Category: Start-ups

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.

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.

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!

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.

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. 

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. 

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.