Investor Stories : Why I Passed (Mougayar, Mohnot, Cowan)
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On this special segment of The Full Ratchet,
the following investors are featured:
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William Mougayar
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Sheel Mohnot
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David Cowan
Each investor highlights a situation where
they decided not to invest, why they passed,
and how it played out.
Investor Stories 65: Lessons Learned (Tunguz, Davis, Draper, Eakman)
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On this special segment of The Full Ratchet,
the following investors are featured:
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Tom Tunguz
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Mark Peter Davis
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Adam Draper
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Lindel Eakman
Each investor illustrates a critical lesson
learned about startup investing and how
it’s changed their approach.
139. How to Angel Invest like the Best, Part 2 (Jason Calacanis)
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Jason Calacanis is back for part 2 of the interview to discuss his book and secrets to successful angel investing. We address questions including:
His thoughts on the original Sequoia scout program and the many similar programs today- How he does such high volume of investments when he insists on spending hours with every startup founder that pitches
- If he’s really investing at the angel round when it seems that he’s been targeting post-seed
- His response to those who claim that VCs get access to all the best deals
- His strategy with his angel list syndicate and the types of deals he’s looking for
138. How to Angel Invest Like the Best, Part 1 (Jason Calacanis)
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Jason Calacanis joins Nick to discuss his new book and his secrets to successful angel investing. We address questions including:
Why Jason wrote the book- What drives him to continue angel investing after all his success
- His thoughts on angels that make large investments during their first year of angel investing
- His focus on finding 5,000x returns and his response to those that say he is discouraging innovation w/ this approach
- How he thinks about the economics and business model of early-stage businesses in nascent markets
- If he takes a contrarian or adversarial approach with founders
Investor Stories 64: What’s Next (Acunzo, Rose, Scevak)
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On this special segment of The Full Ratchet,
the following investors are featured:
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Jay Acunzo
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David S. Rose
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Niki Scevak
Each investor discusses sectors, drivers or
trends that may have significant impact in the
future and are potentially positioned for outsized-returns.
137. Cram Session, Episodes 79-85 (Nick Moran)
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Welcome back to TFR for another Cram Session. In these special releases, we have aggregated the takeaways and tips from previous episodes. In this installment, we will be recapping the following episodes:
79. Hardware Investing, Part 1 (Avidan Ross)- 80. Hardware Investing, Part 2 (Avidan Ross)
- 81. Getting Smart on a New Market, Part 1 (Charles Hudson)
- 82. Getting Smart on a New Market, Part 2 (Charles Hudson)
- 84. The Cap Table, Part 1 (John Buttrick & Sean Moran)
- 85. The Cap Table, Part 2 (John Buttrick & Sean Moran)
Investor Stories 63: Exceptional Founders (Boyce, Ramsinghani, Greathouse)
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On this special segment of The Full Ratchet,
the following investors are featured:
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Peter Boyce
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Mahendra Ramsinghani
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John Greathouse
Each investor describes an outstanding entrepreneur that
they’ve worked with and what key traits and behaviors
make for the best startup leaders.
What Killed Sprig?
If you’ve been following tech media this week, the big news was that Sprig is shutting down. We’ve spoken a number of times about Sprig with Semil Shah and others and lauded the company for its incredible rise from fledgling food delivery startup to the next on-demand unicorn. Different than many other food delivery startups, Sprig was full-stack. They created the recipes, their chefs prepared the meals, they had a fleet of delivery folks often pedaling around the streets of Chicago between 6-9pm. Their well-crafted meals were a hit amongst the busy urban professionals looking for a healthier alternative to take-out. In a way, they had created their own restaurant, with no dine-in option and the guarantee of delivery in less than 20 minutes.
Personally, I value delicious, hot meals. I often like to eat dinner at home. And, above all, I don’t want to spend an hour cooking something mediocre or waiting for cold, unhealthy delivery. For those reasons, I was an immediate Sprig convert. During the first couple weeks of use, I was impressed. The food was pretty good. Not always hot. But quick and satisfying. I recommended Sprig to friends. They recommended to their friends. A lot of people in the extended network were using Sprig.
Then slowly I began ordering less frequently. Eventually, I stopped altogether. As I spoke w/ friends, it seemed like they went through a similar cycle. Everyone was excited, at first, then slowly stopped using the service. As I reflect on my ‘churn story’ a few things come to mind:
- Delivery was inconsistent: Most nights, the food arrived in less than 20 minutes. But there were a couple scenarios where they had issues and it took over an hour. As you can imagine, this was both confusing and frustrating as the app showed a delivery person, doing circles around my building, while I convinced myself I was going to starve.
- Delivery was awkward: Sprig made a decision that I thought was really smart. They disallowed the consumer from paying a tip. I thought this was brilliant, as I always find it awkward to figure out how much to pay the delivery person. 20% of the meal price? 20% of the meal price + a few bucks? Is the delivery charge already included in the cost? I’m often confused and they made a smart step in the right direction. The problem? I still felt guilty and awkward not paying a tip! Despite Sprig’s insistence on not paying a tip, delivery remains an awkward exchange.
- Interruptions changed behavior: While I was still using Sprig, they had an unplanned break in service. I’m not sure how long the pause was because I never came back. I believe it may have been a couple weeks but in that time, my habits quickly adapted. I found other solutions for dinner and never found a compelling reason to re-engage w/ Sprig. And this last point relates to the single biggest reason why I left Sprig and never returned…
- The food wasn’t great. It started off strong. Pretty warm, seemingly fresh, well-crafted. But over time it started showing up cold. Often the meal was pushed to one side of the paper bowls it was served in; presenting a displeasing, sloppy appearance. And worst yet, I started receiving meals that just weren’t that good. In a way, it was anti-climactic. They came out of the gate strong, with delicious meals. Then, between the recipes, ingredients, appearance, and temperature, they just didn’t taste very good. If the meals were fantastic early and remained fantastic, I would have dealt with the delivery issues and interruptions. But it wasn’t, and I churned.
Per the interview today, it’s pretty clear that the unit economics for Sprig were upside down. They could not create and deliver meals to customers for less than their cost. To Eric’s earlier points, they were magnifying problems, throwing money at scaling a system that didn’t work. And I imagine these problems were exacerbated by CACs that outpaced CLVs. When customer acquisition cost is high and lifetime value is not, scale is not a solution. I’d imagine that CEO Gagan Biyani and Sprig’s investors planned for much higher customer lifetime value. But bad product is the ultimate equalizer. The minute the customer experience becomes unpleasant, give them a reason and they’re gone.
136. Dispelling Conventional Wisdom in VC, Part 2 | Should Seed Investors Follow-on? (Eric Paley)
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Today we cover Part 2 of Dispelling Conventional Wisdom in VC with Eric Paley of Founder Collective. In this segment we address:
I wanted to get your quick take on follow-on investing. There was a recent twitter convo w/ you, Parker Tompson, Semil Shah & Nick Ducoff on Follow-on funding… Nick made the statement: Knowing when to double down is the key to solving the “I wish I owned more of my winners and less of my losers” paradox. And you said you strongly disagreed, stating that “Venture funds are made on the first check and destroyed on the follow on checks.” Wow, that was certainly a shocker to read. Why do think following on is not wise?- Why small, early investments by large firms can create conflicts for founders when they’re raising their next round
- Why many early investors actually have a weighted average cost basis of a Series B investor without knowing it
- The paradox of pro-rata where investors want to pay the lowest price but also want their existing portfolio to raise at the highest valuations
- Eric’s thoughts on concentrated vs. diversified portfolios
- His final thoughts on key takeaways from the study and items running counter to conventional wisdom
135. Dispelling Conventional Wisdom in VC, Part 1 | Does Capital Drive Outcomes? (Eric Paley)
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Eric Paley of Founder Collective joins Nick to dispell some conventional wisdom in VC. We address questions including:
What’s the focus at Founder Collective?- What are the downsides of heavily funded companies?
- Overview and Methodology for your study of 71 IPOs: ‘Overdosing on VC: Lessons from 71 IPOs’
- Conventional VC wisdom says more capital, better outcomes… Eric, what were the results of the study and does more capital lead to bigger exits?
- Do you think fundraising is a vanity metric?
- How do you address large overhead and burn rates when the growth objectives or growth vectors for the business change?
- Why did you base the multiples in the study on current, public market caps vs the market cap at IPO?
- Raising lots of capital and big exits… Is there causation, correlation, neither?
- What about acquisitions… does this study omit a significant number of positive outcomes to strategic acquirers?
- You also found that public performance, post-IPO, was quite different between efficient vs. heavily capitalized business. What were the results here?
- Was there any blowback or frustration from large investors at later stages?
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