Some ideas that are too short for their own essays

Reader beware.

Below is a dump of thoughts that I had planned to eventually expand into full posts. This morning it occurred to me that many aren’t destined for anything beyond one sentence. So rather than hoard them I decided to share and see what might happen.

If any of these sparks something in you, dear reader, please don’t hesitate to reach out through the usual channels.

1. A very dangerous startup is an extremely fast growing company with poor retention. This often means a big market need (fast sales cycles, high ACVs) plus a scalable method of providing that solution, paired with an ultimately disappointing product experience. Unless the distribution advantage is super proprietary, the door is open for competitors to come in with better products and kick your ass. For investors, the scary thing is that the full scale of the retention issue won’t be apparent to early stage (Seed/A) investors, but the growth is high enough that competition to invest (and thus entry valuation) is high.

2. The inverse is also true —startups with insanely strong retention/NPS but good-but-not-great growth and open (but ultimately solvable) questions about sales efficiency, and consequently modest valuations, present an opportunity for investors. 

3. Some characteristics of successful very early stage founding teams: A) Have very rapid (and consistent) cycles of learning, and application of that learning, and back to learning again. B) Ability to attract allies and supporters who want to help, even if informally. C) Are obsessed with their customers and teams, and relatively uninterested in startup culture & venture capital. D) Are clear and concise communicators; they write terrific (brief and compelling) cold e-mails and do it often.

4. If you have an opportunity to examine someone’s slope firsthand over time, you have an enormous advantage when it comes to deciding whether or not to work with them.

5. Growth companies that commit to growing the ARR/FTE metric quarter-over-quarter almost always thrive.

6. Most SaaS metrics are really just proxies for how much pricing power the firm has.

7. When somebody claims that their product “democratizes” or “de-centralizes” something, their company usually doesn’t have a working business model.

8. Beware of VCs who have extremely tight (and extensive) criteria for what level of business metrics & KPIs they find acceptable. Their portfolios are almost always terrible.

9. It’s almost never helpful to ask a VC why they passed on investing in your company after just one meeting or call. The problem is that the overwhelming top 2 reasons for passing that early are “I just don’t get it” and “I didn’t want to keep talking to them”, neither of which are reasons that any diplomatically-minded person is going to reveal to your face. Worst, many VCs (especially ones who are low in the hierarchy) want to be perceived as intellectually rigorous and hyper rational, which means that when pushed to explain their reasoning they will usually confabulate something sensible-sounding so they don’t get accused of lazy decision-making.

10. Relatedly, most (not all) VC jobs are destructive for young people early in their careers. People will laugh at your bad jokes and nod approvingly at your awful advice, which can destroy your self-awareness and annihilate your grit. If you insist, consider joining a firm with zero brand awareness and barely any capital.