Some reflections on turning 40

Last week, I celebrated my 40th birthday with my family (which is pretty amusing since my birthday was last November).

When I think back about the last few decades, a few stories from my professional life come to mind that I thought I would share here.

1) Serendipity and luck trump everything.

Certainly hard work and skills are important, but luck and being at the right place at the right time is so critical.

I wasn’t born into a family of entrepreneurs or even tech. I got into startups, because of a couple of key events that happened to me. One event that got me into startups happened in 1996 growing up in the SF Bay Area during my freshman year of high school. My best friend Jennifer told me one day that her cousin Tony was building an internet startup. And she asked me if I wanted to help him and their startup over winter break. I didn’t know what a startup was, but I also had nothing major going on during winter break. So, we took the Caltrain up to San Francisco to “help” Tony. When we showed up, the place was honestly a bit of a mess and chaotic. But it was exciting! Tony and his friends were working together on all kinds of projects. They didn’t have to dress up in “grownup-work-clothing”. And they could eat all the pizza they wanted. It was the dream.

I wasn’t any help to their company. But I knew from that day on, *that* was what I wanted to do when I grew up. I didn’t even know how they made money or that there was even money to be made. But, even from that early day, it was inspiring to see a group of friends come together to build something bigger than themselves. A couple years later that company LinkExchange was acquired by Microsoft for a reported ~$200m. Tony — who was Tony Hsieh — would go on to become an active angel investor in many startups and become CEO of Zappos. And while I didn’t know it that day, he would also later have a bigger impact on my life as well as my startup LaunchBit and Hustle Fund, as I’ve written about before here. I’m incredibly grateful for the path he set me on, and that was entirely serendipitous.

2) Failure leads to success.

One of the things I’ve noticed is that most successful people have had *a lot* of failures as well. But people only talk about the successes.

For me, failure and success are oddly connected. When I was nearing the end of college, I thought I wanted to go to business school, and I applied to a few business schools in the fall of my senior year. Throughout this process, I had wanted to visit a couple of business schools I was applying to in Boston, but my money was tight, and I didn’t want to pay for a plane ticket to Boston from California.

Coincidentally, around that time, I saw an ad for a contest, in which the prize was a free trip to Boston from anywhere in the US. I immediately entered the contest on a whim, and amazingly, I won!

The contest was sponsored by the DISCO career forum, which was/is one of the largest job fairs for jobs in Japan. And oddly enough, it was and still is held in Boston every year. In fact, at the job fair, I met tons of people from Japan who flew to Boston just to apply for jobs back home!

I didn’t care about the job fair. I was merely excited to fly to Boston, see my friends, and visit a couple of schools for a couple of days. But, in order to get my reimbursement for my plane ticket, I had to attend the DISCO career forum for 2 days. While there, I met a ton of companies and even interviewed on the spot for various jobs. Although I wasn’t actually looking for a job, by the end of the weekend, I got a job offer!

I soon learned that I didn’t get accepted into any business school, but at this point, I was very excited about the job offer I received and accepted it.

About a year later, I packed my bags and moved to Tokyo. But, a month into it, I was told that I couldn’t stay in that role, because my Japanese was not good enough. Wow, was I getting fired? After just a month into my first job?? That night, I sobbed my eyes out.

To their credit, my former employer was extremely helpful in this situation. They gave me a few choices and told me that I could still stay at the company for about a year if I moved into marketing (so that I wouldn’t have to talk with customers with my poor Japanese 🙂 ). But they didn’t have budget to pay for me much beyond that, so I had to find something else to do.

I decided to re-apply to business school. But this time, I only had time to apply to one school – so I chose to re-apply to MIT which was the school I liked best after visiting. And, fortunately, the entire application was the same except for one question: “What have you done in the last year?” a topic on which I had a lot to say from my experiences in working in Japan. A mere few weeks later, I received an email saying there was a decision ready. I had not even received an opportunity interview this time, so I was pretty certain it was a fast rejection, but it turns out, I had gotten in!

Looking back, failure and success were so well coupled together. I failed to get into business school so I got a job. I failed to keep the job, so I went to business school.

3) Frugality and portfolio construction are keys to wealth. Wealth is freedom. 

I am a huge fan of the FIRE (Financial Independence, Retire Early) movement and was an avid reader of Mr. Money Mustache. I think when most people aspire to become wealthy, they think they need to be super successful with building a hit company or something like that so that they can buy all the stuff they want.

In truth, when you get there, many people realize that the stuff isn’t interesting. Wealth is about the ability to be free. Free from ever having to work at a job or on a project you don’t like again. Free from feeling pressure to work with bad people. Free to work on the things you do actually like or find worthwhile. Free to spend your time however you like. 

And it actually doesn’t take a life-changing event to become wealthy. Even if you never have a hit company, you can still become wealthy — with frugality and strategic investing. 

In my 20s, I quit my job to start a company. My husband was a post-doc (read: paid pretty much nothing). I took odd and end gigs to make ends meet and scrimped like crazy. This was pre-gig-economy, so random jobs I did included being followed around by a researcher from Xerox Parc, categorizing whiskeys, and critiquing MBA resumes for international students. I remember on the rare occasion we would go out to eat, I would get very nervous if we exceeded spending $25 in total. 

In looking back on that, most people – especially in my peer group of tech friends – think about $25 as “Oh, it’s just $25.” I have many friends who believe that saving $6 here and there on SBUX lattes and avocado toast is meaningless. It’s just $6. And as a millennial, I do believe there are systemic issues with our financial system and incentives, I also do believe that investing the equivalent of one latte a day can make you a millionaire.

The right way to think about spending decisions is in its compounded value. You take $6 a day and throw on a 7% annual interest rate in the public stock market or 12% annual rate or higher(!) in the private markets. That $6 daily latte is actually worth over $350k+ in your 40s if you take the money and invest it. Just from *investing* your latte money daily, your average person who invests in standard index funds available to everyone and lives an average lifespan *will become a millionaire*.

That’s pretty remarkable. 

But I think the topic of portfolio construction for investments is incredibly confusing. And frankly speaking, I think most people find the topic boring and honestly scary – you could lose all your money! Loss aversion is probably one of the biggest roadblocks to more people investing – even in index funds.

I, too, have thought for many years that investing was scary. But I read somewhere when I was very young that putting your money in a savings account actually *loses* you money due to inflation (which today stands at 8%+ annually!). And, I have been investing in index funds ever since my first job in high school. In other words, I was motivated to invest by the idea that I was losing money by merely saving it!

Now at 40, and having seen even some of the meager earnings I had in my teens compound, I still believe index funds are a fantastic place to put your money. You can passively compound and grow it reliably, because it’s diversified and rides on the economic growth of the world.

But, the one thing I do regret about my investment choices was not investing earlier in *private markets*. I didn’t know anything about investing in startups until the last few years. In fact, for many years, the thought had never even crossed my mind to become an angel investor. I always thought you needed to be super loaded to do that.

And then when I was in my 30s, one of my entrepreneur-friends, who at the time had not yet had an exit, told me that he had been angel-investing into friends’ startups with $1k each. This surprised me. How could you invest $1k checks into startups? Why would anyone take that kind of money? I also didn’t understand how he was accredited to be able to do this (I have since learned that his own startup was valued above a certain amount, and his net worth on paper made him accredited). The world of startup investing was utterly unfamiliar to me even though I was a founder myself at the time!

And, it was very inaccessible — there was no information online anywhere on how to get into any of this. Friends learned from friends how to angel invest. I had wished there were an accessible way to get into small check startup investing once I had some level of a portfolio with my index fund investing. I wanted to be able to add some additional risk/higher reward to my portfolio in an educated and balanced way.

And, this is why my colleague Brian Nichols started a program called Angel Squad at Hustle Fund – to empower small angel investors to learn, invest alongside us for even as small as $1k checks, and network with each other as they start and further their angel investing endeavors. We now have almost 1000 angel investors in this community and the next cohort beings soon if you want to apply to join Angel Squad.

4) Family balance is challenging. Take all the help you can get. 

Being an entrepreneur is about doing a lot of sprints while running a marathon. I think the only way I’ve made things work is to rely a lot on help and to not attempt or even care about perfection.

How my child perceives me. I would love a gravity-defying computer like that.

Throughout the pandemic, things were tough for just about everyone. I remember this one day that summed up my life: my husband was working at his lab. I had tons of back-to-back meetings as sh*t hit the fan with everything. My older child who didn’t know how to use a computer needed help logging on to an online class. And my younger one wasn’t quite potty trained and had just pooped on the floor and then stepped in it and ran around from room to room. All at the same time. 

After that happened, my parents who live a few miles away from me, so graciously offered to take the kids to live with them for the *next several months*. That was huge. And I’m incredibly grateful. I don’t know how we would’ve pulled through without that help.

I recently listened to Indra Nooyi’s memoir My Life in Full: Work, Family, and Our Future about how her career progressed through Pepsi, and the multi-generational help she received from family resonated with me. As much as we’ve progressed and moved forward with society, there’s still a lot of burdens or asks that fall on the mom. Don’t get me wrong, I think my husband is a phenomenal dad, and many of my friends are amazing dads as well. Many dads do so much for their kids and childcare these days.

But society still puts a lot of little burdens on moms in unsuspecting ways. And, it’s the little things that add up. For example, during the pandemic, some of the moms in my kid’s class sent out emails asking folks to submit a page for the school yearbook. Thinking those were mass emails, I just completely ignored them. Eventually, those emails turned into a personal one sent directly to me.

You can bet my husband never received those emails even though he is on the parent list and certainly didn’t receive the direct personal one. I politely responded that unfortunately I didn’t have the bandwidth to do a class yearbook page for my first grader. (I mean…who does a yearbook page for first grade??) You might think, “well, it’s just someone asking you to do a yearbook page – sheesh. No biggie.” But it’s all the hundreds of little requests that happen everyday that compound and particularly on moms.

My child created this sign for my office

As it turned out, the mother who emailed me ended up taking on the task to do the yearbook page *herself* for my first grader. I never saw the yearbook page, because I didn’t order the school yearbook (see #3 on frugality). (Also, did anything interesting even happen during the remote school year?)  

Family balance continues to be a struggle, and honestly, I think this is an area that is still being pioneered. After years of getting unhelpful advice from people who have never been in a similar situation before, I think I’ve learned to just embrace the situation. You do the best you can. And that’s ok. Say yes to help. It will work out.

5) Adventures spark inspiration. Routine makes you better. There’s a balance.

Because I grew up the SF Bay Area my whole life, after college graduation, I decided I would go far far away. Even though I knew I wanted to start a company someday, I first wanted to see the world (on someone else’s dime of course — see point #3 on frugality).

So, I left the Bay Area in 2004. I interned at CERN in Switzerland. I worked in Japan in the middle of nowhere (in a town called Suwa in the Nagano prefecture) and also in downtown Tokyo (see point #2 on basically getting fired). I interned in India at Infosys. I briefly worked on a project in New Zealand. I did everything I could to not come back to the Bay Area (until I had my first kid). 

Although none of these trips were for the purpose of entrepreneurship or starting a business, oddly enough, I ended up meeting so many people who would end up becoming successful entrepreneurs. For example, in my intern group in India, one person noticed that a lot of food was served on leaves there. He later started a company in the US to make high end disposable plates made out of leaves, and that company is doing really well. 

I often hear that one of the best ways to figure out how to start a company is by working at other startups or by trying lots of different business ideas. That certainly is one path. But, sometimes, I think the most off-the-beaten path ideas — the ones with most opportunity — are where others are not looking. And that means also exploring or being an adventurer in paths that others are not taking. 

That could mean pursuing an unusual career path. Or living somewhere others are not.

I have been investing in global companies for the past several years now, and while I’m no expert in any and all problems, many of the problems that international entrepreneurs describe to me — at least on some level — are familiar because of my time abroad.

At the same time, running around from place to place and going from one new project to another has its limits. Entrepreneurial skills are honed by doing the same boring thing day in and day out. Just like practicing a sport or a musical instrument, it’s the repetitive mundane that makes you get better. And of course your role changes as your company grows — going from individual contributor to manager to CEO of a large company. But, working on the same problem day in and day out is mundane to many people. And to grow something big is work across a decade or more by doing the same mundane thing better and better everyday.

My thinking about entrepreneurship changed after my company LaunchBit was acquired by BuySellAds in 2014. The CEO and co-founder Todd Garland bootstrapped BuySellAds, and they have quietly become a behemoth. They have grown their ad network tremendously, and they answer to no one. Approaching 15 years, they just continue to hone their supply side and demand side, and that’s how you grow — there are no shortcuts to honing your skills year in and year out. 

Most people, including my younger self, don’t have the discipline to do that. But after many years of doing the same thing over and over, eventually you get really good, and a business does well enough to become really exciting. And BuySellAds has been able to push into new initiatives while keeping their cash cow afloat. They’ve gone into other areas beyond ads, building out a portfolio of other businesses, working with great people. This is the kind of stuff you can do when you own your own destiny and don’t need to answer to investors. And it’s the kind of thing you can do when you’ve got a flywheel going. I’m convinced Todd will be one of the first bootstrapped billionaires — AND most people probably won’t ever know it. 

I think too many entrepreneurs, including my younger myself, are enamored with getting acquired, because they don’t have the patience and the fortitude to do the same thing day in and day out. (And as a VC, of course, I like exits too). But, as trite as this may sound — my lesson from BuySellAds is that the journey is the reward. Getting better at honing your skills everyday is the goal. Being able to do cool stuff with cool people, work on interesting problems, and make money *is* the dream. 

I probably have about 30 — if I’m lucky 40 — good working years left. And, Hustle Fund is my last job. Our mission at Hustle Fund is to democratize wealth via startups by increasing capital, knowledge, and networks in startup ecosystems everywhere. It’s a company I won’t ever sell, because it’s what I want to work on forever. And though not everyday is easy in building Hustle Fund, over the years, I’ve learned to thoroughly enjoy the entrepreneurial journey of embracing all the ups and downs. It’s a joy and a privilege to be able to work on this problem with an amazing team. 

These are just a handful of learnings I’ve had over the last couple of decades. I look forward to learning so much more between now and age 50. 

The New Era of Media Companies

For many years now, VCs have absolutely “hated” investing in media companies. If you were starting a blog or a newsletter, it would be very challenging to raise money from traditional VCs unless you had proven out a ton of traction (with a fast growth trajectory).

But I think it’s important to understand why, because we’re starting to see an inflection point that will shift the entire industry.

Side note: my view on this topic is fairly strong and comes from working with a lot of newsletter companies over the years in running my startup, which was an email ad network.

What’s wrong with media companies?

VCs typically have not liked these criteria about media companies:

Low exit multiples on ad revenue (often 1-2x on annual revenue)
Hard to acquire users quickly & scalably (CAC is too high at scale)
In a recession, companies reduce ad spend – especially brand advertising

All of these things have been traditionally true — especially if you’re looking to sell your business in 5 years.

But what if you thought more long-term? Not a 5 year horizon but 10-20 years or even 20-30 years out? How would you think about your business differently? What would your strategy be?

Regardless of your business, you might do something like:

Gather an audience – maybe start a newsletter to get loyal fans
Launch a product to that audience
Launch many products to that audience to upsell them etc..

And maybe you sell ads or event tickets in the beginning to provide cash flow and keep your company afloat, but eventually you start selling other products and services to a loyal group of people… Maybe you even start a fund that gets layered on top of that.

people having a concert
Photo by Wendy Wei on Pexels.com

Oddly enough, that playbook looks like starting a media company!! This is what is happening now — you see creators and influencers starting media companies with long-term goals in mind.

People like Mario Gabriele with The Generalist and Packy Mccormick with Not Boring (full disclosure: am a small investor in his fund) are layering on lots of programs and monetization mechanisms that all work in tandem. E.g. content about companies can also be investments and vice versa. When you align community engagement with monetization, this allows for incredible scale. I would bet that Alexis Grant’s new company They Got Acquired could very easily follow the same playbook with a similar audience.

Why now?

Now you may be saying, “Well media companies have always tried to mesh together different monetization methods to try to increase value. Why is now any different?” For example, Thrillist acquired e-commerce company JackThreads to try to increase monetization.

I think now there is just so much more infrastructure available to media companies to enable them to quickly plug into new monetization methods and tools. For example, Angellist’s rolling fund allows creators such as Packy to quickly spin up a fund without doing the time-consuming backops work and fundraising required for a traditional fund. This didn’t exist even 2 years ago.

Or other wildcards — like crypto. Mario created NFTs — without third party tools to do that quickly and without hassle would make this near-impossible for a media company with limited resources to do at scale. You can envision community tokens coming in a big way to incentivize audience members to get more engaged and contribute.

various cryptocurrency on table
Photo by Roger Brown on Pexels.com

In other words, there are now many ways to monetize quickly that have much lower COGs than creating new physical products to sell.

I think there has never been a better time to start building a media company and we will see many billion dollar media companies coming out of this era — perhaps even run by just a handful of people. Long gone are the days of just ads and events — the bigger monetization mechanisms are just getting started.

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The Rise of the Decentralized Startup

I think we’re seeing a very big shift right now in how startups are created and operate. But before we dig into that, I want to spend some time talking about work.

For centuries, work has been incredibly inefficient. In the “barter era”, one person would do work in exchange for someone else’s work. E.g. I’ll make you a silver fork in exchange for salt and spices. There were many things challenging about this type of economy. 1) There was no common currency to transact and understand value, and 2) on a macro level, it was hard to know whether your good or service was really needed and whether it was going up or down in value. E.g. Is there a surplus of spices? Should I be spending time in spices or something else this year?

Money came along and solved the first part of that problem. Tribes and groups of people adopted currencies that are the predecessors to modern day money. You could carry around some form of fiat and use it to buy things. You could sell your goods and services for fiat. This helped standardize commerce.

Eventually, the Medici family in Europe established ledger-based banking so that you could take your goods and services to one location in Europe and it would be good for a credit that could be used at another Medici bank. Coincidentally, around the same era, the Yap money system in Polynesia had similarities where money was actually represented by large stones, and there was a record of who paid with which stones. The large stones were too heavy to be moved, so the pointers of who owned those stones did were written down on a similar ledger-based system.

Money solved fungibility issues. But it never really solved the latter problem of understanding where your good or service fit into the broader landscape of what is actually needed in society and how it was valued.

And for centuries after establishing complex monetary and lending systems, this problem still came to a head often. In 2000, during the dot com bust, it became clear that tons of people built out companies and products that no one wanted. Overnight, many of these companies went to zero and many people in the internet industry were laid off. Time and again, we’ve seen companies hire up the wazoo only to do massive layoffs of employees who gave their whole lives to a given company.

In fact, as an individual worker, you often don’t know if a layoff is coming. You often don’t know if things are going well / not going well within your own company. Management typically doesn’t tell you. As an individual, you also don’t know if you should be taking this job or this other job, because beyond the salary, you don’t really know what it’s like to work at a given company until you start working there. And traditionally, you’ve only really been able to work at one company at a given time.

This brings us to today. As of writing this in 2021, mobilizing money isn’t the number 1 issue for companies. It’s attracting and retaining talent. Now you may be thinking, “Well that’s nice and all but I’m still having trouble raising money for my startup.” I have 300+ portfolio companies at Hustle Fund – all with varying degrees of fundraising troubles. But all of them — even once they have the money — are in a war for talent. Even the most well-funded companies who are no longer startups are having trouble finding and retaining talent.

Folks, the current way that startups are being created is starting to break. Under the current way of building startups, you have to figure out what potential users want and will pay for by doing customer development, pitch investors who are not your customers / don’t get it / are traditionally slow, fight in this war for talent against Google, and lastly, as a founder, get burnt out and combat personal mental health issues in the process. Does that sound like the best way to deploy resources for our society?

But what if we flipped startup-creation on its head? What if you start with a mission and values — not founders? For example, at my company Hustle Fund, our mission is to democratize wealth through startups. And to that end, we are furthering capital, networks, and knowledge in startup ecosystems. Even though I’m a founder of the company, it doesn’t matter if I personally work at Hustle Fund or not. It’s the mission that’s important and the people who want to work on that mission. And if no one cares about the mission, then the organization shouldn’t exist regardless of what I, as a founder, think about it.

And if you start companies with missions instead of with founders, then you start to attract people who have lived and breathed that mission before. Those people really get it. And those people are also would-be customers or users. And maybe these same people are not only working on this problem together in a cooperative way but are also investors in the problem — both through work and capital.

When you start with organizations that are centered on missions, then you start to chip away at existing startup problems. Such as understanding whether you’re building something people want – your colleagues are also your customers. They are also your investors and are more value-add through their feedback and network. You also solve for mental health issues. Founders often feel like they *have* to stay at their own company because there is often no one else to lead in the early days.

For all of these reasons, this is why I think we’ll see the rise in the decentralized startup. In fact, we already see many Decentralized Autonomous Organizations (DAOs) in play — this is not a new concept and DAOs are precisely what I described above.

Magdalena Kala tweeted a few articles on DAOs that I think are really good and are all worth reading if you’re not that familiar with DAOs:

DAOs, of course, are not immune to the fight-for-talent problem. But, unlike at a traditional company, often you’ll see various people working on goals or milestones for DAOs in a part-time way. Traditional companies often require their workers to sell their soul to their organizations. But, DAOs mostly just care about getting stuff done. And the transparency around what is happening in the organization gives everyone a clear picture of where a project stands, what is happening, and who is doing what (and getting paid what). In a traditional company, most of this is opaque. You can see if a DAO is going well, but in contrast, you really don’t have a clue with a traditional company.

A DAO that I think is really interesting is the Friends with Benefits DAO (h/t to my business partner Shiyan Koh for showing me this). It’s basically a membership club of inclusive thinkers and creators. They list their values upfront, and people who resonate with the mission can pay (invest) to join the group. This in turn becomes a community that funds the mission, and over time, as they build and monetize, the community who is also their customer base, will benefit. This is the ultimate — having your investors and customers wrapped up as one.

I think we will see many more DAOs formed in the coming years, and reiterating what I mentioned in 2018, I do think that some form of crypto will disrupt traditional VCs over time. But I also think decentralized startups will start to appear even without “typical crypto components”. There will be startups formed around missions that don’t start with founders nor involve crypto but have radical transparency. There may also be decentralized startups formed without Discord channels (personally, I’m unclear how anyone, myself included, can do deep work anymore with so many Discord channels) and just rely on wikis / Notion pages / Mirror / etc to document what work is being done without minute-by-minute chatter. I think we will see startups formed with people who work at multiple places simultaneously or are all contractors – such as how Gumroad is set up. And in that scenario, the need to raise so much money for the company actually becomes *less important*, because you don’t always need funds to cover someone full time and compete with much crazier full-time offers from FAANG companies. This mitigates the fight for talent issue.

At my own company Hustle Fund, some of these concepts are things we’ve thought about and have experimented with a bit. We’re not quite a DAO, but we are a bit DAO-like. We have a number of talented people who are part-time because they believe in our mission, and we are excited to be able to work with them in any capacity. Our GMs also have a ton of autonomy with their business lines that align with our mission — I often don’t have the foggiest clue what is happening with the day-to-day on their businesses, and that’s ok. In fact, that’s great. So at Hustle Fund, which is completely distributed, we have leaders of different facets of our mission who reap strong upside when their particular projects go well. In many ways, a structure like this requires working solely with entrepreneurial people – people who enjoy running with things without centralized instruction or authority.

Ultimately, the most ideal working environment for an individual is to be able to work on a mission (or many missions) you love with people you enjoy. You’re happy with your compensation and feel like you have strong autonomy to be able to have an impact. You get crystal clear transparency get be able to make good decisions for both the organization you work for as well as for yourself personally. This is what I think most people want for themselves and their families, and why I think we’ll see the rise in decentralized startups in the years to come.

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A reflection on our mission

It’s hard to believe that we’ve been in the pandemic for almost 1.5 years now! But the silver lining of a pandemic is it really forces you to question what is important. One of the thoughts I keep coming back to is around mission and purpose, which I wrote about last year at the start of the pandemic. AKA, what are you doing with your life and why?

When we started Hustle Fund a few years ago, setting out to make a boatload of money was not the (sole) purpose of the organization. Prior to Hustle Fund, I could have worked at a number of top VC funds that could have set me on a clear lucrative path. But I wanted to do something bigger and more impactful — something that would also help a lot of entrepreneurs. In mapping out Hustle Fund almost four years ago, we decided that core tenets to our mission at Hustle Fund was to further capital, knowledge, and networks in startup ecosystems.

Recently, we had a chance to reflect on how we’re doing against these tenets at our Hustle Fund team offsite.

Mapping out the future of Hustle Fund

At Hustle Fund, we believe that great founders look like anyone and come from anywhere. In the last four years of Hustle Fund, we’ve built scalable processes to fund nearly 300 pre-seed companies globally! Even pre-pandemic, we made almost all of our funding decisions online through video conference calls. We’ve invested in approximately 50 companies off of cold-application forms.

We’ve also spun up Angel Squad led by Brian Nichols, which in its first year alone has deployed ~$10m into startups of all sizes! Both our pre-seed VC fund and Angel Squad are on their respective ways and continue to build momentum everyday.

And beyond Hustle Fund, a lot of our peer VC funds now do the same. While it’s never easy to raise money, entrepreneurs who are not well-connected can now raise at least some capital remotely from connections built entirely online. And it doesn’t have to be from VCs. In the last few years, we’ve seen the rise of crowdfunding, roll-up vehicles, angel-operator syndicates, debt and revenue-based financing options. Startup capital is what made Silicon Valley special for so many decades, but these days, the capital markets for startups has largely opened up and continues to move towards a free-market dynamic — which makes capital more accessible.

But, Silicon Valley is still a special place for knowledge and networks. Successful entrepreneurs here have long shared advice to the next generation of new entrepreneurs behind closed doors. Tactical advice on things like customer acquisition, hiring, fundraising, testing quickly, building teams and keeping morale up have been passed on from one founder to the next.

At our offsite, we realized there’s a lot of work to be done in opening up knowledge and networks. In this next chapter of Hustle Fund, just as we’ve pushed hard (in a small way) to open startup capital markets, we are going to start pushing to make startup knowledge and networks accessible globally. Unlocking the secrets of startup tactics and inspiring stories is the beginning of what you’ll see from us.

To kick this off and give you a taste, my business partner Eric Bahn will be doing a fireside chat with Vlad Magdalin, CEO/founder of Webflow. In this fireside chat, the two will share stories of what happened in the very beginning, before Webflow became a unicorn.

If you read the funding stories of Webflow, on the surface, it looks like it was a walk in the park. But the Webflow story could not have been further from that.

Vlad exemplifies what the American Dream looks like at its best. As a refugee to the United States from the USSR, he cleaned offices at night with his family to make ends meet while growing up. He also started Webflow in 2005 but had to stop many times along the way to take jobs to earn a living. Eric and Vlad will talk about those tough early days of the company in a way that most startup stories are not portrayed.

This event is free to all and will be next Tuesday evening PT – I highly encourage you to attend and stay tuned for much more!

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Can you build a unicorn business outside the Silicon Valley?

This is a follow-on post to my last blog post about building a global-first startup

The tl;dr for my last post is that these days geography is rather confusing. It’s quite common for a San Francisco Bay Area company to start hiring from day one an engineering team that is elsewhere and building up a real hub elsewhere even though everyone sees them as a San Francisco company. Or for a startup located outside of the US to sell to US companies.  The world is a lot smaller than it used to be.  

And so for these reasons, I believe that to start a company, you can start building a startup these days from pretty much anywhere. The most important thing in the earliest stages is to try to get to product Market fit quickly.

Knowledge has become commoditized at the earliest stages – you can pretty much read about Lean Startup anywhere on the internet.  But what about scaling a business? 

The numbers are actually pretty sobering.  I went ahead and graphed some interesting fundraising data from past portfolio companies that I’ve invested in either as an angel or as part of a team where I was a/the decision maker.  

I took my whole portfolio of all companies that I had invested in between 2014-2016 and created pie charts based on geography. N = over 250 companies in this dataset.

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You can see the vast plurality of companies that I invested in during this time were largely international companies  Note: for the purpose of this exercise, I separated out my Canadian startups from the rest of the world. (Canadian startups are so similar to US startups that I thought they deserved a category of their own.)

I did the best job that I could in labeling just one geography for each startup, but this exercise was a bit tricky. For example, a company that I had invested in is categorized as a San Francisco-based company even though the vast majority of their employees are now based in Dallas. The reason for this is that when I invested in them, the founders were and still are based in San Francisco, and the bulk of their decision-making and operations were happening here at the time.  On the flip side, I classified a number of companies whose founders had recently moved to the US from another country and were doing significant operations in that other country as “other int’l”, even if they were US Delaware C corps. As you can see per my last blog post, it gets a little bit complicated. 

I then went ahead and grabbed the companies that made it to the Series A level and graphed what the breakdown of those startups look like by geography.  The reason I say Series A level is that I have a number of portfolio companies who have done well in revenue and have not had to raise larger rounds.  So if a company had raised a series A, I labeled the company as a Series A company regardless of where the raise happened. Now, I understand that there are some issues with the nomenclature because a Series A in the Bay Area is so much later than a Series A in say Australia, but, this was the best I could do. In addition, if a company had not raised a Series A but had hit US Series A milestones – namely $2m+ “net revenue run rate”,  then I counted the company as a Series A company.

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What is interesting about this graph is just how much the percentages have changed.  Let’s come back to the analysis in a second.

I went ahead and did the same exercise with Series B companies.  I graphed my portfolio that had graduated to the Series B level. And again, for companies who raised a Series B – whether here in the US or abroad — were labeled a series B company.  For companies who had hit US Series B traction milestones – namely 10m+ annual net revenue runrate – I also added those companies to this category as well.

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You can see that this graph has changed even more.

Here are my takeaways: 

1) The San Francisco Bay Area punches above its weight. (not surprising)

One could try to argue that perhaps my San Francisco Bay Area founders are stronger. While I couldn’t tell you whether that’s true or not, intuitively, my gut feeling is that that is not the case.

What I do think is happening here is that the San Francisco Bay Area has a lot more capital, and so there are more startups that get more funding than in other parts of the world. And by proximity of being here, it is easier to access the capital (even though there is also more competition).

But the other thing that I think is happening is access to talent and knowledge, especially as companies scale. I tend to invest in businesses that require less capital. This tends to skew towards B2B companies or other businesses where the margins are nice. I tend to prefer investing in companies where if they could never raise a dime of VC funding again, they would still be able to survive and thrive.

And I’ve applied this lens across all geographies. So as a result, I would not expect such wild differences in ability to get to the Series A level or the Series B level even if there is less capital available in other markets. But you can see that there is a big difference.  

1b) One side note: also, if I remove startups who have founders with pedigree, then SF doesn’t punch above its weight and proportionally stays the same at each stage. 

2) International companies outside of the US & Canada have a much harder time raising money.

You can see that across-the-board, my international companies have had really had a tough time getting to the Series A or Series B level.

And again, I attribute this to less access to knowledge about scaling, less access to capital, and less access to talent that has scaled businesses before. One potential wildcard explanation for this lack of success is that the US & Canada have pretty established customer acquisition channels.  But, that isn’t the case everywhere globally, so it may also be that customer acquisition makes marketing and sales in the US & Canada just faster and that other international companies just need more time to make headway.  

3) Companies based outside of the SF Bay Area that have been successful have spent significant time in the Bay Area

The last interesting thing I would say here is that if you look at the Series B companies, anecdotally I can tell you that all of those founders have cultivated lots of relationships here in the SF Bay Area to get scaling knowledge and access to capital.

Takeaways:

I don’t think you need to be in the San Francisco Bay Area to start a company. In fact, I actually think that since your money goes so much further elsewhere and knowledge is commoditized regarding starting a business.  As an early stage founder, you really should just focus on product-market fit wherever you feel is best for you to live.

BUT!  If you want to start scaling a business – call it at the Series A level and beyond – that’s when you really need to start having connections ideally to the SF Bay Area to raise money from and have a network / learn from and potentially even a pool of people to hire.  

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Image courtesy of Giphy

If you are starting a business outside of the Bay Area and want to build a unicorn business, in today’s global economy, it is significantly helpful for you to start building from connections on day 1 to the SF Bay Area.  

Some thoughts on balancing family and a startup

One of the more taboo topics in “Startupland” is around having a family while starting a business.  When I was about to have my first child while working on my company LaunchBit, I was catching up with a friend of mine who was also an angel investor in my business.

And then he asked me, “How do you think about balancing your company with a young child?”

Since then, it’s a question I’ve batted around for years.  Is this an appropriate question?  Is it even a good question?  And what is even an answer to this question?

To be clear, my friend didn’t mean any malice by it nor was he trying to use my answer as a piece of information in making a decision about investing — he was already an investor. He was just legitimately curious. But of course, the immediate counter question that comes to mind (and that I articulated out loud) is, “Would you have asked me that question if I were a male founder / CEO?”

We all know that he wouldn’t have.

For as long as I’ve been running my own company — first at LaunchBit and now at Hustle Fund — I have not often engaged in conversations about family in business meetings / business settings.  When other people talk about their kids, I usually just kinda smile and nod.  In contrast, my business partner at Hustle Fund Eric often talks about his family and his minivan.  He shares photos of his children with our investors in our monthly reports regularly.  I don’t think think most of our investors even know that I have children.  There is an unspoken looming fear that many female entrepreneurs with children have — that their abilities and dedication as a professional will be judged and looked down upon because they have children.  This is because there is a notion held by some people in the ecosystem that having a startup while having children puts you at a disadvantage and shows a lack of dedication.  Obviously, not everyone holds this belief, but there is no upside as a woman to sharing that you have children while running a startup.  And so for so long, I’ve just generally kept quiet / private about the whole matter.

And I’m not the only woman to do this.  Countless female founders of mine over the years have asked me for advice and guidance on managing a family while starting a company but have also asked me to keep these questions on the down low or even their plans to start a family on the down low.  I’ve become a confidante of sorts because I’m a female founder with a family in this taboo world.

However, after mulling on this for a few years, I think the exact opposite needs to happen.  Everyone would benefit by sharing advice on tips for handling parenting while running a startup.  And, so I’ve decided to write this post on how I’ve managed to balance parenting while running 2 startups (had kid #1 while running a product startup and had kid #2 while starting a VC fund a couple years ago).  

Before I had kids, I had in my mind an idyllic notion of parenting.  I thought I would swaddle my newborn in cloth diapers, feed breast milk for a year, and follow every other piece of advice from “ideal mother” websites. But then, reality quickly set in – in having my first child while running my adtech company.  The idea of spending an extra 30s putting on a cloth diaper at 2 in the morning in a half dazed stage all of a sudden seemed less exciting — my stance on parenting immediately changed when I became a parent — I just wanted to make sure my kid stayed alive and healthy! 

The reality check

On one hand, there is truth to why running a startup and raising children isn’t easy.  Many people will say that it’s because children take up a lot of time and attention.  Other people say it’s because they increase your financial burden. Both are true but IMO not the biggest issues namely because people are incredibly resilient to constraints — both time and money constraints.

For example, before I had children, I thought I was quite efficient with my time. Post-children, in looking back, I’m actually 3x+ more efficient with time now. I never thought I could eke out so much more efficiency. You can ALWAYS become more efficient with more constraints.

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Playing Bejeweled is something I used to do but don’t anymore…

So, the biggest challenge isn’t additional constraints, because resilient people make things work and make them work better.  I actually think the biggest challenge is that there are just a lot more variables that are out of your control.

For example, your kid gets sick and can’t go to school; that’s out of your control. Your kid wakes up every two hours; you can’t control that either. So how do you deal with last-minute situations? How do you impromptu handle situations you didn’t expect? 

So, here are some key things I’ve learned while leveraging my time as an entrepreneur parent:

  1. You need support. Don’t do it alone.
  2. You need to say no and leverage time.
  3. You need to “let go.” 

Support

It really does take a village to raise children, and I’ve leaned on tons of people for support from the beginning through now. I think people are often afraid to do so, but I think it makes life a lot easier. 

During the first few weeks of motherhood, folks showed up with home cooked food or bought meals / meal gift certificates for me and my husband. Beyond the warmth of love and generosity this brought us, such a little act made a big, practical difference in my day. I could then put my energy towards thinking about my business, focusing on my kid, and even some personal recovery time, instead of worrying about what we were going to eat for dinner. On the flip side, this is probably the easiest, best gift you can get a new parent — meals.

My support network helped me balance time as I became a first and then later second time mom while being an entrepreneur. When my kids were still very young, friends and relatives babysat while I went to networking events, to work, or to sleep when I desperately needed a nap. For example, when I was fundraising for Hustle Fund in 2017, there was a networking event on a Saturday in San Francisco, and my husband was out of town.  For the 2-3 hours that I was there, I left my baby with my friends who lived in the Mission.  As an entrepreneur, at work, you ask for the moon from your business partners and potential clients all the time.  But we don’t often do that with people we’re closest with.  Why not?

My husband holds down the fort a lot, especially when I travel for work or have late meetings or events.  And my parents have spent so much time with my kids when they have no school (and in the very beginning when they couldn’t go to daycare), I can’t imagine accomplishing both startups without them or my extended support network.

Pride is one thing you really can’t afford when launching into the role of a entrepreneur-parent. 

Saying no & leveraging time

As a parent and entrepreneur, I need to leverage my time, and I need as much of my 9am-5pm working block to be free to think / write.

To achieve this, unfortunately, this means I end up saying “no” to a lot and moving things to more efficient channels whenever I can.

For example, people ask other people for coffee meetings a LOT!  Usually without any purpose. I used to do these coffee meetings a lot in my 20s. But, now, I often say “no” to coffee meetings. Critics of this strategy may argue, “Well, I’ve built my best connections through coffee meetings.” And I can agree coffee meetings are great to a) re-build or strengthen rapport with someone you already know / want to catch up with a friend OR b) meet with someone new and build rapport with LOTs of coffee meetings with him/her.  But when I look back, the vast majority of my coffee meetings in my 20s have been one and done, and for those people, that one coffee meeting isn’t enough to end up doing business or hang out socially in most cases.  (there are some exceptions but largely true of the coffee meetings I’ve done over the years) 

Instead, I prefer to stick with email for quick communication and if necessary, move to a phone meeting while commuting. In fact, I set up my Calendly so that bookable times are primarily during my commute at the beginning and end of the day. I end up having a lot of meetings while walking, skateboarding, kick scootering or driving. 

For further “networking”, in lieu of a 1:1 coffee meeting, I like to do group drinks / lunch or hangouts outside of my 9-5 working block.  So if there are a handful of people you want to re-build rapport with or want to get to know, it’s a lot more efficient to group everyone together.  And they’re busy too, so they want to make the most of their limited time too.

This means that when I get to work at 9:00am, I’ve already done a few calls / networking, so most of my 9-5pm day is slated for “thinking work”. I might have a couple of additional meetings during that block where I need to take notes and be fully thoughtful, but I like to have — as much as possible — a whole day to only do thinking and writing work.

The opposite of this schedule is what I had when I was working at Google in my 20s. I had back-to-back meetings all day, and then when I got home, I would, in a tired way, try to think and write. In retrospect, if I were to set up my schedule all over again, I would have skipped many of those meetings, asked people to do most work / coordination over email, and done calls while commuting to free up most of the day.

Exercise

As an aside, exercise is really important to me, and combining work time with exercise (walking, jogging, skateboarding, kick-scootering, etc.) allows me to eke out additional productivity.  I don’t believe in multitasking for most things – I think multitasking makes it challenging to really focus and be present. But I do think that exercise and talking-work goes well together, and this type of multitasking actually is more productive. 

I read Christopher McDougall’s Born to Run (excellent book) and learned that our ancestors used to hunt animals by basically jogging a marathon everyday! Since then, I’ve been trying to increase my miles–some days I walk eight miles–and multitasking with phone meetings helps with this goal, too. I’ve also heard that walking is more conducive to thinking than sitting — but who knows?

In addition, I often use voice-to-type to “write” emails on my phone, especially during commutes. Whether walking, jogging, or scootering with my kids, I can still “talk” to do writing work.

Emails

Lastly, everyone gets TONs of email these days, and email management is a big chunk of work in itself.  It’s really important to me to keep my 9am-5pm working block mostly free — I don’t want to be spending most of that time in email.  With the exception of a few emails that need immediate response, I work on email on the Caltrain on the days that I go up to San Francisco or at night after dinner.

I also recommend SaneBox, Superhuman, and Gmail smart responses to streamline emails and Calendly to streamline calls.

I use SaneBox to filter a lot of emails including subscription emails, emails from people I’ve never met, etc.

I use Superhuman for templated responses so that I can tell everyone the same thing over and over again.  For example, if I need to move a conversation to a call, I send the same templated response with just a couple of keystrokes, and people can pick their own time to chat (during commute hours) through my Calendly calendar management.  I also use Superhuman for offline email processing – so for example, if I’m commuting on the Caltrain to San Francisco, I can plough through all my emails offline quickly.

Re-scope responsibilities and letting go

Outside of work, the time it takes to complete simple chores adds up and eats away time and energy you could be spending either working or with your kids. Since working on a startup means having a budget, my husband and I have re-scoped and re-prioritized our chores to make them as manageable as possible.

Laundry. To save time, we don’t fold laundry. We just don’t. I know – that sounds blasphemous. That’s a tradeoff that we’ve made. We each have a laundry basket to keep clean clothes separate, and we wash each person’s laundry in their own load. I also streamline my clothing options by wearing a @HustleFundVC shirt and jeans almost every weekday. I understand that not everyone wants to keep his/her clothes in a laundry basket or wear the same outfit over and over, but I can tell you that it saves me a lot of time. Sometimes you just have to let go and figure out what is really important to you. 

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Photo credit: Giphy

Food. Each week, my husband and I each cook one simple dish, usually on the weekend. One night, we’ll order cheap delivery, one night we’ll end up eating at someone’s house, and one night we’ll pop a frozen pizza in the oven. Leftovers carry us through the rest of the week. Keeping our meals simple means neither of us has to fret over grocery store runs or recipes.

Dropoff and pickup of kids. We only have one car, so we each take a day to do both dropoffs and pickups.  We are fortunate to have managed to get their schools to be close to our work and home, so our commute, in general, is not that long.  (A miracle in the Bay Area where there is tons of traffic) . 

When my kids are not in the car, this is when I do my car calls so that the drive time is not wasted.  When the kids are in the car, it’s actually a good time to chat with our kids.  Conversations don’t just have to be at home at the dinner table.  They can be in the car too.  Since we only have one car, on other days, I will sometimes combine exercise while the kids are in a double stroller or while we’re kick-scootering together and will take calls when the stroller is empty. 

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Double stroller + skateboard combination day

Contractors. People have often asked me if I have a nanny or if I hire a company to clean our place. I’m not averse to this, and in general, I believe in comparative advantage.  Meaning  — if someone else is way better than you at something, for the right price, you should hire help.  This is how you’d run your business; and, this is how you should run your home.

In our case, both of my kids go to school, so a full-time or even part-time nanny wouldn’t be helpful because he/she would have no children to watch during the day. And by setting up the above the systems, things like laundry actually don’t take more than a few minutes — a chore that could take hours you can shortcut by basically not caring.  So should I pay someone for something that I fundamentally don’t care about is the question? Not sure.

I also make my kids — as young as they are (both under 6) — do chores.  In the beginning, it’s not done well, but at this point, they are actually quite good at cleaning and feeding themselves.

But I do think you should pay for things that you do care a lot about and will take a long time (such as this blog post!). That’s how you can get further leverage on your time.

To summarize

Running a business and being a parent each requires a lot more juggling than without children. But, it also forces you to be pretty dam* efficient that you could possibly imagine.  

To summarize, the biggest way to leverage time with a low budget is to a) ask for help from your community (family, friends, and even your own kids); b) prioritize thinking work and figure out how to get rid of everything else; combine with exercise, and c) reduce how much you care about daily chores. 

My business partner Eric at Hustle Fund is appalled by the fact that I don’t fold my clothes, so these exact strategies are not for everyone, but I do think with some creative juggling, you can eke out a lot of additional efficiencies to make parenting and entrepreneurship work without going crazy. 

Special thanks to my editor Caitlin for pulling the first draft of this together.  Also, the stock photo above isn’t a photo of my kids, but they are cute.