I’ve co-founded or been an early investor in many things. One of my favorites is the MIT Banana Lounge. I will be hanging out there Tuesday afternoon and doing an AMA from 2pm to 4pm.

It began with an email from Zoe Sheill. I met Zoe at PSL when she was an intern the summer before her freshman year at MIT. We stayed in touch, and I went bananas when I got the following email from her on May 3rd, 2021.

… Right now, though, we’re running into a bit of trouble raising the money for starting the banana lounge again in the fall. In the past, we’ve given out about a quarter of a million bananas per semester, and about 76% of our budget is just bananas. The Undergraduate Association funded us in previous years – they are now using their limited money for newer projects now that the banana lounge has gotten a lot bigger (over 15k students would visit the lounge per week). Malte (the student that started the banana lounge 3 years ago), me, and Greg had a meeting a while ago and Greg recommended talking to you as a successful MIT alum and someone also excited about the possibilities with bananas.

After some back and forth, I agreed to provide the needed funding. Zoe responded with:

Our banana guy for 2021-22, I’m so excited! You are saving Banana Lounge. So many students will benefit from this and we are very much looking forward to sharing your story with them. I’m humbled by your generosity and the team is grateful and excited, thank you.

The MIT Banana Lounge has become a core part of the institution. Its fame began with a tweetstorm by Iain Cheeseman, a professor at the Whitehead Institute and the MIT Department of Biology.

More fame followed with articles in Boston Magazine (The World Needs More Ideas Like the MIT Banana Lounge) and the Boston Globe (At MIT’s ‘Banana Lounge,’ it’s not just the free food that’s a-peeling.) It appeared in Psychology Today (The Psychology of MIT’s Banana Lounge). The MIT Class of ’62 hunted it down, and MIT President L. Rafael Reif spent about five minutes on it in his Charge to the Class of 2022.

I get an update from the team every few months. The stats so far for the 22-23 academic year (through January) follow:

Bananas: 299,460 at 97.8% reliability and 0.53% wasteDrinks: 36,240 cupsDeliveries: 50

The complete 22-23 academic year plans include 600,000 bananas and 500,000 student visits.

After I provided the funding in 21-22, I was joined by Alex Rigopulos and Eran Egozy (co-founders of Harmonix) along with MIT Undergraduate Asociation and some students and recent alumni.

Because it’s MIT, I get graphs in my periodic updates.

I’ve moved on from sponsoring bathrooms, although I finally did get a bathroom sponsored at MIT. It’s top secret where it is, so don’t tell the MIT administration if you happen to find it.

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Dave Jilk and I had a long discussion last night, which included some rambling about AI. If you have been following me for a while, you know that in 2010 I stated that the machines have already taken over for us and are patiently waiting for us to feed all human knowledge into them.

This morning, Dave told me about the new HyperEncabulator project by SANS ICS as part of their ICS initiative. If you aren’t aware of the ICS initiative, it’s essential for industrial applications, especially IoT and security.

But first, some history, since it’s an evolution of, and inspired by, the Retro Encabulator initiative, which was foundational but little known in the arc of encabultors.

The HyperEncabulator came out in the middle of 2022. Notably, side fumbling is still effectively prevented.

When I asked ChatGPT, “How does a Retro Encabulator work?” they had an accurate but humorless response.

The Retro Encabulator is a fictional machine invented for an engineering-themed comedy sketch in the 1970s. It is described as “an intricate and implausible device for the purpose of regaining lost energy.” The Retro Encabulator is a humorous parody of an electromechanical machine and its purpose is to perform useless tasks. The machine consists of numerous components, such as pistons, flywheels, and other components, that serve no real purpose. The device usually ends up producing more energy than it consumes, although this is never explained.

Grammarly had a few suggestions to improve ChatGPT’s writing.

The Retro Encabulator is the fictional machine invented for an engineering-themed comedy sketch in the 1970s. It is described as “an intricate and implausible device to regain lost energy.” The Retro Encabulator is a humorous parody of an electromechanical machine whose purpose is to perform useless tasks. The machine consists of numerous components, such as pistons, flywheels, and other components, that serve no real purpose. The device usually produces more energy than it consumes, although this is never explained.

When I asked ChatGPT, “Are you aware how little a sense of humor you have?” they said, “No, I do not have self-awareness.” So I hope they figure out how to connect to the HyperEncabulator.

FYI – when I asked ChatGPT, “What are your pronouns” so I could write the previous paragraph correctly, they said, “My pronouns are they/them.”

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Some day there will be a genre called “startup fiction.” I mean, if science fiction, which is a sub-genre of fiction, can have libertarian science fiction and recursive science fiction, surely startup fiction belongs in a sub-genre of a sub-genre of a sub-genre.

Please Report Your Bug Here by Josh Reidel is an excellent example of startup fiction. I began reading it at the end of the day Saturday after finishing The Age of A.I. and Our Human Future. I enjoyed Reidel much more than Kissinger, Schmidt, and Huttenlocher (even though I greatly respect them.)

Reidel was the first employee at Instagram. While the first thirty pages started like yet another explore the bay area startup thing book, it quickly twisted into something more enjoyable. When I picked it up yesterday afternoon after a long run and a nap, I didn’t put it down until it was time to go to sleep, which meant I was finished with the book.

I hope there are a lot more books like this. It balances startup stuff with the cynicism of the experience while placing it in a fictional world. It unexpectedly merges with believable near-term science fiction, which has a delicious parallel universe theme. And, if you believe in the infinite parallel universe theory (or just the multiverse) and haven’t yet renamed your company multiverse (yes, there is one), you can quickly get lost in a sequoia tree. In Oakland.

I assume that Reidel meant to riddle the book with tech industry easter eggs. If this was unintentional, it’s even more fun since that would be my brain doing its thing on Planet Brad.

I hope there are a lot more books like this. I’ve been thinking about writing a fictionalized version of my SPAC experience, and Please Report Your Bug Here inspired me to take that idea more seriously.

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I usually do a few interviews (podcasts?) at the beginning of the year. I avoid all of the end of the prior year “what do you predict for next year” stuff and find that several long-form interviews at the beginning of the year allow me to get out of my head what’s going on from my frame of reference.

If you know me, you know that I learn by doing, writing, reading, and thinking out loud. I find these interviews to be a good way for me to think out loud to solidify my transition into the new year.

I did two interviews right after the new year. One with Andrew Keen …

… and one with Jason Calacanis.

(0:00) Jason Kicks off the show
(2:49) Brad Feld, Co-founder of Foundry, talks about starting out in investing
(13:30) LinkedIn Jobs – Post your first job for free at https://linkedin.com/twist 
(14:56) Brad’s thesis for whom he’ll get in the “trenches” with  
(20:48) MasterClass – Get 15% off an annual membership at https://masterclass.com/startups
(22:22) Fighting to the end + Investing through the dot-com bubble
(38:13) Microsoft for Startups Founders Hub – Apply in 5 minutes, no funding required, sign up at http://aka.ms/thisweekinstartups
(39:43) Surviving the GFC
(44:23) Brad’s perspective on the investor/CEO dynamic + being a leader in a down market
(1:00:02) Reflecting on the speculative asset bubble
(1:16:44) Looking forward into 2023

They are both great interviewers willing to let me ramble when prompted vs. tie me into a structured interview.

So, if you like hearing me think out loud, I encourage both of them. Jason’s show notes include links to specific segments (listed above) if something specific catches your attention.

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I read two books by Ted Conover over the weekend.

Cheap Land Colorado: Off-Gridders at America’s Edge (2022)Whiteout: Lost In Aspen (1991)

Amy gave me the first one as a present. A few years ago, we bought a bunch of land about an hour’s drive away from Aspen. I’ve been spending a lot more time in the middle of nowhere Colorado, especially now that I have a trailer on the land and Starlink. My hikes and trail runs (without Starlink, but with a Garmin inReach for safety), which are still in the day hike category, take me deeper into the middle of nowhere.

Amy’s been highly supportive of this new hobby of mine. She’s not interested in the hiking or trailer, but she likes to visit the middle of nowhere for limited periods, as long as she gets to drive back to Aspen.

Conover’s Cheap Land Colorado was outstanding. He writes about his experience in the San Luis Valley, where he lived part-time for extended periods (commuting back to New York to see his wife and teach at NYU.) Conover didn’t just observe – he became part of the community. He eventually bought some land and made it habitable for him. The texture of his writing is beautiful. The characters are fascinating. The history was all new to me about a part of Colorado I know little about and have only been to once when I visited the Great Sand Dunes.

Looking through his biography, I noticed another book by him titled Whiteout: Lost In Aspen. He’d written it 30 years earlier. After Amy and I bought a place there in 2017 and started living there part-time, I read a few books about the history of Aspen. But I hadn’t read much recently other than The Slums of Aspen: Immigrants vs. the Environment in America’s Eden, which I discovered when reading the extremely disheartening Billionaire Wilderness: The Ultra-Wealthy and the Remaking of the American West.

Even though it was written 30 years earlier, Conover’s style was similar. Whiteout: Lost In Aspen (as does Cheap Land Colorado) takes an ethnographic research approach, similar to what I learned from a graduate school class I took with John Van Maanen in 1988. In the parallel universe / path not taken life, I’d be an ethnographer. Maybe there is still time.

Aspen of 1991 has a lot of similarities, and issues, to Aspen of 2022. As I’ve gotten to know people who have lived there full-time for more than a decade, I hear many of the same complaints that appear in Whiteout. The names of the restaurants are different, but the feel of the town and surrounding area is the same. The notion that Aspen was about to lose all of its beauty and special magic was a big part of the narrative in 1991 and is still around today.

Amy and I have lived in Colorado for over 27 years. This is home now. Conover writes beautifully about it.

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Well, that was interesting.

I get many more private emails in response to blog posts than comments. Yesterday, in response to Reflecting on Ponzi Schemes, I got a few that said anyone under 35 needs a net native currency, and that’s crypto. A few others said some versions of all governments are Ponzi schemes. And I got a few that implied I hated crypto.

Earlier last year, one of my partners told me that I’d developed a reputation with other VCs (presumably our partner funds) that I hate crypto. At the time, I deflected and said that I didn’t hate crypto; I just thought there was considerable Ponzi-like behavior in crypto. I’m regularly cynical about things on our internal Slack channel and periodically post about big blowups, including in crypto.

I realize that I’m conflating speculation vs. investment. The part of crypto I don’t like is the rampant speculation. This morning, a friend of mine sent me an email about some money I owed him for a thing we are doing together. He said, “If you paypal me I’ll buy some bitcoin with it. Looks like it’s starting to firm up.”

Here were the bitcoin prices when he sent me the email and when I Paypalled him the money ($1,456.42).

1/15/23 9:51 PM MT: $21,158.55
1/16/23 7:28 PM MT: $20,879.14

That’s a 1.33% difference. It cost me nothing to Paypal him the money. It would have cost me $19.37 to pay him via Bitcoin just because of the timing difference. That has nothing to do with the transaction cost. It’s entirely a result of speculative activity.

I mean, c’mon. Yeah, I know credit cards have fees, and endless payment rails in the system extract money along the way. But there are also ACH and Debit Cards. And free checking accounts, although I guess it would cost me $0.60 for a stamp. Wait, $0.60 for a stamp? The last time I bought a stamp, they were $0.29. And yes, I know some of you out there have never bought a stamp.

It’s hard for me to hate crypto. It’s been economically very good to me. I accidentally bought twice as many bitcoins as I needed for an online programming course I took in 2013 for about $100 each. I sold the FIL I got from investing in their SAFT as it vested (daily) and was amazed at how much money resulted. The Helium that I earned, which seemed to have no functional utility whatsoever, generated a nice multiple on the cost of all the routers I bought, even though today I earn nothing because of whatever algorithm changes they’ve made, so the network is now functionally and economically worthless. And, the crypto funds we have invested in have done exceptionally well … mostly.

I regularly hear to be patient. It’s like the Internet was in 1999 – ahead of its time. The builders are building, and it’ll take over everything in the future.

Ok. That’s cool. Just beware of the Ponzi schemes.

The post I Don’t Hate Crypto appeared first on Brad Feld.

At the end of 2022, some people started shouting that Crypto was a Ponzi Scheme following earlier declarations by Bill Gates, Warren Buffett, and Charlie Munger.

Others, especially those in the crypto industry, were saying some version of “Well, FTX Might Looking Like a Ponzi Scheme, But Crypto is Legit and Isn’t a Ponzi Scheme.” But then someone else in the Crypto industry, on the same website, wrote Crypto Ponzi Schemes: How to Identify and Protect Yourself From These Scams. Ok. How confusing.

What should an investor believe? The SEC has an official publication, Ponzi schemes Using virtual Currencies. It’s … not helpful … and implies almost everything in crypto is a Ponzi scheme. At least it has some phone numbers you can call if you have questions. Yeah, still not helpful.

Yesterday, I binge-watched MADOFF: The Monster of Wall Street. I was tired, so I just sat around and absorbed four hours of a $65 billion, over 20-year Ponzi scheme. It’s worth watching for historical context.

While longer and less dramatic, it’s more informative than The Wizard of Lies, which stars Robert De Niro and Michelle Pfeiffer as Bernie and Ruth Madoff. However, De Niro completely nails the role of the monster of wall street.

As crypto continues to evolve, it’s worth remembering the part human nature and greed play in all of this. Whenever an economic bubble bursts, Ponzi’s and fraud are revealed. And there’s plenty of it, especially human nature and greed, all the time, everywhere, in finance.

Amy and I watch The Big Short every couple of years to stay grounded in reality.

Pro tip: whenever you see the phrase “guaranteed returns,” close your browser tab.

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When I was in college in the 1980s, David Byrne and the Talking Heads were in regular rotation in my room along with Pink Floyd, except for the one semester where the only thing I listed to was Dark Side of the Moon (ah – the joy of discovering repeat on an early CD player.)

Once in a Lifetime was one of my favorites. Looking back, it was a Gen X anthem.

Mark Goldstein sent me an email this morning titled your blog, an article i was in last week and yep in response to my post What Just Happened. It included the phrase “same as it ever was…same as it ever was.” and a link to The Internet Is Kmart Now from The Atlantic.

Amy had texted me the article mid-December when it came out. It starts strong.

The 1990s hadn’t gone as expected. A bad recession kicked off Gen X’s adulthood, along with a war in the Middle East and the fall of communism. Boomers came to power in earnest in America, and then the lead Boomer got impeached for lying about getting a blow job from an intern in the Oval Office. Grunge had come and gone, along with clove cigarettes and bangs. The taste of the ’90s still lingers, for those of us who lived it as young adults rather than as Kenny G listeners or Pokémon-card collectors, but the decade also ingrained a sense that expressing that taste would be banal, a fate that the writer David Foster Wallace had made worse than death (I swear he was cool once, along with U2).

yep. Thankfully SiriusXM has Channel 34: Lithium.

The article uses the Kmart / Bluelight.com / Spinway story to set up the conclusion. We were in the middle of it (Softbank Venture Capital/Mobius invested in Bluelight.com and Spinway.) Ian Bogost mostly gets the story right. And then, he ends the article as strongly as he started.

Today, the collapse of a big technology or retail company is almost unthinkable. Just look at the pearl-clutching over Twitter’s recent shambles: The public can’t fathom the idea that it might decline, let alone possibly die, for real. But the certainty of death, rather than the hubris of assumed eternity, was the salient cosmic feeling of the 1990s internet. Its creators had learned that sentiment from the Cold War, tapping out time on Atari games about the apocalypse while awaiting its real-world counterpart. Of course Kmart died, and Yahoo too. What else could have happened? “We’re all going to be absorbed; we’re all going to be consolidated,” Goldstein said. “At the end of the day, we just hope to end up as a button that survives.”

Yep. Same as it ever was.

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For those of you older than 40, it sort of felt like 2000.

If you are younger than 40, a massive tech bubble just burst. I expect you know that. For the past six months, many VCs have been podcasting, tweeting, publicly writing, … and generally prognosticating about what you should do and what’s going to happen next.

I think the best VCs didn’t prognosticate. They knew what was going to happen next. Instead, they worked with each company to help them deal with reality as it unfolded. Each company is different, and the dynamics of the bubble bursting were not generic.

For example, one of the companies I’m on the board of grew by over 30% last year. Its revenue grew by 30%+. Its gross margin grew by 30%+. Its EBITDA grew by 30%+. Its FCF, before debt service, grew by 30%+.

Another company had a revenue decline of 25%. However, their GM% increased, and their GM$ stayed roughly the same as the prior year. Their EBITDA loss decreased by 50%, and FCF was close to $0 in Q422.

I have 14 other stories from the companies in our portfolio that I’m responsible for. My partners have another 50+. Each one is different. Each one took a ton of work from the leadership team. Many of these teams took on a set of intense challenges as early as Q122 when it was clear that whatever was unfolding was not what they had just finished planning at the end of 2021 when they came up with their 2022 plans.

Almost all of the prognosticating I heard in 2022 was similar to what I heard and often said in 2000. I was 35 at the time and rationalized continually that things would magically and suddenly change for the better. I was wrong, and then 9/11 happened, and then Enron and Worldcom happened, and business kept getting worse. 2001 was a dreadful year for me. 2002 sucked, but it wasn’t as dreadful. But it still sucked. 2003 was hard. 2004 was the beginning of what I now refer to as “the grind,” which ended for me around 2007.

Nothing is going to magically and suddenly change for the better. No one is going to raise a $100 billion VC fund and start spraying money around at fantastical valuations, followed by everyone else suspending disbelief and believing companies, regardless of their businesses, are worth 50x next year’s revenue. No one will value a company with a GM% of 10% at the same as a company with a GM% of 80% just because they are growing revenue at the same rate. Boxes full of magic beans are going to result in jail time. Interest rates aren’t suddenly going back to 0%.

If you are a fan of Harry Potter, think of 2022 as the sorting ceremony. When you put the 2022 hat on your head, did you end up in Gryffindor, Hufflepuff, Ravenclaw, or Slytherin? Did you address reality early in 2022? Are you just now addressing reality? Are you considering what reality might be and hoping it doesn’t happen? Or are you looking around saying, “Huh, what?”

Whatever it is, there’s no looking back and hoping something different happens.

The post What Just Happened appeared first on Brad Feld.

I’m a fan of David Walton and his near-term sci-fi books. In 2015, I read a few of his books, wrote a post titled Awesome Near Term Sci-Fi – David Walton, and promptly forgot about him.

Eleven days ago, I got the following email from David.

Mr. Feld:

Since you’ve enjoyed my books in the past (e.g. Superposition), I’m letting you know I have a new one out. No worries if you’re not interested; just letting you know. Hope all is well with you and yours.

When paleontologists Samira and Kit uncover dinosaur skeletons in northern Thailand, they find the remains of an ancient genetic technology that nations will kill to control. Catapulted into a web of murder and intrigue involving the Chinese Ministry of State Security, a powerful Asian crime syndicate, the CIA, and a beautiful Thai princess, Samira and Kit don’t know who they can trust. Torn apart by competing factions and stranded on opposite sides of the world, they race to discover the truth before the world goes to war. Can they bring the past to life before it kills them all?

“Walton has brought hard sci-fi roaring back to life.” –Wall Street Journal

I went and looked up the books he’d written and realized I’d missed the last two: The Genius Plague and Three Laws Lethal.

I started the The Genius Plague on Saturday morning and finished Three Laws Lethal last night. They were both spectacular.

It’s easy to relate to The Genius Plague since we just experienced a pandemic that is trying to shift from epidemic to endemic and failing (according to some) while being a non-issue (according to others). But what if the first order impact of the disease was something other than death and the second order impact could go in multiple directions, depending on … Ok, I won’t spoil it for you.

Three Laws Lethal was even more delicious. I expect many readers of this blog know Asimov’s Three Laws of Robotics. But do you know the Three Laws of Warfighting AIs? Mikes played a central role and I kept waiting for a Mike and Ike reference, but it never appeared. Maybe there will be a sequel.

David – well done. Your newest book Living Memory is on my Kindle and I’m starting it tonight after Life Dinner with Amy.

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I made my move at mile 22.

I’d been trailing my nemesis for a dozen miles. The half-mile cutoff was 2:50, and I rolled through at 2:43, so I had plenty of room to spare, although, by this point, I’d given up on my goal of 5:30.

My nemesis was wearing a red shirt. I could see them a quarter to a half-mile ahead of me for several hours. I’d get a little closer, and then they’d pull away.

At mile 14.5, a timing device was set up, presumably to ensure the marathoners were on the second loop. I noticed the guy monitoring it (who later I learned was named Nate) picking up the cones after I went through.

I asked, “Am I in last place?”

“Yes”

“That’s a new experience for me. I guess I have a goal besides finishing.”

“What’s that?”

“Not coming in last.”

I knew I had several hours to catch the person in the red shirt. There was no rush. I took it easy and just cruised through miles 14 to 22. My new friend Nate the Great was at each water stop, packing things into his U-Haul after I passed. Since Red Shirt wasn’t really pulling away much, I’d stop, fill up my water bottle, and chat with Nate.

At mile 22, I picked up the pace. The last three miles of the course were on the Rail Trail. The nice people in New Hampshire considerately paint all the rocks and tree roots on the trail white, so it was a particularly delightful place to pass Red Shirt. As I went by, Red Shirt kind of groaned, and I said, “You got this,” which seemed to be the mantra for this race.

Nate was waiting for me at mile 23, ensuring I was still on the trail.

He said, “Looks like you did it.”

“Yup. Second to last place is more fun than last, but I’ve still got a few miles to go.”

“You got this.”

Yup. I sure did. New Hampshire is State #26 on my quest to run a marathon in every state. I haven’t done many in the past few years, and I’m getting slower as I get older. But I know how to get 26.2 miles done, no matter what the pace (I haven’t had a single DNF in all my efforts.)

The small marathons are my favorites. Other than looking at Red Shirt’s back for a long time, I was alone for most of the marathon, which is one of my favorite ways to exist on your planet.

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Since Matt Levine is so effectively covering anything interesting in the world of the Twitter deal (and all kinds of bizarre, random, and complicated crypto, fraud, debt, and other financial stuff), I think I’ll stick with book reviews for the time being.

Andy Dunn, who I only know indirectly, wrote an important book titled Burn Rate: Launching a Startup and Losing My Mind. While it covers the story of Andy’s company, Bonobos, it’s really about mental health and entrepreneurship.

While there might be other entrepreneur autobiographies like Burn Rate, I can’t think of any. The closest is Tracy Kidder’s awesome book titled A Truck Full of Money about Paul English, an entrepreneur I do happen to know.

Tracy’s book is a mix of Paul’s entrepreneurial story combined with his experience being bipolar. Andy’s book is his entrepreneurial story combined with his experience of being bipolar. Both are remarkably brave books. Andy’s autobiography is particularly powerful since he is extremely detailed about several of the manic experiences that he had while running Bonobos.

While I don’t know Andy, I know several of his investors. His description of how they handled the situation of discovering Andy’s mental health diagnosis made me proud to know them. Andy decided to proactively hold a board meeting to describe what had happened that resulted in him ending up in the hospital and jail. One of his board members, Joel Peterson (who I don’t know), is remarkable.

“When I got out of the hospital, I walked straight into handcuffs. The City of New York charged me with misdemeanor assault and felony assault of a senior citizen.”

“Has there been a diagnosis?” Joel Peterson asked.

“The diagnosis is bipolar disorder type I. I was originally diagnosed when I was twenty, and I’ve been in denial about it for sixteen years.” A brief silence.

“I know a few folks who have dealt with what you’re dealing with, Andy,” Joel said calmly, holding true to his role as my professional father figure, “including more than a couple of entrepreneurs. It’s entirely manageable. I have full faith in you to take care of yourself, and I have full confidence in you as our CEO.”

Andy covers the rest of the board meeting discussion, including questions from board members about whether he was getting appropriate treatment, his legal situation, and the game plan for addressing any publicity around the situation.

A while ago, I was at a dinner with a bunch of VCs and entrepreneurs, including several very famous ones. One of the entrepreneurs stated clearly that if he ever talked openly about his struggle with depression, his board would immediately fire him. Fortunately, this was not the response of Andy’s board, as they took in the situation, asked questions about it, and made rational and deliberate decisions about what to do going forward. It’s worth noting that Andy was still the CEO of Bonobos when Walmart acquired it several years later.

I’m hopeful that Andy’s book will continue to help destigmatize mental health in entrepreneurship. Thanks, Andy, for being willing to write such an intimate story about your experience.

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Steve Case’s new book, The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream, is out. I read it on Sunday, and it is outstanding. If you are interested in understanding how high-tech entrepreneurship has evolved from a primarily coastal phenomenon to one that covers the entire US in the past decade, grab this book now.

Steve is a great storyteller. While he tells the entrepreneurs’ stories, he has been part of helping create them. He created Rise of Rest and did the first of many bus tours in 2014. I was part of the one in Denver, and my partner Chris Moody was part of the one in Birmingham. They were each awesome experiences.

This is the story of what happened on those bus tours, people who were connected, companies that were amplified, financings that happened, and cities that were energized around entrepreneurship.

For the past dozen years, I’ve spent plenty of energy on democratizing entrepreneurship. I’ve worked with Steve and his team on multiple initiatives, including Startup America and Up Global. Steve’s supported me on several things I’ve done, including writing the foreword to Startup Communities: Building an Entrepreneurial Ecosystem in Your City.

When I was a young entrepreneur in my 20s, Steve was a hero of mine. My AOL username was bfeld, which was where my Twitter handle (and everything else I signed up for on the web came from.) Now that I’m a middle-aged something or other at 56, Steve’s still a hero of mine. I expect this is true for many other entrepreneurs.

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The following is a guest post by Arjun Moorthy, founder of The Factual. Arjun and I have known each other for a long time, originally when he was a member of the HubSpot leadership team.  He's one of the smartest people that have come through the halls of HubSpot. -Dharmesh

Startups are hard. 90% fail, 10% within the first year itself. If you’re a startup founder you already know these statistics and yet you are irrationally proceeding forward. Bravo! I did the same thing six years ago and having just successfully sold my company I’ve learned a few hard lessons that I’ll share below in the hopes that you avoid them and improve your probability of success.

Hiring full-time employees before product-market-fit

As Marc Andressen said, getting to product-market-fit is the only thing that matters in the early years of your company. Simply put, do you have something that people really love. Until this point you will be frantically trying many ideas, sometimes weekly. During this time any one other than a co-founder will soon get frustrated by the changes of direction and eventually wonder if the compensation they are giving up on elsewhere is worth it.

I made this mistake three times before learning this lesson and more than the money lost I feel bad that I put those early employees through this very schizophrenic period.

Deprioritizing offshore talent

Saving money is crucial in the early days. No surprise that Google and many other great companies started out in garages. But the biggest expense is labor and given the quality of talent around the world, and tools to collaborate with them, hiring offshore is the best way to save money early on.

At The Factual we hired talented designers and engineers in Argentina for $35-50/hr where the timezone overlap was pretty good with the US west coast. CEOs I know found similar impressive talent in Portugal, Spain, Ukraine, and Vietnam for $20/hr or more. Occasionally, we hired US and Canadian talent in rural towns, or working from cheaper areas abroad. And with few exceptions we found offshore talent to be reliable and easy to work with.

I should mention that while offshore talent is impressive they will not solve problems for you. Like most other contractors, they will do as you ask them. So use them for precise efforts rather than vaguely defined tasks.

Holding on to first idea far too long

Your first idea is very likely going to fail. This may seem like a gross generalization, especially since you probably just quit a job to launch your startup based on an idea you think is very good. But success with startups, at least in consumer, usually comes from insights that no one else has. And such insights are seldom read or found in a survey but rather learned through failure. So the key to success is to iterate fast through ideas and get those insights quickly.

I built a complete product for my first idea before finding out people wouldn’t use it. A simpler landing page test might have told me the same for far less money and time. It’s easy to think a landing page can’t possibly capture the product’s promise but if you can’t write it out in text and get users to sign-up then you don’t know what problem you’re solving and who you’re solving it for.

Building a bigger MVP than necessary

Most founders have a grand vision for the solution to a thorny problem and set out to build an expansive product, albeit in stages. But product form factors like a mobile app or website are far larger undertakings than people realize, even if you really try to minimize the feature set. Just standing up a site or app, getting reliable login/authentication, having useful onboarding, ensuring responsive layout etc takes a ton of time and you haven’t even got a feature yet.

Instead, find the smallest product area you can test with. That may be a simple newsletter but this was our first hit product. And its built-in retention means you are building an audience first, which will be crucial when you do have a more robust product to test.

Not having a marketing co-founder

The number one thing investors look for in a startup is high growth, typically 10% month-over-month or more. That’s because it’s an easy signal for product-market-fit and a business that scales. But getting to high growth is very difficult and requires constant experimentation with new marketing channels and strategies.

A marketing co-founder is essential so that he/she focuses on growth every day and is not distracted by other things. In our startup we had a technical co-founder and a product co-founder/CEO. So neither of us focused on growth exclusively and we never hit the 10% m-o-m growth rate consistently. When we finally hired our marketing co-founder (5 yrs into the journey) it was late and had we done this earlier we would’ve likely have had more steady growth.

Bonus lesson:

Some of the best ideas above came from other startup co-founders. Talking with other founders was often the best source of advice and I had a regular group of four founders who met every quarter for dinner. Beyond the tips, it was great to commiserate with them and realize that my mistakes are not unique. Hope you find your tribe during this incredible journey and drop me a line if you have any questions: arjun dot moorthy at gmail dot com.

David Cohen and I have co-hosted the Give First podcast for 71 episodes. I think our host ratio is 80/20 David/Brad, and he’s covered everything in 2021 because I was burned out on all things public-facing and needed a break.

He figured a good way to get me back in the mix would be to interview me about entrepreneurship and mental health, so that’s what Episode 71 is about.

Listen & subscribe to the Give First podcast on Apple Podcasts, Spotify, and more.

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I got the following email from Barry Schuler this morning. We’ve known each other for many years, and he’s one of my favorite VCs to work with.

He described exactly how I feel this morning. The fall is my favorite season of the year. By labor day, I’m ready for summer to end. The stretch until Thanksgiving is my most productive time of year.

I finally feel like writing again after a summer off (most of my books come out in the late spring / early summer, so I’m fried and uninterested in writing during the summer.)

My running is almost always great in the fall. I end the summer in solid shape and usually ramp up a lot in the fall. I like shorter days, later sunrises, and early sunsets. I like the colors of the leaves. The cool, crisp Colorado mornings.

Amy and I had a good summer, but I’m ready for cooler weather and a different pace.

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There have been many different approaches to ranking VC Firms over the years I’ve been an entrepreneur and a VC. Each approach I’ve seen has issues. Most are easily gamed or have statistical bias issues.

I got the following note from Roy Bahat at Bloomberg Beta a while ago about a new approach called Founder’s Choice.

We and a few other firms sponsored a “founders choice” version of the Midas List, with a legit (IMHO) rating methodology, built by two Penn students. No vitriol possible (unlike The Funded, etc.). We’ve wanted this to exist for a long time — NPS of us as a firm is too forgiving a metric, everyone scores well.

My first question was:

How are they dealing with sampling bias on this one? For example, we send to all our founders and say “please fill this out and give us high scores.” Mostly just curious on methodology.

Roy had a thoughtful answer that made me a believer after a few more questions.

You are literally the only one (and I’m relieved someone did) to ask on sampling bias. For context, the general way it works is founders auth with LinkedIn and then the product tosses away their identity (or, more accurately, only keeps a hash and disconnects it from their ratings). Then the founders get asked for pairwise comparisons of only the VC firms who have backed them (so this is about who founders like as investors, not who has sour grapes from a pitch). How this addresses, to a degree, sampling bias:

1. Dampens outliers: because it only asks for pairwise comparisons between firms (like an ELO rating in chess, if you’re familiar), one very un/happy respondent can only affect so much, and same for a sample. (As opposed to giving one firm a 10 and everyone else 2’s or something.)

2. At the same time, it forces comparisons. A firm can ask founders to rate them highly, but ultimately founders have to choose who gave them more value. Can’t rate everyone a 10.

3. This is why we’re looking for as broad participation as possible, because the sampling bias will actually probably most show up in which firms even have enough ratings to count. (Like ELO in chess, more ratings doesn’t necessarily help you — you get more “points” if a founder rates you as better than a highly-rated firm. More ratings can just as easily hurt as help.)

If you are a founder, go spend five minutes and anonymously rank your VCs on Founder’s Choice.

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Registration for the Venture Deals Fall 2022 course is open.

The course is free and starts on September 20, 2022. This is the second time we are running the new version of the course (v2!) that was co-created with Techstars and Kauffman Fellows.

If interested, sign up now. I hope to see you there in one of the AMAs we will host for anyone who takes the course.

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Registration is open for the 2022 Q4 Leadership Bootcamp, which is happening in Boulder, Colorado, on Nov 10-13, 2022.

Regular readers of this blog know about my long-time (back to 1996) friendship with Reboot co-founder and CEO Jerry Colonna. What you may not know is that several years ago, Jerry and his partner Ali Schultz moved exactly 0.8 miles away from me (there is one 40-acre parcel of land between us.) In the evening, when we are both in Boulder (well, Longmont), he sits under his Cottonwood Tree, I sit 0.8 miles away on my couch next to my pool, and we text and wave at each other.

I’ve been to several Reboot Leadership Bootcamps as a special guest. They are unique and powerful experiences for entrepreneurs. As a bonus, the Reboot Retreat Center is actually on my property in a building called “The Carriage House.” Amy and I don’t charge Reboot for the use of The Carriage House – it’s our gift to entrepreneurs and Reboot for this amazing experience.

If you’re looking to reboot and refresh your leadership, join Team Reboot this November 10-13, 2022, in Boulder, CO, for their fall Leadership Bootcamp.

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Of all the business and technology writers out there, including bloggers, I think the best one, at this moment, is Matt Levine. He’s the only person currently writing on Planet Earth that I find myself reading every word of everything he writes.

For the last few months, he has been mostly writing about three topics:

For a flavor of his writing, read the following 11 chapters of Matt’s writing (listed in chronological order). Then, subscribe to his newsletter and get a magnificent medium-form article in your inbox every other day or so.

Meme Stocks Were Too Good to Robinhood: Also Russian debt and crypto depositors.Don’t Cheat on the Ethics Exam: Also CoinFlex, Spirit and cheerleading for risk.Crypto Loves Its Shadow Banks: Also Archegos, CLOs and bond market liquidity.Say No to YES: Also 10b5-1 plans, crypto bailouts, Tether, MicroStrategy and ethics rules.Archegos Analyst Wants His Money Back: Also Russian assets, universal owners vs. labor and KYC/SOW.Voyager Has Some Tokens: Also vibes and Ben & Jerry’s.Nickel Big Shot Called the Shots: Also GameStop, SoftBank, Luna, Percent and index funds.Elon’s Out: Musk lost interest in pretending to buy Twitter.The Price of Not Buying Twitter: Also Twitter miscellanea, Celsius and Axie.I Was Told There’d Be a Cake Merger: Also a threatening letter, a toehold stock position, a venture-capital paper and a tweet from an undisclosed location.Twitter Still Wants Musk’s Money: Twitter sued Elon Musk for an outcome that no one wants.

Matt – thank you for making me snort or laugh out loud several times on the days you write.

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