Sequoia Advice; Better Decision-Making; Meditation & Biggest Marketplace Platforms 2020
Curated newsletter for founders and investors about the startup world. Issue #005
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What’s new for Founders?
Sequoia’s Advice for Founders and CEOs post-pandemic
Sequoia predicts stronger economic growth in the second half of 2021 than we’ve seen in decades. To thrive in this uncertain environment, the VC firm shares advice for founders & CEOs:
Reassess/reaffirm your why. It’s time to reaffirm your long-term mission. Then, challenge yourself and your team: Are you dreaming big enough?
Prepare for more volatility with scenario planning. Remain nimble and know when to upshift/downshift in changing conditions.
Focus on the wellbeing of people. Put your people first and keep an open dialogue about (mental) challenges employees face due to the pandemic.
Bottom Line: Sequoia recommends remaining deliberate and measured, but not being afraid to dream and be optimistic about where the world is going.
Enduring companies are built around long-term trends and behaviors. So, take advantage of this window while keeping your sights trained on what you could accomplish over the next decade
—Sequoia Team
How to Make Better Decisions, Faster
Making decisions is one of the core competencies of entrepreneurship. Even when they don’t seem like big decisions - the impact compounds rapidly. How to improve it:
Leverage decision-making tools like the RACI (Responsible, Accountable, Consulted, Informed) and responsibility assignment matrices.
Become data-driven. Build a dashboard with important metrics that drive your business. Iterate and keep the dashboard up to date.
Crosscheck your feelings against the most common biases. Data doesn’t speak for itself - look beneath the surface and evaluate the context of the data.
Use unusual data sources. For example, you could buy anonymized credit card data to identify buying patterns and trends.
Bottom Line: Techniques and frameworks can help. Ultimately though, it’s about collecting and analyzing data, applying human judgment, avoiding common pitfalls, and updating your models based on outcomes.
“What should I do differently going forward to improve the way I play the game?” This self-reflection was a key reason that I was a much better decision maker during my time at PayPal.
—Reid Hoffman, Founder of LinkedIn
How to Meditate (Guide for Founders & Leaders)
In meditation as in life, we tend to react to thoughts and experiences in three ways: we embrace them, reject them, or look away. The key is not to do any of those things. Just notice what you notice.
“Hold everything still, and watch what moves.” Don’t react to your thoughts and feelings - simply notice them and look as close as you can: Why are you thinking about this right now? What does it teach you?
This translates into business, e.g. when feeling as an impostor before an investor pitch. Don’t embrace that feeling, don’t reject it, and don’t look away. Just notice.
Even with practice, there will be discomfort. Learn to see what emotion really are: simple sensations in your body and insignificant thoughts in your head.
What’s new for Investors?
a16z’s Ranking of 2020’s Biggest Marketplace Platforms
With Marketplace 100, a16z ranks largest consumer marketplace startups & private companies by Gross Merchandise Value (GMV). The ranking is based on data from Bloomberg Second Measure. Here are some key findings that stand out:
Instacart - the North American leader in online grocery delivery - made up 71.5% of the entire list’s GMV, followed by gaming company Valve (8.3%)
The fastest-growing categories in 2020 were: Celebrity Engagement, Groceries, Wholesale, Flowers, and Music
As the year evolved, there was a shift from groceries to furniture to cannabis delivery and collectibles. The two latter categories grew by 400% from Q1 - startups like whatnot benefitted.
Fundamental vs. Revolutionary Mindset among VCs
Funding is flowing freely, valuations are stratospheric and gigantic exits have become the norm. Fintech veteran Tom Rotman shares his anger with this trend. To explain the situation, he distinguishes been two competing investment frameworks:
Fundamentalists believe that what’s possible is dictated by the dynamics of an ecosystem. The key is to gradually build on solid unit economics. Great companies are built on top of good companies.
Revolutionaries believe that what’s possible is a function of differentiation. Only the destination matters. Success is a function of an amazing team eventually dominating an ecosystem with large TAM.
Today’s market is rewarding revolutionary thinking. Many companies go public with extraordinary valuations despite lousy financials and no proven model.
Bottom Line: Every VC benefits from what’s happening. VCs will complain about the price of new investments, but they’ll be the first to justify the value of their existing portfolio companies.
Philosophically I hate the fact that in this market Investors can profit from selling half-baked companies at fully-baked prices. But there are narratives that have been constructed that justify that today’s market is actually rational.
—Frank Rotman, Co-Founder of QED Investors
The Deep Transformation on Early Stage Investment
Augmented VCs leverage data to be more efficient. While it’s a recurring topic, Stanislas Lot argues that it’s different this time with consequences for the industry:
As the level of competition has increased, the investment team has a higher need for data. They miss deals with the traditional networking approach.
It won’t replace the importance of a network. But the importance of quantitative approaches as a complementary source of deal flow generation will increase.
The victims? Business Angels. Their weapon is their network. They don’t have access to tools that VCs develop for months/years.
Bottom Line: Venture Capital remains a people business and the proprietary network will always be important. However, an algorithm that cuts through the noise can be a valuable complement.
What else is worth your time
Kevin Hart explains how he approached Jeff Bezos cold at a party
Nicolas Colin shares his view on Deliveroo’s IPO and their valuation of $7.6bn
Business Insider named the top 100 seed VCs based on analyzing 1000 of them in partnership with Tribe Capital (Paywall)
Dickie Bush on 10 of Twitter’s advanced features that are not commonly known
James Ball about hacking your productivity and the importance of knowing your “energy schedule”
Sam Altman paints a vision of how the AI revolution will shape our future.
Sahil Bloom shares 10 competitive advantages that everyone can start developing today
Podcast Recommendation
Tim Ferris talks with Balaji Srinivasan, Angel Investor and Entrepreneur about:
The Future of Bitcoin and Ethereum
How to Become Noncancelable
The Path to Personal Freedom and Wealth in a New World
The Changing Landscape of Warfare
… and a lot more
Trending Subreddit
Trending Subreddits is a new section that will be in our newsletter occasionally. It is supposed to highlight one interesting Subreddit that was trending last week.
Imaginary Technology | Impressive Technology-based Sci-fi and Fantasy pictorial art featuring robots, cyborgs, mechanisms, vehicles, spaceships, futuristic cars, or other transport
Food for thought
Lack of confidence kills more dreams than lack of ability.
Talent matters—especially at elite levels—but people talk themselves out of giving their best effort long before talent becomes the limiting factor.
You're capable of more than you know. Don't be your own bottleneck.
Previous issues:
#004 Leadership Lessons from Bezos; Bottom-up Pricing; Indie.vc & South Korea's Amazon
#003 Building Systems; Advice from Netflix's Co-Founder & The Problem with Climate Tech
#002 How VCs Make Decisions; Startup Marketing Manifesto and The Data About Super Founders
#001 Asymmetric Bets; Simplifying Decisions & The Fastest Growing Sectors Of Fundraising 2020
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