The Startup Green Lights

When I meet with a startup founder, certain cues jump out. They shout, “This one’s a winner!”


Get the blog before anyone else…subscribe!


Today, I thought I’d run down a few of the things that impress me most:

1) You’re open with information.

The best founders have nothing to hide. Be open with investors about customers, revenue, etc.

The strongest founders are excited to share their progress! Adopt that attitude, whatever stage your company is at.

2) You’re humble. The best founders give all the credit to their team.

The only thing they take credit for is the mistakes!

This is a key trait of good leaders. Always put your team in the spotlight and yourself behind the scenes.

3) You’re close to your customers. Great CEOs talk about their customers constantly.

They know everything about them. They go to the same conferences and read the same magazines.

Because they know so much about them, they can give them exactly what they want!

4) You have strong product velocity. I recently invested in a company that pivoted from SaaS to a marketplace model in just a few months.

Already, the marketplace is doing $2 million a year in revenue. A year ago, this product didn’t even exist!

This is incredible product velocity. When I see that, I’m sure you can adapt to a changing business environment and succeed no matter what.

5) You’re growing fast.

Every startup is born tiny. In order for it to ever matter, it has to grow, fast.

If you’re growing revenue 20% month over month or more at seed stage, you’ve got my attention! You must be doing something right.

6) Your burn is under control.

I advocate growing at warp speed. But you have to make sure you don’t go broke in the process.

Keep you burn multiple at 3 or less for a seed stage company. This makes sure your growth is cash efficient.

7) You’re realistic about valuation.

Toto, we’re not in 2021 anymore.

Last year, some startups were worth 100 times ARR or more. That was then, this is now.

Today, a high growth seed stage company is worth about $8 million pre-money. These companies usually have $5,000 to $25,000 a month in revenue.

When a founder has realistic expectations, I know she’s focused on the right thing: building the company for the long term.

If you work hard for your customers and cooperate with investors, you’ll get noticed. And you just might get a very large check.

What gets you most excited about a startup? Leave a comment at the bottom and let me know!

The next blog will be on Tuesday – I have an acting gig. Have a great weekend, everyone! 👋

More on tech:

The Startup Red Flags

The Burn Multiple: What Is It, and What Can It Do for You?

The Startup Metrics That Make Investors Drool

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

‘I Heard 100 No’s a Day’: How Travis Kalanick Built Uber

“I heard 100 no’s a day for 6 years straight.”

Travis Kalanick, Founder, Uber Technologies

Travis Kalanick knew something was wrong.

The number of taxi licenses in New York City had not increased since the 1940’s. During that time, the city added over 1 million residents.


Get the blog before anyone else…subscribe!


So he picked up the phone and started dialing. One by one, he cold called black car drivers, trying to get them to join his new service.

Most hung up. But a few were intrigued and met the young entrepreneur.

They became the first Uber drivers.

Travis recounts the fascinating early days of Uber on stage with Jason Calacanis at the LAUNCH Festival in 2014. This vintage interview is a master class in how to create a startup out of nothing and make it grow.

At first, there was just one driver on the map in each city. Then, as Travis kept pounding the phones, there was another, and another.

By 2014, Uber had reached a $17 billion valuation. That same year, it did more rides than taxis for the first time in its home market of San Francisco.

Travis was a born entrepreneur.

He started an SAT prep company in high school. Later, he founded two tech startups.

The first folded, and the second, Red Swoosh, sold for a small sum. Like many great entrepreneurs, Travis’s biggest success was ahead of him.

Five years after founding Uber, the startup was still growing at 20% month over month with millions in revenue.

A growth rate like this is exceptional even in early stage companies. For a company Uber’s size, it’s truly astounding.

Like PayPal, YouTube, Google and eBay, Uber grew at warp speed from the beginning. That’s why growth is one of the main things I look for in investments.

I also love seeing founders who are close to their customers. And you can’t get closer than Travis.

He drove an Uber himself on a busy Saturday night!

One passenger saw potential in him and left this review:

“Somebody needs to tell the CEO of the company that this driver should do more than just drive. He could really add value to Uber.”

Anonymous Uber Passenger

I guess talent is hard to conceal, no matter how hard you try!

In time, Uber hopes to become a super app for way more than rides. The app currently offers food delivery, groceries and even alcohol.

If there’s any real contender for an American super app, Uber is it.

For all his success, Travis remains excited about going to work:

“You’ve gotta enjoy what you’re doing and what you’re building. You’ve gotta be passionate about creating something.

So for me, it’s not about an IPO, I don’t even think about it.

…what are all the crazy, effed up, awesome problems I can solve? And what is all the crazy, awesome s*** that I can invent?”

Travis Kalanick

Let’s go find some awesome problems to solve!

What lessons do you take from Travis’s career? Leave a comment at the bottom and let me know!

More on tech:

The Founders: The Story of PayPal

You’re Doing Investor Meetings Wrong

Q3 Venture Funding Slows to a Crawl

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo: “Travis Kalanick” by jdlasica is licensed under CC BY 2.0.

Tiger Global Down 52% — Losses Over $18 Billion

Note: This is not financial advice.

Hedge fund giant Tiger Global Management has lost the majority of its capital in 2022. From a new Bloomberg report:


Get the blog before anyone else…subscribe!


Tiger Global Management and Whale Rock Capital Management were among stock-picking hedge funds to report September losses as equity markets tumbled.  

Chase Coleman’s Tiger Global fell 4.4% for the month, extending its decline for the year to 52%, according to people familiar with the matter who asked not to be identified discussing the results. The New York based firm’s long-only fund tumbled 9.6% in September to bring its year-to-date slide to 66.5%.

Tiger managed about $35 billion at the beginning of the year, putting its losses at over $18 billion.

Those losses could be far larger when Tiger’s startup investments are taken into account. Those bets on opaque private companies are hard to value.

What we do know is that tech startup valuations are down. This is especially true for the late stage companies Tiger favors, which closely track the public markets.

With losses like this, a brutal math sets in.

Tiger must more than double its capital just to get back where it was at the beginning of the year. Worse yet, it’s long-only fund has to triple!

That’s incredibly hard to do.

But until Tiger wins back its losses, it won’t be able to charge performance fees. These juicy 20% fees are the lifeblood of hedge funds.

Without those fees, bonuses will be slim to nonexistent.

The top performers will leave for greener pastures. Those that stay are likely to be demoralized.

I suspect Tiger will close the long-only fund, and perhaps the entire business. After all, starting fresh is an opportunity to earn juicy fees again.

Tiger’s abysmal performance trails many index funds with much lower fees.

I own Vanguard 500 Index Fund Admiral Shares, which are down just 23% this year. They have an expense ratio of 0.04% and no performance fee.

Tiger’s investors would do well to ditch the expensive and poorly performing fund and give Vanguard a call.

Do you think Tiger will survive? Leave a comment at the bottom and let me know!

More on markets:

Hedge Fund Giant Tiger Loses Over $18 Billion — Long Fund Down 64%

New Report: Millions of Fails to Deliver in AMC and APE Shares

Q3 Venture Funding Slows to a Crawl

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo: Tiger Global CEO Chase Coleman

Why I Just Invested in ProsperStack

You work hard to get new customers. So why let them slip away?

ProsperStack lets you provide custom offers when a customer tries to cancel. They can even segment your customers and give the best offers to your top customers.


Get the blog before anyone else…subscribe!


You can also A/B test different offers to see what works best. And you can do all this in a beautiful, no-code interface!

Only the largest companies, like Netflix, have special programs to stop churn. But why shouldn’t your company have it, even if you’re not a giant?

ProsperStack can also help you understand why customers leave. They can tell you “you lost $10,000 in monthly recurring revenue because you don’t have a Salesforce integration.”

That gives your company amazing direction. It’s time to put that Salesforce integration at the top of the list!

But the thing I like most about ProsperStack is that you can easily see how much revenue ProsperStack stopped from churning. This makes their value proposition crystal clear.

I’m delighted to be an investor in ProsperStack’s recent seed round! Book yourself a demo and crush your churn today!

What issues do you see with subscription churn? Leave a comment at the bottom and let me know!

There will be no blog on Monday. I have an acting gig!

See you on Tuesday. Have a great weekend, everyone! 👋

More on tech:

Q3 Venture Funding Slows to a Crawl

The Startup Red Flags

You’re Doing Investor Meetings Wrong

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Q3 Venture Funding Slows to a Crawl

Venture funding in the third quarter slowed to a crawl, according to a new report out this morning from Pitchbook:


Get the blog before anyone else…subscribe!


Estimated deal count in Q3 (4,074) is off by almost 20% from the quarterly record high recorded in Q1 (5,049) and is the lowest count seen in any quarter since Q4 2020 (3,364). Q3 saw $43.0 billion invested in VC deals across all stages, a nine-quarter low, cementing a tone of investor hesitancy and increased focus on business fundamentals amid the global economic downturn, even if the numbers remain high on a historical basis.

Exits were just $14B in the entire quarter. This is in line with figures from 8 years ago.

Meanwhile, venture funds continued to raise huge sums:

US-based VC funds have raised $150.9 billion, surpassing last year’s previous record and taking the 21-month fundraising total above $298.1 billion.

As an angel investor, I found July and August particularly slow. That’s usually vacation season anyhow, but this year the market was even colder than usual.

At the end of August, I spoke with the head of one of the most active VC’s in the US. He predicted a busy fall.

I was skeptical.

But sure enough, I started to see activity pick up in September. Those deals will probably take until at least Q4 to close, so they’re not reflected in Pitchbook’s numbers.

Personally, I made four investments in Q3, right around my usual pace. A down market is no time to back off — if anything, we want to be making it rain to take advantage of lower valuations!

But nonetheless, a lot of investors got spooked. I saw some great deals I was in only raise half as much as expected as investors pulled back.

Especially at seed stage, the market we’ll exit in will be totally different from today’s. So we should always be investing in great companies.

Warren Buffett said it best in his 1986 letter to shareholders:

What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

Where do you think the venture market is headed? Leave a comment at the bottom and let me know!

More on tech:

The Startup Red Flags

You’re Doing Investor Meetings Wrong

Shopify’s Tobi Lutke on Layoffs and Building for the Long Term

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo: “dead slow sign” by satguru is licensed under CC BY 2.0.

The Startup Red Flags

You’re busting your butt to raise venture capital. But what if you’re raising red flags with investors without even knowing it?


Get the blog before anyone else…subscribe!


I see several thousand startup pitches every year.

Sometimes the founder has a great idea and an awesome story. But one little detail gets my spidey sense tingling.

Here are a few things that raise an instant red flag:

1) You won’t share information. When a founder won’t give me a straight answer to a question, that’s a huge red flag.

In my experience, the most successful founders are very forthcoming with information. Whether it’s revenue numbers, cash in the bank, or challenges the business is facing, they give it to you straight.

When a founder won’t give me information, I suspect they’re hiding something. If I ask for revenue numbers and don’t get them, I assume there is no revenue.

When you don’t share info, you leave investors to assume the worst. Don’t let that happen to you!

And don’t worry about competitors.

I’ve met founders of billion dollar companies that shared detailed financials. It hasn’t hurt them yet!

2) You’re scared of someone stealing your idea.

You might have an amazing idea. But building a startup requires a lot more execution than inspiration.

So don’t worry about people stealing your idea. Instead, share it with as many people as possible and get their input!

When a founder is secretive, it tells me they don’t know how startups are built. Just like #1, it also leaves me to assume the worst.

One form of this is an obsession with patents. Don’t bother mentioning these to investors unless you’re a deep tech startup.

3) You’re not launched.

Some founders have incredible stories about the amazing things they’re going to do. But when you talk to them a few months later, it’s still just stories.

Launch your product as soon as possible. This lets you start learning from customers and refining your product.

It also shows investors you’re serious about what you’re doing. Be a walker, not a talker!

4) You’re an LLC. Founders try hard to project competence when they’re raising money.

Unfortunately, nothing shatters that image quite as fast as finding out you’re not properly incorporated. To raise venture capital, you need to be a Delaware C Corp.

Avoiding some of the biggest pitfalls in fundraising is easy! Just be prepared and be willing to share everything with investors.

Investors want to believe! And they want to give you money.

But they need information in order to give you that “yes.”

What red flags do you see in startups? Leave a comment at the bottom and let me know!

More on tech:

You’re Doing Investor Meetings Wrong

USV’s Albert Wenger on Climate and the Post-Capital World

Shopify’s Tobi Lutke on Layoffs and Building for the Long Term

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo: “red flag” by freddie boy is licensed under CC BY-SA 2.0.

You’re Doing Investor Meetings Wrong

You’ve sent out hundreds of cold e-mails. Now you’re finally meeting with that big shot VC. How can you make sure you don’t blow it?


Get the blog before anyone else…subscribe!


Many founders I meet with make the same mistakes over and over during meetings. Here are a few of the biggest flubs, so you can avoid them!

1) Not leaving enough time for questions. Leave at least half the meeting for questions.

If you have a 20 minute meeting, leave the last 10 for questions. If you have an hour, 20 minutes presenting and 40 minutes answering questions is a good balance.

So often, I see founders spend almost the entire time presenting, leaving maybe 2 minutes for questions. Since I usually have 5-10 questions, that’s not nearly enough time!

Investors have certain objections you need to overcome to get a check. Answering their questions helps overcome those objections and get you the money you came for!

2) Don’t take too long to answer a question. When you answer a question, take about the same amount of time to answer it as the investor took to ask it.

If the question asks for a number, don’t respond with a story. This is a big red flag to me that the founder is hiding bad news.

Here’s an example of the wrong way:

Question: What’s your customer acquisition cost?

Answer: We’ve been trying a ton of different campaigns this year, and we’re having some really good luck with them! YouTube has been a great platform for us, we’ve gotten a lot of customers from there.

Instagram was not as effective until we started doing partnerships with influencers. Molly Cooks, who has 10,000 followers, did a collab with us recently that did great!

This is long, meandering, and doesn’t answer the question. Instead, try this:

Question: What’s your customer acquisition cost?

Answer: Our CAC is $37.

3) Don’t assume the investor knows anything about your company. For many angels and VC’s, their calendar is one 30 minute meeting after another, all day long.

This doesn’t leave much time to research each company before the meeting. And of course, sometimes we’re just lazy and entitled! 😂

So never assume the investor has looked at your deck, tried your product, or knows anything about your industry.

4) Be ready to present or just talk.

Some investors like to see you go through the deck and present the company formally. Others just want to have a conversation.

Even though I always look at the deck before a meeting, I still like to see the founder present it.

Reading a document on my own is one thing. Hearing what the founder has to say about it is quite another.

So be prepared to run the meeting as a presentation or just a conversation, depending on the investor’s preference.

If you can run a tight meeting using these principles, your odds of getting a check skyrocket. The investor clearly understands what your company does and you’ve addressed all her concerns.

What questions do you have about investor meetings?

Leave a comment at the bottom and let me know!

There will be no blog tomorrow. I have an acting gig.

See you on Wednesday!

More on tech:

When Are You Ready to Raise a Seed Round?

USV’s Albert Wenger on Climate and the Post-Capital World

Shopify’s Tobi Lutke on Layoffs and Building for the Long Term

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo: “Wrong Way” by Elaine with Grey Cats is licensed under CC BY-SA 2.0.