Up & Right

Apr 21

Leaked Info on Third-Generation Thunderbolt Points to 40Gbps Transfer Speeds -

I’m still a storage geek and so advancements like Thunderbolt 3 still get me excited. I don’t even have any Thunderbolt 2 devices and I don’t know why I’d need Thunderbolt 3 but none of that matters of course. 3 is greater than 2!

Employee Equity -

Sam nails it in this blog post on equity especially for rank and file startup employees. His fourth point in particular: ”Employees usually don’t have enough information about the stock or options” is a major pet peeve of mine which I’ve written about previously here in “Stock Option Naïveté”. I also love his idea about extending the exercise period to ten years, although I do think there very well could be practical issues on projecting total fully diluted shares that would make it undesirable from the company’s POV. 

Startup Banking's Looming Leviathan by Zachary Townsend -

Great blog post by Zac Townsend, co-founder of my portfolio company, Standard Treasury. Zac succinctly states why building a “real” bank is so hard. Zac’s post fits well within my/ RRE’s thesis in financial services investing which is to invest in banking tools (ie Standard Treasury, Braintree) and non-bank entities that compete with banks (ie OnDeck, Sierra Auto) but not Bank 2.0’s (ie Simple, PerkStreet). We’ve probably seen 8-10 consumer-focused next-generation bank business plans in the last couple of quarters, but have not been able to get comfortable with any. I might be wrong, but it hasn’t felt like it yet.

Besides regulation, I’d note the other primary problem I see with most Bank 2.0 startups is that they don’t have meaningful business models. Most rely on the promise of one day upselling other financial products, which I’m dubious of, and debit interchange, which is not a real business model in the post-Durbin world; it’s a near 0% gross margin pass-through.

Mobile-Payments Startup Square Discusses Possible Sale -

On the topic of capital efficiency, Square hasn’t exactly been the model to emulate. At some point profits really do matter and Square is caught in a transition where they need to move from showing top line (near zero margin) revenue growth to some measure of profitability, which means changing their business model. Square can no longer simply talk about the laundry list of value added services they could sell, now they must sell them and profitably at that — Square Register, Square Cash, Square Loans etc. It is a race against time before they run out of cash. Might some big company buy them even if they never prove out their business model? Sure. Would I, if I were an acquirer, want to pay a premium for a company like that? Probably not. That’s a risky bet.

I love Square’s vision for payments so I’m sincerely hoping they figure it all out soon. They have enough access to cash I don’t doubt they can.

Birchbox raises $60 million -

Birchbox has to be one of the most capital efficient high-growth e-commerce startups of all time. ~$100M of revenue from $12M previously raised. Well done.

Apr 18

The real reasons why Walmart and Facebook are entering the money transfer space | PandoDaily -

Walmart the disruptor. You have to love that. Money transfer and remittance is heating up and this is all just the first volley in what will be a non-zero sum war. I suspect consolidation and M&A will occur soon. We (@RRE) already sold Venmo and Braintree but I bet Azimo, Boom, Remitly, Xoom, etc are/will be on many acquirers minds’ soon.

Apr 17

Instacart Raising at $400M -

Not making a judgment on their valuation as I don’t know their fundamentals but sometimes it feels like the internal monologue of venture is one word long and right now it is: “FOODFOODFOODFOOD”

Apr 16

Zoosk Form S-1 -

Wow, Canaan Partners owns 32.4% of Zoosk. That’s a huge ownership stake for a startup that has raised a ton of cash. As a venture investor I give Canaan a lot of credit for being able to maintain that ownership (usually not very easy to do).

Bitcoin promoter Shrem indicted -

I think the world of tech startups can feel like a game at times, removed from the real world and consequences because a lot can be accomplished sitting in front of a screen without having to get one’s hands “dirty”. I’m not going to opine on Charlie’s innocence or guilt and do not intend to, but I do wonder if Charlie would have done the things he’s accused of having done if he had been forced to do them IRL. My guess is he would have behaved differently IRL. (See: blog comments versus in person conversation)

Apr 15

Forecast New York - Sales Leaders of the Future -

The Forecast Club sales leadership day sponsored by my portfolio company Base CRM will be in NYC Thursday evening. Check it out.