Tremendous

An angel investor's take on life and business

  • AI Is Starting to Prompt Itself

    I was trying to find some info on startup valuations this afternoon. I kept prompting GPT-4, but I couldn’t get the right answer. Turns out, I should’ve let the AI prompt itself.

    Or at least that’s the conclusion of a team from VMware. From IEEE Spectrum:

    There is an alternative to the trial-and-error style prompt engineering that yielded such inconsistent results: Ask the language model to devise its own optimal prompt. Recently, new tools have been developed to automate this process. Given a few examples and a quantitative success metric, these tools will iteratively find the optimal phrase to feed into the LLM. [VMware engineer Rick] Battle and his collaborators found that in almost every case, this automatically generated prompt did better than the best prompt found through trial-and-error. And, the process was much faster, a couple of hours rather than several days of searching.

    Teams from Stanford and Google DeepMind are behind those cutting edge tools to automate prompting. And they’re not alone.

    In the Claude 3 Opus as an Economic Analyst demo we covered on the blog yesterday, Claude repeatedly prompts itself.

    When I saw the “DISPATCH_SUBAGENTS,” my eyes opened really wide. How long until we don’t say “Jim in accounting, please do this” or even “Claude, please do this” but rather “Claude, prompt yourself in an ideal way in order to do this”?

    In time, Claude will probably have auto-prompting built in. So will every other major AI model.

    At that point, reinforcement learning becomes the key.

    If we can label Claude’s outputs as good or bad, Claude can refine its prompts. Then, we’ll get even better results.

    As the models get more and more powerful, Claude may need only a little reinforcement learning to improve drastically. And in time, maybe it will understand our goals so well that it even does the reinforcement learning itself too!

    I’d love to tell you I know where all this is going.

    I sure would seem smart, wouldn’t I? And we investors love that.

    But I don’t know.

    All I can do is carefully follow what’s going on, talk to great people, use the products, and think. And you can bet, I’ll be doing that.

    Where do you think AI is headed? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    An AI Copilot for the Economy

    Why AI + Humans Wins

    Why I’m Learning to Love Consumer Subscriptions

    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!

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

  • An AI Copilot for the Economy

    What if we had an AI Copilot for the economy? Yesterday, Anthropic released what amounts to a beta, and it’s already got amazing capabilities.

    Check this video out:

    In the demo, Anthropic uses its AI to project the GDP of the US and other major countries into the future. Everything is charted beautifully and based in the latest data.

    Imagine how many grad students it would take to pull all this together! Instead, Anthropic’s newest and most powerful model, Claude 3 Opus, performs the analysis in minutes.

    AI Prompts Itself

    The coolest thing about this demo was the “Dispatch Subagents” tool.

    Claude takes the problem “Project GDP for major economies” and breaks it into parts. Then it reprompts itself many times to find data on each country.

    Next, it projects the data forward using an econometric model. And finally, it charts the results.

    Bring Me Supertyler!

    Watching this demo was really exciting! Right before my eyes, I could see the future happen.

    I knew of one man who’d appreciate it more than anyone: economist Tyler Cowen.

    I tweeted the demo at him, and he retweeted it! As a huge Marginal Revolution fanboy, this might be the moment my life peaked. 🙂

    Claude is not going to replace a very skilled economist like Tyler. But it could make Tyler 100x more effective.

    Call him Supertyler.

    Economy Copilot: The Next Step

    Although I can’t wait to meet Supertyler, the future of AI and economics will be even more exciting than that.

    Imagine an Economy Copilot. For any policy we’re considering, we can ask Economy Copilot “What will be the effect on our economy?”

    Right now, a lot of people are upset about immigration. But the US desperately needs workers to fill our countless open jobs.

    So what should we do? Let’s ask Economy Copilot…

    Francis: We’re thinking of closing the border. What will happen to the economy if we do?

    Economy Copilot: Closing the border is likely to reduce GDP per capita by 10% due to a lack of workers. This will cost the average American about $7,000 per year.

    When you put it in those terms, who’s going to be okay with that? And Economy Copilot has no preference of its own…it’s just crunching numbers.

    How Economy Copilot Could Change Politics Forever

    Politicians might not use Economy Copilot, but voters will. Indeed, lots of people are already using Claude, ChatGPT, and other models that may soon have this capability.

    If voters see “$7,000 less for you every year forever,” they’re going to be really mad. And some will tell their Congressman to vote against that new “Seal the Border” bill.

    Some users may get results from Economy Copilot and say that it’s “woke”. Others may say it has a right-wing bias.

    But I think most people will believe the AI model.

    Some research indicates that we view results from AI as more objective than human decisions. From a study of decisions on job applications, published last year:

    Upon evaluating a job seeker’s suitability for a position, participants viewed algorithmic decisions as fairer, more competent, more trustworthy, and more useful than those made by humans. Interestingly, when a candidate was deemed unsuitable for hiring, people reacted more negatively to the verdict given by a human than to the same judgment offered by AI. 

    Wrap-Up

    A world with Economy Copilot is a better world. Today, we often can’t agree on basic facts, much less what conclusion to draw from them.

    Any tool to better analyze data and come to rational conclusions will help!

    What do you think of the Claude demo? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Why AI + Humans Wins

    Morris Chang on Why Taiwan Dominates Chip Manufacturing

    Why I’m Learning to Love Consumer Subscriptions

    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 AI + Humans Wins

    ChatGPT just aced BYU’s intro to comp sci class, getting a perfect 100% for the entire course. But AI’s latest achievement doesn’t mean human programmers are over.

    AI Goes to College

    BYU’s Computer Science 110 is called simply “How to Program.” It’s BYU’s most basic computer science class, covering stuff like variables, if-then statements, and simple algos.

    BYU doesn’t let actual human students use any form of AI for Comp Sci 110. My kneejerk reaction as a technophile is “that’s stupid” — but their reasoning convinced me.

    From the syllabus:

    These tools are pretty cool and fun to use. They’re kind of like using a calculator, but for writing code. Depending on the problem, your mileage may vary in how effective these tools are: they do pretty well on the simple stuff, and sometimes do alright on harder stuff. These tools are not very good at breaking down complex problems into smaller pieces, which is a fundamental learning outcome of the course.

    Just how it would be impossible to excel in an advanced math class if you had to constantly pull out a calculator for every simple addition or multiplication problem, you will not be prepared to program anything but the most primitive pieces of code if you do not practice the basics we present in class.

    BYU doesn’t tell students not to use Copilot outside class. In fact, they’ll even get you a free license!

    But using it on class assignments and exams is verboten. To quote Comp Sci Professor Porter Jenkins:

    “…they become so much of a crutch for people, especially young people, that we sort of collectively lose the ability to think.”

    Why We Have to Learn Without AI at First

    Imagine if way back in 1st grade in 1992, I had used a calculator to learn addition. For the rest of my life, I kept doing it that way, because it’s all I know.

    Now in 2024, you ask me “Francis, what’s 5 + 3?”

    I would know how to punch the numbers into a calculator. And I’d know how to read you the result, “8!”

    But I would have no idea what any of this really means.

    The same principles apply with code.

    AI + Humans Wins

    I’ve always wanted an app to find firewood stands. When I go camping in a new area, finding a stand with decent wood at a reasonable price can be difficult.

    So this morning, I used the newest models from Anthropic to spin up the basics of an app. Let’s call it Woody.

    It does a great job! In seconds, I have the basics of my new app.

    But I’ve never used React. So, I don’t really understand what Claude gave me.

    If this code ever has a problem, I won’t know how to fix it. I also don’t know much about how to make it better, other than just to ask Claude again.

    Maybe I could get the app up and running anyway. But now imagine if I’m also competing with Jim and his new FireStand app.

    Jim knows React inside and out. And he has access to AI too!

    Who do you think is gonna win here?

    Wrap-Up

    In time, I think we’ll see software development start to look a lot like chess.

    The best chess players in the world aren’t humans on their own. And they’re not computer programs either.

    The best chess players on earth are humans using computer programs. The program makes suggestions, and the skilled human makes the ultimate decision.

    That’s where software is headed. In fact, that’s where knowledge work as a whole is headed.

    But you can’t get there if you let the AI do all your thinking for you.

    Where do you think software is heading? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Why I’m Learning to Love Consumer Subscriptions

    The Coinbase Deck

    Morris Chang on Why Taiwan Dominates Chip Manufacturing

    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: “When Computers Were Human” by NASA’s Marshall Space Flight Center is licensed under CC BY-NC 2.0.

  • Why NYCB’s Problems Won’t Spark Another Banking Crisis

    Shares of New York Community Bank are plummeting, down 24% today so far. NYCB is in serious trouble, but it’s highly unlikely to spark another banking crisis.

    The stock is tanking because NYCB discovered “material weaknesses” in tracking loan risks and replaced its CEO late last night. It’s been a bad year for the bank— shares are down 65% year to date.

    But this is not another Silicon Valley Bank. The reason’s for NYCB’s troubles are highly specific to New York City and unlikely to effect many other banks.

    Where NYCB’s Bad Loans Came From

    NYCB’s problems stem from bad loans for multifamily buildings in NYC. About half of its loans are for rent-regulated buildings, according to Bloomberg.

    This is a problem because New York City made a huge change to its rent laws in 2019. The new law is very complex, but the upshot is that it’s way harder to raise rents now than before.

    This may be good for tenants, but it’s not great for landlords.

    Faced with less rent than they expected, landlords may struggle to repay the loan on the building. And that could spell huge losses for NYCB.

    NYCB acquired many of its loans from Signature Bank when Signature failed last year. The problems at NYCB are in part a ripple from the crisis last March.

    A good friend of mine is a commercial real estate broker in NYC and sells a lot of multifamily buildings. He tells me the value of those buildings is way down since the rent law change.

    Do Startups Need to Worry About This?

    Founders are busy, so I’ll make this short: no.

    This situation is not like what happened last year with SVB.

    NYCB’s problems are specific to rent law changes in New York City. Other banks across the country should not be impacted, although more New York area community banks may be.

    I’m glad this doesn’t look like a systemic problem — I don’t think I could go through that again any time soon!

    One of my companies took a year to raise a big round of funding in 2022. And in March of ’23, every single dime of it was in SVB.

    I remember nervously e-mailing back and forth with the founder one night on my way to a dinner with friends. I tried to give him the best info I could find on the crisis, since he was pretty busy running his company!

    It all worked out. But it was a scary moment.

    I don’t anticipate any repeat of last year’s drama this time.

    Wrap-Up

    NYCB looks like a disaster to me. But the disaster should be contained.

    New York City is big, but only 2.6% of Americans live there. Whatever they do with their rent laws, it won’t impact the financial system much.

    What do you think of the NYCB mess? Leave a comment and let us know!

    Have a great weekend everybody!

    If you enjoyed this post, subscribe for more like this!

    More on markets:

    Seed Stage Funding Falls to New Low

    Hedge Fund ‘Returns’ Mostly Swallowed by Fees

    Is Adam Neumann Buying WeWork?

    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!

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

  • Why I’m Learning to Love Consumer Subscriptions

    I’ve usually been a SaaS or marketplace guy. But then something interesting happened at Duolingo…

    A year ago, I looked at the consumer subscription market and I didn’t see a lot of big winners. What I did see were crowded markets, high advertising costs, and scary churn.

    But Duolingo’s rise made me take another look at this category.

    The language learning app’s stock has more than tripled since the 2022 low. Its market cap now sits at $10 billion.

    I had to admit it: consumer subs can produce outcomes of the highest order.

    What the public market is telling me is, “Send us more like this.” Message received.

    But how can we separate a great consumer sub company from the rest?

    Looking for Big Markets

    Duolingo has 26.9 million Daily Active Users (DAUs). I’m one of them. I learn Portuguese on Duolingo most every day.

    The paid version of Duolingo is $7/month. With prices that low, you need a lot of users to make a big company.

    This means you have to be addressing a major need.

    Lots of people want to learn a language. Even more want to lose weight — good news for Noom.

    Stick to those big markets, and we have a chance of success.

    Death by CAC

    One of the biggest reasons I pass on consumer subscription startups is high Customer Acquisition Cost, or CAC.

    I’ve seen consumer subs with a CAC that’s roughly equal to their Lifetime Value (LTV). This means that however much the company makes from a customer, they already paid out just as much to find them!

    A business like that isn’t viable.

    I like to see an LTV:CAC of 12:1 or better at the early stage. The number is likely to get worse as the company grows and saturates one ad channel after another.

    The best consumer subscriptions tend to grow virally, a lot like social media. So if a startup is bringing in tons of customers at $0 CAC, that’s a powerful sign.

    Keep an Eye on Churn

    Some subscriptions bring on lots of users but can’t keep them. It’s usually a sign that the platform isn’t providing enough value.

    So what level of churn is good, and what’s a problem?

    For this, I turn to Lenny Rachitsky, who knows more about this stuff than just about anybody. Here are his benchmarks:

    Good retention (at 6 months): 40%
    Great: 70%

    What we don’t want is to have to rebuild the company every year because all our users left. It’s very hard to get to Duolingo’s size doing that.

    Wrap-Up

    Now that I’ve been investing in startups for almost 3 years, I’m tempted to think I know everything. This kind of company is good, that kind is bad.

    But any good investor watches the market and learns. When the market proves me wrong, I have to adjust.

    So now, I’m looking for consumer subscriptions that address a real problem lots of people have. And I want to see both fast and cash-efficient growth.

    Somewhere out there is the next Duolingo. I intend to find it.

    What do you think of consumer subscriptions? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    The Coinbase Deck

    Why I’m Cold Messaging Aquaculture SaaS Companies and More

    The Deel Pre-Seed Deck

    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!

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

  • The Coinbase Deck

    Coinbase is the world’s 2nd largest crypto exchange. But in 2012, the company was barely getting off the ground. Let’s dig into the deck they used to pitch investors at YC Demo Day…

    Explaining What Coinbase Does

    Right on slide #1, founder Brian Armstrong makes clear what Coinbase does: it holds your bitcoin.

    He also explains what Bitcoin is. Remember, this was 2012, and Bitcoin was just 3 years old.

    It’s so critical to clearly explain what you do. You’d be amazed how many decks I see where 28 slides in, I’m still not sure what the company does.

    Who Would Use Coinbase?

    This part of the deck isn’t as strong.

    Brian doesn’t identify a single type of customer he’s going after. Instead, he mentions many possibilities, from e-commerce to remittances.

    I’d prefer to see a founder pick one type of customer who really needs his product and go after them hard. But keep in mind, this was a very early stage company in 2012. We can’t expect them to have everything figured out!

    Why Coinbase Will Win

    For me, this was the most persuasive slide in the deck.

    Brian shows us how people held their Bitcoin without Coinbase. The alternative is ugly software full of long cryptographic keys.

    Would I want to use that? Heck no.

    Getting Investors Excited About the Bitcoin Market

    One of the first things I look for in a startup is whether it’s addressing a big market.

    Brian shows us the kind of chart that gets VC’s excited: very uppy and to-the-righty. Check out this growth of Bitcoin transaction volume:

    It was still small in 2012, about $2 million a day. But any VC would recognize exponential growth.

    Showing Traction

    Brian gives us strong evidence that Coinbase is catching on in that market.

    Signups are increasing 20% a day. Transactions too are going through the roof.

    Ideally, I’d like to see revenue here. Coinbase doesn’t appear to have that, but it does have the next best thing: strong adoption from customers.

    What Brian Missed

    Brian did miss one very important thing: the team! A bet on Coinbase at this point was above all a bet on the founders behind it.

    It turns out Brian had worked on Airbnb’s payment systems before founding Coinbase. He was extremely well qualified to build a payments business — he had handled payments to 190 countries.

    But unfortunately, we would not know that from his deck!

    Also, I would’ve liked to hear about Coinbase’s revenue model. Is it a take rate of transactions? If so, how much?

    Wrap-Up

    Brian hit nearly all the important points with this deck. He explained what he does, why it’s important, and how it’s going.

    To any investor at YC Demo Day that year, it would’ve been clear that Coinbase was one of the strongest companies. Increasing sign-ups by 20% a day is unheard-of.

    I wasn’t there, but if I had to guess, Brian had VC’s running up to him after this pitch.

    What do you struggle with in building a deck? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    P.S: Here’s an awesome video of Brian practicing his pitch before demo day!

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    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. 

  • Morris Chang on Why Taiwan Dominates Chip Manufacturing

    One company, TSMC, makes almost all advanced semiconductors. The US wants in on this game — but TSMC founder Morris Chang says it won’t be easy.

    In a fascinating talk this past fall at MIT, Chang tells the story of why so much chip manufacturing wound up in one little island.

    Why Taiwan Is an Awesome Place to Make Semiconductors

    Making semiconductors requires enormous skill. Some of TSMC’s chips contain as many as 20 billion transistors.

    Overseeing plants in Texas and Japan at Texas Instruments early in his career, Chang noticed one huge difference between them.

    “[In Japan] their turnover was like 2% a year. Whereas in Texas, it was like 15% when there was a recession…and 25% when times were good.”

    Workers were cycling through the Texas plants so fast that they never really learned how to make a chip well. Japan didn’t have this problem.

    When Chang founded TSMC in 1987, he had the same advantage Japan did: a dedicated workforce.

    Taiwan’s GDP per capita in 1987 was only about 1/7th that of the US. Semiconductor manufacturing was a great job, and workers stayed put.

    The US, meanwhile, became a victim of its own success. The American workers had lots of job opportunities at great pay.

    The Taiwanese and Japanese workers didn’t, so they stayed where they were.

    How the US Could Compete

    Although Texas Instruments may have had high turnover in America, not all businesses do.

    Costco’s is famously low, 17% overall and just 6% a year after 1 year’s employment, according to a Harvard analysis. Costco’s turnover is low because it has better pay and benefits than most comparable jobs.

    So if chip manufacturers want to keep US workers, the solution seems pretty simple: pay more.

    However, those chip manufacturers will be competing with Taiwan, Korea and others. The higher costs may make that difficult, unless the US government subsidizes them indefinitely.

    “South of the Border, Down Mexico Way…”

    It’s hard to make chips in America at a competitive price. But there might be another way…

    The US wants to bring chip manufacturing home because we’re worried China will invade Taiwan. That could cut off our flow of advanced semiconductors, crippling our economy.

    But instead of building fabs in Arizona, what if we built them a couple hours drive away, in Mexico?

    Mexico’s GDP per capita today is about 1/6th of America’s. They’re basically where Taiwan was in 1987.

    Semiconductor manufacturing jobs would be some of the best jobs available in Mexico. Retaining workers while keeping costs reasonable should be easy.

    Meanwhile, we in America still get our chips.

    War could cut us off from Taiwan. But it’s highly unlikely to cut us off from land routes to Mexico.

    Mexico gets great jobs, we get the chips we need, everybody wins.

    Wrap-Up

    Even Morris Chang admits that Taiwan can’t remain dominant in chip manufacturing forever. He predicts that countries like India and Vietnam may begin to displace Taiwan.

    After all, Taiwan is a much richer country these days. Semiconductor jobs are no longer the only game in town.

    But Mexico may be the best choice of all. It serves US interests to keep this critical manufacturing close, even if we can’t do it ourselves.

    Where do you think the chips of the future will be built? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    Thanks to the excellent Bg2 Pod for pointing me to Chang’s talk!

    More on tech:

    The Deel Pre-Seed Deck

    Why I’m Cold Messaging Aquaculture SaaS Companies and More

    Inside Information

    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 Charlie Munger Taught Warren Buffett About the Power Law

    Warren Buffett started out buying businesses at the lowest possible price. One day in 1965, a young man named Charlie Munger told him he was doing it all wrong.

    Buffett had just bought Berkshire Hathaway. At that time, Berkshire was a struggling textile mill, not the conglomerate we know today.

    Buffett recounts Munger’s advice in his excellent new annual letter, just released this weekend:

    “…Charlie, in 1965, promptly advised me: “Warren, forget about ever buying another company like Berkshire. But now that you control Berkshire, add to it wonderful businesses purchased at fair prices and give up buying fair businesses at wonderful prices. In other words, abandon everything you learned from your hero, Ben Graham. It works but only when practiced at small scale.” With much back-sliding I subsequently followed his instructions.”

    Munger was teaching Buffett about the power law — that a small number of investments drive almost all returns.

    He didn’t use those words exactly. But Munger made sure Buffett understood that being in the best companies is more important than paying the lowest possible price.

    The power law rules the world of venture capital, where I spend my days. But the power law is alive and well in public markets too.

    Just seven stocks make up around 30% of the value of the S&P 500. One of them is Apple. And sure enough, Berkshire is one of Apple’s largest shareholders.

    Buffett started buying Apple shares in 2016. Since then, the shares have risen more than five-fold.

    Instead of investing in Apple, Buffett could’ve bought into lots of businesses at super low PE ratios. But would any of them have performed as well as Apple?

    I doubt it.

    Back in 1965, Buffett had the modesty to listen to Munger and admit he was right. Without that moment, Buffett might have kept buying struggling textile mills like Berkshire. And we probably wouldn’t know his name.

    Even as Berkshire grew, Buffett continued to rely on Munger’s counsel:

    Many years later, Charlie became my partner in running Berkshire and, repeatedly, jerked me back to sanity when my old habits surfaced. Until his death, he continued in this role and together we, along with those who early on invested with us, ended up far better off than Charlie and I had ever dreamed possible.

    Buffett’s humility is a great example for me.

    I’ve been angel investing for less than 3 years. A few of my companies are beginning to see success — and the temptation is to think I know everything.

    Surely Startup A will win and Startup B won’t work. I know how to pick a winner, right?

    Not so fast, Francis.

    I’ve learned some, but there’s a lot further to go. And I need to be open to new ideas along the way.

    What have you learned from Buffett and Munger? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

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    How Skeptical is Too Skeptical?

    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!

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

  • Why I’m Cold Messaging Aquaculture SaaS Companies and More

    The best founders in the world have their choice of investors. So I’m not waiting for them to contact me — I’m going to them.

    When I started as an angel in 2021, I let the deals come to me. These days, I’m doing a lot more outbound.

    Here’s how I do it…

    Trolling for Startups

    One of my favorite ways to find startups right now is Crunchbase. I use a little hack I learned from Jason Calacanis at his excellent Angel University program. 

    I search Crunchbase with these criteria:

    – Raised up to $750k

    – Founded in the last year

    I’m looking for pre-seed and seed stage companies, so I want companies that have not raised too much. And I’m looking for new startups, not those that go years without clearing market for a seed round.

    Then, I go to each company’s website. Does the product look compelling?

    If so, I find the founder on LinkedIn. I explain who I am, how I found them and tell them what I loved about their product. 

    Vast majority of the time, I get the meeting.

    Getting Aggressive

    I take any avenue necessary to meet a great founder. Here’s an example…

    On Tuesday, I found a really interesting aquaculture SaaS company on Crunchbase. But wow, were these guys low profile!

    I couldn’t find them on LinkedIn or anywhere else. Then I spotted an open Calendly on their website.

    “Well, better to ask for forgiveness than permission,” I thought to myself.

    This was probably intended for customers. But I booked a time with it anyway, clearly explaining that I was an angel investor and I thought their product was really cool.

    Turns out, the founder was very happy to hear from me! We’ll be chatting soon.

    If It’s Good Enough for Sequoia…

    Look, I’m not the most high profile investor. I’m not Jim Goetz at Sequoia.

    I can’t expect the best founders on the planet to pitch me. I need to go to them.

    But it turns out, I’m in good company.

    When Sequoia noticed a new product called WhatsApp climbing the App Store charts, Jim Goetz cold messaged Jan Koum for months. Jan never responded.

    But Jim didn’t give up. He kept messaging him and eventually, Jan agreed to meet — perhaps just to make the messages stop!

    Sequoia won the deal. Later, WhatsApp was acquired for $19 billion.

    If the greatest investors on the planet have to hustle, so do I!

    Wrap-Up

    No matter who you are, your network’s only so big. Some good deals will come to you, but many won’t.

    That’s why I like to go out there and find them.

    It’s also a lot of fun! Trolling for startups feels like a treasure hunt.

    Pretty soon, you’re talking to a really interesting founder with a great product. You may even be the first investor they’ve ever met.

    And if their product starts to hit, you’re in pole position to make a bet. 

    Investors: how do you find startups? Founders: how do you find investors?

    Leave a comment and let us know!

    Have a wonderful weekend, everyone!

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    More on tech:

    THE DEEL PRE-SEED DECK

    INSIDE INFORMATION

    USE THE PRODUCT!

    Note: Company details are obscured slightly to preserve privacy. 

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  • The Deel Pre-Seed Deck

    Deel is one of the most successful startups today, valued at $12 billion. So when I found their pre-seed deck this week, I was really intrigued.

    Deel’s deck from 2019 is simple and effective. Let’s dig in…

    Framing the Problem

    Founders Alex and Shuo do a great job of framing the problem.

    In 2019, remote work was growing, and companies were hiring more staff abroad. Payroll and compliance is hard enough in your own state, but when you do business across the world, it really gets tricky.

    Regulations vary a lot from place to place. Foreign exchange fees are brutal.

    But Alex and Shuo promised to change all that…

    What Deel Does

    Next, the founders show us their solution: a platform that can pay anyone, anywhere efficiently.

    The value prop is clear. Deel can get your employees paid in 1-2 days, versus 5 days without Deel. And not only is it faster, it’s cheaper.

    Alex and Shuo make clear how their product is better than what’s out there. And if they can make it clear to investors, they might just be able to convince customers too.

    And It’s Easy on the Eyes…

    This is a pretty deck! A lot of YC decks look like this — big fonts, only a little text per slide, and about a dozen slides.

    YC uses this template because it’s a darn good one!

    Whenever I see a deck with tons of text on each slide, my eyes hurt. A deck is supposed to be an intro to the company, not a detailed memorandum.

    When you present with a deck, you want to “let the slide be your guide,” as angel Jason Calacanis puts it. The deck should prompt you with a few key details, not lay out a script.

    What I’d Change

    I wish Shuo and Alex would’ve explained why they’re the perfect people to take on the problem of payrolls and compliance.

    These two have some pretty impressive backgrounds! Both were repeat founders, which tends to help a person in their next startup.

    But we would not know that from the deck.

    I’d also throw in some basics on pricing and the number of companies in Deel’s target market. This gives us a general idea of the TAM.

    Wrap-Up

    Deel’s deck is simple, pretty and clear. I’m left thinking there’s a big opportunity here, and Deel might be the company to seize it.

    These founders don’t get bogged down in unnecessary detail. They hit the highlights and that’s that.

    Take Deel’s deck as a template. See if you can explain what you’re doing as clearly as Shuo and Alex did!

    And once you’ve got it looking good, let me take a peak. 🙂

    What are your pitch deck pet peeves? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Inside Information

    Use the Product!

    Seed Stage Funding Falls to New Low

    Note: I own a very small number of Deel shares because Deel bought a startup I invested in. They have no control over this post.

    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!

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