Venture capital used to be a highly opaque industry. Very few firms, accessible only through network, intransparent decision-making processes. From the outside it looked slightly mystical and certainly very glamorous (it is not).
Thankfully much has changed. The first generation of VC bloggers, like Fred Wilson, Brad Feld, Fred Destin, and others, have contributed to making the industry much more transparent and approachable. And so much capital has flowed in that you can't really move for new firms.*
Venture is now universally discussed - almost overly so. If you're in tech, it's hard to escape "VC Twitter", which is its own little ecosystem. Some of it is content marketing (a lot of it is content marketing), but there are so many smart, well-intentioned, insightful people that are very open that founders can now follow and reach out easily.
A similar openness has been coming to the Limited Partner ecosystem. LPs are the capital behind the venture funds, which are turn managed by General Partners, the VCs themselves.
Sapphire Ventures launched OpenLP in 2016 to foster more transparency in the tech (LP) community. The site aggregates blog posts and other writings by a very diverse set of LPs. It also has a Twitter hashtag #openlp that lets you follow the conversation.
I love the opportunity of learning more about the motivations and decision-making processes in a part of our industry that used to be similarly opaque.
If you're in venture, or an interested founder or investor, check out OpenLP. I've found it fascinating. Much props to Sapphire for running it.
* In numbers, the amount of capital available has certainly grown faster than the amount of good companies to invest in. Not dissimilarly, the amount of founders now outstrips the availability of good engineers.
We are all so distracted. You glance at the phone during our meeting.
When was the last time you gave something your full attention?
By that I don't mean focusing your mind. That just means pushing your distraction to the edges. It is still there. But now also there's tension.
It's hard to live while stealing glances to the side.
Step one might be to undo the labels.
Just to look, without naming the thing. To just be with the thing. To grok it.
Fred has a great post about track record today.
It got me thinking about my (much shorter) venture career and what some of my most valuable mistakes have been.
The top one is probably getting seduced by traction. Early metrics are good - we all like them. But they de-risk an investment less than commonly presumed. Particularly when customer acquisition is paid marketing and it skews the "true" data you could be getting.
I'd much rather see something grow organically in the beginning, even if that growth is slower than what's possible using paid.
Traction also shouldn't supplant other considerations, like what the market's true prospects are. It's easy to believe that because one company is making this new thing work for a small group of early and passionate customers, it has the potential to be a category-defining innovation. Sometimes novelty is just novelty.
Traction also shouldn't outweigh the team's overall potential. I've compromised on team a few times in my career. Particularly when there was a ton of traction and the idea was really big. Compromising on team has always turned out to be a mistake.
I love audacious people, but there's a fine line that separates it from slightly delusional. Where the vision supplants the details, I am much more careful than previously. A great founder can find the right balance between keeping the big vision and sweating the small stuff.
And finally on team, personality matters a lot. Low agreeability is a trait of a lot of successful founders, but low emotional stability is pretty harmful.
The other lesson is that a geo focus sucks. I invested very widely early in my career - hardware, B2B, marketplaces, travel, mobile apps, commerce... I believed that Europe as a geography had too little depth to really select on anything but people (see above).
I think that is still largely true for the market as a whole. But as an individual or even a firm, there's now enough capital that the huge benefits of thesis-driven specialization outweigh the missed opportunities.
That's why I've been 100% focused on consumer/user-only investing for the past year and a half, and I think that's what I'll want to do for the rest of my career.
I'm sure I've made many other mistakes in the last five years of active venture investing (and ten as an angel). But these are the ones that immediately come to mind as the biggest lessons learned.
I finished the final volume of the Broken Earth trilogy today, The Stone Sky. It is my favorite book of the three, not least because it feels more raw, complex, and has an incredible narrative crescendo culminating in one of the most dramatic fantasy scenes I have ever read.
I have to admit that I was skeptical initially - the three consecutive Hugo wins to the same author? But I am wrong. N.K. Jemisin is a fabulous storyteller and these are more than deserved.
While never overtly political, it is a story of allegory set in a world after climate change, touching on slavery, inequality, prejudice, revolution, redemption. The two female protagonists are mother and daughter, with all the complexities that entails. The plot is driven by a race to save the world and to uncover the mystery of the planet's ailments and its heritage of dead civilizations.
If you enjoy good fantasy/sci-fi and haven't heard of the books, they're worth your time. Or you can just wait for the TV show - TNT is making at least the first volume.
I’ve been trying out October, a new invite-only social media platform, for a few hours today.
I like it - certainly well built and some of the product choices are intriguing.
You can dislike posts. You always have a choice of being yourself or being anonymous. And conversations are organized in #topic channels.
It’s an intriguing mix of Twitter and Reddit, with some of the UX from Facebook.
You can try it out using my invite link here: https://october.app/qr/FMZHT
This post is a day late. We had a dozen guests over for Thanksgiving and with the little kids it was a long but fun day for everyone.
Much of our focus in the modern world is on what we lack. The source of ambition for many founders and VCs is discontent. Getting overly caught up in that leads to self-doubt, fear, and anger.
And so as a holiday Thanksgiving is a good place to remind ourselves of the gifts and grace bestowed upon us. From nature, family, friends, luck, God... the labelled source is secondary.
The key is humility. Gratitude is not indebtedness, it is not appreciation, it is not mere thankfulness. It pays honor to something outside of us, greater than us, and so it moves the spirit from ego to the heart, and the focus from the self to the mystery of all life.
Cicero called gratitude "the queen of the virtues", a subtle moral disposition. And science is catching up - just look at all of the mindfulness/positive psychology writings on gratitude.
Originally Thanksgiving was a pagan holiday, a harvest festival at the end of the bountiful season, to develop the gratitude that helps steel us for the dark and scarce months ahead. The Catholic church has celebrated Thanksgiving since the third century. Eucharist is Greek for "giving of thanks."
The Wikipedia list of harvest festivals around the world gives you some idea of the pervasiveness of the tradition in human history, from the Jewish Sukkot (Chag HaAsif) to the Chinese Mid-Autumn Festival.
Isn't it wonderful to see all of us connected in this way, beyond borders and cultures? That, for one, is something to be grateful for.
Happy belated Thanksgiving from all of us!
Simby, the artificially intelligent guardian angel that lives on your phone, has released its full video trailer. It's 15 minutes and well worth your time: the story of our lives since the ubiquity of mobile devices - and how to regain control.
Check it out below. You can find out more about Simby here: https://simby.com/about/
Disclosure: Simby is a Sunstone portfolio company (yes, we invest pre-product sometimes!).
I cancelled two subscriptions last week.
The first was for a major weekly newspaper with 1.5 million subscribers. It's one of those subscriptions you can't cancel online (how is this OK?).
I had called a few months earlier and told them I wanted to cancel. They said they had made a note of it and the subscription would run out in August and not renew.
Come September, sure enough there was a new charge on my card and they kept delivering the paper. I cancelled again and was now refunded the pro-rated (!) annual amount they had initially taken. Fine.
This morning I get an email from them asking for my reasons for cancelling.
Fair enough, I think. They want to know how to get better.
So I go through an automated funnel that, after every option I could have cancelled for tries to counter the argument. In the end I select "Other" (which was true, I cancelled because of their editorial stance) and the funnel culminates in: "Sorry to see you go, you can send an email to email@example.com."
Oh. They didn't really want feedback. What they wanted was to get a last shot at keeping me from churning. Bastards.
The other subscription I cancelled (or tried to!) was for a big online subscription startup. 15 million users. I had started the free trial a few days ago, but wasn't using it. So I wanted to cancel before it charged me an annual fee.
I went to their site. Under "Account" there was "Subscription Management." Great, I thought.
But it turned out that under "Subscription Management" there was really no way to manage my subscription. Instead it sent me to a Zendesk flow that had me answer multiple questions about wanting to cancel. Fine, I thought, maybe they haven't gotten around to building it yet (after 15 million users? Man I'm naïve sometimes).
At the end of the Zendesk flow it told me to write a message to customer support (seriously?).
So I emailed customer support. They were fairly responsive (~12 hours) and very friendly and said they couldn't find my trial in the system. Instead they sent me a long email about all the benefits I got from their product.
I emailed from the same email I had signed up with, so... seriously? That's like dark UX social engineering (aka "lying").
I ended up forwarding them my confirmation email to prove that there was a trial and asked them to cancel. So that's the end of that, I thought. Sure enough I get a Zendesk email asking for feedback (nope, not making that mistake again).
Deliberate misdirection, invisible unsubscribes, forced subscription continuity... these are just some of the dark UX patterns we can see subscription startups employing to rope people into something they don't want anymore.
In my case it's just a nuisance. Just thirty minutes of my life I won't get back, but the $100 wasted doesn't matter. But for other people, it could really matter. So how is this ok?
Of course this stuff goes beyond subscription: check out @DarkPatterns on Twitter for some prime examples.
In the end, it always comes down to how ethical management is. And that mostly comes down to culture, how they were raised, and the source of their ambition. It's hard to see this type of greedy behavior from companies that I respect in an industry that I love.
But some of it may also be driven by competition: if my competitors can pay higher acquisition cost because their lifetime values are higher because they've managed to reduce churn through dark UX, then I may have a real problem.
I'm a limited government guy, so I'm not sure whether regulation is the best answer here. Perhaps the market will self-regulate through public shaming. In any case here are some best practices in my view:
- if I can sign up online, I should be able to cancel online
- let me know when my renewal comes up, so I have the choice
- if I accidentally renew (you can see I'm not using the product), refund me (at least pro-rated)
- allow people to transfer/sell their subscription to others at any time during the life of the subscription
- don't mislead, trick, shame, or otherwise goad people into buying something they don't really want
I've always been reluctant to subscribe to stuff via Apple because I find the 30% tax (reduced over time, I know) egregious. But if it gives me better control over my subscriptions, I might just start doing that in the future.