & emails. I just put down all the steps I could and would take to make the deal available to the right people and I began.

In the past I would have let that fear drive me. I would have gone into overwork and adding in additional tactics that I didn’t even need to insure I would reach my goal. But here I trusted myself to get the outcome. I didn’t exhaust myself. I took care of myself. And the allocation got filled quickly. I checked the commitments this morning and I’ve only got 15% of the deal left.

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Finance Startups

Day 270 and The Circle of Capital

Capital has evolved a lot in my life. The dynamics have changed so much in the 30 years I’ve been ambiently around venture it’s barely the same business. And yes I mean since I was a kid. The apocryphal family history is that I was born on the poor side of Silicon Valley while my unemployed father was working on pitch deck for education software. Yeah it’s a shitty origin story but it’s mine.

Back then you sold your entire life to some dudes for half a million bucks and gave up a lot of control. It wasn’t really collaborative but it was worth it to create the future. Back then your VCs controlled a lot more than they do now for capital they deployed. Flexibility and collaboration wasn’t really considered necessary. Your VCs actually controlled when you got fired (another childhood memory was a “take your daughter to work day” where a CEO got fired), when you could raise again, if and when you could sell your company, and honestly I wouldn’t be shocked if they had some Rumplestiltskin provisions too. That’s just where the market was at the time.

As it has become clear that non-linear returns come from creative founders and new markets, the structures of capital deployment have changed a lot. Capital cares about helping operators create because creation simply has more value than it did in the past. Venture capital isn’t old dudes optimizing for control and margin anymore (even if sometimes that might be a good idea) because that’s just not what makes money anymore.

Heck it has changed a lot in just half a decade. The last time I raised venture for my own startup, we actually priced the round (no uncapped SAFEs), we had a board from day one, and we were allowed to overshoot our valuation and capital goals by a whopping 300K. I was sure we’d reached the height of founder leverage at the time. Heck I felt certain we’d raised a small fortune on favorable & flexible terms. Six years later that would be considered a charmingly small pre-seed round with very onerous terms. Time marches on! And rightly so. Markets adapt to the needs of the participants and the returns they deliver. If it wasn’t profitable it wouldn’t be so.

This is all a long winded way of saying that I am continuing the circle of life. I’ve got my own venture fund Chaotic Capital with Alex Miller and Jacob Brody. It doesn’t look anything like the funds of my childhood or even the seed stage funds of the last decade. Probably because we as founders and operators lived through the hard lessons of venture in multiple cycles and took a lot of lessons with us. Capital isn’t about control. It’s about collaboration now. Capital starts early. Capital is flexible to generate returns But we also aren’t n00bs.

Rather than spend a year raising in silence and announcing it once it’s all said and done we are building a rolling fund. That structure works for us and my general affinity for building in public. It signals founders we are building like them (even as our other constituents see it as being responsive to the demands of the market). The rolling fund is a kind of flexibility to build at the speed of the market while also understanding that the give and take of responsible deployment must also work at the pace of founders.

While we work on forming our proper fund, we’ve created an AngelList Syndicate for chaotic where we’ll be creating SPVs for our current deals (we already have our first two which feels crazy to me) as well as follow-on deals once the fund is created. If you’re an accredited investor and interested in joining our deals, head on over. Isn’t it cool how these structures morph and change over time? I guess having a couple decades of being an operator has some benefits. You’ve seen what works and hopefully have some capacity to change what needs to be changed.

Our LPs and co-investors are mostly our friends and former colleagues who have spent years working with us at companies as varied and diverse as Stack Overflow, Trello, Easypost, Triplelift, Goop, PopSugar and over 40 different angel investments. Alex Miller, Jacob Brody and I have invested over 4m over the years which seems sort of astonishing.

While we work on forming our proper fund, we’ve created an AngelList Syndicate for chaotic where we’ll be creating SPVs for our current deals (we already have our first two!) as well as follow-on deals once the fund is created. If you’re an accredited investor and interested in joining our deals, head on over.

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Finance Startups

Day 255 and Bias Towards Fuckround

There is a tendency to believe that startups have a bias against older people. While ageism is alive and well, I’d argue what appears to be a bias against older teams is actually a bias against teams with experience. No one wants to invest in a team who don’t fuck around. We want teams that will find out.

One of the reasons I work with early stage startups is because their trajectory is not yet set. Every conversation has a hint of “fuck around and find out” because your vision is far away. You need to experiment, test, throw spaghetti against the wall. Pick your metaphor. The bias towards action and the bias for momentum exist in investor minds because the alternative is death.

This has the second order effect of selecting against teams with experience. It isn’t ageism. It is a bias against a certain kind of professional that knows too much. It’s not that anyone thinks experience is bad. It’s harder to fund teams with no exposure to the industry they are working in. It means that some types of experience will function as negative signaling. We think you know too much to solve the big problems. We are afraid you aren’t flexible enough to do the work of throwing out all existing assumptions.

While being an expert in a field means you have a better sense of how you will get from point A to B, it also means you have a less flexible mindset. You have seen what hasn’t worked. You have opinions about can or cannot be done. Even worse, you have an idea of how things must be done. Simply put a certain kind of battle tested, “expert in their field” persona isn’t trusted to fuck around enough.

If you are one of these founders, you have to fight against this signaling issue. Show investors your commitment to fucking around and finding out. Telegraph that all your experience and knowledge from your past work could very well be bullshit. Show us you will be committed to testing even more rigorously every hypothesis of how your roadmap will unfold. Then your experience becomes an asset.

We will trust that you have more opportunities to fuck around and find out than a less experienced founder because you plan to test what you think you know. Which is a lot! Show that no truism of your space will be held sacred. While a neophyte team will need to discover all the truths of a space to even begin to test. you will be ahead of them running test after test. Jujitsu that shit. Use the energy of your experience to show that you will bring the maximum amount of flexibility to finding new outcomes. The unbiased but experienced mind has the best chance at achieving momentum.

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Startups

Day 250 and Getting to Know You

I don’t really like musical theater (it’s the people sorry) but I’ve been humming a tune from The King and I called “Getting to Know You” as I codify my process for meeting founders and startups. It turns out Julie Andrews through Rogers and Hammerstein lyrics may be a viable strategy for finding out if someone is a fit for Chaotic.Capital. The actual play is racist, colonial nonsense but you know take art for art’s sake.

Getting to know you

Getting to feel free and easy

When I am with you

Getting to know what to say

Haven’t you noticed

Suddenly I’m bright and breezy?

Because of all the beautiful and new

Things I’m learning about you

Day by day

She’s talking about being a teacher and getting to know her pupils but it’s also maybe about falling in love, but I like the sentiment that learning “beautiful and new” things “day by day” feels bright, breezy, free and easy. That’s a good template for relationships of all kinds.

Pitching is none of those things. It’s practiced, formal, and exhausting. It may be a necessary evil for founders as you need concise and clear communications about what you are doing and why it requires capital. But I don’t think it’s the best way to get to know people. Getting to know someone should feel easy.

I like to get to know someone over the course of conversations. My preference is through asynchronous communication mediums like chat, direct message or email. There is something about the volleying back and forth of information that helps me more. I like a back and forth that is informed by revealing thought process but also context and background. I’ll chat with virtually anyone and keep my direct messages open on Twitter because I value conversation so much.

I generally don’t feel that phone or video calls are that helpful to me in getting to know someone initially. I don’t mind short 10 minute bursts. What I do dislike is the planned hour long call for an initial conversation. Rarely am I able to be emotionally and physically present for something like that if I am not already interested or invested in story.

But if we’ve had conversations through Twitter, direct message or email where I have more context and connection then it’s possible I can be present for you. But I wouldn’t recommend asking for an hour synchronous medium as your first interaction with me. I’ll do it as a favor to someone now and again but I almost always resent it.

I’d rather get to know you over time before I’m trapped in a room for an hour to put it bluntly. I promise this is for both of our benefit. You wouldn’t take someone on a two week vacation for a second date so why would you hinge your chance to work or get investment from someone by insistence on spending an hour together right off the bat. Let it simmer a bit. Give me an appetite for wanting to help you. Then you won’t be able to get me off the phone or Signal. I will be your most available investor if you take the time to show me who you are.

So go ahead. Message me. Message a bunch. Send an email. If you don’t hear from me message some more. If I’m being evasive tell me straight me. But the end goal should be that getting to know you is free and easy. And you will be able to tell if I’m excited. Don’t give up. Just keep the conversation flowing like Julie Andrew’s did.

Categories
Emotional Work Internet Culture

Day 247 and Rooting for You

I watched a viral video of a young white American kid who claims to have quit a 100K job in order to pitch YouTube star Logan Paul for a job. It’s really hard to watch because this poor young man just utterly shits the bed on asking his favorite social celebrity to take a chance on him. He can’t even tell Logan what he is best at. He doesn’t know himself and thus cannot capitalize on his moment in the sun to show his worth. Honestly it will break your heart.

The shitty sad part of watching this kid utterly fail at self advocacy is if you are in a position of power you genuinely want to help people if they are clear about how you can do so. No one wants to say no. We all want to get to yes.

Being asked “what are you good at?” is an empathy driven open ended “get me to yes” kind of question. Logan Paul, never a celebrity I’d have previously associated with emotionally empathic, actually encourages this young fan. Even in a short clip he encourages him.

It breaks my heart a little that this kid doesn’t have anything to say for himself. Even saying something small like “ I’m the best getting groceries quickly” would have given him a chance.

I think the reason this hits me hard is that everyone has emotionally been that young man. Asked someone to help and just utterly bombed. I know I’ve taken a swing and asked powerful connected intelligent people to help me and then subsequently failed to rise to the moment. I carry those emotional failures with me. I think we all do. It’s what drives us to be better. Those moments of defeat can remake us for success. They course correct us. But only if we don’t let don’t let those failures beat us for good. We have to see the patterns that brought it into our life, accept that it’s our failure, and let it improve us.

That’s why it’s so important when you are in a position of saying no to someone to do it with as much grace as Logan Paul. I know it’s a weird sentence to type. We owe it to ourselves to there to hear them at their lowest moment with the hope may eventually become the path to their better self. Because surely someone once did that for you. That’s wisdom.

It’s hard getting a concise answer to “why you” and finding and accepting the truth of what you are truly better than anyone else is at is a lifetime of work. Being able to do it when you are young is what makes for a life that will give you satisfaction instead of disappointment.

I genuinely believe we want to help others get there. I used to hate when someone who turned down one of my pitches would say they “were rooting for me.” I thought it was dismissive. Now I choose to understand that that most people want to help you succeed.

If someone accepts time to talk to you it’s probably because human to human they would like to get to yes. I now take “we’re rooting for you” as sincere. Maybe it’s not in some cases but why not default to good intent first?

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Internet Culture Reading

Day 244 and Crypto Fiction

Science fiction has often been the proving ground for reality. Without Star Trek I doubt I’d be typing this out on my own personal tricorder (mine is called an iPhone). Imagination begets reality. Much of the internet was charted in the genre of cyberpunk long before the rest of us got online.

I think we are entering a new phase with crypto and I’d like to compile a list of foundational texts that have given us the imaginative framework for concepts like the metaverse, DAOs, and smart contracts. I believe this to be a distinct genre from cyberpunk even though classics like Snowcrash transcend both genres.

For instance I don’t think Neuromancer is a crypto novel even though it is an internet novel. I’ll have to work through my logic and categorization on that front but my instinct is that novels that explore networking and computing are not in and of themselves crypto novels. They have to include some aspect of decentralization to qualify. Further aspects like self executing logic for corporations, societal organization, peer to peer and permission-less code and other similar themes I think all fall under decentralization.

Snowcrash by Neal Stephenson – the original metaverse novel. Hiro Protagonist literally inspired Stack’s Hiro. Full disclosure my husband is the COO. Ironically he has not read the book.

Rainbow’s End by Vernor Vinge – what is basically boomer has to adjust to economic life that is organized around what are functionally DAOs with the help of his granddaughter. This grossly oversimplified plot shouldn’t be used to judge the book which is actually a singularity story.

Daemon & Freedom by Daniel Suarez – the predictive text finisher for Gmail takes over the planet by creating a smart contract. If you ever wondered what would happen if what if Grammarly becomes Putin this is for you. But I do think it is an excellent exploration of how DAO (decentralized autonomous organizations) could replace the corporation.

Attack Surface by Cory Doctorow – you could include any of the books in his Homeland universe but this one pushes home a bit harder how centralized services destroy privacy which is core to why we need peer to peer permission-less systems.

Analog by Elliot Pepper – While it is technically a thriller trilogy there is an augmented persistent metaverse that is run by an organization that transcends the corporation to be something much more. Plus it has lobbyists, self destructive energy billionaire and engineer heroes.

Acellerando by Charles Stross – it starts in the home of the corporation Amsterdam and pans out from there to include things that look like smart contracts that are in fact too smart, lobsters, shell corporations, and the eventual end logic and utility issues brought on by the logic of “always be growing.” Also snag Neptune’s Brood which deals with the monetary policy implications of faster than light travel in a galactic civilization that needs slow stores of value. Cold wallets!

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Internet Culture Startups

237 and Crypto-Optimism

As much as Silicon Valley and startup culture claim a kind of techno-optimism, in the wake of the social media partisanship, science skepticism and climate concerns, it feels hard to really dream big. People say catch phrases like “it’s time to build” but we all understand there are limits to the problems we solve in capitalism’s current markets. And no one believes the government can solve anything.

Any possibility or big dream can be clouded by its politics or cultural baggage if you let it. We yell about cancel culture but it’s really a lack of imagination. A kind of giving in to the boundaries of what is acceptable has captured the moment.

But I’m noticing a genuine mood of possibilities in crypto. A levity that believes in wide open horizons. Instead of the long horizon, crypto sees a bright one.

Maybe it’s because crypto’s proponents genuinely believe it will be possible to toss out legacy systems. Crypto is still so new the disillusionment of compromise to human nature, design dependencies or aggregate power seem far away. The problems that plague ant endeavor haven’t become inevitable. No wonder the mood is ebullient. We are genuinely happy in crypto.

You can imagine a world in which the DAO destroys the corporation. You can imagine a world in which artists are paid directly by patrons in effectively priced markets which respect their ownership. You can imagine expensive and exclusive financial products being automated away so even a small independent entity can access the best without bleeding out through a dozen service fees. Everything could still be a utopia.

And while I know it won’t it feels really great to be optimistic about something.

Categories
Emotional Work Startups

Day 230 and Punishment

I wish I understood why we feel the need to punish ourselves sometimes. What is it about human nature that makes us abuse ourselves? Oh we deserve it. It apparently has a social purpose as well according to Psychology Today

Self-punishment tends to serve a dual purpose as it not only relieves internal feelings of guilt but impacts how others perceive us as well.

I’ve been feeling guilty. This month is the two year anniversary of me selling my last company Stowaway to a private equity firm and pursuing a medical leave to diagnose and treat my spinal condition ankylosing spondylitis. It was a happy ending, at least mostly, with the company being put into better hands than mine. But I still felt guilty.

I felt bad I didn’t live up the expectations of our biggest dreams. I felt guilty I didn’t 100x the capital for my venture investors. I felt guilty that my colleagues had dedicated so much to me and I had failed to deliver on the outcome we had dreamed of in our early days.

So punishing myself seemed like the right thing to do. I deserved to be sick. I deserve to be in pain. I deserved for the whole world to read about my experience and my failures. I deserved to be shown in public as a weak sick woman. It sounds so abusive when I write it out. Like I thought I deserved to be tortured. But maybe that’s exactly what I felt.

I am trying to unearth why I have the self limiting belief that punishment is what I deserve. As it’s more than just the circumstance of selling a startup and not seeing the results I wanted. It’s got to be deeper than the rationalizations I’ve given.

I’ve practice family systems therapy. The basic premise is that our childhood informs how we react as adults. And by healing the rough patch’s or even traumas of those times we can live the life we choose. For me I felt abandoned as a child. I wanted my father in particular to be emotionally available. But it just wasn’t to be. But I held on to the idea that I must have deserved to be abandoned. But of course it had nothing to do with what I did or did not deserve. It wasn’t about me at all.

Now I remember that I am a capable, brilliant and above all reliable person who needs to accept what I can be and not be bound by what I learned in failure. Finding that and turning it into your superpower is where the real success comes from.

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Aesthetics Internet Culture Startups

Day 213 and Kobayashi Maru

I don’t believe in the no-win scenario

Captain Kirk

If you cannot win by playing by the rules, then change the rules. If you are nice Iowa farmboy named James you will probably get away with it. Or a cartoon character named Calvin with a stuffed tiger named Hobbes. There is no cheating in Calvinball because the rules are constantly changing.

I’ve been thinking a lot about shitposting this past year as it becomes a kind of social sport in venture capital and startup Twitter. I’m a big fan of the shitpost as I think making elaborate “jokes but not quite jokes” can be an exercise in vulnerability and honesty.

But who gets to be honest and what rules will be broken if the wrong person says the true thing is quite telling. I have a medical procedure that is going to take a lot out of me this week so I’ve been resting at home in preparation. This has meant I’ve watched a lot of television. I’ve been binge watching Downton Abby the period drama about Edwardian Aristocrats coping with changing social standards as modernity bears down on them. It’s a drama about “manners” which please lots of agonizing over who and what is right and proper. The class structures are so codified they are literally written down. No seriously they kept books about peerages! Check out Burke’s. Fucking wild.

It all seems a bit ludicrous as an American but I’ve got to imagine social institutions I consider completely normal will look utterly baffling in a hundred years too. And much of the way those social mores change is when someone decides that playing by the rules is a no-win scenario. Sometimes the game is so codified that no one but people who have been trained and advantaged their entire life can be winners. When that happens the only way anyone else can win is to change the rules.

Or as Spock might have said to Kirk. “You cheated.” But is it cheating when it’s a no win-scenario? If by changing the parameters the game you open up entirely new possibilities maybe it’s a good thing. Sure, Star Trek does an excellent job of showing us the emotional and moral limits of never having to face failure and it’s consequences. But what if without rejecting the premise of the Kobayashi Maru you could have never known success or change?

I think shitposting might be a bit of social Calvinball or some social media variant of the the Star Fleet ethics test. People with some power use it to great effect. But a lot of people with some talent and an eye towards improving their social position leverage shitposting. They change the rules of what can be said. They make a game of truth telling and shift the rules of the game. This isn’t a finished theory by any means but as I’m determined to slowly think my way through a grand unified theory of shitposting you can expect a lot of notes and works in progress on the topic here.