The Blog
A Guide to Down Rounds and Recaps – Part I
At some point in your startup journey, you will hit a funding roadblock. But they don’t have to be dead ends. Understanding how to navigate down rounds and recaps can help you stay in control of your startup and live to fight another day.
Staying True to Your Values: Learning from Substack’s Crowdfunding Decision
Exploring the consequences of prioritizing short-term gains over long-term trust and transparency in the startup world, as illustrated by Substack’s recent fundraising approach.
From DTC to AI: Lessons in Navigating Business Model Shifts
We can learn from the experiences of DTC and digital media to reinforce the importance of business model adaptability in the face of constant change.
The Ripple Effects of SVB’s Failure: Navigating the New Normal for Startup Funding
The recent failure of Silicon Valley Bank will lead to fewer lending options and more onerous terms for startups. Here’s what you should do.
Mass Extinction Event for Startups? Are You Default Investable or Default Alive?
For many startups, the next 12 months will be challenging. Default Investable or Default Alive. Know which path you are on.
The Pivot – 2 Traps You Must Avoid
Your startup journey will be filled with dead ends, false starts, and long treks down the wrong path. When it’s time to pivot, there are two traps to avoid.
Don’t Be The Hound. Pick Up Your Head.
When building a startup, it’s easy to put your head down to focus on the obstacle in front of you. Don’t be the hound. Pick up your head.
Lighten Up, Speed Up
In the frenzy of building a startup, there are plenty of places where you need to slow down. Your search for product-market fit is where you need to speed up.
Don’t Trade Valuation For Structure
You may have a difficult choice to make – a lower valuation or more structure on your cap table. It’s critical that you understand two things.
Want to Create a Culture of Innovation? Ask These 3 Essential Questions.
Innovation comes from experimentation. Experimentation leads to failure. Embracing failure is the path to building great products and enterprise value.
4 Pitfalls of Raising Venture Capital and How to Avoid Them
There are four common pitfalls entrepreneurs fall into while raising venture capital. Here are a few tips on how to avoid them.
Send It! Bad Advice In Mountain Biking and Startups
Startups, and downhill mountain biking, are inherently risky. You can improve your odds by taking a thoughtful approach throughout your journey.
3 Essential Steps for Startups to Keep Enough Cash in the Bank
Calculating how much runway you have isn’t as simple as you may think. Get it wrong, and your company might be running on fumes sooner than you expected.
3 Common Mistakes That Are Inflating Your Marketing Budget
One important measure of marketing efficiency. So many variables to choose from. Your profitability and cash flow depend on making the right choices.
Don’t Let Selective Storytelling in the Media Warp Your Perspective
The startup press chases clicks on headlines. Be wary of stories about startups before we know how the story ends.
Inflation and Recession Are Coming For Your Contribution Margin! Here’s What You Need To Do.
You’ve raised prices where you could. You cut variable costs as much as possible for now. Once you’ve assessed these changes’ impact on each product’s contribution margin, you have important decisions to make.
Wrong Sales Channels — Let’s Fix That
Shifting sales channel strategies is similar to swapping out the engines in an aircraft already in the air. It just might save your startup.
Startup Restructuring 101 – Find Your Stop Doing Work
You can restructure your startup while keeping your team motivated and on track to deliver future growth.
Down Round, Cram Down, or Wind Down. Difficult Decisions Ahead.
Founders who raise capital in difficult conditions must not fear the down round. It can be a worthwhile tradeoff to keep your startup alive.
External Events Can Move The Goalposts
Even as you hit your key milestones and carefully manage your runway, events outside your control constantly move the goalposts.
Choose Your Venture Investors Wisely
Choosing your venture investors is one of the most important decisions you’ll make as a founder. Relationships last for years. Don’t settle.
Scaling Product-Market Fit is a Marathon, Not a Sprint
Don’t rush scaling product-market fit. Here are two ways to avoid the common trap of wasting time and money on the wrong growth tactics.
Stay in Control
The Pivot to Profitability puts the founder back in control of their destiny.
Webinar: Startup Survival Strategy in the Age of Coronavirus
On Wednesday, March 25, 2020 I delivered the webinar Startup Survival Strategy in the Coronavirus Era. This session was created just at the start of the Coronavirus pandemic. Topics covered include: Setting up an early warning systemUnderstanding your KPIs and the connection to your cash flowTaking decisive action to protect your companyCommon roadblocks to making…
The Casper IPO – Investor Leverage, The Hit To Employee Morale and The Tough Road Ahead
I recently wrote a post about the negative impact of the Casper IPO on investor sentiment in the Direct-To-Consumer (“DTC”) space. Anytime a company in a sector goes public at a valuation that is less than half the valuation of its last round, it’s going to ripple through the rest of the ecosystem. But there…
Learning From the Casper IPO – Investor Sentiment Shifts Fast
In the world of startups and venture capital, industries move in and out of favor very fast. It doesn’t take much for an industry that’s been attracting huge amounts of investor attention and capital to suddenly lose its shine. We are seeing this happen right now in the direct-to-consumer (DTC) space. Casper recently filed for…
Know Your Burn Rate – Set Up Your Assessment Framework
Stephen Blank describes a startup as an organization formed to search for a repeatable, scalable, profitable business model. They are not small versions of large corporations. A well-run startup is like a laboratory, testing hypothesis, comparing actual results against expected results, and constantly executing small pivots until a company is born. Or unit the cash…
Product-Market Fit: Feasible, Desirable, and Viable
Product-market fit lies at the intersection of Feasible, Desirable, and Viable. It’s a constantly moving target. Use these nine essential questions to assess and maintain your product-market fit.
Now You Know That Private Company Valuations Are Arbitrary
The recent WeWork IPO debacle is certainly a great demonstration of how unreliable and arbitrary private company valuations can be. Six weeks ago WeWork expected to go public at a valuation of as much as $60 billion. Now they are on the edge of bankruptcy and hoping for a lifeline at a valuation of $8…
Gross Margin Is Sexy Again
What do WeWork, Uber and Blue Apron all have in common? Two things actually. First, their investors have taken a beating in the past year. WeWork just pulled it’s IPO, and might become the fastest company to ever fall from a $47 billion valuation to zero. Uber, which went public in May at $45 a…
Gross Revenue Is A Vanity Metric
Gross Revenue charts on fundraise decks. Gross Revenue used to calculate customer lifetime value. Gross Revenue used to calculate sales team commissions! Gross Revenue is one of those numbers that can make me a little crazy. Because in many types of businesses, it’s an incredibly misleading number. It can tell a story of happiness and…
The Reality Distortion Field Has Only One Weakness
This post is for all of the Chief Financial Officers, Chief Operating Officers, and advisors of early-stage companies in the room. A quick word about managing the budget and cash flow process with the founders/CEO’s you advise. Someone asked me last week how to manage a planning process where the always optimistic CEO is pushing…
Build Your Pricing Strategy On The Foundation of Testing and Iteration
Digiday published an interesting piece yesterday on the subscription pricing strategy of the Daily Beast. For those that don’t know, the Daily Beast is a news and opinion site owned by IAC that was originally founded by Tina Brown in 2008. It has publicly struggled to find a sustainable business model over the years. When…
Finding Sustainable Growth Before Your Next Fundraise
David Frankel, a Managing Partner at Founder Collective, tweeted an interesting thread last Friday. His point was that if you pull back too hard on growth to try to get to profitability, growth might slow to the point where you will find it very difficult to get back onto the venture capital path to raise…
Pulling Back The Curtain on the Softbank Vision Fund
If you’re interested in the inner workings of the venture capital industry, paying attention to the proposed WeWork IPO is a great place to start. Last week I wrote about the IPO in terms of some of the problems on the company side. But Softbank Capital, WeWork’s largest investor by far, deserves scrutiny here as…
The WeWork IPO – A Fascinating Look At Hype, Greed and The Popping of a Unicorn Bubble
You should be paying attention to the story of the collapsing WeWork IPO. It’s a fascinating look at all that can go wrong when a company that is overhyped and overvalued is exposed before they can get through the IPO process. WeWork’s most recent valuation was $47 billion, driven primarily by investments of over $10…
You’re Not a Tech Company. Invest Your Money Where It Counts
In building the Huffington Post, Thrillist, and JackThreads, I’ve invested a lot of venture capital into building tech platforms. Even though we were media and commerce companies, we described ourselves as tech companies. VC’s loved that description. It absolutely helped increase our valuation in every round. Our pitch decks always had some slides on our…
Almost Worthless: What Can We Learn From A 99.7 Percent Writeoff
When I see 99% destruction in value in a once high-flying startup, there must be some useful lessons in there somewhere. I know I’m a bit late on the Tumblr story, but I was on vacation last week! It’s hard to keep up with this level of destruction of shareholder value when you’re off the…
If There Is No Path To Your Market, Does It Exist?
Have you ever been in the lead on a hike through deep snow? It sucks to be up front. You’re the one breaking through all of that fresh snow, stomping it down to make a path for those behind you. It’s exhausting, and if you don’t share those responsibilities with others in your group, it’s…
How Would Socrates Review That Customer Acquisition Model?
There is something about being the founder of a company that leads you to believe that you’re supposed to be an expert in every discipline, from marketing to software development to creative production. One of the hardest lessons to learn is how to delegate. One of the most important paths to success is to hire…
The Sunk Cost Fallacy – The Roadblock to Meaningful Change
Have you ever ordered too much food at a restaurant, only to end up with a stomach ache because you felt you needed to clear your plate? Have you ever held on to a stock far to long, watching it go down day after day as your losses mount, reluctant to sell until somehow you…
It’s The 60 Percent In The Middle That Will Kill Your Company
The 20 – 60 – 20 rule of thumb is a great framing to keep in mind as you think about where to invest in your company, and where you need to dig deeper to avoid throwing good money after bad. Here’s how it works. 20% of the initiatives in your company represent clear winners.…
Only Revenue Equals Revenue
HuffPost has published a piece about the rise and fall of Mic.com. It’s worth a read to get some perspective on what it’s like to build a startup in a frantic search for a sustainable business model. There are a few good takeaways here that I might come back to in the coming weeks. But…
Go Big or Go Home – Bad Advice Or The Worst Advice
This is the advice the board gave to the CEO of a company in the middle of a critical pivot. Take the biggest swing they can. Lean in as hard as they can to the big idea. Singles and doubles won’t grow valuation and the brand. Fortune favors the bold. And so on. The main…
Making The Best Decisions You Can With The Best Data You Have
One of the hardest parts of leadership is getting comfortable with making difficult decisions with imperfect data. But it’s a critical skill to be able to move your company forward, particularly in an early-stage company. Let’s think about the possible sources of data that could help inform your decision-making process. You have an overworked accounting…
It’s All A Matter of Perspective
I have a few headshots that I use as profile photos on my many email, Slack, and social media accounts. While most of the photos are your standard, professional-looking headshot, there is one that I sometimes use that is the perfect example of perspective and storytelling through effective editing. Whenever someone sees this photo, they…
Blitzscaling Is A Seed Stage Problem Too
Wired Magazine published a story yesterday entitled ‘Blitzscaling’ Is Choking Innovation – And Wasting Money that speaks to significant shifts in fundraising over the last decade. The article’s main focus is on the massive amount of money that is being thrown at companies in later rounds to try to fund an accelerated growth effort to…
Build a Proper Revenue Model
Even in the earliest stages of your business, it’s important to build a proper revenue and customer acquisition model. It doesn’t have to be an overly complicated exercise, but it should force you to think through a few very important parts of your business. If done right, this model will also help you better understand…
Top-Down or Bottom-Up Planning
Whether your company needs to build a new sales plan or develop next year’s budget, the question of top-down planning versus bottom-up is an important one. Spoiler alert. The answer is that you need to do both. Whenever I have led a process to develop a plan that impacts a department, or the entire company,…
If All We Have Is Opinions, Let’s Go With Mine
If we have data let’s look at data. If all you have are opinions, you are setting your team up for failure.
Spaghetti Against the Wall Leaves a Terrible Mess
When nothing seems to be going right within your company. When your cash runway is getting shorter, and your cash burn is getting higher. When your team is searching for answers, and looking to you as the cliff is approaching. One of the worst things you can do during this moment in time is to…
The Founder Superpower
I was reminded today of one of the great powers in the world of entrepreneurship. The founder superpower that can be used for good or evil. Well, to be clear, not really evil. Unless you consider the wasting of time and money to be evil. Which I suppose I do. It’s often the killer of…
Happy and Motivated Employees – Part II
Last week I wrote a post about creating an environment to support happy and motivated employees. I used a framework I heard about from Adam Grant, an organizational psychologist and Wharton professor who writes quite a bit on this topic. Adam broke this topic down to three questions we need to answer for employees. Is…
Valuation Makes The Headlines, But Liquidation Preferences Allocate The Cash
Do the math. Understand your cap table’s waterfall. And remember. Valuation gets the headlines. Liquidation preferences get the cash.
Happy and Motivated Employees
I was listening to Adam Grant recently, and he outlined a way of thinking about what makes employees happy that really resonated with me. His take was that employees want to know: Is this a safe place to work?Is this a fair place to work?Can I make an impact here? Sounds simple, but I consistently…
Focus on Your Losers to Find More Winners
In a meeting with a client this week, they asked me how they could increase average performance of Return On Ad Spend (ROAS) for campaigns run on social platforms, a key metric for their e-commerce business. I told them that they should focus on the worst performing campaigns, so that they could stop doing things…
The Ideal Employee
Often when I get the chance to speak to a group of students, someone invariably asks me to describe the ideal employee. What are the traits of a prospective new hire that I look for, and would give them the best chance of success? In the book “The Five Dysfunctions of a Team” by Patrick…
Career Development: Don’t Over Index For Title, Money or Furniture
One way I’ve measured my career development is in the dramatic decline in the awesomeness of my offices and desks over the years. At the age of 26, I started my new role as an audit and tax supervisor at the national accounting firm Kenneth Leventhal. Their Boston office was located at 60 State Street,…
Find Product-Market Fit Before You Try to Scale
One of the worst mistakes a startup can make is to raise and spend too much money before they’ve found product-market fit. I’ve seen a lot of high value, high cash burn businesses flame out spectacularly over the years. They raise millions on hype and and spend quickly to achieve bogus metrics, only to realize…