Category: Start-ups

Data on how we invest at Hustle Fund

One thing no one talks about are the differences in how investors within the same VC firm make investment decisions. Firms are supposed to be united in their decisions. But, the untold secret is that often there’s a lot of disagreement within a partnership over what deals to do. Sometimes these conversations can become heated. But ultimately, if a firm decides to do a deal or pass, the entire firm is united on that front – even if individuals within the firm feel differently. I’ve talked about the differences between the consensus model and the champion model on this blog before.

This is no different at Hustle Fund. There are often deals that I do that the rest of the investment team thinks are awful. And vice versa. Part of why we have a champion model at Hustle Fund — where any investment professional can do any deal he/she likes — is that outliers tend to be the most contentious.

One of the reasons for differences in opinion about a company lies in what individuals think are the most important aspects of an early stage company. For example, my business partner Eric Bahn really values great products and fast shipping of product. Of course, I think this is important as well, but in my list of things that I care most about, product isn’t always top of the list. And of course, it also depends on what the specific industry is. If you’re selling Salesforce to salespeople, then product is less important than if you’re selling a Canva subscription to designers. Product matters more to certain customers than others. But there are many other nuances about how my decision making is different from my colleagues’ that I hadn’t been able to quite articulate before…until now.

First, some context about our decision-making framework at Hustle Fund. When we evaluate startups, we use a 4 point system. 4 is excellent. 1 is terrible. By having a range from 1-4, it forces the decision maker to pick a number that is either on the weaker or stronger side. No one can pick 2.5 — you have to take a stance on whether you believe a given company is strong or weak in a certain area. And then using this point system, we grade a company across a variety of axes. But ultimately, the scores are meant to help our investors guide thinking; there’s no minimum overall score that a company needs to achieve in order to receive an investment offer. Moreover, if a company scored all 4s, it’s also possible for that company to not receive investment. E.g. it might be a pre-IPO company that has clearly proven out an amazing team, an amazing product, amazing traction etc…but then it’s no longer a pre-seed company.

So with our scoring system, the vast majority of companies we meet do not score highly, including those we end up investing in. The companies are all early, and we do not have grade inflation. But the scoring does show patterns in what each of the investors on our team care about. And having amassed a large data set of how our investment team thinks, I’m excited to share with you our results on how each investor on our team differs in thought process.

Average Scores Across Our Criteria:

We used AI to help us analyze our investment patterns. For the companies who received funding from Hustle Fund (our portfolio companies), these were the average scores we gave our companies when we decided to invest.

  • Team: 2.98
  • Product: 2.32
  • Market: 2.79
  • Execution: 2.76
  • Fundraisability: 2.48

This is pretty interesting, because you can see that our investment team cares about “team” most importantly. As a whole, when we meet with a founding team, we are making our decisions to invest in large part because we are impressed with the team. In contrast, even if we don’t believe the current product is great or we don’t believe the team can fundraise, we’re often still willing to make the bet anyway. As a generalization, the categories of product and fundraisibility matters a lot less relative to other criteria.

Scores Per Investor (with commentary from AI):

  • Elizabeth Yin: tends to score lower on average, especially in Product (2.01 average) and Fundraisability (2.19 average)
  • Eric Bahn: gives higher scores across the board, particularly in Fundraisability (2.65 average)
  • Haley Bryant: has the highest scores in Execution (3.06) and relatively high in Team (3.5)
  • Shiyan Koh: has high scores in Market (3.05) and Fundraisability (2.80)

This is particularly interesting and can be interpreted in a few ways.

Since these are scores for companies that get investment, my scores could be interpreted in a couple of ways. You could say I see the weakest dealflow across my team (!) or you could also interpret this to say I’m the hardest grader of everyone, including the companies we invest in. There’s probably some truth to both in that I care less about how developed your product is and care less about a founder’s fundraisibility than my peers. In fact, across the industry, many VCs care a lot about whether a startup will get follow-on funding, but I very much prefer the founder who has less glitz and glamour and just gets to work. It also means that a startup who receives funding from me may end up being largely bootstrapped for longer and may have fewer downstream investors chasing them until they achieve some serious results. That’s a bet that I’m willing to make that few VCs will make.

You can see that Haley cares most about execution and team. Shiyan most about market. This isn’t to say they both don’t care about other criterion, but you can see what we all think a lot about. (Eric gets along with everyone and hands out A+ marks to everyone :).)

Variations in Scoring (with commentary from AI):

  • The variations in scoring are relatively moderate across all investment team members and criteria, with Fundraisability showing the highest variation for Eric Bahn (1.03) and the lowest for Haley Bryant (0.51). This means that Eric will back a bunch of teams that he thinks can’t raise more money as well as a bunch of teams he thinks will raise money very easily.
  • Elizabeth Yin and Eric Bahn show more significant variations in Product and Fundraisability scores. This means that Eric and I will back some teams that have great products and high fundraisibility as well as those that don’t. We do this because many ideas don’t require that much money or a rocket science product, but other businesses do. It’s case by case.
  • Haley Bryant and Shiyan Koh have lower variations in Market and Execution scores, indicating all of their teams need to have strong market arguments and strong executing teams.

Common Themes and Observations:

According to our AI that did this analysis, “Each investor has a distinct scoring pattern, reflecting their unique perspectives or priorities in evaluating startups. This diversity in viewpoints enriches the investment decision-making process but also highlights the importance of consensus-building or weighting different criteria according to strategic priorities.”

Basically, we look at companies in different ways but individually, have distinct things we look for. If I were pitching Hustle Fund with a new company, I would be looking to pitch the person on our team who was best suited for my company. E.g. I would pitch Shiyan if I had a huge fascinating market, but if I were not great at fundraising, I would pitch myself with a more bootstrapped approach.

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Do you set up your exit before you start your company?

This week, I had a really fascinating conversation with a portfolio founder named Joshua Lee, who’s the CEO and co-founder of a company called Ardius. Ardius helps startups claim R&D tax credits. So it’s a no-brainer why founders sign up for Ardius, because they can get free money, and Ardius takes a cut of what they are able to help founders get. If they can’t help you get any credits, they don’t get paid.

But what was fascinating was that when I was talking with Joshua, he said that one of his learnings in trying so many startups over the years, was that founders don’t think enough about their exit path before starting a company. Ardius, in fact, was not his first company, and so after many companies that didn’t work out, he decided to work backwards to figure out what to build.

I asked him, well, what do you mean?

He said that when he started Ardius, he not only talked with potential customers, but also talked with potential competitors – large companies who could potentially be building a competing product on their own. He was trying to see if he could manufacture his own exit before starting Ardius. He wanted to know what the M&A appetite would be if he were successful. He wanted to know how big of an opportunity large companies saw in what he was building.

And I asked “wasn’t that kind of dangerous to talk to companies that would potentially be building the same thing?” And he said, when he talked with a lot of the major players in the HR benefits space, in fact, many of them were building a competitor to Ardius. And some of them even told him they would squash his company.

While that was frightening to him, his thesis was that if you’re good, startups are actually way scrappier, faster, and more specialized and can run circles around most large companies. And as it would turn out, he was able to plant seeds in their heads that in case they were not happy with their own progress, they should stay in touch.

Ardius ended up doing quite well as an independent entity. And that caught the eye of all of these would-be competitors. Fast forward, Ardius was acquired by Gusto in 2021 after discussing with all the major players in the HR benefits space. These were relationships Joshua had already been building for years, which made the acquisition process quite smooth.

Now this whole story is a pretty controversial path. Many venture capitalists wouldn’t like this path, because VCs would prefer companies to keep raising money if it makes sense to continue to swing for a larger exit. After all, VCs need their winners to be large enough to above and beyond overcome the losses of portfolio companies who fail.

But, Joshua’s view is that VCs should think about the faster liquidity they could get with a manufactured exit. Instead of waiting 15 years to get to 100x (or more), would you rather wait 5 years and take a 10x? He thinks the idea that you have to wait a long time for liquidity in venture is outdated. From an IRR perspective, his model is also way better. In fact, in this particular example, the IRR of the longer time period is 36% vs 58% for the shorter time period.

Not to mention that we didn’t talk about how with his model, the team isn’t grinding too long to lead to burn out. Nor does the team become too big and chaotic, as you often see at large fast-growth late stage startups.

His argument certainly made sense to me. Certainly, if you were running your own angel investments, his proposed model is intriguing. You get your money back sooner, and you can redeploy sooner into other investments.

But, it made me think why this doesn’t work in the traditional VC model. VCs are judged on multiples returned as liquid cash over the term of the fund. Typically funds have a 10 year lifespan. So in this model, the winners aren’t around long enough to become huge winners. And yet, if you’re getting money back in year 5, you don’t have enough time either to deploy the returned capital back into new startups. So, the cash is just sorta stuck — either doing follow on checks into later stage companies, which tend to have lower multiples than early stage startups OR it just gets returned as cash and isn’t enough cash to make up for many of the portfolio losses. In other words, this model — assuming it works — works really well in an evergreen fund but not in a fund with a set term limit of 10 years.

All of that said, his model of building relationships with potential partners / acquirers / competitors from day 1 is smart — even if you aren’t looking to get acquired right away. One of my other portfolio founders did something similar, not for the purpose of M&A, but for the purpose of building relationships and ended up getting acquired by essentially a would-be competitor, because she had built those relationships early.

It may be scary talking with potential competitors – especially when you have nothing – but if you truly believe that your startup is great, you can outcompete your competition. As we’ve seen time and again, more funding does not equate to more success.

One thing that I am skeptical of in this model is the notion that you can actually predict what will be acquired. And therefore, your loss ratio is lower. Afterall, one of the hardest parts about building a startup is finding a repeatable sales process and enough customers who want to pay for your product. M&A demand is predicated on the assumption that your product will find very strong product-market fit. If you are able to find customers but only slowly, your would-be acquirers might decide that there isn’t enough demand for your idea. And, you might not be able to manufacture the M&A deal you thought existed when you set out to begin your company. In other words, I’m skeptical that you can come up with a higher batting average of ideas that are successful that companies will want to buy than the traditional VC model.

I always learn a lot from my portfolio founders, and this model of building-for-exits is certainly food for thought.

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I’m becoming a cartoonist…with AI

Another year!

Last year was an incredible year for artificial intelligence (AI). If the rise of the internet was an inflection point, the rise of artificial intelligence (in my opinion) is an even more massive one.

I think what I’m most excited about is that sometime in the near future, everyone will have the ability and the access to build anything digital. It could be websites, movies/films, songs, mobile apps, comic books. You just need a device (phone / laptop / tablet), internet, and creativity.

In the 90s, with the rise of the internet, this started to become possible, but you still had to run to Barnes and Noble to buy books on how to code. The most motivated quick learners reaped the benefits of the internet in the first inning. You also often needed servers that filled closets and needed to handle the maintenance of all this yourself. It was not a super accessible period of time — not anyone could do this — but it laid the foundation for where we are today.

Fast forward to today, you don’t need to know how to code to build digital things. There are so many no code tools available to take the heavy lifting off of building, and you can learn about all of this with simple video tutorials on YouTube. There is so much that has already been made accessible to the billions of people on this planet. I learn a ton from watching YouTube videos — there is no better educator than YouTube (in my opinion).

Yet, despite these advances, there are some things that historically have still been hard in the last decade or so. For those who have no talent — like me — design, for example, is still hard. I can read and watch tutorials all day, and I still will not be able to draw well to save my life. If I practice for years, I could probably get better, but I won’t be able to come up with cool images or videos in the next couple of months.

Until last year.

Enter Midjourney and so many others. Last year, I thought I could finally fulfill my childhood dream of becoming a cartoonist to draw comics about my favorite stuffed animals I grew up with — all with zero talent.

But, is it hype or is it real?

Meet Warren Hippo that I created with Midjourney

My childhood stuffed animal Warren Hippo should be at least 30+ years old by now, but he is somehow forever 5 years old and will always be 5 years old.

Midjourney was able to make him look pretty real. And more importantly, pretty close to the original Warren Hippo too:

Meet the original Warren Hippo

Pretty close-ish right? I thought I was on my way to becoming a professional artist.

Unfortunately, image consistency quickly became a huge problem, and it’s one of the top issues that Midjourney users want solved (according to a poll in their Discord community).

Midjourney renderings of Warren in various poses. He seems to have…evolved into a different hippo.

Modifying Warren into different poses was an entirely different exercise. Pretty challenging, and he turned into a different hippo. While it’s still really impressive that you can generate these new images of different poses in about 30 seconds, the character consistency will have to get better in order for the technology to truly enable the next generation of comic book artists, brand marketers, and designers, etc.

And this issue isn’t just limited to Midjourney. The generation AI tools I’ve played with are all really good at generating single-use images, but it’s much much harder to create themes, characters, and brands that you can use over and over again. This is getting better, as you can now seed designs with other images and you can preserve past images as well. But, as of writing this blog post, this is still a major blocking point.

In addition, these tools are all great with common images — like dogs. If you want to create a cartoon dog, it’s easy.

But what about something that doesn’t really exist? Something that doesn’t really exist even in people’s imaginations? Like a hippocorn?

I wanted to create a cartoon of our stuffed hippocorn at Hustle Fund. The original stuffed animal looks like this:

Dunky has wings and a rainbow horn and two large teeth

Unfortunately, because the internet doesn’t really know what a hippocorn is supposed to look like, it’s hard to describe it using generation AI tools. You get weird stuff like this:

Early version of a generated hippocorn image

In fact, we did many iterations on our prompts to try to create a good hippocorn design for our announcement of our plushie. Alas, we were unsuccessful.

Generative AI tools are, by definition, horrible at creating images that don’t really exist, because it has no data to work with.

Over the holidays, I was determined to create a great hippocorn cartoon using Midjourney. So I spent a couple of days working on this. (I know, this is a ridiculous hobby.) I realized that if I were going to be successful, I needed to feed it the data to train on. I ended up seeding Midjourney with a ton of photos of our stuffed hippocorn, and the results turned out a lot better.

After a few days of work, this looks a lot closer to our plushie hippocorn Dunky

But even in seeding it, Midjourney struggled to identify its wings (this is why you see a white shawl around the hippocorn). It took a long time to interpret the two white squares as teeth as well.

In addition, it struggled to render different poses of Dunky as well. You can see the teeth were lost.

Renderings of Dunky the hippocorn after having a tooth extraction at the dentist

But, maybe it’s good enough for some use cases.

Ultimately, we were only able to create hippocorn cartoons because we already had designed a hippocorn. In other words, we needed a designer to create our stuffed hippocorn in order to feed the AI models with our design. It would have been impossible to create a hippocorn from scratch with no designer.

This is where AI still falls short. If you are creating something completely new, you will still need a designer to design what you are developing. That being said, AI can probably speed up some bits that are too tedious to do manually, saving your designer some time.

Why bother with your stupid hippocorns?

As we assess products in AI, which is an incredibly competitive space, these nuances matter…A LOT! I think it’s easy as a VC to watch a demo of a product and say “Wow, that image generator can do ABC things.” But really testing the limits and edge cases is important to understand the state of AI and stay on top of who has the lead.

It’s also important not to write off any of these companies because of these limits. I’ve seen so much change in all of these generative AI design products in just the past few months. They are getting better so quickly, and I suspect in a year from now, some of these problems that I’m writing about here will be solved.

What the future looks like?

Eventually, we’ll look back and say, “Wow, the 2020s was an amazing era for technology.” You’ll be able to build movie studios from your computer and distribute your films on the internet, disrupting the traditional movie industry. You’ll be able to write or draw books, including graphic novels, on the internet and distributed on the internet, disrupting the publishing industry. You’ll be able to create websites and mobile apps more easily — as just one person.

So, if I were going to start a new company today, I would probably not build an AI company — there are so many of them. I would probably build a company that thrives with the assumption there will be a lot of AI companies to help us design and build faster and so much more. For example, at Hustle Fund, we hire no-code developers, because you no longer need to code everything from scratch to get things built. That’s an occupation that didn’t exist even five years ago. So, what are the new roles that will emerge in the next five years? I’m sure there will be prompt engineers in the coming few years. Or maybe QA testers for AI. Maybe you’ll need tooling or legal for the creations you develop through all of these AI tools. Think about what that world looks like — I would build a company for that world, because it is arriving so quickly.

Momentum is moving creativity forward quickly. We’ll see new brands arising from individuals and influencers. The next few years will be remarkable.

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I’m (still) not crushing it

A decade ago, I wrote a blog post about how I was not crushing it with my startup LaunchBit.

In that post, I added this graph:

It looked good — up and to the right (though no labeled axes publicly disclosed). But, on a day-to-day basis, the graph looked like this and more importantly, *felt* like this:

Doing a startup is HARD, because it’s hard to see the long-term ups of where you’ve come from and how much you’ve accomplished. And it’s easy to see all the troughs you have to stomach today.

The headfake about my current company Hustle Fund is that even though we are a VC fund, we share many more similarities to our startups than we share with other VCs. This may sound counterintuitive, but we have revenue (with ups and downs of it – just like our startups) and lots of people (30+) who count on a paycheck. Managing money and lots of people is what makes companies hard!

I write this post, because I know that a lot of startups are struggling right now. Capital is tight. It’s hard to make money. It’s hard to console your team who may be worried about the market. I know – I get it.

An example of one trough that I’m going through right now is that I recently learned that I will have to personally chip in a lot of cash — more than I made last year — to cover a company tax situation. I know that so many startups often have founders contribute to their respective businesses to make ends meet. We all face the same issues. This won’t be easy for me. But we’ll figure it out.

In fact, the past couple of weeks or so have been the toughest point for me in our journey — even tougher than those first few months when my business partner Eric and I couldn’t raise that much money for our Fund 1. In many ways, it’s much harder to go through troughs when you’re a bigger company than when you’re two people working in a garage. (Ok, Eric still works in his garage).

A decade ago, I felt every trough so deeply. I was stressed. But there are a few things I’ve changed over time.

Gratitude

A few months ago, I spoke with one of our founders whose company is thriving. But, she saw her business go to zero during the pandemic and recounted how one day during the pandemic, it was just so stressful, she cried her eyes out in her empty office. I asked her, “What made you decide to continue your company and how did you ever pull through?” She told me that she realized that just being able to sit on the floor and cry about her startup was a privilege and that she wanted to continue.

That conversation summarizes how I think about my own startup problems now. It’s a privilege to be able to do this work day in and day out. No one is making me do a startup. It is a gift to be able to work with the amazing Hustle Fund team to get through problems – I am so so grateful.

So even though there are a tons of ups and downs in doing a startup, there’s no way I would give this up to do something else.

My health / habits

I’ve talked a bit on Twitter about how I’ve changed some of my habits which has made it immensely easier to handle stress.

Some key changes that come to mind include:

  • No phone before bed. I keep my phone in the kitchen
  • Use phone meetings to walk / jog to get exercise – there’s often no other time
  • Reduce meetings with voice messages via Async.com
  • Sleep early and wake up early to get a better handle on the day

These changes alone have helped me get a better grapple of not only my time but also my stress.

I also think being a second time founder helps. You know what issues can crop up and not much is surprising anymore.

But, The Ups and Downs are Always There

I think founders often think that if they can just get to the next milestone or the next round of funding, there’ll be more stability and fewer ups and downs. This couldn’t be further from the truth.

On some level, there’s more stability — there are more people to mitigate the chaos (assuming good processes in managing the team). But there’s also just more at stake and issues always arise, so the problems become bigger.

This is fundamentally what startups are all about. Constantly ploughing through and getting pummeled and rinsing and repeating. And this can be depressing for some founders. And, this is not for everyone — and that’s ok to move on.

But if you’re still excited to try to surf your startup wave, keep going! Everyone gets pummeled over and over again — you’re not alone — but just get back up on the board and continue. You’ll figure it out.

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The challenges of growth: where startups struggle and how to fix them

Although I invest in a lot of pre-revenue startups, a stage where I see most companies get stuck is the pre-series A stage. There are two primary ways that companies tend to get stuck. A startup:

  1. Has product-market fit but is too chaotic in trying to serve demand
  2. Doesn’t have product-market fit but thinks they do and overly spends money and runs out of money

What is product-market fit?

At a high level: You have found product market fit when you can repeatably acquire customers for a lower cost than what they are worth to you. This is not earth shattering. This is a simple business statement. Are your costs lower than your revenues? Are you profitable? And can you get more and more customers over time in a systematic way?

I’ve written about this before on Twitter:

How do you know you have product-market fit?

This is something I didn’t understand when I was a founder. Investors would often go around saying “you just know you have it,” which I didn’t find helpful back then. Now on the investor side, I think this is a true statement: if you can’t keep up with sustainable demand, then you have product-market fit. If you are overly spending — i.e. payback period is longer than say 6 months at the seed stage — to get demand, then you don’t have it. You are just spending money unsustainably.

It’s important to be honest with yourself about whether you have it. The truth is – most companies never achieve product-market fit. And, my startup certainly never had it. The market doesn’t generally need most companies. And that’s ok.

Even companies with product-market fit can fall apart

However, even if you have product-market fit, that’s only half the battle in running a company. I often see companies still get stuck. I’ve had many portfolio companies find product-market fit but get close to either running out of money OR actually run out of money, because they didn’t keep a close eye on their cash management.

Even if you are basically profitable in serving your customers, you can still go out of business. For example, if you have a large cash outlay upfront to buy materials for your product before you bring in revenue from selling said product, you could easily run out of money. If you haven’t read the book Shoe Dog, by Phil Knight yet, I highly recommend reading it to dig deeper into this particular conundrum. Shoe Dog is the story about Nike and how they almost ran out of money quite frequently. In Shoe Dog, Nike needs to pay for materials to make their shoes upfront and then sell them later. But, the more shoes they sell, the bigger their outlay of cash has to be each time they buy more materials. So although Nike has a ton of demand for their shoes, it’s incredibly difficult for Phil to solve for their liquidity issues to keep up with demand. Their success actually creates cash problems for them.

This issue doesn’t just happen with e-commerce companies. It happens with logistics companies, ad companies, and B2B companies as well. There’s often a hefty outlay of cash upfront to pay for people to help serve a deal or pay for the cost of goods.

Pre-series A companies need to optimize

For all the reasons described above, I’ve thought a lot about the optimization of growth and startups. Everyone – investors and founders – are all fixated on growth. But once you have some growth, especially during tougher financial markets when it’s less easy to raise money, it’s the founders who can optimize their companies well who will be positioned to be successful.

Truthfully, Hustle Fund recently has been working through its own growing pains of optimization. We have 30+ people now at Hustle Fund and beyond our VC funds, we have several business lines that all work together. Some business lines have product-market fit. Others are more nascent and are too early to tell.

With my last startup LaunchBit, we never hit product-market fit, and we never were this large either in team size or revenue. And with so many people, at Hustle Fund, it’s sometimes hard for us to figure out what cash outlays are happening to ensure profitability when we are paid. In addition, with so many new people at our company, sometimes there’s just a lot of chaos. So we had to make some changes to our own business:

We now have a Company Operating System that allows for scale

For most of the last five years – esp in the beginning – most of the knowledge of how we do work at Hustle Fund has been in people’s individual heads. After a while, this made onboarding new hires challenging and it slowed down work.

Photo by Jeremy Waterhouse on Pexels.com

Every company goes through this transition where at first, it’s fast to not have documentation and processes (e.g. 2 people in a garage who are still figuring things out). But at a certain point, this way of working becomes a crutch and then you have a lot of inefficiencies on your team when no one knows where things are or what is happening or who does what.

Spearheaded by Thenuka Karunaratne, he set up the system for us to help level us up to do business at scale. Thank you Thenuka! In our Company OS:

  • There’s a single source of truth
  • Everything is documented there
  • If you do something more than once, we record a video and just add the video to the documentation to make it faster / easier to document. No one has time to write documentation
  • Done is better than perfect. Revisions happen all the time

Consistent communication channels creates prioritization

Hustle Fund is also a fully remote company across the globe. Most of the people who work here had never worked at remote companies before, so we had a tough learning curve in how to communicate – especially across time zones.

We had to set up guidelines on what communication channels are for what and everyone must be aware of these from day 1.

E.g. Email — this is where work gets done. Subject lines with [ACTION] or [ACTION by 3/1/2023] get higher priority within our team.

In contrast, Slack is where messages go to die. BUT, Slack is important. We have a Shoutouts channel to praise people on our team publicly. We have a channel for news articles. A channel for our own weekly updates. As you can see, these are all great channels for getting to know team members and staying in the know.

We also use Async.com and Loom videos a lot to remove meetings. Instead of a meeting, we send a Loom video or an Async voice memo. It’s way quicker than writing details in an email, and the recipient can quickly read the transcription to digest it. And, you can also convey emotion, which is so so important when you are sending feedback on ideas.

Templates, templates, templates

Lastly, we write and share templates with our team on what to say to various scenarios. This allows us to have consistent messaging and with two clicks, we can respond to most inquiries fairly quickly. There is no reason to re-invent the wheel.

As you can see from our own journey of leveling up both at Hustle Fund and helping our portfolio companies level up, I’ve always wanted to create an epic guided offsite for pre-series A founders.

So, I’ve been working closely with Tam Pham, the newest addition to our team, in creating a Hustlers’ Retreat–a guided strategic offsite for leadership teams this year.

Here’s the thing: Lots of founders get bogged down in the weeds with things that seem important, but don’t actually move the needle on the business – for all the reasons above.

So here’s our vision for Hustlers’ Retreat: we’ll take ~25 leadership teams out of their daily chaos into nature. They will finally have time to slow down and think strategically about their future.

We’ll facilitate workshops to help founders with their top priorities and build their company operating system. We’ll also offer sessions on customer acquisition and fundraising.

The goal is to help pre-series A companies with:

  • Prioritization
  • Getting leverage on their time: Going from an individual contributor to a manager
  • Raising money beyond the seed: What they should do today to prepare for future raises
  • Attracting A-players to work for their tiny startups: Plus retaining those key employees when you have limited cash
  • Acquiring customers: Growth will always be a constant at every stage

The best part? We’ll take care of the whole experience. The Hustlers’ retreat will have:

  • a private property that spans hundreds of acres in beautiful Sonoma County
  • cooks on-site to provide nutritious food for you and your team
  • our team and guest speakers to facilitate all the workshops and sessions 
  • fun activities to recharge & connect like volleyball, board games, a pool party + more
  • a community of hustlers just like yourself to connect and learn from each other

Our goal is that every leadership team will walk away feeling recharged, aligned, and energized to tackle the next chapter of their business at scale.

Anyone can join, but the sweet spot is for pre-series-A cos. 

  • You have a live product
  • You’re making at least 6 figures/yr w a path to 7 next yr
  • You have a team

So if you’re a founder who is at a key inflection point in your business, we designed the Hustlers’ Retreat for you. It will take place Aug 20-24, 2023. We’re also doing something crazy and paying for your lodging (4 nights) onsite to the first 35 tickets, use code “HUSTLER”.

My teammates and I will be connecting with founders throughout the week and facilitating sessions. Hope to see you there!

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Leadership during a crisis

Wow. What a week.

I’m sure most of you reading this are in and around startups and already know what I’m referring to. But if not, the most popular bank for startups and VCs called Silicon Valley Bank just went under. They are still getting a final count on what percentage of deposits are not insured, but I’ve seen 97% being floated around. That’s a lot of money potentially gone.

But we’re all tired of hearing about what we think happened or whether a buyer will come along. The much more important thing to talk about is what to do in a crisis situation.

Over-communicate. And then communicate some more.

One of the biggest mistakes I see organizations make during a crisis is their failure to communicate swiftly and with poise. Often organizations want to find all the facts and think about the right words to say. They want to focus on solving the problem.

Unfortunately, this is a big mistake. And it’s a mistake that happens all the time — such as in this crisis with SVB or during COVID or when employee allegations about abuse or harassment emerge, etc. Companies make this mistake over and over again — both big and small companies.

It is important to own your communications and use them to get ahead of a situation that is spiraling downwards. In fact, this is so critical that I’ve spent the last 2 days drafting communications for many of our portfolio companies in figuring out what to tell their investors, business partners, and/or employees yesterday.

It’s not so much about what the comms actually say but how they make people feel. The feeling you want to convey is 1) You got this under control – leadership is on it and ppl can count on you, 2) if you don’t have all the answers, you will get info and will keep people informed as you go along, 3) your door is always open to chat.

If this isn’t done swiftly, even if you are actively working on a solution to a crisis, people will lose faith in you, because they are unaware of the steps you are taking. As such, it is much more important to communicate something — anything — quickly and update your comms as you go along than to try to write the perfect thing 4 days later. The best time to do this is in the first 24 hours of a situation emerging.

So, in this situation, if you haven’t already sent out communications to your employees and investors, I’d highly recommend doing that today. It can be short and sweet:

For investors:

  • You may have heard about SVB (link)
  • We were/weren’t affected and to what extent
  • If affected, we are still trying to learn X and will keep you informed
  • Thank you for your support always

For employees:

  • You may have heard about SVB (link)
  • We were/weren’t affected and to what extent
  • 1 line about payroll – i.e. rest assured, we are actively looking at loan options to make this work (if with SVB) / or we were not affected
  • Business is as usual
  • If you have questions / concerns, my door is always open

As the CEO or head of your org, your job is leadership. This means that communication and morale is your #1 responsibility. I often see CEOs think they are too busy to address the communications during a crisis mode. They are too busy trying to solve the problem. But communications is everything.

In addition, during a crisis, you’ll often see people go above and beyond. It could be from within your company but it may also be through external partners. In a crisis, there are people helping all the time. This is the time to thank them and make them feel extra appreciated.

Over the years, we’ve done this a few ways: we’ve sent food (treats from a grocery store, meals from Doordash, and gift cards to restaurants). We’ve sent alcohol and ridiculous stuffed animals and stupid stuff to make people laugh. It’s just a way to show appreciation and thank people.

Ultimately, your communications with everyone is about saying “I see / hear you. I’m on this situation. I appreciate you.” That is leadership.

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