Making a Better World – Uncharted’s Economic Equality Initiative
Uncharted is about to launch applications for their new Economic Inequality Initiative to support teams working on radical ideas to address economic inequality. I have a long history with the Unreasonable Institute (renamed Uncharted in 2017) and the work they’ve been doing around empowering entrepreneurs from many different backgrounds who are working across the globe on some of our world’s most important problems. Since 2010, they have helped an amazing set of entrepreneurs raise over $250 million, created impact in 96 countries, and benefited 37 million lives around the world. Amazing! …
May 6, 2021· 2 min read
Net Dollar Retention vs. Net Revenue Retention
Net Dollar Retention (NDR) and Net Revenue Retention (NRR) are both important measurements in any business but many companies conflate the two or (more frequently) only report on one. Both are key metrics but for different reasons. Equally important is separating out NRR for your largest customers versus the rest of your customers since often the behavior of large customers is markedly different than average customers. Their effect on a business and can be hidden in aggregate data and a sense of their impact is lost. …
March 4, 2021· 1 min read
The Importance of the Democratization of Capital
The democratization of capital may be messy at times, but it’s much better than the alternative. And it’s long over-due. Robinhood’s actions to restrict trading in GameStop stock, as well as several other issuers, was completely the wrong response to an increasingly active capital class. It’s time to give up this old notion that small investors somehow need to be saved from themselves (as they claimed was the reason they halted trading in GME and other issues *). For years, capital investment has been the sole purview of the wealthy in the United States and elsewhere. We’ve long had a series of laws that restricted people’s abilities to invest in private stocks and at that same time, given fee structures and the general opaqueness of the public markets, it’s generally been the purview of only wealthy Americans. Both of those trends have started to change over the last handful of years – trends we should be encouraging not limiting. …
January 31, 2021· 4 min read
Work Lessons from the Pandemic
I’ve been thinking a lot about what changes in my work I’d like to keep, post-pandemic (can we even talk about a post-pandemic world? It still feels pretty far off). I’m trying to be deliberate and actionable about it. For me that means actually writing down what I’m trying to change and why. It also means trying to dig deeper than top level or cliche ideas (i.e., of course I’d like to travel less; but the deliberate and actionable version of that idea addresses the drivers of my travel – for example board meetings – and specific ways I’d like to change what’s pulling me out of town). In my world, the two biggest things I’ve changed are: …
September 8, 2020· 5 min read
Performance-based Options Grants
I had a bunch of interesting comments on my recent post about company options programs – many very constructive. One of the things a number of people have asked was what I think is the right approach to performance-based options grants. I realized I referenced this in my original post but didn’t cover it in any detail. Performance grants are important and provide an opportunity to describe a nuance that I didn’t do a very good job of outlining in my original article. For performance grants, I believe the right methodology is for the board and the management team to decide on a pool of options that is available in any given year for merit-based grants. I think it’s important that the company concentrate those grants on the absolute best performers in their business. I’m not a fan of a large percentage of employees getting performance-based grants nor am I a fan of grants being formulaic based on comp or similar factors (i.e.,not really based on performance). I believe that performance grants should be concentrated on the absolute top end of the business (the top 5%… maybe top 10% of the company). The point is to reward your absolute best performers, not to have your performance grant program work as a company-wide option top-up every year. From my perspective, diluting their effect by giving them too far down the employee line is counterproductive. …
September 1, 2020· 2 min read
Better Zoom Meetings
My partners and I hold weekly Monday meetings and about once a quarter, we do an extended, six or seven-hour version. Before COVID-19, we’d end the day with a dinner and a chance to socialize and decompress after a long day of portfolio updates and strategic planning. And, of course, before COVID we’d all be in person. Our discussions were lively, they were engaged and we’d often make use of whiteboards, sticky notes and other forms of interaction (we have a post card with a logo for each of our portfolio companies which we often make creative use of). They’re fun and super productive. …
July 30, 2020· 4 min read
A Few Days
This last weekend, I took the weekend off along with a half-day on Thursday and a full day on Friday. I called it a mini-vacation and it was fantastic. I turned off email and (for the most part) social media and enjoyed some digital free time. Like many of you, I’ve been running hard the past few months. Long days, working weekends, etc. Spring break was skipped and we’re running headlong into summer. At some point we all need to take a moment, ideally a few, and recharge. A week off right now felt like a step too far, so I decided to start with a smaller step. It was a good reminder both of how needed it was as well as about the importance of taking what you can. …
June 11, 2020· 2 min read
A-B-E
Almost universally our best companies are constantly experimenting. This takes different forms in different parts of their businesses but the common theme is that every process, every page on your website, every communication to a customer is an opportunity to test and optimize. Sometimes this is chipping away at a mountain (small improvements that add up over time). Other times we see large jumps in efficiency (I had a company recently change some text on a landing page and see a 10% improvement in sign-ups to a white paper). The improvements are important – businesses become efficient over long periods of time and these efficiencies compound each other to create significantly better operational outcomes (and business outcomes). And even small improvements over long periods of time (and when combined with other improvements in the same flow) add up to significant changes. And it’s worth noting that optimization is a never ending process – even when you find something (like the landing page example above) that seems to make a big difference, that doesn’t end the experimenting. Tastes change and effectiveness of pretty much any page/email/process tends to go down over time. …
April 10, 2019· 1 min read
What’s a Fair 409A Discount?
Quick note: I’m not your lawyer. I’m not giving legal advice in this post. Back in the olden days of venture capital, company boards had wide discretion in pricing company options. As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the company as well). However the board could determine what that fair market value was and, generally speaking, there wasn’t a practical way that these valuations could be challenged. Most boards did some level of work to determine the FMV of a company’s stock but generally options were priced between 10% and 15% of a company’s then preferred price (because common equity sits behind preferred equity there is typically a discount applied to the FMV of common stock to account for this “overhang”). It was and is imprecise science but – at least in the case of venture backed startups – there wasn’t much harm in an option being priced low. It was a benefit to employees and a slight value transfer from equity holders to option holders (generally speaking in M&A transactions the value of the aggregate option exercise ends up allocated across the rest of the cap table). In a funny way it also benefitted the IRS in terms of tax collections as employees were taxed on the spread between the option and the value of the stock on exit and since these shares were typically exercised at the time of an exit were subject to short term capital gains. Higher strike prices distributes proceeds away from short term gain tax to equity holders who more typically are paying long term gains on the value that was shifted (I’m skipping a huge amount of nuance and detail here but the above is a general representation of how things work). …
August 15, 2018· 4 min read
Friday Fun #5 – I have your friend’s phone
One of my all time favorites.
March 2, 2018· 1 min read