How companies decide whether to acquire you, valuations are falling and the ultimate sense of freedom.

Happy Saturday.

I’m back in Ashburn, VA after a quick trip to Vegas mid-week. The jetlag’s catching up to me but that might be my last flight for the year… unless I find out that I need a few more PQM’s to keep my 1K status on United. 

1. “Still, nobody wanted our app.” [Link] [Tweet]

I probably sound like a broken record but knowing how to build an app isn’t enough. You’ve got to be thinking about user acquisition (e.g., “how will I convince people to wantto download this app?”), user retention (e.g., “how will I make this useful enough to make them want to open the app enough to not forget about it over the other 80+ apps they have installed?”) and monetization (e.g., “how are we going to pay the bills?).

2. “But if you see it. Clearly. And have 24+ months to get to 10 customers. And 10 years to real success. Go for it.” [Link] [Tweet]

It’s never too late to start a company as long as you recognize that you have to be in it for the long haul. Building a company is harder than you think.

3. “The web is less than 8,000 days old.” [Link] [Tweet]

A little more perspective on this week’s Fed news: the last time the Fed raised interest rates, iPhones didn’t exist.

4. “We built this spreadsheet and we modeled these two scenarios — one is build, one is buy.” [Link] [Tweet]

At a basic level, the most desirable acquisition targets are the ones that are growing the fastest. That’s as simple as it is.

In this case, Respondly had product, traction and a growth rate that convinced Buffer that it was worth buying the company rather than start building the business from scratch.

Growth > Product

5. “Silicon Valley is cooling, not crashing. Valuations are falling. The era of cheap money is over.” [Link] [Tweet]

If you’re an early stage company focused on revenue and growth, you’re going to be just fine. The only people freaking out at this point are the ones that raised on high valuations in the past and haven’t been able to get their company to grow into that number.

6. “every company is now a software company, whether they sell sugar water or build buildings.” [Link] [Tweet]

On that note, you should be making friends at larger companies just outside of your industry. If your goal is to sell to Google, Facebook or any of the other big companies in the Valley, here’s the bad news: they’re likely to undervalue you, if they even notice you.

Last year, 100+ corporate venture arms were setup. That’s 100+ big corporations saying “Hey, we want to figure this tech thing out. Maybe we should invest in some stuff.” They’re recognizing that technology isn’t “the IT guy in the basement” but rather it’s the stuff that’s going to grow them for the next 100 years.

7. “It used to be that having your own car provided the ultimate sense of freedom for young adults.” [Link] [Tweet]

My first car was about freedom. Hell, my latest pickup truck is still about freedom. I guess I don’t understand those damn kids either.

On a serious note: I wonder if my daughter will ever learn to drive. By the time she’s 16, I imagine that self driving cars and the sharing economy will change the way we take our children to school, soccer practices and shopping.

8. “The problem with early stage investing is that markets can never be sized in Excel.” [Link] [Tweet]

Three things about early stage investing:

  • Most due diligence happens in the rear view mirror.
  • You just need to be directionally right about the market.
  • If the company is spending >50% of the time talking about the product, you should see that as a red flag. The best founders recognize that the product is table stakes, growth is everything.

9. “There’s something metaphysical about driving alone through the night.” [Link] [Tweet]

I’m looking forward to the stops on my tech tour next year — and the long drives that will come with them. I’ve got 7 states confirmed around the US and the events are starting to come together. More on that next week. 🙂

10. “The best time to start a company is when you can nucleate a team around yourself and your vision.” [Link] [Tweet]

Investors will always chase great teams pursuing unique ideas. That is a constant, despite the vacillations of the financial markets.

How about we spend a week together in 2016?

I’ve spent the last few years jetting in/out of places for keynotes and demo days. It’s an effective way for me, as an investor, to meet the maximum amount of companies in the shortest amount of time. I want to give back to local tech communities in 2016.

Here’s the general idea: I’ll come spend a week in your community and we’ll put together a week full of office hours, tech meetups, angel investing workshops, keynotes and fun. I might even bring some other investors with me to help.

In exchange, you cover my costs and help me figure out how to best help your tech community. Bonus: I might do it all in an Airstream.

I’m only going to do a few of these week-long trips in 2016, please fill this out ASAP if you think I can help your local tech community. I’m booked into seven states already, hurry up. 🙂

Firehose

You can get the full stream of the things I read, it’s all on Twitter — follow me: @paulsingh. Sometimes I write stuff too. You can always find me on Slack, apply to join.

Have a great weekend!

-P

P.S. If you loved this newsletter, share it with a friend. If you hated this newsletter, share it with an enemy.

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