Disqus - Latest Comments for christmasgorilla

Re: The Finance To Value Framework

christmasgorilla — Sun, 20 May 2018 14:54:02 -0000

Really helpful framing post. Setting yourself up to raise an up round is important, but not all up rounds are created equal. Two quick follow up questions:

1) Where did the notion of a company that couldn't 2X it's value (early stage) before the next fundraise become a norm?

2) Given this post—what are some rules of thumb around how to position value for a subsequent fundraise that you give to your portfolio companies?

ie, use this framework and be able to double value of the company and you're in great shape vs. create 20% more value over capital burn and you're in the danger zone

Re: The Board works for the Common Stock

christmasgorilla — Wed, 07 Feb 2018 18:51:51 -0000

Appreciate this post, though it raised a question: do you believe that board members (especially VCs representing their investment) are still supposed to represent the common stock when the preferred stock overhang is a larger portion of the cap table than the common stock?

Re: Field Skillet Upgrades the Cast Iron Classic

christmasgorilla — Wed, 09 Mar 2016 11:56:44 -0000

Marcus, thanks so much for the write up and the love—we've put a lot into this and on the line for this and the positive response from everyone has been everything.

Re: The New Entertainment Bundlers

christmasgorilla — Fri, 04 Mar 2016 08:28:41 -0000

"I said– really just to end the conversation– I said, well, gentlemen, there’s only two ways I know of to make money– bundling, and unbundling." - Jim Barksdale

Some deep cuts from a time long ago...

http://bit.ly/1Yae4ni

The above is an article from 2006 with some amazingly prescient quotes from the COO of HBO at the time about how the subscription model (and bundling) allowed them to produce their content (which is expensive to produce). Remember, these comments were made at a time when everyone was pushing for a la carte a la iTunes and streaming hadn't become the thing that it's become.

Next deep cut is an academic paper on Bundling Information Goods: http://pubsonline.informs.o...

Part of the abstract:

"We study the strategy of bundling a large number of information goods, such as those increasingly available on the Internet, and selling them for a fixed price. We analyze the optimal bundling strategies for a multiproduct monopolist, and we find that bundling very large numbers of unrelated information goods can be surprisingly profitable. The reason is that the law of large numbers makes it much easier to predict consumers' valuations for a bundle of goods than their valuations for the individual goods when sold separately. As a result, this “predictive value of bundling” makes it possible to achieve greater sales, greater economic efficiency, and greater profits per good from a bundle of information goods than can be attained when the same goods are sold separately. Our main results do not extend to most physical goods, as the marginal costs of production for goods not used by the buyer typically negate any benefits from the predictive value of large-scale bundling."

Re: Spray and Pray (and Pounce)

christmasgorilla — Mon, 28 Dec 2015 12:33:24 -0000

With the size of today's seed rounds (and how they blend into A territory), I often find myself confused on the difference between seed and Series A. For example, we're coinvestors in a company, Bento, where that line got blurred going from convertible -> priced very quickly. This is probably a champagne problem and I guess my confusion is a result of privilege.

I'm further confused that amount of capital doesn't really clearly delineate anymore. For some funds, a $5M cheque buys optionality (I have an investor that wrote a $10M cheque for optionality). For others, it's a major commitment.

Re: The Tension Between Governance and Deal Flow

christmasgorilla — Mon, 28 Dec 2015 09:23:08 -0000

Picking up here from your other post on Spray and Pray and Pounce (closing out a million open browser tabs)...

It's a big question on whether there's divergent skills in investing and being any good at corporate governance / being helpful. I think the thing that's definitely true is that there's a higher moral imperative on VCs—because the number one question a founder should try and dig up before allowing someone on their board is: how does this person behave in the face of conflict? and how is that illustrated by various cases of shit hitting the fan?

Great governance should be like great medicine—preventative in nature. Which means coaching and guiding. Just like most investors believe they're great pickers, they also often believe that they're great entrepreneurial coaches...

Re: Spray and Pray (and Pounce)

christmasgorilla — Mon, 28 Dec 2015 09:08:54 -0000

Harvesting optionality is the phrase Tren Griffin uses and it's a good one.

I think the reason people / investors can't talk publicly about this being the best approach for returns (ie: it's abhorrent) is that it's very far removed from all of the very human difficulties in building and operating a great company. And when you talk about boards and who you want on your board—you want the person who you'd want with you in a foxhole in a war, not the person holding your company at arm's length until you break out.

The biggest issue this poses is around corporate governance. I think smart people starting funds these days don't take board seats (Sacca, etc) because it allows them to be more effective at harvesting optionality and remain "tight" with founders through ups and downs—and back up a money truck for a later round based on that "tight-ness."

The thing that's interesting about this is that most VCs (according to entrepreneurs) are not that helpful on boards—and many entrepreneurs mainly optimize for investors that have taken a kind of Hippocratic Oath to do no harm. Very curious to see the way that certain things that seem to be at odds get resolved over the next cycle or two—board governance and mentorship vs. returns, late stage optionality vs. taking care of your employees.

Re: Lists

christmasgorilla — Sun, 29 Nov 2015 11:08:21 -0000

One of the things that's interesting about lists is that they've always felt a little bit like "tagging" to me. I think I'm the only person on the web still using Delicious and I try mightily to be consistent in the personal taxonomy I've created—but still completely suck at it.

A Delicious-like service would be much more powerful if it had excellent search (and indexed the pages that were saved / tagged to augment the frailties of human memory). I wonder if lists would benefit as much from really powerful search (imprecise matching, related topics, etc)...

Re: Lists

christmasgorilla — Sun, 29 Nov 2015 10:58:20 -0000

The hard part about lists is that they might be like other types of organizational software—they're incredibly particular to each individual user and their habits around their workflow. If that's true, lists could be a little bit of a red herring—they seem like an atomic unit of functionality but are actually really fragmented. If that's true, might be like calendar/email—which usually requires muscling in with platform power from somewhere else.

It's funny to think that it's something that could be most easily in Buzzfeed's wheelhouse...

One of the more interesting stabs at turning lists into a network was the Berlin-based Amen—which used structured data to try to create a sense of a network from Day 0. I don't think they ever got beyond a million users or so, which seems to be where most list-making products seem to stall out.

Re: Updated: The conferences to attend

christmasgorilla — Wed, 25 Nov 2015 08:06:00 -0000

The smaller, private ones: Goldman in Vegas, Allenco in AZ, etc.

Re: Horowitz applied the same philosophy to his newest... | christmasgorilla

christmasgorilla — Fri, 13 Nov 2015 10:55:14 -0000

More money quotes:

“I really believe in people who make things just because they want to make things. Like a guy who dies, and you look in his backyard and find 700 little sculptures of little dudes. Like that.”

That ethos, however, is alien to the structures of the mainstream publishing industry, which ask for pitches with concrete promises of a final product, a certain audience: concrete markers of success. The sort of things that are hard to think about when you really just want to fiddle your way through a process, living the platonic ideal of the artistic experience, unencumbered by monetary concerns. Which is why Russell Quinn described the unifying quality of Horowitz’s projects as “low risk.”

Re: No Stack Startups

christmasgorilla — Wed, 06 May 2015 11:12:08 -0000

This might be a little too "Soho" for you: http://firstwefeast.com/dri...

But the Coconut Cartel was one of the OGs to really build their business on Instagram.

Re: agent of truth — The Growth Hacker Mafia

christmasgorilla — Sun, 03 May 2015 10:31:55 -0000

Jon Tien. Former head of product at Zynga, created their PM culture, was the lead PM on Farmville...

Now the CEO of Kitchensurfing.

Re: Video Of The Week: Albert’s TEDx Talk

christmasgorilla — Sun, 26 Apr 2015 12:48:46 -0000

Loved this—thanks to Albert and Fred for sharing.

Question: a lot of the USV folks have spoken about / pointed towards a future where networks may have less power or need to be more cooperative with their participants (like in this post about the Mutual Company: http://avc.com/2014/01/the-... )——what does that do to the USV investment thesis around networks?

Re: eShares

christmasgorilla — Tue, 21 Apr 2015 15:58:12 -0000

Angels and lawyers need to evangelize.

It's a nice feature idea.

I'm a fan of the idea of eShares and have had to scramble to find non-existant stock certs in the past.

One of the biggest issues is that the big startup law firms are still actually pretty "against" eShares—which includes Gunderson (which is weird because both USV and Spark are big customers of theirs). When I asked our counsel about moving over (we're a post Series B company with a clean cap table, but busier than a younger company) the response I got indicated a large amount of friction.

Re: bijan sabet — I’d wanted to write a story for my daughters that...

christmasgorilla — Wed, 15 Apr 2015 08:20:56 -0000

John Steinbeck wrote The East of Eden Letters to his close friend and editor, Pascal "Pat" Covici, as he worked on the novel. In a notebook, he would start on the left page every day with a letter to Pat in an effort of "getting my mental arm in shape to pitch a good game." The facing pages would be filled with the drafts that would become East of Eden. This is the first letter.

http://christmasgorilla.net...

"I am choosing to write this book to my sons. They are little boys now and they will never know what they came from through me, unless I tell them. It is not written for them to read now but when they are grown and the pains and joys have tousled them a little..."

Re: A Good Marketplace Looks Like a SaaS Business

christmasgorilla — Tue, 14 Apr 2015 15:56:38 -0000

Justin, the other thing I'd look at is the CAC payback period. With < 24 months of operations it can be hard to get a handle on both LTV and CAC payback period. But good rule of thumb is if you think it takes you more than 6 mos. to payback your CAC you're going to need a monster balance sheet to fund growth.

The other thing to look at and pay attention to is that you have a CAC and LTV on both sides of your marketplace.

From a very macro perspective, I also think understanding your utilization and revenue spread across the seller base is really important. Something I've seen a lot of people f*ck up is thinking they have a commoditized product (relatively even distribution of sales across sellers), when in fact they don't (for example, Etsy has 90%+ of their revenue coming from 5% of their sellers). There's a lot of nuance to this aspect and we've dealt with it quite a bit at Kitchensurfing.

Re: The 0% Take Rate Marketplace Valuation Conundrum

christmasgorilla — Fri, 10 Apr 2015 19:09:48 -0000

Isn't this the basis behind the USV investment in Sidecar?

That the only way to actually compete with Uber is to try and do some sort of end run around them and take the supply side with more transparency, love, and better economics?

Re: The 0% Take Rate Marketplace Valuation Conundrum

christmasgorilla — Fri, 10 Apr 2015 19:08:08 -0000

That depends on the distribution of the marketplace. Etsy has almost a power law curve—where 90%+ of the transactions are driven by 5% of the sellers. Other marketplaces have a more avg distribution.

Some marketplaces have to create a whole separate business to get to a liquidity threshold (OpenTable is the OG of that type) and you're seeing more of this recently.

Re: BIJAN SABET

christmasgorilla — Tue, 17 Mar 2015 21:39:57 -0000

Another one for you: Kishi Bashi covering the Talking Heads:

https://www.youtube.com/wat...

And if you're wondering where I'm getting all these deep cuts from, I'm giving Trntbl a spin: http://www.trntbl.me/bijan — which I forgot about and has been a gem of a jukebox today.

Also, if you want a display of just absolutely incredible musicality, this Tiny Desk concert from Kishi Bashi is amazing: https://www.youtube.com/wat...

Re: bijan sabet

christmasgorilla — Tue, 17 Mar 2015 18:06:53 -0000

Bijan, this is a classic for covers. Original was Thin Lizzy (which is excellent).

The Smashing Pumpkins did a pretty amazing cover in the 90s:

http://christmasgorilla.com...

Re: Common vs. Preferred

christmasgorilla — Wed, 07 Jan 2015 14:46:00 -0000

This is 100% correct. One of the biggest reasons for Preferred Stock (in addition to protective provisions for sideways companies) is that it allows the company to issue employee stock options at a strike price that is less than the price of the preferred.

This is true of many other kinds of assets (for example, many family partnerships or trusts are able to transfer assets between generations at a discounted rate because the person receiving the "gift" doesn't have full control over the assets / doesn't have as much liquidity as if the gift was cash).

Re: - Thisisgoingtobebig.com - Some Rules for Marketplaces and Distributed Workforce Platforms

christmasgorilla — Mon, 08 Dec 2014 09:51:20 -0000

I agree with you. And Marco (CEO of Thumbtack) has made comments about trying to move into the transactional side of the business for local goods and services.

Also, not all transactions need to be sticky. If you only hire a painter once every three years, the repeat rate is not as relevant.

Theoretically, the biggest monster that could be created in the category of local services is something like Thumbtack + Square. The hard part is that they're then open to the Craigslist effect of people sniping off the richest verticals with better flows and tools more appropriate for that vertical.

Re: - Thisisgoingtobebig.com - Some Rules for Marketplaces and Distributed Workforce Platforms

christmasgorilla — Tue, 02 Dec 2014 18:03:31 -0000

Thumbtack has done a great job of winning the distribution game for local services (new age yellow pages / crushed SEO / crushed SEM). I think it's a stretch to call them a marketplace. There's a big difference between a marketplace and a lead-gen platform.

I'd define a marketplace as an environment where neither party would imagine transacting again in the future without the marketplace.

They want to be a marketplace, they're currently a bit more in the lead gen business. But you can cross the gap. Airbnb is a pretty good example of that.

Re: Fred Wilson Dot VC

christmasgorilla — Sat, 22 Nov 2014 10:00:37 -0000

This is the mindset: http://www.cultofmac.com/29...