New utopia?

One of the best parts about my job at Secfi is that I get to know brilliant and interesting people at startups all over the Bay Area and world. I am always humbled by the intelligence and drive of our clientele and I’m very lucky that my job is to help them.

I meet some awesome people and end up being friends with some of them. Today, I spoke to a long-time friend of Secfi who has been working with us and giving us feedback for about 2 years now. He’s been great and is now in need of assistance with his options. It’s always great catching up with him, but today he told me that he left his job as he’s looking to start a new city.

Yes, you heard that right. A city. Not a startup, but a new city.

As most, I was initially really taken aback by this. Did my friend lose his mind? Is he trying to start a cult? What the fuck?

The crazy part? The more I listened to him, the more the idea started to make more sense.

Perhaps city is not the right term. My friend is looking to start a community that may one day grow into a city. These types of communities exist already, they’re called communes. He wants to create a new community built around tech and an economy around remote work. This community may one day grow into a town, and perhaps one day a city. Not so crazy anymore is it?

Sometimes when we hear grandiose ideas, such as starting a new city, we tend to dismiss these things ideas for the simple fact that it is just inconceivable at this point in time. Most are also quick to dismiss how far society has come along. Internet with you at all times at all places seemed inconceivable just 15 years ago.

Perhaps in 15 years, I’ll look back at this blog post in my buddy’s new utopia community/town/city and laugh at the day.

Niksen - the Dutch art of doing nothing

My colleagues in our Amsterdam office got me a book called Niksen by Olga Mecking. What is niksen? Well it’s the Dutch art of doing nothing. I suspect my colleagues didn’t get me this coincidentally as well I am really bad at doing nothing.

My personality tests almost always land me as Type A as they come. I believe this comes from my Dad who is really high strung and loves to live life as a ball of stress. I’ve gotten better over the years due to meditation and wine, but relaxing has always been a bit of a struggle for me.

To understand niksen, you likely have to understand a bit about Dutch culture. I am very fortunate to work for a startup with an office based in Amsterdam due to Dutch co-founders. I’ve been lucky to be out to Amsterdam many a times as the Dutch have one of the coolest cultures in the world. They are some of the happiest (and tallest) people in the world.

As Olga mentions in the book, the Dutch don’t really talk about doing niks or nothing. It’s just simply part of their culture. It’s something we Americans could probably learn a lot from. Many of you are probably thinking that you do niks all the time when you mindless scroll through Instagram or watch Netflix. In reality, that is not niks because you’re still doing something albeit one that requires little brain activity.

Niksen can be many things to different people. Perhaps it’s walking without aim through a park. Maybe it’s sitting and just people watching. It could just be laying on your bed staring aimlessly at the ceiling. For me, niksen is that ultimate feeling when you’re just sitting or walking somewhere without any major thoughts just enjoying your surroundings.

We all know that doing nothing is hard. Work and the availability of distractions through technology and other mediums have made it even harder. Reading Niksen isn’t going to make you suddenly good at doing nothing, but it’s a start.

Like many things I’ve learned in Dutch culture, niksen is something I’m hoping to adopt. Whether it’s taking a break in the work day or leveraging the weekend, the beauty about niksen is that you can really do it anywhere. Maybe if I do it enough, I’ll make my way to a hybrid Type A/B personality one day.

Time for a break

There hasn’t been a lot of vacationing lately due to the global pandemic. I know that can impact morale and work productivity so at Secfi we’re trying to encourage people to take time off.

Unfortunately, I haven’t been a good lead by example here as things have been busy as ever and I find myself still working long hours.

Given the long weekend, I plan on heading up to Tahoe today and taking the weekend through Monday off. Everyone needs a break and I fully expect to be recharged and much more productive come Tuesday.

There’s a lot of schools of thought on vacationing. I’ve spoken to a lot of people who completely unplug and that’s how they recharge. I know a lot of happy and successful people who like to work a little bit every day even on vacation. I have historically been in the latter category but might try to unplug completely this time around.

I’ll see if I can keep my hands away from my inbox the next few days.

The power of fomo. It is what it is.

I started to realize that I was much more introverted than I thought right after graduating college. I value a lot of alone time where I can be by myself, be selfish, and do everything that I want to do. Of course, that’s always easier said than done due to the phenomenon of FOMO.

We’ve all been through the traditional fomo situation. You are feeling tired or simply just don’t feel like doing something with your friends, but the fear of missing out on a fun activity or night leaves you going anyways.

Of course, fomo comes in all shapes and sizes. Fear of missing out on that hot stock/company forces people to make poor investment decisions. Fear of missing out on the perfect opportunity forces companies to release products early prior to being ready.

The latest fomo trend in the tech world has been Clubhouse. The voice app is some sort of country club for the Silicon Valley and tech elite to host discussions about business, life, and politics. The problem? There are only 5,000 invites sent and you’re probably not part of the list.

Exclusivity seems to be the latest trend in tech and I can see why. Hundreds of thousands have flocked to Twitter to try to find invites to Clubhouse. The fomo is real and a powerful marketing tool.

Enter 👁👄👁. What is it? It is what it is.

Okay okay, had to get it out of the way. Sorry. But really what is eye lips eye?

Put simply, a clever bunch of tech employees decided to band together in a sort of satirical marketing campaign. What started as an inside joke turned out to be a viral Twitter campaign where people were added 👁👄👁 to their Twitter names and replying “It what it is” to nearly every mention of the emojis.

There were fake app screenshots and the website collected hundred of thousands of email addresses over the span of 48 hours. It was clearly a mockery of the recent fomo in apps such as Clubhouse.

Upon release, the truth was revealed and there was no app. No product release. It was simply a link to donate to one of three BLM causes. Once you did, you were granted the ability to buy merchandise that would further support these causes.

A brilliant and hilarious marketing campaign that weaponized unreasonable and childish fomo in adults ended up raising over $100k for some amazing causes.

I am not sure what the legacy of 👁👄👁 will ultimately on the industry. I am hoping for positive change as we realize just how powerful our tech community can be. I also hope that it’s a wake up call to our community that perhaps there are more important things in life than being on a list for an app.

Fomo is real. It is what it is.

Can you speak the language?

I made the jump from large firm to tech world about two years ago. At some point after signing my offer letter, I remember meeting my CEO and some of our investors for drinks and dinner while they were in New York. A normally talkative person, I ended up sitting around the table barely uttering a word.

I wasn’t shy. I wasn’t intimidating. I just had no freakin’ idea what these guys were talking about. They used tech and VC jargon I had barely heard of before and it was common language to them. I just didn’t get it back then.

Given my job was to talk to people in tech everyday, I knew I had a challenge in front of me. I had to learn to speak their language. I set out to sign-up for newsletters. I started following the right people on tech and VC twitter. I read and read and read.

Looking back on that time seemed like a long time ago. Once you’re in the tech world, you have to start living it.

Perhaps the first time when I realized that I got everything was when I rewatched Silicon Valley for the first time a few months ago. I was shocked at how much more relevant and funny it was the after getting more of the jokes.

This of course isn’t a blog post about me finally fitting in with the cool kids. In fact, I would argue that it’s quite the opposite of the “cool” crowd, but I digress.

You have to be able to speak the language of your clients and industry. Whatever that industry may be, tech, investing, healthcare, etc. if you can’t relate to your customers, you’re going to be treated as an outsider. In a world of relationships and belonging, you don’t want to be treated as an outsider.

We’ve made some great hires from both people traditionally outside the tech world and from those that have been in the industry for awhile. As part of our training, I tend to inundate our new hires with tech/VC news and recommend different blogs for them to subscribe to.

At Secfi, we provide valuable financial services for those in the tech, startup, and VC world. Our team needs to be able to speak their language so they can provide the best service.

The wild world of market caps

One of the most humbling aspects in my experience investing in the private and public markets is how much I tend to underestimate the potential market cap for a company.

There are so many times when I have said, “I can’t see this becoming a $X dollar company”, only to be pleasantly surprised in the next few months/years. It’s a very humbling experience but one that is well worth studying.

There’s likely a few not mutually exclusive explanations for this.

Mathematically a market cap is infinite while you can only go down to 0. Of course, the total addressable market is finite though.

It’s much easier to find losers than it is to find winners. A lot of people can take 10 minutes, look at a financial statement or latest business deck, and determine that this company is likely destined for bankruptcy. It takes much more skill/talent/luck to find the winners, i.e. unicorns.

People are inherently more conservative when it comes to calculating the addressable market and potential for growth. We live in bubbles and sometimes forget how many people there are in the world. We tend to think of ourselves and why we would or wouldn’t use the product and extrapolate that to the world we know.

Of course, these are very simple explanations to a complex world of markets and investing but if there’s one thing the last couple years in the public and private markets have taught us, it’s never say never.

There is more money in the world than ever before. The internet has made a company’s addressable market infinitely times bigger. Technology has injected steroids into companies. Expect market caps to continue to grow and surprise you.

Immigration in America

My parents were both immigrants who came to the US in their late teens to go to school here. Trump’s latest executive order to ban visas for foreign workers through the end of the year hits close to home.

At best, the executive order is a misguided and stupid attempt to protect American jobs. At worst, it’s a racist proclamation meant to rally the America first crowd. Given who we are dealing with in the White House, we can assume this is the latter.

Regardless, I’m not gong to write about evidence showing that Trump is a racist. Anyone with half a brain can see his agenda and goal to divide the country. Instead, I’m going to focus on what immigration means for this country.

Immigration means more jobs for Americans. Immigrants come to America to start businesses and chase the American dream. Sometimes they are forced to start businesses based on discrimination. Sometimes the entrepreneurial spirit is in their blood. More businesses, more jobs.

Immigration means economic growth. Immigration of highly skilled workers allows us to gain a competitive advantage over other countries. Diversity has proven time and time again to increase performance of high quality teams and businesses. The country’s most successful companies would not be here today if it were not for immigrants.

Immigration is part of why America is great. Let’s hope we can elect a leader who understands this before too much damage is done to our economy.

Reopening and re-spikes

It was a long week for me and I crashed hard over the weekend. My body is telling me that it’s tired and I need to get some rest. I’m going to try to keep my hours down this week and then take a few days off during the 4th weekend. We’ll see how that goes this week.

Given the events of the last few weeks, people seemingly forgot that we are still in the middle of a global pandemic. Not anymore.

The country’s cases are quickly rising and it seems almost inevitable right now that we’re headed for another shut down in most states sooner than later.

The optimism of the reopening resulting in the fast market rebound is now in peril. I am hoping we can get lucky with the virus. Perhaps the summer months can help slow the spread. Perhaps once the dust settles, we find that it’s not as deadly as we thought. Maybe medicine will be developed and prove helpful in fighting the disease.

Unfortunately, I’m not as optimistic as some may be. Health experts are warning of dire consequences in the coming month and I have learned to not go against the science or data.

I sold some stocks on Friday and will be playing defensive until the dust settles. I hope we can get lucky, but I’m not getting my hopes up.

VC type returns in the public markets and Q3 IPO watch

A couple days ago, I wrote about the rebirth of hedge funds due to the rise of young “Robinhood traders”. Will the next generation look to turn away jobs in venture capital in favor of hedge fund gigs? I think we’ll see a leveling out of micro-VC funds and a rise in micro-hedge funds in the next few years. And why not?

Investors can earn VC type returns on their investment in current public market in the span of months, not the 10 year horizon of VC investments. By no means am I saying VC funds are going away, but it’s unreasonable to think that the exponential increase we’ve seen in the last few years in micro-VC funds will continue. It will be interesting to watch.

On the topic of public markets, a friend asked me today if there are any IPO stocks that I am watching. IPO szn has seemed to finally hit in 2020 after a 4 month hiatus due to COVID-19. There haven’t been too many big names to hit, but so far so good.

Biotech has been crushing it. Vroom, an online car marketplace, is up almost 100% on it’s IPO a couple weeks ago. I am now a customer of OneMedical which IPO’d in January and is currently up almost 120% since then.

Two companies I am watching for in Q3? Snowflake and AmericanWell. Sorry if you are a follower of the private markets and was expecting a secret name that no one knows about.

Snowflake is a cloud-based data warehouse that is currently valued at over $12b in the private markets. The world’s data continues to grow exponentially and COVID-19 has only accelerated that growth as companies search for solutions to store their data due to increased online usage.

AmericanWell is a telehealth competitor of the already public teledoc. I love the telehealth trend right now. For the majority of cases, there’s just no reason to go in to see a doctor anymore when it can be done online. Diagnoses, prescriptions, and more can be done within 20 minutes virtually. In addition, you can decide to choose your doctor anywhere in the country.

Like most IPO stock, there’s likely going to be good volatility in the short-term, but these are two long term plays that I will be looking for.

The rise of micro-hedge funds

One prediction I have for the next 5-10 years: expect a rise in micro-hedge funds.

Since the ‘08 crash, we have seen an exponential rise in VC and angel investing. Everyone that works in Silicon Valley seems to be an angel investor of some sort. New micro-VCs seem to be born every other week.

Investment in technology and startups will never stop, but it’s also unreasonable to assume that the growth will continue. The younger generation will look to find alternatives to a saturated environment.

Enter hedge funds.

The hedge fund days of the old seem to be gone. More and more people are shifting attention to VC investing as returns in trading have started to dry up. Annualized returns from hedge funds have been on a steady decline for some time now.

So why am I predicting a rise in hedge funds in the next 5-10 years? Three main reasons:

Market conditions were tough for hedge funds over the longest bull run in history the last 10 years. This is a new market that we have not seen before. Every months seems like a new all time high and/or low. New trends are forming and there are opportunities out there.

One accelerator of that trend will be whether companies decide to go public earlier or not. A prediction in a prediction which I will write about one day in the future: private companies will learn from experiences like COVID-19 and look to go public earlier. We saw a decade of companies staying private longer. Perhaps the 2020’s will be the decade of companies going public earlier. Returns will shift from the private markets to the public markets.

Almost all things in life are cyclical. Running a hedge fund was once the cream of the crop job in investing. That sentiment shifted to running a VC fund. Hedge funds will be back with the increase of trading thanks for apps like Robinhood. Young investors are learning faster and earlier than ever before. The appeal of the market will turn them into hedge fund managers one day.

Robinhood Traders

The buzz over the last week or so on FinTwit is on “Robinhood traders” which is a stereotype of young kids gambling on risky stock using free-trading apps. Robinhood traders have been blamed for cult stock rises such as $HTZ and $NKLA. The perception of young kids buying risky stock and beating out hedge fund managers is a mind boggling concept. The memes and jokes going around are absolutely hilarious as well.

Free-trading apps such as Robinhood has allowed bored millenials to effectively gamble on the stock market. It’s at the same time a wonderful and scary thought.

Many including myself have learned about the markets and investing through Robinhood. I developed my love for the markets because apps like Robinhood made it easy and free for me to invest. I suspect many young people are also in that same boat.

I also suspect that there are many people out there acting recklessly and treating this like a game of blackjack at a casino. This is real money and the stakes can be high. I can only hope that the majority of Robinhood traders are treating this as a way to learn about the markets and not as a short-term gamble.

We can only hope that apps like Robinhood create a net positive for society. I am optimistic but we’ll have to wait a few years to find out.

Everything you do adds up to now

Today I launched a social media paid ad campaign to help Secfi’s marketing efforts. To be clear, I’m not a marketer and had only been running these ads as a side project while we’re still looking to hire someone. This side project came up as I’ve had experience running ads before for some of my side businesses over the year.

I started running social media paid ads for one of my early ventures in 2014 when I just exploring entrepreneurship. That got me enough experience to run paid ads for a well-funded VC startup… at least temporarily until we can hire a professional. What would have thought?

As I get older, I’ve started to realize that life has a fun way of coming back full circle. All these seemingly trivial experiences will often lead to meaningful experiences in the future. What seemed like a waste of time actually turns out to be a major life lesson or learning opportunity.

Whether you know it or not, each step in life adds up to what makes you the best you right now.

Black Lives Matter

I wrote a little bit about the world’s current events and racism in America, but I hadn’t wrote directly about the Black Lives Matter movement. That was on purpose. I have always supported the Black Lives Matter movement, but before I wrote about it, I wanted to take the week to listen and learn more.

I had always thought I fully understood what Black Lives Matter meant, but I learned that it’s so much more than ending racism.

Black Lives Matter is about learning about what it’s like to grow up black or as a minority in this country.

Black Lives Matter is about creating the same educational opportunities for all Americans.

Black Lives Matter is about speaking up about things that you believe in.

Black Lives Matter is about understanding why people are angry and having empathy.

Black Lives Matter is about knowing that we all have implicit biases and racist tendencies and working to combat that.

Black Lives Matter isn’t just about ending racism, it’s so much more than that. It means something different for each and every person on this planet and that’s the amazing thing about it. We all come from different backgrounds and walks of life, but we have all united to band together against racism and other injustices in this country and world. Black Lives Matter.

Long crypto

I listed to Balaji Srinivasan on Howard Lindzon’s Panic with Friends podcast on my drive back to SF today. It was a fascinating interview and discussion on COVID-19 and cryptocurrency. It was also sponsored by Secfi which was our first podcast sponsorship. Hearing your company’s name on a podcast is always pretty cool.

Balaji’s brain goes at a much faster speed than pretty much everyone else including mine, but he has a way of explaining his thoughts and ideas in a way that anyone can understand.

I need a second listen through the podcast before I can do any justice of summarizing Balaji’s key points, but one major takeaway from the end of the podcast: long crypto.

I have been long crypto for awhile, but Balaji’s explanations make it hard to argue against.

Dreams and nightmares

I’m up at Tahoe with Sophia at a share house that one of my close buddies organized for the summer. My friend Mike was living in Tahoe and decided to travel the world until COVID hit. Since then he’s been back in Tahoe and organized an amazing home for a bunch of us to stay at this summer.

I jumped at the opportunity as this has been a dream of mine for some time. This has been a nice benefit of the work from home life due to COVID. I miss the office and my coworkers but I figured that I make the best of the opportunity and ride out the quarantine this summer in Lake Tahoe.

Everything up here almost seems normal. People hanging out enjoying the weather. Restaurants are opening up for limited seating and there’s people starting to congregate more and more.

Of course this is a small distraction from the reality of the world.

COVID-19 didn’t go away overnight. Racial inequality is rampant in the country and there are still widespread protests. We still have an absolute idiot in the White House attempting to divide the country for his own benefit. Yet, the stock market continues to rise and we seem to be set for all-time highs sooner than later.

Reality is going to sink in for everyone including myself sooner than later. The dream of escaping reality up here in Tahoe and pretending things are normal and perfect is well.. just a dream.

In a sense, the stock market is a dream as well. There’s more money in American wallets than ever before due to the Fed and abnormal spending and that’s perhaps masking the reality of the world today.

Unfortunately reality and nightmares will soon hit. I don’t know if the market will crash again or if COVID-19 will continue to spread rapidly. I hope not, but if 2020 has taught us anything, it’s to expect the worst to happen.

The real enemy

It’s been a tough day to stay focused and work with everything going on in our country right now. The Trump press conference is the final straw and I’ve called it quits for the day. There are more important things to worry about at the moment.

If you need any obvious evidence that there needs to be systematic change in this country, all you had to do is watch the moron’s press conference to realize where his priorities are. This country is protesting the use of violence by police and blatant racism. Yet he is threatening to deploy the use of the military to quell the protests. The man itself used violence and force to clear out a peaceful protest for a personal photo op in front of a church.

The violence needs to end. Looters and rioters damaging property and innocent businesses is fueling the racist fire and that’s what Trump wants. Trump wants chaos. He wants to find an excuse for us to divide ourselves so he can walk into a second term later this year.

I remain hopeful that this is a pivotal moment in our country. Are we going to be remembered as the generation that started the change to systematic racism or the the generation that rioted and looted stores?

The enemy is racism and hate. We need to not forget who the real enemy is.

Leadership in America

This is a crazy time right now in America. Between a global pandemic and the widespread protests against racism, there is no shortage of news to catch-up on.

While I don’t condone violence or looting of stores, it’s a time in America for the people to step up against oppression and racism. We cannot ignore systematic racism in this country any longer. There needs to be police reform. There needs to be a changing of perceptions that this does not fly in America.

We have a blatantly racist President who is tweeting calls for violence against protesters. Everything starts with leadership in the White House. Change starts this November when we vote to get rid of the orange man.

What is culture?

I’ve done a terrible job reading during quarantine as most of my time and energy has been devoted to work and I plan on changing that starting in June. I’m currently reading What You Do is Who You Are by Ben Horowitz and it’s a fantastic read.

The big takeaway from the book is that talk is cheap. Culture is what you do. You can measure your company’s culture by watching what a new hire does to stay afloat at your company. That’s your company’s culture — not what you put on the wall or say.

I took this to heart and really took a hard look at Secfi’s SF office culture right now. What I realized was pretty astonishing but should be no surprise to people like Ben Horowitz who are “culture experts”.

I had always wanted to create a culture that prioritized development and learning. What I found was that we were creating a culture that prioritized closing deals and moving fast at all cost. Here are some things I noticed (purposely vague to protect details):

• Prioritizing getting a deliverable out the door rather than getting it done at a high level.

• Sending materials to clients without asking for a second pair of eyes to review.

• Winging conversations with partners and clients.

This was mostly perpetrated by me. Sure I implemented feedback sessions and debrief meetings. Yes, I tried to make myself and others available to teach. But at the end of the day, what always stood out most is driving deals and growing revenue. That’s what I celebrated. I didn’t celebrate a successful feedback succession or someone learning something new to help close a deal. I celebrated the actual deal closure.

This of course is an important revelation that I’m fortunate to have realized thanks to my reading. Luckily, we’re small and nimble and this is as great as a time ever to start changing our culture. There’ll be more changes, but this change starts today.

When things get tough, your culture will define your actions. It’s my job to make sure we have a strong culture and that starts with me.

Stock option are not a "future bonus"

One of the worst takes I hear from both executives and employees at startups is that stock options are an additional future bonus to your compensation. That is wrong. Stock options are your compensation, not a potential addition in the future.

Startups and growth private companies issue stock options as a way to compensate employees for the lack of cash compensation they may be willing to pay. If you are worth $100k at a larger company, but the startup can only afford to pay you $80k, they may decide to pay you the additional $20k with equity. This equity is granted as part of your compensation package.

Employees and executives who plan around their equity as a potential future bonus are missing the mark. If you view your equity as a future bonus, you are going to treat it as a future event and lose out on the upside. This is the answer many at startups default to because, well it’s the easiest route. It’s a future event, so I’ll deal with it in the future.

In reality, equity is granted to you today. There may be restrictions on what you can do with it so the benefits are not as readily apparent, but once you exercised your vested options, they are yours to keep. Yes, there’s always the chance that they make not be worth anything in the future, but you better believe that it is part of your net worth today. Start planning accordingly.

Rejuvenated

I took Friday off and made my MDW a 4-day weekend. I ended up just doing a staycation here in SF where I enjoyed the weather and ate some great food. I’ve written quite a bit about the long few months to start the year which fed right into quarantine.

Needless to say, it’s been a long first half of the year. My mind and body has been trying to tell me to take some time off and get away from work for a bit. I could sense that I was much more easily irritable, less motivated, and all around just sluggish. It wasn’t fair to myself nor any of my coworkers that had to deal with me.

It’s quite amazing what a few days off can do. I feel refreshed and rejuvenated. My motivation is back and I am ready to do my best to close out Q2 strong in June.

I know this is all temporary though and I can slip back into crazy quarantine work mode at any time so I’m looking to take precautions this time. It all starts with limiting my hours and ensuring I’m being more much efficient with my time. I also plan on taking quite a few vacations this summer even though it may be staying put or only doing a close road trip.

I owe it to myself and the rest of the team.