On 2021 startup valuations

Some folks in our angel investing club (thesyndicate.com) have asked me for my thoughts on the surge in early-stage valuations.

The market is scorching hot, with startups across all growth stages getting funded faster and at higher valuations. 

[ Click to Tweet (can edit before sending): https://ctt.ac/GdU89 ]

The dollar amounts raised are often staggering, but so are the exits — which are driving this.

When there is a large number of meaningful exits — from Uber to Airbnb to Coinbase — investors get enthusiastic about investing in the next wave of unicorns.

This causes valuations to quickly double and triple, with investors reporting, “the valuation doesn’t matter if this becomes the next unicorn!”

Of course, it does matter since most companies go to zero, and you can invest in three startups at a $10m valuation for the same price you would pay for one at $30m. 

Three swings at bat dramatically increases your chances of hitting an outlier.

Now, if you could invest in Uber or Airbnb’s angel round, Series A, or Series B, you would certainly do it, but there is no way to know which startup is the next Uber or Airbnb (at least not with certainty). 

Our firm and investment club are adjusting to this moment to focus on four things:

  1. We are investing in high-quality startups at reasonable prices, as we have always done. 
  2. We are investing in select, very high-quality startups at these higher valuations. 
  3. We are helping existing portfolio companies raise money during this frothy market.
  4. We are meeting with as many startups as possible and noting when we pass because of the valuation so that we can meet with them again in the future. Many times a startup will “catch up” to a high valuation, and the next round will allow us to engage at a more defensible valuation. 

We invested in Calm, Uber, and Thumbtack for ~$15m — combined. 

While the $5m Seed round may be over for now, we have seen several pre-launch startups command $15m to $50m valuations. If those startups are led by a serial founder, it’s justifiable, but most of the time, they are first-time founders. 

We are content to sit out these Seed rounds and wait to see if the startup gets to product-market fit. If a pre-launch startup raises at a $50m valuation, for example, and then gets product-market fit and hits $1m in yearly revenue, the valuation is likely to be $10-25m in a normal market. 

This “filling in the valuation” strategy is acceptable for founders who have discipline, but it does carry the obvious risks of a down round if they don’t. Most founders seem to understand this, with many telling me, “I know this valuation is crazy, but we are taking advantage of this moment.” I would do the same if I were them, so no judgments — just make sure that you have the runway to fill in that valuation. 

For investors, you don’t have to hit every winner to be a big winner. In fact, you only need to hit one. 

In a hot market like today’s, we encourage members of our investment club to evaluate their goals, pace themselves, consider making adjustments to their strategy, and always remain disciplined — by focusing on great founders, quality products, and delighted customers.

Great founders.

Quality products. 

Delighted customers. 

Those things don’t happen by accident. 

Best, Jason
PS – Join us next week for Meet Our Fund, where 25 venture funds are pitching thousands of founders https://live.inside.com/meet-our-fund-j

Lessons from Oura CEO Harpreet Rai on improving sleep, hardware, landing NBA partnerships & more | E1213

Subscribe on Apple Podcasts

Top Takeaways

  • Improving sleep is a massive market opportunity. It has fueled Oura’s growth as well as other companies like Calm.com.
  • “99.9% of Americans will try to sleep tonight, but only 10% will exercise per day.” – Harpreet Rai
  • For optimal health, you want a low resting heart rate (your heart is strong and you are relaxed when you sleep) and high heart rate variability (your body is adaptive).
  • Most hardware companies try to raise too much money early, which sets expectations too high. It’s better to test and iterate. Hardware development timelines are too long and risk of delay is too high to keep momentum when over-capitalized.
  • Employers have used Oura to keep their employees safe in COVID, sensor technology can often detect sickness before symptoms are felt.

Listen on Apple Podcasts

Guest: Harpreet Singh Rai | @harprizzle14

CEO Oura Ring (2018-Present)

  • Joined as President in May 2017 (4 years into Oura’s life)
  • Previously worked as a portfolio manager at Eminence Capital for 9 years
  • Began career in Investment Banking at Morgan Stanley
  • Majored in MEMS, Micro Electronic Mechanical Systems (sensor design) at University of Michigan

Oura’s sleep cornerstone

  • Sleep has been a major driver for customer adoption of the Oura ring.
  • There is a limit to productivity if you are not getting good sleep.
  • Poor sleep reduces your critical thinking ability. The quality of your decisions matters. For example, “if you’re a PM at a software app, making the right decisions on data analysis or UX flow can lead to dramatically different outcomes.”

“99.9% of Americans will try to sleep tonight, but only 10% will exercise per day, and only 15-20% will work out each week.” – Harpreet Rai

It’s hard to eat well when you have a bad sleep

  • Two hormones control your appetite. Ghrelin determines how hungry you feel. Leptin determines how full you feel after.
  • When you are sleep-deprived Ghrelin levels double and Leptin levels go down by half.
  • Evolutionarily, if you were not sleeping, it was likely because you were under stress from a predator (like a Cheetah), and your body wants to maximize calories to be ready to run.

How Oura verifies their scores

  • A subject wears the Oura ring at a sleep lab (like UC Berkeley), where they are hooked up to the state-of-the-art sensors.
  • 16 nodes read brain activity, and then data scientists tune the Oura ring’s algorithm to generate similar conclusions from its sensors.

Key Metrics used by Oura

Lowest resting heart rate

  • Reaching your lowest resting heart rate requires both physical and mental relaxation. When you are relaxed, it reduces stress on the autonomic nervous system (the vagus nerve that connects your brain and your body).
  • Research shows that when you get sleep that leaves you well recovered and well-rested, you’ll normally reach your lowest resting heart rate sort of midway through the night.

Heart rate variability

  • Heart rate variability (HRV) is the variation between every single heartbeat.
  • High HRV is a good signal; it means your body is more responsive and capable of adapting to situations. Low HRV is indicative of stress, smoking, and poor health.
  • Affordable, compact sensors precise enough to measure HRV are a recent advancement.

Sleep Score

  • Electrical signals, breathing, temperature, and movement can indicate which stage of sleep you are in (Light, Deep, Rapid Eye Movement (REM), Awake).

Oura’s business model

  • Oura designs hardware, develops software to analyze & display user’s health patterns, and markets their product direct to consumers & businesses.
  • 500K+ rings sold to date, ~350K in the last year.
  • Rings retail from $299-$399 with 2-year warranty, there is no additional fee to use the Oura app.
  • 100% online at ouraring.com, they have not yet used channels like Amazon.
  • Similar to Warby Parker, Oura designed a ring fitting kit that comes in a small box for customers to try on.

COVID Detection, Wellness Monitoring, and NBA & Enterprise Partnerships

  • Oura regularly monitors the temperature of the skin, HRV, respiratory rate, and other signs. Together these signals can typically detect stress and sickness before the wearer.
  • For frontline health care workers, Oura donated 2000 rings and had a sponsor donate another 1000 rings to hospitals across the US.
  • The team used early research and findings to create an algorithm rolled into an enterprise application, “Health Risk Management.”
  • Oura partnered with the NBA, UFC, NASCAR, Red Bull Racing, Las Vegas Sands, and others for COVID monitoring using their Health Risk Management platform.
  • Oura’s cost is low compared to shutting down the economy, daily testing, or high cost of human health.
  • Most organizations can’t afford a test every day (they weren’t even available), the Las Vegas Sands used Oura to monitor the health of their employees and then used Oura data to prioritize those who got tests.

Creating frameworks to avoid Big-Brother

  • Everything needs to be opt-in from the employee side. Empower the individual, notify them first.
  • Oura will not tolerate companies using their rings to terminate employees. (Oura’s contracts give them the right to terminate their customer contract if enterprises misuse data.)
  • Admins can have pre-customized notifications to employees (For example: send a notification when someone may be sick).
  • Oura sees interest from a lot of corporations as they go back to the office to de-risk against new variants and Flu season risks.
  • “Oura-wellian.” – Jason
  • Companies want de-identified tracing tools and frameworks to avoid data risk on their part. They embrace Oura’s cautious and thoughtful approach.


  • Google and Apple have both said they want to own health. Apple has the Apple Watch, and Google has acquired FitBit.
  • Oura plays nicely with both of them; they distribute the apps on their app stores and integrate with both Apple Health and Google Fit.
  • Oura can remain neutral because of its focus on sleep and because it is seen as a complementary product, many Oura users (estimated ~1/3) also wear a smartwatch.

Why the finger is better for monitoring than the wrist

  • For accuracy, the pulse signal from your finger is about 100 times stronger than the wrist. This is because the skin is thin, and the arteries are close to the surface.
  • Oura samples at 250 hertz. This means their LEDs fire 250 times per second (LEDs are used to shine into the arteries to measure blood flow).
  • If bootlegged an Apple Watch or Fitbit to 250 hertz it would die in about an hour.

Oura roadmap & potential experiments

  • Oura’s current competitive advantage is the accuracy of its data. Improving its sleep staging algorithm to continue to be the market leader is important.
  • Jason asked about implants: Basic procedures for simple implantation still cost $5K in the US, so it’s not going to be a near-term solution.
  • Due to the size of the data set at Oura, they can improve their algorithms faster than the hardware sensors themselves. More data improves the fidelity of the insights.

Ring design

  • Oura will likely create both thinner rings and ones with more design.
  • They are thinking through the best way to do design partnerships and have already had inbound interest from brands like Tiffany and Gucci.

Advice for Hardware Founders

  • Test and iterate. Make sure you have product-market fit, then when you are more confident, raise more capital.
  • Many hardware companies aggressively raised capital, but with an aggressive raise comes high expectations. Physical products have a longer development cycle than software, so investors accustomed to software performance will be disappointed.
  • Companies like Jawbone fell victim to this dynamic.

Oura’s financial future, SPACs M&A

  • Apple is selling 15M+ Apple Watches, which is beginning to show the size of the market.
  • Oura has seen a lot of inbound interest from SPACs, but does not see it as strategically advantageous at this point.
  • Harpreets’ hedge fund background makes him appreciate the rigor of being a public company, but he knows Oura is still early in its distribution maturity (only DTC with some enterprise.
  • M&A in the wearables & health space will continue to heat up. Google closed Fitbit, Amazon launched a wearable, and rumors suggest Facebook will be trying to do this as well.

Startupdeals.tech is curated list of the most generous software discounts for startup founders by @jason, @launch & @twistartups

Subscribe to the Weekly Recap Newsletter (sample) | Follow TWiST’s Twitter

Republic CEO Ken Nguyen on making early-stage investing for everyone | E1199

Top Takeaways

  • Ken’s worldview: crowd investing is a powerful way to give people around the world access to high-growth opportunities and give companies a way to raise money while creating a deeper connection to their community.
  • Startups are staying private longer, so platforms like Republic are the only way for the average person to get access to private companies.
  • Ken’s goal is to make it easy for people to begin investing for as little as $10. Republic achieves this by streamlining everything related to organization, legal, & compliance.
  • Republic uses a Crowd SAFE, which essentially groups all investors together as one line item on the startup’s capitalization (cap) table. This makes it easy for the company raising money to manage.

Listen on Apple Podcasts


Ken Nguyen (also appeared on E856)

  • Ken & his parents emigrated from Vietnam to California when he was in elementary school, which partially influences his mission to allow people from all over the globe to invest in great startups.
  • Co-Founder & CEO of Republic (2016-Present)
    • Equity crowdfunding platform
    • Republic empowers everyone to invest in the future they believe in by providing access to startups, real estate, crypto, and video game investments.”
  • Previously:

Republic’s Funding (more than $70m to date)

  1. $2.1M Seed AngelList, Upventures & others (Dec 2017)
  2. $12M Early Stage VC led by Binance Labs & NGC Ventures (Jun 2018)
  3. $36M Series A at $137M Post led by Galaxy interactive (March 2021)

Republic Stats

  • 1 million investors on the platform
  • Avg. raise is ~$600k

Subscribe to the Weekly Recap Newsletter (sample) | Follow TWiST’s Twitter

Why is crowd investing a new thing?

  • After the Great Depression, Congress enacted legislation that only allowed “accredited investors” (read: millionaires) to invest in private companies
  • All non-accredited investors were deemed unfit to invest in private companies and were banished to the public markets and index funds
  • Investing and financial services continue to be highly regulated.
  • In 2012, Barack Obama signed into effect the JOBS Act (Jumpstart Our Business Startups Act), The JOBS act went into effect in 2016 allowing for some equity crowdfunding
  • Republic focuses on Reg Crowd Funding (CF) and Reg A, these regulations were changed in March 15th, 2021 allowing for more investment:
    • CF: $5M max raise (previously $1.07M, set in 2016 Jobs Act)
    • A+: $75M max (previously $50M, set in 2016)
  • Republic is shaping laws – was referenced over 20 times in 2021 SEC ruling
    • The SEC is moving much faster than Ken though possible (still slower than private companies to protect investors).
    • Ken thinks President Biden’s SEC will move slower at loosening regulations than Trump’s because there is a different focus.

What it takes to raise on Republic

  • Diligence is required to list on Republic, but legal and accounting fees for new startups to raise is less than $15k (for most it is much less).
  • To use Republic to raise money, companies pay a fraction of the amount they are raising (on average):
    • 6% in cash
    • 2% in stake of the company (this gives Republic upside in the company and an incentive to make sure only good deals come on the platform)
  • Companies that have a large audience and bring investors to the Republic platform will pay a lower fee. You can think of them in two groups.
    • Those looking to find investors from the community that invests on Republic (Low fee)
    • Those with large following that will use this infrastructure to make it easy to raise (High fee)

Recent big raises on Republic

  • Sahil Lavingia (E1188 ) & Arlan Hamilton (E1080, Angel S2 E5, E772) both raised $5M rounds
    • Gumroad – Sahil Lavingia
      • Crowd SAFE: $5M raised at $100M valuation from 9346 investors
      • Co-investors: Naval, Jason Fried put in $1M as anchor investors
      • 8x price to earnings, over $10M ARR, growing 120% year over year, team of 10
    • Backstage Capital- Arlan Hamilton
      • Crowd IPA: $5M raised – for 10% of future earnings of Backstage capital (~10% carried interest & 10% management fees) from 6958 investors

“My question for VCs criticizing this model is: If your assessing a b2c business that has such a relationship with his customers that these customers would part ways with 500 bucks, not getting anything back [except equity], just on the belief that one day this company is going to succeed. Is it a good signal or is it a bad signal if a company can convince 10,000 customers?”

Ken Nguyen

How power is shifting to the crowd

  • When people are invested in a business they become evangelists for a product. This is especially helpful when a product becomes commodified (like Skyy Vodka Ken used to work for).
  • In 5 years of data from Republic there have not been instances of fraud (this doesn’t mean all investments worked out).
  • There are more reasons than purely financial why people invest on republic.

“Our tagline is aligning profit and passion. The smaller dollar amount that you enable someone to invest the passion bucket is going to be more and more important in their decision making process.”

Ken Nguyen
  • Republic’s social component:
    • People can write reviews on the platform, saying why they invested (it also shows amount invested if they check that box).
    • A co-investor is highlighted with their track record of investing.
    • There is a space for discussion on republic
    • See Review Screenshot & Co investors section

Subscribe to the Weekly Recap Newsletter (sample) | Follow TWiST’s Twitter

To contribute to the TWiST PodNotes archive email us.

We recently launched a curated list of the most generous software discounts for startup founders. View all deals at startupdeals.tech.

Discord in talks to sell to Microsoft for over $10B | E1190

Top Insights

Discord and Slack have had strangely similar journeys

There is a correlation between gaming-focused founders and making great messaging products

  • Rahul Vohra (Runescape > Superhuman), Stewart Butterfield (Glitch > Slack), Jason Citron (OpenFeint > Discord)

Microsoft is paying a premium (likely over 75x price to sales), but Discord fits perfectly into their “Netflix for gaming” ambitions

$10B isn’t too steep considering their market cap is approaching $2T

Background on Discord

Recent history:

Discord is a voice and text-based messaging app that is largely used by gamers for in-game communication, and it was founded by Jason Citron in 2012

A “server” on Discord is the equivalent of a “workspace” on Slack: a dedicated space for people to communicate about a specific topic

In June 2020 after COVID hit, Discord capitalized on the stay-at-home orders and changed their tagline to “Your place to talk.” – targeting fan communities of books, music, art, tv shows, and more to expand beyond just gamers

In January of 2021, Discord ran into some controversy when they briefly banned the r/wallstreetbets server which now has around 600,000 members

  • Wall Street Bets is an infamous subreddit that set off the GameStop fiasco in January – and they use Discord to communicate in real-time via voice chat
  • WSB’s server was banned for one day, and after being reinstated, Discord offered to help WSB moderators due to the amount and intensity of their users
  • We covered the WSB/Robinhood fiasco on an emergency pod back in January

Discord user metrics:

Discord has 140M+ MAUs as of December 2020

  • Other MAU stats: (as of Feb. 2021 via Statista)
  • WhatsApp – 2B
  • FB messenger – 1.3B
  • We Chat – 1.2B
  • QQ – 617M
  • Telegram – 500M
  • Snap – 498M

How they make money:

  • Discord makes money by selling a $100/year premium subscription called Nitro and also by taking fees from games sold on its servers
  • Benefits of Nitro: larger file uploads, HD video screen share, extra server support, personal profiles on servers
  • The core app remains free, so users only pay when trying to access premium features
  • Discord was rumored to be up for sale in 2018 – but did not proceed with buyers due to CEO Jason Citron allegedly opposing an ad-based model proposed by the would-be buyers

Discord generated $130m in revenue in 2020 and has raised $480M since inception

History of Discord and how it’s different but similar to Slack

Discord and Jason Citron had a very similar founding story to Slack and Stewart Butterfield’s

  1. 2002: Launches an MMO (Massively multiplayer online game) called “Game Neverending” which eventually shuts down due to inability to fundraise
  2. Stewart then creates Flickr from the well-received photo-sharing features of “Game Neverending”
  3. 2005: Stewart sells Flicker to Yahoo and starts working there running Flickr
  4. 2008: Stewart leaves and starts a new game called “Glitch”
  5. Glitch eventually fails, so Stewart focuses on the internal chat app they built, which eventually becomes Slack
  1. 2011: Jason Citron sells his social gaming startup OpenFeint to GREE for $100M
  2. While working on his next gaming project, Citron noticed how awful the current voice messaging software was, making it hard to strategize with teammates while playing online
  3. 2012: When his next project showed signs of failing, Citron pivoted to create Discord to meet the needs of its users

Interesting trend: Talented video game designers making amazing messaging products, for example:

  • Rahul Vohra worked on Runescape before Superhuman
  • Stewart Butterfield worked on Glitch before Slack
  • Jason Citron was a successful gaming entrepreneur before Discord
  • Theory: if you can make a game that engages users, you can make a product that engages customers

Deal breakdown: Discord at $10B compared to Slack at $27.7B?

  • Slack 2021: ~$900M in revenue (43% YoY growth), sold for $27.7B (~30x revenue)
  • Slack is geared towards enterprise customers, startups and SMBs
  • Discord 2021: ~$130M in revenue, in talks to sell for over $10B (~75x+ revenue)
  • Discord is geared towards communities, social and gaming

Microsoft is willing to pay a premium for Discord based on its revenue footprint… so what is their thesis?

Microsoft’s major consumer play

Every other FAANG company has a massive, industry-leading consumer business:

  • Facebook – social
  • Apple – hardware/app store
  • Amazon – marketplace
  • Netflix – streaming
  • Google – search

Microsoft’s big consumer bet appears to be in gaming (they own Xbox, Minecraft, and 30+ game studios)

  • With a ~$1.9T market cap, they have the capital to take big swings in M&A

Timeline for Microsoft’s recent gaming acquisition spree:

  • January 2019 – Microsoft CEO Satya Nadella explained his vision for their Xbox subscription:

“We describe it as, ‘Netflix for games'” – Satya Nadella

  • December 2020 – The latest Xbox console release helped Microsoft surpass $5B in gaming revenue during their most recent December quarter (Q2 2021 on their fiscal calendar), up 51% year-over-year (via GeekWire)
  • Xbox content and services revenue increased to $3.5B due to Xbox Game Pass subscriptions
  • Game Pass hit 18 million subscribers in Jan. 2021
  • Game Pass costs $10/month for standard and $15/month for the ultimate package (Ultimate includes XCloud, allowing gamers to play cross-platform)

In summary

Microsoft (~1.9T market cap) sees every other big tech company with a major consumer business and understands that gaming is the clearest path to building its own

$10B for Discord is a fair price to pay if Microsoft integrates Discord into their cloud-gaming subscription products ($10B is well under 0.05% of Microsoft’s market cap)

Microsoft is building a quasi vertical monopoly in gaming – they now own:

  • the hardware (Xbox, Surface, PCs)
  • the software (Bethesda, Minecraft, Xbox Game Studios, dozens of original titles exclusive to Xbox)
  • the communication platform (Discord)

We recently launched a curated list of the most generous software discounts for startup founders. View all deals at startupdeals.tech.

Insights from Giggster Co-founder Hank Leber on building a location marketplace for creators & content production | E1196

Top Insights

  • Building a business on top of another platform is risky, as revenue can go to $0 overnight by no fault of your own
  • Adding simple and easy solutions to archaic industries and business processes can result in rapid adoption
  • Giggster filled their marketplace supply-side first: once there was a large volume of high-quality supply, demand generation was much faster and mostly organic
  • When all sources of revenue are on the line, even archaic industries like film production can adapt quickly
  • Since Giggster has been operating successfully before raising money, they know their unit economics and are comfortable putting together an aggressive growth plan

Intro / Problems with building on other platforms

Guest: Hank Leber | @hankleber

  • Co-Founder & Head of Growth, Giggster (April 2019-Present)
  • Website: https://giggster.com
  • Hank previously was CEO of GonnaBE a planning social media app (they presented at LAUNCH Festival). The concept of planning socially wasn’t embraced by users.
    • Lesson learned: if you put out your plans publicly and no one comes you look like a loser.

“You have an idea that everybody thinks sounds great, then there’s an ugly cultural truth somewhere that makes it not a real thing.”

Hank Leber
  • Hank also had a company called Vytmn which was a “growth as a service” tool built on top of Twitter
  • Twitter shut down one of their key features, the ability for to automate actions like DMs, which killed their revenue ($1M ARR at peak)

“… do not build on the back of another platform, if they can kill you, they will, it’s not your money. That’s their money that you’re stealing.”

Hank Leber

Giggster’s founding story

  • Hank and his Co-Founder Yuri Baranov were not from the film industry, they are tech entrepreneurs
  • How they discovered the market opportunity with Giggster:
    • Yuri is LA-based and lives in a nice house near the water
    • One day, a production scout knocked on his door and offered him $70K to shoot at his house over two days for CSI: Miami
    • The process included door knocking, clipboards, paper contracts and excel spreadsheets
      • this “business flow” was terrible for a $70K transaction, so Yuri told Hank about it and they started doing some research on the production location industry
      • After realizing the location industry had been run this way for decades, they started Giggster
  • Giggster is a two-sided marketplace for video production, meetings, weddings & events. Think Airbnb for production locations and events.
    • Larger clients would be Netflix, HBO, Hulu, large production companies, etc.
    • Smaller clients would be TikTokers, YouTubers, Vloggers, etc.
  • How Giggster differs from Airbnb and VRBO:
    • Short-term rental platforms do not allow production shoots because they require more overhead: insurance, more people per location then allowed, production parking, waivers, etc.
  • Giggster added a services element because some film production teams need higher-touch support (above $2500-$3000 a day) these services include:
    • Logistics
    • Permiting
    • Power
  • In California, you can rent your home for up to 14 days per year tax free
    • Giggster has some client who shut down their listing after being booked for 14 days for this reason

Creating the marketplace supply-side first

“What we’ve found is, chicken and the egg, locations matter first. As long as we have the supply we can generate the demand.”

Hank Leber on starting a marketplace

Giggster has almost 10,000 locations on the platform

  • In the early days, they filled the supply-side inventory by:
    • partnering with Hollywood agencies, who already had direct relationships with private property owners
    • they also knocked on doors for early customers
    • filling the supply-side first turned out to be a good decision, as it created an immediate flywheels with renters
  • Customers needed a lot of education, so Giggster built out detailed FAQs and comprehensive signup flows
  • Demand has been strong and scouts are now loading their locations onto Giggster
  • If a major client (Netflix, HBO, etc.) needs a location that does not exist on Giggster, they will hire location scouts to go find and matching location and on-board them
  • Giggster saw an opportunity to expand with cheap inventory from pandemic disruption (commercial real estate, restaurants, etc.)

Pitching at Remote Demo Day, raising via Jason’s Syndicate

” (Regarding Jason’s Syndicate), the money is actually secondary to the quality of the network.”

Hank Leber
  • Self-funded for 3.5 years while they figured out the business
    • Took ~3 years to build a solid base and infrastructure, and now they are seeing rapid growth
  • Yuri (Hank’s Co-Founder) told him to go try and land Jason Calacanis as an investor, so Hank started reaching out to mutual contacts and eventually got a slot in a Remote Demo Day session over the summer
  • Remote Demo Day format:
    • Seven founders pitch thousands of investors over Zoom
    • Pitches are three minutes each, with a two minute Q&A with judges after
    • After all pitches are finished, the judges vote on their top three and the audience members (accredited investors) vote for their #1 company in a poll
    • One day later, all 7000+ members of Jason’s Syndicate get an email with the recording and a sheet where they can pre-commit a dollar amount to invest
    • Any companies that receive over $200K in interest are syndicated!
  • Giggster was The Syndicate’s largest investment ever
    • According to Hank, the quality of the network of investors created additional value beyond the capital invested

Giggster’s use cases and emerging content business models

  • Giggster collects 15% from the final host payout as a service fee
  • Daily rates for a shoot range $2-30K per day depending on how high-end the location is
    • the average is around $8-10K
    • Larger long-term deals will hit 7 figures
      • example: ABC renting a mansion for The Bachelor for three months
  • Production came back online quickly during the pandemic, the film industry was really aggressive and inventive about their protocols
    • Even in an industry resistant to change, all of the money drying up overnight caused people to change their minds FAST
  • Giggster holds production companies accountable and cares a lot about reputation.
    • Location marketplaces need to maintain a good relationship with cities & neighborhoods so they can continue to operate
    • Typically the professional production companies have outstanding reputations for taking care of properties, however, a new potential business model is more uncertain…

TikTok content houses are a new media business model

  • Sway & Hypehouse are the most famous TikTok houses
    • These are new media operations that have very different needs and filming styles than traditional production.
    • They don’t have big camera crews but are also notoriously crazier than a film studio.
    • It’s not cut and dry how to service these creators yet, so that’s where Giggster is attacking the opportunity:
      • They are working to pick the right locations (areas with more space and fewer neighbors), and figuring out the insurance needs to service these new smaller-scale customers

Scaling Giggster

  • The importance of network relationships and trust is key for B2B. Cold emails work worse in this category.
  • Since Giggster has been operating successfully before raising money, they know their unit economics and are comfortable putting together an aggressive growth plan

” [once] you get dollars in the door and deliver real value with product-market fit, adding money to scale is a math equation instead of trying to paint a picture and tricking people into buying your vision of the future.”

Hank Leber

We recently launched a curated list of the most generous software discounts for startup founders. View all deals at startupdeals.tech.

Joanne Wilson’s Top Insights | Angel S5 E10

Top Insights

  • Raising at a juiced valuation can have devastating downstream consequences for a startup.
  • Recent momentum in funding underestimated founders has helped firms realize the opportunity of having a diverse team of investors.
  • It is harder than ever to be a “generalist” investor. To succeed in today’s market you need a thesis.
  • Portfolio management near the peak is key to thriving in a down market.

Background / Intro

  • Joanne Wilson is a blogger, businesswoman and angel investor with 130+ investments.
    • She mostly invests in women and underestimated founders.
  • Back in the 1990’s, Joanne was Jason’s top sales executive at Silicon Alley Reporter and taught him a very important lesson: sales solves everything. “If you have a great person who can sell, everything goes in the right direction.” – Jason Calacanis

Spotting a bubble, impact of juiced valuations on startups

“… we’ve seen it so many times over the past 20 years. (Founders) end up with a down round even though (they’ve) done a good job.”

“(After raising a down round) that company is damaged. And then institutional investors have moved on into something new and something else and you’re f****d.”

Joanne Wilson
  • How raising during a bubble can create downstream issues:
    • Founders raise at an inflated valuation, and then have to put up crazy numbers to justify a higher valuation in their next round of funding
    • So, even really good companies can “get ahead of their skis” and fail to justify their mid-bubble valuations
    • If a company then raises a down round, that puts a black mark on their resume that is hard to erase, especially if VC money starts drying up
      • or, as Joanne puts it: “You’re f****d.”
  • There is a direct correlation between media sales and the strength of the overall economy
    • According to Joanne, you can check the thickness of each issue of her four decade Vogue collection to see how the economy was doing that year
  • Ad-based companies should bank as much revenue as possible (and even create new inventory if necessary), because high demand won’t last forever

Positive changes to diversity in venture capital over the past 15 years

“There is a whole group of amazing black founders that no one who is a white investor has ever seen. It was the same thing when I started investing in women, there were all these amazing women out there but no one wanted to meet them…” – Joanne Wilson

  • More women and people of color are starting companies and becoming venture capitalists, so the industry is being changed from both sides
  • It’s been 15 years in the making, but the venture industry is finally starting to see real change with funding dollars moving in the right direction
  • Seeing a team page with a bunch of white males on it is an immediate red flag for some investors
  • Investors are funding and hiring people of color for different reasons:
    • some are doing it because they care about making real change
    • others are ashamed at the lack of diversity in their portfolio and on their team
      • both reasons are helping drive change

Difficulty of being a “generalist” investor in 2021, portfolio management in a bubble

“…as an angel you need to take money off the table when it has gotten silly.”

Joanne Wilson
  • Being a generalist investor was great 15 years ago when there were fewer startups overall
  • To be a generalist investor in 2021 you need a team of people around you for market research, diligence, etc. since there are so many startups doing similar things
  • Portfolio management in a bubble:
    • Some greener VCs have never seen a down market
    • Selling a percentage of your winners at or near the peak is a great way to hedge against a rapid downturn
    • For example, Joanne’s husband Fred Wilson lived through this during the dot-com crash of 2000

Watch/Listen to the full episode:

We recently launched a curated list of the most generous software discounts for startup founders. View all deals at startupdeals.tech.

Snack App’s Kim Kaplan PLUS 3 key metrics for consumer, enterprise SaaS & marketplace startups | E1195

Top Insights

“Every 8 to 10 years there’s a new dating app that kind of enters into the space and Tinder’s now nine years old. So it is the right time for that next dating app to come in and usurp them. And I fundamentally believe that’s what Snack is doing with a video-first approach.” – Kimberly Kaplan

  • Snack was created to optimize a single dating platform for Gen Z
    • What was the problem?
      • Users, especially Gen Z, would match on Bumble or Tinder and immediately move the conversation & interaction to other apps like Snap & Instagram
      • On those platforms, users would reply to each others’ stories and casually flirt, rather than carrying on in a more high-pressure DM conversation on the dating apps
  • Learning different lessons from different Match.com properties:
    • Tinder: design-driven
    • Match: marketing-driven
    • Plenty of Fish: data-driven”Match has done a phenomenal job at working with different companies and acquiring different companies.” – Kimberly Kaplan
  • It has been significantly easier to raise capital for Snack post-Bumble’s IPO.
    • A sector can become stale to investors, especially after being burned repeatedly.
    • Proof of a publicly traded challenger company makes picturing startups’ success easier.

Ask Jason

From TWiST Slack member Alan from (msb.ai):

Aside from a PR news wire or DIY PR methods, how else can a company with over $1M in revenue let people in VC know about us?

Jason’s Answer:

  • Celebrate your wins, write a short blog post when you hit milestones (300-500 words).
  • Content Marketing on Twitter, LinkedIn (social media), start following VCs and engage with them. Host conversations where you can share your expertise.
  • Run targeted promotions of your best blog posts to VCs and like-minded individuals.
  • Send monthly updates to non-investors.

From Jacob:

As a new investor – what key metric would you look for in these 3 different types of startups: consumer subscriptions, marketplaces, b2b saas?

  • Consumer Subscriptions (Calm, Netflix, Spotify)
    • What is the user profile of your top users, and what is the retention and churn like for those top-tier users?
    • Customer acquisition cost
  • Marketplaces (UberEats, Doordash, Zillow)
    • Frequency of use (transactions per customer)
  • Bottom-up Enterprise SaaS
    • Land-and-expand, or net dollar retention (NDR)
    • NDR measures impact on revenue generation from existing customers
    • If your net dollar retention is over 100%…
      • It means your startup will grow revenue only from its existing customer base, without needing to acquire any new customers
      • It also means you have achieved net negative churn:
        • which is when revenue gained from existing accounts exceeds revenue lost from churned accounts – (see David Sacks on churn)
        • an example would be: more existing Slack customers expand from free to paid accounts then churn or downgrade from paid to free
        • According to David Sacks, the master of bottom-up SaaS, this is a great signal for your B2B company

Kimberly Kaplan

  • CEO & Co-Founder, The Snack App (Nov 2019-Present), launched in 2021
  • Website: https://www.thesnackapp.com
  • Funding
  • Formerly worked at Plenty of Fish (2009-2018)
    • Started as VP Marketing & Advertising (3rd person at company)
    • Became VP Product Management, Revenue Optimization & Marketing
    • Grew Daily Active Users (DAUs) from 1M to over 4M and Annual Recurring Revenue (ARR) from $10M to over $100M
    • sold to Match Group for $575M in 2015

The Snack App

“You shouldn’t have to date across two platforms. That’s why we built Snack to pull the best of the two together.” -Kim Kaplan

  • A video-first dating app that asks users to create a video and post it to a feed.
  • Users can scroll through a feed (like Instagram) and when someone likes a video, it opens up the ability to comment.
  • Once two users have liked each others’ videos, DMs are open.
  • She reached out to a Gen Z focus group to name the app and come up with the logo. Snack is a Gen Z term for cute/attractive.
  • Snack is not a static app where you update 5 photos. Snack has more dynamic profiles to show off and interact.

How Kim got the idea

  • Saw that people were trying to date on TikTok (making a video with bio about themselves), 13B views of #single on TikTok
  • Users, especially Gen Z, would match on Bumble or Tinder and immediately move the conversation & interaction to other social media like Snap & Instagram
  • On social, users would reply to each others’ stories and more casually flirt, rather than carrying on in a more high-pressure DM conversation on the dating apps

Dynamics of modern Dating Apps

  • Snack app is breaking out the gender categories to better reflect society.
  • Snack is looking more toward social media instead of what the legacy dating apps are doing.
  • Most dating apps are now using a freemium model where people can pay more to get more features or matches.
  • Match.com is the dominant company in the dating apps space:
    • 10.9M average subscribers
    • $2.4B in revenue
    • Brands include: Tinder, Hinge, Match, Meetic, Pairs, BLK, Plenty of Fish, OurTime, Upward, and Chispa
  • Bumble has been a strong competitor and allowed more investor confidence for dating apps challenging Match’s dominance.
  • Kim learned from each different portfolio company in Match.com
    • Tinder: design-driven
    • Match: marketing-driven
    • Plenty of Fish: data-driven
  • Facebook is a massive channel for dating app acquisition
  • Apple is stingy about dating app approvals, Kim had to pull strings to get it approved. Apple has a high quality bar for these apps.

Startup vs. Large company

  • In the early days of Plenty of Fish “we could sit around a table and drink wine in the afternoon because there were only 6 of us.”
  • There are clear changes in how an organization feels at 30, 60 and 90 employees.

We recently launched a curated list of the most generous software discounts for startup founders. View all deals at startupdeals.tech.

Paul Judge on helping lead SoftBank’s $100M Opportunity Fund, the future of VC & more | This Week in Startups Blog

Top Insights

  • Investing over zoom expands the top of the funnel and lowers the barrier to entry for all founders
    • Investors can take 2-5x more meetings with founders from anywhere in the world
  • Paul’s thesis: Investing in overlooked founders will likely generate outsized returns
    • The American Southeast and Midwest include 44% of the US population but only receive 14% of VC funding
    • Despite this, 36% of last year’s Inc. 5000 reside in these regions with a median growth rate of 161% year-over-year
  • The “either-or” debate between making existing firms invest in underrepresented founders from their main funds OR raising “opportunity” funds that are specifically focused on underrepresented founders isn’t helpful, both are necessary to make VC funding more equitable
  • Jay-Z had the best Q1 2021 of any entrepreneur or investor
    • Tidal was acquired by Square for $297M, he sold 50% of Ace of Spades to LVMH for ~$300M, launched $10M cannabis-focused fund to back black founders, Oatly filed for IPO


  • Paul Judge, Ph.D. is Managing Partner of Panoramic Ventures, a VC fund that invests in “underserved geographies and overlooked founders” prioritizing the American Southeast and Midwest. Paul is also Co-Founder & Executive Chairman of Pindrop, an information security company that provides risk scoring for phone calls to detect fraud and authenticate callers). Pindrop’s most recent valuation was $900m in 2018.
  • Paul also serves on the investment committee for SoftBank’s $100m+ Opportunity Growth Fund to invest in Black, Latinx and Native American founders
  • Paul is based in Atlanta, but has become a Miami regular.
  • Atlanta’s startup scene is heating up:
    • Airbnb just located it’s East Coast engineering team there
    • Local Unicorns: Calendly ($3B), Greenlight ($1.2B, consumer fintech), Rubicon ($1B, recycling technology), SalesLoft ($1B, sales software)
    • Strong talent pipeline from Georgia Tech

The virtual-first investing paradigm shift

“I see more companies than I would have seen otherwise, the top of funnel is wider. From the entrepreneur’s standpoint, it’s easier to get a meeting with an investor than it was traditionally. That means a whole new generation of entrepreneurs that wouldn’t have had access, now have more access to venture capital funds & angel investors.”

Paul Judge
  • Paul has made 25 investments in 2020, all over Zoom. He has met 2 founders in person, but only after investing.
  • Being an active investor in 2020 required going virtual. Most investors never considered this a viable method prior to the pandemic. Both Paul & Jason discovered that virtual investing offered a new set of benefits:
    1. Investors can take 2-5x more meetings because intro meeting times went from 2-3 hours to 20-30 minutes. How?
      • Commutes and pleasantries are eliminated, and everyone gets down to business ASAP.
      • Conversations now start with hard numbers. Entrepreneurs have become more direct in their approach, making the information needed to diligence an investment up-front in their first email.
    2. Investors now have much greater access to founders outside their city. Travel and cost of living in the Bay Area are high and are no longer an obstacle for founders.
      • By taking more meetings from broader geography, investors are able to reduce their bias.
      • With more meeting slots available, it’s easier to take a chance on a founder you wouldn’t have met with pre-COVID.
    3. Virtually, the pattern-matching necessary to be a great VC becomes more about assessing the founder based on their performance, rather than by charisma or presentation skills.

How Paul Judge invests

  • Paul’s Techsquare Labs was focused on backing top talent (students & professors) from local universities like Georgia Tech, funding founders at the pre-seed and seed stages.
  • He is now expanding to be involved at Series A & B both at SoftBank and Panoramic Ventures, which just launched a $300M fund.
  • Paul knew 2/4 other members of the Softbank Opportunity fund’s investment committee from being a part of the 2016 class of Aspen Institute’s Henry Crown Fellow Program.
  • Panoramic’s thesis: investing in overlooked founders will generate outsized returns.
    • The American Southeast and Midwest receive only 14% of VC funding even though they include 44% of the country’s population.
    • 36% of last year’s Inc. 5000 reside in these regions with a median growth rate of 161% year-over-year.

How to make investing more equitable

“Black founders are not just solving black problems, they are solving some of the most meaningful problems that exist.”

Paul Judge
  • The “either or” debate between making existing firms invest in underrepresented founders out of their main funds OR raising “opportunity” funds that are specifically focused on underrepresented founders isn’t helpful, we need both to make venture capital more equitable.
  • VC firms typically don’t change their partners often (turnover typically occurs with a new fund every 3-7 years), so adding new diverse partners to existing firms is a slow process.
    • The industry needs to evolve in this way, while also meeting fiduciary responsibility to limited partners who invested in the fund.
  • Purpose-built investment vehicles like SoftBank’s Opportunity Fund have a clear mission and can make an impact right away.
    • Another benefit is creating an ecosystem where some of the top underrepresented entrepreneurs can support & inspire each other.

Jay-Z’s groundbreaking Q1 2021

“I was just talking with somebody about who had the best quarter, Chamath or some other venture capitalist and I was was like, ‘No, I think Jay Z had the best, he just sold half Ace of Spades to LVMH.'”


“I love that love Jay-Z’s going after industries that have traditionally been unfair to the people that have been creating value. The music industry is traditionally unfair to the creators, so he did Tidal. In food and beverage, the Crystal CEO got shot himself in the foot, so [Jay-Z] went after that. Then if you look at the cannabis industry, I mean, it’s not exactly tech, but it’s creating tens of billions of dollars of value. It’s one of the most valuable crops that this country’s ever seen. But if you look at everyone that’s going public, there’s no diversity, but we all know this country was built on the backs of blacks tending to crops.”

Paul Judge

Companies Paul shouted out during the episode

We recently launched a curated list of the most generous software discounts for startup founders. View all deals at startupdeals.tech.

Kevin Rose’s product philosophy, Reddit & Digg’s inverse journeys & Twitter’s new product innovations | This Week in Startups Blog

Kevin Rose

Top Insights

  • Products must begin with only 2-3 key features. Once there is traction, you can prioritize what features to build next by asking users for feedback.
  • Fewer features allow you to launch quicker, at a lower cost, and actually determine if there is product-market fit.
  • Replacing a founder with “professional management” to commercialize a business often kills the product and company culture. (See Tobi’s Rule EP 1184)
  • Twitter’s new product roadmap offers an antidote to the chaos of text-based social media, a natural extension that compliments their core product.
  • NFT & blockchain technologies will revolutionize the ways we manage rights & ownership, despite most projects in the space likely being worthless.


  • Kevin Rose is a partner at True Ventures, a consumer-focused venture firm with early bets on Peloton, Fitbit, Blue Bottle, Ring and more. He hosts the “Kevin Rose Show” Previously, he founded the social news site Digg, the intermittent fasting app ZERO, and the meditation app OAK.
  • His most notable investment include: Twitter, Facebook, Zynga, Square, Medium, Foursquare, Nextdoor, Blue Bottle Coffee, Clever, Ripple, Oura.
  • Kevin’s past This Week in Startups appearances:

Experience as a founder vs. investor

“Nothing beats the rush when you launch a new product. The ultimate peak as a founder is to have people using something that you created.”

Kevin Rose
  • Some downsides of being a founder include managing people, making hard initial engineering hires, fighting for talent, and having difficulty sleeping.
  • Kevin prefers building a product in the early stages over trying to scale a growth-stage startup.
  • A common mistake founders make is not asking for help when they don’t understand how to do something. Great founders seek out mentors and soak up information like a sponge.
    • For instance, when Mark Zuckerberg visited Digg in the early days of Facebook, Kevin was surprised at how unafraid Zuck was to ask questions and be vulnerable.
  • Investing is fun because you get to identify companies early on and try to imagine how it could become a multi-billion dollar business (and sometimes that happens!).
  • There will always be a randomness in investing:

“Some investments, I really did a good job getting the deal done. I tracked down Jack [Dorsey], I had him on my podcast, I convinced him to be an Angel in Square. But the crazy thing is that I’ve had cryptocurrency investments outpace that return, just because somebody asked ‘hey, do you want to throw in some cash on this crazy new up-and-coming project?’ and I put a little bit of money in and it returned a boatload.”

Kevin Rose

Product philosophy

“Pound for pound as product person [Kevin is] part of an elite top 10 alongside Elon, Steve Jobs, and Alex from Calm. When [Kevin] makes a product it just comes out great.”

  • Creative people are filled with ideas, but you need discipline to boil it down to the simplest version of your product vision.
    • Pick only two or three things that absolutely must exist and do them really well.
  • Building fewer features shortens the development timeline down to just a couple of months versus 6-8 months.

Case study on Kevin building Zero Fasting

  • Problem: Kevin read promising research on intermittent fasting from Dr. Valter Longo at USC. There were human placebo, double-blinded, “gold standard” studies showing autophagy, improved glucose levels, and reduced chemotherapy side effects. In short, fasting was helping people live longer with less disease.
  • Market Research: There was nothing on the App Store dedicated to fasting. Using your phone’s timer was inadequate because it didn’t track historical fasting data.
  • The essential features: Timer + Calendar. Allowing for historical performance, average fast duration, streaks, etc.
  • Kevin’s subtle fingerprint on Zero: Showing the live number of simultaneous fasters on the platform in order to create a feeling of community, due to the difficulty of fasting – especially in the early stages. “570,345 people are fasting with Zero”
The Zero app, note the “active faster” count at the top
  • Essentialism creates a clear user value proposition & lets you bring it to market quickly.
  • Once you have traction, there is an opportunity to add the other features you wanted to build. More importantly, your community is going to start telling you what they want.
  • Digg would survey 1 in 100 users, asking them to stack-rank the list of features the Digg team wanted to add. By combining the team’s product insight with the input from users, the community was engaged and excited.
  • Kevin invented the “Like” Button on Digg (called “diggs”).
  • Don’t get high on your own supply as a product person. Keep trying and keep iterating.

“If you try and fail as many times as I can, you will get some home runs from just the sheer number of times you’ve had the at-bat.”

Kevin Rose

Lessons from Digg & Mahalo

  • Jason saw Digg early in 2004 and was impressed with how quickly it became a top source of traffic for his company Weblogs, Inc
    • Jason got a verbal OK from Weblogs investor Mark Cuban to try to buy Digg for $1M.
  • Jason’s idea for Mahalo was 10 years too soon: “I knew that search would change from 10 blue links to what it is now. I even came up with that name, ‘comprehensive search.’ What if the images and the video and content were mixed with the search results? -Jason
  • Branding Mahalo: Jason considered which companies and products had the most beautiful logos. Thunderbird and Firefox came to mind, so Jason tracked down the designer Jon Hicks.
Mozilla Firefox & Thunderbird Logo
Mozilla Firefox & Thunderbird logos
  • There was a 6-month wait due to the demand for Jon’s design genius, so Jason made a series of aggressive offers to jump to the front of the line. Jon’s Mahalo logo was an instant hit amongst “product-people” like Kevin Rose.
Mahalo Logo
  • Beware of relying on one source of organic traffic: Mahalo was making thousands of dollars per day from ad revenue. But when Google released the Panda update for search, 90% of Mahalo’s traffic went away overnight. Even with influential connections at Google, Jason was told search was a “black box” and nobody was able to help.
  • Professional management” can destroy a product and the culture around it: Digg’s 3.0 redesign made it more commercial, prioritizing publishers instead of the content the community loved. The goal was to become a bigger business, but it destroyed the core product value and eventually led to Kevin’s departure.

Twitter Spaces and Clubhouse

  • Not needing to download a new app reduces friction and it’s easy to get “40 blue checkmarks in a room” on Twitter, since influential people are already there.
  • Twitter has been slow to add features or change the core product, which they have been lambasted for by power users. However, it’s also a secret sauce to success. Reddit is in a similar boat with their product history.
  • Twitter Spaces is a natural extension the platform. Audio has the power to create a meaningful dialogue to offset the “dunking” and tensions created from the current lack of tone/context on Twitter.
  • Social media founders didn’t set out to create chaos online, and these new features can help realize an idealistic vision of an at-scale social product. “I think that you’ll use text until you feel misunderstood or the conversation devolves significantly and someone says ‘you guys should talk it out in a Twitter Space.'” -Jason

NFT & blockchain technologies hold promise & potential pitfalls

“I’ve been tracking NFTs for a long time. I believe there’s going to be a lot of garbage in the space when every artist with Photoshop can become an ‘NFT Master’. But there’s a lot of really credible projects reimagining rights, distribution and ownership.”

Kevin Rose
  • Tokenized ownership can allow the creator of an object to receive a portion of the proceeds every time the asset changes hands.
  • Some potential revolutionary use cases:
    • Unisocks has dynamically priced socks where the token can be exchanged for the physical product (it’s silly because these are socks but imagine them as Yeezy’s or other high-end collectibles). This allows for price speculation on objects without needing to hold physical inventory.
    • Backing early musicians, where the owner of the token is entitled to residual music royalties.
    • Media licensing on the blockchain, where every artist/creator can set the price to license their creation.

If you have your own notes, tag @twistartups on twitter and we will link them here.

We recently launched a curated list of the most generous software discounts for startup founders. View all deals at startupdeals.tech.

Lessons from Shopify CEO Tobi Lütke: what he learned from scaling Shopify through the pandemic | This Week in Startups Blog

Tobi Lütke on This Week in Startups

Top Insights

  • Removing friction creates new opportunities and increases market size.
  • Shared priorities of some of the best companies in the world:
    • Priority #1: Go build the best product you can possibly build
    • Priority #2: Make some revenue so that you can do more of Priority #1
    • Priority #3: Never do #2 at the expense of #1
  • Important technologies of the future look trivial today (like games or toys), just like the Internet did in the ’90s.
    • Examples: Crypto, NFTs, Biohacking sensors
  • Software innovation compounds.
  • Going forward, the best companies in the world will be built fully-remote, with in-person events deliberately distributed (all-hands gatherings, etc.)

Watch / Listen to the full episode:

Background / Intro

  • Tobi created Shopify to solve his own problem: running his online snowboard store was really hard, and the only reason he could do it successfully was due to his background in software development.
  • Jason first interviewed Tobi on TWiST at Accelerate Ottawa in 2013
    • At the time, Shopify had ~200 employees with a “crazy” thesis: Amazon would not win it all, and some retailers would want to run their own online stores
    • Jason was originally in Canada to interview Chamath Palihapitiya
  • In their initial interview, Jason was struck by Tobi’s laser-like focus and thought Shopify had huge potential.
    • He remembered:

“… in that interview [Jason made] some statements about the potential size of [Shopify] being hundreds of millions. I thought ‘I’m gonna roll with this but I’m not entirely sure if Jason is serious or not.'”

Tobi Lütke

Shopify’s growth & comparing ecosystems with Amazon

“I have an unbroken track record of underestimating the potential of my own company, which I hope will continue.”

Tobi Lütke

Jump to this part of the episode on Youtube – 4:57

  • 85-90% of all the world’s money exists in databases. The world economy is almost fully digital.
    • The old concept of the e-commerce market is outdated and incorrect.
  • Shopify mainly differs from Amazon regarding direct-to-consumer brands
    • How? By giving them a “home base”, so they can own their storefront on the Internet, rather than “renting” shelf space from someone else.
  • Amazon has a very good sales channel for certain products, and people should use it if it’s appropriate.
  • Shopify’s App Store has helped fuel their growth “Commerce is complex, it’s very hard to build software that can address a lot of different use cases. The inspiration [for the app store] was operating systems.  An operating system that does a good job modeling the primitives can then be used for everything.” – Tobi

“Commerce is complex, it’s very hard to build software that can address a lot of different use cases. The inspiration [for the app store] was operating systems.  An operating system that does a good job modeling the primitives can then be used for everything.”

Tobi Lütke

Removing friction creates new opportunities

“Friction shapes the world a lot more than policy in most cases.”

Tobi Lütke

Jump to this part of the Episode on Youtube – 9:42

  • There were roughly 40,000 online stores in the early 2000s. This was because it was so difficult to run an Internet business due to payment processing, order fulfillment, software development, etc.
  • When Tobi started fundraising, investors that said “no” would point to Shopify’s “low” Total Addressable Market (TAM) of 40,000 stores.
  • Shopify grew its TAM by greatly reducing the friction of setting up an online store, thus encouraging more and more people to either start new online businesses or to create a digital version of their physical store.
  • How’d they do it? Initially by building a payment gateway to make it easier to deal with merchants and collect payments.
    • The goal was to allow sellers to collect payments easily, and once they made sales, the entrepreneur could tell Shopify where to send the orders for fulfillment.
  • Like e-commerce, setting up a blog also used to be time-consuming and difficult, involving servers and coding. Now it’s been made nearly frictionless by companies like Squarespace or WordPress, and their markets have expanded as well.

“Every time an entrepreneur makes it easier, more people participate.”


Lessons learned during the pandemic

“Almost every model and theory I had about how to work together [and] how to build things got either invalidated or got a significantly higher resolution. For instance, I believed that there was no way to replace proximity as a factor in building fantastic products, the proximity of a team is just so powerful, and so multi-dimensional… clearly that was incorrect.”

Tobi Lütke

Jump to this part of the episode on Youtube – 31:28

  • Early remote work pioneers like Matt Mullenweg (Angel S5 E7), and Jason Fried (E1099) were right. Business efficiency increasing while remote proved Jason and Tobi wrong.
  • The problem with pre-pandemic distributed work was that companies needed 100% remote participation, which was very hard to achieve before lockdowns were enforced.
  • High-quality product creation comes from high-fidelity teamwork, which proximity inherently creates.
    • However, this can also be created by great video conferencing software (Zoom), a solid setup (strong internet, good camera/microphone), and a way to mimic a whiteboard (productivity apps, screen sharing).
  • We are still in the early days of remote work, and the software will only become more seamless in the future.

“This is the worst the software will ever be for remote work, it will only get better from here.”

Tobi Lütke
  • Jason’s remote management checklist (SOD > EOD > EOW)
    • Start of Day (SOD): At the start of the day put in Slack what you’re working on in 1-3 bullet points
    • End of Day (EOD): At the end of the day when you’re done working, reply to that same post with what you got done and what you need help with
    • End of Week (EOW): On Friday, taking no more than five minutes, share the most important things you got done during the week

“It’s a contest to see who can inform everybody and how in sync we can be with the least amount of meetings.”


According to Tobi, the best companies in the world going forward will be fully remote:

“I think I think the best companies in the world will be built completely remotely, at least with no stated headquarters. Being together in person is still going to be very important, but more deliberate.”

Tobi Lütke

Forced focus of lockdowns

Jump to this part of the episode on Youtube – 1:05:39

  • Shopify zero-budgeted at the start of the pandemic and realized how unfocused they were.
    • Zero-based budgeting entails redoing an entire budget from scratch, rather than just modifying the previous year’s numbers
  • Due to the initial pandemic scare, Tobi became focused on building an “antifragile” business
    • An antifragile business is one that performs better under duress or in times of uncertainty
    • Antifragile is a book by Nassim Nicholas Taleb
    • Examples:
      • Uber – When people went into lockdown and stopped ordering rides, the demand for UberEats went up. When people come out of lockdown, demand for rides will rise.
      • Disney – When parks shut down, they centered their business around Disney Plus. They surpassed 100M subscribers in the first 16 months after launching in Nov. 2019.
  • Antifragility in practice: Many businesses will take the e-commerce lessons they learned during the pandemic and apply more software when running their physical locations.

Compounding nature of software innovation

“The narrative around programming is more interesting than people realize.  Since blacksmithing, we haven’t had a craft where the craftsmen actually make their own tools.


Jump to this part of the episode on Youtube – 47:00

  • Humans are genetically the same as we were 75,000 years ago. The main difference between then and now are the tools we have available that and the stories we tell each other.
  • Innovation compounds when creators build on the innovations of others Hardware example: Battery revolution
    1. Billions of smartphones are produced, competition leads to fast-charging and long-lasting battery technology
    2. Tesla uses batteries in their cars and makes them cheaper and more effective
    3. Battery-driven Vertical Takeoff and Landing (VTOL) aircraft are now made possible due to the advancements in battery technology
  • Software is the ultimate play of leverage for innovation because it combines zero marginal cost with infrastructure that everyone on Earth can add to and constantly improve.

1,000 True Fans

“We want to make entrepreneurship trivial on the Internet.”


Jump to this part of the episode on Youtube – 1:06:40

  • Spending money on creators via the Internet can now be seen as voting for something to exist.
    • Everyone can now be a “Digital Medici” and sponsor the art/artists/products they want to see exist.
  • The promise of Kevin Kelly’s 1,000 True Fans essay becomes more attainable for a broader set of people with each new technological commerce innovation.

“…there is a home for creatives in between poverty and stardom. Somewhere lower than stratospheric bestsellerdom, but higher than the obscurity of the long tail. I don’t know the actual true number, but I think a dedicated artist could cultivate 1,000 True Fans, and by their direct support using new technology, make an honest living.”

Kevin Kelly
  • Shopify’s Fulfillment Network abstracts logistics away from the seller (just like the Payments Network did before it).
    • they reduce complexity by removing unnecessary information/hassle/steps
  • Jason claims to have seen a 100x increase in high-quality direct-to-consumer companies in the past few years, largely due to Shopify making it easier to run an e-commerce business by handling the technical and fulfillment aspects and allowing entrepreneurs to focus on the product.
  • Example: One founder is selling ~$60K worth of hoodies per month with minimal effort on the fulfillment side. Here’s how she does it:
    • Uses influencer partnerships to market the product
    • Takes orders through a Shopify storefront, which handles payments processing
    • Orders hoodies from a contract manufacturer and routes them to a Shopify fulfillment center because the logistical side of the business was automated, the founder was able to focus on perfecting the product, and is now building her own version of “1,000 True Fans”.
  • Most of the modern Internet has been condensed into 3-5 major players. According to Tobi, it’s important to preserve the opportunity space so that achieving “1,000 True Fans” can still be possible.

Watch / Listen to the full episode:

Fan notes about this episode

@abhishek – Added some great links for exploring the creator economy

We recently launched a curated list of the most generous software discounts for startup founders. View all deals at startupdeals.tech.