notes, learnings and reflections for future self reference
The way MasterClass, Apple and SquareSpace execute their paid acquisition strategy is just a cut above the rest. The advertisement are inherent viral.
SquareSpace – John Malkovich Super Bowl 2016
https://youtu.be/LgQB9cIa0DE
SquareSpace – Jeff Bridges super bowl 2015
Apple: Think different 2013
https://youtu.be/5sMBhDv4sik
Apple: 1984 big brother
https://youtu.be/VtvjbmoDx-I
MasterClass – Hans Zimmer
https://youtu.be/yCX1Ze3OcKo
For startups utilizing SEO as a acquisition model to focus on the following:
In a nutshell, to rank for more keywords via pages created instead of trying to optimize for specific keywords.
MeetUp.com observed to have significantly penetrated Japan.
A quick study shows significant levels of liquidity on both the supply and demand side for this two sided market place in major cities of Japan.
Primary data observed glancing over the shoulders of mobile users in crowded trains
Most solutions will inevitably break when used at scale. These are two recent examples.
AirBnB’s network scales to extend it starts disrupting entire neighborhoods
https://www.bloomberg.com/news/articles/2019-11-06/miami-beach-airbnbs-top-market-in-u-s-as-charlotte-grows-rapidly
Political campaigning on social media gets way out of control after politicians attempt to scale up the method which got President Obama elected to office
https://www.bloomberg.com/news/articles/2019-11-07/google-considers-changing-its-political-advertising-policy
Technology eco-system scales up operations in California thereby triggering the housing crisis.
https://www.bloomberg.com/graphics/2019-california-housing-crisis/
Moderation and self restrain is not common when caught up in a winner takes all situation
Trust is the ultimate source of wealth in any society. The level of manifested physical wealth correlates positively with the level of perceived trust members of society have for an entity.
When an entity, be it a phenomena or a behavior, is observed to be consistent across time without much falter, it soon becomes accepted as the norm. Overtime this norm gets deeply embedded within a society and becomes an integral part of its culture. It thus becomes trusted and a source of credibility.
Societal commerce is built on trust. Trust accumulated through consistency overtime can be converted to other forms of tangible currency. These currencies can then be used to direct resources within the society towards the achievement of very material goals.
When comparing between two entities that are embedded within the cultural fabric of society, the one that exhibits a higher level of consistency inevitably gains more trust. This explains why while fiat currencies comes and goes, the value of gold remains consistent across time.
While it might be tempting to equate trust with value, there is a subtle difference. While trust elicits value, value need not necessarily elicit trust.
Expressing the entire civilization’s undertaking at any point in time as an linear equation, any essential variable that happens to be the most restrictive in supply at that point inevitably becomes the most valued. However wide fluctuations in value does not elicit trust in the long run.
https://www.bloomberg.com/news/articles/2019-10-12/michigan-pulls-600-million-from-ken-fisher-after-lewd-remarks
When it became evident that the country will loss the war, it experienced increased inability to raise debt to in domestic currency denomination to continue financing its war efforts. It’s currency soon lost it’s reserve currency status and it was increasingly forced to denominate debt in foreign reserve currencies.
Post WWI debts denominated in domestic currency where inflated away through printing of cash by the German government to pay of debts denominated in foreign currencies.
Europe was able to cheaply produce this in abundance . Europeans for a period were able to exploit this asymmetry by exchanging cheap glass beads for valuable natural resources. When value within the African society became depleted, Europeans were eventually able to subjugate the entire African population and exploit them through the slave trade.
Bankers increasingly became concern of easy credit driving share prices to stratospheric valuations. An eventual tightening of credit lead to rapid deleveraging within the system. The lack of trust within the system prevented the circulation of money and credit. The central bank ultimately had to step in to restore trust.
It did so by first preventing the flight to value. This was achieved through the banning of conversion of USD dollar to gold.
With the deliberate pursuit of constant 2% yearly inflation by central banks around the world current fiat money are failed stores of wealth .
The currency of the Roman Empire is a perfect example of where we will be headed. Overtime less gold per coin is used. Their currency was ultimately replaced by paper which allowed rampant printing by the government during times of war. The effects of inflation eroded the Roman empires currency as a long term store of wealth.
To build trust is to build wealth. The key to doing so is to adhere and operate on a consistent set of sound principles over across time and in all environments. Being slow and steady is a pre-requisite of this process.
The founder needs to sell the product first before bringing onboard any sales representatives. We need to build out the play book first. PlayBook must help uncover the pain and map the pain to the problem and sell the solution to the company
Need to figure out how to spend money in the engine to generate more than proportionate sales. Sales Pods proposed winning by design. Individuals from sales and marketing functions that are depending on each other and grouped together as a team. Around 35K per month to build out a sales pod. Growth rate doubled.
Presentation format
The Viral evangelism loop characteristics. Always ask them how they hear about the company?
Once you have a base of users that are interacting more frequently with you, do start thinking about how to implement the evangelist program.
A soldier will fight long and hard when given a piece of ribbon. Give me enough medals and I will win the war.
Syndicates are useful for closing the current round. Flexible investment amount.
Keeps your Cap table clean.
The wire and sign for banks it a painful process. Vacations and burning man get in the way.
Worked with Mary Maker who is one of the world’s class research analyst. The willingness to have conviction and willingness to standup on what you think when no one else believes it. The early believer of Amazon.
While software is eating the world. A lot of the companies that do not have profit margin structure of software companies are being invested as if they are software companies. WeWork is one of those classic examples. Its becoming hard to raise money for businesses and for certain people. Ratios will collapse.
We are in major tech trend right now. Priorly was social which made marketing easy. Cloud, SaaS and mobile made it easy for people to dislodge competitors. These trends are around 15 years old already. Investors are always ready to deploy cash.
Real Estate Tech was an up and rising trend which allowed the ability to deploy capital. There is too much money chasing too little opportunity. WeWork has something physical so it feels easier to value, aka real world virality like Uber.
For 5 to 10 years the ecosystem has been in this war chest strategy paradigm. Investors invest in growth. They were willing to fund 20% growth versus 10% while burning more. It pushes the founders to take the money and promise the moon or blow up trying.
The risk is asymmetrical between investors versus founders and employees, since investors just need to make sure one company makes it while the latter group are all in.
The slow and steady growth examples. Founders firmly believe their products are differentiated and don’t want to pretend to be something they are not.
Choice between these two tracks is based on personality of founder and investor expectation.
Due to the prevalence of war chest strategy the environment has became really sharky.
What is the biggest risk and who can address the risk. Micheal the cofounder was able to address the risk for the consumer digital marketing company. The category was open for disruption due to the way its currently being sold. Razors were easy to ship. Patents were expiring.
Just find one or two of the right investor to invest in the company. Don’t have to waste time listening to how other founders are killing it. Just focus on the batting average.
Need to have a unique insight into the market or a technology twist. A lot of the markets are well understood.
Most funds right now are private and very small. Most VCs don’t have friends who are not white and not male.
The easiest way to fix the problem was to start her own firm. She was a venture backed CEO. Sales reps report progress and attend a lot of meetings but didn’t close.
Lots of people rejected her while raising money for CowBoy ventures. Most have never invested in a single founder and single GP fund. The three funds are from the same set of LPs so not much need to look for new LPs.
White men are hired on a promise and women/minorities are hired from the past.
Founders need to consider how they signal the market to change this trend.
Hiring female partners who don’t have cheque writing ability.
Concerned about our industry taking money from Saudi Arabia
Key to success product and distribution
For distribution, create a distribution moat.
Distribution channel saturation.
Google CTR is dropping
Facebook has finite inventory. Cost per click has increased by 50% within the past 5 years. Not going to be viable comparing against LTV of customers.
Move beyond average. Forecast the value of each customer in the funnel and choose the right acquisition approach.
Levels of influence in a purchasing decision
outbound emails need to inject personalization by using their logo, their font, their screenshot.
Use clearbit to predict who is coming to the site. If potential high value customer make chat available. Drive engagement to hijack reciprocity.
Create an engagement that is cheap, qualified and memorable.
If selling complex product, remove pricing to avoid anchoring which makes it hard for sales people.
Test different UVP with very different valuation.
Enterprise B2B hard to use Facebook. Send data back to Facebook to train their ML ad model using our forecast.
Once converted users to dollar, then instead of tracking number of people converted then track how much dollar converted.
how to hire people?
Don’t write job description. It’s useless. Candidates just ignore them. Write the impact overtime. 1 month, 3 month and 1 year.
Hiring the candidates for roles once you understand. Helps interviewers evaluate
Saves time.
What they will own. What they will teach. What they will learn.
Really need to horn your pitch and track them via a CRM. Keep selling them the culture. Make sure to chat verbally before providing a written offer.
Levers to optimize funding round
process is in your control. Leverage momentum. Keep the investors informed in the process. You are always raising.
individual partners and firms reputation/brand as a working partner. stage and sector focus for the investor. chemistry
start with how much you need. What milestones you will hit and how long that runway will be.
make sure not too high otherwise will be hard to justify the valuation of the next round. They might have ownership level requirements and how much they need to deploy
10% ownership at seed
20-25% ownership at A round
valuation versus investor fit. Round size vs valuation. Speed versus valuation.
The success of the underlying business is the most critical criteria to even consider raising money.
Assuming 50 million USD fund.
A strong return of an upper quartile VC firm for USD50 million injection will return 175 million which is 4.4X returns.
Scenario 1 for USD50 million returns
scenario 2 for USD50 million returns