In-Store Tech

I’ve been thinking about this topic a lot recently.

Since a large part of our thematic focus (and portfolio share) is focused on the configuration of the retail store the question of how it will be tackled is top of mind. And based on this CB Insights data, we’re not alone.

I think the general rule that applies to the physical world as applies to software. Master your domain before you add others. And so the successful physical retail companies of the future will be one of three things:

  • Microservices that do one thing well or
  • Platforms connecting the above or
  • Mature companies assembling a full-stack offering of the above two (think Salesforce).

I don’t think this rule applies to solely software services. I think it’s true for items that appear in the physical world.

If you want to be a full-stack physical retail company and you want to tackle the entire store at one time (POS, fulfillment, analytics, digital interactions) you need to do it over time. Otherwise your success will be leveraged against your ability to execute a lot of complex things simultaneously.

That approach never works. Founders who think they can do that as an early stage startup are crazy. I have some experience with this topic.

Not to be cliche but I’m reminded of a well articulated line of thinking from Sam Altman.

Very often, the first thing we do is help hard tech founders find a small project within their larger idea that fits the model of quick iteration and requires a relatively small amount of capital. This project is often the smallest subset of their technology that still matters to some user or customer. It may at first look like a detour, but it’s a starting point that lets founders build measurable momentum–for themselves, for recruiting employees, and for attracting investors.

What’s In My Blood – Q4 2016 Edition

I’ve been doing detailed blood tests every quarter for the past year. The first test was a part of a 30 day measurement experiment to quantify the impact of eliminating alcohol from my system. Oddly I haven’t had a drink since that first day.

I use WellnessFX for testing. In Q2 I tried another service which I didn’t like as much so this September I went back to WellnessFX.

The testing takes 10 minutes and can be done at any local Quest Diagnostics Center. I do comprehensive testing which means I have to give lots of blood. This center had epic views of LA to distract me.

August and September were bad months for my diet and exercise lifestyle. Until July I was a machine. Then I fell off the wagon, at least relative to my current standards. While I don’t believe travel or stress are acceptable excuses for unhealthy living, I leaned them to eat lots of tacos and ice cream.

So the general trend in my blood data shows multiple signs of a higher presence of fat and the physiological reactions to processing it. Left unchecked these behaviors will most certainly lead to an increase in general inflammation, something I focus heavily on avoiding.

These deviations from norm are expected when you cram as many tacos down your throat as I did in August and September. So the test date served as a solid reminder to reset and get back on track. Small deviations can easily become large problems if left unchecked for long periods of time.

Here’s my blood. More context on my lifestyle and past testing is here.

[pdf-embedder url=”” title=”lab-results-wellnessfx”]

Hardcore History

Recently I’ve been enjoying the Hardcore History podcast from Dan Carlin. It’s an odd podcast as each episode averages 3-4 hours. Each episode is the equivalent of a short audiobook.

I listen to spoken word when driving and at the gym. Often books. But my compulsive need to highlight passages and take notes when listening to audiobooks via Kindle is incompatible with most activities and borderline dangerous (especially when driving). It also gives me a headache.

I initially didn’t believe that I would enjoy four hours of history. And now I’m addicted to it. It’s taken me about a week to listen to one episode and I’ve found that frequency sufficient.

The first in a series of episodes about the series of random events that led to World War I is fascinating and, frankly, timely. It’s incredible how similar so many events of that era are to today, especially the media’s treatment of facts.

Here’s the first episode of Blueprint for Armageddon.

Founder Health

A journalist emailed me a question about our view that founder health is as if not more important than anything else.

From Our View:

Healthy people build healthy companies.

A healthy body creates a healthy mind. Healthy minds build better companies. If you’re eating a microwave burrito at your desk at 2am on a Saturday you’re doing something wrong. We prioritize our physical, mental and emotional health over everything else and push our companies to do the same.

Unfortunately, sometimes a healthy body isn’t enough for a healthy mind. Being a founder is hard and lonely and can bring you to a dark place. We’ve experienced some of these demons personally and with our friends and companies. It’s not a taboo topic to talk about with us. We’ve been there.

The journalist’s question:

Did any founders/funds inspire you in your new outlook/rebrand?

Is there any data out there that shows healthy entrepreneurs <> healthy returns? Or how investor/entrepreneur relationships built on open and honest communication leads to higher returns? I imagine that sort of data is hard to quantify, as so many factors, internal and external, affect whether a company succeeds or not.

It took me a while to formulate a response. In all things I am quantitative but in this area I have a binary, unshakeable view. It’s a sacred cow. Sacred cows are difficult to justify. They are visceral in nature. That’s what makes them sacred and often dangerous.

Here was my response (which I also emailed to our portfolio founders):

Thanks for the question. We didn’t consult any data sets to arrive at our strong position that the health and balance of founders & teams is of the utmost importance. It is simply clear that it is the right way to do business as a human.
It is often difficult for founders to remember that the world is not a better place if you build a billion dollar company that kills you.
As for triggers or inspirations for this view, it was most directly triggered by my personal founding journey during which I did not give any attention to health. And I experienced two hospital stays, was on prescriptions for high blood pressure, anxiety, and depression, developed a coping mechanism dependency and finally received wake up call from my doctors that I had a high probability of dying within a few years if I did not take corrective physical and mental action. As an investor I want to do everything in my power to minimize the probability another founder will have my experience.
By elevating our belief in focusing on health and wellness and being transparent about our personal experience, we’ve found that our founders are more comfortable discussing their challenges. And we are aggressive in holding our leaders accountable to this standard.
I do not yet have a body of data to establish a positive correlation between health and authentic relationships with founders and company performance. And honestly I’m not seeking it. It’s just the right way to do business.


I’m en route to spend a week with startups in Tbilisi, the capital of Georgia (the country not the state). I was invited to join a group from Silicon Valley by friend I’ve wanted to collaborate with for a while.

Through the week I’ll be working with Tbilisi entrepreneurs. I’ll also be getting to know Georgia, a country rich in history (and wine). At some point we’ll also be meeting the Prime Minister.

On the way back I’ll be jumping through London for 18 hours and hanging out with the badass guys behind Butterfly Twists.

The journey to a not-often-visited place is always interesting. I travel about 25% of the time and am overseas several times a year. Each time I leave the US I wonder why I don’t do it more frequently.

Traveling helps me reform my world views. I am a better, more grounded person because of these experiences.

When I travel I do weird things. I take weird flight routes. I try to stay in neighborhoods instead of hotels. I buy my weird food in local grocery stores. I workout at local gyms.

When I travel to a new city I usually take a full day and explore, mostly walking. In the growing number of cities with bike share, I do that too.

I don’t buy guidebooks. I don’t hire tour guides. I did this before one could travel with a data-enabled cell phone. Google Maps and T-Mobile have radically transformed this experience.

I think as a result of just getting lost and finding my way I’ve been able to discover things I wouldn’t otherwise find. Today on a six hour layover in Athens, Greece, a city I’ve spent time in before, I grabbed a cab to a neighborhood I enjoyed on my last visit. It’s not a neighborhood the guide books care to include.

While en route I found a restaurant with a lot of great local reviews. Then it was back to the airport for the next leg of the journey to Tbilisi through Kiev.

All of this might sound exhausting to some. It’s not. But to be able to flow naturally in unfamiliar countries you have to suspend the need for complete clarity. I do not do unsafe things. I am as vigilant about safety internationally as I am walking through Las Vegas or New York. You can be in danger anywhere…if you do dumb things.

To enjoy unplanned travel you must resist what I call life seizures. This is the mindset of a person who walks into an airport and immediately is anxious.

You’ve seen those people. They are the ones looking frantically for their gate without looking at the departure signs and looking around to figure out how the gates are numbered.

They are the ones who immediately walk to the boarding door the moment anyone starts talking on the PA system.

They often speak loudly, move nervously. They exhaust you just looking at them.

They would never take a taxi to an unfamiliar part of town because how would they, I mean, getting back, what if, oh god. WHERE ARE THE…WHERE IS MY BAG? I’M JUST…WHERE’S MCDONALD’S?

Life seizures are equally possible no matter a person’s age. They happen at home and abroad. People have them in grocery stores. And old people don’t have them any more frequently than young.

For these people everything is hard. I have never been one of those people even though I have definitely been lost in lots of places, usually while trying to find a bathroom.

It’s generally true that if you assume something is going to be hard, it will be. Remember Henry Ford’s perspective: “Whether you think you can, or you think you can’t–you’re right.”



I spotted this little gem during lunch in Athens and sent it to a friend at TOMS. It is a small world.


Setting Milestones for a Series A

As commerce seed investors an important factor for us to consider is whether the company will be able to raise a later Series A. This isn’t a popular thing to talk about but it’s reality.

Why do we care? Because when you are a large investor in a seed round you are investing in a stage that has an expiration date. Seed investors rarely have the capital to fund a company through a 5-10 year growth cycle. This is especially true in commerce companies with physical products or operations.

We need to be cautious and minimize the probability of finding ourselves in a sunk cost dilemma 1-2 years in the future when a company has no traction, no cash and no potential investors.

We’ve been right about 60% of the time. It is still very early.

VTF Capital Seed Follow-On

Smart investors think of a company’s life story in milestones. Milestones are fundraising related, metrics related and product related and they occur at sporadic points in a company’s growth.

We have the same conversation with every founder we invest in. What’s the next milestone? What does the company need to look like at that point to achieve that milestone?

This is not an evaluation question but rather a collaborative one. It is natural for founders to want to do 4-5 things in the next year. In my view, it is better for a company to be healthy and growing in five years than for it to do 4-5 things in one. As an outsider I have the benefit of keeping that restrained view.

There are rare times when a company can do it all. But often the 4-5 things are aspirational goals a founder sets for the company. On deeper study, I’ve generally found that those 4-5 things are what the founder actually sees the company doing over the long-term. In the hype of pitching investors, he/she believes she must put it all on the table right now. It’s helpful to recall that humans are generally bad at estimating what they can do in a year.

But regardless of capacity, the question one must ask when setting milestones is whether or not all five things are relevant to achieving the company’s goals between now and the point of the milestone (e.g. end of cash runway).

Let’s say your vision for your company is to be the end to end marketplace platform for consumers who buy eggs. To achieve that vision you will build strong technology that manages:

  • egg production
  • egg distribution
  • egg retail sales
  • egg feedback ratings
  • payments for eggs

Today you have 20 farms and 400 retail customers and you are raising a $1M seed round. That money will last you 18 months.

The two things you want to focus on are:

  • What will the company do at the end of the cash runway?
  • What will the company need to look like in order to do that?

Fundraising stages, from early to late, exist on an investor motivation spectrum of faith to spreadsheet. The earlier the investment, the more the investment is a faith investment in the market and the team. The later the investment, the more the investor is concerned with spreadsheets. That is to say, for example, how their capital turns $1 of sales into $4.

If you are planning to raise a Series A, then you must consider what your company needs to look like to Series A investors at the point you need to raise capital from them.

Series A investors invest in both but are to the right of the midpoint preferring companies that show strong metrics-based performance. Yes, some Series A investors say they are more focused on the team and the vision than performance. This may be true for some but my experience in dozens of post-seed financings is that Series A investors overwhelmingly look at data first.

  • What metrics will matter to them?
  • What metrics will they use to determine if their capital can be used as an accelerant to growth?
  • Will your metrics demonstrate strong adoption and product market fit?

The more disparate metrics you have, the lower the probability your performance of each will demonstrate dominance (aka traction…a word I hate).

Investors can connect dots and see what’s possible. When deciding what the company should look like at the next milestone you should err on the side of highlighting your ability to execute.

You want to be able to say (using the egg example:

  • We set out to onboard and process retail orders for 2,000 retail customers. We did that and here’s the data. (note this is not necessarily a revenue/monetization requirement. We’re using an egg example where a successful transaction is someone buying an egg. Active users, participating users, etc. are similarly useful metrics depending on your business.)
  • The next step if for us to own these three parts of the market. You can tell that we can execute, you are investing in that growth.

Conversely you can say:

  • We want to own the entire egg market so we built the technology that does all of these things.
  • We have 100 retail customers, three distributors and are in final talks with 3-4 farms.
  • The market potential is about 50,000 customers and we have a plan to go after them. We have less than 100. But here’s our sales funnel. The ones noted as “pre-qualified” are ones I have email addresses for. I’m confident they’ll close. (this is a real example)

In the latter, the Series A investor sees undisciplined product development and mediocre results.

In the former, she sees restrained, patient product development, exceptional execution and demonstration that people want what you’re putting out.

For most investors, the former will be a better investment.

In my past life as a founder, I ~~just~~ knew I would raise Series A capital when I needed it. I never stopped to consider how.

At SHIFT we had exceptional technology to manage a large fleet of on-demand cars, bikes and multi-passenger buses. We were the first and still only outside company to build access control and telematics systems for Teslas and smart cars. We built the hardware and software in-house. Our customers could access one of 98 cars within five minutes using iOS and Android apps. Our backend automation systems powered a 24/7 recharging and rebalancing operation for an electric fleet in the largest centralized electric vehicle charging station in the US. We were a fantastic engineering operation. We demonstrated we could execute. If only our business goals were to be the best vehicle fleet operator on the planet.

I came away from meetings with large Silicon Valley VCs with a set of metrics related to the business we were actually in. “If you get to 5,000 paying members in 8 months we’ll invest $5M” one of them told me. “Show 4,000 paid transportation uses in three months and we’re in for $4M,” said another.

We were asking them to help us become a billion dollar company. The question they were considering was whether there was reasonable demand for this to be a billion dollar company. We presented ourselves a consumer transportation product, not a backend vehicle operations company. The funny thing is, we put 99% of our effort towards being the latter, not building traction towards demonstrating that we could actually build the consumer side of the business.

In the process of building great technology and a great operation I forgot to focus on what we needed to look like to the person who would get us through our next milestone. And by the time I realized that, I didn’t have two more years to build the company towards that outcome.

Be the founder that thinks this through. Proactively share your plans with your investors. It will help you separate the smart investors from the not.

Thanks to Will Young and Patrick Olson for reviewing drafts of this post.

Seth Godin Q&A from Tim Ferriss Podcast Notes

Seth Godin is among my favorite thinkers. He has a way of whittling down subjects to their critical essence. He cuts the bullshit with a very sharp knife.

He recently did a Seth-only recording of answers to listener questions from his first podcast interview with Tim which I’ve listened to repeatedly. I thought these notes might be helpful to someone so here they are.

Q&A with Seth (TFS Episode 177)

From Aug 2016 Q&A podcast.

Find your tribe to lead. You don’t build a tribe. They already exist. Nike found runners. Harley found the “1%.”

Find the smallest possible group to serve. Serve first. Small seems scary and without life boats. Large seems worth it. But small is the most effective. What does this community need to be served best?

You can’t go to someone and say pay me a bunch of money and tell me what to do. Instead what’s valuable is people who:
(side: school ought to teach)
1- how to solve interesting problems. how to do a things you can’t look up on the internet. how to do a think where no one can tell you how to do it.
2 – lead. have the guts to say follow me.

To get to do the things we want to do in today’s world, we have to figure out how to move forward. We have to figure out where the fear is.

Your business can be about:
1- engaging with people who trust you
2- delivering value to them
3- making enough money to do it again

Brand alignment. Seth took an approach with his first books that his brand was he was a Stanford MBA who knew more than the editors did about business. They didn’t buy the book. So he deliberately changed his brand. Stopped putting spreadsheets in proposals, wearing suits. Listened to what they needed from him. The mindset requires to commit to the marketplace, not your brand. Can’t sell steam shovels, then life insurance, etc.. No one can figure out who you are.

Meaningful specific vs wondering generality (this looks for the “next thing” all the time…can’t build a brand).

How do you decide what is essential, indispensable or useless for your attention? Comes back to brand, the promise, what you stand for, “to the change you are seeking in the world.” If you are trying to make a specific change it is easy to be specific, even more if you know the person or group you want to change.

it’s not difficult for Nike to decide to do or not to do because they’ve decided what they stand for. Nike isn’t going to sell corn chips. Nike had an agreement with Sears not to advertise in the Sunday circulars. Sears broke that at one point. Nike asked the Sears folks to come to HQ and made them sit in the lobby waiting for a meeting from 9 to 5. The reason? To demonstrate that they are serious about their promise and their business. And their promise isn’t to treat retailers well.

The brand is boundries, a narrative. Online comments, for example, are anonymous, general. They are not the small group. They will push you to be more general. That does not affect change.

To be the purple cow, you can focus on a small group of people and endeavor to be the consistent, regular choice. You get the gig because you are better: at knowing them, being flexible, going the extra mile, keeping your promises. You un-commoditize your work by being human.

To stay focused on a project. At some point you need to decide who you are, decide the scale, decide what the brand is when people hire you, when they engage with you. You have to embrace the the niche you select and find the people who want that thing. Others can’t replicate that because you are focused, they are general. Helpful with conferences, project selection, etc.. Does this help my customers because it helps me make it easier to deliver on my promise.

Off-Price Retail

From The Off-Price Market Is Switched On, Apparel News

He also estimated that in the last two decades the competition has driven down the price for off-price goods. Goods are at least $2 to $3 cheaper today compared to the 1990s.

In any race to the bottom there is a bottom….

I study the role discounting, indirectly, for a living. I believe this market trend is the second of three phases in the evaporation of big box retail.
First, we had new stuff close by. That lost its luster thanks to e-commerce. Today, we have cheap stuff close by.
Once that loses its luster we’ll look to retail places to provide consultative experiences. They will be places that don’t just answer questions but help you ask them.

Kevin Kelly on being late

Kevin Kelly is a fascinating figure. His work and how he organizes his life always inspires me.

I’m almost finished with his newest book, The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future. So far I recommend it. I’ll share notes when I finish.

The internet surfaced something he said in a recent seminar at with The Long Now Foundation.

I think it bears repeating over and over again. Our world is a stream of information. These undistilled bits naturally push us to compare ourselves to others. We measure ourselves by external markers. And we conclude that we suck.

What potential greatness do we banish to oblivion when we wrongly assume that we’ve missed our opportunity?

Remember this:

We are at the beginning of the beginning — the first hour of day one. There have never been more opportunities. The greatest products of the next 25 years have not been invented yet.

You‘re not late.

Patrick Hipp on Millennials

I have this light friendship with a person, let’s call him Bob. And every time I ask Bob what’s new, he replies “Oh, you know, millennials.” He analyzes millennials for a living.

I don’t know what he does, who he studies or what he means. This article helped me frame why.

It’s long and I’ve read it top to bottom 2–3 times.

It’s not a strategic blow-your-mind piece. It’s just what needed to be said about the seemingly never ending stream of “what do millennials care about” babble.

I was born in 1981. I did not have the internet as a child. I was 13 and living on a farm when Netscape Navigator was released.

My family’s first cell phone was in a bag that weighed at least 10 pounds. I can’t see how my world view is even slightly the same as a person who never knew the world without an iPhone.

Fuck You, I’m Not A Millennial

Well, for those born between 1975 and 1990, let’s say, our formative years looked nothing like those of the Millennials. Our television came in largely via antenna, our movies were on VHS, our music was on cassettes. The internet wasn’t around, and by the time it was in any way that meant something, you could be disconnected by someone picking up a phone somewhere else in the house. We look like digital natives, but only because we grew up in tandem with the internet, as if technology was designed like the progressive grades in elementary and high school.