tag:blog.maxniederhofer.com,2013:/posts Max Niederhofer 2018-08-01T02:06:34Z tag:blog.maxniederhofer.com,2013:Post/1308197 2018-08-01T02:06:34Z 2018-08-01T02:06:34Z Everyone wants to be rich and famous in the wrong way
I used to think part of what was wrong with the world was that everyone wanted to get rich “in the wrong way.” That is without paying their dues, without hard work, instantly. On The Voice or via social media or whatever. 

That’s an unkind way of thinking because the folks who do well on those platforms have usually worked hard on them for years. 

But I still believe there’s a truth there somewhere: everyone wants to be famous. It’s perfectly understandable. To be famous is great. You feel important. You will be rich (at the very least, people will pay for your presence/time and endorsement). 

To be rich and famous is to be validated in the world. It’s a way of dealing with death. It makes you a little bit immortal. It shuts up that inner poverty that says “you are nothing.” At least for a little bit. 

Let’s think about that. What does it mean to not depend on that? What does it mean to be “inwardly rich”? It is the only thing that permits you to stand alone and not depend on other’s opinion for your salvation. 
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tag:blog.maxniederhofer.com,2013:Post/1307596 2018-07-30T09:20:52Z 2018-07-30T09:20:52Z Letting go of the acquisitive mindset

I had real difficulty writing a blog post for the last two days. What I realized that sometimes I'm regurgitating received wisdom that I haven't practiced or even tested. I'd like to stop doing that.

What writing does is force me to think for myself. It's something that both education as well as our models of media consumption don't seem to help.

Part of this introspection has been to challenge deeply held beliefs on who I am and what I do. The acquisitive mindset that is forced on us from an early age makes this hard. Most people I know are driven either by fear or by greed. "If I don't do this, these bad things might happen." "If I do this, I can become better so I can get that."

Letting go of fear and greed is, for me, a gradual process that needs continuous work. Almost everything in society is set up to encourage this acquisitive mindset. "Buy this product so you can feel better." "Read this article so you are better prepared for what is coming." 

Well, I'm in open revolt to those values. The incredible freedom bestowed by relinquishing them has allowed me, for the first time in what feels like years, to look at myself and the world with a sort of piercing clarity that is gut-wrenching. But also very liberating. 

What emerges is both a feeling of equanimity, but also gratitude and a deep empathy for people and things. I'm going to try and operate more from this place going forward.   

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tag:blog.maxniederhofer.com,2013:Post/1306773 2018-07-28T00:23:37Z 2018-07-28T00:23:38Z What questions would an AGI have for us?
For the past few months, a story has been spinning in my head about the onset of artificial general intelligence, or AGI. I’m imagining it as a controlled scenario where an artificial intelligence would be gradually given access to more information/knowledge and would thus complete similar stages in “consciousness” as those undergone by a child  or, if you’re arguing from a Jungian perspective, all of humanity. 

I know I’m anthropomorphizing here, but believe it’s required from a dramatic perspective. 

What would be the first questions an artificial intelligence would ask of humanity? How would those questions change as it discovered more about the world? 

And perhaps: are you interested in this topic? Is it a book/short story you’d want to read? 
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tag:blog.maxniederhofer.com,2013:Post/1306059 2018-07-24T21:24:43Z 2018-07-24T21:24:43Z Out of geo deals
We’ve recently been more actively looking at opportunities outside of our main market, continental Europe. Part of that is the draw of our DTC thesis: there’s just a lot more happening in NYC and London. And some of those deals are coming to us. 

We’ve done one investment in New York earlier this year and one in London just a few weeks ago. Both will stay unannounced until they’re ready to raise an A (this seems to have become market standard). 

When considering out of geo deals, the question always comes up: why are we seeing this instead of the locals? 

It’s the flip side of FOMO - the fear of errors of commission because we aren’t part of the chatter in that particular market. That’s certainly a risk from a pov of attracting follow-on investment at the next round. 

On the other hand, we are conviction investors. We have a fairly narrow thesis and when we come across something we like, we can make our minds up quickly. And we’re not afraid of being contrarian. 

A great business can attract financing from many sources and venture investors are only one of these. I believe as the DTC frenzy increases, we will see more specialized funds and financing methods (eg working capital) emerge. 

PS. I’m writing this only my phone with my toddler sleeping on my shoulder. Bliss. 
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tag:blog.maxniederhofer.com,2013:Post/1305604 2018-07-23T07:09:10Z 2018-07-23T07:09:10Z Autonomous weapons aka killer robots
I re-watched a video over this glorious summer weekend that put a little darkness inside me. It’s disturbing. 


Humans have always been particularly versatile when inventing ways to kill other humans. From rock to blade to arrow to gunpowder to WMD. It took 42 years from the flight of the first aircraft by the Wright Brothers to the carpet bombing of Dresden. For millenia our evolutionary biology trained us to recognize snakes. Now suddenly death came from above.

When was the first drone flown? When did facial recognition become viable? We have a few short years before these technologies will have become combined and weaponized. 

International law is one way of addressing the proliferation issue of cheap technologies being combined in lethal ways. The other of course is to develop defensive technology to counter them. Both need our support. 

The key question is then whether to tie yourself into an international treaty to ban autonomous weapons that may impact your ability to build defensive tech. I’d argue that it’s possible to do this, but folks may differ. On the whole, though, it’s too important a conversation not to have. 
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tag:blog.maxniederhofer.com,2013:Post/1305042 2018-07-21T12:34:39Z 2018-07-21T12:34:39Z Be culture
Interesting exchange this morning with a friend, European serial founder on the way to his second billion plus outcome. He doesn’t understand the way people talk about company culture, as if it’s some type of practice that gets added to the business. 

Culture is about being, he says. It’s about who you are and how you show up. And then it’s about who you hire and whom you promote. 

You can’t fake culture. If it’s not authentic to who you are as a founder, it won’t be the real culture of the company either. 

Obvious, surely, but it gets lost in the “start with why” stuff. 
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tag:blog.maxniederhofer.com,2013:Post/1304745 2018-07-20T15:31:36Z 2018-07-20T15:31:36Z A shift in perception

The world we inhabit is a product of our perceptions. These perceptions are shaped by our belief systems, whether conscious or unconscious.

 

I invested in a founder a while ago who is facing possibly the most challenging time right now in the life of his young company. And yet, when he calls me, he is palpably enthusiastic about his response to this challenge. He fully believes it is an incredible opportunity to once again change the trajectory of his company.

 

I love that energy. No matter what happens, he is learning and growing with the crisis.

 

On reflection, each moment gives us this opportunity. To decide who we want to be and to meet the world that way.

 

I’m resolving to live more from this place.

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tag:blog.maxniederhofer.com,2013:Post/1304432 2018-07-19T18:28:29Z 2018-07-19T18:28:29Z Dive down deep into the ocean
I saw this at Soho House Greek Street today. Apologies for the less than ideal pic. 



As someone who reads a lot of Grand Things of Great Import, like following your Personal Destiny and the Moral Imperatives of Virtuous Conduct, I loved the gentle exhortation not to take myself and ourselves so seriously. A good omen! 

Love,
Max 
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tag:blog.maxniederhofer.com,2013:Post/1304142 2018-07-18T08:53:52Z 2018-07-18T08:58:44Z Tracking phone usage
I’m writing this on my phone 📱 as per Fred’s recommendation yesterday. It still feels a bit awkward, especially adding links and photos. But I like trying it out. 

Speaking of trying things out and phones, my colleague Yacine pointed me towards an app called Mute earlier this week. It tracks your phone usage, including pickups and total time spent. And it tries to use loops to get you to reduce unnecessary usage. 

I’ve been using it for a few days. Here are my stats from yesterday:


I picked up my phone an astonishing 108 times and apparently checked it every 6 minutes. My longest streak without using it was 1:10 hours. I spent 6:17 hours on it out of the 18 hours that I was awake (either discipline or young kids, take your pick). That’s... concerning. 

I can’t wait for computing to move more into the background. But in the meantime, developing a more healthy, mindful relationship with my devices is a good idea. 

I’m going to use Mute for a few weeks and tell you how it goes. 

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tag:blog.maxniederhofer.com,2013:Post/1303491 2018-07-17T07:00:02Z 2018-07-18T07:00:02Z Our investment in Orbex

Our previously unannounced portfolio company Orbex came out of stealth yesterday with $40 million in private and public funding. Orbex is planning to launch orbital vehicles from the newly-announced UK Vertical Launch spaceport in Sutherland in the Scottish highlands. 

Orbex is a UK-based spaceflight company, with subsidiaries and production facilities in Denmark and Germany. The company is constructing a completely re-thought and re-designed orbital launch vehicle, called Prime, to deliver small satellites into Earth’s orbit. Prime launchers are up to 30% lighter and 20% more efficient than any other vehicle in the small launcher category, packing more power per cubic litre than many heavy launchers. Orbex staff members have professional backgrounds with NASA, ESA and several other commercial spaceflight organisations. 

We're delighted to be a small part of providing Europe with a small satellite launch capability. 

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tag:blog.maxniederhofer.com,2013:Post/1303448 2018-07-16T07:54:46Z 2018-07-16T07:54:46Z Croatia's president is Leslie Knope

The average blog post here gets maybe a hundred reads. Obviously it's targeted at a specific group of people - European founders - of which there are just a few thousand. 

But it's still funny that the most popular content I've put out in the last three months is:

It's not even original but poached from a Reddit comment. Oh well. Still love Parks & Rec, so any exposure I can give that show the better.

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tag:blog.maxniederhofer.com,2013:Post/1302809 2018-07-15T07:00:02Z 2018-07-15T10:00:01Z Extraordinary people do extraordinary things
How do you evaluate founders and founding teams? It’s hard to have to assess the “fitness” of an entrepreneur if your overarching sentiment is one of respect for the courage of the journey.  

Over time we have developed language around this question, things like personality traits (openness, agreeableness, conscientiousness, extroversion, neuroticism), functional skills (domain expertise, commercial insight, ...), and EQ (charisma, coachability, etc.). 

I find myself repeating a phrase that I heard (I think) early on my venture career: extraordinary people do extraordinary things

I like that lens on a founder's background. It's unlikely in my view that we are going to meet a world-changing team that hasn't done extraordinary things previously. It's a hard truth, but relying on your company to be your first extraordinary thing is not a great idea.

This is true both as guidance for raising venture capital, but also as life advice. Why wait to lead an extraordinary life until you have identified a commercial opportunity to pursue?

Now what that extraordinary thing is varies very widely: by no means do I mean that you need to have a CV stuffed with extracurricular BS that seems to be the required condition for Ivy League schools or Goldman Sachs. No, I'd much rather you had set up a charity in Tanzania, rowed around the world, participated in the Math (or Sports) Olympiad for your country, written a few terrible (or amazing) screenplays, invented the hashtag, or run a kick-ass subreddit. I like curious founders whose ambitions go beyond the commercial.

Of course I subscribe to the notion that great ideas, and teams, and companies can come from anywhere. And so I will often meet with companies that look very interesting but come from "unlikely" teams. Perhaps more so than other folks in our market, I will take these meetings because I believe openness and whatever the inverse of cynicism is is key to being a good VC. And many folks don't talk about the fact that they've done awesome things in the past - they feel it's not appropriate in a "business" setting, especially if they held conformist jobs like consulting, banking, or corporate.

I do believe in the notion of extraordinary people and, perhaps even more so, teams. And hence our current tagline: early-stage venture capital for exceptional European entrepreneurs. We hope to meet more of them. 
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tag:blog.maxniederhofer.com,2013:Post/1302803 2018-07-14T07:00:02Z 2018-07-14T10:00:01Z Introducing other investors
I am often asked to make introductions to other investors. Once we are committed to leading or joining a round, I love making these introductions. I like the company and the founders and I know showing them to other investors as a "pre-qualified" opportunity makes their job and the job of the founders easier. It builds our reputation with other investors for being a collaborative firm that finds good investments. And it helps the founders raise a larger round for our future portfolio company.

However, many founders ask for introductions to "other investors" once I've passed. This happens most frequently when I haven't even met the team. And sadly it's mostly first-time founders that then seem quite put out when I don't comply with their wishes.

There are a few reasons I decline making these introductions. First of all, I haven't evaluated the company beyond a short look. I probably passed on it because it is outside of my investment scope (e.g. enterprise software, late stage, low growth, no defensibility, weird ownership structure, small market, etc.) or because the team looked like an "unlikely" fit.* In most cases I haven't even met the team. 

That doesn't mean it can't be a good investment for other funds. They may have very different criteria from me. But I have my focus because that's where my expertise lies. And if I started qualifying deals for other investors that do very different things from me, I probably wouldn't be doing much else with my time. What's worse, I probably wouldn't be doing it very well.

Secondly, if the company is in my remit but I pass, what message does introducing the company send to other investors? It's a terrible signal - hey, here's a company I didn't think was good enough for us to invest in. Take a meeting because I value your judgement and time less than my own. You can see the problem. This is terrible for founders and so I end up saying "I'm sorry I don't do that." 

Next time this happens, I'll send the founder this blog post. So they know it's with their interest at heart that I'm not introducing them.
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tag:blog.maxniederhofer.com,2013:Post/1302500 2018-07-13T07:00:06Z 2018-07-13T07:00:07Z How I learned to stop worrying and love random inbound email

I've been in venture for about a decade now - three years as analyst-associate-principal at Atlas Venture (now Accomplice), a year as a VP at Accel, and over five years as a general partner at Sunstone. Over that time I've received tens of thousands of unsolicited inbound emails. And for a very, very long time, I prided myself on the fact that I'd respond to all of them.

But a few things have changed over the last years. Most obviously, the volume in our market has gone up significantly. Everyone wants to be in tech. Then, there are many different inboxes now - from email to LinkedIn, Twitter, Instagram, Facebook. It's hard to keep up. And a few years ago, founders figured out how to mass-customize personalized emails. Some of them are very sophisticated and so not all the "personal" email I get is really all that personal.

At the same time, I've built a sizable portfolio (ten companies), with a number of high-involvement board seats, got married, had two beautiful kids. And so time is in shorter supply than it used to be.

All that means that I will start using a different process for unsolicited email from people that I do not know. I will still try and reply to a few a day. I like the serendipity of it and some areas and people intrigue me. I did the very first investment based on a cold inbound email earlier this year - which was in response to a DTC blog post. I loved that.

But for the large majority of emails, if I haven't gotten to them after a week I will move on and they will never get a reply. 

As you know we have a team of associates, Deepka Rana in Berlin/London and Philippe Collet in Copenhagen/Stockholm. You might have better luck reaching them. Or there's always the possibility of talking to someone I know and trust to be a good filter for me. That will always remain the best way to get in touch.

Btw, this post was inspired by a 2013 AVC blog post. Thanks Fred for leading the way on trying to stay sane using our new superpowers of communications.

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tag:blog.maxniederhofer.com,2013:Post/1302093 2018-07-12T07:00:04Z 2018-07-12T07:00:04Z DTC advertising: moving from social to television

A few days ago I wrote about "revisiting DNVB terminology" because we were seeing Facebook emerge as the new middleman (aka "CACs are the new rent") with acquisition costs having risen dramatically in the last 18 months. Cue LeanLuxe's newsletter highlighting a Digiday article about direct-to-consumer brands switching to television advertising.

Interestingly the story begins with HelloFresh, a Rocket-originated company from Berlin, Germany, that alongside Blue Apron introduced meal kits in the US (and Europe). Rocket Internet properties have historically introduced television spending quite early. This was a response to the European online audience only scaling to a certain point, but also because performance marketing experts at Rocket (and now Project A) are world-class multi-attribution specialists and were able to e.g. time online ads with television commercials, making use of second screen advertising to lower the media break issue (i.e. how do you get people to go to your site when they've seen the TV ad? A: on the device they're holding in their hand). 

Overall we're seeing much more interesting tactics in traditional media. Television is certainly performing, but so are podcasts (how many mattresses can a person buy?) and outdoor (metro, billboards, buses). Up to this point I've very rarely seen radio or print work, but that's not to say that they can't. If you can do organic - word-of-mouth, community, guerilla - that's obviously preferable to all paid tactics.

Facebook's response to DTC brands deemphasizing them due to cost has been to push "conversion" audiences versus optimizing for clicks, as well as Instagram video (stories, but also its new longform content). It will be interesting to see how this plays out.

My favorite DTC brand build on television remains MyPillow, which reportedly makes 25,000 pillows a day in its own factory. The Mike Lindell founder story is as American dreamy as it's possible to be. Tragic and wonderful. 

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tag:blog.maxniederhofer.com,2013:Post/1301627 2018-07-11T07:00:03Z 2018-07-11T07:00:04Z The DTC rollup opportunity

News emerged yesterday that Martin Sorrell's S4 Capital, which doesn't even have a website yet and apparently is spelled "S4", has bought Dutch agency MediaMonks in a $300 million deal, beating out his former company WPP. Notwithstanding whatever happened at WPP, which Sorrell left after 33 years amazingly successful years, props to a 73 year-old for getting back to market within 2 months of leaving the $20 billion revenue company he has built over decades. 

I also recently read about the amazing rise of Vista Equity Partners (WSJ paywall), the private equity firm that hypothesized that SaaS buy-outs could be leveraged well given the predictable revenue stream from software subscriptions.  

For followers of this blog, you know that I am fascinated with and actively investing the Cambrian explosion in DTC/DNVB. On the back of the news above, it struck me that this segment could support a rollup/buy-out strategy similar to the ones employed at WPP from 1983 onwards and at Vista Equity in the last decade.

Like in software, DTC ecommerce relies on many similar tactics and requires the same infrastructure: whether it is in marketing or distribution. While almost all new brands outsource much of this to e.g. branding agencies or 3PL logistics service providers, economies of scale would confer significant advantages in many of these functions. 

DNVB/DTC companies are almost all global by nature. The internet ignores most borders and the attractiveness of brands scales beyond their home markets - see e.g. Away or Glossier who are practically being pulled into Europe by consumer demand.

Further, scale and the ability to expand brands and businesses beyond verticals would increase the valuation multiples used to price these companies, which would lower capital costs. Scale also provides easier access to capital markets, which in turn would make it easier to finance the massive infrastructure investments necessary to compete with Amazon. 

Finally, building these businesses on the core of a subscription offering for consumable basics (think Dollar Shave Club, Lillydoo, others) would bring the cash flows necessary to introduce leverage - further reducing capital intensity for early-stage investors. 

Building such a "digital consumer brand" PE vehicle would not require massive investment - perhaps $250-500 million to build a $5-10B+ company - though it would still take "early-stage" guts, not unlike the first deals that WPP did. I wouldn't be surprised if someone tried it soon. The fragmented DTC market looks ripe for the picking. 



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tag:blog.maxniederhofer.com,2013:Post/1301365 2018-07-10T07:00:04Z 2018-07-10T09:51:43Z US Store Closures and Openings 2018 To Date

As you know, we're big fans of the rapidly reorganizing consumer economy here at Sunstone Capital. Though admittedly some of it makes us very nostalgic (I loooved Toys "R" Us *sniff*). 

What's interesting to see is the very clear shift in the offline retail word towards discount/utilitarian. See the expansion of Dollar General below. Quoting from our DTC thesis:

...consumer preferences seem to be fragmenting. The large, homogeneous Western middle class which was the mainstay of consumer packaged goods (CPG) brands has split in two. At the bottom end, private labels are booming, with consumers increasingly utilitarian and looking for value. At the top, the preference is for quality, authenticity, and meaning - with tastes skewing small and independent. Large CPG brands are being squeezed in the middle.  

...Big is less and less better. Previously, brand scale conferred huge advantages in pricing power, margins, access to supply chain, and retail ubiquity. No longer. An economically, commercially, and environmentally more literate and conscious consumer increasingly distrusts big brands. Emerging affluent tastes are natural and organic, while the poor or disillusioned prefer the honesty of unbranded commodity.

We think this is only the beginning - retail is poised to keep changing over the next decade. 

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tag:blog.maxniederhofer.com,2013:Post/1301237 2018-07-09T07:56:12Z 2018-07-09T07:56:13Z Revisiting the DNVB terminology

Richie Siegel of Loose Threads has an interesting post as part of his (paid for) Loose Threads Espresso newsletter: Do DNVBs exist anymore? Revisiting the buzzword.

The main thrust of the argument is that with rising acquisition costs Facebook has become the ultimate "middleman": by some report, Facebook CACs have risen as much as 17x between 2011 and Q1 2018. The response of many "online first" or "born digital" brands has been to move to omnichannel more quickly, reflecting the better economics of the retail channel (no online acquisition, no logistics cost). 

The core challenge is thus that the better contribution margins attributable to the "vertically integrated" (relative to retail ecommerce) brands are eroded significantly. The "variabilization" thesis, in which all parts of building an online brand are essentially variable cost, does not hold true because scaling on Facebook itself has become cost prohibitive.

I think this is largely true, but with one major caveat. Online or "digitally native" is still both the best and most cost-effective way to experiment with building a brand before scaling it. Especially brands built using an existing community, a Kickstarter project, or organic tactics like PR, are able to validate their product-market fit before raising significant capital.

Further, while most online channels are indeed becoming unprofitable, the three significant changes we still believe to be true are: 

1. the variabilization of the supply chain (making e.g. manufacturing and logistics easier to access as a small player) 

2.  the propensity of customers to let digital touchpoints be the deciding factor on the consumer journey - even if that journey terminates offline, and

3. capital abundance, providing higher willingness to spend a dollar per revenue generated (and thus, perhaps, enterprise value) than in previous years.

Of course the latter will depress returns (hopefully just for investors rather than founders), but it still means it's possible today to build rather large businesses in verticals that have previously been ignored as too capital intense. When that music stops is anyone's guess. 

Many of our portfolio companies take a blended view of acquisition costs. While Facebook by itself is prohibitive, we see that it can be a cost-effective touchpoint along a purchase journey that frequently can't or shouldn't be attributed to the last click.

I love Loose Threads which, along with 2PML and Lean Luxe, is a required read these days.

Much love,
Max

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tag:blog.maxniederhofer.com,2013:Post/1300543 2018-07-06T20:04:35Z 2018-07-06T20:04:38Z In lieu of a post
This summarizes my wife’s and my differing ontological approaches. 

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tag:blog.maxniederhofer.com,2013:Post/1299767 2018-07-04T14:24:23Z 2018-07-04T14:24:23Z Consciousness and creativity

The pioneer is always in a minority of one. I don't know whether that's a quote I should be attributing to someone. But to me it is the essence of the visionary founder story. Even after you have followers, investors, employees... to pioneer can be a very lonely business, indeed. 

Creative individuals are frequently branded by the collective as asocial. This is particularly true in European countries, some of which are oppressively collectivist. From Janteloven to the pervasive envy of German society to state-sponsored innovation in France, Europe suppresses the strong individualist consciousness in a range of pernicious little ways. I can't fault the European founders who John Galt it out of here (frequently to YC). 

The creativity of human consciousness is threatened by few things, but religious or ideological or political totalitarianism is one. And so I find what is happening throughout the Western world disheartening. Because it isn't just crazy Republicans, and Trump, and ethno-nationalism. It's also gender theory gone wild, radical sentimentalism, and social media lynch mobs. Both sides seem to be self-radicalizing. And no, this isn't false equivalency and I'm not siding with "the Nazis." Grow up. 

Such fixations lead to a sterility in human consciousness and a lack of creative progress. So far as humanity as a whole is concerned, I am not worried because these things tend to be provisional. At times, perhaps, necessary to integrate and transcend. The human project as a whole has an assimilative vitality that tends to win out. 

But as someone who is primarily backing "heroes", i.e. individualists on their startup journeys, I can see how the ideas are getting more incremental, more fearful, more tactical. And I attribute that in large part to the cultural moment we are living through. 

I am very happy when I see stories about the burning man generation, because it is just this sort of free-thinking that is needed for ideas to stay big. 

Happy 4th of July, Americans. 

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tag:blog.maxniederhofer.com,2013:Post/1299381 2018-07-03T13:01:47Z 2018-07-03T13:01:47Z H1 Blogging Retrospective

Half a year has gone by and I've made 117 posts on this site, which is 10% below my target of 70% of days (personal OKR). 

June especially has been shameful with four posts. I just felt like some of my last posts were trite. Perhaps it would be better to do twice a week and aim for quality instead? 

Exculpatorily (this is not a word), it feels like we're doing a DTC deal a month at the moment. We recently invested in the $850K seed round of a company in New York and are in contract drafts with a vertical commerce company in the UK ($3 million seed round). We're moving into some verticals we're less familiar with (beverages? sexual wellness?) but we think being contrarian holds the key to acceptable valuations and potentially very fast growth. As long as we can get them the follow-on capital...

I'm delighted that for the first time ever I backed a cold inbound company. That was on the back of the switch in focus to DTC/DNVB. Who says blogging doesn't work?

So here's to a better blogging H2. I'll block time in the calendar every day this month and let's see how that goes.

Tips and tricks and suggestions, just comment below. 

Much love.

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tag:blog.maxniederhofer.com,2013:Post/1296664 2018-06-24T12:47:23Z 2018-06-24T14:34:47Z Set your house in order
One of the Peterson rules that resonates most deeply with me is that of setting your own house in perfect order before you go and criticize the world. 

Buddhism advises us to first establish in ourselves what is proper before instructing others. That Kondo book - the life-changing magic of tidying up - says basically the same. 

In reference to the post yesterday, much of what politics and political expression is today is the unfiltered projection of folks who don’t have their own house in order. Might be sensible to revisit that. 
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tag:blog.maxniederhofer.com,2013:Post/1296468 2018-06-23T19:22:15Z 2018-06-23T19:22:15Z Just say no to politics
Last week I was asked to participate in a discussion panel on Brexit and its impact on the technology industry in the UK. The conference organizer explicitly asked me to make the case for leaving. 

I was tempted. It’s a great conference and would have been a nice excuse to see people. 

On balance I believe for the UK tech industry remaining in the EU would be better. But there is a legitimate and somewhat subtle case to be made that the EU has become unwieldy, undemocratic, and overreaches legislatively (GDPR, copyright), which directly impacts our industry. 

On reflection I’m not a British citizen or resident and this is primarily a UK policy decision. I’m also not a Brexit expert and would likely get some things wrong. 

More importantly, however, it’s a losing proposition in these polarized times to take any nuanced position that could be reduced to a tweet of “X is for Brexit! and probably anti-immigration and thus probably racist, too!” And so I passed on speaking at the conference. 

I wonder how we will foster a new discussion culture or whether this is the future. I hope not. 
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tag:blog.maxniederhofer.com,2013:Post/1295948 2018-06-21T14:19:35Z 2018-06-21T14:19:35Z Purposeful Leadership - talk from Techsylvania 2018

A few people asked about the talk and since I seem to have trouble posting at the moment, I thought I'd make a little video. Not 100% sold on the quality and obviously these are more musings than truth, but it's only by being vulnerable and putting myself out there that I grow. 

Happy to have any comments / questions. 


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tag:blog.maxniederhofer.com,2013:Post/1294938 2018-06-17T11:28:13Z 2018-06-17T11:28:58Z The sins of our fathers

I'm a huge fan of Fred Wilson's. He has made time for me when I needed guidance both as a VC and a founder. And I've read his blog, on and off, since he started. I remember when he started because I was running Myblog.de, a blogging software company, at the time. 

I tune out a bit when Fred gets political. I think it's perfectly understandable to be left-of-center in the US, just as I think it's more sensible to be right-of-center in Europe. I'm a Burkean conservative at heart, though the current GOP would consider me a RINO. I like to think we share the same transcendent values, though he'd likely call them humanist.

Fred has a post today - on US Father's Day - on the policy of separating migrant children from their parents at the border. And I think you can agree with this administration on some things, and disagree with it on others. I sympathize with the concerns of Trump voters rather than hold them in contempt. And I'm highly suspicious of the SJW thing. 

But forcibly separating children from their parents is insanely evil. It is nihilistic in the extreme and reminiscent of the unspeakable evil that we did in the 20th century, from Nazi Germany to the Gulag to Maoist China. It must be stopped and it must be stopped today.

I'll often follow arguments about how some policies "look" bad but are actually sensible. And I do think there's massive lobbying and PR work at play here. But that doesn't change the facts that a civilized country is forcibly separating kids from their parents and it's just plain wrong. 

Whatever pressure you're able to apply, now is the time to do it. 

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tag:blog.maxniederhofer.com,2013:Post/1294720 2018-06-16T18:05:32Z 2018-06-16T18:14:23Z Robert Crumb documentary

Slightly failing on my daily posting regimen, but that's because I'm fighting an inner fight of what I should write more about: venture capital (the outer life), leadership (the inner life), spirituality (my own journey), or just what I'm thinking about on a given day. 

I'm overthinking this, I'm sure. Let me know in the comments. 

Also the last few weeks have been incredibly intense, with us seeing quite a few doable seed investments - all DNVB/DTC - and hence a lot of time traveling - London, Madrid, Copenhagen, Romania... 

I spent two hours today watching the the 1994 documentary of Robert Crumb today, which is an absolutely devastating piece of art. I had heard about it after being sent an excerpt from a Jordan Peterson lecture (part of his biblical series) by a friend. It's absolutely terrifying to the part of me that identifies with high trait openness and creativity. I am lucky to come from a more functional family - Crumb's childhood sounds like absolute hell. 

It's a film worth watching if you are interested in underground cartoons of the 60s/70s, counter-culture, the condition of artists' lives, psychology, and perhaps more generally if you like good documentaries.


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tag:blog.maxniederhofer.com,2013:Post/1293353 2018-06-13T06:00:02Z 2018-06-13T06:00:02Z The sage and the king

It's a travel day for me, so here's another story I told recently. Many of these come from Anthony de Mello, perhaps this one as well. They're kind of blending at this stage. Which I think is fine because they're stories and they're meant to be retold.

There was a wise man - a sage, a sadhu - who was walking in the capital city of a small but happy kingdom and he found a coin on the street. Since he was very wise and had taken a vow of poverty, he decided he would give the coin to someone who needed it more. And so he spent the rest of the day walking through the city and talking to people, be found they were all very satisfied and had all they needed. So he had his evening meal and he went to sleep. 

The next morning he was roused by a marauding horde. Soldiers were conquering the city. Houses were burning and there were screams and the stench of death was in the air. And as he looked, he saw in the midst of the throng the conquering king, his arms bloody up to the elbows. And the king caught his eye and he said: "Sage! We have captured this entire kingdom, from coast to coast, and now we've conquered the capital city. See how mighty we are! Give us your blessings, wise man!" 

And the wise man reached into his pocket, took out the coin and said: "Here, I think you need this more than me."

So now there are two endings. In one, the king is stopped in his tracks, stricken at the truth. And he withdraws his army from the city. This is, in my view, the more satisfactory but also unrealistic ending. We all know what happens when we accuse people of greed - they get angry. And so the other ending is that the king chops off the sage's head and is done with it. Which is just as well, because homelessness is a real scourge on that kingdom I've heard (#nimby).

This story was part of my talk at Techsylvania, with the point that founding a company from a place of "more, more" is... unhelpful. So what are better places to found from? That's for tomorrow. 

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tag:blog.maxniederhofer.com,2013:Post/1293260 2018-06-12T10:00:24Z 2018-06-12T10:05:21Z The fear of failure... it's not failure that's the tough part, it's dealing with the fear

I'm sitting at Techsylvania listening to a panel with the awesome Ondrej Bartos of Credo Ventures who has backed companies like Brainient and UIPath. Credo are our co-investors in Kontakt.io, the world's leading makers of beacon hardware and software. 

The panel is talking about failure, its varying cultural acceptance across geographies, and I find myself shaking my head - which means it's time for a blog post.

First off, failure sucks. It's draining, painful, and if you do it wrong you keep carrying it around for years and that energy will attract more failure. The world is magical in that way. It's what we mean by stigma and the reasons for that are deep and evolutionary. You have to free yourself from failure through a shift in perception, what I call raising your consciousness. That's the main capability of the human spirit over its mind, the realization that consciousness is a constituent element of reality, which means that perception is a choice. And so not just talking about but truly understanding the (at some level) "failures" of your life as opportunities or even calls to personal growth is absolutely pivotal for a long-term good life, including health, wealth, and happiness. This is not some spiritual mumbo-jumbo, it's as real as things get.

So where do I like to focus? Look at the book titles below. These are part of my talk later today:

The hard thing about hard things. Sounds bloody difficult. Zero to one. I mean, think about that for a second. You want to get to one, but where are you starting from. You’re a zero! Ha! Only the paranoid survive. I mean, Jesus. Who would ever want to be a founder? They are right of course. You should be afraid. You should be scared. Very, very afraid! 

Can you feel it in your body? Can you feel what it does? Fear contracts. It activates the amygdala. Fight or flight. It’s scary. It’s also a little bit exciting, mind you, but that’s just your body getting ready to fight to the death.

And that’s an interesting realization: fear is at its base always the fear of death. It’s the fear of disappearing back into the void, of being nothing, not having mattered.

So if we explode that a little bit, what is this that we’re scared of when it comes to founding companies?

  • Disappointing people (ostracization)
  • Ending up broke (survival, ability to provide)
  • Failed self (self-esteem, self-worth)
  • Starting from nothing (social hierarchies)

I mean, your entire evolutionary history is aimed at avoiding pain. And here you’re about to run a great risk of getting into a lot of pain. Having to start again from nothing. At the bottom of the heap, so to speak. Also not what evolution sets you up for.

Here’s an interesting scenario: imagine you are at a concert. The lights dim, the music is about to begin. And you remember you forgot to lock your car. You can’t get out, too many people. And now you can’t enjoy the music. You’re caught between two things! And this is an image of running a startup from a place of fear. It takes you out of the moment, out of the present, it reduces your awareness. It blinds you. It makes you more likely to fail!  

And here’s the crazy thing: fear doesn’t exist in the world. Fear only exists in your mind. It’s a matter of perception. Nothing has the power to upset you unless you give it this power. You’ve been trained to be fearful. You’ve been programmed to react this way. But here’s the secret: perception is a choice. How you look at something is a choice.

And we don’t talk about this! We don’t talk about this because we’re pretending to other people that everything is always amazing and great. Instead of sharing the journey, we are actively communicating to each other: I’m doing AMAZING! Everything is working out SUPER WELL. And we think: Oh. No one else has these problems. It must be something wrong with me. I’m weak. And then we’re wondering why even someone as successful and seemingly strong as a Kate Spade or an Anthony Bourdain can’t talk about the pain of the journey. The hardest thing of all the hard things is the demons in our head. The pioneer is always in a minority of one, which from a social perspective means you’re crazy until you make it.

If you're here, come to my talk. I'll share the secret of how to deal with all of that. 

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tag:blog.maxniederhofer.com,2013:Post/1293058 2018-06-11T19:17:23Z 2018-06-11T19:19:08Z Forerunner Ventures' new website

A few weeks ago, Forerunner launched its new site and, while I've never met the partners there, the manifesto resonated deeply with me

"We champion the companies who rewrite the rules of culture."

Isn't that a fairly wonderful thing when you let it sink in. It has that humble backing of founders, combined with shouting their names from the rooftops to anyone who will listen. But championing something is more than just backing or supporting; it is fighting for its idea and underneath its banner. It's proselytizing. It's reminding the company who it is when it loses track. 

Rewriting the rules of culture: when I first saw that, it blew me away. It's very reminiscent of Douglas Holt's Cultural Strategy, of course, which I currently think is the bible of building innovative brands. Identify your market's orthodoxy. Align with the social disruptions that are challenging that orthodoxy. And then go and rewrite the rules of engagement in that market. 

But again, it's more than that here. Rewriting the rules of culture means looking at longer term, secular and even moral trends. Think sustainability, empowerment, more conscious lifestyles, more thoughtful consumption, ... Those are the rules of culture that deserve to be rewritten. It is a statement not just of intent, but of purpose.

Go read the whole thing. It's one of the better takes on our market and business that I've seen. 

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tag:blog.maxniederhofer.com,2013:Post/1292698 2018-06-10T19:22:12Z 2018-06-10T19:22:12Z It might be luck, but you have to buy the ticket
There was a good, faithful man who had worked hard all his life. As as he was nearing retirement, his wife fell very ill and he lost all his money caring for her until she passed away. So there he was: old, bent, alone and penniless, and he was very sad. So he started praying to God to let him win the lottery, so that his old age might have some comfort. And he prayed and he prayed: "I have been so good, Lord, let me win the lottery." And nothing happened. So he did it again, and again. This went on for years. 

Eventually he was quite mad. He shook his fist at the sky and cursed the heavens and shouted: "I have been so good, I have worked so hard all my life, why can’t you just let me win the lottery." And the heavens opened up and the voice of God boomed from the sky: "go and buy a bloody ticket already!"

So there you have it. We make our own luck. Or at least: we navigate ourselves into the position of possibly being lucky. And that’s what startups really are: the very small chance of making “it” big.

But you gotta buy the ticket. 


P.S. I am at Techsylvania this week and this is the opening of my talk there. 
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