How founders make decisions when money doesn’t matter, the dose of reality facing angel investors and why stealth doesn’t matter.

Happy Friday.

I’ll be heading to Kelowna, BC later this week — if you’re around, let’s meet up. RSVP here and I’ll send out a note with some meetups that aren’t already on the calendar.

I’ll likely be heading to Phoenix, Shreveport, Pittsburgh and a few other places over the next ~30 days. If you’re around (or know someone that will be), RSVP to the respective stops on my 2016 tech tour and you’ll be the first to know when I post the event calendar for each place.

Finally, if you’re in the DC Metro area and looking for a place to work (and hang out), join me at Brickyard Ashburn. If you mention that you learned about it through my newsletter (or you just hit reply now), I’ll hook you up with some sweet discounts. 😉

1. “By now, all of the information on how to navigate the early hurdles of starting up is available online.” [Link] [Tweet]

It kills me, especially now that we’re in 2016, when I hear a shitty pitch. Or when I see a deck seeking funding for an idea.

If you’re already thinking about an entrepreneurial path for yourself, everything you need is probably a few Google searches away from you.

Between the rise of entrepreneurship, the rise of blogging and the rise of coworking spaces and accelerators, all the basic information you need to turn an idea into a company is already online. Google it. Use it. There’s no excuse for a shitty pitch these days.

As for there being too many accelerators, I think we’re looking at it the wrong way.

If you look at accelerators through the lens of venture capital, the vast majority of them are probably uninteresting. If, however, you look at them through the lens of the modern day MBA, accelerators look quite a bit more interesting and useful to the communities they exist in.

2. “For twenty years, a group of satellites has taken pictures of India every night.” [Link] [Tweet]

When you’re sitting here in the US, it’s easy to forget that the rest of the world is coming online faster than ever. If you do one thing in 2016: travel someplace that your friends haven’t been. (Or join me at one of my tech tour stops.)

3. “it doesn’t feel right in a world in which even mature adult media consumption habits seem to be quickly evolving.” [Link] [Tweet]

Most printed newspapers generate the majority of their income from the printed edition (as opposed to their online efforts). Most of the customers that buy those papers will likely die off over the next 30 years.

There’s a problem there… but only if you’re a printed newspaper, I suppose.

4. “Hello…from the parking lot.” [Link] [Tweet]

The interesting part is that it’s the machines (controlled by scalpers) and not the actual listeners that are driving the speed at which the tickets are actually being purchased.

5. “I’ve had several friends tell me that they’re leaving the Valley because they want to rejoin the real world.” [Link] [Tweet]

When I left the Valley for the DC Metro area, the first thing I noticed was that I didn’t feel like I was constantly missing out on something. It was a relief.

Everyone ought to visit the Valley at least once a quarter, especially if you’re a founder. Living there, however, isn’t a prerequisite for success.

On the flip side: the unrelenting sense of urgency that exists in the Valley is unparalleled anywhere else. If you’re compelled to build a replica of the Valley in your own hometown, figure out how to import urgency and the rest will follow.

6. “A dose of reality may be hitting angel investing.” [Link] [Tweet]

Company valuation is only one line item on any given term sheet but you wouldn’t know that when you read articles like this.

If you think a company is overvalued, you have three options ahead of you:

  • Walk away.
  • Complain about it.
  • Figure out what you’re actually worried about and solve for that.

With the first option, you’re giving up your chance to invest in a company that might go on to return cash. That’s your choice, I suppose.

With the second option, you could try to walk a fine line between negotiating with the founder or complaining about valuations publicly… but you’re running the risk that other entrepreneurs won’t bring their funding opportunities to you. Read: your deal flow will likely suffer.

The third option is the only option but investors rarely talk about it openly. Yes, it’s hard to make money on companies with high valuations — especially when most of your early stage investments will likely fail. When you’re making an initial investment in a company with a valuation at or above $5M, the real risk (aside from company failure) is that they’ll get “acqui-hired” and there are ways to solve for that. 🙂 (Hit reply if you’re interested to learn how I solve for that.)

To be clear, I’m not saying that high valuations are OK. I’m simply trying to suggest that there’s much, much more to any given investment than just the valuation.

7. “Founders make different decisions when money doesn’t matter.” [Link] [Tweet]

So true.

8. “Most technology startups fail. There’s a winner, and there’s 7 out of 10 that lose.” [Link] [Tweet]

I’ve said it before and I’ll say it again: if more founders understood how venture funds (and angel investors) actually make money, I’m convinced we’d see much better pitches.

When I’m speaking with a founder, it’s incredibly easy to turn the conversation towards my thoughts on their idea. That’s the lazy way to speak to a founder.

What I think about someone’s idea doesn’t matter, the real question is “can this team do it?” and, if so, “could this company be big enough to make a meaningful return for me?”

9. “Start now thinking about what you think will make you happier. Start planning how you will get there.” [Link] [Tweet]

Yep.

10. “Too many founders feel that their idea is way too special.” [Link] [Tweet]

I have a policy: I don’t invest in stealth companies. You probably shouldn’t either.

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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