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Words like Loaded Pistols. What an arresting title for a book. I decided to read it just based on its cover. In the first few pages, I learned that it’s a book about rhetoric.

What is rhetoric? I met a few people in college who studied it, and I thought it had to do with logic or philosophy. I was wrong. It’s the art of convincing others with words.

Rhetoric formed a major part of educational curricula before the mid-20th century, but has fallen out of favor for other disciplines. I wish it hadn’t.

When investing in a crypto startup that will issue a token, an investor considers two prices - the price of the equity and the price of the token. There’s a rule of thumb used today that states the token should be worth 3-5x the equity.

A founder informed me the rationale is that a share in a company has a lien on the future dividend streams, but a token has a lien on profit share of the GDP around an economy and that economies tend to be 3-5x larger.

Imagine an AE closes two contracts for $100k ARR. The contracts are identical twelve month contracts except for the payment terms.

Contract A requires annual prepayment - all the cash will be paid tomorrow. Contract B relaxes payment terms to monthly payment, 12 monthly installments for the next year.

Is the payback period for each contract the same?

On one hand, I could plug the numbers into the formula blindly and reply yes, they are identical.

The 100x ARR multiple might be the fundraising meme of 2021. Before, most investors used forward ARR multiples to value companies, but recently, the 100x multiple seems to be a benchmark for SaaS companies raising rounds.

Where did this figure originate? How does it compare to the public markets’ valuation of companies?

Let’s look at the data. Here are the estimated ARR multiples for public SaaS companies. I estimated ARR as the annualized revenue of the most recent fiscal quarter.

We believe the 2020s are the decade of data. The trends are ubiquitous and plain. The number of data teams is growing as more companies rely on data for daily operations. In addition, the sophistication of these teams has progressed meaningfully in the last five years.

During this period, there have been three main categories of data work: business intelligence, machine learning, and exploratory analytics. Of the three, exploratory analytics is the least developed so far.

Reversing a problem is a common mental model for thinking about a challenge in a novel way. Especially in investing.

Google’s share price is $2863.55 as I write this. Is it a good price to buy?

The traditional way of thinking would lead one to build a bottoms-up model with a few assumptions and compare the output to the price.

But that approach ignores some critical information: the price. Price implicitly conveys the market’s expectations: how the company will grow, how valuable it will be, how strong the management team is. Most public companies are valued on the next ten years’ discounted cash flows. As Claude Shannon said, information is surprise.

co-authored with Patrick Chase

We are thrilled to announce that Redpoint has partnered with Spot AI to lead their $20M Series A.

Video cameras are everywhere: in warehouses, factories, car washes, hospitals, schools, banks, and stores. These cameras generate petabytes of data daily, but the software interfaces to access video today limit their use and value.

Spot AI enables simple access to insight from video. Spot AI builds an artificially intelligent camera system that stores video, analyzes it, and enables collaboration across a team. Plus, it’s plug and play.

Crypto companies that launch a token maintain two capitalization tables: equity and token cap tables. They are distinct but related.

Let’s look at a hypothetical crypto company’s cap tables. On the left, the cap table shows a company that has raised a Seed, A, B, and C rounds. In addition, there are allocations for the founders & employees, plus the Employee Stock Option Pool (ESOP) for new employee grants and retention grants.

Passive venture capital investing is a relatively new idea. But it’s transforming the industry. As later stage investors permeate venture capital, they are amassing index funds of startups. If the public equities market is any indication, passive investing is here to stay.

In public equities, passive investment funds constitute 54% of total dollars in the market, according to Bloomberg Reseearch.

Stripe is the most valuable private company in the US. The company started out life as /dev/payments helmed by two brothers from Ireland. Today, Stripe is synonymous with payments and tallies more than 15 products. From fraud to reporting, company incorporation to carbon removal, Stripe has redefined itself again and again. This level of success requires masterful leadership.