Earnings

It’s earnings season right now which means that most public companies will be releasing their earnings results from the last quarter.

I’ve been on an individual stock buying freeze for most of the last 6 months. I of course am stilling DCA’ing into indexes, but my “liquid” portfolio has been frozen. Things are much too volatile for me right now to be putting more money into individual stocks, especially in the growth/tech sector.

With that said, I’ve been paying particular attention to earnings this time around, not because I am buying stocks, because I am trying to get a pulse for the health of the economy.

Sales trend of software, cloud computing, cars, etc. can be a telling picture of what is happening right now in the world economy. For example, Meta’s YoY revenue fell for the first time ever which is an indicator. Of course, these are just one indicator. Slowing Facebook ad sales does not necessarily mean that we are in a recession, but it does mean that businesses are spending less than they did last year.

So far, I’ve been seeing a mixed bag. Some companies are bracing for a recession, others are saying that we’re not in the recession. My philosophy here is to err on the side of caution and be happy that I’m wrong. I’m preparing for a tough few quarters ahead and hoping for the best.

SF Energy Woes

I’ve been writing quite a bit about how the energy is lacking in San Francisco’s downtown. Everything is just a bit boring nowadays. My office has at most 8 people at a time when there are no visitors, and while my coworkers are great, I just miss the overall energy of the city.

Prior to COVID, there was this startup energy that was different. Groups of individuals wearing the same startup backpacks walking to happy hour. Spontaneous run ins with others in fintech. Waiting in a lunch line with your competitors. I loved that SF and I miss it.

I tweeted about this a few weeks ago and based on the response, it feels like nearly everyone remaining in San Francisco also feels as I do. It was great to see that I wasn’t the only one feeling this way. I had multiple people DM me asking to grab a coffee and lunch.

I was stoked when this happened and I’m meeting my first “Twitter friend” post-pandemic tomorrow for coffee. I don’t know where these meet-ups will go in the future. I think a great outcome will be if we can get a group of startup folk together into a regular happy hour or lunch so we can expand outside our immediate colleagues, but we’ll see.

At minimum, I’m hoping that these regular meet-ups turns into at least bringing back some of that pre-COVID startup energy in San Francisco.

Doing vs. guiding

My work life the last few months have been marked by back to back Zoom calls. Weekly catch-up calls, 1:1s, strategy, planning, brainstorms… I feel like I’ve had ever type of meeting ever imagined.

I had a slowdown in my meetings the first few months of the year as I got to focus solely on launching a new product with just 1 other team member. Over the last few months though, I’ve slowly built my number of direct reports back up and now have more direct reports than ever before. With that, comes more meetings and calls.

I’m not necessarily complaining of course. Moving up the ladder and leading a team is part of progressing in most career paths and I’ve had a crash course in management over my last 4 years of time. It’s an experience you don’t get in any other place besides a startup.

The biggest change for most people that move into more of a managerial role at startup will be that transition where you are “doing” nearly everything to where you are now a manager and “guiding” people through the day.

When you move into that manager role, you need to gain leverage by using your team to accomplish much more than you would be able to. Focusing on doing everything will stunt your team’s development and lead you to a path of burnout as you look to both do and guide.

It was definitely a challenge for me as I was used to just plowing through my checklist at work as fast I could… in other words… get shit done. Taking multiple calls a day to guide my team to get shit done was a gigantic change of pace as I took a step back in almost all areas of the business.

All that said, there may be nothing more beautiful at a startup than a highly functioning team that works together to get shit done. It’s an investment that you need to make as a manager, but one that pays off many times your investment in the future.

Housing prices and shortages

This past weekend, I was in Seattle for the wedding of one of my college buddies. We stayed at my friend’s parents’ home in Olympia where they live on a nice golf course. The nice was huge with a big backyard and everything you’d want in a suburban home. You even had hole #8 right behind you. It may have been the first time I thought that life in the suburbs may not be so bad after all.

Naturally being in my early to mid 30s, the topic of real estate comes up a lot. My friend’s parents made sure to ask me about whether I’m buying in San Francisco sometime soon. The unfortunate reality is that even with Sophia and my joint income, buying a home in San Francisco will likely be out the picture for at least the next 5-10 years unless one of us has a windfall.

I’m not the only one who goes through this. I know nearly all my friends are struggling to buy real estate in the cities that they love. The only ones who are buying homes are those that are lucky enough to have supportive parents. One of my clients awhile ago proclaimed that he was a “middle class millionaire” in San Francisco.

This housing shortage started in California long ago and has gotten worse. It’s definitely not fun to be directly impacted by this. My Dad likes to remind me to buy a house every time I come home. I have to remind him that buying a house in San Francisco 30 years ago for $200k was much easier than it is now.

Unfortunately for now, there’s not much we can do. At this point, my strategy is to save, invest, and hope for the best. I suppose if buying a house in San Francisco doesn’t work out, the suburbs aren’t so bad after all.

Newsletter

We launched Secfi’s first newsletter today. We had been talking about doing a newsletter for a few years now. We always thought it was a great idea to share our thoughts and opinions on the world that we live in. For many reasons, it always got put on the backburner.

The biggest reason was just time and priorities. We didn’t feel like writing a weekly or bi-weekly newsletter was the best use of anyone’s time. Looking back on that - I regret not launching it earlier. A newsletter is a great way to connect with our audience and build the base of a community.

On top of everything, it’s been really fun writing again. I had the pleasure of authoring our first week’s newsletter. Others from the team will chip in from time to time. It’s about an hours worth of work to write it and I have fun doing it. It’s nice to get out of my spreadsheets and powerpoints from time to time.

My life philosophy

I’ve been thinking about existential shit recently. I’m not sure why, but I’m guessing it’s because I’m getting older and because I want to bring my own kids into this world soon.

I was reading Twitter the other day and some guy was posting about his life philosophy and I realized that I’ve never really thought about mine. Sure, I have some values and whatnot, but I don’t know if I’ve ever truly defined my life philosophy.

So I’ve been thinking about it for a bit and on my walk during lunch, I realized that I probably do have a life philosophy already, I just never wrote it down. So here I am today.

Happiness in life is bringing joy to others

That’s it. I truly believe that my happiness in life stems from bringing joy to others which in turn brings joy to myself.

Having everything with no one to share it with is just the same as having nothing. It’s why sharing an amazing meal with someone is much better than eating by yourself. Having every material good and toy in the world absolutely sucks if you have no one to share it with.

No work is ever worth it if it doesn’t bring joy or happiness to people’s lives. We build startups to solve problems and bring joy to others. This is why I love working at Secfi so much - I get to help solve people’s problems on a day to day basis.

I don’t know how and why humans got here. I do know that I’m going to spend my life trying to make other people happy. That’s a life well lived.

Monday funks

I feel like my Mondays have been pretty tough recently. It’s as if I’m in a bit of funk every Monday (and often other days). There’s a bit of imposter syndrome on these days and my self-esteem feels like a low on Mondays. Even the smallest tasks are much harder on Mondays than they are on other days.

I used to think that the cause of this was that I just had tiring weekends that left me fatigued and out of it on Mondays. There was some of that for sure, but over the last few months, I have really stopped going out much which doesn’t explain the Monday blues still.

As recently as a few months ago, I started to think that it was simply just a bit of burnout. I definitely think there definitely some impact here. I’ve taken some vacations and think I’m really due for a larger vacation that’s not tied to an event like a wedding. Something nice and relaxing maybe what I need.

After thinking about it some more on my lunch walk, I think I’ve decided that a lot of it just has to do with my mental mindset lately. I probably have twice as many negative thoughts on Mondays than I do other days.

Curbing this habit used to be a lot easier when I was going into the office and seeing a bunch of my friends. But with remote work, things are just much lonelier and depressing on Mondays. Combine this with a lot of negative news lately going around in the world and it’s create a perfect storm.

I don’t think there’s a complicated fix here. A lot of it just changing my mindset on Mondays, staying positive, listening to good music, surrounding myself with good people, etc. Most of all - I need to make sure not to be too hard on myself on Mondays. This perpetuates my negative mindset.

The unsexy things

I was able to watch the end of the The Open championship this morning over my breakfast. I was somewhat surprised to see Cameron Smith outduel Rory McIlroy down the stretch. It seemed like Rory had a commanding 2 shot lead going into the back 9 and he was going to run away with it.

Rory played well enough to win. He hit 36 putts and 2-putted every hole. He made virtually no mistakes. But the difference was that he wasn’t able to make any birdie putts down the stretch. He came close… a lot but they didn’t fall.

Contrast that to Cameron Smith who was money with his putter all day. He had only 29 putts and that became the 2 shot difference down the stretch. It was epic to watch.

Golf is an interesting sport. Everyone talks about long hitters, powerful swings and shot shaping abilities. Like most, I think that’s the most fun part of golf. But as saw today, it was the unsexy part of golf that won it for Cameron Smith.

Like sports, I’ve come to realize that in the business world, it’s almost always the unsexy and inglorious things that make the world of a difference.

Today, I’ll spend couple hours practicing my chipping and putting. As I begin my work week tomorrow, I’ll be focusing on the unsexy things that I’ve been putting off for some time.

Breaking things down to build it back up

I’m in the process of completely revamping my golf swing. I’ve had an unorthodox swing for some time now and it has worked decently well. I’ve broken 100 quickly and I feel like I’ve had spurts of glory on the course. Of course, a flawed swing rears it’s ugly head often and that’s what’s been happening.

While there is no perfect swing, my swing made things extra complicated in that lots had to go right for me to hit the ball straight. I hit the ball straight often as I was able to recover and build my swing with a bunch of tweaks. I’m now at the point where I realize that my severely flawed swing can only take me so far and I may never get to where I want to if I keep doing what I’m doing.

So I’m breaking everything down and starting from scratch. I’ve decided to completely revamp my swing to eliminate the major flaws. It’s going to be many steps back, but I’m hoping that this will be the springing board going forward for me. Day 1 starts today. With 3 rounds ahead of me in the next week and half, I’m a bit worried about my performance on the course, but the pain will be worth it in the long run.

Over the last few weeks, I’ve had a lot of similar thoughts to what we’re doing at Secfi. We’ve been doing this for 4 years and there’s a lot of things that need to be addressed that haven’t. Sometimes things are just not worth fixing and it’s better to scrap the entire thing and build it back up.

We just had a call with our product and engineering team on one initiative that we’ve worked on the last few months. In light of recent events, we’ve come to realize that we need to scrap those plans and restart from anew. Yes, it sucks. We spent time, resources and money on that initiative. But we also realize that to get to where we want, we need to switch course and start from scratch.

Like my golf swing, I wish we had done this many months back, but there’s no better time to start than now.

Our office in San Francisco

We are now looking for another office in San Francisco after our current lease is trying to 3x the monthly rent. In a market where people are reporting that almost 40% of offices in downtown San Francisco are vacant, I do not see how they end up leasing the space out. But that’s not my problem.

It is my problem to figure out where our next office will be. I’ve written recently about how there is a complete lack of energy in San Francisco. Most people who still remain in the Bay Area seem to want to work from home. Contrast that to New York where people are in the office almost every day.

We’ve got some decisions to make as a team here in San Francisco. As of right now, we have at best 5-10 regular attendees in the office. Our New York office already has that same amount and it’s a much easier flight from Amsterdam where our 3rd office is at. We’ll need to decide if we want to invest in space in New York rather than San Francisco as our headquarters. At this point, it seems like this is the logical decision especially with our capital partners being based in New York.

We’ll need some sort of space in San Francisco. The choice will be between a co-working space or signing another lease somewhere. The flexibility of the co-working space is really nice, but that also comes with some major issues. We do know that we are going to downsize the San Francisco office significantly from a 60+ person office down to probably a 15-20 person office. It just doesn’t make sense right now for us to be paying for such a large space and no attendance.

Brainstorming over Zoom

I’ve been in back to back meetings for the last week. It’s been a long week of long Zoom calls meeting with leadership and various teams on planning for the 2nd half of the year. I’ve also put a lot of emphasis on getting feedback from as many teams as possible to revamp some of our processes during H2.

Ideally, we would all be in person and work through it in a conference room. Unfortunately, we’ve had to resort to Zoom and it’s been exhausting, but fulfilling. I’ve learned a lot about working on Zoom, especially in the group context and have come a long ways from April 2020.

Here’s some of my favorite tips and hacks when it comes to group brainstorms over Zoom:

• Lower you expectations when it comes to Zoom. Video conferencing has severe limitations and everyone knows it. Some people expect it to completely replace in-person meetings and by doing so, you’re setting yourself up for failure. Know it’s limitations.

• Have one moderator that keeps things on track and ensures that everyone has a voice. You can’t talk over people on Zoom and it’s often hard to see the people that are less assertive trying to speak up. One person needs to be watching the group and ensuring that everyone can speak.

• Keep everyone on track by asking each other a lot of questions. It’s really easy to get distracted on Zoom and multi-task. People get bored easily and Zoom makes things much worse. Make sure that you are keeping each other honest and challenging each other at all times.

It’s not perfect, but Zoom gets the job done. With a few minor tweaks, life is a lot better over Zoom.

China and liquidity

I woke up to the news of the Chinese government squashing a group of protestors who are attempting to get their life savings out of their bank. It appears that some Chinese banks are going through a liquidity crisis and have resorted to freezing accounts. On the surface, this seems like a terrifying prospect and perhaps a sign of a worsening economy.

China is already dealing with strict government mandated lockdowns. I can only imagine the plight of the Chinese now that there is a potential liquidity crisis looming. I don’t know how this all ends, but I’m hoping it’s resolved soon.

All this stuff scares the living shit out of me. I can only imagine what it’s like to have your life savings locked up with no way to retrieve it. It’s a stark reminder that I need to do a better job saving in this market. All this could get a whole lot worse.

A change of scenery

I had a great weekend up in Lake Tahoe. A change of scenery for a few days of work and a weekend to let loose was great. After a good 3 days of closing out the work week, my friends and I went to gamble a bit and then watch the American Century Championship which is a celebrity golf tournament at Edgewood in Tahoe.

I had been struggling a bit with productivity the last couple of weeks, feeling a bit down and demotivated. I believe this was attributed to just a long last few months of grinding mixed in with the perceived negative sentiment of the world right now. Being up in Tahoe with a switch-up on my day to day routine was a nice breather and I seem to have my mojo back.

It was a good reminder to switch things up when they everything starts to feel stale. I’m a creature of habit and sometimes I fall into the same boring routine for weeks and months on end. It can get boring real quick. I’ll look to kick things off in H2 2022 with a bit of a clean slate when it comes to my schedule. New food, new workouts, new work locations… it’s all on the table.

Future of NFTs

I’ve had a lot of discussions with friends and colleagues about NFTs and the drop in value. Lots of mainstream media seems to be picking up a lot of the failed projects primarily around celebrity projects failing to live up to expectations.

As someone who has participated in a few NFT projects and spent a decent amount of money in the space, I truly believe that this will be good for the ecosystem in the long run. There were way to o many get rich schemes more akin to pump and dumps than real businesses and projects. The vast majority of people that bought NFTs over the last year were in it for the quick profit. I know as I have a lot of friends who were in that boat.

Over the long run, I do see value in NFTs. In the most basic sense, you can compare them to collectors items in which people spend a good amount of money on even in this day and age. If you think collecting items and art is a worthless endeavor, then I’d imagine you’d feel the same about NFTs.

Beyond the collector aspect and online swag aspect of NFTs, I believe we’re still just touching the tip of the iceberg when it comes to NFT use cases. There’s are and will be unique ways NFTs can be utilized in real world use cases beyond the get rich schemes.

Of course, the challenge will be adoption and the pipes and infrastructure for crypto is just not there yet. As my stance has always been, I’ll be participating in NFT/crypto projects that I want to be part of. There is great learning potential there and I want to be part of the evolution of this new technology.

The (lack of) energy in San Francisco

Yesterday, I tweeted about how going into the office in San Francisco is a bit depressing nowadays. There is noticeable drop in people compared to pre-pandemic times and the energy overall is just lacking. Compare this to other cities who have fully come back and it’s a bit sad to see. I can tell that I’m not the only one that feels this way as the tweet had a lot of interactions on it.

As much as I want to blame San Francisco politicians for this, I believe this is created by lax tech culture of the late 2010s. Employees and companies were in boom times and there was a shortage of labor so companies did everything possible to make employees comfortable. A lot of tech workers in San Francisco would quit their jobs if their companies forced them to go back into the office. Call it what you want… the future of work… tech 2.0… privilege. It is what it is right now in SF.

I am saddened by this and realize that we likely won’t ever get back to the point of bustling San Francisco downtown in the 2010s. There is a change in culture and remote work. Yes, things will rebound and get back to some semblance of normalcy, but I think our best case is probably 50% of the peak in 2010. Perhaps 75% if the market starts to shift significantly in favor of employers.

I can’t make Google or Facebook force their employees to come in and fix this lack of energy in SF. However, I was glad to find out that I wasn’t the only one who felt this way. I had multiple people that I have never met DM me asking to grab lunch or coffee in SF as they had felt the same way. I see this as a great way to meet new people who are building just like me.

I’m not sure what will come out of this, but I’m excited to meet some new friends for lunch next week and see where it goes.

H2

H2 2022 is here. Crazy to think… this was a fast 6 months. It was just yesterday we were closing a record 2021 and the markets were still booming. Things have clearly changed since then.

I’m not sure what H2 will look like in terms of the market and economy. Many are saying we are already in a recession and they may not be wrong. Quite frankly, in terms of work, I’ve gotten to the point where I need to care much less.

Planning for Q3/Q4 over the last few weeks have done wonders in terms of clearing my head. I’ve been too focused on external factors and not focused enough on the things that we can control. So for H2, I’m keeping things simple and focusing on myself, my team, and my company and the things we can be doing better.

When times are tough externally, it’s a perfect time to focus on building and that’s what we intend to do at Secfi. Our mission at the company hasn’t changed and will not change based on the economy or the market. I’m looking forward to this change of pace and the newly found headspace.

Tired

The 4th of July holiday came at a perfect time. I feel absolutely dead this weekend. It was a brutally long week of work and I feel like I haven’t been getting proper rest. I reluctantly went out to grab a dinner on Friday, but came back absolutely gassed.

I was dead all day on Saturday and when I went to bed, I started feeling like I was getting aches and the chills. I suppose it’s some sort of stomach flu that hit when my immune system is at a low. I feel a lot better now after sleeping nearly all day.

I’d imagine this is my body telling me that I need some more rest and sleep. I plan to do just that the rest of today and this week. Being a shell of yourself is not the way to live life.

Cassidy Hutchinson

I’m just starting to catch up to the news of Cassidy Hutchinson’s testimony. I definitely have no desire to write about the politics or the legal side of things here, but I did want to applaud her for what she did.

I find it impressive that a 26 year old presumably went against her political affiliations and prior allegiances in order to tell the truth on what happened on January 6th. I can only imagine the immense pressure that she is under from all parties involved.

By taking the stand and telling the truth, she invited herself to a lifetime of vitriol and hatred. Her name will forever be associated with the events on January 6th and her corresponding testimony. Not many 26 year olds would have done the same thing.

At the end of the day, the truth matters and the American public deserves the right to know the truth. She did the right thing for herself and her country.

Private company deals

Yesterday, I wrote about how I’m accumulating a larger cash position in the next few months in order to prepare for a a worsening economic situation. One exception to that strategy was an investment in a private company that I had been eyeing for a few years.

This was the first new investment I had done all year long as the markets have been slowly on a downturn. I have largely been sitting idle on the public markets. My overall position the last 6 months have been defensive. But on the private market side, I saw these investments as longer time horizons so I was okay with the pricing uncertainty due to the markets.

With this investment, I have now put a good amount of money to work in 3 different startups ranging from Series B to F. Each of these investments come with widely different theses.

The first company was a Series B that I invested in last year had the potential to be a game changer in a growing industry. It was a rich valuation which I acknowledged, but I saw it was an opportunity to potentially 10x in the next 5-10 years.

The second company was a Series B that I invested in earlier this year. It was an amazing opportunity to gain exposure to an earlier stage company in the space industry. Furthermore, the Founders and backers were hard to bet against in this industry.

This latest investment is the latest stage company that I have invested in at the Series F. It was just too good of an opportunity in an industry that my current portfolio had no exposure in (purposely not discussing the industry due to confidentiality reasons). The company is led by a repeat founder that has sold a company for over a billion dollars in an adjacent industry.

I’m excited about these initial investments as I continue to build out my personal private company portfolio. Given the uncertain times, I feel a lot better putting my money to work in companies that are expected to exit in 3+ years and are well capitalized.

Preparing for the worst

Sophia and I chatted a bit this past week about how we should be looking to save a bit more. With the market down and the possibility of a recession coming up, I’ve realized that we need to prepare for the worst case scenario.

Overall, I am happy where we are at financially, but it could be a lot better. Like most, we’ve been susceptible to lifestyle creep over the last few years. I’ve been guilty as well and a lot more loose with my cash the last couple of years post-pandemic. As someone who was really aware of the lifestyle creep, it was hard not to spend more during the past 2 years. The promise of the “Roaring 20s” was something ingrained in my head as I traveled a lot and bought toys. It’s time to settle down a bit.

I’ve also underestimated how much cash I should be holding onto. In the last few years, I’ve been putting a lot of money to work by investing in the public markets or startups. That’s great of course, but in a downturn, I’d feel a lot more secure for Sophia and I if our cash balances were a lot higher.

We’re not an extravagant couple by any means, but we hope to start a family in the near future and that changes the equation. The bear market did us a favor by opening our eyes a bit that things aren’t always going to continue to go up and downturns do happen. It was a nice sign that I need to make some lifestyle and money changes to protect my family’s future.