Atlassian acquires Loom

Some relatively big news in the VC/startup world as Atlassian announced that they are acquiring Loom for $975M.

Loom makes a great product that we use at Secfi. In a nut shell, it’s a way to record a video of yourself and your desktop like you would be on a Zoom. Once those videos are recorded, you can send it internally or externally. At Secfi, we use it to send instructions or a walkthrough to our clients in lieu of setting up time for a call. We also use it to communicate async internally. It’s a great product and we’ve been happy with it.

The acquisition price comes in a bit below the Series C at $1.5B in 2021. While maybe not the outcome they envisioned when they raised that round a couple years ago, it’s still a great exit for the employees and most of the VCs. The acquisition clears the preferred stack and employees who hold common stock will have a sizeable payout from their shares.

I am not tied into Loom at all besides being a user. But my guess is that the acquisition comes at a fork in the road. They have a great product that has grown significantly and continues to grow, but growth is likely slowing. So they had a choice to make.

In order to continue to grow, they would likely need to create new products. And if they had an IPO in mind, they likely would’ve had to go down the “platform” route that combines all those products. I assume at some point, they felt that they were best joining forces with Atlassian instead.

Congratulations to the Loom team on getting to an exit!

Reflecting back on the NFT craze

I had a nice night catching up with a couple high school friends yesterday. It’s been really awesome that our high school group of friends has stayed so close over the years. I’ve now known all of them for the majority of my life and I plan to stay close with them for the rest of it.

Sophia told me that I needed to be better at catching up with my friends and I agree. I often get carried about with life and think that friendships nurture themselves. In reality, they need a lot of nurturing and I haven’t been the best at it.

On another note - my friend Francis and I were discussing NFTs as a bit as he still works at a NFT startup. The bear market has definitely taken a toll on the industry.

When the NFT craze was happening, I wrote that I was planning on participating in projects that I wanted to get involved with and trying to stay clear of buying into something for the sake of making money. I’m glad I stuck to that as I don’t have a gaping hole in my net worth right now.

Unfortunately, for those actually building in the space, it appears that the vast majority of those participating in the NFT craze was solely just to try make money, not for any utility. Now that the money has dried up, most the users and participants are also gone.

For myself, I’ve lost some money on the project I’ve bought into just like everyone else. But I did so mainly with gains so I’m in a good spot. I also only bought into projects I wanted to be in long-term which include LinksDAO, Knights of Degen, and the Illuminati projects. I’m still part of all 3 right now, and even golfed last Sunday with a friend I met on LinksDAO.

I hope there’s a bit of resurgence cause there’s some genuinely great projects happening right now. It’ll be interesting to see where things go from here.

The startup risk

In normal times, everyone who signs up to join a startup knows that the risk is failure is very high. For better or worse, that risk seemed to have disappeared during 2020 and 2021 as startups were able to continually raise capital to stay afloat. We’ve now gone back to the normal times and that risk is perhaps never been higher in the last 10 years.

When I joined Secfi in 2018, I came in thinking and knowing that this was more likely than not to fail, purely just on pure percentages and odds. We’ve luckily have been going for 5+ years since then and we have no plans on stopping anytime soon. Still we are a startup and that risk still always runs much higher than working at a much more established business.

The good news about this is that the higher the risk, the higher the reward. A lot of people who are at a startup or have been may not want to stick it out through the bad times. Those that do and are able to make it out will reap the rewards.

Progress takes time

It’s been a tough weekend for the world and humanity. We saw innocent civilians being killed and kidnapped by terrorists. We now have a full-scale war raging in the Middle East and there will be a lot more bloodshed.

As I wrote when Russia launched war against Ukraine that it’s a bit difficult to be optimistic about the world in general right now. I always lean towards optimism and the hope that the humans and the world will figure things out. Unfortunately it looks like we’re heading in the wrong direction the last couple of years.

The optimism in me knows that progress is not linear. The world may need to take a step back or two in order to move forward. Whatever needs to be done in Europe and the Middle East, I hope it’s done as quickly and with as little bloodshed as possible, especially those innocent civilians.

NY Tech Week

A few of us are flying out to New York the week of the 16th to do a lot of in-person meetings and also fine tune our plans for the months ahead. Coincidentally, it’s also NY Tech Week. Despite living in New York for 5 years, I never really participated in much tech related activities out there.

I’m excited to see what the tech scene out there is like. Looking at the list of activities and it’s immediately obvious that FinTech has a much bigger presence there comparatively to SF judging by all the events.

It’s been almost a year since I attended a large event and I’m excited to see what New York tech week is all about.

The EV debate

It’s going to be 85 degrees here in San Francisco for the next few days. While I’m always happy for the nice weather, we’re starting to stray into too hot for me territory.

Sophia and I have been pondering whether we want to buy an EV in the next year or so. Right now, we drive my sister’s 2010 Jetta which is a perfect car to absolutely just destroy in San Francisco. It may be the least cool car I can drive, but having no car payment nor worry about street parking in SF is great.

All that said, we know we will need to upgrade cars in the coming years and I’ve been casually taking a look at the EVs that are out. Tesla was the initial want, but as time has gone on, I’ve realized that perhaps they aren’t the best cars out there.

I still get a bit of charge anxiety living in San Francisco. I will likely always be in SF or NY going forward and it makes things a lot harder not having a house to charge in. I really want to see how the EV charging systems develop over the next years as there should be some big changes.

In addition, I believe we’re at an inflection point of EVs. Most of the biggest car manufacturers have launched their own EVs and I want to see how that develops. There’s some great cars out there and they will only get cheaper in the coming years.

It’s going to be fun to see how the cars develop over the next few years.

Overthinking things

Sophia is gone for the rest of the week and weekend so I’ve rolling solo. I expect a lot of football and golf. It’s supposed to be 80 degrees between now and Sunday so I told Sophia that San Francisco apparently likes it when she leaves.

One thing I’ve really emphasized with my team is to stop overthinking things. At one point, Secfi got so big with so many decision makers that things started moving slower and slower. We’re now past that phase and I’ve really tried to push everyone to get back into that startup thinking.

The majority of discussions or decisions that made day to day have marginal, if any, impact on the outcome. Quite often, that 30 minute discussion on how to word a marketing email just is not worth it.

There’s a lot going on at Secfi and we need to move quicker. Eliminating paralysis by analysis is the first step.

Newsletters

We’ve been writing our Secfi newsletter for about a year now. First, it’s been really fun writing to a large audience. It gets me out of spreadsheets and gets me writing again which is a nice change of pace.

For Secfi, it’s proven to be great for us as a business as it allows us to reach our clients and users in a casual and educational way every other week. We’ve been emphasizing the “air war”, a term I’m borrowing from a16z, which is basically just publishing a lot of content that is helpful. It helps with the company branding and individual branding efforts as our readers get excited to meet us in-person or over Zoom eventually.

So far, we have kept things very educational where our team will either write about a topic that can help our clients or write about a current event topic that is relevant to our user base. We get a lot of positive responses on a weekly basis which is awesome to hear.

Going forward, we will likely look to expand our content base. We’ll look to stray away from just educational to discussing relevant topics around tech or VC. We’ll likely do some interviews with our friends and partners. We’ve also got it on our roadmap to improve things across the board from formatting to getting to a weekly cadence.

Our newsletter has been a huge cheat code for us and we’re excited to continue building it.

Embracing the change and uncertainty

I had a pretty good weekend of rest after a long week of work. It’s been gorgeous here in San Francisco and the forecast has a great weekend in the 80s upcoming. The flooding in New York has me rethinking a possible move there. We’ll see how I feel in the coming weeks.

One of the hardest parts about adjusting to startup life 5 years ago was the unpredictable nature of things. One day you can be the luckiest person and have a huge win at work. The next day the luck can turn and you are faced with a gigantic L which is exactly what has happened to me the last week.

Late last weekend, I had a few things go my way and I was on the verge of some big wins. Things were coming together and we were set-up for a monster October. And by today (Monday), more than half those things that we were working on had fallen through completely for various reasons.

I’ve come to learn over the years that this is just the nature of working at at startup, especially a fintech. It sucks, but you can take one on the chin even when you do everything right. It’s never fun when things go the other way for you, but it’s something we’ve come to learn to embrace.

The psychology of selling

I’m no longer a young buck anymore and I’ve slowly started coming to terms with it. I pushed myself hard these first four days of work putting in some extra hours and I’m proud of what I got done. Unfortunately the end result of pushing myself that hard is that I’m a bit tapped out today. I’m planning on powering through the morning and early afternoon and then starting my weekend/recovery early.

Moving on. One thing that I and others have struggled with in investing is pulling the trigger on selling. Early on in my career, I thought that pulling the trigger and buying stock was going to be the hard part. That’s when the cash leaves you of course.

As I’ve gotten more experience investing, I’ve learned the hard way that selling is much harder. There’s just something psychological about parting with your initial thesis or just taking home a solid win.

If the investment has not worked out, it’s really hard to admit that you were wrong, take your beating, and sell for a loss. What if you were right and it recovers? The FOMO is real.

If the investment is a win, then it becomes hard to just take your win and move on. What if the investment keeps going up and you miss out? The FOMO again is real.

I’ve learned that the best investors change their mind often. It’s a game where you can successful even if you are wrong often. On top of that, the best investors know when it’s time to take your wins. Institutional investors will often hedge their positions. For us retail investors, the best move is often to just sell and take your win.

Rewiring how we work

We’re starting to place a big emphasis on our working culture going forward. We’ve had some initiatives over the past year or two, but we’ve started to realize that things have slowly regressed.

Remote work has presented more challenges over the years. And we feel that it’s incredibly important to address those challenges head on from time to time.

One simple but silly thing we’ve realized is that we have way too many Slack channels. For a relatively small company, I feel like we have 5 slack channels for every person. This has caused people to work in silos. We’ve got to open the lines of communication so everyone is aware of what is going on.

Another issue is that we’ve stopped calling each other and have just taken to sending large emails and slack messages. While Slack and email are great for simple communications, you do not get close to the same level of brainstorming and we need to be talking to each other more.

These are all simple and seem silly, but if unaddressed, can really impact performance at a company so one of our initiatives in Q4 is to reset the remote working culture.

In person meetings

I’m at the point of the post-pandemic world where I think it’s ever more important to meeting our colleagues, partners, and clients in person. Zooms are great, but there’s nothing like a bond that is made from meeting together.

First, I think it’s incredibly important to build trust. Zooms feel very transactional. We have our 30 minute slot. We meet and we end. Everything just feels impersonal and that’s detrimental to building trust.

Second, conversations and ideas just flow much better in person. I’m sure there’s some science behind this, but people just talk more freely and openly when in person. It’s night and day for me when I have a brainstorming meeting via Zoom compared to in person.

Lastly and arguably most importantly, it’s just a lot more fun and less stressful. Zoom fatigue is real and I definitely struggle with it quite a bit. Being in person can energize me quite a bit.

As much as possible, I’m moving my meetings to in-person. It’s worth the price of that coffee.

The ultimate guide to success

A few people from my team were having a quick bullshit session before one of our meetings and the topic quickly changed to all these hustle porn people on LinkedIn and Twitter. Everyone unfortunately has seen these people - the people who claim to have the keys to success if you follow them.

They all follow a similar pattern. They follow people who have had success (oftentimes themselves) and highlight the things they do that made them successful. These keys can be anything silly from taking a magnesium pill in the morning to dieting to work habits.

Look, I’m sure some of these tips are great and do help you live a fulfilling and successful life. Yes some diets can give people more energy to do good work. Implementing Bezo’s 2 pizza rule at your company may work well for you.

But what I hate about these people is the narrative that implementing this also implies that you’re going to have similar success. These people are often selling a “silver bullet” solution that will fix all of one’s problems and make them overnight successes. In fact, think about all of the people who do implement this “fix” and have not become successful.

There’s too much bullshit nowadays on the internet.

Recapping New York

I got back to San Francisco on Saturday afternoon absolutely dead. I had a bit too much fun catching up with my old friend on Thursday for the 49ers game. And I was running on fumes when I got to see my other old friends on Friday. I ended up powering through and paid the price dearly on Saturday.

It was not an early flight at 11am. But it was not an easy one as I felt like I had slept a total of 8 hours the past two nights. I know I had gone into the week thinking I was going to take things fairly easy, but I had a lot of fun and the pain was well worth it.

Next time that I head out to New York, I need to come up with as bit better of a plan of attack. I kept things relatively laid back in the early parts of the week and felt great. But despite trying my best to get more rest, I ended up exhausted by Thursday. I have never been a good sleeper and the energy levels of New York didn’t help get me to bed earlier.

In terms of work, I had a fantastic week with the team. I felt many times more productive being together face to face with everyone. It was just crazy how much we interacted by being in the same room together. Things that would have taken perhaps a week or two to resolve were able to be hashed out quickly.

New York in general just has much better energy than San Francisco. For a fintech startup, it’s fairly obvious that it’s the place to be. Sophia and I will be doing a lot of thinking in the next few weeks to months to determine if we want to make the jump back to New York for a few years. At the moment, I’m riding my New York high still and waiting for that to fade a bit before I make any rash decisions.

Q4 prediction

We have yet another IPO with Klaviyo listing yesterday and having a solid exit. That makes two VC backed tech IPOs this week and the IPO window is officially open.

There is a huge backlog of companies looking to go public and I expect a handful of these companies to follow Klaviyo and Instacart given the relative success.

I previously had thought that we’d see less than 5 VC backed IPOs in 2023, but I’d likely take the over at this point given where we stand. Of course that can all change very quickly.

I also think expectations need to be tempered. While Klaviyo and Instacart getting to an IPO is impressive nonetheless, it would be remiss not to mention that they both are still trading at discounts to their last private round. I expect most of the companies that go public to go at much more modest valuations and likely below their last private round if they raised in 2021.

I also expect secondary market activity to pick up quite a bit going into Q4. Investors are now hunting for pre-IPO stock and there is a huge need for liquidity.

SF vs NY

It’s hard not to have crazy energy to hustle and get shit done after being in New York for a few days. The city is completely back and thriving. Office buildings are packed. Lunch spots having lines out the door again. The tourists are filling the city. I left the city before the pandemic began, and there seems to be even more activity than when I left.

This is obviously the opposite of what’s happening in San Francisco. Workers are not going back to the office like they used to. Restaurants and stores are closing rapidly in downtown. I’ll admit that I’m seriously considering moving back to New York even after being here for 3 days. I miss being in the office with coworkers all the time and the energy that others bring.

Of course, New York isn’t perfect. There seems to be more homeless people on the streets than I recall before. There also seems to be increased retail theft in stores as well. I walked by many places with lots of signs signaling as much. But the issues seem to be drowned out simply by the level of activity in New York.

San Francisco will come back. It’s not dead. There’s still a huge density of talent in the city. It’s still a gorgeous city and I plan to make it my home permanently at some point. However, New York has given me a lot to think about given that I’m 33, married and have no kids. I could be down for another New York stint soon.

IPO window!

I’ve done a bit this trip to make sure that I stay in a healthy mindset physically and mentally. Normally when I travel, especially to New York, I find myself running on fumes the entire week. My pattern historically has been to take as many meetings as possible, eat like crap, and not get much rest. I’ve tried really hard this trip to get more sleep, drink a lot less alcohol, and work out a lot more. It’s paying off as I’ve been feeling great the last couple of days.

Switching gears. It finally seems like the IPO window is officially open. Instacart had a great debut today and opened at $42 per share. It’s since dropped a little bit and of course, no one knows where the price will be in a few months. But overall, it’s a great sign for tech companies. Klaviyo should be following Instacart shortly and they have a chance to open at close to the last round done in 2021.

Given the recent and rumored successes of the first few IPOs, I expect that a lot of companies will be dusting off their S1s and filing shortly. The window is open now until Thanksgiving so we have about 2 months of IPOs upcoming. Hopefully things hold up and we get to see some success after nearly 2 years of pain.

New York, New York

I landed in New York last evening and had a nice night to myself. I lived in New York for 5 years and have been in SF the last 5 years. I love New York, but it does come with it’s own stresses. Within minutes of getting off my flight at JFK, I could feel the anxiety and stress pick up quickly. JFK is always a wreck and my cab driver tried to hassle me into paying cash.

I booked the cheapest hotel that did not seem to have bed bugs, and it is your typical old cheap New York hotel. I’m used to it after living here in my 20s, but I could see why a tourist would not be neccessary happy with a hotel like this. I dropped my bags and went off to one of my favorite restaurants in the country, Szechuan Mountain House.

It was humid and rained on me during my walk down. I got to the restaurant at 8:30 and had a 45 minute wait which ended up actually being a 15 minute wait. All that trouble and I had one of my favorite dishes within 20 minutes. All my stress was gone at that point. I remembered why I love New York again at that moment.

This city is amazing in so many ways. The energy levels here are off the charts. Unlike San Francisco, New York seems completely back. It’s crowded and people were out in force even on a Sunday night. Despite some initial anxiety of being back, I’m stoked to be here this week and I’ll be sad to leave on Saturday.

The retail investor

Investing platform startup Sandhill has been running this live auction of Databricks shares for the last few days. I’ve been following it closely as it’s a transparent view on retail investors bidding on a top private company. I don’t believe this has been done before so props to Sandhill.

The reason I’m interested in this is because I do this for a living, and I’m curious to how people who don’t do this for a living interact. I’ve followed Databricks very closely since joining Secfi and it’s been one of the top private companies in this space ever since.

The company just announced a fundraise and the projected share price should be around $75 give or take a few dollars based on some back of the napkin math. That is an upround from the Series I of $73.48, but not by much. Interestingly enough the round was announced during the live auction.

One noted observation is that bids have picked up since the announcement. Unfortunately, that could be a product of both the the auction coming to an end because people are waiting to put their bids in. Or the announcement affecting behavior. Likely a combination of both.

Secondly, it’s very interesting to see retail bidders putting in bids higher than that “market” for common stock. Yes, investors are buying in at $75, but they’re playing a different game. For one they are buying preferred stock. For another, they have different return profiles and holding periods than retail investors investing in a SPV that likely gets liquidated after an IPO.

The last 409A value was $55 and the market based on the data sources I’m seeing is somewhat around there as well meaning investors are typically buying common there. Pretty much ALL the bids made here are over the $55. As it stands now, the price of the live auction is $69.69. (I know… not a joke… but nice coincidence). So retail buyers are paying a premium to what they would or could typically get in the secondary markets.

In the secondary markets, there’s definitely a supply issue as there are likely more buyers than sellers right now so that’s something to consider. Regardless, it seems that retail investors are very much happy to pay a premium to be invested in a hot name like Databricks.

I’d love the opportunity to interview some of these people and get a bit of their strategy for putting thousands of dollars in Databricks at these prices. That won’t happen unfortunately. At the end, it’s a great company and could be a good investment despite paying a premium, but it’s fascinating to take a look regardless.

2021, what a time to be alive

I’ve started planning on how to close the year strong at Secfi and will be headed to New York for some in-person planning meetings. I’m excited to see everyone in person again and actually do some proper brainstorming.

On another note, I can’t believe that we’re almost in Q4 2023. The craziness of 2021 felt just like yesterday. A little under 2 years ago, the talks about interest rates rising began and officially put an end to the ZIRP world.

Whenever I catch up with friends who work in tech or investing, we almost always talk about those crazy days. We share war and horror stories. We laugh at others and ourselves. And we talk about how much we learned.

Some of the stories from that period are just downright insane. People in charge of millions of dollars throwing it around like it’s candy on Halloween. No real basis for investment decisions besides wanting to win. Founders running effectively live auctions for funding rounds.

We’ll likely never see a period like that again in our lives. And that’s a good thing. It was unhealthy and not the least bit sustainable. I’m happy to have lived through it and learned a lot then, but I hope to never see another 2021.