“We went from 120 people down to 12. Laying them off was incredibly hard.” We’ll call this founder “Jim.” When I spoke with Jim recently, he looked tired but determined.
Jim was doing everything to keep his company alive. That meant getting rid of most of his team.
Cutting Off a Finger to Save a Hand
“Have you ever seen the old TV show Kung Fu?” I asked.
“I don’t think so.”
“Master Con says ‘Sometimes a finger must be cut off to save a hand.’ That’s what you did. If you hadn’t laid those folks off, no one would have jobs.”
Why Jim Laid Off 90% Of His Company
When we read news stories about layoffs, we think, “What a bunch of meanies. How could they take away those poor people’s jobs?”
Wait until you sit on the other side of the table.
Growth is flat. Cash is running out.
Jim was already taking a sharply reduced salary. It was barely enough to get by.
You either cut payroll, or the whole ship sinks.
How Layoffs May Save Jim’s Startup
I actually encouraged Jim to lay off even more people.
But even at 12 employees, the smaller payroll bought the company time.
Jim was able to close some additional investors. It looks like the company has a good chance of surviving.
When To Do Layoffs
If your company isn’t growing and is running out of cash, you’re not doing your employees any favors by keeping them on the payroll. In fact, you’re risking everyone’s jobs.
For startups in this position, the only solution is taking an axe to the cost structure. And costs are mostly humans.
You can be popular and keep everyone on board until the cash runs out. Or you can be a leader and save the company.
Wrap-Up
When you started your business, you dreamed of ringing the bell at the NASDAQ. A few years in, you’re laying off most of your company.
How the heck did you get here?
Finding product-market fit is extremely difficult. Along the way, you may over-hire and have to cut back.
When a company is in trouble, sometimes the choice is between 90% layoffs and 100%.
If you’re running out of cash, don’t wait until it’s too late. Take decisive action now.
With any luck, you’ll be able to rehire your team soon.
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
“Missionaries, not mercenaries.” How many times have you heard that? But before he started a career in technology, my friend Jesse was a real missionary. And in Mexico, he had a terrifying experience.
I’ll let Jesse tell you the rest…
I was staring straight down the barrel of an AK-47.
On the other end was a corrupt Federale.
Or at least someone dressed like one.
I was in my early 20s, bright-eyed and stupid enough to think this was all somehow part of the adventure.
At the time, I was a missionary in Mexico, working at an orphanage caring for children with disabilities. It remains one of the most incredible seasons of my life.
Every once in a while, a group of us would pile onto an old school bus and head into neighboring towns to share food, clothing, and the Gospel.
This particular trip was taking us toward Ensenada.
We didn’t make it very far.
About half a dozen Federales — or men dressed exactly like them — pulled us over. Suddenly there were AKs shoved into our faces. They roughed us up and demanded money.
Then came the part I’ll never forget:
“Give us the money, or we’re taking the girls.”
We gave them the money.
Obviously.
And somewhere in the middle of this completely insane situation, this bus full of twenty-something missionaries started praying and singing.
I realize how bizarre that probably sounds.
But that was missionary work to me.
Not the AK-47s. Thankfully.
It was the idea that when the world around you gets ugly, you show up anyway. You bring whatever you have—food, clothes, encouragement, hope — and try to leave people with a little more than they had before you arrived.
I had no idea that lesson would eventually become my career.
Zero to Animator
Years later, I started a nonprofit called Brayhaus.
The idea was simple: teach creative and technology skills to kids who otherwise might never have access to them.
One Saturday, I called a local library with an experiment.
“Can I borrow your computer lab and teach people how to make an animation in an hour?”
We had people from about six years old to sixty sitting at computers together, and within an hour they weren’t just watching me animate.
They had made actual animations they could share with someone.
More importantly, they had learned something about storytelling.
The library loved it.
Then other libraries started calling.
Before long, I was getting requests from across the state to come teach Zero to Animator.
Fortunately, I’d asked that first library for permission to record the workshop. We got the appropriate waivers, put a camera in the room, and afterward I posted the class online.
I didn’t think much of it.
Then the company that made the animation software found the video.
They lost their minds.
They flew me from Portland, Oregon, to Boston.
And essentially said:
We want you to build this.
So I built an entire learning management system from the ground up and turned that little library experiment into a free online animation school.
It ultimately taught more than 60,000 students.
The company’s user base grew past 100,000 users, and we reached roughly $3.5 million in revenue in less than six months.
Then they gave me possibly the greatest job title I’ve ever had:
Software Evangelist.
And I’m not exaggerating when I say it may have been the greatest job I’ve ever had.
I literally got paid to travel, eat with people, talk about animation and software, teach, give talks, and get people excited about making things.
I even gave TED-style talks about it.
My job was basically:
Go make people fall in love with this thing you love.
Which is when I realized something funny.
I’d spent years thinking I’d stopped being a missionary.
Apparently, I had just changed what I was evangelizing.
The AK-47s were thankfully gone.
But the lesson I’d learned in Mexico never really left.
Go where people are.
Bring them something useful.
Teach them something they didn’t know they could do.
Care about them before you ask them to care about what you’re building.
Sometimes that’s food and clothing from the back of a school bus.
Sometimes it’s teaching a six-year-old how to make a cartoon in a public library.
And sometimes, apparently, doing that for one room full of people is enough to accidentally reach 100,000 more.
— Jesse
I hope you enjoyed Jesse’s amazing story. For me, seeing how scary the world can get puts life in perspective. What we’re worrying about probably doesn’t matter!
What’s more, those terrifying experiences can become something positive in the future.
We’ll be back to our regularly scheduled programming tomorrow. Thanks for reading!
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
The right images can get millions of eyes on your startup. This morning, I used the new Grok Imagine 2.0 to make creative for a fake startup: Chamath’s sweater emporium.
Round #1: Making an Ad for the Grand Opening
I’m picturing blonde wood, Nordic design, and endless piles of buttery soft white turtlenecks. Let’s see if Grok can make us an ad for the grand opening…
I seeded the prompt with the Chamath sweater meme. Grok did a great job of rendering the smooth wood and nubby sweaters.
I reprompted it to make the grand opening sign larger. Eventually, I got the look I’m going for.
Imagine 2.0 does a great job of making images for an event. You could use this for real events, like a product launch party.
Who needs Canva when you have Grok?
Round #2: Making a Logo
Now that we have an ad for our product, let’s make a logo!
I asked Grok to make a logo for Chamath’s new sweater line. I told it to include a line drawing of a vicuña, source of the finest wool on earth.
Grok gave me four great options. I picked the most minimal, with just the company name and a lovely pencil drawing of a vicuña.
This logo looks so good you could use it on a major brand. Gone are the days of hiring random people on Fiverr.
Round #3: Creating an AI Model to Wear Chamath’s Finery
Chamath is a handsome fellow, but we need a beautiful woman to really make these sweaters sell. And I don’t want to pay a human…
I had Grok create an image of a classy brunette wearing one of Chamath’s turtlenecks. I want her on a sun-drenched street in the West Village, living the glamorous life that only vicuña makes possible.
Grok’s first effort was solid, but a little generic. I reprompted it to have her look straight at the camera on a street flooded with sunlight.
Success!
Reprompting Grok was a heck of a lot easier than directing a human and a lighting crew, not to mention thousands of dollars cheaper.
If you’re thinking of using a human model to promote your product, think again. AI can do it for next to nothing.
Wrap-Up
Overall, I’m giving Grok Imagine 2.0 an A-.
It produced some beautiful images. But occasionally, I needed to re-prompt it to get what I wanted.
If Grok could interpret my intent a bit better, I’d bump that up to an A.
Imagine 2.0 is a very powerful tool for your marketing. Give it a shot and get more eyes on your startup!
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
I’m heading back to Japan in early 2027. But Madonn, are those flights expensive! Fortunately, I got early access to an AI assistant that can help…
Instinct Becomes My Personal Travel Agent
Instinct is a new AI personal assistant. You talk to it via iMessage or WhatsApp.
It’s in private beta right now, but I got an invite from one of its investors.
I gave Instinct a difficult challenge: finding non-stop flights that are close to 90 days apart without going over (visa restrictions). Let’s see if this puppy can find me a cheap flight!
Finding Solid Deals in Seconds, All Via Text Message
In under a minute, Instinct found some great itineraries. It sent me one for around $2,100 on American Airlines, a solid value.
But that has me going out of JFK. I live in North Jersey.
Would it cost me much more to fly out of Newark?
Instinct found that it was a mere $8 more to fly out of Newark, which is quite a bit easier for me. Score!
I verified all these itineraries on Google Flights. Unlike so many travel planning apps, Instinct pulled real, available itineraries. Many apps hallucinate fares that don’t exist.
How Instinct Is Going to Save Me Even More
I asked Instinct what else it could do, and it suggested texting me when the fare drops. So cool!
I told Instinct to text me if the price drops by $100 or more. This is a lot more flexible than Google Flights notifications, which don’t handle long trips well.
Wrap-Up
Handling all my travel planning via iMessage is absolutely awesome. But Instinct does a lot more than travel.
It can manage your calendar, draft emails, do most anything a human assistant can. It does all this through your messaging app, where you spend all day anyway.
I’m giving Instinct an A. The accuracy and ease of use beat any other AI assistant I’ve tried.
I’m excited to see this awesome tool go to general release. Our days of noodling around on Google Flights may be over!
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
Elon dropped his most powerful AI model ever last week: Grok 4.6. I just used it to make a slick app for angel investors in minutes.
Building My First App with Grok 4.6
I want an app to track all the deals I pass on.
Right now, I track them all in a spreadsheet. It’s getting long and janky.
I used Grok 4.6 via Grok Build and gave it a detailed prompt. I asked for a simple, MS-DOS-like interface…a lot like this blog. I told it all the possible reasons I pass on a deal and my possible deal sources.
Grok Creates a Prototype in Minutes
Grok finished my new app in just 4 minutes and 7 seconds!
The app works beautifully.
I can easily enter a new startup without having to scroll to the bottom of some giant spreadsheet. It did everything exactly the way I told it to, from pass reasons to deal sources.
How Long Would This Have Taken Without AI?
I asked Grok how long it would’ve taken a skilled engineer to build this pre-AI. The answer: 2-3 days.
I think a top engineer could do it in 1 day. But either way, the productivity improvement with AI is off the charts.
No wonder we’re investing trillions of dollars in this!
Grok’s Model Is Powerful, But Usability Needs Work
Grok did a really nice job on this app. But I’ll probably wind up sticking with my spreadsheet.
Grok doesn’t make it easy to publish the app and start using it. I need hosting and a Supabase database to make this a real, working product.
That’s so time consuming that I just fall back to my Excel sheet.
If Grok Build could do everything in one click, I’d use it way more. This shows how important the actual application (or “harness”) is, as opposed to the model alone.
Wrap-Up
Overall, Grok 4.6 is the best vibe coding experience I’ve seen. I’m giving it an A.
To get an A+, Grok needs to make it easy to turn this prototype into a real product. It should provide the database and hosting so you can get everything up and running in seconds.
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
I run the world’s tiniest venture fund. And it’s beating almost everyone. 2.38x TVPI, 35.5% IRR.
I think of my angel investments as the world’s smallest fund. This morning, I dug into some numbers to see how I’m doing…
What Metrics Should We Look At?
My “Fund 1” contains 36 primary investments made from mid 2021 to mid-2025. I also wrote a couple follow-on checks, the last of which went out in July.
For a newer fund like mine, we’re looking for two numbers: Total Value to Paid-In (TVPI) and Internal Rate of Return (IRR).
TVPI is the portfolio’s total value on paper. This takes into account markups in later funding rounds.
IRR measures my annual return on capital. This accounts for how long it has taken each investment to reach its current value. Faster growth means higher IRR.
For older funds, Distributions to Paid-In (DPI) is a key metric. But for a newer fund, it’s not very meaningful.
In a five-year-old pre-seed and seed fund, your biggest winners usually have not exited yet.
How My Fund Stacks Up on the Numbers
For 2021 funds, top decile performance is 1.54x TVPI and 15.2% IRR, according to Carta. I’ve beaten that handily.
2021 was an unusually bad vintage. Valuations were high, and AI was about to change the industry forever.
Mine is one of the few funds that weathered the transition.
Doing the Numbers Like Sequoia
To arrive at these valuations, I only counted priced rounds as markups. This is in line with the best practices from top funds like Sequoia.
Some people count any raise at a higher valuation as a markup, even if it came on a SAFE.
Had I done that, my returns would be almost three times as high.
What’s Driving the Returns?
Like most venture funds, almost all my returns are coming from a couple companies: Micro1, Rilla and North.
I’m in awe of these founders. Without them, I would be nowhere.
I’ve piled additional investments into these companies whenever possible.
Slow Deployment Wins the Race
One of the biggest reasons my fund is outperforming almost everyone in the 2021 vintage: I took my time.
In 2021, many people were deploying a fund in 6-12 months. I took five years.
That’s at the very slow end for most funds. But I want to do the job right.
This is my own money. I’m not trying to hoover up as much cash as possible and charge a management fee on it.
I’m actually trying to get a return!
If you deployed your entire fund in 2021, you’re in pre-AI companies at sky-high valuations. Those investments probably aren’t looking too great today.
I have a few of those too! But I also have AI-native companies at better prices from 2022 and 2023’s down market.
Those investments are driving my returns now.
The Risks are Real
There are two big risks here: concentration and illiquidity
Almost all the gains are coming from three companies. Problems at one of those companies would hit my portfolio hard.
What’s more, we can’t eat markups. This portfolio is marked high, but this isn’t real money we can spend.
For a newer fund, that’s normal. It usually takes 10-15 years for a company to reach billions in valuation and IPO.
But there’s no guarantee these paper gains will ever hit my bank account.
What’s Next?
So what’s next for the world’s tiniest venture fund?
The 3 winners don’t need much help from me at this point. I just sit back and let the returns roll in.
I’ll be spending more time with the struggling companies. If I can help them even a little, it could change those numbers from a zero to a 1-3x.
Meanwhile, I’ve started investing out of “Fund 2”.
This fund will contain 40 companies. I’ve already got 7 names in it, and I’m itching to add more.
Wrap-Up
When I started angel investing, I committed to myself to invest for 10 years.
I’m a little over halfway through that 10 year commitment. And I’ll tell you, I’m having way more fun than when I started!
The obvious direction to take this is to raise money from outside LP’s and form a real venture fund.
I’m conflicted on whether I want to do that or not. It’s a lot of fun answering only to myself. Plus, all that time spent fundraising is time I’m not spending with founders.
On the other hand, more money means more impact.
Who knows what the future holds? All I know is I’m having a heck of a time! I’m grateful I get to do this every day.
If you want to be the next investment in my tiny little venture fund, shoot me a DM on X!
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
You may need it. But does anyone want to give it to you?
So many founders treat venture capital like a gas station. When you’re out, come in for a refill!
That worked in 2021. It doesn’t work now.
What you need is not the investor’s problem. Their problem is taking their capital and getting a return on it.
Banks don’t give money to those who need it. Same with VC.
When I started investing in startups in 2021, the standard was 3x year-over-year growth. If you could show that, you were fundable.
Those days are over.
The standard today is 10x year over year.
For any other than the fastest-growing companies today, another round may not be there.
Stop assuming another round will be there. Whether they know it or not, many startups today have raised all the venture capital they ever will.
Money is concentrating into a handful of extremely high-growth startups.
I see it every day. A $50 million Series A at $500 million, not a $10 million Series A at $50 million.
That $50 million going to the fast-growing company means four other traditional Series A’s didn’t happen. That leaves those slower-growth companies out in the cold.
That might not be fun, but it’s survivable. Unless, of course, you’re burning a lot of money.
Always have a plan to get to breakeven, fast. Or better yet, simply be there by the time you’re raising!
Then you don’t need investors like me.
If the terms are favorable, you can take our money. If they’re not, you can tell us to sod off and keep building on your own.
Don’t let your company die! Always be within spitting distance of breakeven.
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
Ever dreamed about building a viral app? My buddy Jesse Bray did it.
Jesse had an idea for an app called TimTalk — a hillbilly Twitter. People loved the demo…but building a scalable app proved more difficult than Jesse expected…
We Won $5,000 for an App That Didn’t Exist
How a fake trailer, a fictional hillbilly, and two million AI credits taught me that stories spread faster than software.
Everyone wants to know how to build a viral app.
I wish I had a sexy answer.
I don’t.
Because I never set out to build one.
I set out to make myself laugh.
That’s a very different goal.
In fact, the app that eventually landed me a $5,000 grant, two million AI credits, a spot in Create.xyz’s 30-Day App Store Bootcamp, and more traffic than I knew what to do with…
…didn’t exist.
Not when I entered the competition.
Not when I pitched it.
Not even when people started asking where they could download it.
I had built a trailer.
Not the software.
The software came later.
Looking back, that’s probably the biggest startup lesson I’ve learned in the last twenty years.
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
“They said a $5 million valuation was way too high.” I was chatting with a great founder from Tokyo last night. And I could hardly believe what I was hearing…
Dealing With Investors With Crazy Expectations
We’ll call her Sarah.
Sarah is raising for a SaaS company with some strong early traction. They’ve jumped out to $300,000 ARR in just a few months.
But even for a strong startup like this, raising money in Japan is really hard. If you’re raising anywhere outside SF or New York, you might be having the same problem.
“They were looking for a $2 million pre-money valuation,” Sarah said.
“But if you’re raising $1 million, you’d be selling a third of the company!” I said.
“I know! That’s what I tried to explain to them.”
Find Yourself Some New Investors!
When the investors you’re pitching just don’t get it, it’s time to find some new ones. Here’s what I suggested…
“You need to broaden your funnel of investors.” I said.
“Find everybody in Japan that invest at your stage. You also want to look for VCs in the US that write checks in Japan.”
Finding Better Investors
I recommended using OpenVC to find new investors. It’s a great way to find the right investors for your company.
Look for people who invest in your country, stage, and market.
Sarah will filter for investors who write checks into early stage SaaS in Japan. She’ll want to avoid pitching folks who only invest in America or only do late stage.
How to Run a Fundraising Process
Fill your investor funnel with 200 names — a mix of VC’s and angels.
Work your way down the list. Send a brief, personalized message to each one. Here’s a guide I wrote on how to do that.
Stack all the meetings in one week, if possible. Create a sense of urgency.
If you’ve got a team of builders and some early traction, you should get at least one term sheet.
Wrap-Up
Maybe you’re not in SF or New York. Maybe you feel like you’re on the outside, looking in.
But there are investors looking for companies like yours! You just have to find them.
If the investors you’re talking to have unrealistic expectations, don’t worry. You don’t need them.
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
I used this app every single day to dictate to my computer, I’m even dictating this text using Wispr Flow! It’s way better than Apple’s native dictation.
My productivity is up about 25% since I started dictating rather than typing. I’m also less tired and stressed.
Tremendous 