Tremendous

An angel investor's take on life and business

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

    Today, I want to talk to you about a startup metric you don’t hear much about: the burn multiple. The burn multiple measures how efficiently you’re using your cash to drive growth.

    This number is more important now than it’s been in many years. We are in a more difficult fundraising environment and investors are heavily scrutinizing how companies use cash.

    In the boom times we’ve had for the last couple years, high growth startups could get funded no matter how inefficiently they spent. Shoot, even startups with no revenue or product often raised big rounds!

    Those days are over.

    The NASDAQ is in a bear market, late stage funding is down, and investors are asking themselves not just “Who will thrive?” but “Who will survive?”

    The startups that make it will be those who know how to use money to efficiently drive growth.

    So now that you know why the burn multiple matters, how do you actually calculate it?

    It’s pretty simple. For any period (usually a quarter or a year), divide burn (losses) by new revenue added in that period.

    Burn Multiple:

    Net Burn / Net New Annual Recurring Revenue (ARR)

    Your burn multiple calculation should account for the length of your sales cycle.

    If it takes you around 2-3 months to close a new customer, it’s appropriate to compare burn in Q4 2021 to new ARR in Q1 2022, for example. If your sales cycle is 6 months, compare Q3 2021 to Q1 2022.

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    Now you know what your burn multiple is. But how can you tell if it’s good or bad?

    Use these benchmarks from a superb post by David Sacks, one of the leading SaaS entrepreneurs and investors:

    Burn multiple is especially relevant for SaaS companies with their sticky revenue. Burning cash to get lots of revenue that sticks around makes sense.

    But the burn multiple is still quite relevant for all startups. It helps you understand if the cash you’re burning is actually building your business.

    I recently saw a deal memo for a company that had burned about $1.1 million in a quarter to add just $80,000 of new ARR. That’s a burn multiple of 14.

    A burn multiple like that is an emergency!

    So let’s say you’re that company. What should you do?

    Get that burn down right away! If you can’t show cash efficient growth, it’s going to be hard to raise money right now.

    You’ll want to extend your runway (time before you run out of money) as much as possible. This gives you time to figure out the issues in your business before the cash runs out.

    Another advantage of knowing your burn multiple is that you can share it proactively with prospective investors. Especially if you’re a seed stage company, your awareness of this important metric alone will impress investors.

    Of course, you’ll impress them even more if you can show a good burn multiple!

    I’m writing this because I want to see your company survive and even flourish! But we won’t get there with happy talk alone.

    Calculate your burn multiple regularly and act when it gets out of line.

    What issues are you seeing in today’s fundraising environment? Leave a comment at the bottom and let me know!

    More on tech:

    Inside Today’s Early Stage Venture Market

    What the Best Founders I Know Have in Common

    The Startup Pitch Checklist

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  • Citadel Adds Millions to AMC Options Bet

    Citadel LLC added tens of millions of dollars to its option bet on AMC Entertainment Holdings, Inc. in the most recent quarter.

    Its net bullish position increased from $90 million to $125 million, according to an SEC report released yesterday. It also built a bullish position in GameStop Corp. options during the period.

    The hedge fund giant held $245 million in call options and $120 million in puts, versus $191 million and $101 million respectively in February.

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    This bullish position is ironic given that Citadel was a major backer of Melvin Capital Management LP. Melvin lost billions shorting AMC, Gamestop Corp., and other meme stocks last year, and may have imploded had Citadel not rescued them.

    Perhaps Citadel’s patience with Melvin’s investing style has run out. Citadel has pulled out most of its $2 billion investment in the failing firm, and began adding to its AMC options position around the same time.

    The SEC report doesn’t specify the strike prices or duration of the options, so we don’t know exactly what Citadel’s strategy is. It could be expecting lower prices in the short term and higher ones in the long term, or vice versa.

    But I find it fascinating that this archvillain of the meme stock saga has capitulated and placed bullish bets on the same companies. It seems Citadel’s losses in Melvin’s hedge fund taught it a lesson.

    What do you think Citadel’s strategy is? Leave a comment at the bottom and let me know!

    More on markets:

    Hedge Fund Giant Tiger Global Losing $28 Million an Hour

    Melvin Capital Faces Investor Revolt

    Hedge Funds Could Lose Nearly Half of Assets Under Proposed SEC Rule

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    Photo: Citadel LLC CEO Kenneth Griffin

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    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.

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  • How Feed Supplements Could Solve Cow Farts and Fix the Planet

    It’s time we acknowledge an uncomfortable truth: everybody burps and farts.

    But amongst all animals, cows are the reigning champions. Those charming emissions contain methane, a potent greenhouse gas.

    Indeed, cows produce more greenhouse gases than Brazil or Germany. But an innovative startup may have found the solution.

    Mootral produces a garlic-based product that farmers can mix into cow feed. It cuts methane emissions by 20 to 38% and boosts milk production by as much as 5%.

    Best of all, it doesn’t hurt the cow or change the flavor of the milk or flesh. Think of it as Beano for cows.

    As far-fetched as it may sound, Mootral’s product is backed by numerous peer reviewed studies. UK farmers can even get the supplement for free if they share their methane data.

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    Mootral isn’t the only startup tackling this pungent problem.

    Blue Ocean Barns has created a seaweed-based supplement that may be even more potent than Mootral. Their product reduced methane emissions by 52% in a recent study.

    A young lady I spoke with recently told me that the world is doomed because of climate change. I couldn’t disagree more.

    Bit by bit, innovative scientists and companies are figuring out this problem. A feed supplement here, a wind turbine over there, and we may soon be amazed at the progress we’ve made.

    What do you think of Mootral and Blue Ocean Barns? And what are the most interesting environmental technologies you’ve seen recently?

    Leave a comment at the bottom and let me know.

    Have a fantastic week everyone!

    More on tech:

    Growing Veggies on Mars

    Coffeebots and the Search for the Perfect Cup

    Male Contraception With an Ultrasound Device?

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    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. 

  • Venture Capitalists Don’t Invest in Ideas

    A few months back, a very nice young lady contacted me. She had an idea for a software product and wanted me to hear it.

    I had to think of a very polite way of explaining that…

    Venture Capitalists Don’t Invest in Ideas.

    Many people think that angels and VC’s spend their days evaluating ideas. When they find an interesting and original concept, they shake hands and write a big check.

    This isn’t how it works.

    There are countless ideas, but only a skilled and determined founder can turn her concept into a real product. And then it takes even more perseverance to find customers who need the product and get their money.

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    Traction Over Everything

    So rather than attempting to read the tea leaves and find out which idea will work, most investors look for evidence that it’s already working. That evidence is called “traction.”

    If you have several thousand dollars a month in revenue coming in the door, growing 30% month over month, there is clearly a very strong demand for your product. You’ve proven its value in the market.

    If you can show an investor traction like that rather than just a deck or even an MVP, your odds of getting funded skyrocket.

    Why are investors so stingy? Because they know that most startups will never even get to dollar 1 of revenue.

    If investors dump cash on too many companies that don’t succeed in the market, they will soon have no more money left to invest. And then, even the best startups won’t be able to raise capital.

    Venture Capital Is to Help You Scale, Not to Help You Start

    Venture capital is really for scaling a business, not starting one. If you clearly have strong demand for your product in the market, we can help you staff up and meet that demand.

    But few investors, if any, want to give you money to build a product.

    What we’re trying to avoid is a team that raises money, works on the product, but misses their launch date. The date is postponed, and they miss it again.

    Soon, they’re back asking for more money with no real progress to show.

    But What About Pre-Seed?

    Even for pre-seed deals, most investors want to see a Minimum Viable Product (MVP) built. Without that, it’s difficult to tell what you’re even investing in.

    It’s also hard to say if the founders will ever be able to deliver on their plans.

    Even the Best Bring More Than an Idea

    Last year, I got a deal memo in my inbox for Callin, a social audio app co-founded by David Sacks.

    Sacks is part of the famed PayPal Mafia and served as the company’s COO. After that, he founded Yammer and sold it to Microsoft for $1.2 billion in 2012.

    He has a stronger track record than almost anyone. But even he didn’t show up with just an idea.

    Sacks and his team had a nicely functioning app in private beta available for iOS. Numerous users were already creating podcasts on the platform.

    Alas, the round was massively oversubscribed and I never got my allocation. But I did come away with an interesting lesson.

    Wrap-Up

    If you want to raise money, show up with more than an idea. Show up with an MVP you can show investors.

    Better yet, come with a couple of customers and a little money coming in the door. Nothing impresses investors like real customers and real revenue.

    Building an MVP with minimal resources and finding customers on your own is very hard. But so is contacting investor after investor with little chance of success.

    What misconceptions have you seen about fundraising? What still mystifies you about the process?

    Leave a comment at the bottom and let me know!

    Have a wonderful weekend everyone! 👋

    More on tech:

    Inside Today’s Early Stage Venture Market

    What the Best Founders I Know Have in Common

    Amp It Up

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    Photo: “Startup” by Skley is marked with CC BY-ND 2.0.

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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. 

  • Move to T+1 Trade Settlement Could Crush Short Sellers

    US markets will soon move to faster settlement of trades. This change could seriously damage some short selling hedge funds.

    From a new report in The Trade News:

    The Securities Industry and Financial Markets Association (SIFMA), the Investment Company Institute (ICI), and The Depository Trust & Clearing Corporation (DTCC) are working together to reduce the T+2 settlement cycle in the United States to T+1 by the first half of 2024.

    This could quickly lead to regulators requiring that trades settle same day, or T+0, according to a Deutsche Bank report. Faster settlement could have two disastrous effects on short sellers:

    Naked Short Selling Gets Harder

    Some hedge funds sell short shares without ever borrowing them first. This mostly illegal practice shows up in huge, persistent fails to deliver in volatile meme stocks like GameStop Corp. and AMC Entertainment Holdings Inc.

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    If trades have to settle faster, it will be harder to sell short shares you don’t own while possibly locating some shares later. You have less time for your incomplete trade to sit in limbo.

    Without this powerful tool to push down stock prices, it will be more difficult for short sellers to tank a stock.

    Brokers Are Less Likely to Suspend Trades in Volatile Stocks

    Last January, Robinhood Markets Inc. and other brokers stopped users from buying shares of volatile meme stocks like GameStop and AMC. Their rationale was that given how much the stocks’ prices were moving, they couldn’t afford to put up the necessary margin to process the trades.

    After buy orders were stopped, GameStop stock plummeted:

    Brokers like Robinhood have to post money with clearinghouses such as the National Securities Clearing Corporation (NSCC). The more volatile a stock and the longer it takes to settle the trade, the more money they have to cough up.

    If the time it takes for a trade to settle is cut in half, the amount of margin brokers would have to post would likely be cut in half as well. Indeed, reducing margin requirements is one of the main reasons why regulators want to move to T+1 settlement.

    Where This Leaves Short Sellers

    Short sellers in recent years have had a lot of advantages.

    Loose trade settlement rules made naked shorting easier. And if that failed, brokerages might bail you out by stopping retail traders from buying the stock to squeeze you!

    And even with these advantages, hedge funds like Melvin Capital lost billions on their short positions. How big would the hole have been without these tailwinds?

    The Loophole

    There is one good piece of news for shorts: there may be a loophole. SIFMA, a Wall Street Lobby, is seeing to that:

    …SIFMA requests an exemption from SEC Rule 15c6-1 for security-based swaps, which are generally bilateral and executory in nature.

    This would make swaps exempt from the faster settlement rules. Hedge funds like Archegos have already used these derivative contracts to make massive bets out of the public eye.

    If the move to T+1 settlement makes short selling harder, I expect more funds to move into swaps to avoid the rules. I encourage the SEC to find a way to make T+1 apply to swaps transactions as well.

    The future is looking darker for short selling hedge funds. The question is, will regulators create a more efficient market for everyone, or let lobbyists pick apart their work piece by piece?

    What do you think new settlement rules will mean for short sellers? Leave a comment at the bottom and let me know!

    More on markets:

    Hedge Fund Giant Tiger Global Losing $28 Million an Hour

    Hedge Funds Could Lose Nearly Half of Assets Under Proposed SEC Rule

    Archegos Used Swaps to Hide Positions; Other Funds Are Too

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    Photo: Prominent short seller Gabriel Plotkin, founder of Melvin Capital

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    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. 

  • Inside Today’s Early Stage Venture Market

    The good times are over. And they didn’t even last that long.

    The NASDAQ quickly bounced back from an over 30% fall in early 2020 as COVID raged. The tech stock index reached all-time highs last November, only to plummet a further 29% since.

    Now, the tech stock rout is making its way into private markets. So what does this mean for early stage startups and angel investors like me who fund them?

    Here’s what I see going on inside today’s market:

    1) Deals are taking longer to close. A deal that might have closed in 1-2 months last year is taking 3-4 months now.

    2) Valuations are down moderately. I am seeing declines of around 10-20% from the 2021 peak.

    Publicly released numbers show less of a correction, but remember that there is often a several month lag between when a deal is priced and when it’s publicly announced. If valuations drop, it won’t be apparent to the general public until months after it happened.

    3) High growth companies are still getting plenty of funding.

    Seed stage and Series A startups that are growing revenue rapidly, in the range of 10-20% month over month or more, are raising almost as before. These are the strongest startups, and in a tougher market, investors will gravitate toward them.

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    4) Some investors are increasing their pace of capital deployment.

    I’ve actually invested a bit more than usual in the last two months as valuations have retreated. If you can invest in great companies for less than you could 6 months ago, you may want to deploy more cash than usual.

    5) Crypto/NFT projects continue to command crazy valuations.

    Bitcoin has fallen by more than half since November. NFT trading volumes on major exchange OpenSea are also down more than 50% since the beginning of this year.

    Yet this, the most rah-rah of all venture sectors, seems to be going full speed ahead. I still see extremely expensive rounds in blockchain companies that have few if any customers and often not even a launched product.

    The NFT area seems the most overheated of all. I recently saw a $1 billion valuation for an early stage NFT company.

    It not only didn’t have a product yet, it didn’t even have a deck.

    I expect a brutal correction in these markets in the coming months, leaving behind only the most useful and widely adopted projects.

    In all, if startups focus on good, cash-efficient growth, I’m confident they’ll still find the funding they need in today’s market. But companies with no revenue, no product in market, heavy burn, and/or anemic growth are in trouble.

    What are you guys seeing in early stage venture markets? And what do you think the future holds?

    Leave a comment at the bottom and let me know!

    More on tech:

    What the Best Founders I Know Have in Common

    Amp It Up

    The Startup Pitch Checklist

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    Photo: “2016/366/238 Proceed with Caution” by Edna Winti is marked with CC BY 2.0.

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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. 

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

    Save Money on Stuff I Use:

    Fundrise

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

    More on Fundrise in this post.

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

    Misfits Market

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

    I wrote a detailed review of Misfits here.

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

  • Hedge Fund Tiger Global’s $17 Billion Loss May Be Biggest Ever

    Things seem to be going from bad to worse at hedge fund giant Tiger Global. Its losses for 2022 are up to $17 billion, according to a new Financial Times report:

    Tiger Global has been hit by losses of about $17bn during this year’s technology stock sell-off, marking one of the biggest dollar declines for a hedge fund in history.

    The run of poor performance means the firm — one of the world’s biggest hedge funds and a big investor in high-growth, speculative companies whose shares have tumbled since their pandemic peaks — has in four months erased about two-thirds of its gains since its launch in 2001, according to calculations by LCH Investments.

    Less than a week ago, the Financial Times estimated the losses at closer to $15 billion. But the NASDAQ Composite index of tech stocks has fallen another 9.5% since then.

    Tiger’s losses may be the largest in the history of hedge funds. Bridgewater Associates lost $12 billion in 2020, and Melvin Capital took a $7 billion hit last year as meme stocks soared.

    But Tiger’s losses dwarf those, and also far surpass some of the most famous hedge fund flameouts ever.

    Long Term Capital Management made international headlines and required a bailout when its Nobel Laureate traders lost just $4 billion.

    I suspect Tiger’s losses may be even worse than they look. As the Financial Times notes, the $17 billion figure doesn’t include Tiger’s investments in private tech startups.

    Tiger was one of the biggest investors in large, late-stage private tech companies. It helped to drive those valuations up 653% since 2018.

    Now, the problems in the public markets are beginning to affect private markets as well. Late stage valuations have begun to drop.

    Given that the Nasdaq is down over 25% since November, they may have a very long way to fall.

    During the bull market, Tiger was well known for doing little or no due diligence and paying extremely high prices. Indeed, its tactics forced other venture firms to shorten their diligence process and pay more.

    Now, markets are sinking and easy funding is drying up. Tiger may be stung by its lack of diligence and willingness to bid aggressively as some major startups fail.

    Where do the difficult market conditions leave Tiger Global?

    So far, there have been no reports of massive margin calls or investor redemptions. But I expect to see a run on the fund’s remaining capital at any moment.

    What do you think will happen to Tiger Global and other major hedge funds? Leave a comment at the bottom and let me know.

    More on markets:

    Hedge Fund Giant Tiger Global Losing $28 Million an Hour

    Hedge Fund Tiger Global’s Coming Liquidity Crisis

    Melvin Capital Faces Investor Revolt

    Photo: Tiger Global CEO Chase Coleman

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

    Save Money on Stuff I Use:

    Fundrise

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

    More on Fundrise in this post.

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

    Misfits Market

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

    I wrote a detailed review of Misfits here.

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

  • What the Best Founders I Know Have in Common

    Hi everyone, hope you had an awesome weekend! Today, I want to talk to you about some of the smartest people I know.

    As an angel investor, I meet with a lot of startup founders. As I took a walk on the Hudson today, it occurred to me that the most successful ones all remind me of each other.

    So what distinguishes the best founders from the rest? Here are a few thoughts:

    1) They have all the facts at their fingertips. Whenever I ask them a question, they tend to know the answer cold.

    I could be asking about a product feature, customer acquisition strategy, or a metric like gross margin. Whatever it is, they’ve thought about it already and know all the relevant facts.

    2) Strong customer focus. The most successful founders I’ve seen are obsessed with their customers.

    They know everything about them and what they need. And they tailor their product ever more carefully to those needs as time goes on.

    What are the less successful founders focused on? Often their competitors, someone “stealing their idea,” or endless fundraising.

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    We should always remember that the business’s goal is to serve the customer. Don’t let distractions take you away from that.

    3) Openness to questions and criticism.

    The best founders I’ve seen gladly answer any question an investor asks. They’re eager to show off their awesome product and happy customers!

    The less successful ones evade questions and try to convince investors the business is going better than it really is. I sometimes suspect they’ve convinced themselves too, at their peril.

    If we’re forthcoming with information and open to constructive criticism, we can learn from others and improve!

    One of the most exciting moments for me as an investor is when a new founder reminds me of one of the best I’ve met. That’s when I start to salivate and reach for my checkbook. 🙂

    The good news is that the best founders have a lot to teach all of us about how to up our game, if only we’re willing to listen!

    What do you think makes a great founder? What did I miss?

    Leave a comment at the bottom and let me know!

    More on tech:

    The Startup Pitch Checklist

    Amp It Up

    How to Write a Deal Memo

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    Photo: “A Street Called Awesome” by moonlightbulb is marked with CC BY 2.0.

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

    Save Money on Stuff I Use:

    Fundrise

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

    More on Fundrise in this post.

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

    Misfits Market

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

    I wrote a detailed review of Misfits here.

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

  • Hedge Fund Tiger Global’s Coming Liquidity Crisis

    Hedge fund giant Tiger Global Management has lost nearly half its assets in 2022. But it’s not pulling back.

    On the contrary, it made 16 investments in private tech startups in April, per Crunchbase. That was enough to tie for #1 most active investor in the United States.

    This could be a huge mistake.

    Many investors will probably try to pull their money from Tiger after the huge losses. What’s more, brokers could issue margin calls due to the massive losses.

    The investments in private companies that Tiger is making are illiquid. It cannot get that money back to meet redemption requests and margin calls.

    These investments are huge. Last year, Tiger’s median investment size in a startup was $114 million.

    So Tiger may have plowed as much as $2 billion into opaque, illiquid company shares. In a month.

    That is a very significant sum for a fund that, after its massive losses this year, is down to about $20 billion in assets under management. Tiger started 2022 with about $35 billion in assets.

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    If Tiger finds itself unprepared for redemption requests from investors, expect them to gate their fund. This common hedge fund tactic limits withdrawals or prohibits them altogether until markets stabilize.

    And that could be a very long time. Any investors who wish to redeem their Tiger investment should consider doing it sooner rather than later, before a gate provision is triggered.

    The more dangerous scenario for Tiger is large margin calls from brokers. If Tiger is faced with dwindling liquid assets (its publicly traded stocks) and lots of illiquid assets (its private tech startup shares), Tiger could be forced into a fire sale.

    In that scenario, Tiger would have to sell desperately to meet margin calls, taking whatever price is available. The whole market knows Tiger is long growth tech stocks, so it will short those stocks.

    This could force Tiger into even more desperate selling until it goes bankrupt.

    There’s no telling if Tiger will implode or manage to right itself. But I strongly urge the fund’s managers to avoid illiquid investments at this time.

    What do you think will happen to Tiger? And which hedge funds do you think are next for big losses in this tough market?

    Leave a comment at the bottom and let me know.

    Have a wonderful weekend everyone! 👋

    More on markets:

    Hedge Fund Giant Tiger Global Losing $28 Million an Hour

    How Giant Hedge Fund Tiger Global Blows Up

    Melvin Capital Faces Investor Revolt

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    Photo: Tiger Global CEO Chase Coleman

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

    Save Money on Stuff I Use:

    Fundrise

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

    More on Fundrise in this post.

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  • Amp It Up

    “Only the government can print money; the rest of us have to take it from somebody else.”

    Frank Slootman

    Frank Slootman has been the CEO of three companies: Data Domain, acquired for $2.4 billion, ServiceNow, market cap $94 billion, and now Snowflake, market cap $52 billion. His track record has few parallels.

    But Slootman wasn’t always a big success. As a teenager in the Netherlands, he cleaned toilets for a living. When he moved to the United States, he had his heart set on joining IBM.

    They rejected him. 12 times.

    So how did Slootman go from obscure Dutchman to one of the biggest names in tech? By bringing a warrior’s mentality to business.

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    Slootman focuses like a laser on destroying the competition, on breaking their will to fight. And the most powerful weapon in his arsenal is growth.

    When you grow much faster than your competitors, it demoralizes them. And as you become the winner, you can begin poaching their best people, causing the rest to lose all confidence.

    The importance of growth to Slootman’s approach is impossible to overstate. It’s also born out by data:

    “‘Grow Fast or Die Slow’ is the title of a 2014 McKinsey & Co study that examined thousands of software and services companies between 1980 and 2012. It concluded that growth trumps everything else as a driver and predictor of long-term success. ‘Super grower’ companies, which McKinsey defined as 60% or more annual growth, had five times higher returns than medium growth companies (which had less than 20% annual growth). Super growers also had an eight times greater likelihood of reaching $1 billion in annual revenue. “

    So how do you grow fast? Slootman recommends focusing on one key thing.

    Many priorities means no priority.

    You should also push everyone to move faster at all times:

    “Leaders set the pace. People sometimes ask to get back to me in a week, and I ask, why not tomorrow or the next day? Start compressing cycle times.”

    Frank Slootman

    But not just any team can achieve this. Finding the very best talent will make or break your business:

    “Hire more for aptitude than experience and give people the career opportunity of a lifetime.”

    Frank Slootman

    This talented group of people also must be motivated by an important mission. Snowflake is making data queries 10-100x faster, leading to a total revolution in how humans use data to make decisions.

    That’s the kind of mission that will put pep in your step!

    Slootman also has some interesting info for investors in startups, such as myself. The way he spotted “super grower” companies to take the helm of was by looking for a fast growth track record, a huge market, and extremely happy early customers.

    We can use the same criteria to find great investments.

    Slootman’s book is energizing, exciting, and a true page turner. That’s rare in the world of business books.

    I strongly recommend getting this slim volume for yourself! After reading Slootman’s words, I felt ready to run through a wall.

    You will too!

    Let’s close with a great quote from Frank:

    “Only in hindsight will you truly realize what your experiences have meant. That is why it’s okay to embrace your inevitable challenges and setbacks as part of your journey. They are there for a reason.”

    Frank Slootman

    What do you think Slootman got right, and did he leave out?

    Leave a comment at the bottom and let me know what you think.

    Have a great day everyone!

    More on tech:

    Hedge Fund Giant Tiger Global Losing $28 Million an Hour

    The Startup Pitch Checklist

    The Lean Startup

    Photo: “Frank Slootman” by Thomas Hawk is marked with CC BY-NC 2.0.

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

    Save Money on Stuff I Use:

    Fundrise

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

    More on Fundrise in this post.

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

    Misfits Market

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

    I wrote a detailed review of Misfits here.

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