On Power Constructs

The last week has been rather disturbing on a number of levels. I’ve been able to reflect a little bit more methodically on what is actually happening here in the United States in the last 24 hours or so.

But before I dig into that, I wanted to share with you something that we shared with our portfolio companies this weekend to give you a sense of how at Hustle Fund are thinking about things. We write a weekly newsletter to our founders in our portfolio, and this is what my partners and I sent:

Not only are we still dealing with the surge of cases of the coronavirus, which we know is affecting so many of your businesses, but in addition, you may have seen in the news a lot of racially charged incidents that also happened this week. This spans from a police officer murdering weaponless George Floyd to a woman threatening to call the police on a Black man who was birdwatching and rightfully trying to tell her to put a leash on her dog. These are not one-off cases, but just the latest in a series of incidents where Black Americans are the subjects of casual police brutality. For those of you who are not based in the United States, a lot of this may sound completely senseless. I, too, couldn’t explain any of this to my kindergartener. It just doesn’t make any sense.

We’ve heard from our Black friends that they feel afraid and fatigued. It’s a fear and anxiety that comes back every time injustice directed towards the Black community happens. The events of this week are reminders that you can be innocently minding your own business — not even near a crime — and can be a target for violence simply because of your skin color. If you are afraid, I want to give you a big social distancing hug. 

From Aeon’s How to See Race

Race is ultimately a power relationship; racial categories are not about interesting cultural or physical differences, but about putting other people into groups in order to dominate, exploit and attack them.

In the United States race as a form of power has existed since the very beginning.

The US Constitution divided people into White, Black or Indian, which were meant to stand in for power categories: those eligible for citizenship, those subjected to brutal enslavement, and those targeted for genocide. In the first census, each resident counted as one person, each slave as three-fifths a person, and each “Indian” was not counted at all. But racialisation is often more insidious. It means that we see things that don’t exist, and fail to recognise things that do. The most powerful racial category is often invisible: Whiteness. The benefit of being in power is that Whites can imagine that they are the norm and that only other people have race. An early US census instructed people to leave the race section blank if they were White, and indicate only if someone were something else (‘B’ for Black, ‘M’ for Mulatto). Whiteness was literally unmarked.”

As startup founders, we understand power and power structures as it pertains to incumbents and their grip on the markets we are attacking; and yet we try. We are optimists who believe we have the power to change things, otherwise we wouldn’t start companies

We want you to know that at Hustle Fund, we condemn violence, discrimination, racial profiling, etc. Whether it is now or down the road, if you ever feel like you are an outsider or that you are being discriminated against because of your race, gender, nationality, age, or anything else for that matter, I want everyone in this Hustle Fund family to know you can come to us. If we even just take the smaller startup community in the broader world, I know that the startup community, too, is fraught with problems. There is a lot of discrimination and bad behavior within the startup ecosystem, especially as it pertains to raising money from investors.

Part of the reason we decided to start a VC fund is so that we can start to right the world a little bit. It will take a long time. We are not the biggest VCs. And we are not the most powerful VCs. But we have a bit of a voice. Let’s use it for good. Let’s use it to effect the change we want to see in the world — even if it starts small. We may all be different but you will always be Hustle Fund Family. 

Let’s break this down further though. Also, as a reminder, these next thoughts are mine and do not necessarily reflect the thoughts of the partnership.

I am disturbed by what happened to George Floyd, a Black man, who was murdered by a White police officer named Derek Chauvin last week. I am also equally disturbed by the video that I saw of the conflict in New York between Amy Cooper, a White woman with a dog and Christian Cooper (unrelated Coopers), a Black birdwatcher. Although both cases are very different in their outcomes, the latter was also just as disturbing because it showed the sinister power dynamics in that situation. 

Amy was in the wrong – she did not have a leash on her dog — but she played the power card of calling the cops to potentially wrongfully arrest or hurt Christian (even though SHE was in the wrong!). What this actually illustrates is that she KNEW very well the “power construct” of the situation. She KNEW that even though she was in the wrong, she could bring about trouble for Christian because of the power dynamics. 

And that is incredibly evil. 

I don’t care if that woman doesn’t normally act like that – it could have been just a bad day for her. But what it does show in that one example is what everyone deep down knows and dismisses — that there are “power constructs” based on race in this country that are so extreme such that you can call the cops because of someone’s skin color. She KNEW that something bad would happen to him simply because of the color of his skin. In fact, studies show that police brutality is a leading cause of death amongst Black men. The root of this stems from slavery, and we have not overcome this. 

Let’s rewind a bit on something separate and then I’ll come back.

In the “old days” — many centuries ago — around the world, most governments were monarchies or dictatorships of some sort. Under these governments, it was very clear who had power. There was no pretense of life being fair or just. Or that you could work your way up. If you were not royalty, you just lived with it and hoped to make your life as best as possible. 

And if things got really bad — like the dictator was crazy or really unjust — then you’d see revolts and governments overthrown. Usually this was instigated by a mad family member who wanted the throne, but things would have to be bad enough for a mad family member to generate support from other people. This type of government was rinsed and repeated for many centuries. 

Ok fast forward. In the US, we’ve never had our government overthrown. This is because our social contract in the US is that if you generally work hard and generally follow the rules, you can work your way up. This is what is promised to us as Americans. And, in large part, for many years, if you were White and male, this is/was true. Afterall, we have a currency that hasn’t had hyperinflation, there’s food to eat, clean water, and we have rule of law that generally works. These are the basics of a developed nation. You don’t see complete anarchy unlike in other countries.

But our system isn’t perfect and is especially far from perfect for many other people. It’s been good enough such that we haven’t had revolt but under the surface, there are major systemic problems. There’s a premise and social contract that things in the US “should be fair”. I.e. if you do a, b, and c things you can get ahead. But beneath the surface, there are power constructs encoded in our laws that don’t allow for this and reinforce power in the hands of a concentrated group of people. And so things on the surface “seem fair”, but then they actually are not. Even if there are no longer physical shackles of slavery, there are legal ones that loom and are often hidden. 

This week illustrated just how sneaky some of this is. For example, from all the videos that we saw, I was appalled by the police brutality on peaceful protesters and journalists who want to share the truth. In this country, freedom of speech is a fundamental right. 

But it was very clear to me from these past few days that freedom of speech is a social contract that isn’t being fulfilled. The police shouldn’t be allowed to shoot rubber bullets at you for videotaping them. They shouldn’t be allowed to tear gas protesters who are chanting unarmed. 

What is amazing is that even though there is all this video footage of all these things, it doesn’t even matter! The police don’t care that they are videotaped for this. Why? Because nothing bad will happen to them. As I’ve learned more recently, there are no checks and balances on the police. In many cities around the country, leadership positions within the police may be voted on directly or indirectly, but citizens have no ability to effect change within the ranks. And (thank you to my VC friend Kanyi Maqubela for this) unions and qualified immunity prevent really anything bad from happening to any cop — regardless of whether they uphold American laws or break them. This is frustrating. The people who are supposed to protect you can do literally whatever they want. And while I do believe that most people are fundamentally good people, power constructs have led to a culture to enable rampant wrongdoings and complicity in police forces in America. Ultimately, power is consolidated in the hands of a few, and this isn’t what most of America signed up for. 

I know that many of you don’t read my newsletter to read about societal issues. But this a good lead in to other power structural issues that directly pertain to you. Also just to be clear, this next part is in no way meant to suggest that these next issues are as bad as police brutality or racism. It’s just another example of power constructs meant to consolidate power that directly pertains to entrepreneurs:

A power construct that should worry you, as an entrepreneur, that most people don’t know about: VC funds are only allowed to have 99 investors. There are a couple of exceptions. (ie. if you want to have a small VC fund, you can have up to 250 investors or if all of your investors are worth over $5m, you can have an unlimited number of investors). But, for the most part, most VC funds can only have 99 investors. 

Let’s do the math on that. If you want to raise a $100m fund, that means that your average check size from an investor in your fund needs to be over $1 million. This means that you cannot crowdsource small investments here and there from 5000 people.  If I had my way, I would just market the sh*t out of things and raise a fund from 10k individuals, and a good marketer could easily do this. But, that’s not allowed per SEC rules. 

What this really means is that if you are raising a VC fund, you can only raise money from very wealthy organizations or people. The number of people or groups who can easily write a $1m+ investment check is very few. Power in the investing world is concentrated in the hands of just a few people and that money generally continues to support existing funds and the founders they support who are typically White, Male, graduated from an Ivy League or MIT/Stanford, and worked at a top notch tech company liked Facebook or Google. This is why you don’t see new money or new ideas go into investing. Literally, change is prevented by the laws that are in place. 

Now let’s follow the money. If you are an overlooked founder – and by this it can mean a lot of things. It can mean race. It can mean geography. It can mean schools or workplaces that you went to or didn’t go to. It can mean age. If you are overlooked, you are likely not going to find a large fund to fund you — at least not in the beginning when you have not built out much. 

If you find anyone to fund you, it will most likely be a startup fund (such as from Hustle Fund and others) that is small and cannot for many years raise a large fund because the money is so concentrated with power constructs to keep it this way. This means that it’s harder for you as an overlooked founder — there isn’t truly a free market here. Laws like this are subtle but have big impacts on society. 

Again, in bringing up the fundraising issues that founders or funds have are in no way meant to be considered on the same plane as police brutality or racism. Just generally speaking, if we really want to effect change in this country, we need to change the way “hidden” power constructs like these are set up in our legal system. Specifically in the areas that consolidate power and have no checks and balances. Just like how we don’t approve of power monopolies in companies in the US and have antitrust laws (that are sometimes enforced), we shouldn’t accept power concentration in other facets of our lives. These are currently encoded in our laws in ways that the American public is largely unaware of but have huge impacts on our society. 

I know that entrepreneurship can create wealth and change lives. Although money isn’t power, they are directly related, and by helping overlooked founders create wealth, we can start to — in small ways — right some of these power constructs. At Hustle Fund, 18% of our North American portfolio companies were started by underrepresented founders (Black & LatinX). This is a start but we know there is so much more work to do including: 

  • Welcoming and continue to welcome cold pitches. 15% of our portfolio companies came from cold inbound pitches. We didn’t know them. They didn’t have a referral. Great companies come from everywhere including outside one’s network. We don’t want to miss out. 
  • Building and continuing to build informal deal flow relationships with others who reach different sets of networks. This includes working with our Venture Associate Intern Jasmin Johnson who works with Score 3. Or Lolita Taub in her investor-matching program. Or relationships with a large variety of co-working and entrepreneurship organizations around the country.
  • Meeting founders remotely. Even pre COVID-19, almost all of our investments have been done via phone calls and video conferencing. Contrary to what many other investors think, I think meeting with founders in person doesn’t actually show you a person’s true colors – it’s just a show. People dress up and they put on a pitch show. And in-person pitches also introduce unconscious biases — everything from ability to pay for travel to how a person looks / dresses to how good a person is in pitching. I just want to know the raw nuts and bolts of a company and, to the extent possible, minimize unconscious biases across pitches. 
  • Post investment, helping our founders by:
    • Getting to know and introducing our founders to other microfunds and angels who share similar ethos in funding entrepreneurs based on execution rather than based on network or ability to pitch. 
    • Building a following online to help amplify our founders’ stories — one of our founders raised $80k+ from angels through our tweets
    • Running growth camps (4-6 weeks) to help our founders increase their revenue right away so that they don’t need to rely on more investor money
  • Scouting new team members. It’s no secret our team is almost entirely Asian and we are not racially, nor by background, a diverse team! Furthermore, in the GP-ship, we all went to Stanford and have been friends for 20+ years. We are exactly guilty of what my VC friend Rich Kerby writes about here! At the same time, we also have no management fees as a small fund to bring onboard new paid hires (and actually rely on grants and sponsorships to make our current budget work). We have been slowly getting to know & “courting” a couple of talented operators whom we would love to work with so that we can add more talent to our team in the coming 2-3 years. To be clear, the way that I think about things from a North American investing perspective is who do I want to eventually replace me? Who do I want to replace Eric? (hah sorry Eric) How will the demographics and needs of the United States change in the next 2 decades? What and who are underserved groups of people within the US as consumers and businesses? This isn’t some quota thing — I aspire to have a diverse partnership because I think it’s an asset in being able to identify opportunities and underserved markets, and being able to connect with different groups of people within the US. At Hustle Fund, I aspire to be a 100+ year franchise, and in order to get there, we will need a team that is different from what we have today. Always be scouting and building relationships early.

Credits: Special thanks to Jasmin Johnson, Dr. Billie J. Moore, Shiyan Koh, and Eric Bahn for all their incredibly helpful thoughts & feedback on this post

Why VCs are obsessed with Unicorn companies? (HINT: let’s do the math together)

I’ve written a bit about startup investing portfolio theory before:

But I find some of the nuances of portfolio construction hard to grasp in writing. So, today, I thought I’d try something different. I made a super raw video that walks through the rough math of startup investing. I did this with 1 take and no editing – so bear with me.

This video is geared towards both founders and investors. I think going back to first principles of portfolio construction helps in understanding a lot of the psychology of what investors are looking to achieve. It may change how you pitch your company. Or heck, it may even help you decide that raising VC money is not for you, and that’s ok.

And for budding investors, this will help you understand what you’ll need to think through. I’ve met so many new microfund managers and angel investors who haven’t run through various scenarios of portfolio construction. And that’s surprising to me!

As if you didn’t have enough to subscribe to, subscribe to our Hustle Fund YouTube channel for more walkthroughs and interviews on a variety of startup topics.

Here’s why understanding switching costs is crucial to good product strategy

I recently spoke with my business partner Eric Bahn about the importance of selling products that fit into customers’ existing workflows.

That conversation got me thinking how important switching costs can be to the success of products — often in ways that don’t seem obvious at first.

So I’ve written about the relationship between switching costs and product strategy below. I hope you’ll find them helpful:

First, it’s not enough to just have a good product

Of course, it doesn’t hurt to have a good product.

But even if your amazing product solves a dire need better than any other product out there, you’ll never sell anything if customers have to pull out their hair to switch to your product from the product they’re already using.

So before you start selling your amazing product, you need to understand how switching costs impact adoption and retention of your product, because that will determine how — and more importantly, when — you should sell your product.

Switching costs are a two-way street

When it comes to switching, it’s important for entrepreneurs to think in both directions.

This may sound obvious, but it’s really important: When a customer switches products, they switch to one product and they switch away from another product.

  • The cost of switching to a product determines adoption.
  • The cost of switching away from a product determines retention.

The key is to make switching costs work for you, not against you: Ideally, entrepreneurs want low costs of switching to their product and high costs of switching away from their product.

Photo by Snapwire on Pexels.com

So, what does that look like for actual businesses?

I’ll start by digging into a few examples that are close to home:

Example 1

At my prior startup, we sold ads. The initial sales process was fast and easy. Why? because marketers were willing to try many different ads. So since the cost of switching to my product was low, my rate of adoption was high

But on the flip side, many of my customers would move on quickly to the next ad product.

Example 2

My partner Eric ran a GMAT test preparation startup that offered GMAT coaching on discussion forums. His initial sales process was also easy, because it was easy for students to post questions on numerous forums. Again, the cost of switching to his product was low, so adoption was high

But his users were more likely to stick with his platform because they got faster and more thorough answers to questions on his platform, and therefore had little reason to leave.

Of course, these are simplified snapshots of just a few businesses. 

But switching costs impact all kinds of businesses 

Switching costs shape buying decisions for everything from T-shirts to tax software. They can take several different forms: 

  • Financial costs, such as “exit fees” or lost reward points.
  • Psychological costs, such as the perceived loss of status or comfort associated with a known brand or product.
  • Procedural costs, such as the time and effort it takes to set up or learn how to use a new product.

Products are “stickiest” among consumers (retention is highest) when they are associated with several different switching costs. 

Let’s zoom in on marketing automation software as an example 

Marketing automation software is software that helps companies send emails to prospective users, publish content, among other marketing activities. These platforms, like Hubspot or Marketo, are usually tightly integrated across an organization’s entire operation. Potential customers can’t just “try out” a new product without investing a huge amount of time and energy — it’s a product that has enormously high switching costs in both directions.

So marketing automation software companies have 2 main options when it comes to selling their products:

Option 1: Win over existing customers by competing directly against similar products.

This strategy is challenging because: 

  • It involves long sales cycles and constant follow-up to get the timing right — when a potential customer is ready to switch and has the time and energy to switch
  • It requires offering a product that’s not just as good as, but often 10x better than competitors’ products to convince customers to switch
  • It still involves a gamble of getting customers to overcome the inertia and risk of switching 

Option 2: Find new customers by selling an adjacent product and then expanding.

This strategy is generally preferred to Option 1 because:

  • It doesn’t require customers to rip out software
  • It doesn’t require such precise timing in the sales cycle

HubSpot, who is now a leader in marketing automation, successfully used this second strategy to battle incumbents. 

Unlike other marketing automation companies, HubSpot targeted smaller companies who didn’t already have any form of marketing software and then grew with them. They started by offering free products such as “website grading tools” that were small little widgets with fast adoption cycles. And, once clients started signing up, over time they grew their software product offering to eventually go head-to-head with marketing automation behemoths.

Now, HubSpot is a large and diversified software company that sells a variety of sales and marketing software products.

So, how can entrepreneurs use switching costs to their advantage?

HubSpot calls its strategy of up-selling customers products with higher switching costs a “flywheel” approach. 

The model works by using products with low switching costs to get customers in the door, and then using other products with higher switching costs to shut that door behind them. 

The same principle is applicable to ANY product: 

  • If your primary product has a low switching cost, focus on retention by increasing the value (and therefore the switching cost) of your product or by offering other higher-value products.
  • If your primary product has a high switching cost, focus on adoption by reducing the friction it takes for customers to try your product or by offering other products with lower barriers to entry.

Special thanks to Conor Grant on this post!

Operating in tough times

I think we’re all pretty exhausted. Exhausted from hearing the same things over and over about COVID-19 and people losing their jobs. On top of that, entrepreneurs are probably tired of hearing about how VCs are slowing their investing or are waiting for predatory valuations. These times can be quite frustrating.

Many people don’t know that in November 2008, I left my cushy job at Google to start a company. This was just a couple of weeks after Sequoia wrote their first RIP Good Times memo that we have all seen multiple times at this point. By 2009, it was impossible to fundraise. I went into meetings with investors, and they would all be checking their stocks. It hurt them to see their net wealth drop 50%. It hurt me that no one was paying attention — every investor was so distracted. I wouldn’t be able to raise money for 2 more years. I did odd and end jobs to try to bring cash in the door. I had a whiskey categorizing gig. And critiqued resumes of aspiring MBA students. Among many other things. Of those, the most amusing was the time when Xerox Parc paid me to have one of their user experience researchers follow me around for days.

Photo by Pixabay on Pexels.com

Although 2009 was a frustrating time, in retrospect, it was actually a good thing I couldn’t raise, because I had no idea what I was doing. And the school of hard knocks taught me how to really build a business — to the point of perhaps too much confidence. These days, I don’t ever worry about not being able raise money from others or find a job again. Even if my VC fund partners kick me out, the rough days in 2009/2010 taught me *how to make money*.

That is an amazing feeling that only comes about from being stuck with the unfortunate luck (or fortunate luck) of starting a business during dark times. And that is my wish for all of you — that you, too, can find that even if things feel rough this year.

Though it might not seem like a blessing in disguise, tough times force you to focus on what is really important and to track your cash carefully. All too often in the last two years, we’ve seen businesses that don’t make any sense rise in valuation to enormous levels.

During these times, I’m going to move my next blog posts away from fundraising and back to fundamentals. How do you bootstrap a company? How do you get customers when you have limited cash? How you keep the lights on? Basically — how do you BUILD a company.

Faster sales cycles

One of the biggest mistakes at the beginning of my entrepreneurial career was that I spent too much time building and not enough time selling. After making this mistake over and over with failed side projects, I ended up getting incredibly frustrated that I was wasting weeks or months only to come to the conclusion that I didn’t have a great product to sell.

This frustration forced me to think about selling product immediately even before building anything. So when we started building out LaunchBit (which was basically our 8th side project), the very first thing I did was to sell without a product. I did so with my personal PayPal account. There was no website. No product. I cold emailed a bunch of ppl with my value proposition and started charging. And guess what – they sent me money to my personal PayPal account. I was shocked that anyone would do this.

What does it take to operate in this market?

This is a chaotic time but also an exciting time, because incumbents are easily dismantled in times like these. As I wrote to my portfolio companies the other day, you’ll see large brands / companies get purchased for pennies on the dollar, because they won’t be able to slim down to a skeleton crew fast enough and act nimbly. Small companies – with even 2 or 3 people — may even be able to acquire some these companies! Or win their business. What wins in a good market doesn’t always win in a bad market. And understanding this is key.

So what does win?

Fast sales cycles win. Now is the time to find out if you have a fast sales cycle. Can you pre-sell what you have even if it’s not built? Can you continue selling what you do have? Are people buying? And if they’re not buying, do you think they will buy in 12 months when this is all over? Or is your market dead going forward?

Photo by Andrea Piacquadio on Pexels.com

These are questions to ask yourself.

If you have no business today, there are going to be two camps of companies — 1) ideas that will be viable in 6-12 months and 2) ideas that won’t be viable at all post COVID-19.

If you’re in the former camp, then maybe you need to get a job or a consulting gig and wait out the market. There is no shame doing that. Desperate times call for desperate measures. Maybe this is a good time to refactor your code business and optimize your product and processes.

If you’re in the latter camp, you need to rethink your company. People don’t like change. They don’t like starting over. They don’t like starting new business ideas. But you have to be honest with yourself and make a hard pivot if you think this is not going to work.

And I’m going to be brutally direct here. If you’re in either of these camps — whether this is a temporary or permanent shift — it’s not worth fundraising now. I see all these companies pitching travel ideas and retail ideas and other ideas that have been dramatically affected by COVID-19, etc.


Don’t waste your time working on something that you literally can’t sell to anyone. The truth is would-be investors want you to be able to put their money to work right away — not to sustain your livelihood for 6-12 months until your market comes back.

Scrappy founders win. Being lean and nimble to be able to pivot – even if just slightly – is really critical in these markets.

If you realize that you need to make some drastic pivots / changes to your business, the good news is that there ARE a lot of market opportunities — both short term and long term that you can get started in right away.

If you need some ideas on getting started again, Noah Kagan starts a business LIVE here: https://okdork.com/how-to-start-a-business-from-scratch/

This is something that large companies burdened with big teams cannot do. Wield your strengths.

Frugal founders win. Lastly, it’s frugal founders who win in this market. A year ago, if you had raised a lot of money, that would’ve been considered a strength. And if you still have that money, it is still a strength – cash is king.

But if you have a high burn rate — that has quickly become a huge liability and a big team also prevents you from being scrappier, because coordination amongst many people is hard.

So the tables have a turned a bit. This is a natural advantage for teams who struggled to raise money and were forced to become ramen profitable over the teams who may have raised millions of dollars. The latter teams can still win, but very few of these founders will be able to make the right decisions to cut down to becoming frugal.

Need help with cash management? I’m holding an AMA on cash management on Wednesday April 15th at 4pm PT. It’s completely FREE but we are capped at 1000 participants.

Sign up here: https://cashflowmgmtduringtoughtimes.splashthat.com/

Finding purpose and mission in bleak times

This past week was particularly exhausting. I think I speak for almost everyone when I say this.

And the prior two weeks were rough as well.

It’s hard to find comfort in times where people all around the world are getting very ill (COVID-19) and in some cases, dying a slow horrific death. Our medical professionals on the front lines have no equipment. Everything is basically shut down – wall street is falling and main street is crumbling. Panicked people are hoarding. The news is infuriating. And being cooped up inside with small children all day is not easy. For the better part of the last few weeks, I’ve felt helpless about everything going on around me.

It’s during times like these that it’s important to dig deep. A question I’ve often asked myself over the past few years is “Why do you do what you do?” And this is the question I ask of you today.

And, if the world were to end tomorrow, what do you wish you would’ve done differently? What do you want to be remembered for?

For many years, I didn’t know the answer to any of these questions. But in the last few years, it really clicked.

One thing that I noticed in the past few years is that the best entrepreneurs are very often overlooked in the beginning, and it’s hard for them to get access to resources. Certainly, well-connected people who went to certain schools or worked at certain places may often be an exception, but in large part, this is true (and even for many well-networked people). I believe that people who are “great hustlers” – as defined as people who execute with speed – ought to be able to get access to resources even in the very beginning their journeys.

And so, two years ago, armed with this mission, I started Hustle Fund with two friends of mine: Eric Bahn and Shiyan Koh. We have a long ways to go, and right now, we can only chip at the problem little by little and are not able to help every great hustler today. But we’re working on this mission over the next 30 years or so.

Your mission may be different.

Img courtesy: motivationaltwist.com

I am fortunate that my mission carries over professionally as well as personally. I am paid (a little bit) to follow my mission. But, your work doesn’t have to align with your mission – that’s ok. For many people, a job pays the bills to allow you to follow your personal mission outside of work. But always remember your mission even if it’s not your livelihood.

In times like these, it’s especially important to remember what your mission is so that you can dig deep and find the courage to do the hard things that these times may require of you.

For many of my entrepreneurs whom I’ve backed, as well as broader main street, these tines are going to really test their leadership. Most of them will have to lay off a lot of people in order for them to keep going to fulfil their missions. Many of them will see significant drops in their revenues as consumers are not able to spend as much money — or at all — at home. Many of them will feel like they have spent the last 2 years working so hard a building traction only to start anew — an incredibly frustrating experience. The decisions we will see our entrepreneurs make over the next few weeks or months will not be easy.

Lack of morale makes it hard to get out of bed in the morning. But it is during these times, you actually have to do the exact opposite of what you naturally want to do in order to succeed. You must find courage to embrace these tough challenges and inspire others to help you achieve your mission. And this is where mission comes in — when everything else around you is falling apart, other people are no longer motivated by money or traction or achievements — because all of these things are gone or have dropped considerably or are unstable. People are motivated by what the future looks like and the mission you want to achieve not the past.

In some cases, missions are really easy to convey. For health companies, for example, they can say their mission is to “find the cure to cancer or whatnot”. But for most companies, missions are a bit less clear. My former startup was an advertising technology company. I can tell you that most people don’t find it inspiring to work at an ads company. “To show as many ads as possible” would just not be a mission that many people would sign up for. (nor would I) And yet, there are often great missions behind companies without obvious missions. Zappos is a great example of a company that conveys their mission well. They want to provide the best customer service and just happen to sell shoes. Google is actually an ads company (which so many people don’t think about including Googlers themselves), but they want to organize the world’s information to make it accessible to all.

Remembering your mission helps you focus. It’s also makes it easier to make tough decisions – such as layoffs. If you remember your mission and why you’re doing what you’re doing in the first place, it’s often clear what the path needs to look like even if it’s a tough one to go down. The right sacrifices in the short term are often beneficial in the long term.

In addition, if your mission is really clear, many people will want to rally behind it. I was talking with a fellow fund manager the other day, and I was beaming about my amazing team. He was a bit confused how I even found all these kickass people (let alone pay for them). I told him that most people on our team could be making way more money elsewhere, and as a small microfund, we have no budget. But it’s the mission that everyone rallies around. Building a microfund is in fact not the best or easiest way to make money — there are much better and easier ways to do so. But at Hustle Fund, we are constantly selling as many people as we can on our mission — whether they are potential team members, investors, startups, or partners. People who join forces with us want to change the world and invest in the best hustlers even if they didn’t go to MIT or live in the middle of nowhere. Mission can often compensate for many things — even if you have near zero cash or resources.

Missions extend beyond companies. In fact, companies often start out as personal missions that rally up other people who also believe in the same cause. If you don’t already have a mission, that’s ok! This is a good time to come up with one or join someone else’s.

People often hesitate in thinking through their personal missions, because we’re all so busy. Almost too busy to think. And too busy to do or too busy to help. But one of the things that I’ve learned over the years is that there is no amount of help, thought, money, time, etc that is too small. In fact, what I’ve learned is that the secret to the success of the Silicon Valley is lots of bits of small help here and there. There are so many angel investors here who run around town investing $1k into startups here and there. $1k as a startup investment sounds incredibly small, but these all add up. Small bits of capital combined with new connections to larger checks and more resources — this is how you get momentum going. On our own Fund 1 for Hustle Fund, we had some investors write us $10k or $25k checks in the beginning — that doesn’t get you very far in raising $10m, but it does get you a lot of credibility and momentum. And I am so grateful to those small check writers who supported us on Day 1 and believed early and helped us get others rallied around our cause. Generalizing this, in a crisis, if you want to set out to help small businesses, even buying a $5 gift card is helpful. That sparks momentum. AND, if can you leverage your social capital on social media to turn $5 into friends putting in $100 and they in turn promote this which turns into $1000, that’s valuable. A $5 donation quickly gets leveraged to $1000s. I have seen this happen time and again. Small actions go a long way.

Going back to my mission, my mission doesn’t just apply to Hustle Fund. In my personal life, I ask myself what resources can I help procure (either my own or rally others around)? And who are the effective stewards (hustlers) of those resources to have the biggest impact? Although at Hustle Fund, we currently only apply this mission to venture backable startups, on a personal front, I think about all the other groups where this thinking can apply.

To that end, here is a running Google Doc of the activities I think are worth promoting – activities that I’m personally getting involved with on some basic level. I won’t ever be effective on the front lines – I have zero medical knowledge. I know nothing about main street. But I can help as a connector. Connecting resources to hustlers is what I do. That is what I want to be remembered for.

I challenge all of you to think through your personal mission. Dig deep. Then roll up your sleeves to start to build or rebuild towards it. In these challenging times, we will need all hands on deck in a whole variety of ways — in health, in business (your own or others), etc. No amount of thought, time, money / other resources, or help is too small.

Let’s go make some dreams come true.

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.


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.  


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.