Evolution of Megacities

I live in New York City, and have been thinking about how I think large, densely populated cities (in developed markets) will evolve after Covid-19. I don’t think the soul of the city will change, and reading Here is New York (by E.B. White) from the 1940’s affirms this, but I do think the city will go through an evolution over the near to medium term.

New York City has gotten more and more expensive which has resulted in it shrinking (net population loss). The growth of the suburbs continues to be good (across the US) particularly from immigrants who tend to have less disposable income and seek better value for money. This podcast episode with Alex Danco and David Perell also is a fun discussion on the subject that is worth checking out if you’re interested in the subject.

The continued rise of eCommerce/delivery, distributed work and autonomous vehicles, are all shifts that are likely going to accelerate changes in megacities (some of which were catalyzed by physical distancing).

Fully distributed or partially distributed is a particularly powerful trend as many technology and finance jobs may no longer require living in places like NYC as a prerequisite but can still pay the same wages.

Here are a few of my predictions:

  • Offices centered around collaboration, not individual contribution: Office in the future will look different. I imagine they will have more meeting space, and more collaboration space versus single person desks designed for individuals. These collaboration spaces will be shared, and only a portion of the company will be in the office on any given day.
  • Less office space, more (and larger) residential spaces: Individual contribution work will happen outside the office, and much of it from home or other flexible work spaces (coffee shops, shared office space). Office space will be repurposed into residential space or other gathering (e.g. bars or restaurants) or ‘multipurpose’ spaces. Homes will be larger to accommodate flexible working spaces or dedicated offices.
  • More young people, more old people and fewer families: Young people love densely populated places, and so do healthy empty nesters. Megacities will have more of them particularly as empty nesters are fitter and healthier for longer. The food, culture and nightlife scene will become even more vibrant.
  • Growth of the suburbs around megacities for families: Families all move outside the city epicenter, where dual-income parents can still easily go to their offices for occasional collaboration sessions (e.g. 1-2 times a week) but spend most of the time working from their home. The quality and comfort of these homes becomes even more important for families. The transport from homes to offices becomes even easier and faster because of driverless cars (5-10 years away).
  • More pedestrianized, car free zones, and even more delivery: Purchase of ‘staples’ happens more and more via delivery vs. in person and ares of the city (e.g. Flatiron) become fully pedestrianized and cycle zones with delivery permitted during certain windows.

I don’t have any real unique insight into this topic, beyond personal interest. I’ve spoken to a number of business owners who are not extending their office lease, and also a number of friends (particularly with families) who are leaving the city for the suburbs.

I would personally not invest in real estate in Manhattan over the next few years until we see how it’s going to shake out. I think that investing in the city suburbs, and in ‘up and coming’ cities with net population growth, growing income/capital and with great culture but lower cost of living is likely still a solid call.

Angel Investing Learnings

In this post I’ll share some advice and learnings from a decade of angel investing to help others get started or improve their own process.

I’ve been investing in startups for about 10 years through Musha Ventures, after learning the ropes at Index Ventures. I’ve made ~70 investments (around 40 in Africa), and realized around twice my total invested capital (Distribution to Paid in Capital – DPI). Most of the companies in my portfolio (~55) continue to operate without a realized liquidity event.

I love meeting and learning from founders, and being exposed to different business models. When I support a company, I am able to learn from observing it grow or fail and build friendships with the founders beyond my small investment. I think that early stage investing has made me a better product person and operator, and I hope to continue to support entrepreneurs throughout my life.

Investing Frameworks

Ben Holmes, Index Ventures

I worked with Ben Holmes at Index Ventures, who led their investments in King, iZettle, and Just Eat. He showed me a simple framework, which is still the foundation of my investment evaluation process, detailed below. At least one dimension of Team, Technology or Traction should be an A+, and a big enough Market (now or in the future) should be a precursor to making the investment.

  • Market: Is the market big enough ($1Bn+) and can you see this company being a leading player (with 10%+ market share) in the next 3-5 years? If you think that the market now or in the future is too small, then don’t make the investment.
  • Technology : Is the product or technology differentiated and sticky within their market? How difficult is it to replicate?
  • Team: Is the founding team both individually exceptional and complement each other? How deep and long is their professional relationship?
  • Traction: Is the business growing and do they have positive unit economics? Do they have paying users? What does customer retention look like?

Brian Singerman, Founders Fund

I don’t know Brian Singerman personally but I really enjoyed this episode of “Invest Like the Best” with him. He’s invested in companies like Oscar, Affirm, Wish, and AirBnB. Here are a few of my takeaways from the conversation:

  • As a startup market, moats and execution are the only things that matter.
  • As a VC, seeing, picking and closing are the only things that matter.
  • You learn to invest in venture by actually investing, not by observing.

Investing Advice

This is a collection of advice when you are starting to invest, in no particular order:

  • Learn with small investments: Optimize for learning per dollar invested if you are just getting started, have limited capital and hope to build a portfolio. If you invest $1k with the same diligence process as if you were investing $100k, then you will learn by making less expensive mistakes early on.
  • Take it slow: Start early in your career but start slow, and invest more frequently as you improve your judgement – I made too many investments in my first year. It takes a long time to calibrate your gut because it can take 10-15 years to figure out if you are a good investor (but you’ll get some validating and invalidating data points along the way).
  • Asymmetric Advantage: Invest in areas where you have some asymmetric advantage. If you know a founder super well, or know a space really well and can invest in a related company (without conflict) these are sources of asymmetric advantage.
  • Time vs. Money: Invest money in companies that you would be willing to spend your time on personally, but may not be the right personal trade off for you. When you are earlier in your career you can think of time and money as interchangeable. If you don’t have the capital to invest, then try and join these companies and get some equity for your time.
  • Deep Relationships: Invest in great teams who’ve known each other a long time and even better worked together for a while – it reduces the risk of founder issues (65% of company breakups are for this reason).
  • Founders you like and respect: I invested in a few companies that I did not have the best rapport with personally, or had an unexplainable ‘gut’ reaction to avoid even it if looked good on paper. Most of these companies did not work out, but I have a small sample and so this still needs more data.
  • Company first, then terms: Terms are less important than believing in the company and the founders. Don’t make an investment because of a low valuation or tax incentives – these are all bonuses, and never a reason to make an investment. I made a number of mistakes here early on and regretted them.
  • Valuation: If you are going to negotiate on anything, negotiate on price although this is mostly supply/demand driven and you may not have leverage if you are a small investor. There is a common belief that valuation does not matter in venture capital, but if you are investing your own money then overpaying consistently will hurt your returns.
  • Get written answers: When I have follow up questions, I usually send them over email and look for an email response. This is an indication of how clearly they think, and communicate. It is also more efficient for me and I have a permanent record.
  • Cap table: Look for ‘clean’ cap tables (equity split) in early rounds. If the founding team has an unexpected equity split, or there are early inactive employees/ investors significant equity it can affect the company’s ability to raise money in later rounds and if founders are too diluted, then they may lose motivation.
  • Discipline: Founders who are structured and regular with investor communication are often also good operators. If they show discipline with investors, they are likely applying the same discipline to running their companies. I often ask for the last investor report to get a sense of their communication quality.
  • Metrics: Founders should be super on top of their key metrics, growth rates, revenue distribution, burn rate etc. This shows that they both track them carefully, and review them frequently.
  • Pace of iteration: At all stages look for pace of iteration and product development. Teams that ship more often and test more hypotheses are likely to have better products and build long term sustainable advantage.
  • Sleep on it: Even when I really like a company, I always sleep on the decision and never commit after a meeting. If I still feel good about it the next day, then I’ll message the founder to invest. Try not to get pressured, or react to FOMO and make a decision too quickly or without conviction.

Practical Tips

This is a collection of more practical/tactical things to do when you are investing:

  • Track your portfolio: If you only make a handful of investments, then think of it as money spent and a nice bonus if one of them is successful. If you have a portfolio, then keep a strict record of your investments and track their progress and returns (I use a simple Google Sheet). I track key dates like fundraising events and summarize the status of each investment about once a year.
  • Write Memos: Your memory is less reliable than paper record, and so I recommend writing short 1 page memos with the ‘why’ behind your investment. I’d start with the structure I outlined from Ben Holmes up above and expand it over time.
  • Customer References: For software as a service businesses in particular, do some customer reference calls. I always ask the following three questions: What was in like before the product? What is it like after the product? What would happen if took the product away? If they get very upset at the last question happening, that is a very good signal.
  • Post Mortems: If companies fail, write a few bullet points down about why the company failed (I just add them to my original memo), and see if you identified the risk when you made investment. Learn from this, and don’t repeat mistakes.
  • Intro Email: I’ve just started writing an ‘intro’ email to founders which founders seem to appreciate. It allows you to clearly express how you can help, how you operate as an investor, and share some of your expectations as well.

I’ll continue to add to this list as I learn more, and please send me any thoughts or feedback!

Seeking Leverage

Leverage allows us to amplify the impact of our creations and decisions. If we apply leverage to these things we can create more value for the amount of time invested. Leverage is not easy to attain, and the different forms of leverage either don’t scale easily or require specialist skills and the ability to distribute creations effectively. I’ll summarize the inspiration behind this post, and then go into the different types of leverage below.

Inspiration

I listened to Naval’s Podcast Series a few months ago – I don’t love the title of the series, but I agree with many of his principles. Here is a link to a set of Tweets from him which are a little faster to digest, which catalyzed the podcast.

Here are a few of my favorites from the Tweets:

  1. Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.
  2. Pick business partners with high intelligence, energy, and, above all, integrity. Don’t partner with cynics and pessimists. Their beliefs are self-fulfilling.
  3. Learn to sell. Learn to build. If you can do both, you will be unstoppable. (Aadil Note: The two things we were never taught at business school).
  4. Leverage is a force multiplier for your judgement. Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).

Gated Leverage

Gated leverage requires an outside party to agree to give you leverage and does not scale without additional marginal cost – for example, raising money from an investor or recruiting a new person to your team still takes incremental time and effort.

People

If you have people working for you who are able to execute your ideas you can (in theory) make more decisions for greater output versus doing it all yourself. This is not costless leverage as recruiting is expensive, developing trust and high performing relationships is difficult, and alignment between people as you scale is challenging. People can be amazing to bring in new skills, different ideas and make a product or organization better but they are not my favorite source of pure leverage.

Capital

Let’s assume you spend 100 hours developing a well reasoned theory to pick an investment (e.g. buying Amazon stock in 2011). If you have $100 of your own capital to invest and it returns 10x, you make $1,000. If you have $1,000,000 to invest because you raised money from others (let’s assume you get 20% of the upside), you would make $2,000,000 in the same scenario. The amount of time you spent crafting the thesis remains constant but the returns are much larger if you have more capital. This is not costless, because you have to convince other people to part with their capital and trust you with it unless you are already wealthy.

Scaleable Leverage

Scaleable leverage has zero marginal cost of replication, and does not require someone else to agree to it. This is the best kind of leverage as it can create value even without ‘active’ involvement from you. Code and Media are both great forms of leverage but distribution and discovery of your code and media is still a requirement for success.

Software

A line of code can be deployed and distributed at scale with very little marginal additional cost. Servers are constantly available, and users can interact with your technology whether or not you’re actively working on it. Imagine, if like a doctors office, Google Search was only available from 9am-5pm, Monday to Friday.

Media

Books, Blog Posts, Podcasts, Youtube videos are all good ways of getting your ideas across at scale. The cost of creating the content is fixed but the marginal cost of a user downloading another podcast episode or viewing another blog post is essentially zero.


Scaleable leverage is both responsible for a lot of wealth creation for modern content creators and technology company builders, with very little invested capital for the relative impact. I think that this kind of leverage will grow in popularity and impact, whereas many companies of the past were built with Gated Leverage.

I would like to spend more of my career seeking scaleable leverage. Working in technology and investing in startups (for equity) will hopefully allow more passive wealth creation than purely ‘renting’ out my time.

Investing in Africa

I’m frequently asked ‘why’ I invest in startups focused on Africa, and this post attempts to clearly articulate the reasons this is important to me.

I was born and raised in Mombasa, Kenya and my family has been in here for 5 generations (since the 1850s). I grew up in relative privilege compare to most Kenyans. I remember being about 6 years old sitting in our car when a homeless boy about my age knocked on our window. My father opened the window and handed him some candy, and turned to me and said ‘You are sitting here and that little boy is out there. I hope you appreciate that was luck of the draw and will do something good in your life’. I remember that moment quite clearly even now, over 30 years later.

There are many reasons for my interest in investing in Africa, and I don’t pretend that I invest out of altruism, but I think this is what led to my interest in supporting early stage entrepreneurs on the continent.

I always liked maths and science and studied engineering at university. This experience taught me to approach problems from first principles and think through effective systems. I don’t really have skills that I can directly help people (e.g. a doctor), so I needed to approach the problem space differently. In my early 20s, I realized that entrepreneurship and technology could drive economic development, in a relatively capital efficiency manner. I started building my career in technology, starting at Google in London. After spending time at Index Ventures and learning about venture capital, I realized that, with even small amounts of capital, you could have outsized returns both in terms of value creation and impact.

Technology entrepreneurs create products that improve the effectiveness for people and businesses, and create new jobs with new skills. Given all these benefits I decided to start investing in technology companies in Africa a little over 5 years ago, after ‘learning to invest’ in silicon valley as an angel through my own fund, Musha Ventures starting in 2011. As an inexperienced investor, I tried to maximize learning per dollar invested, as I did not have a lot of capital. I tried to be disciplined by writing investment memos (that no one read), conducting reference checks and completing annual reviews for every company. 

In 2014, there was little capital available for early stage entrepreneurs in Africa and even today in 2020, there is still a deficit of capital available for those who don’t have the right networks. With small investments I am hopeful that I’m able to have an outsized impact on this ecosystem. Even when I don’t invest, I try and give entrepreneurs feedback, be clear on my reasons for passing, or share articles or advice that I think might be valuable to them. 

There have are some early positive signals; my Africa portfolio has rougly doubled in value (on paper), and the companies have created thousands of jobs, enabled new startups to exist, and improved efficiency in archaic supply chains / markets. Despite these early signals, it’s still very early in the life of the venture capital ecosystem in Africa and it’s still unclear if these companies will endure and to have a lasting positive impact on the economic development and people’s lives in the markets. Only time will tell.

My plan, which has remained consistent over the last 5 years, is to continue to think very long term and invest consistently and conservatively in early stage (mostly B2B) technology businesses in Africa and support entrepreneurs doing the hard work along the way. 

Predictions for the Future

The goal of this post is to opine on some things that 20-30 years from now (our children) would be surprised that our generation thought was ‘normal’. I am looking forward to reading this later in my life and seeing how it plays out!

I’ve broken this up into two categories – predictions where I have higher confidence and predictions where I have lower confidence.

Higher confidence Predictions

  • Driving cars: Much of the the research and data points to autonomous vehicles being the future of transportation. Lower rates of accidents (1m people die per year with 95% of deaths caused by human error), increased independence, reduced traffic, fewer parking spots and lower ‘wasted’ time from travelers makes this very compelling. I think our kids will think that we were ‘crazy’ to do something so dangerous every day. ‘Classic’ cars will still exist but they will be more focused on collectors and enthusiasts vs. a common mode of transportation.
  • Eating meat: I am a meat eater and enjoy eating meat. However, I realize that eating meat is inhumane, bad for the environment (deforestation, fresh water usage and greenhouse gasses) and an inefficient way of generating calories. We are much more likely to enjoy plant-based, lab grown ‘meat’ like the products from Beyond Meat (now served at McDonalds) and Impossible Foods – which are only going to become cheaper to produce over time.Like ‘classic cars’ it’s possible that consumers will still be able to buy meat but it will become much more expensive and rare and not a common mode of calorie consumption.
  • Mental health: As modern medicine allows us to extend life, cure disease and regenerate our bodies it’s entirely possible that (wealthy) humans will not die of natural causes in the next generation. As we live longer and longer, I think we are going to be more mindful of our mental health and not just our physical health. There will be better measures of overall mental health, preventative check ups with mental health specialists (like we do annual physical check ups now). We will also integrate time for meditation or reflection as part of our daily routine just as we do with physical exercise now.

Lower confidence Predictions

  • Owning a primary residence: Fewer people are buying homes (marrying later and higher student debt) and I think this trend is going to continue. Young people are spending more money on consumption and want optionality to move around. I also think that many people (in the US) have too much of their net worth concentrated in a single asset and would be better placed investing in a more diversified manner. I think there are lots of emotional reasons to purchase a home – e.g. roots in a community and family stability which is why I have lower confidence in this prediction.
  • Drinking alcohol: Drinking alcohol is terrible for you – we’re essentially poisoning our bodies. Studies have shown that alcohol is both more dangerous to individuals and to society than a number of illegal drugs. However, as humans we crave products that help us feel more relaxed, less inhibited, and facilitate shared social experience with others. Also many cultures all around the world have their own alcoholic drinks that are an important part of their history, and there is a massive $1.5 trillion global industry around alcohol production and consumption. Drinking might be too ingrained in society to go away, but I’ll follow how young people behave closely.

Thanks for reading – I wrote this mostly for fun and to capture my thoughts at a single point in time on how the world may change in the future.

Unbundling your job

Why do we have jobs? Jobs provide us with a bundle of many things, which is why they’ve been around for so long:

  • Predictable cashflow: cover lifestyle costs, plan for the future
  • Benefits: 401k retirement accounts, health and life insurance, paid time off, access to new capital such as mortgages
  • Purpose: creative outlet, sense of accomplishment, contribution towards something bigger than yourself
  • Identity: personal and company branding, access to opportunities and people that would not otherwise be attainable
  • Social Interaction: friendships, human contact, collaborating with others towards a shared purpose

I’ve been starting to lightly consider what it would look like to unbundle these components of work, particularly the predictable cashflow component. Are there other vehicles that might provide a better source of predictable cashflow that we don’t typically consider investing in as ‘normal’ retail investors?

A couple of areas that I’m starting to explore, beyond dividend focused public markets investing are below:

1. Franchises: one idea could be investing in / running franchises which can have quite low initial investment costs, fast payback periods and decent margins which can lead to predictable cashflow. You would need to diversify the type of franchises to invest in so you’re not over-indexed on specific sectors e.g. boutique fitness or fast-food.

2. Real estate: a diversified real estate portfolio which focuses on yield is another interesting avenue – I’m currently exploring fundrise and potentially cadre to learn how each of these work.

This is currently just in the idea stage, and I’ll publish more on this if/when I develop my thinking beyond this initial idea.

Investing in niche ideas

From time to time, I have an opinion on how the world may evolve and have not found a good way to invest in these kinds of macro theses. It’s too difficult or time consuming to find public (or private) products that provide access to these types of investment opportunities.

I would love to find a platform that surfaced more niche, long tail investment strategies or figure out how to enable folks to create packages of investment products for themselves around macro theses and then offer them externally. If this could be made much simpler, we could see a decentralization / democratization of ‘funds’ and fund managers and many more niche funds/investment products that would allow investors to create much more customized portfolios.

A selection of these macro theses are below, together with how I’ve tried to invest in them (and mostly failed).

  • Technology entrepreneurship in Africa: I think that a number of significant companies will come out of Africa in the next few decades but the timing of when these companies will ‘hit’ is hard to predict and unclear. This is the only ‘thesis’ which I’m actually getting exposure to in a systematic way. I’m planning to invest consistently and conservatively in a wide range of sectors over the next 3-5 years and see how the market evolves through Musha Ventures.
  • Esports: In 2014, after spending a few years playing games like Starcraft and League of Legends I became convinced that Esports would be as big or bigger than ‘traditional sports’. There are opportunities in Esports for professional players to create much deeper relationships with their fans because of the nature of the platform (e.g. livestreaming on Twitch). I wanted to invest in ‘Esports’ at a macro level but could not find a way to get exposure at this level. One idea I had was to buy a small percentage of every large Esports team (Cloud9, FNATIC, SKTelcom etc) and use this as proxy for the Esports market without taking any individual team risk. There was no comparable product that existed and it would have done quite well over the last 5 years and still think it would do well over the next 5-10 years.
  • Up and coming cities: I’m short real estate in ‘mega-cities’ like NYC and London over the next 10-20 years. I think that the nature of work will change to be more distributed, and prestigious (high paying) jobs that drive up real estate prices in major cities will be more accessible from other cities in similar time zones like Nashville, Austin, Denver, Atlanta etc. I wish there was a way to invest in some sort of property index / REIT for these cities vs. buying a house or apartment in a major city where I currently live – surprisingly difficult to find.
  • Mental health: We have neglected mental health for too long. We have improved our tools as a species of fixing physical ailments but are still behind on mental health. There are scenarios where we, as humans, may not die of normal age related disease and can maintain younger, healthier bodies for longer periods of time. Currently 1.5% of deaths per year are driven by suicide (from Homodeus) and this will likely get worse over time. How could I best invest this macro thesis as a value investor beyond individual public/private companies – meditation, psychology, hallucinogens etc?
  • Meat Alternatives / Niche meat producers: I think that only very high quality meat producers of rare meat (e.g. Wagyu beef, Iberico Pork etc) will survive, albeit at a much higher price point, and the rest of normal meat consumption will be fulfilled through plant based and lab grown alternatives which will both be cheaper and better for our environment – again I can’t find an investment product for this in the public markets. I could invest in a single company like Beyond Meat but I’m looking for a basket of companies to support the thesis.

An outlook on Facebook

Facebook (FB) is under a lot of fire right now but despite public perception, I think that FB is still a great long term investment.

They’ve made many mistakes and lost consumer trust (with a certain segment of users) due to recent incidents such as Cambridge Analytica, data privacy in general and poor content moderation. 

However, their business continues to be very strong (2019: 2.5 BN users, $55BN revenue, $25BN profit and 35k employees,  $1.6M revenue / employee) and I think it will continue to grow and become more diversified over time. Right now, almost all of their revenue comes from advertising, which results concentration risk and has durability issue in a recession. 

There are three core segments of FB’s business – Core FB, Instagram and Whatsapp and they cater to different audiences:

  • Core FB: Core FB has 2BN (a little bloated probably) monthly users. This is still very popular among baby boomers who have both time and money. Their engagement is solid, and they are a highly valuable audience from an ARPU perspective. It’s why monetization is still so strong. Core FB has seen a dip in engagement from younger audiences, and probably has low engagement with developed market teens.
  • Instagram: Instagram has over 1BN monthly users. Instagram has strong engagement with younger people in developed markets and celebrities. Engaged people often have multiple accounts for multiple use cases (Interest X, close friends, ’normal’) and interaction / time spent metrics are very high – it’s probably the best product / interest discovery tool on the internet. I’m personally very excited about Instagram building shopping/transacting natively into its app – inventory management, transaction, shipping etc allow instagram to own more of the value chain, create a consistent experience for shoppers, and provide them with a completely new revenue stream (% of transaction) in addition to advertising. 
  • Whatsapp: Whatsapp probably has 2BN monthly users. It has high engagement in most english speaking developing markets in Africa, SE Asia and Latin America. From my experience in Africa, it has completely revolutionized business and personal communication and will continue to do so over time. Whatsapp has very high revenue potential for FB in three areas:
    • Advertising – small business and business discovery through search and referral
    • Tools / subscription services – products to allow businesses to run better (e.g. CRM, template responses, workflow) are useful for both enterprise and small business and can generate subscription revenue
    • Payments – Whatsapp could power P2P payments (within countries and cross-border) as well as C2B payments which would open up a new revenue stream entirely for them, and bring more ‘core actions’ into their product. Payments and messaging are often strongly linked, and this is a natural extension of how people are already using the product

I think that Whatsapp (payments, business) and Instagram (discovery -> transaction) will allow FB to diversify their business model and tap into different market/people segments and think FB will continue to be a great long-term investment.

Disclaimer: I’m not a professional public markets investor, I don’t have a sense as to whether the stock is current fairly priced and came to this conclusion based on ‘value investing’ concepts and product/business thinking. This is not a recommendation to buy or sell FB stock.

Tips on startup decks and pitching

I’ve been investing in startups across the globe for the last 10 years and seen a lot of pitch decks that vary significantly in quality.

Particularly when you come from a ‘non-traditional background’ or are an entrepreneur in an emerging market it’s a source of differentiation to have a high quality deck for investors.

Here are a few of my favourite resources for entrepreneurs which are a mix of practical advice and inspiration:

During your actual pitch I always like to learn about the ‘why’ of the founding story (authenticity and energy help a lot), and it also helps to be on top of all the important metrics and growth rates.

This tends to separate the good from the great founders during the fundraising process.

Investor updates for startups

I’ve invested in about 30 companies over the last 6 years and received a lot of different investor updates. Some companies send few, sporadic (often too detailed), updates whereas others send updates with a fixed structure and on a predictable schedule.

I think the sweet spot for many micro vcs with a portfolio is quarterly updates which arrive on a predictable schedule – e.g. 2 Mondays after the end of Quarter. Founders who update investors on a predictable schedule generally build better companies, in my experience, as there is a correlation with discipline and organization.

Here is my suggested template for sending updates, although this is not meant to be prescriptive and more to summarize the bases covered:

Many startups often miss the ‘Metrics’ section and I think this is the area where most could benefit for improving their reporting.

Template (Quarterly)

Summary

  • Key milestones hit/missed
  • Important takeaways

Highlights

  • Limit to <5 bullet points
  • New customers, product wins, critical hires, geographical expansion

Lowlights

  • Limit to <5 bullet points
  • Lost customers, product failures, lost employees

Metrics

  • Consumer: DAU/MAU, Revenue, Retention/Churn Metric, Employees, Cash, and Burn Rate
  • Enterprise: # of customers, Revenue, New customers, Sales pipeline, Employees, Cash and Burn Rate
  • I recommend showing the same metrics in a table Quarterly and then highlighting YoY and QoQ growth

Product

  • New features or products shipped and a short summary of their impact / future impact

Team

  • New hires / team changes

Other

  • Anything that is not covered by the sections above e.g. Press coverage

Fundraising

  • If fundraising add this section to show progress / any key milestones
  • Also useful for converting existing investors for additional funding

Help

  • Specific intros to investors or potential customers generally yield the best results

I know some founders feel like these updates don’t do noticed but I read every single once of the updates I get from founders, even when I don’t reply.