Tremendous

An angel investor's take on life and business

  • US Stocks Are Extremely Overvalued

    Note: This is not investment advice.

    Every day, my Vanguard account seems to hit a new all-time high. I’m loving it, but it also makes me worry — are we headed for a crash?

    A Tour of Indicators

    This morning, I looked at four valuation indicators for the US stock market as a whole. Every one of them says stocks are overvalued.

    Let’s start with the Buffett Indicator.

    This indicator measures the aggregate market cap of all stocks in the Wilshire 5000 divided by US GDP.

    The Wilshire includes almost every publicly traded stock in America. Dividing their total value by GDP shows us how stocks are valued relative to the economy as a whole.

    The Buffett Indicator is flashing red. It indicates stocks are extremely overvalued right now, by far the worst since at least the 1970’s.

    Scary. But we shouldn’t go based on one indicator alone.

    Let’s look at the S&P 500 PE ratio next.

    This measures the total value of all stocks in the S&P divided by their total earnings. It’s a great way to see if major US companies are overvalued or undervalued.

    This one is looking pretty bad as well. The current PE is roughly twice the historical average, although lower than during the dotcom bubble or the housing boom of the 2000’s.

    Next, let’s check out the Shiller PE ratio.

    This figure measures the current value of the S&P 500 divided by the average inflation-adjusted earnings for the last 10 years. The Shiller PE smooths out short-term deviations in earnings, which helps us see long term trends.

    The Shiller PE is also flashing red.

    It’s not saying that current prices are unprecedented, the way the Buffett Indicator is. But the Shiller PE still indicates that stocks are almost as overpriced as during the dot-com bubble.

    Finally, let’s look at the Equity Risk Premium (ERP).

    This number shows the earnings yield of the S&P 500 minus the real (or inflation-adjusted) yield on bonds.

    The earnings yield is the inverse of the PE ratio. It tells us what percent of the money we put in stocks we get back in earnings every year.

    If we’re going to own stocks, we need to be getting paid enough extra money to accept the risk. Keep in mind, we could always put our cash in risk-free government bonds instead.

    The ERP also indicates a steeply overvalued stock market.

    All four of our indicators are saying the same thing: US stocks are significantly overvalued right now. The indicators differ on how extreme that overvaluation is, but they all agree prices are way too high.

    American Exceptionalism

    These days, America is the prettiest girl at the dance.

    We’re growing faster than any other developed market. Our companies are crushing it, churning out earnings in the tens of billions.

    All over the world, people are wondering how we do it. And they’re piling into US stocks.

    No wonder they’re pricey!

    But if we look at markets around the world, we get a very different picture. The PE ratio of stocks in many major countries, like the UK and Germany, are far below the American level.

    Granted, many of those countries aren’t growing much, if at all. But that’s bound to change eventually.

    Today, America is up. But there will come a time when we’re down.

    This is why when I need to sell off a little stock to fund an angel investment, I sell my US stocks. I’m holding on to my shares in overseas index funds — they’re priced right.

    Wrap-Up

    We never know whether stocks will go up or down. But we have enough data to say that US stocks look significantly overpriced.

    So, am I dumping all my US stocks? Hardly.

    Over the next 10, 20, or 30 years, American companies are going to keep innovating and growing. In the very long run, US stocks are likely to continue to rise.

    So I’m going to sit tight. Sometimes, the most profitable thing you can do is nothing at all.

    We’ll get back to startups tomorrow. I have an exciting new investment to announce!

    What are your thoughts on the market today?

    Note: This is not investment advice.

    More on markets:

    Lessons From My 3 Most Challenged Investments

    Learning From My Top 3 Investments

    Is the Consumer in Trouble?

    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. 

  • Is the Consumer in Trouble?

    I paid $6.79 for 18 eggs recently. No wonder the consumer is in trouble.

    For fortunate people like me, inflation is just an annoyance. But for people of modest means, it’s a crisis.

    “How long can people keep going like this?” I wondered. So this morning, I dug into some data…

    Falling Behind

    Americans are falling behind on credit cards and auto loans. Balances 90+ days delinquent have jumped significantly since 2023.

    Some of the wildest stories are coming out of the auto market. People bought cars for above sticker price during COVID and now owe more on the cars than they’re worth. This creates a debt spiral.

    The Struggling Working Class

    Americans as a whole have reported worsening finances since 2021. But the biggest drops in financial health are among people with a high school diploma or some college but no more.

    In other words, the working class.

    Before inflation, many working class people were getting by and perhaps able to save a modest sum. Now, with prices through the roof, they’re being pushed into the lower class.

    A Two-Track Society

    Why are things going well for people like me, but not for blue collar Americans? It all comes down to the money supply.

    The government has increased the money supply by 38% since the beginning of COVID. This money has chased two things: assets and goods.

    The price of both are through the roof. But the higher asset prices primarily benefit the well-off, while the rising prices for goods crush the working class.

    Inflation is beginning to fall, which should make things a little easier for the working class. But prices are still over 20% higher than before COVID, and that’s not likely to change.

    Regardless of what you think of the man, is it any wonder Trump won given these stats?

    What This Means for Businesses

    For those of us who run and invest in businesses, financial stress among consumers is a serious problem. If you sell your product to the working class, sales are probably getting harder.

    Take Buy Now Pay Later (BNPL) providers like Affirm or Klarna, for example.

    Consumers who use BNPL are poorer than average. I expect BNPL delinquencies to rise just as credit card delinquencies have.

    Wrap-Up

    It’s a hard time for working class Americans. While fortunate people like me benefit from an asset bubble, blue collar folks struggle to pay their bills.

    Declining inflation will help the average man. But it’s going to take a long time to make up what they’ve lost.

    Are you seeing more people struggle financially?

    More from the blog:

    Which Jobs Will AI Replace? Which Jobs Are Safe?

    Why Manufactured Housing Won’t Fix High Housing Costs

    Lessons From My 3 Most Challenged Investments

    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. 

  • Lessons From My 3 Most Challenged Investments

    Two companies about to shut down. Another getting acquired at a loss. This is the reality of angel investing — a lot of them don’t make it.

    Every founder I’ve ever invested in worked really hard. But nonetheless, most companies die.

    Today, I looked at my 3 most challenged investments. Let’s see what we can learn from these companies…

    Startup X

    I was sure this company was going to be huge. And boy was it growing fast — almost 20% month over month.

    But one day, the growth stopped. Revenue started trending down, way down.

    They had built a cool product, but it didn’t address the needs of customers well enough. Customers churned and new accounts became harder to find.

    This founder is incredibly smart and worked very hard. But the company is likely to go out of business soon.

    I invested in this company between rounds. This means the company wasn’t getting the usual multimillion dollar cash infusion when I invested.

    They were profitable and had some cash in the bank, so I figured the investment could work.

    But a company that’s profitable one day can start burning the next. Without a big cash cushion, the picture quickly becomes dire.

    Startup Y

    This one was a pure founder bet. I had strong conviction that this founder was incredibly determined.

    I was right about that. But the company is still about to go out of business.

    Despite his best efforts, a difficult market and a lack of cash made it hard for the startup to survive. Even the scrappiest founders can run up against insoluble problems.

    The company had strong growth, but less traction than I’d normally look for. It was making a small profit but didn’t have a lot of cash on hand.

    Like Startup X, I did this investment between rounds. And like Startup X, over time customers churned and a profit became a loss.

    That’s when the minimal cash cushion began to bite.

    Startup Z

    “There are no sure things in startups, but this is as close as it gets.” Well, that’s what I thought then.

    Now, this company is being acquired for a small sum and we’ll likely take a partial loss on the investment.

    These guys had it all. Amazing product, incredible growth, a round led by one of the best early stage VC’s in the world.

    But shortly after the round closed, the two co-founders started arguing.

    One of them wound up leaving. The company has trended downward ever since.

    Long sales cycles led to missed targets. Meanwhile, burn continued.

    A lot of companies didn’t cut burn soon enough in the down market. Startup Z was one of them, and it helped sink the company.

    Overall, this loss was the hardest to predict.

    What I Learned

    Out of 32 names in my portfolio, I’ve done 3 investments between rounds. One is growing, but the other two are about to go out of business.

    I have enough information to say that investing between rounds is not a successful approach. In the future, I will only be investing when a startup is closing a full round.

    Running a startup is hard enough. Doing it without a cash cushion is almost impossible.

    Despite these losses, my follow-on strategy worked. I didn’t invest any follow-on in any of these companies, which will keep my losses small.

    Lastly, Startup Z showed me how important the co-founder relationship is.

    Today, I ask how the co-founders know each other. If they have a longstanding relationship, that’s a huge plus.

    Wrap-Up

    Ultimately, I will never avoid all losses. Nor should I.

    We are playing a high risk game. Most companies will go out of business.

    But if we’re lucky, 1 out of 30 or 50 becomes a huge success.

    My hat is off to all these founders. They worked really hard.

    In this business, failure is inevitable. All that matters is to keep trying.

    What have you learned from failure?

    More on tech:

    Learning From My Top 3 Investments

    Why It’s Easier to Raise $3 Million Than $300,000

    Why Entry Price Matters

    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. 

  • Learning From My Top 3 Investments

    $17 million, $12 million, $8 million — those are the annual run rates of my 3 most successful investments so far. This morning, I sat down to figure out what these incredible companies have in common.

    Startup A

    Startup A is doing so well I can barely believe it.

    Revenue was around $500k ARR when I invested. Less than 2 years later, they cracked $17 million and raised a Series A from a top firm.

    I’d love to tell you I knew it all along — but I didn’t.

    What I could see was some awesome revenue growth and a tenacious founder. When I dug into his background, I found out that he once appealed a rejection from an entrepreneurship program and got in.

    That’s a man who doesn’t give up.

    I had no idea the company would do this well. But if I keep investing in great founders with growing businesses, I have a chance to hit a phenom like this once in a while.

    Startup B

    Like Startup A, these founders showed an incredible ability to stick it out during tough times. COVID nearly killed their business in its infancy, but they pivoted and made it through.

    These guys also had strong growth and a ton of revenue for a seed stage company.

    ARR was around $2.4 million, rare for a company raising at such a good price. Startups outside SF are often overlooked.

    With a huge market, serious revenue and strong growth, this company had the kind of metrics I dream about. Add in founders who clearly refuse to give up, and no wonder it’s a winner.

    Startup C

    I actually passed on this company at first. But my decision was based on misunderstanding their business model. The founder asked to meet a 2nd time and showed me where I was getting confused.

    He was right. I wrote the check.

    To this day, I thank him for correcting me!

    Clearly, this is a fella who doesn’t give up easily. And the performance of his company reflected that.

    The growth at this startup was incredible — 60% month over month in the prior 4 months. They had passed a $1.5 million a year run rate and were raising a late-seed stage round.

    Today, they’re at an $8 million a year run rate. I still can’t believe I almost passed on it.

    Wrap-Up

    What do these 3 startups have in common?

    In every case, the founder showed incredible tenacity. They did that in different ways, but it was clear each time.

    These startups also had far more revenue and growth than what’s typical for a seed stage company. The best startups have a way of jumping out early.

    Today, I’m looking for investments like these: gritty founders with incredible growth.

    Tomorrow, we’ll look at the 3 most challenged startups in my portfolio. What can we learn from these struggling companies?

    More on tech:

    Why Entry Price Matters

    Why It’s Easier to Raise $3 Million Than $300,000

    Small Investors Lead to Big Investors

    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. 

  • Why Entry Price Matters

    Former Google and Stripe executives just raised $56 million at a $500 million valuation for their new startup, /dev/agents. I never do deals like this. Here’s why…

    Returning the Fund

    In most venture funds, one investment accounts for the bulk of the returns. The same will probably be true for my angel portfolio, which I think of as a tiny venture fund.

    A typical early stage fund might contain 35 names, or separate companies. Since one company will probably provide most of the returns, I want every investment to be able to return the fund.

    Think of it like shooting a target. If a bet can’t return the fund, I just wasted a precious bullet.

    For an investment to return the fund, it needs to increase by about 70x.

    Companies raise more money along the way, diluting the early investors. Investors at pre-seed and seed, the point at which I invest, are usually diluted by around 50% come IPO.

    So, to give me 35x and return the fund, I need a 70x increase on that initial investment.

    Underwriting /dev/agents

    I didn’t have an opportunity to invest in /dev/agents, but I’ve had a shot at many deals like it recently. With the excitement around AI, many startups are raising giant early rounds at eyewatering prices.

    So, could I make money investing in /dev/agents? Let’s run the numbers…

    At an entry price of $500 million post-money, I need /dev/agents to hit a $35 billion valuation to give me my 70x. Although the founders involved are exceptional, getting to a $35 billion valuation is extremely unlikely.

    By my count, there are only 49 US tech companies worth $35 billion or more on the public markets. Just 49 ever, in all of history.

    This outcome is so rare that I cannot underwrite to it.

    Controlling My Entry Price

    So far this year, my average entry price has been $11.6 million post-money. A 70x on that is much easier to underwrite to.

    I don’t even need an investment to be a unicorn. $800 million will do me just fine.

    Don’t get me wrong, getting to a $800 million valuation is extremely difficult. But it’s a whole lot easier than hitting $35 billion.

    And if that little seed stage startup hits a $2.4 billion valuation, I have a nice 3x fund returner. Add in follow-on investments in the most successful companies, and I might get that to a 6x or more.

    Wrap-Up

    /dev/agents may become a fantastic company, but it’s unlikely to be a good investment.

    This is no reflection on the founders, and I wish them all the best. Moreover, /dev/agents is hardly alone in raising its first round at a sky high price.

    So, why do VC’s make investments like this?

    They may just want a shiny logo for their website. Saying they’re in X hot deal makes them look smart, like they’re insiders.

    Me, I don’t play that game. If an investment can’t make money, I’m out.

    What do you think of the /dev/agents raise?

    Have a great weekend, everyone!

    More on tech:

    Why It’s Easier to Raise $3 Million Than $300,000

    Benchmarks for Valuation and Traction at Y Combinator

    Small Investors Lead to Big Investors

    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. 

  • Why It’s Easier to Raise $3 Million Than $300,000

    “I know this sounds crazy, but it’s actually easier to raise $3 million than it is to raise $300,000.” Yesterday, I was helping a wonderful founder plan his fundraise. Like many founders, he thought a small raise would be easier — but it’s not.

    One of the weird things about venture capital is that raising a large sum is easier than raising a small one.

    Signaling Risk

    When I see a company raising a very small sum, I think to myself, “Why aren’t they raising more? Other companies are raising millions. Are they unable to raise?”

    And if they’re unable to raise, is there something wrong with the company?

    We don’t have much data to go on for an early stage startup. So investors pay a lot of attention to those signals, even if they can be misleading.

    “What Happens in 3 Months?”

    Let’s say a company is burning $100,000 a month and raising $300,000. What happens in 3 months?

    If I’m putting a check into a company, I don’t want them running out of cash right afterward. So I look for 12 months runway after a fundraise closes. I’d prefer to see 18-24 or more.

    Investors don’t want to see you limping along from small check to small check. They want you to raise significant cash and get the company to the next level.

    Big Ambitions

    Raising a larger round shows you have big ambitions. VC’s love ambitious founders.

    Only a huge outcome will make the VC’s money. Their business model is to lose money on 30 investments and have a single company put them into the black.

    Raising $2-4 million at seed shows that you plan on building this into a major company. Raising a couple hundred thousand may mean you just want to make a solid, small business.

    That small business may be great for you. But it won’t get the VC’s paid.

    Bringing in the Institutions

    Most institutional lead investors need to write a check of $1 million or more at seed. If your whole round is $200,000, they can’t do that.

    Now, you’re left with no lead.

    Every other investor you meet will wonder why you don’t have a lead. Did they pass on the deal? Did you fail due diligence?

    With questions like that in their minds, VC’s will just move on to the next deal.

    Insiders vs. Outsiders

    When you show up asking for $3 million for a seed stage startup, you’re showing that you know how the game is played.

    You know what your company is worth and what it can raise. And you have the network to get it done.

    When you show up looking for a $250,000 “seed round,” you look like an outsider. You look like you don’t know how venture capital works.

    Fairly or unfairly, investors want to back insiders, not outsiders.

    Wrap-Up

    If you’re going to bother raising money, you may as well take down some serious cash. Aim for a seed round of $2-4 million.

    You’re ambitious on signing customers, right? Bring the same ambition to your fundraise.

    There will be no blog tomorrow for Thanksgiving.🦃 I’ll see you on Friday. Happy Thanksgiving, everybody!

    More on tech:

    Benchmarks for Valuation and Traction at Y Combinator

    How Much Runway Do I Need?

    Small Investors Lead to Big Investors

    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. 

  • Benchmarks for Valuation and Traction at Y Combinator

    Next week, YC’s first fall batch will present at Demo Day. Here is what will distinguish the top companies from the stragglers, based on my scores of meetings with YC companies over the years.

    1) Top Tier. This elite group makes up 5-10% of the batch.

    These companies have built a serious business in a very short period of time. They have significant revenue, typically $150,000 to $500,000 ARR.

    You’ll see these guys raising $2 million at a $20-25 million post-money valuation. The rounds often wind up oversubscribed.

    2) Mid Tier. This is the average YC startup, perhaps 60% of the batch. Expect to see revenue of $3-5,000 a month, often in pilots.

    You’ll usually see these raising $2 million at a $20 million post-money valuation. The rounds do not usually oversubscribe.

    3) Lower Tier. This final group of companies is struggling to sign customers. It represents perhaps 30% of the batch.

    Expect to see zero revenue with these. They may have some Letters of Intent (LOI’s) or a rich pipeline, but cash is king, and they don’t have it yet.

    You can pick these up at a $15 to $20 million cap. The round is unlikely to oversubscribe.

    Even if a startup isn’t at the front of the pack on Demo Day, it can still be a huge success. No one can look at a brand new company and say for sure where it’s headed.

    Why Investing in YC Companies Is Hard

    Let’s take the average YC company at Demo Day. We’re talking about a startup with a couple thousand a month in revenue priced at a $20 million cap.

    If you build an entire portfolio of these, it will be very hard to make money.

    Assume a miracle happens and one of these startups hits a $1 billion valuation. You’ll be diluted by half along the way, giving you a 25x return.

    A portfolio of early stage startups might contain 30-40 companies. So, that $1 billion outcome didn’t even return the fund. Meanwhile, most of the others are probably failing.

    The fundamental problem for the investor is that these are pre-seed companies priced like late seed stage startups with $500,000-$1 million ARR.

    How I Approach Investing at YC

    That said, YC has a history of producing some of the best companies. I don’t want to exclude YC as a source of deals.

    I pick off one or two excellent YC startups a year before Demo Day. I also invest in others a year or two after Demo Day, when their traction has caught up to their valuation.

    This gives me a portfolio with a couple high priced deals balanced out by many cheaper ones in non-YC companies. My average entry price stays reasonable, at $9.7 million for companies averaging around $300k ARR throughout 2024.

    Wrap-Up

    YC does a ton of filtering for the investor. They also give their startups some of the best coaching on earth.

    This valuable service isn’t free. Hence the higher valuations.

    Like any luxury product, it’s okay to indulge from time to time — if you have the money.

    Note: YC also admits many biotech and deep tech companies. Those companies have entirely different benchmarks and I don’t invest in those areas, so they are excluded from this analysis.

    More on tech:

    How Much Runway Do I Need?

    Pitch Deck Roast: LightHaus

    Small Investors Lead to Big Investors

    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. 

  • How Much Runway Do I Need?

    How much runway* do you need? How much should you burn? Here’s an overview of what the best people in the business do, and what I expect to see as an investor.

    Learning from Rahul

    Rahul Vohra has built Superhuman into one of the hottest startups in America. On a recent episode of This Week in Startups, Rahul explained how he makes sure Superhuman never runs out of money:

    “Every single quarter, we make sure that at that moment in time, we have 48 months of runway left.”

    48 months might sound ridiculously conservative, but Rahul stands by it:

    “Some people aim for 24, which, by the way, why 24? Guys, that’s not enough. You need more than 24 months of runway.”

    Rahul has run Superhuman in an uncommon way. And he’s gotten uncommon results, building a unicorn in just 7 years.

    How Much Runway I Want to See

    I love Rahul’s approach. He might have left a little bit of growth on the table, but he’s mitigated one of the biggest risks to his company — running out of cash.

    But of course, most startups don’t run this way.

    When I’m looking at a deal, I want the company to have a minimum of 12 months runway once the current round closes. If it’s any less than that, I pass.

    With under 12 months runway, the founder will have to turn around and start raising again almost immediately. It’s hard to run a company that way.

    When to Raise

    You want to start raising when you have at least 9 months of runway in the bank.

    The raise could take 6 months. You want to make sure you still have some cash on hand at the end of that period.

    Having lots of runway when you go out to raise gives you leverage with investors. You don’t have to accept just any terms.

    If you can make it to breakeven before you start raising money, even better! You can always ramp up the burn again when you refill the gas tank.

    Remember, investors don’t invest in startups that need money.

    Wrap-Up

    Always know your runway. Making sure you don’t run out of cash is one of your most important jobs as a founder.

    Aim for a minimum of 12 months runway after a raise. And seriously consider Rahul’s conservative approach — it’s working for him!

    If worse comes to worst and you do run out of money, your company can still survive. I’ve seen startups lay off everyone other than the founders and keep building.

    I have enormous respect for entrepreneurs like that. But it’s easier not to go broke in the first place!

    How much runway do you like to see?

    *Runway: The amount of time your startup has until it has $0 in the bank, given its current burn rate and cash in bank. For example, if you’re burning $50,000 a month and you have $500,000 in the bank, you have 10 months runway.

    More on tech:

    Pitch Deck Roast: LightHaus

    Three Free and Easy Ways to Meet Investors

    Small Investors Lead to Big Investors

    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. 

  • Which Jobs Will AI Replace? Which Jobs Are Safe?

    “Am I going to be out of a job?” That’s the first thought a lot of people have when they see a new AI tool. So what jobs are safe, and what jobs aren’t?

    As an angel investor, I see new technologies before most people do. So let me give you a sneak peak of what’s coming, and what isn’t…

    Most Threatened Jobs:

    1) Sales Development Representatives (SDR’s). SDR’s cold message sales prospects and set meetings for their bosses, the Account Executives (AE’s).

    There are a million AI SDR startups. It’s so many that I avoid investing in them — the market is too crowded.

    If your job involves sending customized cold messages to prospects, qualifying leads, and setting meetings, start looking for a new job. AE’s are safer because they actually meet with customers.

    2) Loan officers. Loan officers decide who should get loans for houses, cars and the like. This job is extremely vulnerable to AI.

    Loan officers gather a ton of paperwork, analyze it, and make a decision on whether someone is creditworthy. AI is great at sucking up unstructured data like this and making a decision.

    3) Customer Service. If your job involves answering similar questions for many different customers, you’re in trouble.

    AI can analyze prior tickets and come to a good solution for probably 90% of customers. The edge cases will go to a much smaller group of human agents.

    Klarna recently laid off two thirds of their customer service staff, some 700 people. An AI system now does their jobs.

    What Klarna is doing today, everyone will be doing within 5-10 years.

    Least Threatened Jobs:

    1) Emergency Medical Technicians. EMT’s take vitals, drive ambulances, and even administer some medications. They also spend a lot of time calming down scared patients.

    This job is too multifaceted to be automated.

    “If it ever happens, it will be at least 20 years from now,” I recently told a friend who’s an EMT.

    The same is true for most jobs in healthcare. The jobs are too varied, not to mention heavily regulated.

    2) Plumbers. Plumbers fix clogs, install new plumbing, and repair water heaters among many other tasks.

    The job is physical and highly variable. The industry is fragmented. This makes plumbing quite difficult to automate.

    The same is true for most skilled trades. As AI gobbles up more and more jobs, the trades will be a great home for many workers.

    3) Live performers. An android can sing and dance. But will anyone come to the concert?

    I doubt it. They’ll all be watching Taylor Swift.

    Humans want to connect with performers. We want to obsess over what Taylor’s wearing and who she’s dating.

    What’s true for big stars is true for local bands and theater troupes as well. It will be a long time before these jobs go away, if ever.

    Wrap-Up

    AI is a serious threat to a lot of jobs. But many other jobs will be safe for a very long time.

    If your work is multifaceted, physical, or involves human connection, you’re in a strong position.

    In the end, we will always find ways to be useful. Society has been automating jobs for centuries, and there’s more jobs now than ever.

    We humans land on our feet.

    What jobs do you think are most at risk from AI? Which are safe?

    Have a great weekend, everyone!

    More on tech:

    Three Free and Easy Ways to Meet Investors

    YC’s New Request for Startups

    Pitch Deck Roast: LightHaus

    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. 

  • Three Free and Easy Ways to Meet Investors

    You want to meet investors. But how do you do it? Here are 3 free, easy ways to get in front of us:

    1) OpenVC. OpenVC is an awesome platform that connects founders and investors.

    OpenVC is free and anyone can join. You post a blurb about your company on their website. Investors can see it and if they’re interested, they contact you.

    At that point, you can send them the deck and set up a meeting.

    I did a deal from OpenVC earlier this year. The company is doing so well that I just invested in it a second time!

    Since I’ve found a winner here already, I make sure to pop in several times a week. Many top VC’s do the same.

    2) Crunchbase. Crunchbase is a database of startups and investors. I troll the site several times a week, looking for interesting new startups.

    Anyone can submit their startup to the database for free. I wrote a step-by-step guide on how to submit your company, which you can read here.

    Many VC firms have analysts assigned to monitor this database. If you’re in it, they may contact you.

    This is a lot easier than having to do all the outbound yourself!

    3) Mercury Raise. Mercury Raise is a program that helps startups raise money. It’s open to all customers of Mercury.

    Mercury is a bank for startups. Many of my portfolio companies use it and love it.

    Mercury Raise sends a batch of startups to investors each month. Some even participate in a Demo Day with the founder, Immad. I attended one of those recently and it was great!

    Lots of VC’s use Mercury Raise to find new investments. And especially if you’re already a Mercury customer, you may as well take advantage of this.

    Wrap-Up

    Meeting investors can seem like some sort of dark art. But it’s actually pretty easy and shouldn’t cost you anything.

    If you use all 3 of these methods, you’ll be booking meetings in no time!

    What are you favorite ways to meet investors?

    More on tech:

    YC’s New Request for Startups

    Pitch Deck Roast: LightHaus
    Meet My Latest Investment: LedgerUp

    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.