ACQ2 by Acquired

We got *awesome* feedback on the recent special episode we did with Levels founder Josh Clemente -- so we asked Josh if he'd join for a follow-up Q+A session on our next LP Call, and he graciously agreed! 

The conversation was so good we decided to release the audio recording in the ACQ2 feed. 

Thanks again to Josh and the Levels crew, and we hope you enjoy the conversation as much as we did live!

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

When the internet’s top China tech analyst Lillian Li posted a great Twitter take (linked below) on our Meituan episode, we knew we had to try to get her on ACQ2 to tell us all more. What’s really going on with these platforms on the ground in China, what is the government’s role in all this, and why is Meituan’s outlook “rosy, but maybe not quite as rosy as we painted on the episode”? Thanks to the magic of the internet, a few Twitter DMs later and voila — not only do we have this awesome episode with her, but a new friend and collaborator on hopefully much more Western-China tech crossover content to come!

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

Links:

• Lillian’s Chinese Characteristics substack: https://lillianli.substack.com
• Lillian’s original Twitter thread after the Meituan episode: https://twitter.com/lillianmli/status/1370327344704016384?s=21
• Our original Meituan episode: https://www.acquired.fm/episodes/meituan

The very cool (and also very hot! You can read about their recent funding rounds from Benchmark and Altimeter) fintech startup Modern Treasury recently asked if they could interview us for their internal "Coffee Break" series of fireside chats. We agreed, on one condition... that we also get to interview them! The result was a match made in Acquired Interview Heaven.  

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

Links:

• Modern Treasury: https://www.moderntreasury.com 
• MT's Journal: https://www.moderntreasury.com/journal 

Emergence Capital's Jake Saper returns to the LP Show to talk 2021 "state-of-SaaS" and Emergence's Deep Collaboration thesis. We cover how Figma changed the game for embedded collaboration within work tools, and why this theme represents a deep vein that Emergence is investing behind with companies like Ironclad and Jake's latest investment in Maze. Plus we cover the impact of the Zoom investment (undeniably one of the greatest venture investments of all time) on Emergence as a firm, and why investing in your partnership through coaching, peer groups and simply prioritizing dedicated time together is just as important after big successes as before. 

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

Peer group resources Jake recommends for entrepreneurs:

•  Enrich
•  Pace
•  10X CEO
•  Leaders in Tech

We team up with Mario from the Generalist and Packy from Not Boring for something new: The Idea Dinner!

We've been longtime fans of each others' work and, given all the buzz on Clubhouse and Twitter Spaces, decided to team up and run a little experiment: The Idea Dinner. Last night on Twitter Spaces we all got together and brought one beverage of choice, one public market investment idea, and one private market investment idea.

Despite some technical audio issues... it was a blast! We're super excited to share the recording here with everyone who couldn't make it. We hope you enjoy it as much as we did. Stay tuned for more to come!

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

It's a kids game, it's a social network, it's... potentially the hottest IPO of 2021? We team up with Mario Gabriele from The Generalist + S-1 Club to break down Roblox's business and its prospects as a public company.

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

Links

• Mario & friends' definitive S-1 Club analysis of Roblox's prospectus: https://www.readthegeneralist.com/briefing/roblox-ipo 
• Mario on Twitter: https://twitter.com/mariodgabriele
• Acquired: https://www.acquired.fm

With 2020 and (hopefully soon) the global pandemic coming to a close, both existing and new companies everywhere will soon face a choice of how to operate going forward. Embrace the "future" that was pulled forward by the pandemic and remain remote? Or return fully/partially to a physical office environment? For those who choose the future (and investors who are considering betting on them), Doist and its CEO Amir Salihefendić provide a 10-year case study of both the challenges that arise and the opportunities unlocked by embracing the internet to its fullest extent in growing and running an organization. And oh yeah — along the way they built a profitable, double-digit $m ARR business with 100 employees, that's been completely bootstrapped on $0 capital invested. We dive into it all!

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

Topics Covered:

• Amir and Doist's journey from side programming project to bootstrapped, double-digit million ARR global business
• How they've operated as remote-only company for the past 10+ years, with 100 people across 35 countries and 10+ time zones
• Why just going remote but keeping the same tools and culture as in-person doesn't solve any problems and just creates more
• Why the temporal nature of work is just as (if not more) important than its physical location, and how the new modality of "asynchronous" work takes advantage of that
• How remote + asynchronous unlocks massive opportunities both for new companies and the tools to serve them

Links:

• Doist: https://doist.com
• Doist's "remote setup guide": https://twist.com/remote-work-guides/remote-company-setup
• "The CEO with an Empty Calendar":  https://superorganizers.substack.com/p/the-ceo-with-an-empty-calendar
• Packy's "We're Never Going Back" post: https://notboring.substack.com/p/were-never-going-back
• Amir on Twitter: https://twitter.com/amix3k

We continue our VC Fundamentals series with Portfolio Construction & Management — how do you build and manage a fund's portfolio as a whole, beyond each individual portfolio company and investment decision? We brought in two of the very best people in the world to help us dissect this topic: Jaclyn Hester & Lindel Eakman of Foundry Group. Jaclyn and Lindel have been early and longtime LPs in some of the best venture funds in the world: USV, True, Spark — and of course Foundry — and now also sit on the GP side of the table at Foundry. Tune in for a master class on how the best VC managers think about generating and optimizing fund performance. 

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

Topics Covered:

1. The bar for what "good" venture fund performance looks like in terms of returns:

• Where venture sits on the spectrum of capital allocation options available to limited partners
• The difference between "gross" and "net" fund returns and why IRR is still important
• The distribution of returns across venture firms & funds — how many hit the performance bar — and the importance of diversification vintage years

2. Portfolio construction: how do you allocate the fund's capital across companies?

• Why have a "portfolio" at all vs. loading up on a few high conviction investments — and what an LP's incentives are for diversification vs. a GP's
• How to determine overall $ size you should target for a fund
• Concentration vs diversification and the concepts of "shots on goal" and "groups" of high-potential companies within a portfolio
• Fund reserves planning — are you "making your money at the buy", or able to buy up over time in your winners?

3. Balancing playing offense and defense:

• The upside potential of "interstitial rounds"
• Whether it's possible to save a company with more capital, and if pivots are a good idea

4. Time allocation vs capital allocation within a fund:

• Understanding and managing your own cognitive biases
• Why time & effort allocation across a portfolio rarely matches capital allocation (and shouldn't)
• Why a firm's partnership dynamics are typically the most important driver of funds' outcomes

 Links:

• Foundry Group: https://www.foundrygroup.com
• Seth Levine's post on skewed VC returns:  https://www.sethlevine.com/archives/2020/10/vc-fund-returns-are-more-skewed-than-you-think.html
• Fred Wilson's posts on losing money and portfolio outcome distributions: https://avc.com/2016/04/losing-money/and https://avc.com/2012/07/the-power-of-diversification/

Superhuman CEO Rahul Vohra joins us for an absolute masterclass on startup fundraising that shatters much outdated traditional wisdom in the space. We cover why it's possible to build momentum and raise even as a solo founder, how you should think about syndicates vs. "brand name" VCs, and why you always want to be preempted and how to make that happen. This episode is a 100% must-listen for anyone raising money now, or planning to in the future. 

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

Topics Covered:

1. How to run a successful fundraising process 
   • Why founders should think about raising money as "creating a market" for their company's equity
   • How to build fundraising momentum, and why you shouldn't be afraid of using outsourced design and development agencies
   • Preempted fundraises vs marketed fundraises: why you always want to be preempted, and how to orchestrate that happening
   • Non-obvious ways that founders should think about runway, amount to raise and raise-timing in order to always have leverage in fundraising conversations
2. Round construction 
   • The value of "brand name" investors vs. non-traditional capital, and why you actually want both at different times
   • Why founders might want to raise their first capital from other founders and operators (versus from funds)
   • Why founders should put some of their own capital into early rounds
   • How to use high-resolution financings (SAFEs and convertible debt) efficiently
   • The concept of "interstitial financings", where you raise convertible debt in-between rounds, and when & how to use them
3. Investing while also being a founder/operator 
   • Time/attention allocation and why it's now possible to do both effectively
   • Flexibility to build positions over time vs. traditional fund structures
   • Rahul's own angel fund with Todd Goldberg
4. Bonus! The origin story behind the Superhuman name 

Links:

• Todd & Rahul's Angel Fund: http://toddandrahulangelfund.com/

Hello ACQ2! Posting the audio recording of our Book Club Zoom session with Emily Chang in digestible podcast form. For those who weren't able to attend, we hope you get as much out of the recording as we did being there live!

Sponsors:

• Sierra: https://bit.ly/acquiredsierra

Book notes public post: https://www.acquired.fm/episodes/book-club-discussion-brotopia-with-emily-chang

GDoc version of book notes: https://docs.google.com/document/d/1939VQja1rIK9yP1Ahe4w2frPy4-nUYEH7pxwRk-WjBk/edit?usp=drive_web&ouid=110434699798216361855

Thanks as always,

Ben & David