Leaped like a tiger, landed as a bedside rug – the risks of overselling your round

There is a German saying that goes something like this:

“Als Tiger gesprungen und als Bettvorleger gelandet.”

A rough English translation is “leaped like a tiger, landed as a bedside rug” – it basically means someone came roaring in to say a negotiation / argument / situation but essentially was overselling and or bluffing from the start in an over the top way – eventually the bluff is called and all credibility is lost. The outcome for the former tiger, now turned bedside rug, is never a good one.

Every now and then I’ll see this failed stunt in startup fundraising and it ends in tears a lot of the time. Actually I am seeing it more and more so I thought I’d write about it. It’s important because it can ruin your entire raise and risk your company – without any need.

The movie goes like this. “Hey you need to know we have XX term sheets at XX valuation and funds X, Y and Z are really keen. You have until XX to decide.” Sometimes the founders will say that, sometimes the existing investors will put in a call to us.

Per se that is OK -

Onboarding your investors

Your job is hard enough as a CEO to be dealing with a board / investors that only roughly understand what is actually going on. This happens more than it should.

So one of the things you can do to make sure your investors / board are really up to speed from day 1 is to run them through a structured onboarding process. Here are some ideas on how to do that:

 

Low gross margin allergy

I saw this a while a go on Michael Moritz’ bio and it has stuck with me since:

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I have no problems with Cabernet grapes, I quite like garlic, I do have hay-fever (not sure about Wildgrasses though) but what stuck with me is the allergy to low gross margins.

I have a severe allergy against low gross margins too.

Why? I am going to over-simplify a lot and there are a ton of exceptions and caveats – but here it goes:

If you are building something difficult, that creates real value to users / customers / companies, something that is hard to replicate and unique with a great distribution model – well then you generally get to charge a lot more for your product than it cost you to produce it.  This can apply to anything from a unique consumer app to a niche SaaS company. There are a million ways to get there.

If you are doing something relatively straight forward (e.g. buying and selling on for a margin), something that is not so hard to replicate, something where customers will think twice about the price – well then you

A week on twitter, maps and democratizing data

Note: Scroll all the way down if you are interested in methodology and some caveats around how to interpret the data.

I built a map this morning showing twitter mentions of 4 portfolio companies during last week:

That’s pretty noisy so I looked at each individually.

Here’s CartoDB’s week on twitter:

CartoDB is platform and community for map builders (and folks building data apps on top of maps), so you would not necessarily expect a lot of folks talking about them on twitter. Except that when the community builds something and shares it. You can see activity increasing a lot towards end of the week when Simon Rogers built his #JeSuisCharlie map.

My guess was that of course most tweets would be out of France, so I toggled a switch to look at that:

 

Here’s EyeEm’s week on twitter:

EyeEm is a community and market place for mobile photography. It’s pretty popular everywhere and there are no obvious useage patterns. Well, except I figured Japan must be especially active as they are positively crazy about photography . So I toggled a switch to look

Eating animals

I have been thinking a lot recently about how as an individual my choices shape the world we live in for good and for bad. It is very easy to talk yourself in to the mindset that really your choices do not matter in the wider scope of things.

This is simply not true and nothing short of a comforting cop-out. The psychology behind it is clear: only by forgetting, living in denial, etc can you afford to continue with the lifestyle you hold so dear. I am going to elaborate on this in a longer blog post when I have finished collecting some more data and crunching some numbers on the impact an individual can have.

But today I am going to keep it short and just recommend one of the best books I have ever read on the topic of making conscious choices as an individual that can have a huge impact. I think this is a book everyone should read; it should be required reading at schools in my view:

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It’s Eating Animals by Jonathan Safran Foer. You may know him from “Extremely Loud and Incredibly Close”

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