MobCon

A collection of visual wonders - both old and new (Yes. We updated the website) Come and take a look... tymbals.com

@scottastevenson There's a lot of other creative ways this is being reported.. I have stopped looking at headline number for this reason writing.nikunjk.com/p/liars-valuat…

@sandykory Alas the framing of “sophisticated numbers-driven investor” Is not something one normally associates with operators of the world best lifestyle business (think Venture Capital). Indeed the odds of them beating the index are higher than the odds of them investing in a startup

The average VC might invest in roughly 1 of every 50 companies they meet with. For growth equity firms, that number is closer to 1 in 1,000. The dynamics of VC vs growth equity often bewilder founders. That's not accidental. To understand why, it helps to clarify what these firms actually are. VCs traditionally back early-stage startups with high technical risk. They're unprofitable for years and usually fail, but can create huge returns when successful. Its opposite is private equity, where investors back mature, stable companies for shorter periods and use financial engineering to juice returns. Between them sits growth equity. They look for companies with strong growth and proven unit economics. If the VC targets a 1000x return over 10-15 years and the PE 3x over 3, the growth equity investor might target 10x over 5. Historically, startups needed VCs to survive. In contrast, growth equity investors realized their best investments were in companies that didn't need any money. Thus, unlike the history of sales dynamics in VC, where startups sold to VCs, early growth equity investors such as Summit and TA found sales execution key to generating alpha. These days, the growth equity firm that's most active in reaching out to Horizon's portfolio is Insight. I recently chuckled when I heard one of Insight's founders on a VC podcast boasting that "we've really built one of the great sourcing engines of the world" and that "to get through the gauntlet of Insight's due diligence" is "a pretty big accomplishment." It's true: Insight and their growth equity peers, such as Left Lane and Lead Edge, do far more due diligence than typical VCs. For every company that receives growth equity investment, 100s go through deep due diligence and don't make it "through the gauntlet." But why would so many companies share their information with Insight & their peers when the chances of investment are so slim? They are masters at the art of seducing founders. They hire young, hungry ex-bankers and consultants, train them in outbound sales, and have them reach out to every promising company in a given space. They get smart on the sector and make founders feel like they're being pursued--even when they're not. Now, I want to be clear that I don't think this is unethical. I understand the business model, and when these firms do invest, founders generally like working with them. The problem is the information asymmetry it creates. For founders who don't know they're 1 in 1,000, the experience is a distraction at best and genuinely demoralizing at worst. So, if you're going to talk to these firms—which are so good enough at getting in front of founders that you probably will—go in with the right frame. They're using you to get smart on your space, so use them back. Get their analysis and understand what a sophisticated numbers-driven investor sees in your business. Just don't mistake the meeting (and the likely follow-up texts, etc) for a relationship.

@deedydas @hnshah VC has rarely beaten passive in the 21st Century so your observations are better understood as a retrospective rather than a forecast The problem with SaaS has always been CAC & the noise around distribution these days speaks more to the speed of VC learnings than market changes

Founders should know the sobering reality for enterprise SaaS venture funding today. Here’s the math. Say you’re a $1M ARR company raising a Series A with a classic 33222 growth expectation. That gets you to $72M in 5yrs and say $250M in 8yrs. By then you’re usually growing <<50% and the public markets might give you a 7x or $1.75B, if you can even go public. If you get $10M at $100M post-money for the A, that’s a 17.5x and maybe 10x after dilution. That would be ~33% IRR and $10M invested becomes $100M. In the venture model, you have to outperform the SP500 which is 15% and a Google which is 25%. Here, with perfect execution, a lot of work, time and risk, you get 33% in a near optimal (95 percentile) case. And usually, you expect 7/10 things to not work out: execution risk, market size, competition. Plus, this math is for a Series A. You need investors to underwrite even more growth at the B / C / D. It’s really hard to see this sort of deal driving fund returns. Now, of course, there’s tons of caveats. You could pay less than $100M post, try to grow faster, do pro rata to avoid dilution, stay private longer etc, but the point remains. There might be exceptional growth stories like Databricks, Snowflake and Applied Intuition, but most deals look like what I described. In a previous time, SaaS multiples were higher in public (20x), entry valuations were lower ($30M) and the money you needed to hire talent was lower ($150k). You could get 100% IRR before. Now, it’s harder than ever to justify investing here, unless they are true outliers.

@HarryStebbings This all very exciting but surely the first question you should ask any top tier VC is: when was the last time they beat investing in the market index over a 10-15 yr period? Which funds beat passive & why? What are the lessons they learnt? & what are they now doing differently?

“We are not allowed to believe in luck at a16z. We must see every deal in our domain. We must win 100% of them. I have not lost a deal in 6 years”. It has never been a more uncertain time to be an investor. - Is SaaS dead? - Do margins matter? - Is triple, triple, double, double dead? - Will foundation models eat the apps layer? Spotify 👉 open.spotify.com/episode/3dG8Mt… Youtube 👉 youtu.be/Aq0JSbuIppQ Apple Podcasts 👉 podcasts.apple.com/us/podcast/20v… My 8 takeaways with @illscience 👇 Timestamps: 00:00 Intro 00:56 Why building an AI company requires being in San Francisco 04:01 The "SaaS Apocalypse" myth: Why "vibe coding" everything is a lie 05:18 How AI agents are finally breaking the lock-in of legacy software providers 07:41 Incumbents vs. Startups: Who actually wins the AI distribution war? 12:28 Why the developer tool market looks more like Cloud than Uber and Lyft 20:18 The death of the Chatbox? Why browse-based interfaces are still preferable 25:32 Why power users are 10x more valuable in the age of AI consumption 26:40 Do margins matter in a world of AI? 28:21 Why we are definitively not in an AI bubble right now 31:07 Why the Legal & Customer Support industries will have dozens of winners 37:42 Lessons from Marc Andreessen: Why the "quality of being right" supersedes process 42:59 Is "Triple, Triple, Double, Double" dead? 57:34 Open vs Closed Source 01:02:58 Is Kingmaking Real? 01:09:10 Quick-Fire Round 01:12:51 The a16z Playbook: How to win 100% of the deals you chase

@ianmiles The line ‘turns people who are good at something into people who are very good’ is probably the best explanation yet of why AI will have very little impact on VC portfolio returns

Marc Andreessen: AI isn’t just about job losses or job gains. At the individual level, it turns people who are good at something into people who are very good—and the best into something else entirely. This is the real shift parents should be thinking about. We have a 10-year-old, we homeschool, and we think about this a lot. AI is a tool that raises the average for everyone—but it also creates the super-empowered individual who can go far beyond average. If you’re already good at writing, coding, designing, or creating—and you use AI—you don’t get a little better. You get dramatically better. The gap between “good” and “great” is about to explode. What we’re seeing right now in coding is wild. Really great coders aren’t twice as productive anymore—they’re saying they’re 10x better than they used to be. That’s AI as leverage. At the N=1 level—the individual kid—the goal isn’t chasing “safe careers.” It’s creating a super-empowered person who can use AI to amplify their talent beyond anything we’ve seen before.

@dunkhippo33 The problem with SaaS was self evident when Salesforce IPO’d The model basically subsidises users at the expense of future earnings. tymbals.com/splash/zipflue…

@excapite The multiples are higher on SaaS for sure. But even if you were bootstrapping the business, SaaS still gives you that predictability.

As a founder, I used to think that SaaS revenue was overrated. Why did VCs care so much about that? Especially when it didn't make sense per the business More >>

@MartinGTobias Customers

Founders: Other than money, what do you hope your investors give you ?

@herrmanndigital The big fix Meta needs to fix is the arb on cheap reach has disappeared and isn’t coming back The other is people are increasingly spending more time with AI powered competitors that with aging social media platforms and (in or likely hood they won’t be coming back)

Help me help you on Meta! Right now the big fix we need Meta to handle right now are: 1. Ad budget pacing is broken. If you experience this please post below this thread. I’m talking ads are spending entire budgets in 1 hr and we see delivery swings by over 80% a day. 2. Flexible ads are not displaying correctly. Again, if you experience this please post below. Please show me what you’re experiencing as this thread is being seen by Meta leadership. Thank you

@herrmanndigital The answer to your question is is more likely yes yes. Yes there is in all probability a problem with bot traffic on meta platforms (but until the platform is regulated, audited and demonopolised…) Yes the is in all probability a problem with Shopify’s data handling practices

This garnered a lot of convo. Yes, we all know Meta has bot traffic. It never is more than 5-8% of total traffic. However, according to Shopify’s new bot or human traffic metric we are seeing this increase to 20-30% of total Meta traffic while all over social networks are barely a blip. Either there is a major bot issue on Meta over the last month or the Shopify metric is wrong. This isn’t just one or two sites. It’s a big batch of sites I have access to that show this.

@_agarner What was the close rate? Without the close rate the numbers are interesting but really don’t tell you much about the quality of the targeting E.g. if the close rate was 1 in 10 qualified lead then these numbers are no better than cold calling

The Tl;dr is both worked I booked more meetings with ads But, the meetings booked from cold email were higher quality

I ran an experiment: Spent $20k on Facebook ads and $20k on cold email. Here's what happened:

@tomfgoodwin It’s designed to obfuscate. It’s designed to make the ad buyer think they are winning even when they are losing. It is basically a derivative of the casino slots. A perfect piece of ugly design addiction offering just enough hints of winning to make you roll that dice again

@excapite Their platform to buy ads is an absolute disaster. Don't get me wrong, millions of people use it quite happily, the data they have, the results they get, all appear to be magnificent , but that doesn't mean it's Well designed or conceived.

Meta haven’t innovated in a useful way for 10 years. The $100bn - $500bn they spent on the metaverse and AI is a joke. They have billions of users and can print money selling ads. should have just been a cash cow for 25 years and made no attempt to chase the limelight

@dunkhippo33 Idk it took OpenAI (what?) 7 years before they launched version 3.5 with the ‘kids are cheating at their homework’ PR campaign. Before that hardly anybody had heard of them. Never mind used their product. Now this tech tortoise is marketed are fastest growing tech in history.

Startup competition is so fierce that I truly believe that in order to win today you also have to win on brand and content. Gone are the days when you can quietly build.

@codyplof It was a great strategy in 2022 when OpenAI (after shooting blanks for more than half a decade) ran ‘the kids are cheating at their homework’ PR campaign. They are now worth what? $500 Billion? PR is THE Silicon Valley Growth Playbook 101

@excapite That’s a good strategy in 2012

You are Director of Growth. You get 3 roles. What are the first 3 hires for your DTC brand? Mine are: - Influencer Director/ Manager - Creator/ Producer - Edition/ Designer hybrid Debate

@codyplof The correct answer is of course Facebook didn’t spend a dime on advertising and nor should you Your first hire is a PR manager and two assistants excapite.blogspot.com/2013/12/snapch…

@excapite Wrong answers

@MartinGTobias Then I assume you only invest in who you know - or at least those known to your network Or, are you that rare thing? The exception to the rule. The black sheep of the VC herd who enthusiastically throws money at cold outreach… the blank canvas

@excapite I invest in what I don’t understand all the time. Ha.

This email from a VC friend sums up the VC dilemma today: “Try to find more unique ideas/bold bets. We're seeing 10+ AI sw things for most categories, makes it very hard.” We have capital to deploy but when everyone is building the same thing it is very hard to get excited and want to fund a war of attrition. One way through is to build in a vertical you know well (your unique edge) that few are building for. Vertical market software. We love vertical markets. If building that DMs open.

@codyplof What’s the ‘kiss the pixel’ rate across your paid media channels? as every industry insider knows, the gap between CTR & eCTR is where the platforms eat your margins The reason being Meta & Google haven’t offered cheap reach in years Paying a premium for garbage is expensive