Team

I’m excited to watch my Warriors hopefully close out the series in Game 6 tonight. Going to Game 7 scares me considering how Boston has won 3 of these game 7s these playoffs. My hunch is that Boston is out of gas and we should be able to roll to a NBA championship tonight.

This would be the Warriors 4th championship run cementing their legacy as one of the greatest dynasties in the history of the NBA. What’s more impressive is that this dynasty has been with the same core 3 players, Steph Curry, Klay Thompson, and Draymond Green.

I think it’s pretty damn impressive for a trio to stay together and accomplish what they have done over the last 10 years. Their first championship was 7 years ago and they’ve been through many ups and downs together. They lost 2 of those NBA Final series during the period.

I love this Warriors team because of this. They are the model of offensive efficiency that plays a beautiful game. It’s all built out of selflessness. Other players come to the Warriors and simply shine despite having 3 superstars on the team. We’ve seen it this year with Gary Payton II, Andrew Wiggins, Kevon Looney, etc.

I can only imagine what many core group of co-founders or early employees could accomplish if they stayed together for 10 years. Unfortunately most don’t make it due to personal conflict, ego, etc. In this day and age, 3 years with a core team seems like a decade.

I’ve been with Secfi for almost the last 4 years now. I can only hope to have a fraction of the success in business as the Warriors have had in basketball, but my goal is to be here for the next years with my same core group. We have something special going right now and I’m committed to sticking it out.

Exhausted

I’m on day 3 back from vacation and I’m already tired. The doom and gloom news cycle has been exhausting to read. My Twitter feed filled with layoffs, company teardowns, FUD, fraud accusations, etc. It’s not a fun time right now.

We joked at a management team meeting today that we wish we could just freeze everything and come back in 3 months. Wouldn’t that be nice?

Unfortunately, that’s not how life or business works and we’re going to have to address everything head on. I suspect that this summer will be difficult as we head on these turbulent times.

The good news is that it gets better. It always does and we need to look forward to that. We have to hold out hope that the shitty times don’t last forever while not lying to ourselves that this may fix itself quickly. Holding out on a miracle is a great way to be disappointed.

I can’t wait until we’re through this period. In the meantime, I need to remind myself to sleep more and take care of my mental and physical health in the meantime.

Shouldering the blame

I’ve been a bit annoyed at Twitter today with all the couch CEOs blasting founders and executives for “mismanaging companies”. The arguments are typically the same, saying that CEOs forgot that the point of starting a company is to make money and their hiring was a product of greed.

While I agree that anything that Founders/CEOs should take the blame for any issues with the company as that’s part and parcel of the job, I absolutely hate the simplified narratives that many people love to put out there. Most of these people are those that have never started or helped run a company.

Starting and running a company is absolutely difficult. Often you see a window of opportunity and it’s your job to go after that full speed. There’s almost always pressure from employees, investors, and the board to grow the company.

Many seem to like to pull the hindsight card here but in reality, most would have made the same decisions as these Founders/Execs/CEOs.

Another trip for the books

I pretty much took the last 2 weeks off completely from writing during my Hawaiian vacation. I had originally wanted to try to keep up and be productive in the mornings, but I realized quickly that “being productive” meant checking emails, working, and then writing. I stopped that early on to ensure that I could take the time off that I needed and be present.

It was an amazing 2 weeks on the islands. The first 5 nights were spent in Kauai visiting my sister. Then we hopped over to Honolulu to visit some friends for 4 nights. Then we ended with a bang in Maui for my best friend’s wedding.

Overall, the trip had a little bit of everything. There was a lot of chill and down time in Kauai, then lots of eating and sightseeing in Honolulu. Followed by partying and celebrating in Maui. Of course, beach time was scattered throughout the entire week.

The wedding in Maui was definitely a highlight. Through many events starting Wednesday and culminating with the wedding on Friday, we were able to hang out with a lot of old friends, share stories, and celebrate our friends’ marriage.

The sad part of all this of course is the realization that these kinds of events are coming to an end shortly. As it stands right now, none of our core group of friends have kids so we were all able to fly to Maui and party together for almost an entire week. Things will be changing in the next year or two as our group of friends start having kids and other responsibilities.

For now, I’ll be sure to cherish these times we have together. There won’t be too many more chances in the future.

Sentiment

I wasn’t old enough to be working full time during the last recession, but I can’t remember when the sentiment has been this low. This is also including the COVID pandemic. At least during COVID, people expected COVID to end and it became a matter of when, not if.

Today, the New York times had a clickbaity article titled “It’s Doom Times in Tech”. The subtitle ponders the question, “Will this meltdown permanently damage the tech world, or is this one more temporary blip?”

I laughed when I saw the headline. People need to start realizing that the last 1.5 years were the anomaly. There was too much cash in the system and valuations were too ridiculous as a cause of that. Yes, we’re in a market reset. Comps are now below the historical averages. I expect comps to reset back to the historical averages soon enough.

What a lot of these doom and gloomers are missing are that the comps were out of whack last year. While a 80% pullback in valuation is not good, these corrections will happen and you can argue they are healthy.

There are going to be tougher times ahead but innovation is not stopping. Great companies will continue to be made. Tech is not dead and will not be dead.

Hello from Kauai

I thought Iceland might have been the most beautiful place I’ve seen. Kauai is definitely giving it a run for it’s money.

I had an amazing first day yesterday hanging out at the beach and drinking Mai Tai’s with my sister. Today, I went on a 6 mile hike and checked out the Na’Pali coast. It’s as gorgeous as advertised.

The island lifestyle is definitely different. Most of the island is asleep by 9am and up by 6am. It’s definitely a welcome adjustment. Getting up early and getting the most out of my day is something I could get used to.

I’m planning on grinding out some work for the next hour and get to bed shortly. Tomorrow, I’m taking the morning to do a bit of work and take some meetings. I’m limiting myself to 3 hours though which I think is a win for me. I love the island life, but at end of the day, I also still love being productive.

The big win

I wrote on Sunday how I wanted to come away from this week with a big win. I knew it was going to be a busy week workwise and personally as I head into a long vacation and recover from a company trip. These weeks don’t typically stack up to be the most “productive” in terms of knocking off the checklists. Instead, I wanted to go into my vacation with a major win under the belt and feeling good.

Well we got that win today. and also accomplished a lot more than I expected. I’m stoked. It was a good week for us at Secfi. There’s a whole lot more work to be done though and I plan on trying to limit myself to working only an hour or two a day at most during my trip.

I’m feeling fired up going into the weekend and my trip. I’m going to be able to see my sister, old friends and celebrate my best friend’s wedding. I can’t wait. I also can’t wait to get back and start grinding again with the team. It’s a great feeling.

The risk of recourse

The news of the day in startup twitter is that Bolt has just conducted a layoff. Some of these employees had taken out loans from the company to exercise their options. I just got done speaking to a few reporters about it today.

First, these loans are inherently risky. I wrote about this many months ago when the CEO announced publicly that the company would offer these loans out. Recourse loans are a good option for some individuals, but the vast majority of startup employees should not be touching recourse loans to exercise their options. They can and have bankrupted individuals.

These loans should not be offered to employees on a broad scale. They should only be available to the individuals who can take on the risk of servicing the debt in the occasion that the worst case happens.

In this situation, the worse case scenario is that you are laid off by the company and your company will demand that you pay back the loan in full. This is unfortunately the situation we see at hand at Bolt. While I do not personally know any employees who took out the loans, I’ve worked with thousands of startup employees who are in this position.

These employees likely took out the loans without having proper education on how stock options work, yet alone the debt instrument. They were very likely blindsided by the layoffs and the corresponding triggers that require repayment. In addition, they likely will have a difficult time servicing the debt now that they no longer have a source of income. Last and not least, once they do pay off debts, they will hold Bolt stock which may not be liquid for years (or ever).

As you can see, this can snowball into a terrible situation very quickly. I’m hoping that is not the case and that Bolt will hopefully help these departing employees.

Adapting to Endure

I just finished reading Sequoia’s Founder All Hands presentation titled “Adapting to Endure”. It was a good one.

I haven’t been working long enough to see the last downturn so I have been reading and learning as much as I can. The presentation did an amazing job bringing decades of experience and anecdotes to the current situation at hand.

As expected, Sequoia is predicting that this is not a short-term downturn and we are headed for some rough times ahead. As such, founders need to be preparing themselves, their team, and their company for what is about to happen.

There are countless tidbits of great info, but the biggest takeaway I had was to play for the long-term. We need to weather the short-term storm, but have a much longer-term view in terms of our investments. I will be adjusting my planning accordingly.

There’s a lot of work to be done here at Secfi. We have a strong team, but some difficult days ahead of us. It could be the other way around, so I’m grateful.

Imitation is the greatest form of flattery

To pretty much no one’s surprise, COVID has been running rampant through a group of people who attended our company trip in Iceland last week. Many others including myself have some sort of a cold but remain negative. I’m now headed to Hawaii to visit my sister and attend my best friend’s wedding and COVID is the talk of the town. After 2+ years in, I’m absolutely sick of it and ready to just treat it like the flu. Canceling events and trapping people in foreign countries doesn’t do any good when everyone has had it.

Anyhow, I saw a long thread from the Co-Founder of ECO yesterday about how there was a company out there that was effectively copying everything they’re doing. He was visibly upset and used his network to put the copycats on blast.

I had a good laugh as I reading through as he did seem to have a case. My stance is that imitation is the greatest form of flattery. If a company is copying what you’re doing, that means you’re doing something right.

I had my first hard lesson on this when I launched a card game on Amazon many years ago. My friends and I were bored and we wanted to launch something on the side for extra income. After a successful Kickstarter and launching on Amazon, we soon had multiple companies copying our game nearly identically. It absolutely drove my 23 year old self nuts.

Of course, this was just the start of it. After initial success at Secfi, we started to see competitors popping up left and right. We had one that copied our entire website but changed the blue to red. A cease and desist followed shortly after that.

For better or worse, this is part of business and you have to accept that success will bring in the copycats. You just have to block out the noise and focus on continuing to innovate.

Buy, wen?

Finally home after 2 weeks and of course I catch a cold. Not happy about it, but it’s much better than having COVID. The worse part about having a cold is that everyone around me is going to think I have COVID.

On another note, I and pretty much every other investor has been sitting on their hands waiting for the market to stabilize a bit. I don’t see many seasoned investors buying stocks or investing in startups right now. There’s just too much uncertainty at the moment.

The problem with this volatility is that no one knows what a company is worth right now. We know that multiples will be compressed severely especially compared to last year, but we don’t know where those multiples will eventually land.

For most people, it’ll likely be better to wait things out a few weeks/months in order for the dust to settle rather than overpay. That’s the advice I’m getting from investors, and I plan on following suit.

Home

I’m finally home after 2 weeks on the road for work. It was a long journey back that took just about 20 hours from leaving my hotel to making it back to my apartment in SF. I don’t take the ability to travel for granted, but man I am glad to be home.

Speaking of home, I’m here for 1 week and then head out for vacation and a wedding for 2 more weeks in Hawaii. Again, don’t feel sorry for me but it has been a long time away from home and the office.

I’ve got a busy week ahead catching up on everything from the last week while also planning ahead for my trip. Given the circumstances, I’ve conceded that this may not be the most productive week of work in terms of completing projects. That’s okay - not every week needs to be a huge sprint.

Instead, I’m focusing on managing my expectations so I don’t go into my trip upset and stressed. I want to get 1 big win this week at work. If I can get 1 big win, I’ll feel great going into my vacation and be able to be more present. Time to work!

Reflection on an amazing trip

I’m finally headed home after 2 weeks on the road in Seattle, Amsterdam and Iceland. The last 5 days in Iceland with nearly the entire Secfi team has been amazing for so many reasons.

First, it’s worth noting that Iceland may be one of the coolest places on the planet. There are so many natural sights to see and things to do. It’s an adventurers paradise filled with waterfalls, geysers, glaciers, volcanos, caves and more.

I was able to go rafting and snorkeling with the team during our team activities this past week. I topped it all off with a few hours in a natural hot spring called Blue Lagoon with a few teammates. I have no doubt that I need to come back to Iceland at some point and do a proper 1-2 weeks exploring more of what this island has to offer.

On another note - it was absolutely amazing to see our team together, especially after COVID. It’s been almost 2.5 years since our last company trip in Austria. Since then we’ve nearly tripled our headcount to over 100 employees. It was honestly a bit surreal at times meeting everyone and hanging out with everyone. I was speaking to our CEO about how crazy this was and we were both in awe of what this team has become.

We’re by no means a small company anymore. By the end of the trip, I believe I’ve got everyone’s name and where they are from down. I’m proud of that, but I imagine that next time we meet, I’m not going to be able to meet everyone. It was so fun meeting everyone.

We’ve built a great team from all over the world. It was really fun hanging out with such a diverse group of individuals. Most of all, these are some of the most talented people in the tech world. I’m coming back home to San Francisco energized and excited to continue to build this company with this amazing team.

Fraud in the air?

I believe one of the story lines to watch in the coming few months is the unraveling of some companies and accusations of fraud. At most of VC backed startups, you raise money before ever building a product or generating revenue from selling that product. This creates an interesting situation where entrepreneurs are taught to dream things into existence while at the same time bring given often large sums of money to build said thing.

Naturally, we’ll see situations where lots of entrepreneurs never actually build a product that generates revenue. On the extreme end, we see Elizabeth Holmes where she pretended that her Theranos blood testing system was actually fully functioning. We now know that was completely false.

On the other end, we’ll see a lot of people selling products that may severely under deliver. Perhaps there may be even more to the story that leans towards more of a Theranos situation.

I’ve had a lot of spidey senses about some companies in the last few months. Hopefully none come close to Theranos levels of fraud, but I do feel like we’re in for a bit of a reckoning given the capital environment of the last year.

We’ll see, but I suspect there to be more Netflix documentaries in the near future.

The sun is still shining

I had an amazing weekend in Amsterdam with a bunch of people from the team. The weather even decided to cooperate. There may not be a more amazing city in the world on a sunny weekend day. It’s almost if the weather didn’t get the memo from the markets that it’s all supposed to be doom and gloom.

One of the best parts about my weekend was that I didn’t open the laptop or check my email once from Friday evening until Monday morning. I desperately needed a break from the difficulties of the world. I think most people do.

Weekends like these are a great reminder that no matter how much it seems like things around us are burning down, we all have to realize that everything is going to be okay. The markets will come back. Things will stabilize. It won’t always be bad news.

Secfi is on our company trip in Iceland starting tomorrow. The trip couldn’t have come at a better time. I think we all could use some time to focus on building relationships internally within the company while blocking out the outside noise.

It’ll be a great reminder of all the awesome parts about building a startup. During these periods of tough times, we all could use a reminder.

Survive and advance

At Secfi, we have and continue to prepare for a prolonged downturn. Similar to how we did during the 2020 shutdown, we’ve started the process of navigating a difficult macroeconomic environment for a prolonged period.

The first step in preparation is acceptance. Realizing that we likely won’t be seeing a V-shaped recovery like we did in 2020, I’ve started acknowledging the fact that this is will be life in the coming few months and perhaps year(s). This allows us to take a hard look at ourselves, our financial situation and current spend, then make crucial decisions today.

As a company, the #1 and most important goal is to survive. There will be many startups in bad financial positions that won’t make it out unfortunately. At Secfi, we’re in a fortunate position but regardless, we need to evaluate our burn and plan for the worst case scenarios. Everything I and my team does needs to look towards this goal as a baseline. It may sound obvious to most, but those in lower level positions may have never needed to manage burn before. This needs to be articulated and reinforced. Survive.

From a business unit perspective, I’ve started to review and adjust my roadmap. Things will take longer in an environment like this. Hiring will slow down. Deals will take longer to close. Priorities will change. This is the new reality and we need to set new expectations. Launching a new product will be for naught if you fail to survive as a company.

We’ve gone from a grow as fast as possible environment to a grow with caution to manage burn levels. Nowadays, the name of the game is survive and advance.

Pain and diversification

Hello from sunny Amsterdam. I just realized I hadn’t written anything since last Tuesday. The last week has been a blur. We had some team members in town last week. Then I flew out to Seattle for meetings on Monday. Then I hopped on a flight to Amsterdam to do some work with the product team.

Behind the last week of work has been the tech and growth stock market collapsing and crypto capitulation. I wrote a few weeks ago that we’re in for a lot more pain ahead. We’re starting to see a lot of that pain now and boy does it hurt.

Like many, my portfolio is down significantly. It sucks to watch but it’s part of the process. Markets go up and markets go down. I suspect there will be many that learn about diversification during this downturn. Putting your net worth into one token or picture of an ape turns out not to be such a good idea.

I wrote last year that I go through a quarterly rebalancing as I evaluate my net worth and decide where to trim my positions. Back then, I wrote about how painful it was to sell some of my crypto positions. I had ridden BTC and ETH up from the crypto winter and had significant gains. Selling means generating a tax bill and going against the HODL mentality. But at the end, I was overconcentrated and I needed to diversify so I sold and reallocated my assets.

Hindsight is 20/20 and I obviously wouldn’t be writing this is BTC was trading at $60k right now. But it’s in times like these where sound financial advice comes in handy. It’s easy to ignore diversification plans in the good times, but when everything around you is burning, you’ll be glad you did. I sure as hell am.

There’s likely more pain to come in this market. That pain is the price you pay for returns in the future. Diversification helps you manage that pain and puts you in the best position to succeed when the market comes back. Many people forgot this last year.

Competition and capitalism

The news in Fintech today was that Stripe released Financial Connections which is effectively an APi service to connect to financial institutions. If this sounds familiar, it’s because it is exactly what Plaid does. I don’t think this was a crazy surprise that Stripe would indeed one day stray into Plaid’s world.

What is interesting was this tweet reply from Zach Perret (CEO of Plaid) who accused the PM at Stripe unethically probing into Plaid in order to copy what they were doing.

https://twitter.com/jay_ssh/status/1521884840991330306?s=20&t=pkbKjyqvtiIbSDbZZJxLGw

Business is the ultimate competition. Capitalism is the league that allows businesses to compete.

There are certain truths to business. One of them is that if you’re doing something right, someone is likely going to copy you. We’ve seen that happen many times over the years at Secfi.

If Zach’s accusations are indeed true, then this is just another instance of capitalism at work. It’s unethical for sure. No one should be taking interviews at a company or asking for a RFP just to copy it. But it happens, a lot.

I’ve had many competitors reach out over the years pretending to interview me for a role, or looking to partner, etc. all just prying for more information. Often times they are blunt and ask to see a contract right away. Other times they are a bit more clever and will ask for a demo or a proposal.

It’s good to keep your guard up. Competitors are watching.

Office vs home

We’ve got a large office in Jackson Square in San Francisco. It’s a lovely space with great views and lots of room to work and conference rooms to meet. Unfortunately, only about 25% of local employees are coming in on a regular basis.

Almost all of the ones who do not come in on a regular basis have a longer commute as they live in the greater Bay Area versus the city. It seems like the biggest thing holding people back is just pure convenience. Driving 30 minutes or hopping on BART for a 45 minute commute seems like too much to overcome for most folk. Whereas those who live in the city will gladly walk or commute in under 30 minutes to the office.

We have a relatively full house today as we have some leaders visiting the office and we are all going to dinner afterwards. I believe the only way we are going to get people to come into the office full time is to mandate it or make the benefits outweigh the inconveniences.

For us, mandating office work will not be in the cards anytime soon. So we have to find ways to incentive people to come into the office. Lunch right now is not good enough. I suspect we’ll start with more team events and regular happy hours, and look to expand there. We’ll see how it goes.

Overcoming inertia

One of the hardest parts about launching a new business or product is overcoming inertia. Very few companies go through exponential growth just by launching a product. In fact, almost all products require a lot of brute force initially to kick off that flywheel. As Paul Graham put it, you need to do things that don’t scale at the beginning of the startup.

When I helped launch our financing product 3+ years ago, it felt like we would take 2 steps forward and then 1, sometimes 2 back. There would be prolonged periods of nothing happening. No new leads coming in. Not hear from any potential customers. We went out and tried lots of things that don’t scale, conferences, personal outreach, etc. It was a grind, but it needed to be done.

We’re currently deep in that phase of a product build right now. We’re building and making great progress, but it feels like baby steps at this point.

The beauty behind the grind is that if you design the flywheel correctly and your thesis is correct, then things can pick up quickly. 5 deals a month quickly turns into 15 then 40 then 80.

The problem is to get to this point, you have to grind. Inertia is not easy to overcome and for most, the grind can last months or years. The best tip I have for people in the grind is the embrace it and come to terms that these things take time. Set expectations accordingly. If you’re hoping for an easy answer to get users, customers, etc. you’re setting yourself up for failure.