INDIE AUDIO – Détails, épisodes et analyse

A few weeks back in this very email, I put out a request for a new content format we wanted to experiment with that we called “Startup Confessionals”.

From my note:

If you, or founders you know, are willing to share a startup confessional, we’d love to help. We can make these totally anonymized or public, whatever you're comfortable with. We'll be recording these remotely and aren't looking for hours long conversations — we're planning on editing them into quick lessons and anecdotes.

For example, here are “confessional” conversations I’ve had with people one-on-one just in the last few weeks:

— Over/under raising
— Surprising/shocking fundraising stories
— Horror stories of investors/board members behaving badly
— Hiring to please investors 
— Acquisitions blocked or held hostage by investors/board members

Thankfully, a few heeded the call. I think this week’s video captures the essence of what we were going for and the experiences we were hoping to mine. 

This week, we have stories and lessons from some legendary founders —

Ben Kauffman 
Founder of Quirky and Camp as well as CMO at Buzzfeed. Ben has an incredible knack for building brands and storytelling that has attracted some of the largest brand partnerships and most legendary investors. 

Harper Reed
Came into the national spotlight as the Chieff Technology Officer for Barack Obama’s re-election campaign. Shortly after, with encouragement and funding from then-Google CEO Eric Schmidt, he founder Modest which was later acquired by PayPal. Most recently, he wound down a venture backed startup Galactic. He’s currently exploring new ideas with his longtime collaborators. 

Finbarr Taylor  
Got his start in tech in various staff roles at companies like Groupon, Pebble, and Y Combinator. As a co-founder of Shogun, he and his partners bootstrapped to over $1M in ARR before raising their first round of funding. That first round let to another and then another. Shogun continues to be a thriving business that Finbarr remains on the board of and actively advises in addition to angel investing. His takeaways from bootstrapping to rocketship growth to near unicorn status are lessons not to be missed or dismissed. 

This is our first attempt at this format and we’re so grateful to Ben, Harper, and Finbarr (as well as the others we have in the can) for being willing to wade into such uncertain waters with us. 

We’re really happy with how this turned out and welcome your feedback on how we can improve it over time. 

We’d also welcome more stories from you or your networks. If you know someone who’d be fun/interesting/insightful on the topic of unpacking their founder, or early employee experiences and lessons, please send them our way!

As always, we hope you enjoy watching this one as much as we all enjoyed making it.

Bryce

As someone who entered the venture industry in the wake of the Dot-com crash, I have a deep appreciation for new managers, their entry point into the industry, and how that shapes their world view. For me, it was pure carnage for the first few years of “investing”. I put that in quotes because it was mostly triaging the portfolio and trying to assess which companies were worth saving and which were destined for the Dot-com dust bin. 

Shortly after stepping out on my own to start OATV, another bubble burst with the Global Financial Crisis™. My trips to NYC for board meetings were often capped off with midnight strolls through Zuccatti Park to witness the occupation of Occupy Wall Street. The markets were in free fall, checkbooks closed, and founders, once again, were at the mercy of the market. 

But easy times never make for strong people and that’s why I was excited to sit down with Turner Novak when we both found ourselves in Columbia, MO for the Main Street Summit a few weeks back. His is a “chronically online” story of discovery and persistence into the world of startups and VCs. Through the use of memes, social networks, and data, Turner was able to build an audience and a “fantasy portfolio” to land himself an internship and, eventually, a fund of his own. 

Turner came into his own as an investor in the frothy times of the not-too-distant past. With wide eyes and fresh funds to deploy at his newly formed firm, Banana Capital, he set to work deploying near the peak of the ZIRP bubble. I thought it would be fun to unpack the experience of someone who built their brand online, from the midwest, and began deploying into a market that’s rules and dynamics quickly changed on them. 

With that as the goal, this one did not disappoint. A few takeaways: 

- Turner’s exposure to entrepreneurship began early with his mother running a small wedding gown business. Turner developed an interest in technology and the internet during his teenage years, teaching himself programming.

- Turner’s path into venture capital began in college, where he joined the investment club and got hooked on investing. After working in commercial lending and for a nonprofit endowment, he started building a “fantasy VC portfolio” on Twitter, which helped him break into the industry. His visibility on social media eventually led to his first job in venture capital.

- Turner’s largest learning from the last few years in venture is the importance of entry points — getting in at the right valuation can make or break an investment. While many aspects of startups are unpredictable, controlling the price you pay is crucial for long-term success.

This was a really fun one and I think Turner has a bright future ahead of him as an investor and fund builder. The easy times may be over, but I can see his strength already showing through as he navigates this new reality. 

I hope you enjoy listening as much as we enjoyed recording it. 

PS - Today is my birthday and all I want is for you to A) subscribe to the INDIE YouTube channel (just hit that subscribe button) and B) send the next category defining company our way. Is that too much to ask?!?

• Product-market fit requires both customers willing to pay and stay. It’s not just about initial sales, but also retention. Early-stage sales should focus on research and understanding customer problems rather than immediate revenue generation. Founders often skip this crucial research phase.
• Abstract solutions require focusing on specific problems rather than leading with the technology itself. To create urgency, you need to demonstrate how a problem is growing or intensifying for the customer. If a problem isn’t being measured or managed, it’s likely not a priority.
• Early adopters are often those early in their buying journey who are willing to experiment. They buy into the founder as a subject matter expert rather than expecting a fully-built product. Successful startups often start by focusing on a specific niche before expanding horizontally. Being highly specialized allows you to understand customer problems better than they do.
• Invalidation is a healthy part of the startup process. If you’re not invalidating assumptions, you’re likely not learning or going deep enough. Sales feedback is valuable for positioning and refinement, but product vision should come from founders or product leads. Salespeople should not drive product vision. Demonstrating expertise by setting boundaries on what your product does (and doesn’t do) can actually increase customer confidence.

— Capital has no insights
Eric argues that venture capital alone doesn’t solve business problems, and having more capital doesn’t necessarily lead to better outcomes.

— Compounding value vs. negative value
The importance of building companies that compound positive value over time, rather than scaling prematurely and compounding negative value. Funding should primarily be used for experimentation and scaling proven business models, not for scaling unproven ideas, because it’s easy to compound negative value if you’re not paying attention to the right things.

— Vanity metrics vs. intrinsic value
The industry often focuses on vanity metrics like growth rates and valuations, rather than building long-term intrinsic value and durable businesses. The venture capital industry’s incentive structures often encourage behavior that may not be in the best interest of building sustainable businesses. It’s important to maintain a long-term perspective on building value, rather than getting caught up in short-term growth or fundraising cycles. In many tech businesses, there are often diseconomies of scale rather than economies of scale as companies grow.

— Playing the game on your own terms
CEOs and founders are ultimately responsible for making disciplined decisions about resource allocation and scaling. While entrepreneurs can’t completely ignore the “game” of venture capital, they should focus on building value on their own terms rather than getting caught up in comparisons or unrealistic expectations.

Some takeaways:

— There’s a significant gap between the hype around AI and its actual implementation in businesses. Many companies are still in the experimental phase, with few AI solutions in production. The main barriers to AI adoptions are technical challenges, cost considerations, and lack of expertise. We’re still very early in realizing AI’s promise.

— AI adoption was slow, then immediate. In a pre-ChatGPT world, the focus was on convincing companies to care about data science and machine learning. Post-ChatGPT, there’s been an explosion in demand, with companies actively seeking AI solutions.

— Most companies are still in the proof-of-concept stage. There’re limited production-ready AI use cases, which hinders adoption. But with major cloud providers (Microsoft, Amazon, Google) aggressively pursuing AI strategies, that’s bound to change. There’s constant evolution in model performance and capabilities. Companies need to view AI as a continuous investment, similar to cloud infrastructure, rather than a one-time project.

— Tribe’s approach to AI implementation is what made it such an interesting investment for indie. Their focus on education to help companies understand AI's potential, and emphasis on quick, cost-effective proof of concepts to demonstrate value, means they’re positioned to continue rapidly growing. As a services business, they’re able to help companies balance cost with value creation, navigate rapidly evolving AI technologies, and future-proofing AI investments.

A few takeaways from this conversation:

— Early crypto applications were challenging to use and primarily attracted tech enthusiasts and speculators. Over time, the technology matured, making applications more user-friendly and broadening the user base. While there’s still a long way to go, the maturation of the technology also led to a shift in focus from speculative gains to building durable and sustainable businesses.

— A significant issue in the crypto space is the short-term focus of many projects, prioritizing quick liquidity events, like token generation events (TGEs), over long-term business building. This emphasizes the importance of founders who are serious about building lasting companies rather than those looking for quick gains.

— Market cycles heavily influence behavior in the crypto space. Bull markets attract a lot of attention and speculative projects, while bear markets tend to wash out less-committed participants, leaving behind those genuinely interested in the technology. smac notes that bear markets often lead to better quality projects and more serious builders.

— Events like the FTX collapse and the Silicon Valley Bank (SVB) crisis reinforced the importance of self-sovereignty and distrust in traditional institutions. Compound's belief in the growing importance of self-sovereignty extends beyond financial institutions to healthcare, education, and data institutions.

— Compound looks for founders who are serious about building their companies and have a long-term vision. They value founders who are thoughtful about their projects and not just looking for quick liquidity.

— How crypto can be applied in areas like distributed energy and healthcare data. We also highlight the potential of decentralized physical infrastructure networks (Deepin) and decentralized science (DeSci) as promising areas for future investment.

When you end an essay with a line like:

"Majoring in computer science today will be like majoring in journalism in the late 90’s.”

You’re bound to ruffle some feathers. In the case of Chris Paik’s “End of Software” essay, not only were feathers ruffled, but the entire farm was flustered. And then the pitchforks came out…

Given the violent response to the piece, both positive and negative, we approached Chris with the idea of adapting the Jimmy Kimmel “Mean Tweets” skit to address some of the critics and dive into the nuances of such a bombastic proclamation. What we ended up with was an incredible, and occasionally comical, deep dive into his thinking and observations around the innovation that’s emerging at the intersection of software development and Artificial Intelligence.

Some insights from this one —

• The cost of creating software is approaching zero, which will fundamentally change its nature.  Software is shifting to a new phase where it will be created on-demand to serve a specific intent and then disappear. This is similar to how content creation and distribution costs went to zero with the internet, enabling ephemeral user-generated content.
• People are lazy and want software that routes them directly to what they want with minimal effort. Platform providers that can best deliver on user intent will monopolize the market, just as social media platforms monopolized attention.
• Solving the discovery and distribution challenges amidst this coming explosion of near-zero cost software will be the source of the biggest future opportunities and venture returns.
• While AI will make average software more accessible, it will also shift the curve to enable the creation of revolutionary new software that is better than what exists today.

This is really one you should watch on our YouTube. Like, all of them are. But this one has Will going to a White Board.

What if we could know whether the business idea you can’t shake is worth pursuing? What if we could ensure that we're pairing the right ideas with the right capital sources to ensure the best possible outcomes? Will Quist, from Slow Ventures, is on a mission to answer these question and more for founders with subject matter expertise and high opportunity cost.

To that end, he’s designed the Slow PhD, a program that embraces the idea that "Important companies and successful businesses can’t be hacked, forced, or faked.” Through a rigorous engagement process and step by step opportunity analysis, Will hopes to target more of the right people at the right opportunities with the right sources of capital behind them. 
 
This conversation was an attempt to give a preview of the PhD program and explore ideas around its perimeter. Take aways from this one—

• There has been a decoupling of awesome products from awesome companies and awesome companies from awesome venture capital investments. Just because a product is great doesn’t mean it will make a great company or require venture capital. A lot is knowable early on about a company’s prospects.
• The abundance of venture capital in recent years may actually be a bug, not a feature, for founders. When capital was scarcer, getting funded was a stronger signal that an idea was worth a founder’s opportunity cost to pursue. Now, founders are sacrificing a lot of their valuable time without enough diligence.
• Venture capital should be used to fund experiments to test novel hypotheses about how the world works that could be wildly valuable if true. The experiments should generate clear true/false signals without requiring too much capital. This gives optionality to pursue bigger opportunities if the initial hypothesis is validated.
• If founders become better “investors” in their own companies by deeply understanding their business model, capital efficiency, and growth levers beyond just building great products, it could lead to more efficient allocation of capital and better venture outcomes overall. But truly great venture-scale companies may still be constrained more by the supply of innovative ideas than the supply of capital.

My friend, Michael Dempsey, Managing Partner at Compound, and I have an ongoing thread about the intersection of indie ideals and his areas of focus in deep tech. Most of these conversations happen over meals or online, so we decided to dive in a bit with the cameras on.

Our conversation was as fun as it was wide ranging.

I’ve watched for years as Michael has built Compound into a research focused, thesis-driven firm that has moved from the edges to the center of some of the hottest investment areas today. We get into details behind his early conviction around AI juggernauts like RunwayML and Wayve, to new themes they’re exploring in crypto and biology. 

Some quick takeaways and highlights to look for —

• There’s a trend of deep tech startups pursuing overly ambitious “narrative rotations” by constantly expanding into new areas, which Michael aptly calls a “Ponzi scheme of ambition.” This is driven by the need to justify raising large amounts of venture capital.
• His bias towards building one big business in a massive market rather than narrative expansions. For shelling point investments, like SpaceX and Palantir, the focus is on owning and expanding a principle or market over time, rather than narrative rotations.
• Compound’s approach to investment themes that are considered “too early or too ridiculous” with no real customers yet, and funding those contrarian opportunities.
• The value of developing specific year-by-year theses on how certain sectors will play out, acknowledging that 80% may be wrong but aiming for the 20% that are very right. You only really need to be right twice per fund.

We invited our friend, Reggie James, to help unpack what's happening in hardware and break down what's behind many of the recent negative viral product review videos currently hitting the internet. Reggie is a longtime friend to indie and prolific advisor to many of this new crop of hardware startups in market and in development. He cuts right to the point with strong opinions and spicy takes that may not be obvious to the casual observer. You'll also hear a view on technology and culture that extends far beyond any single device. 

In this one, we touch on —

• The disconnect between the world of venture capital/tech startups and the reality of many creatives/builders who don't view capital as a tool for building. With AI enabling code generation, this group could potentially produce venture-scale outcomes without relying on traditional funding.
• The tech industry has struggled with effectively communicating and branding themselves, especially after the era of Steve Jobs and Apple's lifestyle branding. This has led to insular narratives and misunderstandings around emerging technologies like crypto and AI.
• Physical products and hardware still hold importance for branding and communicating a clear lifestyle/use case, unlike software companies that often neglect this aspect. Successful hardware brands like Teenage Engineering have a distinct identity tied to their products.
• Devices like Humane's are attempting to break people's "addiction" to smartphones by offering an alternative that frees the user's hands and gaze, challenging the narcissistic nature of current mobile devices.
• Niche hardware products like USB Club's file-sharing network cater to specific communities (DJs, designers, etc.) and could enable new economic models by tying hardware to digital networks and data storage.
• There is a potential cultural shift happening around the perception of manufacturing/trade jobs, with younger generations being more open to these paths instead of defaulting to universities and white-collar work.