Tremendous

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Business, Technology

Which Accelerator Should You Choose?

March 30, 2023 tremendousblog 1 Comment

If your startup has a couple of customers, you’re at a crucial point. Your product is beginning to catch on, but fundraising is still tough.

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Your best path may be an accelerator. But which one?

Let’s run through a few great options:

Y Combinator

This is the granddaddy of accelerators.

Founded in 2005, it’s been around longer than anyone. Its track record is amazing, having produced companies like Airbnb, Stripe, DoorDash and Instacart.

YC invests $500,000, more than most accelerators except perhaps LAUNCH (more on that below).

YC’s only real downside can be a lack of individual attention.

There are 268 companies in the current YC batch. That’s way more than many other accelerators, who often have fewer than 10.

There’s a big difference between being one of 7 companies and one of nearly 300.

That said, YC produces amazing startups regularly. My last two investments have been YC companies.

LAUNCH Accelerator

This is my personal favorite. I’ve invested in 6 LAUNCH Accelerator companies, by far the most of any accelerator.

LAUNCH invests $100,000 for 6% of your company. It usually puts another $500,000 or so in when you raise your seed round.

In all, LAUNCH likely provides the most money of any accelerator.

It also provides individual attention. There are just 7 companies per batch and the LAUNCH team works intensively with them.

Founders I know who have gone through the program met everyone — Sequoia, Craft Ventures, you name it.

The only downside is it’s not as big of a name as YC. It’s much newer, but it already has 1 unicorn in GRIN.

In all, LAUNCH is an excellent choice.

Entrepreneur’s Roundtable Accelerator

I started paying attention to these guys when I invested in an ERA company, Rilla. It quickly became one of my top performers.

ERA invests $150,000 for 6% of your company. Like LAUNCH, the batch size is small — just 15 companies.

Although ERA is newer than YC, it already boasts 4 unicorns.

The people who work there are serious and focused. That’s who I’d want on my side.

I’m looking forward to investing in more of ERA’s awesome companies!

Techstars

Techstars is another longstanding accelerator with a great track record. Founded the year after YC, it has produced 11 unicorns so far.

Techstars is in person, but it has programs all over the world.

I’ve invested in one Techstars company so far, with more sure to come.

Wrap-Up

I think accelerators are the best path for most pre-seed companies. Top accelerators provide a built in network, great mentorship, and a brand name that can help with fundraising and recruiting.

But don’t go just anywhere.

Avoid accelerators with no name recognition. Also avoid any accelerator that doesn’t actually invest.

The right program can take you to the next level. But the wrong program can waste your time and space on your cap table.

Best of luck building the great companies of the future!

What has your experience been with accelerators? Leave a comment and let us know!

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Scare the Sh-t Out of VC’s

Where Should Startups Put Their Money Now?

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Food, NYC Area

From Fries to Pastry, Lafayette Shines

March 29, 2023 tremendousblog Leave a comment

It was ice cold and the pancakes in front of me were driving me nuts. Why can’t I eat them?

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The first time I went to Lafayette, I was only pretending to have brunch.

I was an extra on the Netflix show Kaleidoscope, filming on the patio in November. Why did they have to pick a restaurant with food so hard to resist!

As the scene finished, I asked a Production Assistant if I could finally eat the pancakes. She took mercy on me and looked the other way. 😁

Even stone cold, they were delicious.

So I had to come back and try Lafayette for real!

On a recent Wednesday, I wound my way down the stairs to the private dining room. I’d barely sat down when first rate bread and butter hit the table.

When you try the bread, you know how good a restaurant will be. At an excellent place, bread is never an afterthought.

Next: an inventive frisee salad with bacon and poached egg. If you hate salad, this is the one for you!

The smoothness of the egg white and oozing yolk tantalize. The crispy greens and unctuous lardons bring it home.

Think shrimp cocktails are over? Then you haven’t tried Lafayette’s!

I have never seen shrimp steamed so perfectly. Every time I come, they’re just right — neither underdone nor turgid.

Out comes a rich mushroom risotto. The mushrooms’ earthly flavor suffuses the rice.

To think we were only halfway through! Now, the main event.

First, a giant platter of fries…err, frites. Then, a steak bigger than your head, a poivre.

And just to make us look respectable, we also got some lovely cod.

The fries were the highlight for me. How do potatoes always manage to steal the show?

These taters were crisp and heavily seasoned, the way I like them. You can’t make a good fry without a pound of salt.

“Who was the first guy who’s like ’That was a good meal we just had. I’m full. Are you full? You wanna eat a cake?’”
Jim Gaffigan

No one needs dessert. But what’s life without it?

So I cracked the shell of a beautiful torte and watched the chocolate ooze out. Awesome.

I needed all my concentration to construct the perfect bite. A little cake, a little ice cream, scoop up some of the chocolate — chef’s kiss.

But perhaps the best thing I ate that night was the almond pastry. It was flaky, nutty and moist.

Lafayette is above all a bakery. And though they turn out a lovely dinner spread, pastry is where they truly shine.

Lafayette Grand Cafe & Bakery is located in NoHo just east of Washington Square Park. Open for breakfast, lunch and dinner 7 days a week, Lafayette also has a lovely outdoor patio.

Give it a shot!

What are you favorite restaurants in New York? Leave a comment and let us know!

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Business, Technology

Scare the Sh-t Out of VC’s

March 28, 2023 tremendousblog 2 Comments

Pitching investors can be nerve-wracking. But what if you flip the script and scare the sh-t out of them?

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Last week, I sat down to coffee with an aspiring entrepreneur. As we brainstormed together, he came up with a great concept for a startup.

What about a platform to make finding wellness providers like acupuncturists easy?

I liked it — but encouraged him to go further. He could start with a few wellness providers, but what about taking on medicine as a whole?

We all hate doctors’ high costs and opaque pricing. What about a marketplace where you always knew up front what you’d pay?

In time, rather than supplementing insurance companies, he could replace them.

This could be an awesome business. And there’s another cool benefit…

It’s a big idea. And if there’s anything that scares the hell out of venture capitalists, it’s missing the next “big thing.”

VC’s always want to identify and ride a trend before everyone else.

It’s how they make money. But perhaps even more importantly, it’s how they say “I told you so!”

And what if they miss that next big thing?

Their fund languishes and they become irrelevant. And more than anything, angels and VC’s fear being irrelevant.

Otherwise, why would they constantly promote themselves on Twitter, podcasts, and blogs like mine?

Back to our young entrepreneur.

He could present investors with a nice platform for booking acupuncture. They’d smile politely and thank him for his time.

And he probably wouldn’t get a check.

But what if he shows them the exact same thing with a very different vision? Today acupuncture, tomorrow Prenuvo scans, and eventually all of medicine?

That’s a trillion dollar company. And that’s what VC’s want to invest in.

If this business fails, the VC’s downside is minimal. But what if they miss another Google?

The biggest opportunity in that investor’s professional life goes up in smoke.

Paint a compelling vision of how your company can be another Google, Uber, or Airbnb. It is never a straight line and you won’t get there tomorrow.

But show up with a big idea. And make that investor terrified he’s going to miss it.

That’s how you get a big check. It’s also how you change the world.

How do you pitch investors? Leave a comment and let me know!

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More on tech:

AI: Capital Bonfire?

Where Should Startups Put Their Money Now?

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Life

What Meditation Does for Me

March 27, 2023 tremendousblog Leave a comment

It was March 2020 and the world was shutting down. It was the perfect time to try something new: meditation.

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Countless people tell you to meditate. But how the heck do you even do it, and why bother?

Here’s how I meditate every day, and the benefits I’ve gained.

How I Meditate

Every morning after breakfast, I sit down in this red armchair. I keep my back straight and feet flat on the floor.

I breathe in and out. I either focus on my breath or repeat a word.

You can use whatever word (or “mantra”) you like. Swami Rama suggests a few: om, amen, or shalom.

I usually go with om. Sometimes I say it out loud, other times just in my head.

Using a word can make meditation easier. For most people, it’s easier to concentrate on a word than their breath.

I continue doing this for 10 or 20 minutes. I seldom exceed 30.

Choosing Your Thoughts

Most of us inhabit our thoughts. All too often, so do I!

If we’re mad, we’re mad with our entire being. If a negative thought pops into our head, it repeats endlessly.

But increasingly, I’m able to spot that thought and stop it.

I tell myself “I don’t have to think about that.”

Then I ask myself, “What would I like to think about?” And I think of something nice, like a great dinner with friends or a cute squirrel I saw.

Your life is a lot more pleasant when you can, at least sometimes, pick what you think about!

Improved Sleep

When I can’t fall asleep, it’s often because of some repetitive thought. Perhaps I’m worried about something.

Being able to spot that looping thought and realize “I don’t have to think about that” is so freeing!

In turn, good sleep helps your brain work even better!

Relaxation

We live in a world of nonstop inputs. Information flies at us whenever we’re awake.

Meditation is an opportunity to stop all that. You won’t believe how nice that can feel, even if it’s awkward at first!

Success vs. Failure

A friend once told me he was struggling to sleep. “Have you tried meditation?” I asked?

“Yeah, I suck at it!”

The thing is, we all suck!

Mostly, we get distracted and don’t actually focus on our breath or our mantra. Instead of feeling inner peace, we think about how we forgot to buy paper towels.

But that’s okay!

This isn’t about being awesome. Just do it regularly and you’ll benefit.

I hope that even once during a meditation, I can spot my distraction and redirect myself. If I can do that, that’s wonderful!

That’s the skill we’re trying to build. We want to spot what’s in our mind and be able to redirect it.

Try It!

At first, I wasn’t sure I was getting anything from meditation. But the benefits crept up on me.

Soon enough, I found myself spotting unhelpful thoughts without even trying. When I stop them and redirect myself, it’s a wonderful feeling!

This practice has given me so much in just three years. See what it can give you!

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Business

Deutsche Bank Under Fire

March 24, 2023 tremendousblog Leave a comment

Is Deutsche Bank the next Credit Suisse? Traders think so today as they dump the stock and rush to protect bond holdings.

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From a new report in Bloomberg:

Deutsche Bank AG became the latest focus of the banking turmoil in Europe as ongoing concern about the industry amid a slowing economy sent its shares slumping the most in three years and the cost of insuring against default rising.

The bank, which has staged a recovery in recent years after a series of crises, was the biggest loser among large European bank stocks Friday after announcing a plan to repurchase debt, a move normally seen as a sign of strength. Analysts struggled to explain the selloff, which prompted German Chancellor Olaf Scholz to publicly back the lender.

The cost of insuring against a bank’s default is a key stat. Called a Credit Default Swap (CDS), this protection often soars in price when a bank is close to failing.

Old Lehman Lesson from 2008:

Watch the price action on the next “weakest bank” for a lead on “what’s next.”

-Deutsche stock down 13%, CDS at the highs and they are back to reporting on daily moves in credit.

That’s not bullish. pic.twitter.com/XeZ7k3FLFK
— Alexander Campbell (@abcampbell) March 24, 2023

One thing in Deutsche Bank’s favor: a big pile of cash. It’s sitting on $179 billion of cash and deposits at central banks, according to its latest annual report.

That means it could pay back 28% of its deposits almost immediately. But the thing is, Credit Suisse had a ton of cash too.

It failed anyway. In the end, no bank can pay back all its depositors right away.

Even US regulators seem concerned. Treasury Secretary Janet Yellen convened a group of top officials this morning in an unscheduled, closed door meeting.

In the end, Germany won’t let Deutsche Bank fail. Neither will the ECB.

Deutsche Bank is the largest bank in Germany by far. It ranks #8 in the entire EU.

Olaf Scholz is not going to let old Granny Durchdenwald lose her life savings.

But that doesn’t mean Deutsche Bank shareholders are safe. Once mighty Credit Suisse is now a penny stock.

I hate bank stocks. Banks often pick up pennies in front of a steamroller, turning in decent profits until they suddenly get crushed.

Perhaps Deutsche Bank will survive as an independent company. Either way, shareholders won’t be sleeping well tonight.

What do you think will happen to Deutsche Bank? Leave a comment and let us know!

Have a great weekend everyone!

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More on markets:

Don’t Wanna Pay 216%? How About a Naked Short?

Interest Rate Time Bomb May Kill Hedge Funds

Executives Dumped Shares Shortly Before First Republic Rescue

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Business

Don’t Wanna Pay 216%? How About a Naked Short?

March 23, 2023 tremendousblog 2 Comments

Cost to borrow shares of AMC Entertainment holdings went through the roof today. From a report out just this afternoon on InvestorPlace:

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The cost to borrow (CTB) fee for AMC Entertainment (NYSE:AMC) has skyrocketed to 215.80% today, up by more than 100% from the reading of 101.76% on March 10. Yesterday’s closing CTB fee reading clocked in at 211.41%. Meanwhile, between March 10 and today, AMC stock has fallen more than 10%. What’s going on?

The CTB represents the yearly fee that short sellers must pay to borrow shares. A higher fee could represent increased short seller demand while a lower fee could represent lower demand. A higher fee could also signal a scarcity of available short shares. Still, AMC’s exorbitant CTB fee could actually be seen as a positive for AMC stock shareholders.

Let’s say you want to short AMC. But you don’t want to pay 216% a year interest because…uh…no one does.

But don’t worry! There’s a dandy alternative.

How about a naked short?

With a naked short, you don’t even have to borrow the shares at all! Instead of 216% interest, how about 0%!

Pretty sweet, right?

One small problem. It’s against the law.

There is strong evidence of massive naked shorting in AMC stock. Fails to deliver hit nearly 12 million shares in the latest SEC report.

That’s absolutely staggering, even for AMC. And keep in mind, most stocks have few if any fails to deliver.

Why are tons of trades failing?

To close a short sale, you need to borrow some shares. But it’s kinda hard to do that right now, at 216% interest.

So why not just cut some corners and naked short? It’ll just wind up a fail to deliver and get swept under the rug.

There’s likely a crime here in plain sight. But for it to matter, the SEC needs to act.

But before shorts laugh at the SEC and pop a bottle of Dom, they should think about the risks.

Half of Wall Street is betting that AMC will crash if APE shares convert. This share conversion dilutes AMC stock holders.

But conversion isn’t certain. And even if it happens, AMC shares have jumped after prior dilutions.

In a way, that makes sense.

Yes, you own a smaller piece of the company after dilution. But this heavily indebted company now has far more capital.

That makes the risk of bankruptcy increasingly remote.

I have no idea where AMC or any other stock is going.

But I do know that people don’t like paying 216% interest. And to avoid it, they just might break the law.

After all, what could happen?

Do you think the SEC will act? Leave a comment and let us know!

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More on markets:

AMC Shorts Lose $180 Million So Far This Year

Interest Rate Time Bomb May Kill Hedge Funds

Executives Dumped Shares Shortly Before First Republic Rescue

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Business

AMC Shorts Lose $180 Million So Far This Year

March 22, 2023 tremendousblog 1 Comment

This is not investment advice.

Like moths to a flame, short sellers love to bet against AMC Entertainment Holdings. Those bets have cost them a cool $180 million so far this year.

And it’s only March.

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From a new report in TheStreet:

This year alone, thanks to quick rallies in the stock, AMC short sellers have already lost about $180 million.

One of the main reasons why there has been such high demand for short positions in AMC in recent months is the fact that many investors have entered into an arbitrage trade. They’ve shorted AMC and gone long APE due to the share price discrepancy.

Short sellers need to borrow AMC shares. The borrow fees have soared to 160% currently, a staggering rate.

AMC and APE are an obvious pairs trade. The two may converge if APE shares convert into AMC shares, as expected.

So if you short AMC and buy APE, you should make money on both trades. The AMC shares decline due to dilution, while the APE shares rise in value to match the AMC shares.

Sounds great right? Small problem…

AMC has a passionate fan base of retail investors. Those investors are attempting to orchestrate a short squeeze.

And that’s a whole lot easier to do when 25% of the shares are sold short and it costs 160% a year to do it.

The pain has no end in sight.

Retail investors are buying stocks like crazy. They bought at a pace of $1.5 billion a day in the first two months of the year, a record.

Hedge funds shorting AMC, pairs trade or no, are making a big mistake.

Every day, more cash is coming in to squeeze them. And you can’t hold a position forever at 160% interest.

Worst of all, their potential for loss is unlimited.

Any responsible investor would close this trade immediately. But never forget, they’re playing with other people’s money.

What do you think the future holds for AMC and APE shares?

More on markets:

Interest Rate Time Bomb May Kill Hedge Funds

Executives Dumped Shares Shortly Before First Republic Rescue

SVB Fallout

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Business, Technology

AI: Capital Bonfire?

March 21, 2023 tremendousblog 1 Comment

AI is the biggest opportunity in 20 years. It could also kill countless VC funds.

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I took a sip of some yummy espresso last Thursday and plopped down at the laptop. Time to dig into a deal memo from a VC I really respect.

He laid out a clear view of AI’s future. And if you’re an investor, it’s scary. 😲

Tons of startups are all racing to become the next hot thing in AI. They’re all doing the same things with the same tools.

Most will fight each other to the death. With differentiation nonexistent, margins are headed to zero.

Now, what if we add VC’s with billions and a bad case of FOMO?

A bunch of massively overfunded companies will fight to the death. No one will make money.

And many AI-heavy funds will be destroyed. Or as this investor put it, we are headed for a “capital bonfire.”

I tried to poke holes in his argument. But I couldn’t.

It’s not that hard to integrate AI tools into software. A founder I know did it in just 6 hours using OpenAI.

If you’re not something more than a wrapper for OpenAI, you’re not going to make it.

Geez Francis, you really hate AI, don’t you?

Not at all! I think ChatGPT and similar technologies are an incredible revolution.

But just because a new technology is incredibly useful doesn’t make it profitable. Toasters are very useful, but making them isn’t a great business.

There are too many other companies making the same thing.

Aggravating the defensibility problem are massive valuations.

I’ve seen AI companies with no revenue raise “seed” rounds at $150 million or more. I even saw an AI hardware company recently raising “seed” at over $400 million!

These valuations don’t make sense for companies that are barely off the ground. As Fred Wilson of Union Square Ventures has proven, investors can’t make money with $100 million seed rounds.

So who wins in AI?

Big tech will be huge winners. Microsoft practically owns OpenAI.

It has also integrated AI into all its Office products. You can even ask your calendar to prepare you for an upcoming meeting!

Microsoft owns the platform many people already use. Then they serve this captive audience some great AI features.

That’s a winning model.

Another winning model is focusing on data. I’m looking for companies focusing on unique data sets, data cleaning, and better data processing.

Data fuels every AI model. Better data means better outputs.

Even if many AI companies go bust, selling data services can still be a great business. Airlines have a way of going bankrupt, but Saudi Arabia’s doing pretty well selling them fuel.

Let other investors drop money onto every AI startup from a helicopter. I’ll be taking careful kill shots at big game.

After all, we only have so many bullets.

Where do you think AI is headed?

More on tech:

Where Should Startups Put Their Money Now?

SVB Fallout

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Business

Interest Rate Time Bomb May Kill Hedge Funds

March 20, 2023 tremendousblog 3 Comments

As March began, hedge funds placed one of their biggest bets of all time. It may be their undoing.

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Traders placed the largest bet in history on increasing short term interest rates. But as a banking crisis spreads, rates may fall, exposing them to huge losses.

From a report out this morning in Reuters:

Hedge funds face huge losses on their record bet that the Fed will go full steam ahead with its aggressive interest rate-raising campaign, after some of the most abrupt and violent swings in U.S. rates and bond market pricing in living memory.

Commodity Futures Trading Commission (CFTC) data shows that speculators held the largest ever net short position in three-month SOFR rate futures in the week ending March 7, only a few weeks after amassing a record short position in two-year Treasuries futures.

Now, their trade is deeply underwater:

Implied rates then plunged as much as 200 basis points in a week as traders drastically redrew their Fed outlook. The two-year Treasury yield posted its biggest fall since the Black Monday crash of 1987, and U.S. bond market volatility surged the most since Lehman’s collapse.

Many funds have already lost 10% of their assets or more so far this month. And as bank after bank fails, the bleeding may get even worse.

A month ago, most of us thought the Federal Reserve would keep raising rates. Inflation was the priority.

Now, with a cascade of bank failures, the Fed may cut rates to stop the crisis. Markets are predicting the Fed will lower rates this summer.

The question for the Fed this morning isn't whether to hike 25bp or 50bp this week. It's when do they start cutting rates, at least according to fed funds futures, which have priced out rate cuts and priced in rate cuts as soon as June. pic.twitter.com/ROHatlStkx
— Lisa Abramowicz (@lisaabramowicz1) March 20, 2023

Already, hedge funds are going bust.

Adam Levinson’s Graticule Asia lost 25% this year, most of it in a few days after the SVB collapse. The fund has closed its doors.

As an investor, sometimes I think I know where markets are heading. But I never put too many eggs in one basket.

I’m playing with my own money. But most hedge funds aren’t.

And it’s not hard to tell.

What do you think will happen to these funds?

More on markets:

Executives Dumped Shares Shortly Before First Republic Rescue

SVB Fallout

Goldman Sachs Under Federal Investigation

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