Weekend Briefing No. 324
Welcome to the weekend.
Thanks to everyone who participated in our Apierogon book club last Saturday. It was a hit and we were lucky to have the author Colum McCann join us which was a lovely surprise!
SOCAP has invited me to do a live Q&A about the ever changing landscape of the stimulus packages and the impact on entrepreneurs. Tune in Wednesday, April 29, 1:00 - 2:00 pm EST. Click here to reserve your spot.
As always, I’d love for you to join us at Bourbon & Briefing a Zoom happy every Saturday during the quarantine at 5 ET today. If you don’t already have a calendar invite, sign up here.
Lastly, I’ve got a favor to ask. For the first time in our 12-year history, my firm is going to start doing some advertising because we believe that our General Counsel service could be immensely helpful for entrepreneurs right now. But before we do, I need your advice.
I’d be honored if you took some time to review some of our ideas and give us your honest feedback. It will take about 15 minutes of your day (no small commitment, I know). But you’ll get a sneak peek at what we’re up to. In addition, I’ll give a shout-out to everyone who completes the survey in next week’s briefing.
Click here to give me your advice. Thanks.
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100,000,000 — This week, Jeff Skoll made a new $100 million gift to the Skoll Foundation, which it will use to fight the COVID-19 pandemic globally. Nearly all new grants will address the direct- and second-order public health, economic, and social effects of the pandemic.
32,227 — Solar panels in Germany smashed a record on Monday, producing 32,227 megawatts of power. Ample sun and a lack of human-created smog enabled solar generation to produce 40 percent of German power Monday. Fully 78 percent of the electrical output in Germany on Monday was from renewables.
-37.63 — The price of a barrel of West Texas Intermediate crude to be delivered in May, which closed at $18.27 a barrel last Friday, ended Monday at negative $37.63.
Thank you to everyone who took the time to share their experiences applying for the paycheck protection program (PPP). We had over 130 entrepreneurs respond. So what have we learned from the survey? (1) Most respondents were genuine small businesses. The vast majority of companies in the sample had $5M or less in revenue, 50 or less employees and were asking for relatively small amounts of capital. (2) They had low-funding rates. More than 80 percent of applications have not been funded. This isn’t too surprising to me. The program is literally free money. It was rolled out incredibly quickly without clear government guidance and administered by banks that all have their own policies and priorities. Given these conditions, this disastrous rollout could have been predicted. Now the PPP funding is tapped. We’ll see if it gets replenished and whether the SBA and banks can get it together. (3) If I could summarize all of these entrepreneurs’ narratives into one word, it would be “frustration.” I think this largely stems from a lack of clarity on the process (see above). Additionally, the frustration is rooted in the seeming arbitrary nature of the process. Your shot at funding was tied to how your bank chose to roll out the program, which varied widely. Lastly, it seems possible/likely that larger “small businesses” may have been given priority at the expense of true small businesses. The banks were certainly financially incentivized to service the bigger loans. This has sparked lawsuits against major banks. Take a moment to read through some of the entrepreneurs’ narrative descriptions. I’ve organized the data so you can review and sort by bank, employee size, revenue, etc. I hope this is helpful and look forward to any feedback. Click here to see the data.
Real Good Company
Limitations force creativity. My friend Allie Trowbridge and her co-host Catlyn Crosby recently launched a podcast called Real Good Company about building a good company and a meaningful life, which you should be listening to. In one episode, they ask an important question: What does the current pandemic make possible both in business and in our personal lives? While we have witnessed many negative effects of COVID-19, there are also countless opportunities that can come from this time, connecting with family and friends, adjusting our priorities and finding new ways to run our businesses. I have a short cameo on this episode at the 35-minute mark discussing PPP. Apple Podcasts (44 minutes)
Digital delivery of health and government social services are more important than ever. Westaway's client Exygy has been helping governments, health providers and community organizations build digital services for decades. Today, Exygy is focusing on digital tools that help epidemiologists track reports of viral outbreaks, Departments of Health communicate with residents, seniors access telehealth, and essential workers find emergency childcare. Exygy's Affordable Housing web portal is ensuring that vulnerable Bay Area residents can apply for affordable housing without leaving their homes — a critical and COVID-relevant improvement from the paper-driven/in-person processes required for access to most government services. Click to learn more about them. Exygy (5 minutes)
Andy Kaplan, who has served as the CFO for Donorschoose.org, Audible, Time Life Inc., Thompson Reuters Publishing and is also part of the Weekend community recently gave a talk regarding tactical advice for how your company should respond to the financial crisis. (1) Your budget is toast. You’ve revised your profit and loss (P&L) and cash flow scenarios through 2021 with two versions. Version 1 is what you expect to happen. Version 2 is the worst case that can happen. Update them at least twice a month until your confidence in trends allow for updating less frequently. (2) Find every way to cut costs. Leave no stone unturned. You can’t cut even one person from payroll before you have done absolutely everything else required to bring down expenses. (3) You must lead through the crisis. Be the first one in and last one out. (I’m not exactly sure how you do that in quarantine, but you get the idea.) Say: “This is about survival. It’s going to be challenging” (if it is). Don’t say: “Everything is going to be OK” (if it might not be).Offer hope. Bring back your mission, vision and the new reality you’ll get to. Check out the full presentation. Google Slides (16 minutes)
New Rules of Growth & Profitability
In the startup world, the consensus has been that growth was paramount — the single most important metric for a company. Profitability was a much smaller consideration. Right now, most startups are feeling cash-constrained. If you’re enduring losses relative to a modest cash position, you don’t have the luxury to heavily invest in growth. However, as an early-stage startup, you are not going to cut your way to success. You have to grow. Specifically, you want to focus on getting to a strong CAC/LTV ratio with a short payback period of less than three to six months or ideally less. Take these steps: (1) Become more efficient and frugal to become cashflow neutral/positive. This will give you an infinite runway. (2) Iterate your product to identify and double down on profitable streams. (3) Scale the business as fast as possible by rapidly reinvesting revenue. A recession shines a light on your product-market fit and should make it blindingly obvious whether you truly have it or not. Assuming you have good product-market fit in the new reality, a downturn is often a unique opportunity in that it’s the cheapest time to acquire new customers. NFX (16 minutes)
Time to Build
Every Western institution was unprepared for the coronavirus pandemic despite many prior warnings. This monumental failure of institutional effectiveness will reverberate for the rest of the decade, but it’s not too early to ask why and what we need to do about it. Part of the problem is clearly foresight, a failure of imagination. But the other part of the problem is what we didn’t do in advance and what we’re failing to do now. Our bigger obstacles are inertia and regulatory capture. That is a failure of action — specifically our widespread inability to build — goes beyond PPE and ventilators to schools, housing, transportation and infrastructure. We need to want these things more than we want to prevent these things. We should want new companies to build these things, even if incumbents don’t like it and even if only to force incumbents to build these things. Another concern is will. The right is generally pro-production, but is too often corrupted by forces that hold back market-based competition and the building of things. The right must fight hard against crony capitalism, regulatory capture, ossified oligopolies, risk-inducing offshoring and investor-friendly buybacks in lieu of customer-friendly (and, over a longer period of time, even more investor-friendly) innovation. It’s time for full-throated, unapologetic, uncompromised political support from the right for aggressive investments in new products, new industries, new factories, new science and in big leaps forward. The left starts out with a stronger bias toward the public sector in many of these areas to which I say, “Prove the superior model!” Demonstrate that the public sector can build better hospitals, better schools, better transportation, better cities and better housing. Stop trying to protect the old, the entrenched and the irrelevant; commit the public sector fully to the future. Build new things and show the results. In fact, building is how we reboot the American dream. The things we build in huge quantities (ex. computers and TVs) drop rapidly in price. The things we don’t build (ex. housing, schools, hospitals) skyrocket in price. What’s the American dream? It’s the opportunity to have a home of your own and a family you can provide for. We need to break the rapidly escalating price curves for housing, education and healthcare to make sure that every American can realize the dream, and the only way to do that is to build. Every step of the way, to everyone around us, we should be asking this question, “What are you building? What are you building directly, or helping other people to build, or teaching other people to build, or taking care of people who are building?” If the work you’re doing isn’t either leading to something being built or taking care of people directly, we’ve failed you. We need to get you into a position, an occupation or a career where you can contribute to building. There are always outstanding people in even the most broken systems. We need to get all the talent we can to fix the biggest problems we have, and focus on building answers to those problems. a16z (18 minutes)
Photos of Earth
Earth Day was first organized in 1970 to remember and appreciate the environment, and our responsibilities and roles within it. On April 22, 2020, we observe the 50th Earth Day. Though many improvements have been made, environmental challenges remain. In the past five decades, the population of the Earth has more than doubled — more than 75 percent of the people alive today were born after 1970 — and the increased demand on our limited resources makes sustainable solutions even more important. Collected here are 31 images of our world from recent years, each a glimpse into some aspect of our environment, how it affects and sustains us, and how we affect it. The Atlantic (10 minutes)
Smart Responses to COVID-19
Pulse Oximeter — This is just a public service announcement: There is a way we could identify more patients who have COVID-19 pneumonia sooner and treat them more effectively. It would not require waiting for a coronavirus test at a hospital or doctor’s office. It requires detecting silent hypoxia early through a common medical device that can be purchased without a prescription at most pharmacies: a pulse oximeter. We ordered one this week.
Send Something Sweet — While we’re all staying in to flatten the curve, this app helps gather and organize a group of people to celebrate someone’s special day (birthday, graduation, anniversary, etc.) over text.
PPE Drive — All Hands and Hearts is raising funds for PPE in NYC.
Please Don’t Live in Fear — Bon Iver just released a new track reminding us to move beyond fear. One hundred percent of streaming proceeds will be directed to Direct Relief, a humanitarian aid organization working to protect workers and patients alike.
Most Read Last Week
Higher Ed Consolidation — Tech firms will partner with a world class university to offer 80 percent of a traditional four-year degree for 50 percent of the price.
Plan B — If the big corporations want taxpayer assistance during the short term, we should bind them with a “Plan B” and require them to provide a real and enduring return to society by becoming benefit corporations.
Preparing for Business Post-Pandemic — These questions can guide you as you work to bounce back from the crisis.
About the Weekend Briefing
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Let Us Bring to Life All that You Click and Scroll
Powering up our machines
starlit doorways into each our own universe
Space collapsing as we hit “Join Meeting”
Space collapsing when we see Us projected, small built-to-scale squares, and gaze across Gallery View,
Space collapsing when we ask the logistical and metaphysical question “Can you hear me?”
Can you see me? Do I exist beyond the footprint of my apartment?
Space collapsing as Gen X asks Gen Z how to turn on audio
And we click through to a room no one built in their house but that has become the hearth where we sit in the glow of our screens
– warming our bodies chilled by the darker days of quarantine
In these our times of untouching 6-foot personal circumfrences
we are drawing ourselves closer in a circle that only opened for holidays,
a circle we didn’t need as doing was coursing through our days
because so many obligations kept us from these
flickering ambient patterns, each silhouette cast uniquely
We circle around a fire fueled by a steady supply of seasoned wood
the flame favoring no shadow over another
built to a heat each can enjoy from their own communal distance
A fire tended in turn by all of us
against a cold hearth
adding to its play of shadows, just as they were cast on cave walls
Its present steady roar
setting afire a possibility
of how the light, cast by collective contributions
forms a projection,
a long pan of a world re(assembled)
-Dr. Katharine Westaway
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