1/25: It’s been 6-months since I posted a thread about the trend of early stage companies raising of 2-3 back-to-back rounds with minimal progress in-between. I asked some amazing VCs whether or not anything has changed since. They think it’s gotten worse. Their thoughts:

2/25: We still have the conversation with Founders every few weeks if not more often: “How much can you learn how quickly for how much money?” This is even true for first equity rounds which are the bigger problem for us right now. (@iamjakestream)

3/25: The why: Many large VCs are incented to put money to work because in they’re playing an AUM game and need to show their LPs they have access to all the “hot companies”. (@iamjakestream)

4/25: We have the Sisyphean task of convincing Founders that a $5MM seed check out of a $1B+ Fund isn't necessarily going to improve their chances of getting to product-market fit. It buys runway but doesn't always increase optionality --- it can actually hurt. (@iamjakestream)

5/25: Hectocorns! (100x 🦄) Valuations are outpacing our lexicon for exceptional business. We're realizing companies can reach heights nobody imagined possible a year ago. If you want to understand "crazy" seed round pricing, start from there and work backwards. (@Mark_Goldberg_)

1/23: One #startup trap to avoid (founders and VCs) is to fall in love with a value prop that can’t be delivered IRL now. Good diligence will surface disconnects but they’re often brushed under the rug by #VCs who believe fixing delivery over time will be fine. Unpacked:

2/23: The foundational reason why this matters from day 1 is that building a franchise of loyal customers is difficult for any #startup to pull off but the challenge is amplified if the #startup has to rebuild its franchise as it scales.

3/23: Broken or unfulfilled promises lead to customer behaviors that have real consequences. Poor ratings and reviews. High customer service costs. High complaint volume. Low engagement. High attrition/returns/cancelations. Low organic growth.

4/23: Undoing damage takes time and sometimes is nearly impossible. Convincing inactive customers to “retry” your product isn’t easy. Overcoming bad reviews can be a Herculean task. And resources will be thrown at fixing past sins at the expense of new functionality.

5/23: And guess what happens when #VCs dig into questionable early performance numbers? These conversations tend to revolve around caveats, apologies and synthetic analysis that bakes in significant improvements (many of which are still “unknown” in nature).

1/33: So you want to be a top performing #VC investor. Here are six exercises you can practice as you evaluate #startups that will hone your skills, establish frameworks, and help identify great investments.

Read on if you’re interested:

2/33: Exercise 1: Describe the company’s magical experience

After reading a deck or hearing a pitch, can you easily articulate who their perfect customer is and how they’d interact with the company’s product/service in a perfect manner?

3/33: Only after you understand the experience that a company is trying to create can you evaluate it against currently available options. If the new experience is truly magical and differentiated then it might be worth your time.

4/33: If the experience is only slightly better than options that are readily available in the marketplace today, then the company better have a significant distribution or cost advantage that defines their “reason for existence”.

5/33: When a company is creating a magical experience for a broad audience AND they have distribution and/or cost advantage then you should lean in hard. The best of the best investments are designed to win on multiple dimensions.

1/23: One #startup trap to avoid (founders and VCs) is to fall in love with a value prop that can’t be delivered IRL now. Good diligence will surface disconnects but they’re often brushed under the rug by #VCs who believe fixing delivery over time will be fine. Unpacked:

2/23: The foundational reason why this matters from day 1 is that building a franchise of loyal customers is difficult for any #startup to pull off but the challenge is amplified if the #startup has to rebuild its franchise as it scales.

3/23: Broken or unfulfilled promises lead to customer behaviors that have real consequences. Poor ratings and reviews. High customer service costs. High complaint volume. Low engagement. High attrition/returns/cancelations. Low organic growth.

4/23: Undoing damage takes time and sometimes is nearly impossible. Convincing inactive customers to “retry” your product isn’t easy. Overcoming bad reviews can be a Herculean task. And resources will be thrown at fixing past sins at the expense of new functionality.

5/23: And guess what happens when #VCs dig into questionable early performance numbers? These conversations tend to revolve around caveats, apologies and synthetic analysis that bakes in significant improvements (many of which are still “unknown” in nature).

1/16: One business model I talk about frequently with Founders is underbuilding their software as a strategy.

It’s a really powerful concept that can help a product stand out in a crowded market and turbo-charge growth. Unpacked 👇:

2/16: It’s difficult to deny that just about everyone is a user of software on a daily basis. Phones and Computers are just Operating Systems + Pre-Loaded Apps + Downloaded Apps. Apps include streaming services, browsers, spreadsheets and POS software. The list goes on and on.

3/16: But ask yourself this: How many functions do you typically use in the software/apps that you interact with most? Streaming services: Search, create playlists, play. POS software: Add item descriptions and pricing, ring up orders, view reports.

4/16: The concept of purposefully underbuilding software hinges on the fact that there are situations where doing a few things extraordinarily well can be more valuable to an end-user than offering a complete suite of products/functions that are all “pretty good”.

5/16: Truism #1: Solving for all common use cases is more difficult than solving for a specific use case. Solving for edge cases is even more difficult. Going deep with a few pieces of specific functionality is a way of underbuilding to create advantage.