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In 2014, I published a post called Do Startup Require Less Capital to Succeed than 10 Years Ago? It’s been five years and time to see how things have changed. In the analysis, I created a metric, the return on invested capital (ROIC). ROIC is the number of revenue dollars that one venture dollar bought.

In other words, at IPO, how much revenue per VC dollar did the company generate. In 2014 we saw increasing efficiencies over time, which was very exciting because it reaffirmed the efficiency of SaaS go-to-market.

In early and developing markets, selling complete products is often a superior go to market strategy, rather than selling an innovation in a layer in the stack. This is true for five reasons.

First, for early customers to generate value from a novel technology, that technology must solve a business problem completely. End-to-end products do that. Layers in the stack don’t. They optimize existing systems. In early markets, customers want to buy a car, not a better camshaft.

In the past few years, Zoom has become a verb: the act of video conferencing someone. Eight years ago, Eric Yuan, former VP Engineering at WebEx left to create a business with a better video conferencing product. He and his team authored a new codec, which is far more resilient than others. The innovation results in higher quality calls. Focused on capital efficiency from the earliest days of the business, Eric has built a monster software business, with few comparisons in both absolute scale and efficiency. The company filed their S-1 on Friday.

Imagine-75 years ago-our Commencement date was listed as January 1, 1943. Our “last supper” date was December 12, 1942. It was in the main dining room. President Hopkins and Arthur Hayes Sulzberger, president and publisher of the New York Times, were the keynote speakers. No pomp, no valedictorian, no honorary degrees, no cap and gown, no family. The dinner ended with hugs and tears eyes. We scattered in different directions the next morning. We were facing World War II in its darkest moments…91% of the class was headed for the armed forces.

PagerDuty was founded in 2009 by 3 former Amazon engineers who were often on-call. To engineers, being on call means carrying a pager to respond to crises when software breaks or services go down. In the 10 years since that day, PagerDuty has built an exceptional business.

Their product has evolved from on-call management, which includes routing calls, triaging alerts, and creating workflows to handle crises in real time; to an incident management platform that manages the standard operating procedures for responding to crises; to real-time operations dashboards that provide visibility and health scores for infrastructure.

Rewind a decade. Angel investing was an important part of the Startupland ecosystem. Today, you can’t make the same argument. 2018 observed the fewest number of angel-led financing rounds since before 2010. Angels led 156 rounds last year, a figure that collapsed from 714 in 2015. In that same time period, the median angel round has fallen from $500k to $270k. And the total number of dollars invested by angels halved from a peak of $365M to $177M.

A founder posed me a question earlier this week: Do you have any data/perspective on whether it’s worth keeping the unassisted free trial flow vs. providing only one path which leads to a demo and an assisted free trial? This is a complex question. Let’s break it down.

The unassisted free trial has benefits. There’s a deeper discussion in this post: Confessions of a Perpetual Freeloader.

1. You capture the buyer at the point of maximum intent and reduces the activation energy of the sale.
2. You broaden the universe of people who try the product. You educate the market on your product.
3. You establish longer term relationships with customers since they can engage with the brand and product earlier on in their journey.
4. You create barriers to entry by reducing the cost of customer acquisition and inhibit newer competitors who might disrupt using this acquisition strategy.

There are also costs.

Last week, the dynamic Harry Stebbings and I recorded episode 213 of the Saastr podcast, where we discussed the learnings from the free trial survey in a bit more detail. Harry’s a wonderful interviewer, and moves effortlessly from topic to topic. I made him laugh once later in the show when I told him about the last book I read. Normally, he’s the one making me laugh.

When I was a teenager, I read many books about Dr. Richard Feynman. The irreverent but kind Nobel prize winner in physics became famous for his contributions to quantum mechanics. Though I’ve never understood quantum mechanics all that well, I’ve always admired Feynman, like many others.

To read Surely You’re Joking, Mr. Feynman is to hear about his upbringing in Queens, New York, where as a boy Feynman teaches himself advanced math, plays practical jokes and fixes radios during the Great Depression to help neighbors, and impresses all of them with his intellect.

I remember the first time I visited China. We landed around 11pm local time in Beijing in the midst of the summer heat wave. As we landed, humidity fogged the Boeing’s windows, and the runway lights projected mirages from the haze. I could have sworn that heat was the product of a billion people’s fervent labor to advance their country and pull themselves into a new era.

Since that trip, when I visited RenRen, Autonavi and a few other blossoming startups, the Chinese startup ecosystem has grown tremendously. Chinese startups raise nearly half of all venture capital dollars and nearly 100 are valued at $1B.