One click cancel

The FTC announced a new “Click to Cancel” rule yesterday which forces businesses to allow people to cancel subscriptions much easier.

My initial thoughts on this are positive as businesses have just gotten too clever and make it exceedingly difficult to cancel their services that they don’t use. Some businesses have become like a lobster pot, very easy to get into and damn near impossible to get out.

I do think you should be able to cancel a subscription just as easily as you can sign-up for one. But with any new regulation, I hope that things do not go too far and create a lot of unnecessary work for businesses.

I’d imagine that this will impact a lot of startups and they’ll need to make adjustments which will possibly lead to higher churn numbers. It will be interesting to watch and see how things unfold.

Slowing growth rates

This will be a tough year across the board for software sales. There will be of course be some exceptions, but generally the trend was been downwards in the private company space.

A lot of companies we work with and have been exploring have not hit their targets for the year and will be guiding downwards as we start Q4. We’ve adjusted our forecasts and models accordingly as well heading into Q4.

The primary reasons for these slower growth rates is cost cutting across companies. There is simply just less money to spend on software in 2024 than there was 3 years ago. In addition, sales cycles have gotten a lot longer and that has thrown off a lot of forecasts for the year.

There is always hope with Q4 though and we hope that most companies can close out the year strong.

Triaging the opportunities

We’ve gotten a lot more lean and efficient at Secfi over the last two years. While we all wish we had more staff at times, there is a lot of beauty in running a lean ship. Possibly the biggest benefit is that we get to stay focused as a company and team on the best opportunities.

We unfortunately just don’t have time to tackle all opportunities now a days. We have to prioritize and triage the best ones and stay focused on the top. Unfortunately this may mean not taking on some deals and just simply passing on them because we don’t have the time. We can’t work with every company out there.

It’s a trade off that we’re happy to make and wish we would’ve done better during the growth at all cost years. Sometimes deals just aren’t worth the cost and it’s my job as a leader to make sure we’re focusing on only the best opportunities.

Preparing to be a father

I’m finally back home for the foreseeable future after flying back Friday. I spent most of the weekend catching up on life and sleep. Last week was a lot of fun and we got a lot done, but it took a big toll on my body and I’m now battling a cold.

I told my coworkers this and apparently I better get used to it because lack of sleep and being always sick seems to be the norm once you have kids.

On that front, Sophia and I are now scrambling to plan for this kid. While he could technically come at any moment, it becomes much more real in another couple of weeks. So that leaves us about 2 weeks to really get everything as ready as possible.

While we’re in a decent spot, there’s still a lot to be done including putting together his nursery and getting everything organized. Our apartment is a mess right now with boxes and things everywhere. This next 2 weekends will be about getting the apartment in order.

For myself, I’m looking to get rest and get my mentals in order. I want to get back to a good healthy place again after a busy few weeks with quarter end and travel. If things go according to plan, I’ve got one month before my son gets here. That’s one month to prepare for my son but also most important prepare myself.

I still suck at sleeping

It’s been a frustrating week as I learned that I still suck at the whole sleeping thing. After the awful delay and early Tuesday morning arrival, I powered through the evening and got a decent night of sleep despite operating at about 50% brain capacity. We had a great day of meetings on Wednesday and I was hoping to get some good rest so I can be back to 100% today. It was not meant to be as I spent then night tossing and turning.

The frustrating part is that I’ve been doing a good job at taking things easy while I’ve been here. I’ve headed home after dinners with the team and have been back at my hotel at around 10pm every night. Blame the jet lag, hotel life, or stressful week in general… I still struggle mightily to get good rest on these trips.

In the times past, it’s been overdoing the social events. This time I just don’t have a good excuse. I just can’t seem to get consistently good sleep when I travel for work.

It’s frustrating but on the positive side, it’s been worth the exhaustion. It’s always great seeing coworkers and getting good face time. We did a ton of planning for the next few months and quarters ahead. It’s an exciting time to be here at Secfi and despite everything, I’m happy I made it out to NY.

In-person meetings

I finally got a good nights sleep last night for the first time since Thursday. Between the long weekend and travel issues, it’s been a rough few days for me. Of course, I’m probably stuck with sleep deprivation for the next few years ahead with this child on the way. But things just seem to feel different after a weekend that zaps the energy out of you.

I’ll need to be sure not to fall back into a vicious cycle by treating my body right on this trip to New York. Getting good sleep and rest is going to be imperative to make sure that I’m on my A game for the team during the short times we have together.

We’ve got a long agenda of things to do while we’re here in New York. We sat together this morning and blocked off our day to tackle that list. So far a few hours in have been incredibly productive. As always, the in-person brainstorming and discussions just hit a lot different than what we typically get on Zoom.

I also have it on my list to hang out with the rest of the team more and get to know them better in-person. Personal connections via Zoom just don’t feel the same and will never be the same.

The New York energy

I had a rough travel day yesterday getting to New York. My flight was delayed about 5 hours because they were missing a plastic part in the cockpit that eventually needed to be flown in from LA.

Landing at 3am and getting only a few hours of sleep is not the ideal way to start a New York trip. All that said, it could’ve been worse and I should just be grateful that I made it rather than have to be rebooked through other means.

I sit here writing this at 1:30pm running on coffee and the New York energy. The energy in this city is absolutely electric as always. The office culture here feels 10x stronger here than San Francisco and it makes me want to go grind.

On a personal level, there’s simply just too much shit to do here. My list of places I want to go this trip far exceeds the time I have. I’ll be lucky to sneak a couple of the restaurants I’ve been eyeing into the schedule.

An epic trip and flipping the page

I was in Seattle for the last few days for the UW football game against Michigan. I decided to go up early on Thursday to see friends as well. It was a great trip topped off with a big win on Saturday. I always viewed this trip as likely my last hoorah. While I am flying to New York for work today, this trip to Seattle was likely the last big “party” weekend until my kid is born.

I spent Thursday night hanging out with old friends and we ended up taking it easy which was awesome. On Friday night, I caught up with more old friends and probably stayed up a bit too late. I continued the party into Saturday catching up with more old friends at the tailgate and then celebrating the big win over Michigan.

It was an awesome trip and I have no regrets considering the circumstances, but I’m definitely feeling the effects of it yesterday and today. I’m simply past the age where these big weekends are just way too much. At some point, the exhaustion and lack of sleep just catches up to you.

There’ll be more trips to Seattle for Husky games in the future, but they’ll just look a lot more different and that’s a welcome change. At this point of my life, I’m ready to focus my attention on being a father. My life is going to get a lot less social and I’ll be tired in different ways, but I’m ready for the change. We’re a little over a month until our due date and it’s time to flip the page.

Marketing

We had our all-hands today to discuss Q3 and put in plans for Q4. Each business unit and team had a chance to present their accomplishments in Q3. I was particularly impressed with our marketing teams performance this past quarter.

A lot of folks who have not really run businesses think of marketing as sexy ads and viral campaigns. That maybe true for some companies, but for the vast majority of businesses out there today, most marketing is just non-sexy. That includes SEO optimization, brand awareness, content, etc.

Over the years, this non-sexy stuff is what works for Secfi. It is non-sexy because it’s a slow burn. You don’t put out a great piece of content and expect it to drive hundreds of new leads immediately in most cases. For example, a case study I put together on the Snowflake IPO in 2021 is still one of our best performing pieces and continues to be the biggest driver of leads.

We had to really revamp our marketing efforts over the last year or so and the results are really starting to show. The efforts of the team will continue to build on each other and set us up for success over the next few years.

Stay disciplined

We cam across two companies that we all loved last week.

One was growing like crazy and we felt that they were the clear winners in their customer target niche which was very large. The team was impressive and we felt that this was a good time to get in before they start taking off.

Another one was a competitor to a public company and was a clear disruptor that we felt would overtake that public company in the next couple of years. They were also growing very well and had a much better product.

In both cases, we decided to pass.

In the first instance, the risk was just too high for us at the moment. We felt that exploring in another year or two would be the better option as the company really begins to scale. There is risk in the scaling and for our financing product, we felt that risk was too high.

For the second company, the pricing just didn’t work out for both us and the shareholders. We felt great about the company, but sometimes dynamics like the 409A and valuation just makes it not a great deal. We decided to circle back in 1-2 years once they’ve grown a bit and have a clearer path to IPO.

As investors, we love doing deals. That’s what gets us going, but we also need to stay disciplined as stewards of our LPs money. It was frustrating, but the right move.

Startup graveyards

It’s blazing here in San Francisco today as the weather should hit 90 in the next hour or two. It’s a nice little heat wave to kick off October. I’m sitting here in a good mood with a great Q3 behind me and a fun trip to Seattle this weekend followed by a work trip to New York next week.

I was notified today that another consumer finance startup that I was following for a couple of years is shutting down. The company was incubated by a firm that I admire and I gave it a shot as an early adopter. I eventually canceled as the app was very basic for my needs.

I don’t know the stats on this, but I’d guess that consumer finance startups, specifically apps, have to be in the top 3 of VC backed startup graveyards. It’s an incredibly hard space to build in.

On the surface, the tools you have today from the incumbents are in need of a tech overhaul. It’s easy to see why a tech minded individual who is using antiquated tools built by banks want to build something better.

But most consumer finance apps need significantly scale to make enough money to just generate enough traction to get to the next round, yet alone make a profit. These users are expensive to acquire and possibly harder to keep.

Getting users to manage their personal finances is a psychological battle where individuals don’t get immediate gratification and may not realize benefits for many years in the future. The inherent churn in these businesses are very high.

For most, I’d guess that raising VC money to build the next personal finance startup isn’t a wise decision. I’d imagine that there are plenty of great businesses that are bootstrapped and kept small intentionally. Costs are lower and a relatively small core of users can create a profitable business.

Monday musings

Sophia and I spent the weekend mostly running errands and starting to prepare the apartment for the newborn. We’ve decided to stay at our current one bedroom apartment for at least a few months past birth as we figure out our next move in San Francisco or New York. It’ll save us a bit of rent and we won’t have to figure out how to get out of our lease.

We’re lucky we have a closet that is large and works well for a nursery. It’s a bit of a weird concept thinking of putting our nursery in a closet, but this appears to be fairly common and it’s as big as some rooms I’ve seen in New York.

Both my football teams are leaving a lot to be desired this season. My Washington Huskies lost to Rutgers in a game that we should have easily won. We seem to be the best 3-2 team in the country but keep shooting ourselves in the foot at the most inopportune times.

The 49ers had a good win, but don’t seem close to the form that we were in last year. With injuries piling up, these next few weeks could be a make or break season. Go on nice win streak and get some players back, and we can be talking Super Bowl. But if we start rattling off some more early season losses, it could be a tough year.

The Giants today fired our President of Operations Farhan Zaidi. I’m not that well-versed in baseball, but Farhan seemed like that very typical Silicon Valley analytics type executive. There were a lot of promising moments and many years ago, it felt that Farhan was going to be that elite executive that was just ahead of the curve by using data and analytics. But things didn’t work out and baseball is still a team sport that data cannot completely account for.

On the work front, our quarter ends today and we have a lot of reasons to celebrate. It was a challenging quarter that started off very uncertain, but we pulled together as a team and have set ourselves up for a great year. I’ve told my team that we should wrap up strong this week and clean-up some things as we finish the quarter. Then we all need to take a bit of a breather.

Q4 is always the busiest time of the year for us and the holiday schedule doesn’t make it easier. It’s important that we take some time to relax and celebrate the big quarter. Fittingly, it’s a heat wave in San Francisco so I’ll be taking some time to work outside and do independent work away from calls.

RIP Om Jenggot

I’m still feeling the side effects of this COVID vaccine almost 2 days later. I got caught up with a few things that needed to get done yesterday and was only able to rest starting at around 2pm. I didn’t take it as easy as I would have liked. Today,

I have some minor aches and just feel a bit tired despite a decent night of sleep. I really miss the days when I didn’t have to have these huge recovery days. It was nice being young.

On a different note, I received the sad news that my uncle in Indonesia died yesterday at age 70. He had an unexpected stroke and passed. We called him Om Jenggot. Om meaning uncle. And Jenggot meaning goatee in Indonesian. He always sported a goatee when I was young.

My Dad was 1 of 11 in his family and he was the one sent to the US to go to school. Given the large family and fact that we’re across the globe, it’s always been hard to see family.

Om Jenggot always took a liking to me as a child. He was a tailor and would send me the best Halloween costumes. I last saw him as a teenager when I went to Indonesia probably close to 20 years ago at this point. I can tell my Dad is definitely upset. He was very close to this brother.

I was able to meet his son, my cousin when he was a kid as well. I know he had another son is young as well. I hope that they’re doing well given the news.

It’s an eye opening moment for me. A lot of my uncles and aunts have passed at this point. I wasn’t close to many of them given the large family but family is family, and I need to visit back home to see family soon. I hope I can bring my son and Sophia to Indonesia sometime soon so they can meet my family.

Taking it easy

I’m feeling like shit this morning after getting my COVID, flu, and TDAP vaccines yesterday. I decided to rip the bandaid off and get them all done as they were doctor recommended for the baby.

I’d imagine the COVID vaccine side effects is probably what is taking a toll on my body right now. I’m achey and have minor chills after having a tough night of sleep. I was dressed, packed up, and just about ready to head out the door to my office when I came to my senses and decided to stay in today and take it easy.

I don’t see a need to torture myself when I have a perfectly good desk at home to get my work done. My workout can wait a day when I’m feeling better. I’m no longer young and I need to treat myself better.

This “power through” mentality definitely came from my Dad who ran his own business. I don’t think I’ve seen him take a proper sick day and stay home from the office. I carried that mentality from my youth and would always power through my colds and go to school/work. Turns out I was probably that gross jerk getting everyone sick.

Vista acquires Smartsheet for $8.4B

The news of the morning is Vista and Blackstone’s acquisition of Smartsheet for $8.4B. I’ve only been able to read tidbits on Twitter, but it appears that the price was a 40% premium over what the stock was trading for which was a big surprise.

It appears that Vista and Blackstone both thought that Smartsheet was very undervalued. Some financial highlights I saw were that the company had a $1B of revenue growing at 20% with 80% gross margins. That’s a pretty healthy topline growth in a tough year for SaaS sales at their level of scale. The margins are in-line with top tier SaaS companies as well.

The big downside to Vista is that they have struggled to generate a profit which is probably why Vista and Blackstone are salivating right now at this acquisition. They probably saw a company that had a good product and good growth which they could improve in the coming years.

Probably more exciting for them is that they saw a very inefficient sales and marketing motion that was burning too much cash. Unfortunately, I’d imagine there will be a lot of people at the company that will have to move on.

On the surface, it seems like this is right up Vista and Blackstone’s alley and they could turn a big profit here in the next few years.

Embracing the chaos

I’ve had a pretty hectic day with a morning doctor’s appointment that led to me having to rush to a lunch event in Palo Alto. After the event, I had to rush back to the city for another meeting after sitting in traffic for over an hour.

It was pretty stressful with me using the time in the car to make calls to clients and having to spend a couple hours in the evening getting caught up with everything.

In the grand scheme of things, it wasn’t all that bad of a day but I had to really take a bit to decompress when I got home as I felt like I was hopping around a lot. Unfortunately for me, I know that this will become more or less my life with kids now. I have a new appreciation for what my Dad had to do as a single father and a business owner.

It’s really up to me at this point to have a better mentality at tackling the hectic schedule. I’m someone who is very organized and likes to be early to things as to not rush. These days when I’m running meeting to meeting really throw for me a loop and it’s something that I need to learn to embrace more.

Two months away

We’re officially under 2 months until the expected due date of the baby. While anything can happen, I expect things to get really crazy starting in a few weeks.

Sophia’s physical struggles have picked up significantly recently and will continue to get more difficult. The thought of having to pack a hospital bag and being on call 24/7 if anything happens is pretty crazy to think about it.

As for my social life, I had earmarked 2 months as really when I really have to slow things down. I have one personal trip to Seattle the weekend after next and then a work trip to New York. Besides that, I plan on being largely a homebody.

It’s not all so bad. I spent a lot of this weekend getting caught up on rest and just relaxing. My body and brain could definitely use a bit of quiet time before the baby gets here. I plan on taking most of the next two months to do just that.

Friday wrap-up

I’m absolutely exhausted from the week and day. I had hoped for a fairly easy Friday to cross off my checklist, but I unfortunately cursed myself and was subject to about 5 different work related things unexpectedly. It wasn’t all so bad as the outcome of today was a positive one as we made progress, but it was stressful to say the least jumping from one fire drill to another.

It wasn’t until about 3pm today that I caught some air. A 15 minute break turned into a 45 minutes nap as I fell asleep while laying down for a bit. I’m now back at it and hoping to wrap up my checklist in the next couple hours so I can spend Friday night with Sophia.

In the craziness of the week, I barely had time to think about the Fed cutting rates by 0.5%. It’s finally nice to see rates come down a bit from the highest level it’s been in 20 years. I’m no way near qualified even to fully discuss the consequences of cutting too fast, but I know as a consumer and investor, I’m glad to see some good news on the macro front.

Perhaps it may be time to start talking about refinancing my car loan. And hopefully this sets us up for a good 2025 IPO window.

Burn out at startups in 2024

I’ve been noticing that a lot of executives and employees at startups have been mentioning that they’re feeling really burnt out lately. It’s all anecdotal of course, but it feels like this year has been the breaking year for many folks.

Burn out is nothing new in the startup world. Startups are really fucking hard. You’re constantly chasing a moving goalpost target and there’s often no one to really help you out on the work. Unlike at large companies, vacations mean you’re often also working because there’s not enough to cover you.

But if we think about 2024, I do think it makes sense that a lot more startup employees are feeling the burn.

For one, the last 3 years have been tough in the tech and startup world. Companies are spending less. Growth rates at startups have gone down and employees have to work harder to generate more revenue.

Startup valuations have also declined and there’s a mental aspect of seeing your hard work lose value. The IPO window is closed and the demands for an exit have gone up so employees aren’t seeing the liquidity that they once had hoped for to justify their work.

In addition, head count at startups have gone down as they aim to get profitable. There’s just simply more work per employee than there was in 2021.

The optimistic view is that the market will improve and companies are much more employee-friendly when it comes to burn out than they were many years ago. There will also be a hard-charging mentality when you’re at a fast growing startup and that won’t go away.

I’m curious how companies will adapt to employee burn out going forward. For myself, it’s yet another reminder that I need to take care of myself and my health first.

Practice, practice, practice

I took the morning off to attend a golf event with one of our partners that we’ve worked with for a few years. At this point, they’re more friends than business partners and it was great catching up with them.

They branched out from their day jobs almost 10 years ago and started their own firm and have been crushing it lately. They’re smart and entrepreneurial folks. They talk about how it wasn’t always easy for them. They tried a whole bunch of things that failed and went through a lot of growing pains. But that’s what starting a company is like.

After 4 years of golfing, my game is finally at a great point. It wasn’t easy and there were a lot of painful months and years. At many points, I thought that I would never get even decent at golf. I stuck with it and practiced as much as I could while also building a startup.

I’m glad I did as my game is finally starting to come around. I feel very comfortable on the course nowadays. I can confidently go up to a tee box and the ball is finally starting to go where I want it to. It’s not perfect and golf is a game of imperfection, but I’m no longer a hack on the course.

It’s good to see my years of practice finally paying off. There’ll be more setbacks in the future. That’s golf. But I have a swing for the first time ever. It feels similar to that point at a startup where you start to feel just a tad bit more comfortable that things will work out. It feels great.