Money2020

I’ve been in Vegas since Friday hanging out with my childhood best friend who moved here four years ago. We’ve spent most of our time golfing, hanging out, and just eating good food. There’s a lot more to Vegas besides the strip and it’s been cool to see.

Money2020 officially kicks off tonight and I am excited. There’s a lot of old friends I’m pumped to see and lots of opportunities for Secfi as we finally go big at Money2020. Our CEO, Fred is on a panel on Tuesday which will be fun to watch. We’ve also got a big booth and hope to introduce Secfi to those who have not yet met us.

I need to ensure to pace myself. There’s a lot of fun to be had in Vegas and I need to remember that I can’t hang like I used to in my 20s. Top of mind for me today and tonight is to get a good nights sleep so I can be well rested for a long day tomorrow and Tuesday.

TC Disrupt

I’ve been swamped the last two days at Techcrunch Disrupt. On top of meetings, I hosted 4 roundtable discussions where we discussed equity compensation and the changing landscape with the market.

I was really pleased with the attendance at the roundtables. All sessions got to the point of standing room only and it was really cool to see founders and investors really care about the future of equity compensation.

I was admittedly a bit worried as there were some really interesting speakers and talks that were perhaps more “intriguing” to the younger generation. I had expected NFTs, crypto, interoperability, etc. to be the headliners of these roundtables but perhaps I underestimate how cool stock options and taxes can be.

A lot of really awesome people came up to speak to me after the sessions. It was inspiring seeing a lot of young talented builders wanting to ensure that they are setting up equity programs the correct way at their companies.

I forgot how exhausting these conferences can be. I came into the week tired from the weekend but after a good workout Monday night, I was ready to go Tuesday morning. As I write this on Wednesday evening, I am absolutely dead mentally and physically. I had tried to go on a quick run to rejuvenate couple hours ago but my legs felt like tree trunks and after a sad 1.5 miles, I decided to walk home.

Once again, it’s another reminder that I am no longer in my 20s and I need to give myself and my body a bit of break more often.

Conference szn

It’s October which means that it’s conference season for Secfi and I.

We kick things off this week with TechCrunch Disrupt in San Francisco. I’ll be hosting 4 roundtable discussions at TechCrunch Disrupt on Tuesday and Wednesday. And have a few meetings with some potential partners.

Next week is Money2020 which is fintech’s super bowl. I went to M2020 last year and I had an absolute blast and met some awesome people who I still speak to today. We’ve decided to go big this year and we’re bringing 12 people and have a booth in the exhibition hall.

I’m excited to see some old friends and make some new connections. Perhaps if I have time, I’ll also sneak off to the craps table for a couple hours and let off some steam.

These conferences are a lot of fun but draining. I’m not sure if it was the pandemic or just being in my 30s now, or a combination of both, but every time I go to one of these conferences, I need a solid 3 days to recharge my batteries. I’ll need to be cognizant about getting sleep and proper rest these next 2 weeks.

Tired

I’m dead today after a big weekend. I had a long week at work and by the time Friday came around I was pretty brain dead and was ready for the weekend. I took the night to relax and go to bed early.

Saturday morning was filled with work and wedding planning. It was a stressful morning and I didn’t get as much done as I had hoped before I had plans to meet up with friends.

I ended up going out with some old friends and didn’t get home until 2am. It was a big night for me and while it was fun, I was absolutely dead this morning.

A friend from out of town wanted to golf today and I should’ve canceled to rest and get some things done, but I felt bad and ended up powering through.

As I write this on 7:44pm, I am absolutely zapped and realized that I definitely overdid it this weekend. I’ll be paying for it tonight, but hopefully will be catching up on some sleep tonight in light of a big couple of weeks. It’s another reminder that I need to be treating my body better.

Four years at Secfi

October 1st marked four official years at Secfi. It’s been remarkable to think how fast the years have gone by. It’s even more remarkable to look back and realize how much we’ve accomplished and what we’ve had to overcome in those years.

I couldn’t see myself at any other place besides Secfi and I’ll forever be grateful that I got introduced to these two Dutch guys starting a company from a friend of mine. When I joined Secfi, I was coming up on five years at PwC and was really lost. I had thought about starting my own business, traveling for a year, and going to business school.

I had met Fred and Wouter, the co-founders of Secfi, at the perfect time. I was ready for a change and a new challenge. Secfi was a startup at the perfect intersection at everything I knew and wanted to be part of. Secfi fell on my lap at the perfect time. One thing I’ve learned over the years in my career and learning about other people’s careers is that when you work hard, you set yourself up to get lucky. That’s exactly what happened to me and I couldn’t be more grateful.

Remote working abroad

I had lunch with a friend today who has been consistently traveling with his girlfriend for the last year and half while working remote. He’s lived in Europe, multiple places in the U.S., Mexico and South America during this period.

I’m pretty jealous - it’s pretty cool to be able to travel the world and live somewhere new whenever you want to. I’ve always had the travel bug so this is something that I would’ve loved to do especially earlier in my career.

I’ve met quite a few people who have been doing this the last couple of years. I’m curious to see if companies allow this to continue to happen in the next few years especially being in a bear market right now. On one hand, remote working tools have made this possible and we’ve seen very successful companies being built remotely.

On the other hand, I’m not sure I’m a believer that employees are giving their full potential when traveling. I spent a month abroad in Mexico and while I made it work, I admit that I would’ve been much more productive going into the office every day in San Francisco.

It’ll be interesting to watch whether employee happiness or employee productivity wins out in the end.

International teams

One of the best parts about working at Secfi is the fact that we are very international. We have offices in San Francisco, New York and Amsterdam with remote employees scattered from Brazil to Spain. We have people from every continent except Australia and Antarctica. (I’d love to hire an Aussie soon though)

The diversity of the team makes for a really fun work environment. Learning about different cultures, food, and traditions is a daily occurrence within Secfi. Furthermore, the diversity between countries allows different ways of thinking that brings out the best in all of us.

Of course, there are some difficulties to navigate. Cultural differences play a big factor when working with each other. To keep things simple, cultural norms in the U.S. and Europe, for example, are much different. Little things from Slack and emails over the weekend to the way we give feedback are all different enough that we need to be aware.

One thing that I’ve done to try to bridge this gap in understanding with those that have never worked with me is that I lay it all out on the table the first time I meet them when they join the company. During my 1:1, I let them know a bit about my personality, how I work, and my boundaries.

For example, I always emphasize that I have a strong and opinionated personality and to not take things personally with me. I believe that health debates (arguments) can be good for work if done in a mature and controlled way. I also let them know that I’m always open to feedback and they can let me know anything at any moment.

By being upfront, it helps people understand who I am and how I work and I also encourage everyone on my team to do the same.

Gratitude

I was dreading this past weekend as we were taking a red eye to Baltimore on Wednesday night and attending Sophia’s cousins wedding. It wasn’t that the wedding was bad, but it’s just a real long way to go for a weekend especially on a red eye. It ended up not being as bad as I had thought and the weekend overall was really fun.

My negativity and pouting the entire week ended up being worse than the actual experience. I think I often forget how lucky I am to be able to travel across the country, explore a new city and spend time with friends. I believe all this really comes down to gratitude. Instead of being annoyed that I have to travel on a redeye and go to Baltimore, I should be grateful that I have this opportunity.

We have today off for the U.S. employees for indigenous peoples day. It was a nice welcome day off after a few long weeks of travel. I’m going to do a bit of work, but use most of today to get caught up on errands and life.

As much as I want to spend most of today grinding, I know we have a gauntlet of events and things to do in the next 3 weeks with Techcrunch Disrupt and Money2020 coming up. I need to take the rest when I can get it.

Companies that raised at insane valuations last year

I can’t believe how many companies I’ve looked at recently that raised rounds at 30x+ ARR multiples back in 2021. The number is staggering and what’s even crazier is that most of these companies are on a growth rate to earn back that multiple in likely 3+ years.

Let me illustrate using a company that had $50M ARR that raised at a $1.5B valuation in 2021. They raised at a 30x ARR multiple. Assuming they are growing at 50% YoY, then their ARR will look like the following:

2021: $50M ARR

2022: $75M ARR

2023: $112.5M ARR

2024: $168.75M ARR

Assuming a pretty damn high growth rate at 50% YoY, they will need to get to $150M in ARR in 2024 in order to get back to a 10X ARR multiple which would be consider high, but reasonable at this point in time.

Now a few things can happen. The market can come back and ARR multiples can go back up. Revenue growth could also accelerate. But the opposite can also happen…. ARR multiples can stay stagnant and revenue could also decelerate which tends to happen with most tech companies.

Time will tell what will happen to a lot of these companies, but many could be in a lot of trouble when they run out of cash and will need to raise another round. Most will likely end up with that dreaded down round.

Hello Q4 my old friend

And just like that, we’re back to Q4. I can’t believe how fast time is flying… I feel like I was just writing about going into Q4 the other day. Football is back, the pumpkins are out and the holiday season is upon us. What a time.

We had hoped that September would be the bounce back month for investors, but unfortunately, we have yet another low month of VC capital being deployed. Times are undoubtedly tough right now with the market continuing to worsen and geopolitical events on the horizon.

Unfortunately, I can’t make the markets come roaring back or force capital allocators to pump money into the startup ecosystem. What I can control is my attitude and mentality going into Q4 and that’s exactly my plan.

Heading into Q4, my teams will be absolute relentless in the market. Instead of waiting for the markets to come back to us, we’re going into full attack mode. It’s no surprise that things are much easier in a bull market for us, but we don’t care and we’re going to embrace this challenge of working in a bear market.

We’re going to grind, build and close in order to ensure that we end this year strong. It’s going to be a hell of a quarter.

Generative AI

Crypto? NFTs? Web3? See you later. Hello, Generative AI.

Yes, this is a bit of an exaggeration as I don’t believe web3 is dead, but it is a bit funny to see the attention shifting to the new latest trend in tech which is generative AI.

As impressive as the web3 wave was, I believe that the output and content created from these Generative AI startups is even more jaw-dropping. We’ve got computers now making art, writing stories, and creating stock images from word prompts.

We saw a glimpse of Generative AI a couple years ago with GPT-3 and I believe we’re just touching the surface of the realm of possibility. This will be fun to watch.

At bare minimum, the cheating scandals in colleges with students using Generative AI to write essays will be hilarious.

An employer market

Save for a few minor blips such as COVID, the last 10 years have largely been employee markets in tech. Employers raced to increase compensation and benefits in order to recruit and retain the best talent.

We’ve seen free lunches turn into full on fine dining spreads. Tech salaries have outgrown inflation by a large margin. Summer Fridays have turned into complete weeks off to "recharge”. Companies have gone fully remote and some have explored with a 4 day work week.

While work-life balance is important, I think we’ve seen quite a bit of employee privilege over the last few years, especially in the post-pandemic life. Employees were demanding more and companies were appeasing these employee demands in order to not lose talent.

Enter the 2022 recession and I believe we will start to see this completely flip. Employers are well aware of quiet quitters and that they have quite a bit of “fat to trim”. Boards and markets are dictating a stricter environment where goals and spending will be under greater scrutiny.

While I still expect tech employees to command high salaries and great benefits, I think we’ll see a significant clamp down going into Q4 and 2023 with companies putting their foot down.

Back to the grind

I had a great 9 days down in Mexico. The original plan was to do a long weekend in Cabo for my bachelor party. But that soon evolved to a 9 day vacation combined with a bachelor party at the end. I had been needing a vacation and things lined up nicely to for longer trip where we golfed the first 5 days, and then the “party” portion started.

I had a great time and was able to unwind and put away my computer for a bit. The one bummer about the trip is that quite a few friends had weddings over the last weekend and were unable to come. Ultimately there were no perfect weekends and we had just to choose a date.

I had written that weekends like this will likely be very limited in the future as we enter our next stage of life. I’m not sure on the next time we’ll have a chance to do this again. I was just grateful that we were able to spend time together.

On the work side of things, I’m back today trying to get caught up on everything. It’s going to be a hectic and busy October workwise and personally. Lots of exciting stuff workwise ahead but it’s going to be a grind to close out the year strong.

Secfi Wealth

Today we announced our launch of Secfi Wealth. It’s been a work in progress and my biggest focus for the last 12 months. We started with a small beta program back in February in which we started signing on select clients that we loved working with. The initial reviews were great and confirmed our hypothesis that startup operators wanted more help with their overall financial picture, starting with their stock options.

It’s been a fantastic ride. We’ve made a lot of mistakes, learned a ton, and built a ton in the last 12 months. I couldn’t be more excited that we’re officially launched and ready to take on more clients.

I’ll be resting this week and weekend on my vacation in Cabo. When I’m back next week, it’ll be game on. We’ve got ambitious goals and while we are all celebrating today and this week, we know we have a lot of work to do.

Cabo

Well, I made it to my vacation week in one piece. It was an especially tough week as I was feeling like shit in the earlier part of the week. Regardless, the work is done and everyone is prepped for the next week while I’m out.

I’ll be flying down with 3 of my close friends to play golf and eat some tacos for the first half of the week. Then on Thursday, a few more of my friends show up and we’ll start the “bachelor party” side of the trip.

This will likely be the last of my bachelor parties for at least a couple of years. I’m going to try to savor this as much as possible as I know the times where our friends and I get together like this are limited.

We’re at that age where kids are going to start becoming a reality and while I’m excited for that next stage of my life, I’m always trying to savor closing down my young adulthood phase.

Failing your way to success

One of the more frustrating aspects of writing this blog and my job is that I can’t write about specifics due to confidentiality. I work with so many amazing companies and aspiring entrepreneurs that I’d love to write about them more, but I can’t. I’m hoping that one day I’m able to come back to these blog posts and reveal the identity of the company/individual though.

Today, I had one of these amazing stories that I hope to discuss more in detail once I can. I had a due diligence call with a couple executives at a company we’re looking to partner with. The company had a difficult start out of the gates as they severely struggled to grow revenue the first few years. They had a great product that their customers loved, but they operate in a somewhat commoditized space and they had to compete heavily to acquire customers.

The offering itself was not differentiated enough and they were burning cash and revenue was not growing. That’s normally a startup death sentence.

After a few years the company decided to go with a fintech pivot and change up their revenue model. Instead of doing what their competitors were doing, they decided to start offering ancillary services and switch up the model a bit. That turned out to be a pivotal decision that changed the trajectory of the company. Revenue has been growing significantly ever since and they have been blowing up the last couple of years.

What I love most about this startup story is the culture of the company. They were a company that experimented and failed often. They understand that not everything they try will work and stick. But when you find that winning formula, amazing things can happen.

That’s exactly what happened in this instance as clever entrepreneurs realized what they had was not working and sought out to fix it by trying something different. The eventual solution was of course not the only thing they tried. Out of this success story comes many failed experiments and a lot of hard work. They tried, failed and failed again until they found the winning formula.

That’s what a startup is all about. Experimenting, failing and iterating until you make it. We often only hear success stories of startups, but every successful startup has had their failures.

More pain ahead?

The Fed just announced that they are raising interest rates by 75bps again. It seems to be a recurring theme of 75bps increases. I saw a few rumors that they were going to go with a 100bps increase this month, but I guess sticking to what you’ve done was a bit easier.

There was a lot of optimism that the markets were going to settle in the fall and inflation would be beat by now. I think this may be a much longer bear market and recession than we think. All signs point to the fact that there will be more pain ahead before things get better.

My hope is that things will at least stabilize a bit. On the private markets, VCs are sitting on a lot of dry powder and will need to deploy that at some point. A stable market allows investors and companies to be able to at least get to a good comp and deploy some capital.

Our portfolios may be down for a bit, but the innovation and progress shouldn’t stop.

Tired and ready for time off

I’m halfway through the workday and just dragging a bit. My 4 hour of calls this morning was good but I’m pretty drained already admittedly. It’s been almost 4 months since my last vacation (beyond just a day off for a long weekend) and they have not been an easy 4 months.

There are some pretty obvious signs that it’s time for some time off. The extra snoozes in the morning despite having a good night sleep. Struggling to get through even the most basic work tasks. Reaching for some caffeine to get you through.

None of these are great signs obviously and it’s time for some rest and relaxation. I fly out to Mexico on Friday for a week and half with my closest friends and I couldn’t be more excited. There’s going to be a lot of golf, eating and relaxing and that’s exactly what I need right now.

For now, I’ll power through and ensure that we’re all in prime position for the next week while I’m gone.

The Dawgs are back

I was up in Seattle watching my UW Huskies take on then #11 Michigan State. It was a great weekend and reminded me of why college football is the best. It was a gorgeous fall weekend in Seattle and MSU fans were great visitors.

I love the pageantry and traditions. I got to see a lot of old friends over the weekend and at the tailgate. There really is no better place to spend a Saturday when the atmosphere is like it was this past weekend.

The Huskies were amazing from the start. They let a bit off the gas towards the end and that made me nervous but it was a complete domination from end to end.

Considering we were 4-8 last year, I couldn’t be happier with a 3-0 start and a perfect start to the Kalen DeBoer era. It’s been special to watch. We’ve got a shot to compete for the Pac-12 title which is really all you can ask for after last season’s debacle.

It’s amazing how much leadership and coaching matters in both sports and work. We have largely the same players as last year and we look like a completely different team.

It all starts with the culture that Coach DeBoer has instilled in that locker room. You can just sense that things are night and day from last year. Everyone is bought in. When you got a culture like that, special things will happen.

Adobe acquires Figma

I’m up in Seattle to watch my Washington Huskies take on Michigan State. It’ll be my first time back to Husky Stadium since the pandemic started and I couldn’t be more excited. I love Seattle and would definitely live here again one day. Great food and great people. It’s not lost on me that raising a family is much easier living in Seattle than it would be in San Francisco despite being an expensive city as well.

The biggest news of the year when it comes to startups hit the tape yesterday as Adobe announced they were acquiring Figma for $20B. This is a huge acquisition and a big premium at 50x ARR. I read a few places that this is the largest private company acquisition in history and this is the highest multiple granted to any acquisition.

The street didn’t like it as Adobe stock has tanked more than 20% since the announcement. Personally, I saw this as an amazing buying opportunity and bought some shares today.

My hypothesis is that the street doesn’t like the acquisition as they view it as expensive and rich, but they also do not understand it either. Figma is an amazing product that is universally loved by all designers and product teams.

Figma is built to be a multiplayer collaborative in-browser tool which is made directly to combat Adobe’s weaknesses in their product suite. Adobe Illustrator and other products are not in-browser and teams cannot collaborate on something at the same time. With the way these products are made, you cannot just convert them into in-browser multiplayer tools.

With the acquisition, Adobe has just eliminated their biggest threat to their existence. Figma has been a thorn in Adobe’s side and has been eating their lunch for years now. Their 100% YoY growth shows that. Adobe felt threatened and saw that the only way to address this was to acquire them with an offer that was too good to pass up.

This acquisition has potential to be Adobe’s Instagram. Similar to that, people thought Facebook was crazy for buying Instagram for $1B. Nowadays, that was a steal of a deal.

In the long-term, I see this as a huge acquisition for Adobe and I am long Adobe.