How to Help Your Customer Reach Happily Ever After: A Princess Bride Quest

We’ll venture through four stages: Awareness, Consideration, Decision, and Loyalty / Advocacy and examine how to save customers from fire swamps that slow them down along the way. 

Whether you’re just starting to sell or you’re deep in the weeds of growth marketing, understanding your customer’s journey from awareness to rabid fandom is essential. Founders, let’s map your customer’s epic quest inspired by the timeless classic, The Princess Bride. We’ll venture through four stages: Awareness, Consideration, Decision, and Loyalty / Advocacy and examine how to save customers from fire swamps that slow them down along the way. 

Scaling the Cliffs of Awareness

To get to happily ever after, customers must first scale the Cliffs of Awareness. So, how do you make your potential customers aware of your offering?

Riddle me this: 

I am what you seek to spread the word,
A means to make your product heard.
To solve the puzzle, it’s plain to see,
Experimentation is the key.

Hint hint: there are 19 different channels that can be employed to build awareness, but only 1-2 will help your customers find you. The only way to find these channels is to test. Examples of these channels include: 

Once you identify your top performing channel, monitor its performance (e.g., how many clicks did your ad campaign get?) and test different messaging. Guide your customers, like Fezzik carrying his companions up the rocky cliffs, safely to your offering. 

Wading Through the Fire Swamp of Consideration

After your customers ascend the Cliffs of Awareness, they face a deluge of choices, like Westley and Buttercup navigating the perilous Fire Swamp.

As they research and evaluate their options, aid them in their quest by following these steps:

  1. Understand their priorities. (e.g., choosing between Apple iPhone and the Samsung Galaxy, the customer might consider price, features, design, and/or brand reputation)
  2. Create buyer-centric content: Develop content that addresses your audience’s specific needs at each stage of the buyer’s journey. (e.g., Zillow’s comprehensive home buying guides.)
  3. Leverage lead nurturing: Use email marketing, retargeting ads, and personalized content to keep leads engaged and guide them towards a decision. (e.g., Everlane’s targeted promotions.)

Empathize with your customer’s pain points and fears, and create content and testimonials that showcase your brand’s unique qualities. (e.g., Airbnb’s user-generated reviews and experiences.)

Are customers getting past the Cliffs of Awareness but struggling to make it past the Fire Swamp of  Consideration?  The only way to know is to measure and test messaging! (e.g., how many people clicked on your retargeting ads)

The Pit of Purchase Decisions 

In the decision stage, customers have chosen a solution and are ready to buy. If your purchasing  process is as torturous as the Pit of Despair, your customers will go no further and peril. 

If your customers are emerging victorious from the Fire Swamp of Consideration but dropping off in the Pit of Purchase Decisions (e.g., abandoned cart), attempt to save them just as Miracle Max saved Westley when he was “mostly dead”. Here are some tricks to try: 

  • Count the clicks: Know how many actions it takes for the customer to buy and make it as easy as humanly possible (e.g., Amazon’s one-click purchase; guest checkout; credit card autofill and Apple Pay)
  • Email your customers to bring them back to their abandoned purchase. You can even deploy product promotions (e.g., “Sign up now and save 30%”) to sweeten the deal. 
  • Re-examine your demo or sales script. Have an experienced sales person sit in on a closing call or review emails sent in the closing process, implement the feedback and test the new messaging.  

Happily Ever After: Loyalty and Advocacy

Congratulations, you’ve won the battle, but the journey is far from over. You don’t want a fake, short relationship (Boo!) like that of the King and Princess. Create a true and everlasting love between your customers and company like that of Westley and Princess Buttercup. 

Here are some strategies to foster loyalty:

  1. Exceed customer expectations: Go above and beyond to deliver a memorable experience that surpasses their expectations. (e.g., Chewy delivers flowers when a pet passes away and has an exceptional return policy)
  2. Personalize customer interactions: Use data insights to tailor your marketing efforts, offers, and communications, creating a bespoke experience for each customer. (e.g., Spotify Wrapped)
  3. Implement a loyalty program: Reward loyal customers with incentives such as discounts, exclusive offers, or early access to new products. (e.g., Starbucks Rewards program.)
  4. Regularly request feedback: Actively seek customer feedback and demonstrate your commitment to improving their experience by implementing frequently mentioned suggestions. 

When you show your customers love, advocacy becomes more natural. 

However,  if customers need a nudge to shout their love from rooftops, here’s a trick: 

Implement a referral program that rewards customers for sharing their positive experiences with friends and family. (e.g., Scott’s Cheap Flights gives users a month of free Premium service when their friends sign up or Dropbox’s famously good referral program that took them from 100,000 to 4,000,000 users in 15 months.)

Sharing the Storybook

As we close the storybook on our Princess Bride-inspired customer journey, remember the lessons learned from Westley, Buttercup, and their friends. From the rocky Cliffs of Awareness to the triumphant Happily Ever After, this quest is yours to write. And when you help your customers every step of the way, they will live another day to pass along the story of the great quest. After all, the best person to help a new customer up the Cliffs of Awareness is a friend who has emerged triumphant. 

Why Invest in a Sharia Compliant VC Fund

Shariah compliant VC funds provide proven economic benefits to LPs, GPs and portfolio companies including higher rates of return, diversity, less volatility in portfolio returns, and better alignment with environmental and social good.

Last fall, Oksana and I met with hundreds of prospective Limited Partners for our new fund. Among those who we realized had the best fit, were a significant number of Muslim investors, and they had some great ideas about how we could improve our fund performance by becoming a Shariah compliant fund.

Investing in Shariah compliant funds has gained popularity in recent years, as investors seek to align their investments with their values and beliefs. Shariah compliant funds follow Islamic principles (but are not limited to Islamic investors) and avoid investments in sectors such as alcohol, tobacco, gambling, and pornography.

Given our unadulterated devotion to ethically improving returns for LPs, we did our research and discovered that Shariah compliance is a fast growing investment market and provides many proven economic benefits to LPs, GPs and portfolio companies, including: higher rates of return, diversity, less volatility in portfolio returns, and better alignment with environmental and social good.

According to a report by the State of the Global Islamic Economy (SGIE) in 2020, the assets under management (AUM) of Shariah compliant funds had grown from $58 billion in 2009 to $121 billion in 2019, representing a compound annual growth rate (CAGR) of 6.7%. The report also projected that the global AUM of Shariah compliant funds would reach $174 billion by 2023. This is pretty impressive when you consider that CAGR is almost double traditional fund inflows.

On the economic benefits, the first advantage of investing in Shariah compliant VC funds is that they offer the potential for higher returns than traditional VC funds. A study by the Islamic Development Bank in 2015 found that the average annual return of Shariah compliant VC funds was 16%, compared to 13% for non-Shariah compliant VC funds. The study also found that Shariah compliant VC funds had a higher success rate in exiting their investments, with 78% of their investments successfully exiting, compared to 62% for non-Shariah compliant VC funds.

Secondly, Shariah compliant VC funds offer investors a way to diversify their portfolios. These funds typically invest in startups that are aligned with Islamic principles, which means they are likely to invest in a range of sectors such as healthcare, technology, and renewable energy. A study by the University of Maryland in 2015 found that Shariah compliant funds were more diversified than non-Shariah compliant funds, which reduced the overall risk of the portfolio. This means that investors can benefit from the potential for high returns from investing in startups, while also reducing the risk of their overall portfolio by diversifying.

Diversity leads to less volatility, our third area of economic benefits. In a study by Khediri and Charfeddine (2016) found that Shariah compliant funds exhibit lower volatility due to the diversification of their portfolios. The study analyzed the performance of Shariah compliant and conventional mutual funds in the Gulf Cooperation Council (GCC) countries and found that Shariah compliant funds had lower levels of volatility. The authors attributed this to the diversified nature of Shariah compliant funds.

Shariah fund reduced volatility is not only from their diversity, but is hard-wired into their selection process. According to a study by El-Gamal et al. (2017) found that the screening process used by Shariah compliant funds tends to exclude companies that are highly leveraged, which can reduce the risk of investment losses in volatile market conditions. The authors also noted that Shariah compliant funds tend to focus on long-term investments, which can lead to a more stable investment portfolio. Holy alpha!

Fourth, investing in Shariah compliant VC funds can provide investors with a way to make socially responsible investments. Shariah compliant funds avoid investing in sectors that are deemed harmful to society or the environment, such as alcohol and tobacco. This means that investors can align their investments with their values and beliefs, while also potentially generating higher returns. A study by the Harvard Business Review in 2017 found that companies that focus on social and environmental issues tend to outperform those that do not, which suggests that investing in socially responsible startups can lead to higher returns.

And as a secret bonus, Shariah compliant VC funds offer investors access to investment opportunities that are not available through traditional VC funds. These funds tend to invest in startups that are based in emerging markets, such as Asia and the Middle East, which have high growth potential but may be overlooked by traditional VC funds. A study by the University of Cambridge in 2017 found that Islamic finance institutions were more likely to invest in small and medium-sized enterprises (SMEs) than conventional finance institutions, which suggests that Shariah compliant VC funds may be more likely to invest in startups that are in the early stages of development and have higher growth potential to late-stage VC funds.

So yeah, we went all-in for Sharia compliance with zero regrets! Yeah, we want to generate higher returns with greater diversification, less volatility, invest in a sustainable and socially responsible manner, provide access to unique investment opportunities, and crush benchmarks for top decile funds. While there is no guarantee of returns with any investment, the academic research and published studies suggest that investing in Shariah compliant VC funds can be a viable option to make all our GP dreams come true.

If you’d like to learn more about Shariah compliance and VC investing, here’s links to the articles we mentioned above, and a few more we found interesting. Enjoy!

  1. Report by the State of the Global Islamic Economy (SGIE) in 2020:
  2. Study by El-Gamal et al. (2017) on corporate governance in Islamic finance:
  3. Study by Khediri and Charfeddine (2016) on Shariah compliant funds in GCC countries:
  4. Study by Chaieb and Khediri (2018) on performance and volatility of Islamic and conventional mutual funds in Tunisia:
  5. Article by Islamic Finance News on the performance of Shariah compliant funds:
  6. Report by PwC on the growth of Islamic finance:
  7. Report by EY on the outlook for Islamic finance:

Everyone Tells Me My Product Is Awesome, So Why Don’t They Buy It?

Polite people don’t want to tell you, “your baby is ugly.”

Many early stage entrepreneurs are truly baffled by the fact they get wonderful feedback from prospective clients, and may even have some unpaid pilots, but when asked to buy, customer silence is soul-crushing. Said one founder, “literally, everyone I show this to tells me what I’m building is awesome and they love it, but then I ask them to buy it and they go dark.”

If this is you, I’m about to reveal a shocking truth: they’re lying to you.

Polite people don’t want to tell you, “your baby is ugly.” So, humans tell white lies and say, “that is amazing.” Amazing, awesome, great, and beautiful are perfect words. They, and their many friends, convey a sense of wonder and accomplishment that doesn’t convey the fact that the person has zero need for what you’ve built.

If you want to get past platitudes, stop showing people your product and start asking them smart questions:

  1. How do you currently solve this problem?
  2. Why do you do it this way?
  3. Would you change anything about this?
  4. How would changing that help you?
  5. Will you walk me through how that happened last time?
  6. Who pays for this and why?
  7. Is there anything else I should be asking to understand this better?
  8. May I observe how you work to understand what you do better?
  9. Who else should I be talking to to learn about this?

If you have a cunning grasp for the obvious, you’ll notice that none of these questions are about your product/service or introducing it in any way. That is precisely the point. If you want to sell something, stop selling and start listening.

Studies show that if you allow your customer to talk around 60% of the time on a call, you have the highest probability of success. I generally recommend an 80-20 ratio, since I find most people don’t realize how much they are talking (myself included), and by targeting 20%, they end up closer to 40%.

When you ask questions about how a customer solves a problem and why they do it, you’ll gain insight on their interest and develop a better solution. Don’t worry, they’ll get to your solution soon enough. Focus on them first, and the sales will follow.

Diversity Wins

Every VC fund needs a token, white, male, general partner.

Sputnik ATX does mark-to-market portfolio updates quarterly and the results thus far have been fantastic (89%IRR, not that I’m bragging). Our goal is to help people reach their full potential, and we believe that IRR is a key outcome to measure if we’re doing our jobs well. Diversity is another measure of that success. How are we doing?

Two metrics we’re just as proud to cite: over 40% of our portfolio companies have a female founder, and over 20% have a black founder. How do we do it? We joke among our team that our secret to success is maintaining a token, white, male, general partner.

Yes, I’m the only white dude.

The fact that we have only one white male on our team gives us an unfair advantage. I highly suggest more VCs try this approach. If you’re a general partner (GP) reading this article, please consider ways to get your own token, white, male GP and do so NOW.

What we’ve learned at Sputnik ATX is that when diverse people (education, culture, work experience, ethnicity, gender, etc) all have a say in decisions, we make FAR better decisions. There is copious research to support me on this (check out this HBR article.).

We’re well past the time to continue to allocate capital to homogeneous white dudes and yet, the flow of capital to these funds is shockingly disproportionate and persists. It’s time for lip service to end, and action to begin.

At the risk of alienating allocators looking at our next raise, I just have to say to every fund of fund manager and pension fund manager, please stop giving money to funds where the GPs all look like me. It’s hurting your returns, its skewing investment away from quality founders, its exacerbating US economic apartheid, and preventing everyone from reaching their full potential.

Note: I highly suggest reading the links in this article, and the book on US economic apartheid is especially interesting. Also, after writing this article, Sputnik ATX shockingly found another white guy who joined our team as a temp this summer. Congrats Matt, you beat the odds at our fund. Let’s not get too comfortable. Our investor returns depend on it.

De-Risk Your Startup

Let’s take a side eye to the five general categories of risk that can doom your start-up and how you can best avoid them…

There are literally a million things that can kill your startup. Worrying about all of them will likely drive you nuts, and distract you from the “holes” right in front of you. So with an eye on the hole right in front of you, let’s take a side eye to the five general categories of risk that can doom your start-up and how you can best avoid them: product risk, market risk, financial risk, team risk, and execution risk.

Product risk is what most early stage founders and investors most commonly fail to measure. It is best framed in the economic measure of consumer surplus (the gospel of which I am an avid disciple). Are you producing something people want because the cost of acquiring it is far less than the value it provides to the user? To answer this question, you’ll need to listen (yes, stop talking) to a LOT of customers. Ask them how they do things, observe how they solve their needs. Question the root cause of those needs. Seek first to understand them before you begin showing off your so-called solution. When you can make something they actually want really badly for a cost far below what they are willing to pay, you have product fit.

Market risks that can doom your startup are most often found in distribution problems, market size, and competition/substitutes. Even if you have a product with massive consumer surplus for a party of one, you’ll never have a massive business if the total size of the market is minuscule, you can’t find a channel to get it to market, or if there is a competing solution that is half your cost. Most companies die because they fail to solve market risk by building effective sales channels. Too often VCs cite a company with a lack of product-market fit when in reality, the company has a great product and zero marketing. To solve this, focus on how you can make purchase decisions easy: convenient location of sale, ease of technology, elegant UI, one-click buy, marketing channel exploration, CAC/LTV ratios, etc. This is why we advocate for maker-founders to seek out help from proven marketing and sales guru investors who put in money and time into your company rather than advisors who both those things out of your startup.

Financial risk becomes a problem when the fundamental costs of doing business generate insufficient returns to sustain your business. Some are short term, like making payroll next week if your runway is going away. Some are longer term, like high upfront capital costs from inventory or equipment required to make or distribute your product/service. The key here is to keep a tight lid on costs and try to get profitable as fast as you can. Avoid splurging on that fancy office when a shabby one will do just fine (and use the savings to add the additional sales person who will help resolve this problem). If your company has significant upfront costs, you’ll need to carefully manage inventory levels and development expenses so that you don’t run out of runway before you’re ready to take off. Too often I hear founders complain that their company failed because they couldn’t get funding, when really, they couldn’t find a way to develop the product and market fit with the resources they had, when it was entirely possible to do so. They just failed to have a financial plan to match their access to resources. Yes, it does take longer to build a company without funding from VCs, and yes, we often don’t understand what we’re doing. So if you’re the smart founder who does “get it”, live within your means to do so.

Team risk is why most seed stage companies with $50k-$100k MRR fail to raise their series A. No one is going to drop $3-5mm on a company that, if the founder is hit by a bus tomorrow, blows into dust with them. Nor will a VC put real money into a team that has only product skills. If you want money to scale, you need to show that you can build a team that is better than the founder and has complete skills (product, marketing, sales, customer support, and finance). This means you not only need a team, but a team that says, “we’ve got this”. Hire folks who’ve done it before or have such impeccable academic qualifications that their abilities are not in doubt. Hire away a key person from a HOT growth company who has experience with the growth challenges you face right in front of you (note: Google is not a hot growth company, it is a stale corporate machine).

Execution risk will be the subject of a post later this month, but to summarize it best, it is when you get to $3mm in annual revenue and think you’ve “made it” when really, you haven’t even started the real race yet. The ability of a company to grow quickly under pressure, hire the right people, put in place proper culture, incentives, and relationships so that the company can prosper and run full speed is far, far harder than anyone thinks. Execution risk is the killer of would-be unicorns and turns them into someone’e distressed asset purchase or family business. Your ability to create a culture of performance aligned with your customers needs and economic value model will be the key to getting things done as you scale. If this is your start-up, DM me, and we’ll talk further. A paragraph here just doesn’t do that sentence justice.

So, overall, start thinking about how you can de-risk your startup by looking at these risks and how your daily activities, weekly and monthly goals help eliminate them as best possible. You’ll never get rid of them, but you can sure sleep better at night if you do.

Getting Back to Work In the Post-COVID Era

It is humbling to see how a tiny virus can reveal the best and worst of humans.

I hope that when you’re reading this, you and your kick-butt start-up team are fully vaccinated, as we are, and heading back to take over the world. We love ya!

With all the progress we’ve made, we’re announcing that we will return to in-person meetings when our next cohort begins. This assumes that between now and then, our steady COVID case decline continues, fingers crossed.

Science has made it possible for us to safely meet in-person for our next cohort that begins in late July. I can not express the depth of gratitude I feel, and absolute thanks for all the health care workers, vaccine developers and researchers who saved our collective bacon.

We are requiring all funded cohort members to be fully vaccinated and attend in person, unless they have a medical exception. We love science. We expect you to love your neighbor and do the right thing with the vaccine.

That may seem harsh to some people; however, we learned a lot during the pandemic about ourselves, our portfolio, and the importance of communities working together. Over the long-term, success comes when we collectively make selfless choices to help one another and show love for neighbors over ourselves.

It is not about your rights. It is not about gas lighting me with some twisted “freedom” excuse. It is about making a scientific choice to protect the people we love, and the communities we live in.

There are legitimately people who can not get vaccinated because it would cause grave harm to their bodies. Please love these people enough to get vaccinated. It is how we keep them safe from COVID.

Patriots give their lives to defend those who can not defend themselves. Let’s be patriotic for humanity, and get immunized.

It is humbling to see how a tiny virus can reveal the best and worst of humans. We want to keep working with the best, for the best.

We’re back from Zoom Austin. See you this summer.

Six Software Services Every Start Up Needs Now

Let the robots optimize it for you at internet scale…

There are generally two things that start up companies need to get right: formation and sales. We’ve seen companies’ fundraising screech to a halt when formation is botched, and nothing kills a start up faster than making something no one wants. So, here are six software tools/services that you really need to know about so you can get these things right.

  1. Clerky – If there is any remote possibility that you will seek venture capital to fund your company, then you must be a Delaware C corporation. Your headquarters can be anywhere you want, just incorporate in Delaware. This is common. This is easy. Clerky does it for you, for a subscription fee, and takes care of annual filings, etc., . More so, it will correctly draft your founding documents, and help you avoid tens of thousands in legal fees. Clerky has legal tutorials and help so that you understand what all this stuff is. Heck, it evens fills out your 83(b) paperwork for you. If you don’t know 83(b), well, get over to Clerky right now. Your pre-IPO attorney’s will thank you.
  2. Wave – Accounting sucks for most founders. Quicken is no longer easy to use, and makes people cry. Wave is free, automatically does double-entry accounting in the background so you don’t even have to know what this is, and will do your payroll for you also (for a nominal fee). It integrates with your bank so you don’t have to do a whole lot other than smile and click send when VCs ask for your accounting. Proper accounting can not be easier than using Wave, period. And yeah, it’s really free, the company has been around ten years, yada, yada, yada…
  3. Sofos– After you’ve built your MVP and figured out your marketing/product development process, finding investors and customers is pretty much the crappiest part of getting off the ground. First time founders focus on product, second time around you realize that sales matter more. is like hiring a sales monster to test out every possible permutation of customer and investor opportunity. Starting at $300 a month (the max primo service is around $1,000 a month) it will connect to your LinkedIn network and, like 1980’s Mike Tyson on Leon Spinks, will work over your extended network to set up sales/investors. They even include copy writing help to craft campaign message flows for maximum impact. If you opt for the primo package it includes a BDR who will schedule all sales and investor calls for you so you’ll just spend your days selling and talking to investors back to back.
  4. Growth Channel – Marketing agencies are expensive, and mortals have a limited ability to test out every permutation of digital marketing to optimize your company. Growth Channel uses AI to test millions of permutations of digital marketing channels to optimize the best chance for your success. Let’s hear it for the robot marketing apocalypse! Basic help starts at $20 a month (AI doesn’t need much food or shelter) but for the full $250, you get so much additional marketing insight power, it is a no-brainer. With everything from psychographic profiles of your customers to optimization strategies for the big five socials, you get a full service digital agency on a shoestring budget. So, you can spend the next 40 hours trying to figure out where to best place that new campaign and who to target, or just sign up for their service and let the robots optimize it for you at internet scale. Yep, easy choice.
  5. Foundersuite – While Sofos (above) will animalize your LinkedIn network to find and qualify investors, Foundersuite will help you to expand beyond that network and, most importantly, help you structure your IR function early with monthly investor letter update templates and tracking processes that make you look like a Sand Hill Road rock star even if you’re just working from Smallville. More so, they have a whole suite of discount services, templates for documents you’ll need (HR, finance, etc.), as well as a massive database of angels, accelerators and funds that want to be contacted by you now. Their dashboards are clean, easy to use, and informative when tracking large numbers of contacts and new introductions.
  6. Hubspot – If you’ve been reading this list closely and already had a startup, then you’re thinking, “hey, where’s Hubspot?” Yes, closing out our list is the titan of CRMs that does it all. Need a landing page fully integrated into everything else in your company? Yep, got that. Need to track all correspondence across your team with customers, investors and advisors? Yep, got that. Email campaign support? Yes, yes, yes! This is the Swiss army knife of CRMs and will help you to not only maintain good communications, but includes powerful tools to grow your sales dramatically, testing and tracking your efforts with excellent data capture and visualization that is simple, powerful and actionable. Pricing varies (they may even give you 3 months free if you’re a start up in a partner program) but starts at $40 a month for most companies.

So, get out there and start leveraging tools to incorporate correctly, grow insanely fast, and track metrics that matter. Software can be a powerful force multiplier when overcoming inertia and help spin the flywheel of success faster.

Donald Trump is Neville Chamberlain in the War Against COVID-19

It’s time America unites to fight our common enemy instead of one another.

At the dawn of World War II as Hitler rose to power and started militarizing Nazi Germany, UK Prime Minister, Neville Chamberlain, cut defense spending and engaged in a strategy of placating evil. Sure, historians debate the full extent of Chamberlain’s lack of vision, but his all but flat-out ignoring the threat of Hitler didn’t make the war go away. Today, Chamberlain is regarded as one of the worst PMs in UK history, and one of the leading factors no one checked Hitler’s rise to power earlier.

Enter COVID-19, and US President Donald Trump. We have a new invasion, and in the first year, it will likely kill over 200,000 Americans. World War II took the lives of just over 400,000 Americans, over a period of four years. In short, the war against COVID-19 is deadlier than World War II in its ability to kill Americans faster. And yet, here is the President of the United States, at first denying the risk, then when obvious wearing no mask, ordering testing to slow down, holding massive rallys-cum-super-spreader events, and asking people to ignore the obvious: we are at war. Neville Chamberlain couldn’t have done it better, I think Trump is using his playbook.

When Imperial Japan attacked the United States, a draft card was a sign of patriotism. Many courageous youth even lied about their age and health conditions to get into the fight. Healthy and able Americas were united in their desire to sacrifice whatever was required to protect those who couldn’t fight: E pluribus unum. Presidents and Prime Ministers of Allied forces asked for sacrifice, and a willing country united against a common enemy with patriotic ferver.

Back to COVID-19. Wearing a face mask is the draft card of this war. True patriots wear a face mask to protect Americans who can not protect themselves. Strong leaders care for those who are at risk, and many patriotic Americans wear masks in the great American tradition of doing whatever is required to protect those we love.

Sadly, despots and tyrants use propoganda at times of national crisis in an attempt to aggregate their power. The love of power, and the selfish exercise of power to harm the public good, is why our founding fathers created our democratic system. So that once every four years, we vote and make sure that our country is led by someone who puts others above themselves, in the best traditions of America.

Bring on America’s Winston Churchill. It’s time America unites to fight our common enemy instead of one another.

Fundraising: Don’t Waste Time Convincing Skeptics

Find investors who share your “gospel” and understand what you’re doing.

Ok, full disclosure, the headline is a smart quote from my fund partner, Oksana Malysheva, and, yeah, it is freakin’ brilliant.

Far too often, founders spend inordinate time talking to angels and VCs trying to convince them of their vision, commitment and results. The reality is, a good company, getting good traction, MUST find investors who share their “gospel” and understand what they’re doing. The phrase, “missionaries, not mercenaries,” applies just as equally to early-stage investors as employees.

I just spoke with one of our companies. They have a $600k sales backlog that they’ll complete this month, and about 50% or more of that will be recurring revenue. The product is a complex AI service in an industry vertical that is large and growing fast.

They had a call with an investor who basically questioned their revenue numbers because it seemed to him that they were just too high. How could a company only six months old have $600k in revenue this month? Didn’t make sense to him that the industry vertical had revenue anywhere near their forecast. In short, he didn’t know their industry economics, and instead of jumping at the opportunity to get in early with a VC backed company showing strong sales growth (epic growth, quite frankly), he sits like a stick in the mud.

What was Oksana’s response? “Don’t waste time convincing skeptics.” Truth.

Many angels and VCs will not share your vision. You will not convince them otherwise. There are literally thousands of people who fund companies. If you’re raising money, shift your efforts from convincing those who don’t get it, to those who do. You’re time is as valuable as the VC’s time, even if it doesn’t seem that way from how they treat you.

In fact, it could be argued that time is more valuable than money, especially at an early stage. Don’t waste that precious asset on a road to nowhere. If a prospective investor doesn’t get it, cut bait and move on fast. Politely let them know that it doesn’t look like a good fit, and move on.

Blitzfailing – How to NOT Grow a Company

If your marginal profit per unit sold is negative, no amount of volume will help you be profitable.

Some time around 2016, a company that was raising at a lofty valuation pitched to me requesting capital from one of Sputnik ATX’s antecedent funds. The company pitching was WeWork.

The heart of their presentation was a claim that WeWork represented a new model for coworking space that was going to revolutionize coworking from stodgy folks like Regus, a profitable competitor. At the time, WeWork charged less than Regus to use office space and WeWork had significantly higher unit operating costs, customer acquisition costs, higher churn, and a significantly riskier customer base.

I pointed out to their pitchman that they had lower unit revenue and far higher unit cost than their competitors. How could they make money?

They responded with more of the same balderdash. WeWork’s plan to overcome negative unit economics was to make it up on volume, as they grew faster and faster with additional investment.


This reminds me of Paul McElroy in the old SNL skit, First Citywide Bank, who claims the bank makes it up on volume. Thus the old joke, “I lose money on every one I sell, but I make it up on volume.”

If your marginal profit per unit sold is negative, no amount of volume will help you be profitable. Taking investment to accelerate losses makes the situation worse.

Blitzscaling is taking in large amounts of venture capital for massive customer acquisition growth in a short period of time. Growing so fast, you can’t be ignored, and then basking in the glow of a sustainable, massively profitable business.

A Blitzscalable business must have positive unit economics so that scaling increases profits, over and above overhead expenses and marketing costs. In short, the net profit selling each unit accrues faster than your expenses. When this happens, your company becomes profitable and sustainable.

Over the past few years large amounts of venture capital have poured into negative unit economic businesses that tout “volume” as the solution to their woes. Unless those businesses have some monopolistic plan to dominate the industry and then jack up prices to alter the unit economics, they will fail.

Of course, they could be hiding a novel new technology that will disrupt industry cost structure to make the unit economics positive, but if they did, why aren’t they using that technology now?

For example, Uber analysts tout that the company may be profitable when driverless technology becomes broadly available. This begs the question why they’re just figuring that out now, after massive investment on a different thesis, but I digress.

Bottom line: when your unit economics are negative, the business is unsustainable and you are blitzfailing if you raise capital to dig your grave at an accelerated pace.

Instead, resourceful entrepreneurs should create disruptive innovation that dramatically lowers the cost to solve a customer’s problem or provide a new, novel service that generates massive consumer surplus that cannot be ignored.

If you choose the path of the resourceful entrepreneur, unit economics and the market will reward you handsomely.

Author’s Note: yes, I love old words like poppycock. So precise!