Founder @CircleUp; operator and investor
https://t.co/FOOyCnBRHE
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Oct 5, 2018 • 18 tweets • 4 min read
1/ I’ve talked several times before about building a systematic fund in the private markets. Systematic quant vc/pe funds are coming, and they will grow quicker than anyone expects.
2/ To build a successful systematic VC/PE fund, several things are needed.
I’m going to talk about two specifically here:
A. Information advantage (IA)
B. Large # of companies (N)
IA + large N = enormous value.
Oct 4, 2018 • 24 tweets • 4 min read
1/ I am seeing more and more founder secondary in venture rounds (Secondary = founders selling some of their shares before some other shareholders are able). Series B-D. I see both as an investor and through entrepreneur circles.
2/ I like secondary for entrepreneurs. Moderation is key but in a lot of situations I think it helps accelerate the co. Lots of very smart investors disagree. Here are my thoughts.
Sep 30, 2018 • 6 tweets • 3 min read
1/ Went to @StanfordWSoccer soccer today v. @USC_WSoccer with my family (wife, 18 mo boy and 4 yr daughter). Dog was invited as well and enjoyed the crowd.
2/ First observation – the crowd reignited a belief in me that Bay Area can have a good sports fan base that isn’t just jumping on the latest bandwagon. Game was sold out.
Sep 24, 2018 • 9 tweets • 3 min read
1/ We will see more and more use of data in private markets. Over next 24 months it will become table stakes in most private markets. wsj.com/articles/priva…2/ The transition will happen much faster than it did in the public markets because publics have paved way, easier to process massive amounts of data, more of a demand now to differentiate yourself.
Sep 22, 2018 • 15 tweets • 3 min read
1/ @UNFI – a the largest natural foods distributor- reported earnings. Spoiler- they were horrible. zacks.com/stock/news/324…2/ Let’s be clear. By horrible I mean that GM% was worse than expected as WholeFoods/Amazon (>30% of their business) puts pressure. EPS missed estimates and guidance implied that margin pressure will intensify next yr. Stock hit 5 yr low.
So I guess I call that horrible.
Sep 13, 2018 • 24 tweets • 6 min read
1/ Feeling so grateful to @mahendra_gr and @techcrunch for covering such an important topic: The mental health of founders. techcrunch.com/2018/09/10/inv…2/ I think almost all founders struggle with these emotional issues-but there are so few that talk about it. Why? Fear of being the only one not “crushing it”, fear of what it will mean with potential investors/customers/employees, fear of not living up to expectations.
Sep 12, 2018 • 12 tweets • 3 min read
1/ The magnitude of CEO turnover is hard to imagine if you don’t focus on CPG. Find an industry where leadership turnover is worse. wsj.com/articles/packa…2/ Almost no CEOs in public CPG companies have clout. They are almost never the founders, often aren’t respected by the street. Usually suits that have never created anything, never driven real positive change.
Sep 9, 2018 • 14 tweets • 4 min read
1/ I’ve said a few times that I think @Instacart will win in grocery delivery. They will beat @Amazon. It isn’t a popular view, and there aren’t a lot of folks that bet against any part of the Amazon machine.
2/ I know, I know – insane to bet against a trillion $ business. Maybe. But a little insanity is what you need as a private investor. Or an entrepreneur.
Let me lay out the argument and see if there is a good response other than “yeah but Amazon has a lot of money.”
Sep 8, 2018 • 21 tweets • 6 min read
1/ Grocery needs some help. Avg op margin in grocery is 2-3% but avg margin for public CPG is 21%. Are public CPG co's adding that much more value? No - I think that margin difference is a legacy from decades ago when the large brands mattered. Today value contribution is same.
2/ That doesn’t seem fair.
But life isn’t fair.
Sep 5, 2018 • 15 tweets • 4 min read
1/ I was so happy to see @DelRey cover this topic and with so much depth.
recode.net/2018/8/29/1777…2/ There are wonderful things about the tech press-namely giving attention to innovation (which spurs more innovation & invst). The tech press matters- a lot.
But I also think too often they get seduced by large funding rounds. Talking about raising $100m is, very oddly, sexy.
Sep 4, 2018 • 11 tweets • 2 min read
1/ I sent a deal to a VC today. Here was his response verbatim:
2/ “I get a little worried on these with a. distribution and b. how much you can really learn / validate on a seed check. The pain is obviously near and dear to my heart. If he's up to debate those points, love to meet him.”
Aug 26, 2018 • 23 tweets • 7 min read
1/ Capabilities. That’s the word of the day.
One thing that industry “experts” often miss when evaluating historical M&A or trying to predict M&A, is that the best acquirers often aren’t looking at the financials of the target first- they look at the capabilities of the target.
2/ Let’s talk about what that means, why it is important and why entrepreneurs, investors and strategic acquirers should care.
Aug 20, 2018 • 19 tweets • 4 min read
1/ How to get promoted at a startup:
At larger companies career tracks are (too) well defined, and there are clear paths on how to move up. But at startups there isn’t a playbook for how to get promoted.
2/ By “promoted” I mean bigger title, more comp, more responsibility - whatever it is that you care about. You’re more likely to get it if you do these things.
Aug 16, 2018 • 25 tweets • 6 min read
1/ This Tweetstorm is for people that like data. Data engineers, data scientists, data enthusiasts. People that don’t like data should not read this. You should watch a cat video on Facebook, and probably shouldn’t read my stuff on Twitter.
2/ There is a secret industry that is 3x the size of tech and has an outrageous amount of data in it. The data has been shown to be predictive of success and it is out there in the wild - just waiting for you to gobble it up.
Sing it loud…..CPG.
Aug 14, 2018 • 25 tweets • 5 min read
1/ Quant/systematic asset managers – think Two Sigma, Man Group, RenTech – are dying to get into privates in a bigger way. Almost all of them have teams that are leading efforts to crack that nut.
2/ ...Silicon Valley just fell asleep. Wake up- this will get interesting for you in a minute. First let’s establish something- they manage about $1 trillion- far bigger than VC in Silicon Valley. ft.com/content/ff7528…
Aug 9, 2018 • 29 tweets • 6 min read
1/ There are a lot of problems to be solved in PE/VC. Human bias, bad investors, crazy arrogance, behavior that comes at the cost of the entrepreneurs.
But one that has a bigger impact than most realize, is the desire by the General Partners (GPs) to raise larger funds.
2/ Lets first establish that approximately 99.63% of PE/VC investors are in it for the money. That’s ok- but let’s just have that as a foundational truth.
Aug 2, 2018 • 27 tweets • 15 min read
1/ I believe celebrating innovation leads to more innovation. It leads to more investment in the space, more entrepreneurs, more talent to join those co's, etc.
With that goal, we put out an annual list of the 25 most innovative consumer/retail companies called the CircleUp25.
2/ Here is this year’s list of the #CircleUp25. We used #Helio and a panel of industry experts to identify the winners. forbes.com/sites/ryancald…
2/ Let’s focus on offline distribution first. I think offline distribution in CPG is massively inefficient throughout the offline distribution landscape. Stale old industry, that doesn't use much technology, has a bunch of fat cats that don't innovate. It is ripe for disruption.
“We are in a product cycle business. Which is to say that every product in tech becomes obsolete, and they become obsolete pretty quickly.....
2/.....If all you do is take your current product to market and win the market, and you don’t do anything else — if you don’t keep innovating — your product will go stale. And somebody will come out with a better product and displace you.”
1/ Top things CPG investors look at when evaluating success.
[FYI these are heuristics - most investors look at these metrics because they are intuitive and seem to make economic sense. I’ve never met an investor that has proven their value.]
2/ NET REVENUE- If a CPG investor can have 1 number and only one, it is # of eyeballs that looked at your app but didn’t pay anything for it.
Nah just kidding- it’s net revenue. I know- crazy right? Net revenue is actually an important metric.
1/ The pt was VCs are paid to ramp up on new & hyper complicated products/industry dynamics. Drones is an ex. If they can ramp up there- they can ramp up on beauty. Agree the 2 are very different. But beauty isn’t harder, just different.
2/ I called out Hims as a pretty clear example where some VCs say they “don’t understand beauty” then made an exception because clearly they can just relate to Hims (my little joke). :)
Hims is a beauty co.
Hims would say their key levers are the same as a typical beauty co.
