My coffee came out, alongside a chocolate covered almond and a cool glass of water. Was I back in Vienna?
Actually, I was in New Jersey. But if you want to have an Old World coffee experience, this was the place to do it.
This is Two Crepes in Union City, New Jersey. This little shop on bustling Park Avenue turns out delicious crepes and coffees in a delightful setting.
A friend and I stood at the counter recently, mesmerized by the many delicious choices. Sweet crepes, savory crepes…what should we choose?
Fortunately, you can’t go wrong here. We went for a classic — Nutella crepes.
We sat at a cozy outdoor table, watching the neighborhood kids pass by.
The moment of truth! The waitress presented us with a beautifully folded crepe, covered in Nutella.
It’s so pretty, I almost didn’t want to take a bite. Almost…
The mild crepe together with the intense nutty sweetness of the Nutella is a perfect combination. And let’s grab a bit of that whipped cream…
The iced coffee alongside was the perfect accompaniment. Its flavor was almost chocolatey.
We relaxed and talked, smiling as we enjoyed our perfect dessert.
This was the best way to spend an evening.
Two Crepes is open 7 days a week until 9 or 10pm, depending on the day. It’s a great place to get a dessert after dinner and unwind with family and friends.
Stop in for a taste of Europe!
What’s your favorite place for coffee and dessert? Leave a comment and let us know!
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On a Saturday, if everything goes right, I’ll wind up here: Jefferson’s Coffee. Located in bustling Hoboken, NJ, Jefferson’s serves smoky espresso, creamy iced lattes, and delicious teas in a relaxed atmosphere.
I make sure to snag a table outside before I even order. Is this rude?
Probably. But I’m a man on a mission.
Then comes a critical decision. A decision that has puzzled men since the dawn of time.
Espresso or latte?
On a recent Saturday, it felt like an iced latte kind of day. When mine was up, my heart jumped with excitement.
Out to my table. A book, great coffee, a breeze — life doesn’t get any better than this.
As I settled into a comfy chair, I took a sip. Smooth, creamy, delicious.
Jefferson’s always gets the balance between milk and espresso just right. The coolness of the velvety milk, the bitterness of the espresso — wonderful.
Of course, cafes are about more than coffee. They’re also about atmosphere.
And it’s hard to beat Jefferson’s Washington Street location for that. The people watching on the busy thoroughfare always intrigues me.
And if you crave quiet and a bit of nature, there’s a lovely backyard garden as well!
The family that runs Jefferson’s coffee has roasted coffee since the 1500’s. It reminds me of a slogan I once saw on Arthur Avenue — “the good taste of tradition.”
Unlike many other cafes in the area, Jefferson’s is open late. The Washington Street location closes between 8 and 9 most nights. The Madison street location closes a little earlier, between 5 and 6.
Stop in for the best coffee in town!
What’s your favorite cafe? Leave a comment and let us know!
Have a great weekend everybody!
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The Equal Opportunity for All Investors Act, a bipartisan bill passed by the U.S. House of Representatives in May, could significantly relax qualifications to become an accredited investor, giving more people the ability to invest in private markets regardless of their wealth or income levels.
If you want into a startup, hedge fund, or private equity deal, you have to be accredited. That generally means your income is over $200,000 or your net worth is over $1 million — oh, and your house doesn’t count.
The House bill would replace these discriminatory requirements with a simple test:
If passed, the bill would require the SEC to create an exam that would be used as a measure of investors’ knowledge in areas such as financial statements, types of securities, and issues surrounding conflicts of interest. Any investor who passed the test, regardless of income and wealth, would qualify as an accredited investor.
The exam would be free and administered by the Financial Industry Regulatory Authority (FINRA). Investors above the current thresholds for net worth and income would not be required to pass the exam.
Today, only around 11% of Americans are accredited. We can’t claim to be a country with equal opportunity if some of the best investments are reserved for the rich.
What’s more, income and net worth are no guarantee of financial sophistication.
I know a young startup founder who isn’t accredited (yet). But he knows far more about startups than I did when I became an accredited investor.
If I can invest, why can’t he?
And never forget that a huge percentage of the rich inherited their money. Daddy leaving you $100 million doesn’t make you an investment expert.
If we want to test for financial sophistication, let’s do so directly.
A fair and free exam is the best way. It’s how we license lawyers, doctors, even beauticians.
Why not investors?
This week, a fellow I know made around $8 million from a tech IPO. He and his family are set for life.
His initial investment: only around $25,000.
The average American might have some money to spare. But she’ll never get that opportunity — not unless the law changes.
Let’s end discriminatory accreditation laws. Open up opportunity for everyone!
What do you think of the House bill? Leave a comment and let us know.
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“America has the best hand ever dealt of any country on this planet today ever, okay. And Americans don’t fully appreciate what I’m about to say. We have peaceful, wonderful neighbors in Canada and Mexico. We’ve got the biggest military barriers ever built, called the Atlantic and the Pacific. We have all the food, water and energy we will ever need, okay. We have the best military on the planet, and we will for as long as we have the best economy. And if you’re a liberal, listen closely to me on that one, okay, because the Chinese would love to have our economy.”
Jamie Dimon
Jamie Dimon is CEO of JP Morgan Chase, the largest bank on earth. Under his leadership, the company has done so well that it has twice the market cap of any other bank on earth.
At a speech at The Economic Club of Washington, D.C., Dimon raves about America’s competitive position.
America: Back on Top
The US has incredible geography and natural resources. But perhaps our greatest assets are cultural, according to Dimon:
“We have a magnificent work ethic. We have innovation from the core of our bones.”
Indeed, the US dwarfs the rest of the world in company creation and venture capital funding.
Innumerable nations have tried to recreate Silicon Valley. All have failed.
“Get on an Airplane…and Tell Me What You Think”
So often, we don’t appreciate everything we have in this country. And if you don’t believe that, do what Dimon suggests:
“Yes, we have problems. Get in an airplane, travel around the world, go to all these other countries, and tell me what you think.”
One evening in Japan, I walked down a quiet residential street and saw something curious: a line of small children in front of a coffee shop.
Little kids don’t drink coffee. So why were they there?
“It’s kodomo shokudou,” my Japanese friend said.
“What’s that?”
“It means children’s diner. Children go there to get a cheap meal, like 100 yen.”
It was heartbreaking. These little children were tiny — all were thin.
And they were lining up not even for a free meal, but for one at reduced cost!
It’s a Nice Place to Visit, But I Wouldn’t Want to Live There
I’ve never seen this in America. I’m guessing you haven’t either.
This is the situation in one of the world’s most highly developed and wealthy countries. I can’t even imagine what life is like in a place like Somalia or Yemen.
This was no isolated incident. Walk the back streets of Tokyo and you’ll see corrugated metal shacks and electrical wires running every which way.
You might expect to see this in a developing nation. But Japan is the third largest economy in the world.
Foreign countries are great to visit — pretty, atmospheric. But if you live there, it’s a hard life.
Yes — We Still Have Problems
For all its virtues, Dimon is also clear-eyed about America’s failures:
“Inner city school education is a disgrace.”
If we want more opportunity for those less fortunate, the number 1 thing we can do for them is give them a good education. Education is why I’m not poor, and it will work for them too.
Wrap-Up
Dimon’s speech is from 2016, but I had never heard of it until a couple of months ago. The same is probably true for many of you.
As the economy booms and the US leads in AI, we seem to finally be feeling a bit better about ourselves. As Packy McCormick of Not Boring notes:
That people received a patriotically optimistic rant from a Big Bank CEO enthusiastically was telling on its own, but the fact that the video floated around the internet ether for seven years until people were ready for it is fascinating. In 2016, Americans wanted to Make America Great Again; in 2023, they celebrated the fact that, despite its issues, it’s already pretty great.
As we head into another election cycle sure to focus on all America’s faults, it’s wonderful to reflect on everything that’s right with our country. Now let’s go make it even better!
What did you think of Dimon’s speech? Leave a comment and let us know!
“Do we have huge problems? Yes. Is this the first time we’ve had huge problems? Hell no. Is there the prospect that we can solve those problems? Yes!”
Larry Summers
That’s Larry Summers at the All-In Summit last week. The former Treasury secretary gave a sweeping overview of America’s current position on the world stage — and we’re looking good.
“I’d rather be playing the hand of the United States than the hand that Xi Jinping is playing, than the hand that India is playing, certainly than the hand that societies in Asia, where they’re only going to be half as may people a century from now, are playing, certainly than the societies of Western Europe.”
Larry Summers
I couldn’t agree more with Summers here.
Xi has crushed the entrepreneurial spirit in China. India has ethnic tensions far beyond anything we could imagine.
Japan and Korea’s populations are falling off a cliff. Europe is aging and sclerotic.
There’s no German ChatGPT. There’s no French SpaceX.
That tells you everything you need to know.
For all his optimism, Summers is clear-eyed about our problems. He thinks it will take a recession to beat inflation, noting that a soft landing would be unprecedented.
He blames the Fed’s slow reaction to escalating prices for today’s predicament.
“…they made bad decisions and they kept making them too long…”
Larry Summers
Nonetheless, America has one thing going for it: a dynamic system.
When we face problems, we don’t just sit on our butts. We find a way to fix them.
Our self-criticism makes us take action. We just have to be sure it doesn’t make us lose hope.
“Patrick Henry said in 1792…that the spirit of the revolution had already been lost.”
Larry Summers
Ever since I was a kid, I’ve heard the same refrain: “The country is going down the tubes.” Meanwhile, with a couple brief interruptions, all we’ve done is grow richer.
The little rust belt town where I grew up is now filled with high end condos. The field across from my grandma’s in Kentucky is now McMansions.
For all it’s problems, America keeps moving forward. There’s nowhere else I’d rather be.
“We are the place that people from every part of the world want to come to.”
Larry Summers
What do you think of Summers talk? Leave a comment and let us know!
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Sand Hill Road is packed with big name VC’s managing billions. But if you really want to make money, look elsewhere.
That’s the conclusion of a new report from Pitchbook. Pitchbook analyzed hundreds of firms’ performance. Smaller firms outside Silicon Valley dominated the list:
Here’s Pitchbook’s top 10:
1) Union Square Ventures Opportunity Fund – NYC 2) Emergence Capital Partners Fund – SF 3) Union Square Ventures – NYC 4) IA Venture Strategies Fund – NYC 5) Third Rock Ventures Fund – Boston 6) TLV Partners – Tel Aviv 7) Newion – Amsterdam 8) YLV – Tel Aviv 9) True Ventures Select – Palo Alto 10) Index Ventures – London and SF
Does Location Change the Way We Think?
When you imagine a venture firm, what do you picture?
Probably not yellow taxis and bagels. And definitely not Amsterdam.
But the data tells us that’s where the money is!
Another standout here is Tel Aviv. The city has fewer than half a million people, but grabs two spots on the global top 10.
You Can’t Do Average Things and Expect to be Above Average
These data are surprising. But on the other hand, what else should we expect?
If you want above-average returns, you can’t do what all the average investors do. And in venture capital, the average investor finds a big name in Menlo Park and hands them a bag of cash.
People outside the Silicon Valley bubble see things differently. Maybe we’re less likely to get swept up in the latest craze, whether it’s crypto or foundational AI models.
Those crazes cost investors a fortune. How many LP’s are looking at big, fat 0’s on those 2021 crypto funds?
Small Is Beautiful
The top firms are in weird places. But they’re also special in another way.
Almost all of them are small.
Some big VC’s have tens of billions under management. Most of the top performers, on the other hand, manage a couple billion at most. Some have far less.
It’s a lot easier to get a big return on a small pot of money.
If you want to 3x a $1 billion fund, that requires $2 billion in exits. If you own 10% of your winners at IPO, you need a $20 billion outcome — in every single fund.
Those companies are rare. But if you only need a $100 million outcome, the game gets a lot easier.
Lessons for Investors
Whether you’re a VC, LP, or an angel like me, this list can teach you a lot.
If you want above-average returns, you have to do things differently. You can’t invest in the hot Silicon Valley company with no revenue at a sky-high valuation.
That’s what the average Joe is doing. We need to play a different game.
Here’s my game: find great startups with strong revenue growth in big markets. I don’t care if they’re in San Francisco or Frisco, Texas.
What do you think leads to the best returns in venture? Leave a comment and let us know!
Have a great weekend, everyone!
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“This is war. In a war between missionaries and mercenaries, the missionaries always win.”
Brian Chesky
Today, Airbnb is one of the most successful tech companies in the world. Its listings span the globe. Its market cap is over $90 billion.
But back in 2011, Airbnb almost died. The assailant: two brothers from Germany with a history of copying the most successful startups.
Brian Chesky, co-founder and CEO of Airbnb, told the story of this near death experience on the excellent new Crucible Moments podcast by Sequoia.
A Perfect Clone
“One day, we like noticed that we’re getting all this scraping data and like a lot of weird messages are being sent to our hosts to list them on this site called Wimdu.”
Brian Chesky
Wimdu was a perfect clone of Airbnb. It was created by the Samwer brothers in Berlin.
The Samwer brothers were notorious among US founders and VC’s. They had copied Groupon, and Airbnb was next.
“All of a sudden, I felt like we had a gun to our head.”
Brian Chesky
The Samwer brothers threatened to take over Europe, locking out Airbnb. Since Europe is where Airbnb’s American user base wanted to go, this could’ve kill the company.
Do or Die
The brothers invited Brian to Germany for a meeting.
“…make no mistake — this was do or die.” – Brian Chesky
Brian and Sequoia Partner Greg McAdoo arrived at the converted factory in Berlin that was home to Wimdu. They were shocked at what they saw: hundreds of people, cloning Airbnb.
“On the left monitor is Airbnb’s website and the right monitor is Wimdu. And literally there are designers and engineers cloning the site, like an assembly line cloning the product, in front of us.”
Brian Chesky
The Samwer brothers offered Brian and Greg a choice — buy us, or else.
Brian’s Choice
It would’ve been easier for Brian to buy Wimdu. But it would’ve diluted the company and encouraged more copycats.
Brian decided to stand firm.
“You had the baby, you raise the baby, I’m not adopting your baby. You raise the baby. And I thought ‘there’s no way they’re going to raise this baby for 18 years.’”
Brian Chesky
Brian was right. The Samwer brothers didn’t give a damn about connecting hosts with travelers. They just wanted a quick payday.
And indeed, the Samwer brothers gave up seven years later, in 2018.
What I Learned from Brian as an Investor
No founder who doesn’t care about the business will last 18 years.
To probe a founder’s motivations, I like to ask, “What made you want to start this business?” I’m looking for a personal connection to the problem.
Brian had experienced the pain of being unable to make rent. Taking in boarders saved him.
Brians are rare. But when you find one, there’s no limit to what you can achieve.
If companies I invest in are successful enough, they too will face copycats one day. Brian’s experience tells me not to worry — if I’ve backed the right horse, I’ll succeed.
Wrap-Up
Every company faces a near death experience.
Brian’s story shows us that the way to get through it is perseverance. That perseverance comes from a deep desire to solve a problem.
Have you faced a copycat? What happened?
Leave a comment and let us know!
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It was the Dream Team of computing. Andy Hertzfeld, one of the original developers of the Macintosh. Bill Atkinson, inventor of the GUI. And CEO Marc Porat, creator of one of the world’s first satellite networks.
Their mission: make a computer you can hold in your hand.
The story of the company they built, General Magic, is the subject of a great documentary from 2018. When I sat down to watch it last week, I felt like I was there with them, building the future.
Build a New World
The team had incredible camaraderie.
Engineers sat on the floor for meetings. When you see the old footage of these confabs, you’ll notice that just about every person is smiling.
General Magic was the real, old Silicon Valley.
No catered lunches and massages here. Just nonstop coding and bunk beds for those few hours of sleep the team managed to get.
“It became my entire life. I shunned even my family to a certain extent. I just wanted to make this company General Magic happen.”
Just about the only companies doing this today are run by Elon Musk. No wonder they’re so successful.
Demo Day
After years of intense work, General Magic released the Magic Cap OS in 1994.
The device they created was incredible for its time. You could send e-mail, take notes, and make phone calls — all in a package that weighed just over a pound.
While Magic Cap was a breakthrough, the company struggled to find the right customer.
Who’s Gonna Buy This Thing?
Some employees at General Magic said the best customers would be businesspeople. Others insisted Joe Sixpack was the right market — the computer for everyone.
But can Joe Sixpack afford an $800 device? Does he even have e-mail?
I don’t think so.
The ideal market would have been people like themselves — early adopters who work in tech. But for some reason, they ignored the customer base that was right under their nose.
General Magic’s Blind Spot
Despite its cutting edge tech, Magic Cap had a strange limitation: it couldn’t access the World Wide Web.
The web came out during Magic Cap’s development. The team underestimated its importance and failed to integrate it into Magic Cap.
Customers were left with a device that was cutting edge in some ways, and woefully behind in others.
“No One Came”
The General Magic devices didn’t sell.
“My stomach turned sour and I thought ‘we’re doomed.’ No one came. No one bought it. Nothing.”
Bill Atkinson
As the product the team worked so hard on floundered, the team became demoralized.
Bleeding cash, General Magic went through layoffs. The company continued to flounder for several years, releasing a string of products including a voice-based assistant.
Although the company failed, every smartphone on the planet traces its lineage back to General Magic.
Tony Fadell, one of General Magic’s top engineers, went on to invent the iPod and iPhone. Another General Magic engineer, Andy Rubin, created Android.
The iPhone and Android interfaces are surprisingly similar to the old Magic Cap. Magic Cap’s touchscreen with little icons for phone and e-mail would be familiar to any current iPhone user.
“Fail early, fail often, but always fail forward.”
If anyone defined failing forward, it’s General Magic. The first experiment by these wild engineers may not have been successful, but their next ones were!
This is how technology progresses. Ambitious people try things, fail, and grope their way toward success.
General Magic teaches me a lot as an investor. If I find the best teams and back them repeatedly, I have a chance to be a part of something big.
What do you think of General Magic? Leave a comment and let us know!
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I’m headed to Porto in November! Where should I go? What should I eat?
This seaside town in northern Portugal has captivated me ever since I saw Anthony Bourdain walking down its narrow streets in Parts Unknown.
When you see Anthony digging into a cheesy pork sandwich called a francesinha in a little cafe, who doesn’t want to be there?
I’ll be staying for 11 days in the center of town. If you’re a dedicated reader of Tremendous, you know I love to eat!
Where should I go?
Where I’m planning to eat:
A Perola do Bolhao — a grocery store out of a time machine, known for fine olives and cheeses.
O Alfonso — where Bourdain had his mouthwatering francesinha.
Chocolateria Flores and Chocolateria Equador — known for Porto’s best sweets
Pingo Doce — charming grocery store found all over Portugal. I want their pasteis de nata!
The Dog — cachorros, the cheesy hotdogs Anthony is eating later in the episode. Sliced into small bites, they make the perfect snack.
Murca no Porto — very traditional Portuguese foods like tripe at an excellent price. Delightful, homey setting.
Combi Coffee — beautiful espresso, lattes and pastries.
And yes, I plan to do things other than eat!
Sights on my list:
Igrejo do Carmo — Perhaps Porto’s most spectacular church, replete with traditional blue and white paintings called azulejos. Azulejos are very typical of Porto.
Igreja de Sao Francisco — contains 100 kg of gold leaf!
Foz do Douro — lovely old fort along the sea.
Livraria Lello — bookshop known for ornate woodwork. May have been the inspiration for Harry Potter.
Jardim Botanico do Porto — free botanical garden! How often do you see that?
Parque da Cidade — the biggest park in town, with easy access to the ocean.
I’m excited to add a lot more to my list! This will be my first trip outside the US in two years, so I’m really looking forward to it.
Please leave a comment with your favorite spots — I might even write them up on the blog!
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P.S. I found another, very early Anthony Bourdain episode on Porto. It’s from A Cook’s Tour, his first TV series. Enjoy!
Demo Day came again last week at Y Combinator, and prices were predictably high. But consider the work that goes into Demo Day…
The Long Road to Demo Day
Over 20,000 companies applied for YC’s Winter 2023 batch. 282 were selected, a little over 1%.
That means that YC staff had to read and discard 19,700 applications. If each one takes even 10 minutes, that’s 3,283 hours of work — more than a year’s worth.
After finding the best of the best, YC intensively coached these startups for 3 months. The coaches are some of the best founders and investors on the planet.
And you expect to get this for $8 million pre-money? Get real.
YC Deals vs. The Rest
We can’t compare a YC deal to the average startup raising money.
YC has the best track record in the business. Airbnb, Stripe, and Coinbase all came from YC — not the random dealflow in your inbox.
What’s more, the average startup hasn’t been vetted and coached by the best people in tech. Nor does it have $500,000 of guaranteed YC cash behind it.
I’ve had the good fortune to back several awesome YC companies in recent years — Caribou, TANGObuilder, and Hellometer.
The founders are scrappy and astute. Clearly, they learned a lot at YC.
But These Companies Have Zero Traction!
It’s true that most startups at Demo Day have little to no traction.
I don’t invest without revenue. So, I’ve never invested in a YC company at Demo Day.
Instead, I like to meet them about 1-3 years later.
These are no longer fledgling companies. They have significant revenue and a growing list of customers.
Best of all, they’re usually raising at the same price as they were on Demo Day!
That’s the flip side of high Demo Day valuations: it’s hard to go higher any time soon. Investors like me can just wait for the startups to grow, investing later in a de-risked company at the same price.
Looking Beyond YC
YC isn’t the only source of pre-vetted, high quality deals.
The LAUNCH Accelerator cranks out awesome startups with real traction at reasonable prices. I’ve done more deals there than anywhere else.
I also like the Entrepreneur’s Roundtable Accelerator in NYC and Techstars.
Or — gasp! — you can do the work of finding companies yourself! You’ll probably pay less, but you know what they say — you get what you pay for.
Wrap-Up
All of us in startupland should be grateful to YC. No one else funds and coaches so many awesome entrepreneurs, every year.
Whether you invest at Demo Day, a year later, or not at all, we’re better off with YC than without.
Congrats to the Winter 2023 batch — see you next summer!
What do you think of YC valuations? Leave a comment and let us know!
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