Kristen Profile picture
Apr 18, 2020 15 tweets 3 min read
There was a lot of talk a few weeks ago about how this hard time would sort out bad startups and destroy those that are more vitamin than painkiller.

I understand that point of view, and I agree with part of it. Contractionary cycles are an important part of strong growth.

1/
I also was stunned by ridiculous valuations and companies whose products seemed cheap copies of each other raising hundreds of millions of dollars after a few short months of existence. Almost all of which were founded by (mostly white) men.

Scooters come to mind.

2/
So now we are supposed to be slashing bubbles and pricing more closely to reality - whatever that is - and companies that were not solving real problems or had no product market fit will take their appropriate disintegration.

Some VC seem nervous. Many smell opportunity.

3/
But what I’ve seen in the last few weeks from these leaders scares me a bit. I’m worried we are going to go back in time, not forward, and we will call it efficient markets and a period of correction.

The cost will be higher than that, though.

4/
First, as others have said, I see product-market fit being conflated with pandemic-market fit. If the job is to be where the puck is going, it seems like a lot of VCs think what’s happening right now is not going to change. Not in one year or five. This seems odd to me.

5/
We can all acknowledge that this moment in time is extraordinary. And that things won’t be just like they were. But are they going to be like *this*? It seems a misunderstanding of human nature to believe that. People will socialize. Evolution is bigger than this pandemic.

6/
So funds rushing into the pockets of (mostly white male) founders right now who serve an acute need of the moment, but a niche need of the future, feels counterintuitive to me. Is this the painkiller we talked about? What’s happening here?

7/
It may not be insight of the year, but we are continuing to see how disconnected VC is to the majority’s needs.

Tens of millions need nothing more than a job and an income, but you’re focused elsewhere. On you.

(Clubhouse amplifies your privilege to deafening tones.)

8/
It’s always been a problem that VCs think of themselves as customers first and are hard to be convinced of products where they are not a target customer, but it is particularly dangerous as inequality explodes.

They decide what gets innovation dollars and focus. Scary.

9/
Second, I see some of the early stage startups being hit hard right now are those who had a social mission built into their operations.

- Accessibility
- Climate
- Diversity and inclusion
- Ethical supply chain
- Fair wages
- Underserved segments

Seen as luxuries now.

10/
Data isn’t out yet but I’ll take a guess this is not going to be a breakout year for women and POC raising funds.

Department of Labor has already rolled back affirmative action requirements for contractors.

What does this mean?

11/
Social impact will show up as a casualty in the same way fluffy, mediocre products do. Not urgent. Not what VCs call a painkiller.

The mission-oriented companies who had space to flourish in a bull market risk being decimated in the name of ruthlessly decisive business.

12/
UNLESS we check ourselves. Right now. We can recognize that not everything that is about to die deserves it. And that investing in companies that are still good for the long run is a very good business decision.

Some of those companies’ metrics may take a hit right now.

13/
But think about where we’re going. The impact of d&i, a11y, climate, and serving the underserved will be massive. Our society depends on building equality and future wealth for all.

Let’s keep funding for the future, even if the whole world seems frozen in the moment.

14/
I have high hopes that such smart people who have proven their ability to move mountains will insist we build for that world, and put their dollars towards it.

It’s time to grow up and realize that we can’t live on painkillers.

We need vitamins to truly thrive.

/end.

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More from @CatchKristen

Jul 5
Rich kids have one very important advantage in life: they see from early childhood how to find leverage and use money to free up time.

It's a crazy important skill for VC-backed founders and part of why the learning curve can be so steep for non-rich people (like how I grew up).
When I was little my dad taught me how to fix a toilet. "You never want to pay $500 for something you can easily do yourself."

And while the ability to do labor is hugely valuable, the resource I was ALWAYS taught to conserve was money. It was part of our DNA on a single income.
Whereas rich kids are more likely taught how and when exchange money to free up the MOST valuable resource: time.

Giving your kid an ability to know how to make the tradeoff, when to buy more time, and what to do with that time, is easy when money isn't a strict constraint.
Read 5 tweets
Nov 8, 2021
People talk about tech debt a lot. I tend to align with the belief that you should take on as much as you're able pre-PMF and work back from it over time.

But I want to talk about growth debt.
Growth debt is what happens when you do things you wouldn't normally do just for growth. Every single successful company has some of it (just like tech debt).

It's not inherently bad, but it's not inherently good either.

First, what it is:
Courting customers who aren't your target is growth debt. You'll get sucked into servicing them, fielding support, feature requests etc. from people who aren't your target customer. Maybe they're too low LTV, maybe they're too high CAC. Both a problem.
Read 12 tweets
Mar 26, 2020
Omg if one more SF VC says current status “proves” remote work is the future (full stop) I will lose it. What about the current situation makes you think it is working?
3.28M filed for unemployment last week. Hundreds of billions of dollars evaporated out of the economy. Productivity at historic lows. Anxiety exploding. Now, let’s assume you’re talking only about the software companies you spend all your energies on:
Roadmaps are slowing down. Hiring is slowing if not stopping. Cuts are being made. Kids out of school are making WFH prohibitively hard. Many tech companies will close completely. You’re probably thinking “right but that’s the pandemic.”
Read 5 tweets
Dec 20, 2019
A year ago today, we were almost out of money. We had a consulting client who owed us ~$450k, but was trying to negotiate down on the amount, despite work being fully delivered in September. Then, "the holidays" hit.

1/
Everyone at this client company evaporated for at least two weeks. Our burn rate was high-ish because we were building across three different regulated industries (banking, investment, insurance). Our funds kept trickling out. Traction existed but was not entirely compelling.

2/
My co-founder, @ajambrosino, and I had been trying to raise VC funds since May 2018. Not full time, but we bought into the "build relationships" trope, and the "they'll fund you when you don't need money" bit. We completely failed at driving urgency.

3/
Read 14 tweets

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