This Week in Startups - Armstrong & Tether skip crypto hearings, Adele’s NFT resale solution + Startup Checklist E10 | E1342

Episode Date: December 10, 2021

First, Jason covers the recent crypto hearings (1:25), then offers a brief potential NFT solution for Adele's ticket scalper problem (16:06). After the news, Jason closes out the 100-point Startup Checklist with ten tips for founders including, lean management (23:19), constant product engagement (43:51), monthly updates (46:30) and more!

Okay, everybody, it's a big show today. We're doing episode 10, the final show of the startup checklist. You can see the entire startup checklist at this week in startups.com slash checklist, but first, I'm going to cover the news. Brian Armstrong and Tether skipped the crypto hearings this week. They got called out by a senator. And Adele has a new residency at Caesar's Palace in Vegas, and people and bots are buying up her tickets and reselling them for $30,000. I got a really interesting idea of how to use crypto to solve this problem. Stick with us. It's going to be a great episode. This week in startups is brought to you by LinkedIn Marketing.

To redeem a $100 LinkedIn ad credit and launch your first campaign, go to LinkedIn.com slash checklist. Odo is a fully customizable and fully integrated suite of business apps that lets you build and scale your stack as you build and scale your business. Your first app is free forever. And right now Odu is offering $1,000 off your first implementation pack. at Odu.com slash twist. That's ODOO.com slash twist. And Vanta. Compliance and security shouldn't be a deal breaker

for startups to win new business. Vanta makes it easy for companies to get a sock to report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist. Okay, in our first story today, Brian Armstrong and Tether are called out. Senator 4 skipping the crypto hearings on Wednesday.

Here's a little background. The House Financial Services Committee hosted a number of crypto executive, Circle CEO, Jeremy Lear, who's been on the program, FTX, CEO, Sam, Bankin Freed on the, was there. Coinbase's CFO was there, but not the CEO, Paxo, CEO Charles, was there. And some other lesser-known crypto executives. Of course, when people talk about crypto, a lot of OK boomer moments, a lot of stuff trending on TikTok and Twitter. But you do see from, I didn't get to watch the whole thing, but from the clips I did see, we're starting to see, I think, a more mature group of executives who are playing by the rules and an increasingly intelligent discourse with the government.

So, you know, we're going into the second decade of this crypto journey. And it feels like the second decade of the internet, which is to say, people are. starting understand what's going on here. There are obviously a ton of issues around stable coins, according to Bloomberg's write-up. Stable coin regulation was the most discussed topic, especially due to Tether's absence, and of course their horrific track record of disclosures and fines and general shenanigans. We've talked about Tether and the Tether Investigation, hashtag Tether Investigation on Twitter on a number of episodes 1232. 12, 43, 1250, and 1,300.

Brian Armstrong not making it. That's a little weird for me. You know, he did call out the SEC. He is the biggest player in the space. He should have been there. I'm not sure why he didn't show up. It could have been a personal reason. But the CFO is pretty good to have there as well.

But that could have been a strategic mistake, because if you call out people for not meeting with you and then they have a meeting and you don't show up, not a great luck. I'll be honest. But who knows? Maybe he had an excused absence, you know, somebody's kids, you know, in a play or something. Tether missing, well, that's to be expected. I mean, I think if they land on the ground here, who knows, the DOJ could have warrants out for them that we don't know about. There could be all kinds of shenanigans if you've been getting fines at the rate they're getting them. And there are these questions. You never know what's going on in the background. I hate to be a conspiracy theorist. But here's Brad Sherman, a Democratic representative. from California, pulling them out in this 52-second clip. I'll see on the side. The fact is that the advocates of crypto represent the powers in our society.

The powers in our society on Wall Street and in Washington have spent millions and are trying to make billions or trillions in the crypto world. These include Goldman Sachs, J.P. Morgan, Visa, Black Rock, Citadel, Musk, and Zuckerberg. Not to mention the CEOs that are before us here today. The regulators need to listen to this hearing very carefully. With all the money and power on one side, we will not be able to pass meaningful legislation. And if you wonder about where the power is, Zuckerberg had to come here himself and sit there. Brian Armstrong sent his number two. And Tether doesn't bother to show up at all. Zuckerberg did not have a day in the park. He did not enjoy it, but he had to come. Armstrong didn't. And Tether ain't here at all.

Okay. So, Tether is in the crosshairs. You can't operate an at-scale stable coin worth tens of billions of dollars and not show up when you're respectfully asked to come and have a discussion about the impact of these stable coins on society. And, you know, he's dead right in that. Interesting that he's making some comparison here to the power of crypto. to that of Wall Street and tech writ large, like the major tech companies. I'm not sure if that's exactly correct, but certainly there are a lot of concerns, I think, of a contagion. And also, let's be totally honest, crypto is competing with the banks and the banking system. And it's also competing, especially stablecoins, with the US dollar. And the US dollar is, you know, a locus of power for politicians. We are at their mercy when it comes to what they decide to spend, how they spend it, printing more money, and monetary policy generally. I mean, obviously, we elect them and we can take them out of office. But, you know, USDT, USDC, other

cryptocurrencies, if people decide they want to opt out of having a Bank of America or Morgan Stanley Wells Fargo, you know, pick the bank and they decide, you know what, I want to just keep my money at Coinbase and I'm going to take my paycheck and I'm going to direct deposit it into, you know, a bank, but then I'm going to quickly wire it over to my crypto holdings and buy crypto with it or stocks at Robin Hood or crypto and stocks at Robin Hood or just crypto over at Coinbase. I mean, this has a serious impact, I think, on the future of our government's control over money. Some people say that's a good thing. Some people say it's a bad thing. It's a little bit of both. There's upside to having control over the monetary system, and it's obviously downside.

It depends on how things are executed. On December 14th, the Senate Committee on Banking, House and Urban Affairs will hold their own hearing on the risk of stable coins. So they are clearly front and center in people's minds. This is a quote from the Bloomberg article, the president's working group on financial markets recently proposed for stablecoin issuers to effectively become banks with insured deposits, that makes complete and total sense to me. They basically are printing a new currency. They're printing poker chips, and there is a real danger there if that money were to go away after the hearing concluded. Sam Bankman Freed, the founder and CEO of Crypto Trading Platform FTX, tweeted the following. Huge thank you to Maxine Waters, Patrick McHenry and the whole House Financial Services Committee

for having us today to talk about the future of digital assets. The meeting was productive, and I'm really grateful for the engagement and thoughts and thoughts from policymakers. I came in expecting some hostility and grandstanding, but instead found the discussion to be by a large, productive and helpful. I'm excited to keep engaging with lawmakers and regulators to refine the regulatory landscape. So I think what you're seeing here is actually quite productive. The people who are the bad actors, the shady actors, most people would put tether into that bucket,

are now it's becoming apparent who they are. And then the people who are the good actors are having productive dialogues. And, you know, I think we all have the same goal. The good actors, politicians, and other regulatory groups, everybody just wants to see this be orderly. We don't want to see people be hurt. And we don't want to see a bubble because when bubbles burst, there's this issue of contagions, the black swan kind of issue. And so we need to get ahead of this. This is long overdue.

And really, to have some sort of regulatory environment here that made it more clear would be good. and it also needs to be fair. We have a group of people in the world, myself included venture capital firms, included private equity firms, banks, hedge funds who are playing by the rules. Companies going public,

Republic, Seed Invest, various platforms, seed invests being owned by Circle now. All of those platforms are spending tons of money on regulations, legal accounting, in order to be compliant.

And then on this other side, people are popping up Dow's and coins, and then like XRP, which is super shady, and they're doing whatever the hell they please, and they don't care about securities law in the majority of cases. And let's face it, they're running amok, they're breaking the law. And our government takes three, four, five years in order to process people who break the law. That's just the nature of it, right?

We don't want to live in a society where people are being arrested willy-nilly. we want to have a thoughtful process of when somebody does get investigated, taken to trial. We want to have due process, of course. Before I start the ad read, please go to LinkedIn.com slash checklist. You're going to get a $100 credit towards your first ad campaign on LinkedIn. All right, let's get to the ad read. Every startup founder and marketer has been in the situation before. You're planning to launch your new campaign.

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And with LinkedIn ads, you don't need to guess. Because when you advertise on LinkedIn, your message reaches people who are ready to engage because LinkedIn equals business, business equals LinkedIn, they're in that business mindset. Over 30 million companies are, active on LinkedIn, 30 million companies and over 71% of professionals who's LinkedIn to make

business decisions. You know that because you're on LinkedIn making business decisions every week. In my case, multiple times a day. So once again, the call to action is very simple. Startup markers, don't wait to start achieving your brand and lead gen goals. LinkedIn is offering our listeners here at this week in startups. A Hyundai, $100 ad credit to get started today. Get that $100 ad credit for your first LinkedIn. campaign at LinkedIn.com slash checklist, terms and conditions apply, because when you go to LinkedIn.com slash checklist, you're going to get a hundie. Okay, great job LinkedIn. That means when a group of people en masse become bad actors like the ICO movement, the rush to secure the bag, the rush

to steal money to bilk, you know, grandmas and grandpas and, you know, unsuspecting civilians out of their money is great. And we know the griffs, painting the tape, wash trades, pumping and dumping and dumping, pump rooms, people buying NFTs, selling them to themselves and their friends, and then lowering the price and giving people a deal on an NFT that is worthless, all the shenanigans that are going on. You know, it's going to take years for all those regulatory committees to ask for information and then to find them. Look at how long tether has operated before they got fine. And then the really bad actors, which I believe Tether is one of, they will use the fact that they're not been stopped as proof that they are illegal. Like, oh, shouldn't we've been stopped by now?

Or, you know, we just paid a small, you know, 20, 30, 40, whatever, a million dollar fine. Oh, that was just a speeding ticket. They make up these excuses. But if you look at ICOs, you just type in ICOs and the SEC, you're going to find them going after people. And those are ICOs that happened, what, four or five, six years ago? So the law is slow, but it is pretty harsh. As you can ask the founder of the Silk Road, who at a very young age built a website that he thought was eBay for people who wanted to trade cannabis, and he is going to be in life

in jail for life plus, I think, like 40 or 80 years. So he's never getting out. I mean, there's a big movement to try to get him out. But this is serious stuff. and I think this is great. It'd be really great if this led to rethinking accreditation laws because all of the crypto projects seem to not even know what those are. The number of investors allowed, you know, when I do a syndicate

or somebody does a reg D on inequity crowdfunding, there's a dollar limit, there's the number of people, there's accounting, you have to do this, there's all these protective provisions. And let's face it, some people are doing them and other people are not. Let's all look at those laws and say which ones are still valid and which ones are not. I love the fact that people are getting an education. I love the fact that people are betting on the future.

All of that is great. I just don't want to see anybody, and nobody does, face the risk of ruin. And I don't want to see anybody be the victim of fraud. And we know there's a ton of fraud there because this is super non-regulated. Conversely, we don't want to see the United States fall behind. And so my very simple regulatory framework was if a project has a market cap of under $10 million. Let it register.

Let it exist without too much red tape. When it hits 50 million, give it a different designation, and then over 100 million, okay, everybody who's participating has to be legit. So, you know, if you want to be the nodes or the routers or you want to be transferring coins, all that kind of stuff, you're going to need either licensing, you're going to need to put your Social Security now, and you're going to have to sign paperwork to say you're responsible for making sure that there's not fraud, to make sure that it's KYC, to make sure there's not money laundering, all that stuff that is a critical part of running a functioning society.

So I feel like, I hate to be super positive here, but I feel like we're trending in the right direction and that everybody is, you tell me, but it feels like people are on the same side now. And I think people are getting a little more, I think they're getting a little more realistic that this isn't going away, but it needs to have some rules. of the road and that we can, as a society, come to them together. The tiered regulation of crypto projects, my suggestion, is brilliant because it allows innovation. It doesn't stifle innovation, but with great power comes great responsibility. So if, you know, Tether was a $10 million product, who cares? But if it's $10 billion,

they should be treated a different way. If it's $10 billion, you need to get a license. You need to be here in the United States. Your CEO needs to sign documents. You need to be audited, not attestations, you know, another nonsense, right? Also, look for, I predict, taxes and all kinds of tax-related and reporting regulation to come very soon. And we know that that's been in some of these recent bills. Moving on in the news, I saw that Adele, who is wonderful and I'd love to see her in concert. I was just on, you know, when Chrome surfaces stories for you, I saw this, that she was upset that the resale prices for her concerts in Las Vegas in January, going for between 2000 and wait for it, $35,000 a ticket.

Show is called Weekends with Adele. And she's going to be playing on Fridays and Saturdays from January to April. That's a run. Oh my God, how much money is she going to make? According to TMZ, pre-sell tickets sold out in minutes due to bots, of course. Interestingly, the TMZ article noted that last week, Democrats and Congress, Congress introduced Stopping Grinch Bots Act. And this would stop ticket resellers from using bots to buy tickets instantly before

actual fans can get to them. And it wouldn't just cover tickets. It would also cover other highly desirable things like holiday toys and sneaker drops. That's a lot of regulation from the government, probably unnecessary for the government here. I just had an idea I wanted to float with you. We've been talking about NFTs and you can make them smart contracts. So everybody who goes to a concert gets an NFT, it has their ticket, it's got a hologram of whatever,

maybe it includes, you know, a live, live music, you know, or the rights to play the live music from your show. Maybe they take a picture of everybody, you get a picture yourself there. You can do all kinds of fun stuff, but more importantly, they would be resellable only add up to 10% more than you paid for them. That's it. Only 10% more. And you can only resell it twice, maybe.

In other words, if I bought the tickets, I could sell them one time and that person could sell them one time. So the most it could go up is a $100 ticket. We go to $110 and then you go from $110 to $121. And of course, Adele or the, you know, get that money or she could say any resales. I would like to give to this charity. So yeah, by all means, resell it if you can't make it. But that would be a beautiful way for us to stop this. And, you know, all it, I don't even think you would need to be too involved in crypto to do this because to, you could give people their ticket in a wallet like Apple does or ticket master does or any number of people do with, you know, a unique hash password, whatever.

It would only be if you want to resell it that you would need to get into crypto or whatever. So most people who are not reselling it, they would be fine. But when you go show up for the concert, you know, in these high value tickets, why not have the ticket? when it's purchased, the person who bought up to four tickets, at least one of those people has to show their driver's license, right? When I go to a conference and I bought a ticket, when you go to TED or, you know, other recode conference, whatever, and you pick up your ticket, your name is on your pass, right? So this could be a little bit of pain for individuals because you'd have to know who you're going to bring to the concert with you. But if you at least

know, the person who bought them is going and then, you know, their plus one could maybe not have to show their names. But this would be better for fans. And The Grateful Dead did this. They would sell their concert tickets themselves. You would be on their mailing list. You'd send them an envelope. They had a bunch of people in a hidden office somewhere up in Mill Valley, you know, north

of the Golden Gate Bridge, and they would email you tickets to your shows. And they just took control of their own things. And NFTs is a great way to do that. I'm guessing there are 78 startups that have written white papers and nobody's written a line of code for this yet. If anybody in the crypto space has done more. more than write a white paper with spelling errors in it, and you actually written some coding,

can do a product demo. I'd love to see it. It was the big problem. Every time I meet somebody, I was in an hour, Basel, everybody's telling me they have the greatest project ever. So you can show me a demo? And they're like, oh, we haven't, we haven't done it yet.

But we've just raised $10 million at $150 million posts. And I'm like, but you haven't built anything yet? Like, not one line of code. Nobody's building anything. Everybody's talking. I want to see product demos. Let's see some product demos, folks. All right, let's get on to the startup checklist.

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episodes of the startup checklist which was just a crazy idea i had at some point when i was riding my rad power bike to go get some Greek food. And I was like, what if there was a checklist, because we always obsessed over these checklists, checklist manifesto, great book. There's a checklist for founders where they could just go through this list when they start a company in their first year and make sure they don't miss something important. Well, here we are. We've done nine episodes and today's the 10th. You can see every single item in my notes and all the videos at this week in startups.com slash checklist. This week in startups. dot com slash checklist. And this is something you're going to want to print out. And maybe if you've got

two founders and two people on your management team, the five of you can get together and you can run through this, do it at an offsite, take a weekend, go to LA, go to Phoenix, wherever you, Austin, Miami. And maybe just for a couple hours a day, you go through these items and just see if any of them are things that are important for your startup. I'm going to make this into an e-book, I think, or maybe I'll just publish it as a book. I'll talk to my book publisher. I'll send to these videos. Maybe this could be a quick book I could do in addition to the one I'm writing. but today we're going to cover the items that you told us we missed or my team in watching this and going through the list said, you know, this didn't fit into the other categories,

but they're critically important. So again, the full checklist, this week in startups.com slash checklist. If you are an angel investor, send this to your new founders, first time founders, first year, year zero, year one, and they can catch up. Again, I don't expect that 100 of 100 of these is going to be new. information for you. It's a checklist. It's meant to be some of them are meant to be obvious, but could be great discussion prompts for you and your team and, you know, get out your journal and start writing and start thinking about these issues. Okay, item number 91 on our startup

checklist is understanding lean management. And it's critically important for you, especially in the age of remote work and the pandemic, is to, have some kind of reporting system that's not oppressive and micromanaging and that is led by the individuals. You want individuals on your team who can manage themselves ideally and you want managers who don't need to be standing over the shoulder of somebody watching them at a desk to make sure they're doing their work. If that's the case, you probably hired the wrong people and maybe you hired the wrong managers. I wrote a post in January of 2019. I titled it, lean management, the power of the EOD report.

And I came up with my own little device. And it works really well in Slack because Slack has become kind of where work coalesces. It's kind of like the water cooler or the open floor plan office. And the channels are where people kind of congregate. And a little bit of structure goes a long way. So I said, hey, at the start of the day when you're checking in, not clock punching, but just letting everybody know, hey, I'm here. You can just make an intention. You can start the day and say, here is what I would like to get done today.

Here's what I'm working on today. This serves two very important purposes. Obviously, it lets everybody else know what you're working on because you might have a manager or a coworker who needs help with something. Maybe what you're doing is much more important and you should do that. or maybe what they need your help on something else. And so they can look at it and go, oh, you know, that's not super important. Can you help me with this mission critical thing we're doing? Or maybe they can help you or maybe they see something you're working on.

They say, oh, I already did that. Or I was working on that last year before you even came to the company. Here's like my Excel spreadsheet or my Google sheet where I actually built that model. Maybe that would be helpful for you. So it really makes communication extraordinary. Now, the other reason is for you to feel, I don't know, a sense of, purpose at the start of the day. So you're not sitting there going,

I'm just going to go into Slack and read messages. I'm going to read the news. I'm going to go into my inbox and get lost for two hours, then eat lunch, and then hope nobody notices that I'm kind of coasting in the afternoon, right? You want to have some intentionality. You want to set some goals for yourself. And it's important that you write it, not your manager.

If the manager writes it, it's kind of lame. You should be able to write it. You should be able to direct your work. A manager, of course, can reply. Your coworkers can reply. And then you replied to that with what you got done. down at the end of the day. What's nice about that is we all have all these hours of the day. We're working all hours a day. We don't have a natural start and end time, which was our

commutes to the office. So since we don't have this, this kind of acts like a commute. You just get that nice warm cup of coffee and you write your start a day. At the end of the day, you follow up with it. And then what I'm seeing people are doing now is, in my company, is they decided to do it for the entire week. So they do a start of week at an end of week. S-O-W, Monday morning, E-O-W, Friday afternoon and then end of day, start of day, the other days of the week and the other time. So they do 10 of these a week. It could be one bullet point. It could be three.

Some people at the end of the week give me five sections with five bullet points under each. And it really becomes amazing for me as a CEO and a founder to read the end of weeks because I just now know who on my team is crushing it. And then they start putting links into it. So when my team meets with a company, they will link to their notes on the company. If they're selling ads to a company, they might link to. just the company's domain name and I can say, oh, this company wants to buy ads. Oh, that's kind of interesting. Or if we're hiring somebody, the person says, I'm interviewing people and they link to their LinkedIn. Okay, great. Now I can see that and say, oh, you know, I'm connected

to that person through this person. Communication people always say is the biggest problem at any company. Like literally, if you go to 100 companies and you ask 10 executives at each, now you got 1,000 votes, and you say, what is the biggest problem at this company? 900 plus times are going to say communication. Why do they say that? Because communication can always be better. Well, some sort of process where people are self-reporting and setting their own goals and doing it in a public fashion, it builds everybody's. It builds everybody's performance. And it lowers anxiety. Everybody knows what we're working on. And then you can have more rich discussions because it's not, hey, what are you working on. I know what you're working on. Everybody drinks coffee. They're right

there as they read everybody else's. And then if you're an ambitious person in company, you're a young person coming into a company, you see what everybody else is doing? Hey, okay, I see this person is really important, is working on diligence. Oh, I see this other person is doing meetings. Maybe I need to be able to, you know, at this venture firm I'm working at get on the diligence train, right? Or maybe I need to be able to do some of those first meetings or sourcing of companies. And it just levels the playing field of what work is being done in the company. And so you don't have to do my system. And I can tell you when I used to do this system, I had one or two people who are really respected, say I won't do it. And I didn't respect them all that much afterwards. It eventually

became clear with the people who didn't want to do this. It was only two people really out of like 16. It just weren't doing as much work as their contemporaries. And so it's much more fair, I think, for everybody to just say, here's my contribution to the company and leave it at that, right? And sink or swim. And I like a meritocracy. So I think it's very important. You can do whatever system you want. Some people like to use 15-5, a company we've invested in. Other people use OKRs. They've got other reporting systems. What's important is that you have some lean management system and the word lean is in there for a reason. It shouldn't be overbearing. TPS reports from the movie office space. We all know those are oppressive. So remember, you don't want to be oppressive.

You want it to be led by the individual and you you want to be congratulatory. So I just love to pop in there and just tell people a great job or tell me more about this. It just works great. Oh, yeah. And one point, don't leave the hardest stuff for the end of the day. When you're deciding on what you're going to work on today, you know, there's some easy things. You can put the hard things first, right? So if you got to make a strategy document or a model for the next two years, it gives you a little prioritization, right? I was going to ask people to put how much time they spent on things. I stopped doing that. I did it for a little while at Inside because I wanted to know how long they were spending on newsletters.

Once I realized a good newsletter takes some people two and a half hours, other people four, that it was going to be between two and a half and four, which meant a person who was full-time could write one in the morning, one in the afternoon, and have a little bit of time left over. So I just did that early on so they could share with each other when they started a newsletter, when they finished. And then actually the CMS tells us that anyway, so we don't need it, content management system. But it'll let you also prioritize, right? Sock 2 compliance is critically important.

Why? If you don't have your sock 2 type, you can't close major customers. Vanta's going to give you $1,000 off your SOC 2 right now. Vantus compliant software makes it easier to get and renew your SOC 2 because they continually test against technical and non-technical SOC2 requirements. They partner with over two dozen audit firms who have been trained to file SOC2 reports directly within Vanta. It saves a ton of time. And on average, Vanta customers are still. Sock 2 compliant in just two to four weeks compared to three to five months without Vanta.

Just take it from Kitty Hawk CEO John Hegrains, who heard me read Vantta's ad on this very program. And then he emailed me and told me how much he loves Vanta. John told me Vanta was essential in helping Kiti Hawk get Soctu compliant so they can target larger customers, which are the ones you want, those lighthouse customers who pay on time and who pay a very large contract. Don't screw it up, folks. Get that SOC2 compliance done with Vanta.

and you're going to unlock bigger sales and give your employees time to work on more business critical assignments. Vant is giving twist listeners. I kid you're not a $1,000 discount on their subscription. You just have to claim it at v-a-v-a-a-com slash twist. That's vanta.com slash twist to get 10 hundies, $1,000 waiting free at vanta.com slash twist. Go get it. Okay, item number 92, you got to hire people that are smarter than you. and a young founder sometimes get intimidated by people who are better than them. What you want to do and what I did was I hired Carol Martesco as an example who was a legendary

independent publisher when I was doing my zines. Elliot Cook, who was an incredible operations and strategy thinker who was with me to this day. I hired people who were smart at Brian Alvey, you know, clearly smarter than me and worked for me and then was my business partner on Weblogs Inc. Peter Rojas and Ryan Block, who were partners on Weblogs, Inch, Sean Gold, all better than me at what they did, whether it was, you know, their ability to write about tech and blog, they were better than me, they were better bloggers than me, and better at sales and partnership. So hire people who are better than you. This is critically important. You want people who can do things you can't, and there is this concept at Amazon of the barraiser.

You can do a Google search for that. They try to make every single person they hire somebody who raises the bar in some way. So Molly Wood coming here and helping on this week in startups. Listen, I mean, she's got a lot more experience candidly than the producers I currently have on the show because she's been doing it for a magnitude longer. So she is a barraiser. She's going to teach me stuff and she's going to teach our producers here at this weekend startup stuff. And we're up for that, right? Yeah, everybody likes to learn and we want the show to get better.

So hire people smarter than you, hire people who have more experience than you. And then let them teach you and let them make you better. you, if you're building a team and there's somebody who's a three-point specialist and your team is not good at three-pointers and you get Clay Thompson on your team all of a sudden, that may make everybody a better three-point shooter because

we're going to see Clay Thompson shoot 300 three-pointers after you know, practices over and we can all get in on that and he can give us tips. Okay, number 93 on our checklist, understand how to spend your capital efficiently. You want to be frugal. You don't want to be cheap.

And, you know, people waste money. I see people do it all the time. Don't waste money. If you have short tasks to do, you're going to, you know, use freelancers. You don't spend $20,000 on a logo when you raise, you know, a million dollars. That's a lot of money. But if you had raised $10 million, you can. And you can always spend $500 on a logo now, $5,000 down the road.

And when your company's profitable, you know, have a design consultant and then do a $50,000 rebranding, am at reimagining. There's always time to spend more money later. Office space is a waste of time. You know, you don't need Class A loss of space. You should have a dump. If you have any office space at all, uh, now everybody's working from home. And when somebody says, hey, I was getting paid this amount at Facebook or Google, you say, well, that's fantastic. If you want to get paid that, go work at Facebook or Google. This is a startup. You're getting compensated with equity. We're all here to build something and to be the underdogs. And you don't even entertain that conversation that you would ever be able to keep up.

So you want to allocate your capital intelligently for marketing. You know, if the marketing doesn't work, you're not just going to hire some agency and blow through your money and hope for the best. You're going to run small tests, tight tests, iterate, and make sure that that marketing spend works and not just spend blindly. I've seen people hire an agency, spend $300,000 on creative, blow through, you know, $700,000 on ads for three months, and then they get 100 customers and it costs them, you know, $10,000 a customer and the customers are only paying $1,000.

And it's like, okay, well, that was dumb. Maybe we should have done something as simple as just emailing people or, you know, going to a conference and networking. You have to, have to be frugal and you have to be guerrilla, guerrilla marketing, and be smart about how you deploy capital early. Professional services you can always negotiate. If you have an attorney, an accountant, et cetera, you can say, hey, we're young now. Can you cap these fees?

can you work with me here? You know, you don't need to travel to conferences and waste time on that. If you're going to spend $10,000 going to Art Basel, you know, business class and hiring hotels just to see if you can drum up a deal, well, could you have hired if you're going to do one of those business development meetings every month for $120K? Could you hire a salesperson who does it over Zoom and emails 10 people a day and does three phone calls a day? You probably would have got a lot farther. But maybe you want to go to Art Basel and party. Well, you're going to have to ask yourself, what is the most efficient use? and you are a steward of the capital you're raising from other investors.

So be wise about that. Don't be spending money. It's really bad optics when you waste money. When you see a young startup below 5 or 10% of their money on their office space, and the office space is really nice. And you're like, what are you people doing? Like, spend your money wisely because you never know when the market could turn. All right.

Item number 94, attention to detail. I want you to know the value of little big things. There is a website called little bigthings.com. and it just shows how in user interface being clever and having little things that people notice little refinements you see when you own a Tesla or an Apple product you see it when you fly Virgin America or Atlantic you see it when you go to an Amman hotel or a W hotel little things mean a lot Airbnb CEO Brian Chesky understood a lot of the little details that made things great as an example, somebody told him on Twitter, like, can you get the upload and the download speed of these locations?

Because I go and I've had this happen. I want to do video conferencing at an Airbnb. I got to do the podcast. And they, for some reason, you know, have elected to get the $12 a month internet plan, which can't do video. Where they capped it. I was at one place that capped. We watched two movies. And then all of a sudden, they're like, oh, yeah, you guys ran over the cap.

I'm like, we're paying $300 a night. The difference between like the capped internet of $20 and $80. just $60, just uncap it, and they uncapped it while we're there. You know, Brian Chesney made a tool that the hosts can actually, with an app, record, and then publish to their Airbnb pages what the actual speed of their internet is. So you could search for places where you can work and actually do video conferencing or recorded podcasts.

That's a big little thing or a little big thing. You want to obsess over little big things. And we just showed you the video if you're watching on YouTube. And I told Brian, I loved them on Twitter for doing this. Seriously, like little big things are so important and think that through. You know, sometimes I was amazed the first time I ever stayed at a nice hotel. I was staying at shutters. I was probably 23 or 24 years old.

I went for a run on the promenade in Santa Monica. I came back. And I kid you not, the valet or the, you know, person who was the bellhop walks up to me with a bottle of water and a towel, like a hand towel. And I looked at me, I said, that's not mine. And he said, no, no, I'm giving it to you for free. It's part of the service here at the hotel. You're sweating, and I thought you might like some cold water. I was like, really?

It's incredible. The first time I flew in business class with my friend Doug Rushkoff, they brought warm nuts. I had never had warm nuts in my life. I put my hand in the thing. I was like, whoa, these nuts are hot. And Doug Rushcroft was like, yeah, it's warm nuts. They do it on every flight. I started eating the warm nuts.

I was like, why don't we heat our nuts up at home? Yeah, it's warm nuts. are incredible. I literally went home and I got a ramekin and I started heating my nuts and my toaster oven. I'm going to do that today. Little big things. They mean a lot.

Okay, 95. You need to be able to do back of the envelope math. You hear me do this on the podcast all the time. It's a little party trick I do when I'm meeting with founders. Hey, how many employees you got? Oh, seven? Great. Oh, do you have an office?

Oh, yeah. We work. Great. All right, yeah. What's your sales? Oh, okay. You got $50,000 in sales a month. Okay.

Oh, you're in New York. Great. All right. Seven times, uh, maybe 90. thousand dollars, eight thousand dollars, seven thousand dollars all in per employee. All right. Seven times seven, four nine thousand a month. You have 50.

Okay. And you're spending 10 on your office space, maybe 10 on legal, spending 70. You're making 50. Okay, sorry, I just say, yeah, you burn's 20 and they're like our burns 18. How did you know? And then I just tell them the party trick. I talk about it in my book angel. You need to be able to do back of the envelope map.

And you need to be able to do it quickly because when you're doing things like talking about pricing, you're talking about expenses. This comes from building your model in Excel. or Google sheets over and over and over again and just having your calculator up. And I would model everything. Okay, if we have 15 newsletters at inside and we can get three classified ads a week or $150 each, just kind of what I went through for inside. I was like, okay, if we can have five, my original idea was to just have like five classified

ads at the end for a job or an event. It's like five ads at the bottom, 150 each, 750 a week. And then in my mind, I'd say, okay, 750 times 100 is 75, divide that. half 3750, something like that. So maybe 35K, 37K, 37K per week. Okay, got 750. Okay, if I do four episodes a week, if I pay somebody 100 bucks, 150 bucks a newsletter, that's three hours to write it.

That one ends up being 30 bucks an hour. Yeah, you can find freelance writers for 30, 40 bucks an hour to do that. And I was just like, okay, this business could work. It's possible it could work. And sure enough, we're profitable this year with a couple million dollars in revenue. And it happened exactly as I thought it would with my back of the envelope math. And I'm doing more back of the envelope math. I just did it with events.

I was like, well, I think we could do each newsletter could do one weekly event and then maybe a quarterly event or two big events a year. The weekly events, if we got a sponsor to give us $1,000 a week, that would be $50,000 a year. For those 50 events, we could probably sell it, you know, 15 or 20 events at a time and get 50 to 200 people at each weekly event. And then I modeled the events business. I was just able to do it in my head after 30 years of,

being an executive, you really want to be able to do that. Don't be intimidated. You just learn how to use Excel and you put numbers in there. You put it up on your screen and then you have a little discussion with your team. Hey, how many ads do you think you could sell? What's the minimum number of ads we could sell? What would be a price people would pay for those ads? That would be a no brand. How many people would we need to have come to the event? How many people would we have to invite to get to 100 people at the event? Okay, we think that 5% of people are going to come. Great. We need to have 2,000 active readers on the newsletter. Okay, we have 8,000 people. We're to easily be able to get to 100.

Okay, great. Maybe we'll set the target at 200 and we'll double the price of the sponsorship. You get the idea. Back of the envelope math, being able to think quickly with numbers, understanding how much revenue you're going to make it a year and how much you spend on, you know, the cost to do something will make you be able to just build a model in your head. If anybody's a great chess player, a backgammon player, you can look at the board and you know where you are, right?

Or you can look at your cards and know where you are. Okay, I have the eighth best hand here. There are seven better hands in poker. I'm up against two other players. There was a raise. It was a re-raise. Everybody's got strong hands. You know, I got a pair of queens and there's an ace and a king on the board. Ain't no chance that those other two other players don't have an ace or a king here. My queens are probably dead. I need to get out of here, you know? Like, you can really start to understand kind of intuitively where you're at.

It doesn't mean you're not going to try for a bluff, but you get an idea of where you're at. So do that back of the envelope math and get good at it. Okay, number 96. I just got to read the Mount Rushmore of management books. There's a debate over which ones. I like Checklist Manifesto. I like working backwards. I really love the No Rules Netflix culture book. Some people really like Good to Great.

Read the business management books. Some people would say lean startup. There's many different ones out there. I gave you four or five right now. Make sure you read them. Make sure read them with your team. And when you find a great book where the operating philosophy is something you want to have, buy the book, by the audio book,

and have a discussion with your team about the principles there. Ask them if they finished the book yet. If they didn't finish the book, ask them to finish the book. It really is great for everybody in the company to have read some of these seminal books so that they can share that system and apply it to your company. It's almost like shorthand. So we say checklist manifesto, we say working backwards in our company. We know we talk about writing culture and making checklists so that we avoid making mistakes.

You get the idea. Item number 97. I think going through your entire products workflow every week or a month is a really good idea. People forget to go through their sign-up forms and they don't refine their products. You really want to look at things with fresh eyes, create a new account, look at that drip campaign and go through your workflow. Des Trainor was on episode 543 back in 2015. And on that episode, he said, all founders should go through their entire product workflow at least one time per week. that's pretty intense.

This means you sign up as a new user, you go through the onboarding process, and you just understand what it looks like because sometimes you forget. And then what are you going to focus on? How do I make this faster? Less clicks, less friction, less time, less annoyance, and make it clear.

Okay, item number 98, you want to avoid shiny object syndrome. This is something I've given you a thousand metaphors about. But if you've got a business, and it's working, and Web 3 comes out, and somebody says, you know what? This Uber thing is amazing,

but what if it was a Dow? Airbnb is amazing. But what if it was decentralized? You know what? That's a great thought experiment. But if you've got a hundred million customers, they're delighted in, you're growing 30% year over year, I would stay focused on that. If you want to put somebody on a, you know, a little side project here to model something out, that's fine. But too many founders see some shiny new object happen, some new feature, and they don't finish their existing features. They don't refine them and they never get to true product market fit. So avoid what people in the industry call founder ADHD. And if you find oil, you keep drilling. So many times, a founder

will say to me, hey, we drilled for oil. We found oil. I'm like, great. You want to drill deeper? And they're like, no, I think I'm going to go over to that stream with this pan and see if I can pan for gold. I'm like, that's a great idea. There's 50 people over there panning for gold. There might be gold there. There's nobody over here on this oil field. And we just drill for, I don't know, three more months, one more quarter and see what happens. That's what I did with the newsletter business at Inside. I just kept drilling. That's what I did with the syndicate.

That's what I did with this week in startups. I wonder if I did two episodes a week if we get better, three episodes a week if we get better. I wonder if we started meetups if we get better. With Inside, I wonder if we did five newsletters, 10 newsletters, 15 newsletters, would it get better? But if we do events, I kept drilling, kept going deeper, pulling the thread, seeing if it gets better. That doesn't mean you just keep launching new products, right? You got to be very careful.

A new product means a whole new set of things you need to maintain, products, people, businesses, constituents. Okay. Number 99. Align your team around monthly updates. Sending monthly updates to your investors is inspiring and giving each of your team the ability to track their metrics weekly and then roll them up monthly and then know that that information is going to investors,

man, it puts everybody on point. This is why when we invest in companies, we ask them to send us a monthly update. I would say on average, they send six, seven, eight a year. Some people said none. We have to, and we just know, those people who said none, they're probably doing poorly, they're not good leaders.

They don't inspire their team. And so, you know, maybe we made a mistake investing in them, or maybe they need to get a better support team around them because they may just be waiting for good news to happen, and then they run out of money. are like, is this company even in business? I haven't heard from them in 12 months. And to be totally honest, the companies in our portfolio that have done the best send a monthly

update internally because they want everybody on the team on the same page. So it's not just for investors. It's also for everybody who works in your company to be able to then take in that celebration and just pause for a minute every month on the 15th and say, listen, it's December 15th. Man, sales team killed it in November. Product team killed it. Hey, customer support. We're behind our ticket times are taking longer, but we got a plan. Here's to plan. Just absolutely fantastic. And number 100, some people are going to think this is silly, but, and it's, it certainly is a no-brainer. But never lie about where you're at, to yourself, to your team, to investors, especially. You want to be candid. You want to be up front. You want to

face the music. If you're drilling for oil and nothing's coming out, you're to be honest about that. and if 10 gallons of oil are coming out, you tell people it's 10. You don't tell them you're on a run rate for 100 just because one gallon happened to come out fast because, I don't know, you just hit a pocket of oil. You never bend the truth. You never lie. You never exaggerate. If people are on a trial and they're not paying, you say they're on a free trial. You don't say they're a customer.

Call them somebody who is a free user. They're trialing the software. If somebody's in your pipeline, that doesn't. mean they have a free trial. If you give them a free trial and they never log in, they're not on a free trial. You're trying to get them on a free trial. It's important because if you're selling securities and you're almost always in a startup, either preparing to sell securities or in the process of selling securities, you're committing securities fraud when you lie about the reality of your business. And misrepresentations and losing your credibility,

it's just not worth it because you can go to jail. You can ruin your reputation. You can burn yourself with employees, with stakeholders, investors, your customers, be honest in all things, except the reality of your startup, and the truth shall make you free. You know, one of the issues we had at a company I was at was that people were not renewing. And, you know, we did have sales rising, but the same time we had churn problems. And I said, what's the story with the churn? And they were like, yeah, you know, we're growing. And I was like, but are we growing or are we on a treadmill that is not sustainable? And we just had to be. a candid discussion about it and I said,

can we just talk to everybody and ask them to answer and give them a prompt and say, check all that apply? Why did you stop using Acme's product? Too expensive, not enough value, too slow, couldn't understand it, found a better solution, other. And we just let them check it off.

And, you know, it wasn't price. It was that they didn't understand how I use the product. And so it was like, okay, product's too complex. We've got to simplify this thing. Or they didn't get enough value from it. Okay, they don't know the features. So it's a training issue. okay, let's do training.

Let's train people on how to use. Let's invest in a customer success person, right? The truth shall make you free. All right, everybody. This wraps up the startup checklist. 100 items across 10 episodes of this week in startups. Hardest working team in startup land. Put this together.

Thank you to Charlie, Nick, Jackie, Ashley, Fresh, Marine, Rachel, Justin, everybody worked on and did a great job. Thank you so much. It's a great list. Share it. feel free to remix it. You can copy it. You can change it.

Just link back to the original Thisweekinstartops.com slash checklist. Thisweekinstartops.com slash checklist. And we'll see you next time on this weekend startups. Bye-bye.