Author: Paul Singh

What we’re going to do in 2017

If you’re excited by technical terms, we’re going to continue building an API to venture capital and functional expertise outside Silicon Valley and NYC. If you prefer plain english, here’s our plan for 2017.

Results Junkies = Tour + Content + Investments + Network

North American Tech Tour. We visited 42 cities, drove 26,141 miles in 2016, primarily focused on cities with less than 250,000 people and I learned a lot — personally and professionally — along the way. We’re going to do that again in 2017 and we’re going to reach 10X more people on the ground. I hope you’ll join us on the road.

Ramping up the content machine. We really dropped the ball on this in 2016 — we shook hands with over 20,000 interesting people. We should have been collecting more stories along the way and sharing them with you. We’re going to do this right in 2017: think blogs, vlogs and maybe even a book.

More investments. We closed only a handful of the ~40 investments I would have like to have made through 2016 and I was the bottleneck. I’m hopeful that we’ll still be able to close most of those deals this year (check your emails, founders!) but we’re going to streamline the investing process in 2017 (back the syndicate, investors!). Based on what we’ve seen this year, there are great companies emerging in the smaller cities around North America and I want us to be the most active early-stage investor in those regions.

The Network. One of the biggest learnings of the 2016 tour: most cities now have an intra-city network of entrepreneurial resources but there’s more we can do to connect them with their peers around the country. We’re going to build a series of weekly events and workshops that can be dropped into any coworking space or accelerator cohort around the country. There’s no reason that ambitious entrepreneurs in Tulsa, Butte, Grand Junction or anywhere else shouldn’t have access to the same level of resources as their peers in Silicon Valley or NYC.

So that’s the plan. We probably won’t get this right on the first try — or even the second try — but we’re going to make it happen.

I’ll share more details soon. 🙂

What you should do in 2017

I’m convinced that becoming a better entrepreneur is similar to becoming a better athlete. You’ve got to do the work.

You don’t become a better runner by reading Runner’s World. You don’t become a better person by reading Men’s Health. You become better by doing the work.

If you want to be a better entrepreneur, here’s what you have to do: sell one thing to one person you don’t know.

It’s that simple.

You don’t have to quit your job first.

You don’t need to learn to code first.

You don’t need to get business cards first.

At the end of the day, entrepreneurship is about sales.

Just make one sale this week. It doesn’t matter whether it’s a product you’re thinking about building or if it’s a few hours of your consulting time.

Invest in yourself this year: learn how to sell things. Your future self (and career) is depending on you.

 

26,141 miles of mistakes, learning and growth

[This is my 2016 wrap up. You can find my 2017 wrap up here: I started my travels to escape life. Along the way, I found it.]

It’s comforting to be back in DC this holiday season — close to my daughter, our friends, our local bar, in our home and back to all the other things we know.

It’s hard, after spending most of 2016 wandering around the US and Canada, not to want to get back on the road again. Back to the long roads, weird rest stops, new people and adventures — both mundane and unbelievable — that I’ve experienced this year.

So I’m going to do it again in 2017. But first, I want to tell you the truth.

…

Divorce has a way of making you untouchable. The people you knew in your previous life — including your family — aren’t sure what to say or do. The people that you learn to know in your new life aren’t interested in the baggage. You’re stuck somewhere in the middle.

That’s how I started 2016: somewhere in the middle but mostly broken — personally and professionally.

You may have heard stories — especially from me — about the tech tour but here’s the truth:

At the beginning of 2016, Dana and I weren’t ready to move in together and I couldn’t move back in with my parents. I didn’t know where else to go, so I moved into an Airstream travel trailer. Full time.

I wasn’t sure what to say to my friends and family in the DC area, so I started thinking of ways to get away. That was the beginning of the tech tour: a plan to get away from the things I knew.

It was cheaper to keep the Airstream moving than it was to keep it parked in one campground, especially in the DC area, so what started out as a six city tour became a 42 city tour that would take me across North America and back three times over the course of 9 months.

Along the way, I shook hands with over 20,000 people. I ran out of gas twice. I saw things — the most beautiful things — that few people ever see.  And I learned about myself.

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These are a few of those things:

  • Take your family with you. For the first half of the year, Dana was only able to join me on the road sporadically. For the second half of the year, she joined me full-time and I’d like to think that the quality of both of our lives improved dramatically. You don’t need to be together 24/7 — there’s value in alone time — but there’s something incredible in traveling with your significant other. There’s something amazing about going places together, experiencing new things together and growing together.
  • Everyone’s pretending. I grew up in a culture that prefers to keep everything hidden. Most of us work in a professional culture of keeping everything hidden. You don’t need to broadcast your issues to the world, just find your tribe and keep them close. At the very least, make sure you never pretend around your significant other.
  • Everyone is (mostly) good. When I moved into the Airstream full-time, I worried about my safety. A year later, I’ve learned that full-timers watch out for each other. More importantly, I’ve learned that the vast majority of people are good. They just want to help and they hope you will do the same.
  • Reduce friction in your daily life. When I first moved into the Airstream, I quickly learned that trailers have more water than most people want and less electrical storage than most people need. I invested in a huge power upgrade (600A of lithiums, 900W of solar panels, a hybrid inverter and a 3000W generator) and my quality of life became nearly indistinguishable from apartment living. If you use something every day, invest in it.
  • Always top off the tank. Every time I’ve made a mistake — personally and professionally — it’s because I didn’t take care of myself first. It’s not selfish, it’s a fact: you can’t take care of others, make good decisions or do anything else important if you’re not in a good place mentally and physically. If you can get an extra hour of sleep, do it. If you see a gas station, top off the tank — even if you still have half a tank (unless you want to run out of gas 50 miles from the next station, like me).
  • You’re capable of much more than you — or anyone around you — thinks. I would have never thought I could spend a night on BLM land miles from the nearest human being or spend a night in a Walmart parking lot. The truth is that you’re capable of so much more, especially when you’re back is against the wall. Get a first-aid kit and a small toolbox, then learn how to use everything in it. Watch your self-confidence skyrocket.
  • Never stop learning something new. Some people learn how to code, other people learn how to knit but I decided to learn how to long board — so I got a Boosted Board. I’ve taken more than a few nasty spills but there’s no faster way to put an ear-to-ear smile on your face than cruising on one.
  • Be intentional. Be methodical. Every time I’ve rushed to do anything with the Airstream, something goes wrong. (Remind me to tell you about that one time I almost rolled the Airstream off a cliff in Whistler, BC… with Dana inside. She wasn’t happy.) The world wants you to rush everything, don’t fall for it. Some people like checklists, other people like processes — find your system and stick to it. Some people grow up when they’re 18 years old. I grew up at 35.
  • Laugh more. Smile more. At the risk of this sounding like a self help thing, just trust me on this. I love that Dana and I laugh all the time. I love that I really smile in photos now. I love that I feel happier than I’ve ever felt. I don’t know how to measure it but I know that smiling and laughing has helped me be a better person this year.

If I can leave you with one thought as we enter the new year, it’s this: Change makes you better. Traveling makes you better. Do both, if you can.

Change makes you better. Traveling makes you better. Do both, if you can. Share on X

Weekend roundup: reach vs revenue, the cost of doing greater things and optimizing your career

Happy Saturday.

And hello from Washington, DC. It’s good to be home.

  1. “25 people. 4 of them — FOUR — are the president-elect’s children.” [Link] [Tweet]

I (along with most of the tech sector) might be living in a bubble but why aren’t more people outraged by this?

The President-elect is openly putting his children (and who run his businesses in a “not-so-blind trust”) into meetings they wouldn’t ordinarily get on their own.

If Malia or Chelsea were sitting at those tables a few years ago, those two Presidents would have had a shitstorm on their hands. For this guy, we — as a country — seem to be letting him get away with anything.

2. “I should be constantly learning, and I should be happy and fulfilled in that role.” [Link] [Tweet]

One bit came from Peter Pham who told me to go work for a market leader, whatever role that happened to be, it just needed to be the top in their category.

Far too many people decide to start their own thing before gaining any real experience. Unless you can emotionally explain why you care so much about the problem you’re trying to solve, you’re better off working elsewhere.

3. “Natural selection no longer determines how man evolves. Man does – through innovation.” [Link] [Tweet]

Science has given us medicines that have doubled our average lifespan. Technology has given us the means to scale large organizations such as police forces, courts and jails. Violence has decreased a hundred fold; today less than 1 in 100,000 people are murdered. Those would have died from ailments or been killed in the past now live long lives, resulting in swelling ranks of elderly. There is little to no selection at all.

4. “Hours are never the differentiator — it’s never about working more hours than someone else.” [Link] [Tweet]

People make it because they’re talented, they’re lucky, they’re in the right place at the right time, they know how to work with other people, they know how to sell, they know what moves people, they can tell a story, they can see the big and small picture in every situation, and they know how to do something with an opportunity. And so many other reasons. Working harder than other people is not the reason.

 5. “I view the reach vs. revenue conundrum as a spectrum of options ” [Link] [Tweet]

The key phrase here is spectrum of options.

There are two things to consider as you decide where your own company should be on that spectrum:

  • How much access to capital do you have? If you’ve got the ability to keep your company running without new revenue coming in the door, you should consider leaning towards more reach.
  • What is the key metric of success for your business? Aside from revenue, there’s probably some measure of usage (eg, “user completes an action”) that is strongly correlated to your future ability to monetize them. If you know that metric, it’s probably worth leaning towards revenue.

I wish there was a perfect answer for everyone but — based on all the business mistakes I’ve made over the years — I’ll tell you what’s right for me: lean towards revenue whenever you’re in doubt.

Do yourself a favor: get a cup of coffee and read this post in it’s entirety. It’s a solid 14 minutes but it’s well worth it — especially if you’re currently in the early part of your own business.

6. “In order to do greater things, you are going to piss people off or ostracize yourself.” [Link] [Tweet]

I envy people that have found a way to perfectly balance work, life and all the relationships that come with them. I haven’t figured it out and, to be honest, sometimes I think that’s the price I have to pay for my freedom.

Entrepreneurship (the version of it we live in SF) is isolating and lonely at so many times. And in my opinion, it’s unavoidable, but rewarding in a way that I cannot describe. You must be prepared to lose things that are important to you in the pursuit of it.

7. “By all appearances, we’re in a golden age of innovation.” [Link] [Tweet]

Outside of personal technology, improvements in everyday life have been incremental, not revolutionary. Houses, appliances and cars look much like they did a generation ago. Airplanes fly no faster than in the 1960s. None of the 20 most-prescribed drugs in the U.S. came to market in the past decade.

The innovation slump is a key reason the American standards of living have stagnated since 2000. Indeed, absent a turnaround, that stagnation is likely to continue, deepening the malaise that has left the middle class so dissatisfied.

8. “Half a century ago, the entirety of ARPANET, predecessor of the internet, was 45 computers connected to 40 nodes.” [Link] [Tweet]

How far we’ve come: I wouldn’t be surprised if there were 40+ nodes in the average household these days — between phones, Nests, cameras and all the other connected devices we all own.

9. “Explain where the company will be in 18–24 months, how you plan to use the money and how that changes over time.” [Link] [Tweet]

Pro tip: if you find yourself talking about your product for more than 50% of any investor meeting, you blew it.

10. “Early in your career you should be optimizing for two things: learning and building your network.” [Link] [Tweet]

If you’re considering a future job in VC, apply for — and do anything it takes to get into — the AngelList Analyst Program.

Firehose

You can get the full stream of the things I read, it’s all on Twitter — follow me: @paulsingh.

-P

No, the big VCs are not coming to your small city.

It’s nearly impossible to mix local geographic interests with venture-scale returns. That’s why the big brand name venture firms from Silicon Valley or NYC are unlikely to setup shop — or even visit — your small town.

The first step is to understand how investors make decisions. The second step is to realize that VCs aren’t incentivized to visit your town. Let’s take a quick look at how they get paid and then I’ll explain exactly why they’re not planning to visit you.

VCs aren't incentivized to visit your town. Share on X

VCs are paid on management fees and carry — you’ll hear something called “the 2 and 20” to describe this. The first number is the management fee and the second is the carry.

Let’s pretend, for example’s sake, that I was the sole investing partner of a fund managing $10M. On a typical “2 and 20” model, I’m taking home 2% of the fund every year just to manage the fund and I get to keep 20% of any profits after I return the original $10M principal back to my LPs.

Let that sink in for just a minute.

…

When you’re getting paid on the standard 2% and 20% model, the overall incentive for a professional VC is to raise larger and larger funds. When they raise larger funds, the number of investable companies becomes smaller and smaller.

Still with me?

…

Here’s the bottom line: VCs paid on the typical model are incentivized to raise bigger and bigger funds. The problem, however, is that the average startup that survives long enough to build anything meaningful is more likely to get acquired for $20M-$100M instead of going public.

NEWS FLASH: Big VC firms don’t have to travel. Anyone building anything big is going to go visit them. Stop wasting your time, money and efforts trying to win those big funds over.

Here’s what you should do instead:

  1. If you really want to bring VCs to town, aim for funds managing less than $75M.
  2. Teach your founders to talk and act more like their coastal peers.
  3. Recognize that there are great companies that will never fit the venture returns model and that’s OK. It’s better to have 10 companies making $1M/year consistently than it is to have one company hoping to make $100M/year.

As an aside, I believe there’s room for a new venture firm to completely dominate the early stage tech startup  scene across the Midwest. Here’s the sneak gist: raise a $10M fund, invest $100K into 30 companies, reserve the rest to follow on in the best of them and repeat this every six months.

How professional investors make decisions.

Something I learned when I used to sell cars: if you understand how someone makes money, you can better understand how they make decisions.

The business of investing is about deal selection, not deal sourcing. The best investors see 100x more deals than local angels, VCs and anyone else in-between. That’s why it’s easier to get coffee with a professional investor than your local angel group. If you’re a founder, you should skip the local investors first. If you’re an investor, look at deals outside your hometown first.

VCs are easier to understand than angels. VCs are investing other people’s money while angels are investing their own. When angels choose not to invest in your company, it could be for any reason at all (eg, they don’t like your shoes, they hate the weather outside, it’s a Tuesday…”). When a VC chooses not to invest in your company, it’s because they don’t believe that the financial return of your company aligns with the financial returns they promised their investors.

The goal is to make money. When anyone invests in companies, the goal is to return their principal and another three times on top of that. So, for example: if I’m investing $1M in companies this year, my goal is to spread that across X number of companies and hope that one or more of them returns enough money for me to make ~$4M back.

Angels usually earn a paycheck from their day job and keep all the profits when you exit. VCs earn their paycheck from the fund’s management fees and split the profits on your exit with their investors. This is why VCs are incentivized to raise larger and larger funds… and why they’re less and less likely to spend any time outside of Silicon Valley, NYC or other large cities. (More on that tomorrow…)

If you think you’re going to raise money for your company at some point, start by understanding how investors make money before you begin pulling your deck together. Better yet, get to $1,000/month first.

Don’t “do” a startup.

Look, you’re either building a business or you aren’t.

There’s no in-between stage and this is true whether you decide to raise other people’s money or you choose to bootstrap things yourself.

When you say things like “doing a startup,” you’re undermining your own credibility.

If you can’t describe your exact customer in a sentence, you probably don’t know your customer at all. (Dead giveaway: “anyone that needs [X] will need us.”)

If you can’t figure out how to make your first $1 of revenue within the first 30 days, consider doing something else. (Dead giveaway: “we need to spend the next 6-12 months making the app and then we’ll launch big!)

If you can’t make your first $1 of revenue within the first 30 days, consider doing something else. Share on X

If you’re reading this from a bigger tech hub — like SF or NYC — all of the above is obvious to you. If you’re reading this from anywhere else, please share this advice with every entrepreneur you meet.

The most common complaint I hear from local community leaders across North America is that they can’t get coastal investors to come to their cities and they can’t get the local investors to open their wallets. The problem isn’t the investors, it’s the founders.

If you want to make yourself more successful, pay attention to the details — all of them. If you want to make your community more successful, teach them the things that the coastal entrepreneurs are told every day.

Fundraising don’ts.

Aside from actually building your business, asking others to invest in your company is the hardest thing a founder will do.

You can find all sorts of tips across the web on how to find investors, how to structure your term sheets and almost every other detail you’ll need to know. It’s what not to do that isn’t shared often.

  • $250,000 is the minimum to raise. Anything less will send the wrong signals to professional angels and VCs.
  • Never be an investor’s first deal. It’s hard enough to get professional investors to commit to your deal, why make things harder on yourself by dealing with someone that may not be prepared for the risks associated with early stage investing?
  • The smaller the check, the bigger the headache. The minimum check size you should take directly into your company is $25K. Anything smaller needs to get routed into an AngelList Syndicate (here’s mine) or rolled up into some other SPV (ask your local angel group about this).
  • Raise 18 months of capital or nothing at all. Once you step on the venture treadmill, the expectation is that you’ll raise more money at a higher valuation roughly every 12-18 months. If you raise too little capital, you’re unlikely to hit the milestones needed to get that next round. Don’t set yourself up to fail.
  • Investors check references on founders. Founders need to check references on investors. Check AngelList. Ask other founders in their portfolio. Read what others might have said about them anywhere else online. The truth of the matter is that it’s easier to divorce your spouse than to “undo” an investment. Trust me on this.
  • Use AngelList to fill your round, not start it. The same is true for any other online fundraising service you choose to use. Getting the first person to commit is a function of handshakes and time — actual meetings.

Behind the scenes across the Midwest.

I’ll write a full recap of the 2016 tour but, since it’s my first week back in DC after spending the last few months almost entirely in transit, I’m trying to keep my head down as I dig out of the backlog of emails, deals and naps.

Instead, I want to share the time we spent on the ground in Wichita, KS last week. It was our 41st stop of the year and, as we’ve seen everywhere else, there’s a thriving entrepreneurial community present and a number of smart hustlers leading the charge.

Add that to the list of challenges for Midwestern startups: they’re all doing great things locally but the only way to find out about it is to go there.

We’re going to experiment with video quite a bit more through 2017 and I hope you’ll join me on the ground in at least a few of the cities.

WICHITA HIGHLIGHTS

DAY 1

DAY 2

DAY 3

Weekend roundup: the speed of learning, what to read every morning and understanding the lifestyle of building a business.

Happy Saturday.

Hello from Orlando, FL where we’re blowing off some steam after wrapping up the 2016 tech tour. Fun fact: this was my first visit to Disney World and IT IS AMAZING.

Wichita, KS was the 41st stop of the tech tour and it was the best way to wrap up this year. [RECAP VIDEO] We’re going to take the next couple of weeks to rest, recharge, catch up on emails and nail down the 2017 tour. We’re definitely doing this again.

  1. “I now see it’s not speed of doing that matters. It’s speed of learning.” [Link] [Tweet]

This is a sobering look at what happens when you try to grow a bit too fast. To be fair though, 99% of the companies we meet aren’t growing fast enough — or at all.

It’s a fuzzy line but it’s better to be growing too fast (so you can pull back) than to be growing too slow. Default to fast.

2. “I will only meet people who genuinely give a shit about what I do.” [Link] [Tweet]

If someone shoves a business card at you before they learn at least one thing about you, they’re not that interested in you.

3. What do Elite Venture Investors Read Every Morning? [Link] [Tweet]

Email newsletters are the morning newspapers of our generation. I made a quick list of things you should skim every morning.

4. “there is zero correlation between how much money goes into a company and its exit value.” [Link] [Tweet]

Many of the founders I meet — especially outside of Silicon Valley — don’t seem to understand that an investor’s fund size usually dictates the minimum size they want you to reach.

Big funds need big exits. Small funds don’t mind smaller exits. It’s a bit more complicated than that in real life but that’s the gist.

5. “I know a lot of companies that failed due to lack of focus.” [Link] [Tweet]

I know a lot of companies that failed due to lack of focus. I can’t think of one that failed because they were too focused.

I can openly admit that nearly every failure I’ve experienced over the past few years was directly related to my own lack of focus.

I’ve got the same 24 hours in the day as you.

Do one thing well and don’t do anything else until you can get that one thing turned into a business that can run reasonably well whenever you’re not involved. Then — and only then — you can start to experiment with other things.

6. “Tesla spends $6 on advertising for every car sold (compared to the $2k+ that Lincoln spends per car).” [Link] [Tweet]

Most purchases (and investments) are emotional, not rational.

7. “Find (hunt down) people who are currently practicing but are not blogging about it” [Link] [Tweet]

For anyone currently looking for growth hacks online, stop reading blogs. Think about it: no one reasonable would openly talk about a good growth hack until it stops working for them.

By the time you read about it, the experts have moved on to the next thing and won’t tell you about it until they’ve exploited it.

The point is that you should be paying attention to what people do, not what they say.

8. “Whether bootstrapped or funded, there is nothing easy about the lifestyle of building a business.” [Link] [Tweet]

I’m not sure why people talk about venture-funded companies as it they’re somehow better than their bootstrapped counterparts.

When you’re bootstrapped, you can pretty much do anything you want as long as you continue to grow your revenue. When you’re venture-funded, there are only three ways off the “venture treadmill” itself: M&A, IPO or failing.

9. “It now takes much less time to self-fund a SaaS business to profitability.” [Link] [Tweet]

One of the hardest things about the tech tour has been repeatedly noticing that the “common sense” people have in the Valley isn’t quite common everywhere else.

99% of what people need to know about growing their business is already online.

10. “People are falling behind because technology is advancing so fast and our skills and organizations aren’t keeping up.” [Link] [Tweet]

This is one of the most balanced things I’ve read about the recent election. Technology is moving faster than ever and the people being left in the wake have few ways to re-invent themselves.

Firehose

You can get the full stream of the things I read, it’s all on Twitter — follow me: @paulsingh.

-P