I remember one time I had this guy call me up, wanted to pitch me, right?
Wanted to sell me stock. So I let him. I got every fuckin’ rebuttal outta this
guy, kept him on the phone for an hour and a half. Towards the end I started
askin’ him buying questions, like what’s the firm minimum? That’s a buying
question, right there. That guy’s gotta take me down. It’s not like I asked
him, what’s your 800 number? That’s a fuckoff question. I was givin’ him a run
and he blew it. Okay? To a question like what is the firm minimum, the answer
is zero. You don’t like the idea, don’t pick up a single share. But this putz
is tellin’ me you know, uhh, 100 shares? Wrong answer! No! You have to be
closing all the time.
We’re not in the boiler room anymore, but angel has changed a lot in the last
decade.
Recently one of my portfolio founders was talking to me about fundraising and
said a VC frowned on his $1k minimum check size in the round, said that he
needed to up that to $25k or $50k (or more!)
There’s a few historical reasons for this suggestion, and they’re all wrong
today.
Small checks don’t muck up the cap table
First one was the biggest: Section 12(g) of the Securities Exchange Act of 1934
(roughly) meant you had to go public once you hit 500 shareholders. This dinged
a lot of companies like Facebook, since, you know, it wasn’t 1934 anymore and
the financing economics behind venture capital had changed dramatically.
When you hear “clean up the cap table”, a lot of it comes from this historical
point of view, that it becomes problematic having so many shareholders of a
company. That’s gone for a couple reasons.
The JOBS Act (Thanks Obama!): 2012’s JOBS Act expanded the amount to 2,000
“holders of record”, or 500 who weren’t accredited investors.
RUVs, SPVs, Rollups, oh my!: The biggest change lately is that of
roll up vehicles.
AngelList kicked off a new approach that let 250 individual investors get rolled
up into a single entity on your cap table, so even if you add 250 small checks
in your round, you’re still only effectively adding a single “shareholder”.
There are a few drawbacks of using a roll up vehicle for the investor
themselves: the main one is that you’re entering through an intermediary,
usually one controlled by the founder themselves, so theoretically you won’t
have direct influence on your equity or voting power. In practice I’ve found
this to be never relevant for angels: by definition of being a small check, your
equity power isn’t going to hold much weight in the first place, so who cares.
You looking for the return exposure, not legal power over the company.
Small checks don’t water down your attention
Another thing that I’ve heard come up is that you’re suddenly going to have more
people who care about your company to respond to and talk to, and I guess that’s
a pain and a real drag on your time and company. If that’s the case: why the
fuck did you take their check in the first place??
Seriously. Someone being excited to give you feedback on your investor updates
is a good thing. And from a technical level, they’re just another BCC on the
monthly email. (You aresending regular investor updates,
right?)
I’ll give you another tip: things can change, and it’s super fine if they do.
For example: the investors that help you out from your pre-seed days aren’t
necessarily the same ones that will help you out around your Series D. A number
of my later stage companies switched from “let’s chat frequently” to “we’ll chat
every now and then”, and… that’s great! I know I’m a better fit early on, and I
want them to keep focusing on the wild fuckin’ returns they’re bringing to my
shares. So no, I don’t see an issue with ruining your attention.
You don’t need to turn the screws on someone for a few grand
I’ve increased my check size a few times over the years because a founder has
requested it. Every single time I’ve regretted it. I don’t think this has
explanatory powers, but I wanted to point this out because I’m still angry about
each of those, lol.
If you’re doing a purely pre-seed angel party round, sure, I could see the
desire to try to move someone from a $1k to a $10k check, but if you have any
institutional checks in the round they’re going to dwarf the angels anyway… so
who cares?
You don’t need an actual check size at all
I was going to do the standard “hey, $1k is a fine minimum check size”, which is
kind of the standard “we’ll take anyone!” amount founders mention these days,
but I don’t think that’s right. The correct answer — to borrow from Boiler
Room — is zero.
By that I mean this: think hard about the person you’re talking to and if they
can have a real impact on your business. When you start talking about check
sizes, you realize $1k is a pretty fucking easy barrier to clear in terms of
billable hours: do you think you can get $1k in value from this person as an
advisor, as a networker? That same question can go for zero: even if they don’t
pay you anything, would you give up a few grand’s worth of a SAFE now in order
to meaningfully benefit from this person’s experience and network?
It’s a classic “grow the fucking pie” problem: smaller slice of a way bigger pie
is the whole ball game when it comes to startups. You want more good people on
your boat, and if you’re worried about a couple thousand bucks when you’re also
raising a couple million from a traditional fund or whatever: what are you even
thinking?
Party rounds are back in, baby
The more the merrier. Startups are already a very lonely road: there’s no reason
not to bring some new friends to join the experience with you.
I remember one time I had this guy call me up, wanted to pitch me, right?
Wanted to sell me stock. So I let him. I got every fuckin’ rebuttal outta this
guy, kept him on the phone for an hour and a half. Towards the end I started
askin’ him buying questions, like what’s the firm minimum? That’s a buying
question, right there. That guy’s gotta take me down. It’s not like I asked
him, what’s your 800 number? That’s a fuckoff question. I was givin’ him a run
and he blew it. Okay? To a question like what is the firm minimum, the answer
is zero. You don’t like the idea, don’t pick up a single share. But this putz
is tellin’ me you know, uhh, 100 shares? Wrong answer! No! You have to be
closing all the time.
We’re not in the boiler room anymore, but angel has changed a lot in the last
decade.
Recently one of my portfolio founders was talking to me about fundraising and
said a VC frowned on his $1k minimum check size in the round, said that he
needed to up that to $25k or $50k (or more!)
There’s a few historical reasons for this suggestion, and they’re all wrong
today.
Small checks don’t muck up the cap table
First one was the biggest: Section 12(g) of the Securities Exchange Act of 1934
(roughly) meant you had to go public once you hit 500 shareholders. This dinged
a lot of companies like Facebook, since, you know, it wasn’t 1934 anymore and
the financing economics behind venture capital had changed dramatically.
When you hear “clean up the cap table”, a lot of it comes from this historical
point of view, that it becomes problematic having so many shareholders of a
company. That’s gone for a couple reasons.
The JOBS Act (Thanks Obama!): 2012’s JOBS Act expanded the amount to 2,000
“holders of record”, or 500 who weren’t accredited investors.
RUVs, SPVs, Rollups, oh my!: The biggest change lately is that of
roll up vehicles.
AngelList kicked off a new approach that let 250 individual investors get rolled
up into a single entity on your cap table, so even if you add 250 small checks
in your round, you’re still only effectively adding a single “shareholder”.
There are a few drawbacks of using a roll up vehicle for the investor
themselves: the main one is that you’re entering through an intermediary,
usually one controlled by the founder themselves, so theoretically you won’t
have direct influence on your equity or voting power. In practice I’ve found
this to be never relevant for angels: by definition of being a small check, your
equity power isn’t going to hold much weight in the first place, so who cares.
You looking for the return exposure, not legal power over the company.
Small checks don’t water down your attention
Another thing that I’ve heard come up is that you’re suddenly going to have more
people who care about your company to respond to and talk to, and I guess that’s
a pain and a real drag on your time and company. If that’s the case: why the
fuck did you take their check in the first place??
Seriously. Someone being excited to give you feedback on your investor updates
is a good thing. And from a technical level, they’re just another BCC on the
monthly email. (You aresending regular investor updates,
right?)
I’ll give you another tip: things can change, and it’s super fine if they do.
For example: the investors that help you out from your pre-seed days aren’t
necessarily the same ones that will help you out around your Series D. A number
of my later stage companies switched from “let’s chat frequently” to “we’ll chat
every now and then”, and… that’s great! I know I’m a better fit early on, and I
want them to keep focusing on the wild fuckin’ returns they’re bringing to my
shares. So no, I don’t see an issue with ruining your attention.
You don’t need to turn the screws on someone for a few grand
I’ve increased my check size a few times over the years because a founder has
requested it. Every single time I’ve regretted it. I don’t think this has
explanatory powers, but I wanted to point this out because I’m still angry about
each of those, lol.
If you’re doing a purely pre-seed angel party round, sure, I could see the
desire to try to move someone from a $1k to a $10k check, but if you have any
institutional checks in the round they’re going to dwarf the angels anyway… so
who cares?
You don’t need an actual check size at all
I was going to do the standard “hey, $1k is a fine minimum check size”, which is
kind of the standard “we’ll take anyone!” amount founders mention these days,
but I don’t think that’s right. The correct answer — to borrow from Boiler
Room — is zero.
By that I mean this: think hard about the person you’re talking to and if they
can have a real impact on your business. When you start talking about check
sizes, you realize $1k is a pretty fucking easy barrier to clear in terms of
billable hours: do you think you can get $1k in value from this person as an
advisor, as a networker? That same question can go for zero: even if they don’t
pay you anything, would you give up a few grand’s worth of a SAFE now in order
to meaningfully benefit from this person’s experience and network?
It’s a classic “grow the fucking pie” problem: smaller slice of a way bigger pie
is the whole ball game when it comes to startups. You want more good people on
your boat, and if you’re worried about a couple thousand bucks when you’re also
raising a couple million from a traditional fund or whatever: what are you even
thinking?
Party rounds are back in, baby
The more the merrier. Startups are already a very lonely road: there’s no reason
not to bring some new friends to join the experience with you.
Awhile back I asked my friend Leah Culver about how
she tracks angel investments, because I was just getting into angel investing
and it seemed weird that everyone just had some shitty spreadsheet setup to keep
track of all this stuff:
Anyway, her answer was “a spreadsheet”. And that was the same for all the others
I asked then, too.
That was seven years ago. I always figured all these rich angels and VCs who
were deep into futuristic next-generation technology would spur some clever tool
to track all of their holdings at some point, but that ain’t happen. It’s
almost enough to think that this crowd might not have their finger on the pulse
of technology after all. HMMMM.
Anyway, I always had some crazy shit in my head that I wanted to see built, and
after a couple hundred angel investments and five different attempts
(Numbers.app => Airtable => Notion => bespoke app => Notion), I finally build
the damn thing: Signed launches today. Sign up at signed.com.
Spreadsheet++
Hey, I’m not knocking spreadsheets. They’re
incredible
(even for non-profits, too).
But I always hated distilling an entire angel investment and my entirety of
working with the company down into a single row in Excel. There’s so much more
to it!
What’s more, I’d wager 95% of the angel spreadsheets I’ve looked while building
Signed are absolutely trash. It’s actually been pretty jaw-dropping, at times; I
know some investors running multi-million dollar portfolios through effectively
a single row of “company” and “amount invested”. Even “date invested” is hard
for some to track down, much less return profile, IRR, PPS, and all sorts of
other things you can derive from your financials and the company itself.
You can’t improve unless you first measure. So Signed helps me manage a ton
now, and accordingly I’ve never had this much visibility into my own portfolio.
Investing is a social activity
One of the things that’s really bothered me is that
investing is inherently a social activity,
but it’s done almost entirely behind closed doors: private introductions, cold
emails, even literal closed doors to the meeting room. AngelList had a concept
of social activity around their offerings, but years ago they’ve fucked off to
chase funds and SPVs. So ironically we didn’t even have a List of Angels really
anywhere (not sure what we’d call it).
Anyway, now we do: Signed has public profiles and
woooooo boy do I have a lot of really cool shit I’m ready to build on top of
this in the very near future.
Private markets? Everyone’s an investor.
I’ve been building Signed over the last year or so, and it’s been an interesting
time to build something in the private markets: startups are continuing to wait
ever-longer durations to make it to IPO, and secondary offerings have
caused some big dilemmas for
investors and employees alike. None of this is looking like it’s changing any
time soon, and it’s a good time to get a handle on all this- even if you’re an
employee. Free accounts’ll let you track your employee equity just like an
investor does.
And you should: startup equity is a lottery ticket… until you hit it big and
then you realize thinking it as a “lottery ticket” was doing you a disservice
the entire time. It’s an investment, and you should treat it as such.
ship it 🐿️
So Signed is live now! It’s been in beta for a few months, and though we just
have dozens of early users, Signed is already tracking $75M in equity, which is
a pretty exciting start. So much more yet to build (and write! — there’ll be
plenty of new posts on my blog and the Signed Blog
this year as well.) Have at it! signed.com
Awhile back I asked my friend Leah Culver about how
she tracks angel investments, because I was just getting into angel investing
and it seemed weird that everyone just had some shitty spreadsheet setup to keep
track of all this stuff:
Anyway, her answer was “a spreadsheet”. And that was the same for all the others
I asked then, too.
That was seven years ago. I always figured all these rich angels and VCs who
were deep into futuristic next-generation technology would spur some clever tool
to track all of their holdings at some point, but that ain’t happen. It’s
almost enough to think that this crowd might not have their finger on the pulse
of technology after all. HMMMM.
Anyway, I always had some crazy shit in my head that I wanted to see built, and
after a couple hundred angel investments and five different attempts
(Numbers.app => Airtable => Notion => bespoke app => Notion), I finally build
the damn thing: Signed launches today. Sign up at signed.com.
Spreadsheet++
Hey, I’m not knocking spreadsheets. They’re
incredible
(even for non-profits, too).
But I always hated distilling an entire angel investment and my entirety of
working with the company down into a single row in Excel. There’s so much more
to it!
What’s more, I’d wager 95% of the angel spreadsheets I’ve looked while building
Signed are absolutely trash. It’s actually been pretty jaw-dropping, at times; I
know some investors running multi-million dollar portfolios through effectively
a single row of “company” and “amount invested”. Even “date invested” is hard
for some to track down, much less return profile, IRR, PPS, and all sorts of
other things you can derive from your financials and the company itself.
You can’t improve unless you first measure. So Signed helps me manage a ton
now, and accordingly I’ve never had this much visibility into my own portfolio.
Investing is a social activity
One of the things that’s really bothered me is that
investing is inherently a social activity,
but it’s done almost entirely behind closed doors: private introductions, cold
emails, even literal closed doors to the meeting room. AngelList had a concept
of social activity around their offerings, but years ago they’ve fucked off to
chase funds and SPVs. So ironically we didn’t even have a List of Angels really
anywhere (not sure what we’d call it).
Anyway, now we do: Signed has public profiles and
woooooo boy do I have a lot of really cool shit I’m ready to build on top of
this in the very near future.
Private markets? Everyone’s an investor.
I’ve been building Signed over the last year or so, and it’s been an interesting
time to build something in the private markets: startups are continuing to wait
ever-longer durations to make it to IPO, and secondary offerings have
caused some big dilemmas for
investors and employees alike. None of this is looking like it’s changing any
time soon, and it’s a good time to get a handle on all this- even if you’re an
employee. Free accounts’ll let you track your employee equity just like an
investor does.
And you should: startup equity is a lottery ticket… until you hit it big and
then you realize thinking it as a “lottery ticket” was doing you a disservice
the entire time. It’s an investment, and you should treat it as such.
ship it 🐿️
So Signed is live now! It’s been in beta for a few months, and though we just
have dozens of early users, Signed is already tracking $75M in equity, which is
a pretty exciting start. So much more yet to build (and write! — there’ll be
plenty of new posts on my blog and the Signed Blog
this year as well.) Have at it! signed.com
Part of the annoying thing about angel investing is that you’re ostensibly
investing in CUTTING EDGE FUTURE STARTUPS who are about to BRING THE FUTURE TO
YOUR FACE and in order to do this you have to go through some of the worst
software and processes on the goddamn planet: banks, and laws.
Some cool stuff remains, though.
Money
EUROPEANS AVERT YOUR EYES FOR THIS SECTION
Thank god we got all the Eurovestors to skip this section, because it’s going to
be a disaster of our own American™ making.
Our banking system is trash. I don’t have to tell you this; everyone knows it.
But it’s particularly bad if you want to do things with the money at your bank.
(Don’t worry; if you don’t want to do anything with your money, banks are still
bad.)
I have burned through so many banks over the years. First, you start with one
of the Big Four banks, because that’s what you bank with and you figure hey, I
have money here, let’s send it to someone. There’s your first mistake: it seems
banks employ scores of teams specifically to prevent you from sending wires or
ACHs. (This was facetious when typed, but honestly… probably not wrong,
considering the fraud they incur from this broken system.)
Some banks will bury transfers behind administrative debris: first you have to
create a Company record, then a Person, then you have to add their bank details
with pasting disabled in your browser because they assume typing 9+17+17 numbers
by hand is going to be less error prone than pasting it directly from your wire
instructions.
You’ll also see process limitations: sometimes you can only send three wires a
month, or only receive three wires a month. Or maybe they’ll cap transfers at
$1,000. Or I’ve had one bank straight up not allow me to send transfers at all
unless I call in and repeat the numbers by voice to my banker.
I had many other points to add here, but this is not designed to be an anti-bank
screed (you’d be here reading for forever). Suffice to say, American banks don’t
want you to move your money.
Eventually I just realized it’s best to actually go with a bank that is designed
to transfer your money. I ended up going with Wise
(normal link and
referral link if you want some fee-free
transfers or something). Wise was built specifically to transfer money quickly
and cheaply globally, and it turns out they’re pretty good at it. Their security
is quite good (but not overbearing), they let you upload a PDF of wire
instructions and parse the account numbers and amount for you, and generally it
works great as a sort of “slush fund”, where you just use it as a holding
account before sending out or receiving it elsewhere. They also have a kind of
sudo mode like we built
at GitHub
where you’re not constantly getting hammered by 2fa requests.
One of the things you can play around with as an angel is how you invest in
companies, legally. There’s a few different approaches:
Invest as yourself, under your own name (easiest)
Invest as your trust (easiest for estate planning)
Invest as an LLC
I’ve done all of them (and then some), for varying reasons. The first two are
fairly straightforward: I’ll cover the latter briefly.
One thing I loathe as being a more serious angel is that you get lumped in with
all the other angels who might invest in one or two companies a presidential
term but still call themselves an “angel”. You see a lot of funding rounds of
“We raised from Sequoia, Hustle Fund, and a bunch of angels!” It’s that “a bunch
of angels” which is kinda shrug.
Something I’ve done in the last few years is incorporate
Tifo as an LLC, in an aim to group my investments somewhere
between traditional venture fund and occasional angel. It’s nice to have a
separate brand you can expand over time. For incorporating I just used
Doola, which I’m not a huge fan of but it exists as an
option. If I did it again I’d probably just use
Stripe Atlas for the LLC- I’ve incorporated a c corp
with them a number of times over the years and it’s just not trashy like Doola
and all the other registrars are. There are some concerns with investing out of
an LLC if you want QSBS treatment; give it a research prior to jumping into
things.
One other more advanced approach you can take: I also have a trust for Tifo
which specifically invests out of my Roth IRA. My dad, of course, thinks this is
a terrible idea, but it’s not a meaningful amount of money, and it’s something I
can afford to risk. The benefit of this is twofold: any gains you make are
tax-free, and it also involves far less reporting overhead (to the point where
it’s actually pretty alarming how much you just… don’t have to report to the
IRS; makes life much simpler). My Roth investments are primarily short-to-medium
term bets in later stage companies, with the hope to compound faster and with
(slightly) less risk than a pre-seed company I might normally invest in.
There are some real concerns with this approach, though: QSBS treatment might
save you a lot of taxes, anyway, so that underlines another motivation to look
towards later-stage (ie, non-qualifying) companies for this. You also do have
some reporting and bookkeeping concerns — it’s not just totally the Wild West
here. And there are some critical laws around self-dealing which is a huge
no-no.
It’s also a pain in the ass to do right now. You want a “checkbook IRA”, which
allows you to write checks for qualifying investments as you see fit. Best I’ve
spotted is Rocket Dollar, who tries their best
to break their platform every couple of days (it’s currently not allowing
sign-ins for the last week because… reasons?) But at the end of the day it does
let me make these Roth investments, and hopefully in another decade I’ll have
billions of dollars in it like some other truly evil people in the Valley.
Portfolio tracking
Once you shoot a wire over to a company, you really should track its performance
over time. I just launched Signed for this reason. No, I’m
not going to make a harder sell here. If you’re interested in seeing more, go
check it out; it’s fucking awesome.
Meeting notes
The other thing I wish I did more religiously during my first few years of
investing was taking a lot more notes during pitches, during 1:1s with portfolio
companies, and keeping track of things better. I’ve used various CRMs for this
over the years — now I used Signed, of course — but the point is to use
something. The more founders you meet, the harder it is to pull these
conversations to front-of-mind years after you made your initial investment.
There’s too many beers in life to keep track of them all in your head.
Turns out I suck at taking notes, though, both in school and also as an
investor. I also feel like a dick, typing away as I go, instead of actively
listening. I’m not the first investor by any stretch to suggest
Granola, but it really is the best at this point- let
it transcribe your call, it’ll mix it with your own notes you want to focus on,
and then you can dump the transcript into Signed or your CRM or however you want
to do it going forward. Did not think I’d ever be a “notes” guy, but here we
are.
So that’s what I’m using currently. Probably will change by tomorrow, though,
given how fast things are moving these days. (And if you’re building those new
things… hit me up.)
Part of the annoying thing about angel investing is that you’re ostensibly
investing in CUTTING EDGE FUTURE STARTUPS who are about to BRING THE FUTURE TO
YOUR FACE and in order to do this you have to go through some of the worst
software and processes on the goddamn planet: banks, and laws.
Some cool stuff remains, though.
Money
EUROPEANS AVERT YOUR EYES FOR THIS SECTION
Thank god we got all the Eurovestors to skip this section, because it’s going to
be a disaster of our own American™ making.
Our banking system is trash. I don’t have to tell you this; everyone knows it.
But it’s particularly bad if you want to do things with the money at your bank.
(Don’t worry; if you don’t want to do anything with your money, banks are still
bad.)
I have burned through so many banks over the years. First, you start with one
of the Big Four banks, because that’s what you bank with and you figure hey, I
have money here, let’s send it to someone. There’s your first mistake: it seems
banks employ scores of teams specifically to prevent you from sending wires or
ACHs. (This was facetious when typed, but honestly… probably not wrong,
considering the fraud they incur from this broken system.)
Some banks will bury transfers behind administrative debris: first you have to
create a Company record, then a Person, then you have to add their bank details
with pasting disabled in your browser because they assume typing 9+17+17 numbers
by hand is going to be less error prone than pasting it directly from your wire
instructions.
You’ll also see process limitations: sometimes you can only send three wires a
month, or only receive three wires a month. Or maybe they’ll cap transfers at
$1,000. Or I’ve had one bank straight up not allow me to send transfers at all
unless I call in and repeat the numbers by voice to my banker.
I had many other points to add here, but this is not designed to be an anti-bank
screed (you’d be here reading for forever). Suffice to say, American banks don’t
want you to move your money.
Eventually I just realized it’s best to actually go with a bank that is designed
to transfer your money. I ended up going with Wise
(normal link and
referral link if you want some fee-free
transfers or something). Wise was built specifically to transfer money quickly
and cheaply globally, and it turns out they’re pretty good at it. Their security
is quite good (but not overbearing), they let you upload a PDF of wire
instructions and parse the account numbers and amount for you, and generally it
works great as a sort of “slush fund”, where you just use it as a holding
account before sending out or receiving it elsewhere. They also have a kind of
sudo mode like we built
at GitHub
where you’re not constantly getting hammered by 2fa requests.
One of the things you can play around with as an angel is how you invest in
companies, legally. There’s a few different approaches:
Invest as yourself, under your own name (easiest)
Invest as your trust (easiest for estate planning)
Invest as an LLC
I’ve done all of them (and then some), for varying reasons. The first two are
fairly straightforward: I’ll cover the latter briefly.
One thing I loathe as being a more serious angel is that you get lumped in with
all the other angels who might invest in one or two companies a presidential
term but still call themselves an “angel”. You see a lot of funding rounds of
“We raised from Sequoia, Hustle Fund, and a bunch of angels!” It’s that “a bunch
of angels” which is kinda shrug.
Something I’ve done in the last few years is incorporate
Tifo as an LLC, in an aim to group my investments somewhere
between traditional venture fund and occasional angel. It’s nice to have a
separate brand you can expand over time. For incorporating I just used
Doola, which I’m not a huge fan of but it exists as an
option. If I did it again I’d probably just use
Stripe Atlas for the LLC- I’ve incorporated a c corp
with them a number of times over the years and it’s just not trashy like Doola
and all the other registrars are. There are some concerns with investing out of
an LLC if you want QSBS treatment; give it a research prior to jumping into
things.
One other more advanced approach you can take: I also have a trust for Tifo
which specifically invests out of my Roth IRA. My dad, of course, thinks this is
a terrible idea, but it’s not a meaningful amount of money, and it’s something I
can afford to risk. The benefit of this is twofold: any gains you make are
tax-free, and it also involves far less reporting overhead (to the point where
it’s actually pretty alarming how much you just… don’t have to report to the
IRS; makes life much simpler). My Roth investments are primarily short-to-medium
term bets in later stage companies, with the hope to compound faster and with
(slightly) less risk than a pre-seed company I might normally invest in.
There are some real concerns with this approach, though: QSBS treatment might
save you a lot of taxes, anyway, so that underlines another motivation to look
towards later-stage (ie, non-qualifying) companies for this. You also do have
some reporting and bookkeeping concerns — it’s not just totally the Wild West
here. And there are some critical laws around self-dealing which is a huge
no-no.
It’s also a pain in the ass to do right now. You want a “checkbook IRA”, which
allows you to write checks for qualifying investments as you see fit. Best I’ve
spotted is Rocket Dollar, who tries their best
to break their platform every couple of days (it’s currently not allowing
sign-ins for the last week because… reasons?) But at the end of the day it does
let me make these Roth investments, and hopefully in another decade I’ll have
billions of dollars in it like some other truly evil people in the Valley.
Portfolio tracking
Once you shoot a wire over to a company, you really should track its performance
over time. I just launched Signed for this reason. No, I’m
not going to make a harder sell here. If you’re interested in seeing more, go
check it out; it’s fucking awesome.
Meeting notes
The other thing I wish I did more religiously during my first few years of
investing was taking a lot more notes during pitches, during 1:1s with portfolio
companies, and keeping track of things better. I’ve used various CRMs for this
over the years — now I used Signed, of course — but the point is to use
something. The more founders you meet, the harder it is to pull these
conversations to front-of-mind years after you made your initial investment.
There’s too many beers in life to keep track of them all in your head.
Turns out I suck at taking notes, though, both in school and also as an
investor. I also feel like a dick, typing away as I go, instead of actively
listening. I’m not the first investor by any stretch to suggest
Granola, but it really is the best at this point- let
it transcribe your call, it’ll mix it with your own notes you want to focus on,
and then you can dump the transcript into Signed or your CRM or however you want
to do it going forward. Did not think I’d ever be a “notes” guy, but here we
are.
So that’s what I’m using currently. Probably will change by tomorrow, though,
given how fast things are moving these days. (And if you’re building those new
things… hit me up.)
Recently I had a long call with an old friend who was facing an age-old
predicament that I’ve been seeing more and more these days:
Lucked out, worked hard, employer is crushing it, and now she’s sitting on a
large amount of paper money gains at her startup
Company does a
tender offer, either
buying their stock back or allowing a third party to come in and buy shares
Employees might be allowed to sell, say, 10% (or whatever) of their equity
So here’s the question: do you sell, or do you roll the dice and risk it
longer?
I took a tender offer on my early GitHub shares, and it comes up a lot in
emails and conversations with others I run across in the startup world. It’s a
decision can be annoyingly agonizing. And there’s a lot of conflicting advice
out there, each with different motivations behind it. I’ve added to that, too,
with lots of advice over the years of “look at all the alternatives in front of
you and make an even-headed decision”.
Anyway, fuck it, here’s the bottom line: take that money, queen.
Gambling with your life
I’ve found it helpful to look at your life as a gamble: a set of probabilities
that add up to whether or not you should make a decision a certain way. Assuming
you’re in this situation, you might be looking at a windfall of, say, half a
million to tens of millions of dollars. That’s wildly lucky, and can be
life-changing money.
Two massive motivators in this decision:
It’s way easier to make more money when you already have money.
Successful startups are an insane mix of timing and luck — no matter what
people who sell online courses will tell you — and if you’re at a point where
your imaginary gains are truly life-altering… you’ve already won. Now: try not
to lose.
I’m here to tell you: don’t fuck it up. It’s easy to assume two things, because
we’re Startup People who are Bold and certainly will Change The World (by
increasing query performance by 6%):
we assume that this will be just the first of many correct startup decisions
we will make and every four years we’ll be faced with this decision
that the startup we’re at will only go up and to the right because that’s all
it’s ever done and surely it won’t face hard times both internally or
externally
Successful startups sometimes fuck up. I interviewed at Zenefits about a month
before the first bad press came at them- back then it was one of the
fastest-growing companies of all time. One of the execs interviewed me and
guaranteed I’d become stupid rich if I joined. It was obvious to them they were
all going to be gazillionaires in no time at all. I came away with dozens of
utterly insane stories I continue to tell over drinks, and frankly was horrified
at how much of a clusterfuck everything internally was. But you talk to them and
they were all convinced they could do no wrong. (Except for head of
infrastructure- he was the most interesting person I interviewed with and we had
a fantastic discussion about how fucked up the infrastructure was. Figures that
the earliest to know something are the ones who see it break the most.)
All of this to say: it’s easy to become delusional while at a startup — in fact,
you could argue that the best startups have that cult-like delusion built into
their DNA. But things can change. Or the external structures can change. I don’t
have to tell you that tech is in a bubble right now; everyone knows it, everyone
knows it’s going to pop, but no one knows when or the extent of it. There have
been hundreds or thousands of startups over the decades, staffed with the best
and brightest, with revenue, with customers… and they’ve still bitten the
bullet. That’s the game. So don’t look a gift horse in the mouth; take the
horse’s wallet instead. (Sometimes my metaphors don’t always land.)
It’s a forcing function
You reading all this and thinking it doesn’t apply to you? That your startup is
c r u s h i n g it and that by
selling, you’re leaving so much money on the table? Good. One of the reasons I
wrote this in this way is to act like a forcing function: get you to be
horrified at the thought and make you critically analyze if holding on to your
stock makes sense or not. It’s like the advice of flipping a coin to make a
decision, and as the coin is in the air you’ll learn which decision it is that
you’re hoping it will land on.
I will say this, though: I did take a tender offer after I left GitHub, it was a
wildly stressful decision, but I have zero regrets today. I took something like
10% off the table, which had a positive impact on my abysmal emotional health at
the time, and had GitHub ultimately eaten it, I would have had at least
something left to show for all the work I had put into the company.
Amusingly enough, this post itself stemmed from conversations with
Billy Gallagher, the founder of
Prospect, one of my angel investments. They do
scenarios and projections of early equity stakes, and I basically told him that
I’m too horrified of doing the retroactive math behind taking the tender and
dealing with all the stock fuckups GitHub subjected us to. It’s probably a large
number. But I don’t think about it at all today. Would have been helpful at the
time, sure, but the stress is a product of the time, and likely not one that
will stick with you forever… if that helps you make these decisions.
I also found it helpful to realize something logistical, too: the money you take
today is, you know, still money. You can invest it, diversify it, grow it. The
exponential growth of startup equity makes the more linear — but still
compounding — growth of “normal” investing feel like you’re just losing out, but
you’re still compounding that cash. It doesn’t just disappear.
You can afford to not be perfect
So yeah- all of this is good to think about. Run the numbers. Model different
scenarios. Get a real understanding of the trade-offs here.
Sometimes it’s helpful to “get permission” from someone — anyone — though. Like,
that it’s acceptable to make this tradeoff. When GitHub got acquired, one of the
best pieces of advice I got was: you can afford to not be perfect. There’s
this weird pressure out there that every single financial decision needs to be
optimized for every little bit of performance… but sometimes you can miss the
forest for the trees with that. You can also drive yourself mad, and forget why
you’re doing all this in the first place.
I’d also be remiss to not mention that this isn’t entirely a “rich person
problem”. I’ve known many paper millionaires who were functionally broke: they
had school debt, or were putting their partner through school, or had kids with
costly needs, or they were responsible for multiple families or generations who
were relying upon them. Liquidity in startups is increasingly harder to come by
these days. Life is constantly about planning for the future, whenever that
thing might come. Sometimes it’s helpful to think about today, too.
Recently I had a long call with an old friend who was facing an age-old
predicament that I’ve been seeing more and more these days:
Lucked out, worked hard, employer is crushing it, and now she’s sitting on a
large amount of paper money gains at her startup
Company does a
tender offer, either
buying their stock back or allowing a third party to come in and buy shares
Employees might be allowed to sell, say, 10% (or whatever) of their equity
So here’s the question: do you sell, or do you roll the dice and risk it
longer?
I took a tender offer on my early GitHub shares, and it comes up a lot in
emails and conversations with others I run across in the startup world. It’s a
decision can be annoyingly agonizing. And there’s a lot of conflicting advice
out there, each with different motivations behind it. I’ve added to that, too,
with lots of advice over the years of “look at all the alternatives in front of
you and make an even-headed decision”.
Anyway, fuck it, here’s the bottom line: take that money, queen.
Gambling with your life
I’ve found it helpful to look at your life as a gamble: a set of probabilities
that add up to whether or not you should make a decision a certain way. Assuming
you’re in this situation, you might be looking at a windfall of, say, half a
million to tens of millions of dollars. That’s wildly lucky, and can be
life-changing money.
Two massive motivators in this decision:
It’s way easier to make more money when you already have money.
Successful startups are an insane mix of timing and luck — no matter what
people who sell online courses will tell you — and if you’re at a point where
your imaginary gains are truly life-altering… you’ve already won. Now: try not
to lose.
I’m here to tell you: don’t fuck it up. It’s easy to assume two things, because
we’re Startup People who are Bold and certainly will Change The World (by
increasing query performance by 6%):
we assume that this will be just the first of many correct startup decisions
we will make and every four years we’ll be faced with this decision
that the startup we’re at will only go up and to the right because that’s all
it’s ever done and surely it won’t face hard times both internally or
externally
Successful startups sometimes fuck up. I interviewed at Zenefits about a month
before the first bad press came at them- back then it was one of the
fastest-growing companies of all time. One of the execs interviewed me and
guaranteed I’d become stupid rich if I joined. It was obvious to them they were
all going to be gazillionaires in no time at all. I came away with dozens of
utterly insane stories I continue to tell over drinks, and frankly was horrified
at how much of a clusterfuck everything internally was. But you talk to them and
they were all convinced they could do no wrong. (Except for head of
infrastructure- he was the most interesting person I interviewed with and we had
a fantastic discussion about how fucked up the infrastructure was. Figures that
the earliest to know something are the ones who see it break the most.)
All of this to say: it’s easy to become delusional while at a startup — in fact,
you could argue that the best startups have that cult-like delusion built into
their DNA. But things can change. Or the external structures can change. I don’t
have to tell you that tech is in a bubble right now; everyone knows it, everyone
knows it’s going to pop, but no one knows when or the extent of it. There have
been hundreds or thousands of startups over the decades, staffed with the best
and brightest, with revenue, with customers… and they’ve still bitten the
bullet. That’s the game. So don’t look a gift horse in the mouth; take the
horse’s wallet instead. (Sometimes my metaphors don’t always land.)
It’s a forcing function
You reading all this and thinking it doesn’t apply to you? That your startup is
c r u s h i n g it and that by
selling, you’re leaving so much money on the table? Good. One of the reasons I
wrote this in this way is to act like a forcing function: get you to be
horrified at the thought and make you critically analyze if holding on to your
stock makes sense or not. It’s like the advice of flipping a coin to make a
decision, and as the coin is in the air you’ll learn which decision it is that
you’re hoping it will land on.
I will say this, though: I did take a tender offer after I left GitHub, it was a
wildly stressful decision, but I have zero regrets today. I took something like
10% off the table, which had a positive impact on my abysmal emotional health at
the time, and had GitHub ultimately eaten it, I would have had at least
something left to show for all the work I had put into the company.
Amusingly enough, this post itself stemmed from conversations with
Billy Gallagher, the founder of
Prospect, one of my angel investments. They do
scenarios and projections of early equity stakes, and I basically told him that
I’m too horrified of doing the retroactive math behind taking the tender and
dealing with all the stock fuckups GitHub subjected us to. It’s probably a large
number. But I don’t think about it at all today. Would have been helpful at the
time, sure, but the stress is a product of the time, and likely not one that
will stick with you forever… if that helps you make these decisions.
I also found it helpful to realize something logistical, too: the money you take
today is, you know, still money. You can invest it, diversify it, grow it. The
exponential growth of startup equity makes the more linear — but still
compounding — growth of “normal” investing feel like you’re just losing out, but
you’re still compounding that cash. It doesn’t just disappear.
You can afford to not be perfect
So yeah- all of this is good to think about. Run the numbers. Model different
scenarios. Get a real understanding of the trade-offs here.
Sometimes it’s helpful to “get permission” from someone — anyone — though. Like,
that it’s acceptable to make this tradeoff. When GitHub got acquired, one of the
best pieces of advice I got was: you can afford to not be perfect. There’s
this weird pressure out there that every single financial decision needs to be
optimized for every little bit of performance… but sometimes you can miss the
forest for the trees with that. You can also drive yourself mad, and forget why
you’re doing all this in the first place.
I’d also be remiss to not mention that this isn’t entirely a “rich person
problem”. I’ve known many paper millionaires who were functionally broke: they
had school debt, or were putting their partner through school, or had kids with
costly needs, or they were responsible for multiple families or generations who
were relying upon them. Liquidity in startups is increasingly harder to come by
these days. Life is constantly about planning for the future, whenever that
thing might come. Sometimes it’s helpful to think about today, too.
Once upon a time I built a calendar and then
wrote an exhaustively long talk
about working with time, timezones, calendars, and everything in between. For a
few unrelated reasons we ended up not shipping the calendar, but in general, as
I mentioned in the post:
Zach, whatever you do: just don’t ever build a calendar.
Anyway, I built a calendar again! Okay,
technically I got away with only tangentially building a calendar this time
around, but it’s the thought that counts.
Partner-driven development
There’s dogfooding where you write software to scratch your own itch. I’m
going to just invent the term “Partner-driven development” for the times where
you’ve said multiple times you’re going to write something and then your
wife/husband/partner keeps complaining that indeed, that was bullshit and why
haven’t you built the thing you said you were going to do years ago yes I
realize software is sort of hard but you keep saying it would be easy to whip
together and yet here we are, not in fact using it?
As a calendar sicko who spends too much time thinking about calendars over the
last decade, I sync like a dozen different calendars to my phone and desktop: a
personal calendar, a calendar for a nonprofit I work with, a couple calendars
for Tifo and Signed — yes, Signed is
also shipping shortly — various soccer calendars for Oakland Roots, Tottenham,
Dortmund, USMNT & USWNT, events I’m going to from Luma and Partiful, and so on.
And yeah, my wife Monica did, on occasion, give me some
well-deserved gruff for making it pretty difficult to track when I have
something going on without having to sync all of those calendars to her own
calendar anddddd… it was a mess.
Your endearing calendar
So it’s something I always wanted to build in a Do One Thing Well app: add the
URLs of all your calendar feeds and dump out a single feed for my wife to
subscribe to and get visibility on my schedule. So that’s what
Calendearing is. You get it? It’s an endearing
calendar! Sometimes typos while writing code turn into realizing a .com is
available and the hellhole that is Naming A Company ends up being three
minutes instead of six months.
It’s $30/year, and merging calendars is all it does. Nothing more, nothing less.
There’s no crypto, no advertising, no VC treadmill, no AI models powering the
thing. WYSIWYG.
I love angel investing, I love building venture-scale products, but I really
miss side projects, too. My start to the industry was 25 years ago when I built
Good-Tutorials, which housed the most tutorials for Photoshop and other software
in the world for well over a decade. I read well over 100,000 submitted links
over the years (and yet, I still never became very good at Photoshop; imagine
that). I sold it not too long after joining GitHub, but I do miss those days of
having something small and just yours to work on and learn from. And god, I
haven’t had this much fun just building since Rails came out twenty years ago.
So yeah, if you have calendar problems, well, I have the solution: don’t build a
calendar. Oh and then use Calendearing if it’s of
interest to you.
Once upon a time I built a calendar and then
wrote an exhaustively long talk
about working with time, timezones, calendars, and everything in between. For a
few unrelated reasons we ended up not shipping the calendar, but in general, as
I mentioned in the post:
Zach, whatever you do: just don’t ever build a calendar.
Anyway, I built a calendar again! Okay,
technically I got away with only tangentially building a calendar this time
around, but it’s the thought that counts.
Partner-driven development
There’s dogfooding where you write software to scratch your own itch. I’m
going to just invent the term “Partner-driven development” for the times where
you’ve said multiple times you’re going to write something and then your
wife/husband/partner keeps complaining that indeed, that was bullshit and why
haven’t you built the thing you said you were going to do years ago yes I
realize software is sort of hard but you keep saying it would be easy to whip
together and yet here we are, not in fact using it?
As a calendar sicko who spends too much time thinking about calendars over the
last decade, I sync like a dozen different calendars to my phone and desktop: a
personal calendar, a calendar for a nonprofit I work with, a couple calendars
for Tifo and Signed — yes, Signed is
also shipping shortly — various soccer calendars for Oakland Roots, Tottenham,
Dortmund, USMNT & USWNT, events I’m going to from Luma and Partiful, and so on.
And yeah, my wife Monica did, on occasion, give me some
well-deserved gruff for making it pretty difficult to track when I have
something going on without having to sync all of those calendars to her own
calendar anddddd… it was a mess.
Your endearing calendar
So it’s something I always wanted to build in a Do One Thing Well app: add the
URLs of all your calendar feeds and dump out a single feed for my wife to
subscribe to and get visibility on my schedule. So that’s what
Calendearing is. You get it? It’s an endearing
calendar! Sometimes typos while writing code turn into realizing a .com is
available and the hellhole that is Naming A Company ends up being three
minutes instead of six months.
It’s $30/year, and merging calendars is all it does. Nothing more, nothing less.
There’s no crypto, no advertising, no VC treadmill, no AI models powering the
thing. WYSIWYG.
I love angel investing, I love building venture-scale products, but I really
miss side projects, too. My start to the industry was 25 years ago when I built
Good-Tutorials, which housed the most tutorials for Photoshop and other software
in the world for well over a decade. I read well over 100,000 submitted links
over the years (and yet, I still never became very good at Photoshop; imagine
that). I sold it not too long after joining GitHub, but I do miss those days of
having something small and just yours to work on and learn from. And god, I
haven’t had this much fun just building since Rails came out twenty years ago.
So yeah, if you have calendar problems, well, I have the solution: don’t build a
calendar. Oh and then use Calendearing if it’s of
interest to you.
It’s mind-boggling how many in the general public don’t understand this, so let me rant about it for a bit: many companies are designed to lose money this year. That’s the fucking point.
Today’s main character energy is the news of WNBA players wearing Pay Us What You Owe Us shirts during the All-Star game. The knuckle-draggers on social media immediately clutched their pearls, saying “ohmygod the WNBA lost $40M last year so players should really be paid zero dollars, not given a raise!!111” You see this all over the place, like all the stories recently about Apple “losing” $1B a year on it new streaming service.
No; losing money is the fucking point.
Econ 101
You’re not “losing money”, of course: you’re investing. (Yes, I realize that line sounds like a meme, but stick with me here.) The money doesn’t just go up in smoke- it gets invested in staff, infrastructure, materiel, and so on. It all comes down to a single bet: more investment in the organization today will mean larger returns tomorrow. That’s it; that’s the thing the average person seemingly doesn’t understand. You’re now smarter than average (which, depending on your take on the general state of the world, could mean a lot to you, or still be embarrassing).
The thesis behind that single bet is the important one, of course: you’re assuming you’re operating in a business where early success can be replicated in a later stage organization. If you can, the thought process is simple: invest in the business and you’re going to make more money, particularly if you have enough cash to grow the business in the meantime (either through your own pockets or through outside investors).
There are myriad reasons why that wouldn’t be the case, though: the market might not be big enough (in which case you can’t keep expanding your sales), your company’s hierarchy or process might not scale at the same efficiency as before, competition might snuff you out, or sometimes you’re just unlucky.
That’s why there are so many Series B+ funds out there whose job it is to basically pour gas on a fire. Much of their focus is entirely on unit economics: the company might be losing money overall, but have they proven their base case out? The most obvious example of this is Uber: by the time they IPO’d they were losing billions of dollars a year… but they were able to reach profitability in certain mature markets. That made it pretty obvious that raising more money made sense: as they developed more markets, the overall business would become healthier, and most importantly: when they reached profitability it would be at much higher profit levels than if they took a slower route without outside capital. And eventually, that’s what happened.
I’ll take anybody’s money if they giving it away
Sports in general is a pretty good example of this phenomena, which is why the WNBA stuff pissed me off so much this morning. I originally wrote about it through my ownership experiences with Oakland Roots: sports clubs tend to be extremely cash-hungry and require a ton of resources just to survive year-to-year. But that’s largely mitigated through valuation increases.
To take the example of the WNBA, again: just between last year and this year, valuations of those franchises grew, on average, 180% year-over-year. (For novices, something growing 180% in a year is one of those “pretty good” investments to have.) There’s additional positive signs — huge new broadcasting deals, growing expansion fees (which is American sports’ sterling example of socialism at work) — but the valuation increase is the most interesting to look at.
Valuations are a really powerful tool that ownership can choose to wield. There are a couple different ways to leverage a higher valuation: you can use it to secure more debt for the org (through loans, future cash flow lending, etc), and you can also peel off minority stakes. If your team goes from $1B to $2B, hey, it might make sense to bring on a new minority owner for $100M. You still keep majority ownership, but you get that $100M back in the company to grow the pie even more (hopefully beyond the point of the equity you sell).
Red is fine
For certain companies, with easy access to external cash and a clear growth pattern, yes, staying in the red is fine. That’s not the case for all companies — your kiddo’s lemonade stand probably doesn’t need a $45M capital infusion. Unless it’s really fucking good, in which case send me a case, sounds delicious. But yeah, for a lot of venture-backed companies, or sports organizations, or other companies where you can afford to put more cash into the business for a larger longer-scale outcome: red is good, embrace the red. And pay your players.
It’s mind-boggling how many in the general public don’t understand this, so let me rant about it for a bit: many companies are designed to lose money this year. That’s the fucking point.
Today’s main character energy is the news of WNBA players wearing Pay Us What You Owe Us shirts during the All-Star game. The knuckle-draggers on social media immediately clutched their pearls, saying “ohmygod the WNBA lost $40M last year so players should really be paid zero dollars, not given a raise!!111” You see this all over the place, like all the stories recently about Apple “losing” $1B a year on it new streaming service.
No; losing money is the fucking point.
Econ 101
You’re not “losing money”, of course: you’re investing. (Yes, I realize that line sounds like a meme, but stick with me here.) The money doesn’t just go up in smoke- it gets invested in staff, infrastructure, materiel, and so on. It all comes down to a single bet: more investment in the organization today will mean larger returns tomorrow. That’s it; that’s the thing the average person seemingly doesn’t understand. You’re now smarter than average (which, depending on your take on the general state of the world, could mean a lot to you, or still be embarrassing).
The thesis behind that single bet is the important one, of course: you’re assuming you’re operating in a business where early success can be replicated in a later stage organization. If you can, the thought process is simple: invest in the business and you’re going to make more money, particularly if you have enough cash to grow the business in the meantime (either through your own pockets or through outside investors).
There are myriad reasons why that wouldn’t be the case, though: the market might not be big enough (in which case you can’t keep expanding your sales), your company’s hierarchy or process might not scale at the same efficiency as before, competition might snuff you out, or sometimes you’re just unlucky.
That’s why there are so many Series B+ funds out there whose job it is to basically pour gas on a fire. Much of their focus is entirely on unit economics: the company might be losing money overall, but have they proven their base case out? The most obvious example of this is Uber: by the time they IPO’d they were losing billions of dollars a year… but they were able to reach profitability in certain mature markets. That made it pretty obvious that raising more money made sense: as they developed more markets, the overall business would become healthier, and most importantly: when they reached profitability it would be at much higher profit levels than if they took a slower route without outside capital. And eventually, that’s what happened.
I’ll take anybody’s money if they giving it away
Sports in general is a pretty good example of this phenomena, which is why the WNBA stuff pissed me off so much this morning. I originally wrote about it through my ownership experiences with Oakland Roots: sports clubs tend to be extremely cash-hungry and require a ton of resources just to survive year-to-year. But that’s largely mitigated through valuation increases.
To take the example of the WNBA, again: just between last year and this year, valuations of those franchises grew, on average, 180% year-over-year. (For novices, something growing 180% in a year is one of those “pretty good” investments to have.) There’s additional positive signs — huge new broadcasting deals, growing expansion fees (which is American sports’ sterling example of socialism at work) — but the valuation increase is the most interesting to look at.
Valuations are a really powerful tool that ownership can choose to wield. There are a couple different ways to leverage a higher valuation: you can use it to secure more debt for the org (through loans, future cash flow lending, etc), and you can also peel off minority stakes. If your team goes from $1B to $2B, hey, it might make sense to bring on a new minority owner for $100M. You still keep majority ownership, but you get that $100M back in the company to grow the pie even more (hopefully beyond the point of the equity you sell).
Red is fine
For certain companies, with easy access to external cash and a clear growth pattern, yes, staying in the red is fine. That’s not the case for all companies — your kiddo’s lemonade stand probably doesn’t need a $45M capital infusion. Unless it’s really fucking good, in which case send me a case, sounds delicious. But yeah, for a lot of venture-backed companies, or sports organizations, or other companies where you can afford to put more cash into the business for a larger longer-scale outcome: red is good, embrace the red. And pay your players.
Most developers know about red teams:
a specific group of people chosen to be the antagonist to your system, trying to
sniff out vulnerabilities in your code or organization. Basically, like
Sneakers, or the
annoying plotline in
The Newsroom season two.
(Someone should have really red team’d Sorkin himself on that one.)
There’s a few other concepts of a red team I think that every development team
should have some exposure to outside of the traditional cybersecurity angle.
Someone to look for dicks
Once upon a time, GitHub was very excitedly looking forward to shipping our
FIRST BILLBOARD! It’s an odd experience, turning into one of those startups who
advertise on 101. Some sort of weird fucked-up sign of maturity and/or
sufficient VC dollars. Particularly for a company whose product only exists In
The Cloud… seeing real-world analogues is very surreal.
So Marketing worked on it, ran it through design, chatted on some plans as to
what it should look like. If I recall, the GitHub thread on it was a couple
weeks old, and Cameron McEfee put out a final “I’m
going to send this to the printers at the end of the day, so speak now or
forever hold your peace!” Some few-dozen people had seen it at this point so it
probably was fine.
Anyway, I looked at the last iteration around the same time as
Rick Bradley did and we each were like… uh-oh that
looks like goatse. Are we sure we aren’t goatse-ing all of San Francisco traffic
for a few weeks? Seems rude.
Cameron dropped a “holy shit” and got it updated it prior to it hitting the
printers. He also put a kind of “dick check” in the general design shipping
process for large launches at GitHub- check for various genitals, meme-ability,
and really any sort of ways the new work could be used in unintended ways.
I mean, the last thing you want is to have teammates work on something for
months and users end up ignoring all their hard work because the new logo
looks like a booty or something.
It sounds totally goofy, but it’s not a bad idea to have someone in an
antagonistic mindset to make sure you’re not shipping something awkward,
insulting, or inappropriate through your visuals.
Finally, internet shitposters have a valid business use case.
Someone with an ad blocker
Ad blockers can be somewhat contentious: on one hand it’s good to support
websites whose access might be free-of-charge; on the other hand, so many of
these websites are fucking terrible, with ads and popups and unclosable
interstitials.
But some of your users are going to use ad blockers; there’s no way around
that. So have some asshole on your team constantly piping up if you break
navigation with various ad blockers turned on. Yeah, there’s some political
aspects here — who blocks the blockers? — but every time a site inexplicably
doesn’t work because someone made it so a file include or piece of HTML wrecks
your entire site is one of the most rage-inducing aspects of modern sites out
there, particularly if there aren’t any ads on the site in the first place.
Someone with a password manager
Look: I have a lot to say about
sessions and signing in to a product,
but suffice to say: there will be password managers for the foreseeable future
and holy shit how do you all get the simplest sign-in form so wrong all the
time?
Like, at its basic form it’s just a username and password. I get — sort of —
layering on all this other shit like magic links and 2FA and enterprise sign-in,
but so many dev teams don’t even get the basic form right: they do something
custom in a hair-brained way so that 1Password or other password managers don’t
auto-fill the form. (Yes, some of that is because 1Password itself has turned
into some sort of deranged software that breaks if you look at it, but you get
the idea.)
So someone on your team should use a password manager. I mean, you all should,
of course, but for the love of god at least get one person on the team to pipe
up with “why doesn’t my auto-fill work on our site?” And then fix it.
None of these are like, major blockers: people will work around broken forms or
websites, and drivers will drive by your phallus on the highway. But they’re
pretty easy to prevent. The main problem is that when you’re building a new
feature you have so many other things to worry about… which is why having a kind
of “red team” can be so helpful, to come at it with fresh, antagonistic eyes.
Anyway, just wanted you to think about this as you build your products! If you
think it’s helpful, I’m just about to send these stickers to the printer- let me
know if you’re interested in grabbing one.
Most developers know about red teams:
a specific group of people chosen to be the antagonist to your system, trying to
sniff out vulnerabilities in your code or organization. Basically, like
Sneakers, or the
annoying plotline in
The Newsroom season two.
(Someone should have really red team’d Sorkin himself on that one.)
There’s a few other concepts of a red team I think that every development team
should have some exposure to outside of the traditional cybersecurity angle.
Someone to look for dicks
Once upon a time, GitHub was very excitedly looking forward to shipping our
FIRST BILLBOARD! It’s an odd experience, turning into one of those startups who
advertise on 101. Some sort of weird fucked-up sign of maturity and/or
sufficient VC dollars. Particularly for a company whose product only exists In
The Cloud… seeing real-world analogues is very surreal.
So Marketing worked on it, ran it through design, chatted on some plans as to
what it should look like. If I recall, the GitHub thread on it was a couple
weeks old, and Cameron McEfee put out a final “I’m
going to send this to the printers at the end of the day, so speak now or
forever hold your peace!” Some few-dozen people had seen it at this point so it
probably was fine.
Anyway, I looked at the last iteration around the same time as
Rick Bradley did and we each were like… uh-oh that
looks like goatse. Are we sure we aren’t goatse-ing all of San Francisco traffic
for a few weeks? Seems rude.
Cameron dropped a “holy shit” and got it updated it prior to it hitting the
printers. He also put a kind of “dick check” in the general design shipping
process for large launches at GitHub- check for various genitals, meme-ability,
and really any sort of ways the new work could be used in unintended ways.
I mean, the last thing you want is to have teammates work on something for
months and users end up ignoring all their hard work because the new logo
looks like a booty or something.
It sounds totally goofy, but it’s not a bad idea to have someone in an
antagonistic mindset to make sure you’re not shipping something awkward,
insulting, or inappropriate through your visuals.
Finally, internet shitposters have a valid business use case.
Someone with an ad blocker
Ad blockers can be somewhat contentious: on one hand it’s good to support
websites whose access might be free-of-charge; on the other hand, so many of
these websites are fucking terrible, with ads and popups and unclosable
interstitials.
But some of your users are going to use ad blockers; there’s no way around
that. So have some asshole on your team constantly piping up if you break
navigation with various ad blockers turned on. Yeah, there’s some political
aspects here — who blocks the blockers? — but every time a site inexplicably
doesn’t work because someone made it so a file include or piece of HTML wrecks
your entire site is one of the most rage-inducing aspects of modern sites out
there, particularly if there aren’t any ads on the site in the first place.
Someone with a password manager
Look: I have a lot to say about
sessions and signing in to a product,
but suffice to say: there will be password managers for the foreseeable future
and holy shit how do you all get the simplest sign-in form so wrong all the
time?
Like, at its basic form it’s just a username and password. I get — sort of —
layering on all this other shit like magic links and 2FA and enterprise sign-in,
but so many dev teams don’t even get the basic form right: they do something
custom in a hair-brained way so that 1Password or other password managers don’t
auto-fill the form. (Yes, some of that is because 1Password itself has turned
into some sort of deranged software that breaks if you look at it, but you get
the idea.)
So someone on your team should use a password manager. I mean, you all should,
of course, but for the love of god at least get one person on the team to pipe
up with “why doesn’t my auto-fill work on our site?” And then fix it.
None of these are like, major blockers: people will work around broken forms or
websites, and drivers will drive by your phallus on the highway. But they’re
pretty easy to prevent. The main problem is that when you’re building a new
feature you have so many other things to worry about… which is why having a kind
of “red team” can be so helpful, to come at it with fresh, antagonistic eyes.
Anyway, just wanted you to think about this as you build your products! If you
think it’s helpful, I’m just about to send these stickers to the printer- let me
know if you’re interested in grabbing one.
From Cold DM to Owning a Soccer Club
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From Cold DM to Owning a Soccer Club
I'm one of the investors in
Oakland Roots, a club in the USL Championship, the second tier of soccer in the
US. So: what is sports ownership like, anyway? How similar is it to my
startup experiences? Can I write a way-too-long of a post about it
all? Yes. Yes I can.
Zach Holman
January 30, 2025
Look: I don't much understand it either. Apparently
I'm a part-owner of a soccer club.
Yes, I love soccer. I played it growing up. I play it today. I watch
the shit out of it. That part makes sense. But it's the ownership
thing that's weird. I grew up in a world where only 90-year-old
white billionaires would own sports teams. You wouldn't see them in
the supporter section with their shirt off screaming at a goal.
I'm not saying this is necessarily an old billionaire who
doesn't care about his team... I'm just saying in general.
Probably.
Sports was like... some weird world where all the owners live in their
posh suite way up top away from the rest of the proles and the
cameramen will put them on-screen once a game so fans know the owner
is still (relatively) alive, with the only thing pulsing their heart
is a deep-seated compulsion to buy up more members of Congress.
And yet, here I am. And as part of that — like most things in my
professional life, good and bad — I'm going to write a long fucking
post about it. This is going to be a weird post, too: for one, the
audience is all over the place. I have a lot of following from the
tech/startups side of things from my time at GitHub years ago, so
there'll be a fair amount of "huh, well THIS is certainly different
from running a tech company". There's also going to be a lot of soccer
sickos reading this as well, from elitist Eurosnobs to
chip-on-the-shoulder USL dorks to the corporate MLS suck-ups, and
that's all great because I'm also all of those. And then there'll just
be people who drop by to hate, which is also fine, because dammit, I'm
also a hater. So I'm going to try to play keepy-uppies with all these
balls and hopefully there'll be something interesting for all of you.
This all matters to me because sport matters to me. I've met my very
best friends, had my very best experiences, as well as my worst
experiences, all within this silly little game. It bothers me when
these absent billionaires fuck around with someone's fandom.
Rule number one: give a shit, and make it known that you give a shit.
And talking about this stuff publicly is a small way I can make this
clear, and make the club itself more transparent. I get the feeling
that most sports ownership concerns are discussed in private cigar
rooms that none of the rest of us are invited to. Who even smokes
cigars anymore, anyway? The world's changing, and we're seeing both
club ownership and the nuts-and-bolts of running a club more open to
the general public, and I love it. In fact, part of the motivation
behind this post stems from people like Dennis Crowley, who almost a
decade ago wrote about building
Kingston Stockade FC. I'm always going to support making more decisions in public, be it
startup or sports club.
Our three teams in Oakland, California:
Oakland Roots SC
Founded: 2018. Men's team.
League: USL Championship
oaklandrootssc.comOakland Soul SC
Founded: 2022. Women's team.
League: USL-W
oaklandsoulsc.comProject 51O
Founded: 2019. Academy team.
Leagues: USL League 2 & UPSL
project51o.com
Okay wait so what the shit is all of this? Who are the Soul? What are
the Roots, and why isn't Geordi LaForge involved in it? Who the hell
are you, anyway?
I'm Zach Holman, just some soccer fan. I played
soccer in high school, but that was the extent of my serious playing
career. I'm involved with the
American Outlaws, the
largest supporters' group for US Soccer, both on the local and
national level: I run American Outlaws San Francisco, where we watch
US games at McTeague's Saloon on Polk street (join us for a game
sometime!), and I'm also the Director of Technology for American
Outlaws nationally (which basically means I donate my time and code
for the software side of the non-profit). I'm currently starting a
sports startup called WorkOn with my
friend
Jimmy Conrad, who had a long career in MLS and played in the 2006 World Cup. I
also angel invest through a fund called, appropriately enough,
Tifo.
Here I am in a Soul shirt at an 1. FC Union Berlin game, which
kind of blew me away; totally worth a visit.
Bluesky:
@holman.bsky.socialThreads:
@holmanTwitter:
@holman
I had heard about Oakland Roots since they started, and was a huge fan
of how they talked about the club, their commitment to the community,
and honestly, their branding was fucking incredible. They got
Matthew Wolff to design the
logo. Matthew's done pretty much all the recent great work for clubs
globally: LAFC, NYCFC, PSG, the legendary Nigerian kits, god,
everything. I'm a fan.
The logo caught my interest, but the brand sucked me in.
Punched far above their weight class, and it had a feel that I had
been waiting for years to see from other clubs I had followed. They
had such an emphasis on Oakland. And that's really the
end-all, be-all: let Oakland be Oakland.
Damian Lillard wearing a shirt before a 2019 NBA playoff game.
Oakland's limited-edition Black Panther kits. The
short film
by Calvin Gaskin was incredible, too.
Zendaya and Tom Holland. Tom's also a fellow Spurs fan, and I will
not be accepting any comments on how we're doing this season.
For years I had practically told everyone in any single bar I stepped
foot in that if I could "invest in American soccer" I would. MLS was
expanding like crazy, with expansion fees alone that were larger than
valuations of 100-year-old clubs in England. The USWNT had continued
to win World Cup after World Cup, and the USMNT were looking really
threatening (before, uh, Trinidad, but don't worry, we're back on
track again). It's just not too often you have the largest economy in
the world suddenly — over decades, of course — discover a pasttime
that the entirety of the rest of the world has known for years.
Eventually I realized well, if I couldn't invest in soccer
generally, maybe I could invest in a club specifically. Definitely
still thought this was the realm of billionaires, though, but I
figure I'd shoot my shot. Amusingly similar to how I got my job at
GitHub a decade prior, I sent a cold DM over Twitter to the Roots'
chairman, Steven Aldrich, asking if they'd be interested in having
an additional investor come on board. We had a chat, and then I
became an investor. Sometimes life just comes down to asking, it
turns out.
I do want to make it clear that I'm not a majority owner by any
stretch: the amount is meaningful to me, but on the cap table it's
more along the lines of angel investor: somewhere around one
percent of the club. I'm also not involved in the day-to-day
operation of Roots and Soul; the co-founders, the chairman, all
the full-time staff and game-day staff honestly have a more direct
impact that I do. I do see a lot of visibility into the
organization, and I try to get as involved as much as possible.
But most relevant to why you're reading this from me: I love
writing about stuff like this, so here we are! A blog post!
Owner vs Investor
One last quick note on nomenclature before we get into things-
the original investor group was just that: an
investor group. There's potentially a lot of problems
with using owner while running a team of athletes, and
traditionally we hadn't used it to describe the investor group.
It wasn't until we did a crowdfunding round last year where we
surveyed the fanbase and they overwhelmingly preferred "owner"
instead of "investor", which makes sense in terms of a community
who wants real participation in their community's club. I'll
likely bounce back and forth between the two here, but it's
something we're still discussing a lot.
the finances of owning and running a football club
Initially I wasn't going to write specifics about the finances
involved, but then I realized there was a very good reason to. The
reason I came up with is: "fuck it". Again, the sports world seems
like
so many shady backroom deals, and putting some real numbers
to the problem makes it just that less shady.
For most sports organizations, it's not really a one-and-done thing.
Roots are no different. I've invested ten times into the club. Here's
the detailed breakout of my wires:
Date
(Rough) Valuation
Amount
Current value
Notes
October 2020
$24M
$100,000
$161,812
January 2021
$28M
$100,047
$161,887
September 2021
$35M
$100,000
$161,812
January 2022
$40M
$41,093
$66,492
February 2023
$70M
$42,900
$51,480
September 2023
$78.2M
$10,000
$11,003
First crowdfund campaign
January 2024
$90M
$86,471
$86,486
August 2024
$93M
$1,000
$1,000
Second crowdfund campaign
November 2024
$93M
$75,000
$75,000
January 2025
$93M
$103,000
$103,000
Total
$659,511
$879,972
I've definitely had better returns, both in the public markets and in
the private markets. No, it's not the best investment in the world
(yet). Even with valuation increases, the amount of yearly burn makes
it pretty cash-greedy and impacts the return profile. But if life were
just about financial returns, I'd invest in oil companies or some
shit.
One of the reasons I feel comfortable detailing some of this is that
so much of the Roots' finances are public at this point, because of
our two public crowdfund campaigns (thanks to the JOBS act: thanks
Obama!) The
current crowdfunding campaign
ends in a few days (January 31, 2025!) and it's a great way to peer
directly into the finances whether you're an investor or not. It's
reached its target raise for the round, but still taking investments-
minimum is just a hundred bucks. All the nitty-gritty financial
details are in the
financial statement
linked halfway down the page.
Crowdfunding vs public vs private ownership
Man, I really love that Roots did a public crowdfunding campaign. In
2023 we raised the largest public sports crowdfund of all time: $3.6M
from 5,400 new investors, including Billie Joe Armstrong (Green Day),
Jason Kidd (NBA), G-Eazy (rap), and many, many other notable figures.
We're currently in a second crowdfund campaign.
I think it's great to have public ownership. Ideally, the whole club
is owned by the community. Unfortunately the math doesn't really math.
American teams like the Green Bay Packers are owned by half a million
fans, but the NFL (among many other leagues) has now outlawed that
type of ownership. German football clubs follow the Bundesliga's
excellent
50+1 rule,
which ensures control of the club stays with the fans. In the US,
though, team valuations have been so high for so long that,
particularly for recently-formed clubs, it's really difficult to
generate that type of demand from fans to buy in.
If you're looking strictly at Roots: over the last seven years the
club has raised $60M from investors. Current valuation is around $93M.
That's a lot of burn, and we'd have to raise our first crowdfunding
round 20 times over to achieve that.
And honestly? I'm not sure early-stage clubs should be entirely
fan-funded. It's a really fucking risky investment. It's
actually do or die: either Roots are going to be wildly
successful, or the club is going to fold and the investors are going
to lose all their money. There's not likely to be an in-between here.
I worry a lot about the type of money that goes into the club, and the
implications of who gets impacted if the stock price goes to zero.
Fans already put so much into the club as fans.
I like having an SPV of 6,000+ investors on the cap table.
Last season we had roughly as many investors as we had seating
capacity for them in the stadium. Having a big tent opens up a more
direct line between fan and majority ownership, and lends itself to
the possibility of community votes and public decisions down the line.
It's a different accountability from ownership compared to someone who
bought a ticket once and has Lots Of Opinions Online.
But damn, it's a really tough problem, though. Money versus fandom.
Not unique to American soccer by any stretch, although certainly
exacerbated by our lack of pro/rel and league franchising and
ownership decisions made decades ago and many sports ago. Down the
line, though, once the club is on a more stable footing? I'd
personally love to see diminished ownership by existing investors and
increased ownership by the community itself. (Not by "yet
another dumb city buys the sports team a stadium", though: though
actual ownership by fans, with actual participation on the cap table.)
Seeing
red
This is a perspective I'll probably never convince most people
about, but: you're supposed to lose money. Kind of.
("Seeing red" is an extremely clever triple entendre in this
context; just wanted credit for that, dammit.)
Every time a journalist writes a piece on a large tech company —
omg, so-and-so is losing billions a year!! — the common response
is "Look, they're incompetent! They don't know what they're
doing! They're broke!!" That's not the point.
To over-simplify the argument... there are two ways to grow a
business: bootstrap, or take outside investment. Neither are
correct or incorrect; they depend on the context.
If you take outside investment, the bet you're making is that by
having more resources available today, you'll grow far larger
tomorrow than you would if you simply grew in a linear fashion.
For a new soccer club, it's often the case that you'll face a
number of steep up-front costs that are hard to recoup in the
short term: paying potentially millions (thanks USA!) to join a
league, providing for training and game-day facilities,
supporting player and staff wages, and about nine zillion other
costs.
The teams Oakland has produced are legendary, globally: Raiders.
A's. Warriors. Roots have aspirations to be in that same boat
(while staying in Oakland, forever). That's really the reason
why it made sense to take outside investment in the first place:
we think there's magic in Oakland, and we want make those
impacts locally and globally in a huge way.
You can measure your approach, too. When Uber went public, for
example, they were losing billions... but they were seeing
certain individual markets hit cashflow-positive. They were
willing to invest in new markets because they thought they had a
formula that would lead to positive cash flow for the whole
business. (A few years after their IPO,
they did, with profitability
a few years after that.)
Don't get me wrong: I have a lot of gripes about Uber. But the
notion has its parallels here. Roots hit their first consistent
game day positive revenue numbers last season, which was a huge
shift from a couple years ago where each game was deeply in the
red. This year's move to the Oakland Coliseum expands us from a
roughly 5,500 capacity to, well, technically 60,000+. But costs
are higher, too. The hope is that we can narrow that game day
revenue-to-costs gap even further in the coming years and
ultimately reduce the reliance on outside investment.
The goal is always to be a self-sustaining club the whole Town
can rally behind... that will never, ever leave Oakland.
Sustainable growth matters to get to that point. And yeah, I
always worry about it. But god, it's been so exciting to see the
impact.
The exit
I have absolutely just written a shit ton of words about what is
kind of a not great investment so far, yes, lol. Obviously I get a
lot of personal joy out of supporting Oakland Roots, but I'm also
not just doing it For Love Of The Game, which is also a
baseball movie by Kevin Costner from a few decades ago that I
fucking hated and was so livid I wasn't getting another
Field of Dreams in that theater.
I invest in startups, and startups are all about The Exit,
which usually means: IPO, acquisition, some sort of
buyback/dividends/profit sharing, or (most likely) you lose all your
money.
Roots are a little different. Though some clubs are on the public
market —
heja BVB! —
it's not likely Roots will go public, barring a huge change to
securities laws (which hey, maybe will happen given the pace of IPOs
over the last few decades, never know).
In my mind, it's most likely that shareholders would be able to exit
their position through share buybacks (someone comes in and offers
to buy your shares because they want more ownership of the club) or
through some sort of profit sharing. Profit sharing is likely to be
*much* further down the line, though: again, we think there is a ton
of growth ahead for Roots and Soul, and by taking money
out of the club, you're limiting how quickly that growth
can occur. So for forseeable future, the club will likely remain in
the red, or fairly break-even.
That would leave selling your shares. And that's been an approach
many teams and franchises have taken over the years. Right now,
number keeps going up:
MLS has had truly meteoric growth lately, with San Diego FC's recent
expansion fee rumored to be
$500M
last year. (Too bad it wasn't San Diego Loyal, which still deeply
bothers me how badly
they were done dirty.) The US's top-flight women's league, NWSL, has also had some
mind-boggling growth as well: in 2020 the Seattle Reign was
purchased for $3.5M and Angel City's expansion fee into the league
was $2M; four years later, Bay FC bought into the league for $53M
and Angel City was valued at $250M.
USL is also seeing positive growth. Valuations for the top-tier
clubs — Louisville FC, Phoenix Rising, Indy Eleven, Oakland
Roots, etc — are probably somewhere around $100M to $250M today.
All the American leagues are seeing this ahead of World Cup 26,
which will immediately be the most-attended World Cup of all
time (surpassing '94, also hosted in the US, although that had
substantially fewer teams). There's also Club World Cup this
summer and likely a women's World Cup in the coming decade, too.
There's a ton of focus on the sport right now.
Valuations, like most financial instruments, can be a tool for
investors. If your valuation goes up, your slice of the pie gets
larger. That means you could de-risk by subsequently selling a
portion of your larger slice of the pie off. This is why so many
clubs can be in the red for so long: you might see a club peel
off a sale of minority shares, which happens
all the time.
This can be a tool for good! In the optimistic case, you're
rewarding those who took a risk with you and came on board early
on, before success was "guarenteed". In many cases those owners
are not leaving club ownership- they're just selling a small
portion of their stake, so you can still benefit from their
connections, passion, and future funding.
Is MLS needed?
I see this a lot- "Oh, Roots are planning
to build a huge stadium
because they want to get into MLS down the line". And yeah,
MLS aspirations were my first question when I first talked to
Steven, too.
MLS would be great. I went from being a decade-long Quakes fan
to hating them due their ownership's total lack of interest in
developing one of the best markets in the world for soccer:
the Bay Area. It'd be fantastic to see an emphasis in
top-flight football again in the region, and I'd love for
Roots to be leading the charge.
But from an investor standpoint, no, I don't think that
needs to be a goal anymore. That's not a phrase that
existed even five years ago, really. Hell, even a decade ago
MLS was still
losing clubs; this stability and growth is really a fairly recent thing.
With USL starting to see stability and growth, there's a great
opportunity to be a long-term, profitable, successful club at
that level of the pyramid, led by clubs like Louisville,
Charleston, Indianapolis, and others. There's plenty of prior
art in Europe, too: clubs like
FC St. Pauli and
Wrexham show you
can have a global impact from lower-tier leagues.
And of course, this can be used for
what's-the-opposite-of-"good"-kinda-like-"evil"-but-less-likely-to-get-me-sued.
You know, like John Fisher, owner of the
Oakland Las Vegas Sacramento A's,
and the San Jose Earthquakes. He doesn't really care about putting
funds into his clubs, because he can benefit from other MLB and MLS
clubs doing the work and pushing overall league valuations up while
he coasts. Eventually,
he can sell a minority stake
to cover interim costs, and if he doesn't need the liquidity in the
immediate future, eventually sell the damn club and ride the monster
valuation increase over the duration of his ownership.
"Everyone's leaving Oakland"
Look: yes, the A's are gone. The Raiders are gone. The Warriors are
across the Bay. It makes sense that fans to worry about Roots
leaving the Town, too. And I see that mentioned online, in person,
whatever. But it's one of those things that, from ownership's
perspective... god, it's not remotely anything that anyone would
ever fathom even to begin to think about. I can't underline how much
more likely the club is going to go broke long before it would ever
cross anyone's minds, lol. Every single person who put money into
the club, whether it's $100 or $10M, wants to see an Oakland club
succeed in Oakland.
Sure, there are detractors about Oakland. Last year I was at a
dinner with an MLS owner — who shall remain nameless — who, out of
nowhere, replied to my conversation with a seatmate with "yeah but
no one wants to go to that shithole anymore!"
No, I'm just kidding. About the nameless part, I mean. It was
Anthony Precourt, owner of Austin FC. That guy who desperately tried
to move the Crew away from Columbus. The idea that a team would want
to stay in the city they love might be confusing to some people. And
I think that can be a financial decision on its own, as well: the
magic of the organization stems from Oakland.
But anyway: that's my schtick on finances for a new soccer club.
Yes, they can be ugly; no, it's not entirely unexpected; yeah, you
can tackle these issues a bit as you grow the club.
But I fucking love being on this ride.
the football: peeking behind the curtain
I'm a soccer sicko.
I watch U-15 tournaments from the other side of the world at 3am. I'm
an unabashed diehard of one of the best cup competitions in the world,
the
US Open Cup,
watching like eight games at once during those fun early rounds. I
have many opinions on why the world needs to adopt
90s MLS penalty shootouts, or why the '00 adidas Predator was the greatest boot of all time.
But these are all from the fan side of things; ownership was
eye-opening, to say the least.
It's kind of like — or actually, come to think of it,
exactly like — moving from being an employee to being a
founder at a company. There's so many cases from, say, your first job
where you suddenly think "oh shit, that's why they did things
that way". I mean, you still don't agree with it, but you at least
have context for why your manager did that stupid fucking decision
you're angry at years later, for example.
A lot of it is just seeing context for the other side of things. Why
did that one crowd favorite leave the club? Well, there are reasons
behind it. Why didn't this player pan out, or that player develop
well? Well, turns out it's really hard to manage people, whether
you're at a startup, or a soccer club, or a McDonald's.
All this has been really interesting to see the other side of the
curtain, so to speak, and there are a few reasons for it.
The fans are morons
Guilty as charged. I'm an absolute shithead when it comes to
my fandom. I played varsity soccer in North Dakota twenty years ago,
and then some soccer for fun every now and then afterwards. Like, I
have no idea what I'm doing. And yet, here we are, at a bar or at home
or on a reddit thread, yelling at each other about some player's
performance on-field based on the 90 minutes we see of them once or
twice a week on TV.
This, like most things in soccer, is not too dissimilar from all sorts
of other things in society. Dunning-Kruger all the way down. Everyone
has opinions, but they're not always opinions worthing
listening to.
If a fan has a Really Wrong Opinion and is pissed about it, though,
it's still important to identify what they're
directionally talking about. Classic soccer example is "THIS
GOALKEEPER IS TRASH!!!" when maybe its the backline with issues, or
set pieces are a disaster, and so on.
This is the case for building product in tech, too- with GitHub we’d
constantly see horrible fucking ideas proposed to us in an
attempt to improve some deficiency in the product. This is exacerbated
when the customer ("fan") has more short-term thinking than you: they
have a problem with the product right now, and they don't
care that you're planning on revamping and improving the entire
feature six months or two years or whatever down the line. They have
real feelings today. Identifying that directional anger, even
though they might be "wrong" about the feature specifically, might
lead to you finding them a stopgap solution in the interim, or moving
up your long-term plans. Or you realize you're the one who's wrong
with all this after all. Or you can simply just offer to talk with
them directly and give them more context; sometimes that alone can
help a ton.
It’s super hard but like… people don’t get pissed off unless they
care. Once you stop seeing feedback entirely... that’s when you’re
truly fucked. Then they don't care at all.
The fans are geniuses
The opposite is true, too: it's unbelieveable what sort of insights
and understanding can come from the fanbase as well.
You can't fake the product in football, not really. Either you have a
great squad and perform well, or you have a great game day
environment, or you make an impact on your community... or you don't.
People have way too much shit going on in their lives right now to
fuck around with a club that isn't putting in the work.
In that sense, fans are incredibly sophisticated these days. They know
what they like, they know what they want to spend their money on. Used
to be your grandpappy would spend -20°F winters with their butt
outside on a bench watching their alma matter lose six straight
decades of college football, because that's what their own pops did,
dammit. Now Taylor's dropping a new album and coming three states away
for a show and you have to drop six months' salary to see her show
because she's goddamn the GOAT, now what are you talking about with
this soccer stuff?
You can only toss so many hot dogs into a silent crowd before they
peace out because of how corny it all feels. Unless it's corn dogs.
Shit, I don't think I've seen corn dog tosses to the crowd very often,
gonna have to send that up idea the tree next.
Technically and tactically, fans can be incredible, too. Even in USL,
merely the "second tier" of soccer fandom in a country that allegedly
"doesn't like soccer", the journalistic side of things is a
never-ending supply of fascination, and tactics, and the human side of
being a fan.
John Morrisey's
tactical breakdowns on
USL Tactics and
Backheeled are
gold-standard. The crew at
RootsBlog do amazing
in-depth analysis and game day threads of everything Oakland Roots.
The Union Report
posts so much about Monterey Bay FC that I feel like I know more about
that club than my own sometimes (just kidding, RootsBlog). And there's
so many in-depth podcasts and videos coming from journalists like
Cheyenne Foster. Really
makes you think... sheesh, we're finally building something incredible
in this league, and in this country. Proper footballing nation, innit.
Supporter groups are sacrosanct
Part of this is talking my own book; I help with the
American Outlaws
both locally and nationally for US Soccer, and I've been a part of San
Jose's supporter groups in the past, too. You'll find me in the
supporters section at any given game I'm at.
Supporter groups are just that: groups of fans who get together to
support the team. They're the ones who sing the songs and wave the
flags. They travel to away games, they bring their friends to games,
they volunteer and donate to the community. It's actually kind of
nutty how much time, energy, and money goes into being a supporter of
a club.
But supporters are the ones that deserve — amusingly — support. Not
really financially, since directly funding them puts them (and the
club) in a pretty strong conflict-of-interest with each other. But
simply supporting their existence, giving them a voice, keeping ticket
prices accessible, and letting them do their thing is so important.
The atmosphere they create is, well, honestly, what many go to games
for. That's why a game
with the Yellow Wall
is a bucket list item for so many, and why some of the stadiums in the
Prem are libraries.
It's a tricky balancing act, because you want them to be independent
groups, but you also want to help them thrive. But again- fans are
sophisticated. You can't force them to feel a certain way, much to the
chagrin of plenty of clubs who give out NFTs or some other weird shit
in the stands. Some of the most memorable atmospheres I've been in
have been a few dozen superfans on a couple bleachers at an Open Cup
game, making up friendly chants about the sideline official's
spectacular calves. It doesn't need to be much, but I refuse to be a
part of a club without it.
Everyone should play Football Manager once
This is entirely stupid to say, but I'm not sure I trust fans who have
an opinion on running a club if they don't have at least one savefile
with
Football Manager. Just
cracks me up. Swear to god, that opened my eyes the most when it came
to how hard it is to build a roster, cope with great signings becoming
mediocre and bad players becoming club legends, and dealing with the
balance of salaries and cap space and various local insanities (I will
forever get a kick out of
confident Europeans trying their hand managing an MLS club
for the first time). It also makes you realize how different being a
great manager is versus being a great technical director. They're very
different jobs, although both need a deep understanding of the other,
too. Fascinating stuff.
how can I non-ironically be helpful?
the hell is an "investor" anyway
There's a phrase in venture capital that normal people take the piss
out of all the time: "How can I be helpful?"
It's kind of an implication that most investors don't really add
anything to the business besides their initial check. They're not sure
what they can add, so they ask, "How can I be helpful?" At the very
least, if you were able to fundamentally change the startup's
trajectory, you'd probably already intimately know what the founders
will need, or what questions to ask.
Roots have been a fun experience to figure out
how I can be helpful!
First bit is enthusiam. I can't underline this enough: I'm sick of
these old, billionaire owners who seemingly don't give a fuck about
the teams that they own. Nothing makes me angrier than seeing the
people in control of the thing that I love just not caring. So I try
to bring that in spades everywhere I go.
For one, I'm a bit of a shitposter reasoned internet
commentator. This was apparent far before Roots; I commented and
posted and tweeted about the Earthquakes previously, and I definitely
was overly-accessible when it came to early GitHub: I probably saw
close to 95% of all tweets directed to @github between 2010-2014 (and
responded to many, many of them). It's just table stakes to me: if you
care about something, you talk about something, particularly if you
can write it in a way to increase transparency, or if it's
interesting, or you just want to talk about something you care about.
I mean, shit, that's what I'm doing here. Breaking the fourth wall and
all of that: I want to write an embarassing quantity of words on this
post because I want you to learn more about Oakland Roots and Soul, I
want you to think about
investing in the crowdfund yourself, and I want you to be more passionate about American soccer.
Regular readers of this blog will notice that, at times, I have
writtenembarassinglylongreads about
things that matter to me. Usually it works out great: people like
learning about how things tick, people like hearing stories, but most
importantly... people love discovering what deeply impacts someone
else, be it joy, sadness, excitement, anger, whatever. Life would be
far too boring to not have strong feelings about certain things. So
yeah, of course I'm going to write loud and proud about my favorite
fucking thing ever. You obviously care an iota about it too, otherwise
you wouldn't have made it this far, either. You're a soccer sicko,
too; greetings.
Most organizations need the same stuff
And that's usually along the lines of: people, connections, money.
That's it, really. All the mindless thoughtleading about venture
capital and endless podcast episodes and it mostly just boils down
into "can you help with people, connections, and money?"
So I've helped with that. I've referred friends and contacts for
hiring, I've made connections between other clubs and investors up and
down the US soccer pyramid, and I've invested money. Part of what I've
learning is that soccer in particular is a more-than-young-man's game:
if you're trying to find other large dollar amount investors, they
tend to skew older and male-r. Like, extremely. It's an area I'm
trying to break into further, but in that sense it's a bit different
from, say, angel investing in tech, where some rando 22 year old might
actually be a billionaire. (I'm turning 40 this year, so I guess I'm
also becoming ancient in some peoples' eyes, but I certainly
feel a decade or two too young in this area.)
Also: if you're part of the younger end of the spectrum and actively
invest or donate money to local soccer issues and facilities, be it
here or internationally,
shoot me an email! I'd love
to chat. I'd also love to write a post about donating to soccer
organizations in the future, really; I've found that a little bit goes
an insanely, stupidly long way, particularly for local soccer
organizations. It's wild, and goes far beyond the game itself.
Some organizations need different stuff
I mean, it's a soccer team, and I love soccer. So there's so much
weird shit that has been a joy to pitch in with.
A huge part of it is just showing up. Again, you purchased part of a
club, so ostensibly you enjoy the actual game itself, no? So going to
games, sending your tickets to others when you can't make games, and
particularly showing up for away games can be a strangely huge
bank-to-buck ratio. USL doesn't have a ton of traveling away fans; for
one, America is big, and there aren't many driveable games. But that
means that showing up for playoff games or regular season games in
enemy territory counts for like, god, six billion bonus points. And
it's almost always easy to strike up a conversation with local fans,
learn more about what they're building, and tell them more about what
you're building.
Celebrating in San Diego with players and fans after our
first-ever playoff win. Ridiculous game, too. Sorry Loyal.
I've found Roots tee + blazer is the best way to dress up and
still advertise at events like this private US Soccer meeting.
No law that says you can't force your dogs to gear up, either.
By far the coolest shit I've done as an investor, in my humble
opinion, is wire an NFL training facility.
For years I had been tinkering with our home network, expanding it
into a full rack, dodging persistent questions from my wife of "well
why do we need to support 1,000 simultaneous clients on our wifi at
home?" Dodging because, no, I had no rational answer. UNTIL I
DID! In January 2022, the investor update mentioned needing wiring
internet in the new training facility:
Years of learning how to wire and set up enterprise networking
connectivity at home had led to a single tear running down my cheek as
I said "HELL YES". And that's how I ended up on the roof of the former
Oakland Raiders NFL training facility — which now Oakland Roots are
the proud tenants of — running ethernet for my club.
Roots have one of the best training facilities in the country.
RIP Raiders.
Some day I will find out who from the Raiders organization
snipped all the ethernet cables only six inches from the wall,
eight feet from the floor. I will punish you.
I swear, years later now and the internet has been rock-solid ever
since. Okay, we lost one AP, but the rest is shockingly humming
along. I'm almost competent.
roots & soul
So that's it. That's a lot of words about putting money into my love
of a club.
I've invested in something like 200 startups; this is by far my
favorite investment out of all of them. Everything hits different when
you can actually bring your friend and feel the atmosphere, see the
smiles. And wins feel fucking fantastic. (Losses, well, not
so much, but hey we're talking about good feels here.)
It's a great time to be a fan of the club: we're moving into the
historic
Oakland Coliseum
in just over a month and a half when the season kicks off. I can't
possibly convey how fucking excited that makes me. Join me for a game
this season! If you're in the Bay
during our season, drop me a line: I'd love
to meet you at the Coli and say hi. Away fans can absolutely take me
up on it, too. Except for Sacramento fans. Just kidding. Probably.
It's a great time to be an investor, too: our second crowdfunding
round closes in a couple days. Minimum investment is $100, with
higher levels getting you more perks. I just got some goddamn
dirt from the Oakland A's infield a couple weeks ago.
That brought me so much joy. I immediately mounted it to my wall
for display. If you're interested in chatting more seriously about
joining the investor group, or if you have any other questions I
could help with, you can also
shoot me an email; more
than happy to chat!
From Cold DM to Owning a Soccer Club
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From Cold DM to Owning a Soccer Club
I'm one of the investors in
Oakland Roots, a club in the USL Championship, the second tier of soccer in the
US. So: what is sports ownership like, anyway? How similar is it to my
startup experiences? Can I write a way-too-long of a post about it
all? Yes. Yes I can.
Zach Holman
January 30, 2025
Look: I don't much understand it either. Apparently
I'm a part-owner of a soccer club.
Yes, I love soccer. I played it growing up. I play it today. I watch
the shit out of it. That part makes sense. But it's the ownership
thing that's weird. I grew up in a world where only 90-year-old
white billionaires would own sports teams. You wouldn't see them in
the supporter section with their shirt off screaming at a goal.
I'm not saying this is necessarily an old billionaire who
doesn't care about his team... I'm just saying in general.
Probably.
Sports was like... some weird world where all the owners live in their
posh suite way up top away from the rest of the proles and the
cameramen will put them on-screen once a game so fans know the owner
is still (relatively) alive, with the only thing pulsing their heart
is a deep-seated compulsion to buy up more members of Congress.
And yet, here I am. And as part of that — like most things in my
professional life, good and bad — I'm going to write a long fucking
post about it. This is going to be a weird post, too: for one, the
audience is all over the place. I have a lot of following from the
tech/startups side of things from my time at GitHub years ago, so
there'll be a fair amount of "huh, well THIS is certainly different
from running a tech company". There's also going to be a lot of soccer
sickos reading this as well, from elitist Eurosnobs to
chip-on-the-shoulder USL dorks to the corporate MLS suck-ups, and
that's all great because I'm also all of those. And then there'll just
be people who drop by to hate, which is also fine, because dammit, I'm
also a hater. So I'm going to try to play keepy-uppies with all these
balls and hopefully there'll be something interesting for all of you.
This all matters to me because sport matters to me. I've met my very
best friends, had my very best experiences, as well as my worst
experiences, all within this silly little game. It bothers me when
these absent billionaires fuck around with someone's fandom.
Rule number one: give a shit, and make it known that you give a shit.
And talking about this stuff publicly is a small way I can make this
clear, and make the club itself more transparent. I get the feeling
that most sports ownership concerns are discussed in private cigar
rooms that none of the rest of us are invited to. Who even smokes
cigars anymore, anyway? The world's changing, and we're seeing both
club ownership and the nuts-and-bolts of running a club more open to
the general public, and I love it. In fact, part of the motivation
behind this post stems from people like Dennis Crowley, who almost a
decade ago wrote about building
Kingston Stockade FC. I'm always going to support making more decisions in public, be it
startup or sports club.
Our three teams in Oakland, California:
Oakland Roots SC
Founded: 2018. Men's team.
League: USL Championship
oaklandrootssc.comOakland Soul SC
Founded: 2022. Women's team.
League: USL-W
oaklandsoulsc.comProject 51O
Founded: 2019. Academy team.
Leagues: USL League 2 & UPSL
project51o.com
Okay wait so what the shit is all of this? Who are the Soul? What are
the Roots, and why isn't Geordi LaForge involved in it? Who the hell
are you, anyway?
I'm Zach Holman, just some soccer fan. I played
soccer in high school, but that was the extent of my serious playing
career. I'm involved with the
American Outlaws, the
largest supporters' group for US Soccer, both on the local and
national level: I run American Outlaws San Francisco, where we watch
US games at McTeague's Saloon on Polk street (join us for a game
sometime!), and I'm also the Director of Technology for American
Outlaws nationally (which basically means I donate my time and code
for the software side of the non-profit). I'm currently starting a
sports startup called WorkOn with my
friend
Jimmy Conrad, who had a long career in MLS and played in the 2006 World Cup. I
also angel invest through a fund called, appropriately enough,
Tifo.
Here I am in a Soul shirt at an 1. FC Union Berlin game, which
kind of blew me away; totally worth a visit.
Bluesky:
@holman.bsky.socialThreads:
@holmanTwitter:
@holman
I had heard about Oakland Roots since they started, and was a huge fan
of how they talked about the club, their commitment to the community,
and honestly, their branding was fucking incredible. They got
Matthew Wolff to design the
logo. Matthew's done pretty much all the recent great work for clubs
globally: LAFC, NYCFC, PSG, the legendary Nigerian kits, god,
everything. I'm a fan.
The logo caught my interest, but the brand sucked me in.
Punched far above their weight class, and it had a feel that I had
been waiting for years to see from other clubs I had followed. They
had such an emphasis on Oakland. And that's really the
end-all, be-all: let Oakland be Oakland.
Damian Lillard wearing a shirt before a 2019 NBA playoff game.
Oakland's limited-edition Black Panther kits. The
short film
by Calvin Gaskin was incredible, too.
Zendaya and Tom Holland. Tom's also a fellow Spurs fan, and I will
not be accepting any comments on how we're doing this season.
For years I had practically told everyone in any single bar I stepped
foot in that if I could "invest in American soccer" I would. MLS was
expanding like crazy, with expansion fees alone that were larger than
valuations of 100-year-old clubs in England. The USWNT had continued
to win World Cup after World Cup, and the USMNT were looking really
threatening (before, uh, Trinidad, but don't worry, we're back on
track again). It's just not too often you have the largest economy in
the world suddenly — over decades, of course — discover a pasttime
that the entirety of the rest of the world has known for years.
Eventually I realized well, if I couldn't invest in soccer
generally, maybe I could invest in a club specifically. Definitely
still thought this was the realm of billionaires, though, but I
figure I'd shoot my shot. Amusingly similar to how I got my job at
GitHub a decade prior, I sent a cold DM over Twitter to the Roots'
chairman, Steven Aldrich, asking if they'd be interested in having
an additional investor come on board. We had a chat, and then I
became an investor. Sometimes life just comes down to asking, it
turns out.
I do want to make it clear that I'm not a majority owner by any
stretch: the amount is meaningful to me, but on the cap table it's
more along the lines of angel investor: somewhere around one
percent of the club. I'm also not involved in the day-to-day
operation of Roots and Soul; the co-founders, the chairman, all
the full-time staff and game-day staff honestly have a more direct
impact that I do. I do see a lot of visibility into the
organization, and I try to get as involved as much as possible.
But most relevant to why you're reading this from me: I love
writing about stuff like this, so here we are! A blog post!
Owner vs Investor
One last quick note on nomenclature before we get into things-
the original investor group was just that: an
investor group. There's potentially a lot of problems
with using owner while running a team of athletes, and
traditionally we hadn't used it to describe the investor group.
It wasn't until we did a crowdfunding round last year where we
surveyed the fanbase and they overwhelmingly preferred "owner"
instead of "investor", which makes sense in terms of a community
who wants real participation in their community's club. I'll
likely bounce back and forth between the two here, but it's
something we're still discussing a lot.
the finances of owning and running a football club
Initially I wasn't going to write specifics about the finances
involved, but then I realized there was a very good reason to. The
reason I came up with is: "fuck it". Again, the sports world seems
like
so many shady backroom deals, and putting some real numbers
to the problem makes it just that less shady.
For most sports organizations, it's not really a one-and-done thing.
Roots are no different. I've invested ten times into the club. Here's
the detailed breakout of my wires:
Date
(Rough) Valuation
Amount
Current value
Notes
October 2020
$24M
$100,000
$161,812
January 2021
$28M
$100,047
$161,887
September 2021
$35M
$100,000
$161,812
January 2022
$40M
$41,093
$66,492
February 2023
$70M
$42,900
$51,480
September 2023
$78.2M
$10,000
$11,003
First crowdfund campaign
January 2024
$90M
$86,471
$86,486
August 2024
$93M
$1,000
$1,000
Second crowdfund campaign
November 2024
$93M
$75,000
$75,000
January 2025
$93M
$103,000
$103,000
Total
$659,511
$879,972
I've definitely had better returns, both in the public markets and in
the private markets. No, it's not the best investment in the world
(yet). Even with valuation increases, the amount of yearly burn makes
it pretty cash-greedy and impacts the return profile. But if life were
just about financial returns, I'd invest in oil companies or some
shit.
One of the reasons I feel comfortable detailing some of this is that
so much of the Roots' finances are public at this point, because of
our two public crowdfund campaigns (thanks to the JOBS act: thanks
Obama!) The
current crowdfunding campaign
ends in a few days (January 31, 2025!) and it's a great way to peer
directly into the finances whether you're an investor or not. It's
reached its target raise for the round, but still taking investments-
minimum is just a hundred bucks. All the nitty-gritty financial
details are in the
financial statement
linked halfway down the page.
Crowdfunding vs public vs private ownership
Man, I really love that Roots did a public crowdfunding campaign. In
2023 we raised the largest public sports crowdfund of all time: $3.6M
from 5,400 new investors, including Billie Joe Armstrong (Green Day),
Jason Kidd (NBA), G-Eazy (rap), and many, many other notable figures.
We're currently in a second crowdfund campaign.
I think it's great to have public ownership. Ideally, the whole club
is owned by the community. Unfortunately the math doesn't really math.
American teams like the Green Bay Packers are owned by half a million
fans, but the NFL (among many other leagues) has now outlawed that
type of ownership. German football clubs follow the Bundesliga's
excellent
50+1 rule,
which ensures control of the club stays with the fans. In the US,
though, team valuations have been so high for so long that,
particularly for recently-formed clubs, it's really difficult to
generate that type of demand from fans to buy in.
If you're looking strictly at Roots: over the last seven years the
club has raised $60M from investors. Current valuation is around $93M.
That's a lot of burn, and we'd have to raise our first crowdfunding
round 20 times over to achieve that.
And honestly? I'm not sure early-stage clubs should be entirely
fan-funded. It's a really fucking risky investment. It's
actually do or die: either Roots are going to be wildly
successful, or the club is going to fold and the investors are going
to lose all their money. There's not likely to be an in-between here.
I worry a lot about the type of money that goes into the club, and the
implications of who gets impacted if the stock price goes to zero.
Fans already put so much into the club as fans.
I like having an SPV of 6,000+ investors on the cap table.
Last season we had roughly as many investors as we had seating
capacity for them in the stadium. Having a big tent opens up a more
direct line between fan and majority ownership, and lends itself to
the possibility of community votes and public decisions down the line.
It's a different accountability from ownership compared to someone who
bought a ticket once and has Lots Of Opinions Online.
But damn, it's a really tough problem, though. Money versus fandom.
Not unique to American soccer by any stretch, although certainly
exacerbated by our lack of pro/rel and league franchising and
ownership decisions made decades ago and many sports ago. Down the
line, though, once the club is on a more stable footing? I'd
personally love to see diminished ownership by existing investors and
increased ownership by the community itself. (Not by "yet
another dumb city buys the sports team a stadium", though: though
actual ownership by fans, with actual participation on the cap table.)
Seeing
red
This is a perspective I'll probably never convince most people
about, but: you're supposed to lose money. Kind of.
("Seeing red" is an extremely clever triple entendre in this
context; just wanted credit for that, dammit.)
Every time a journalist writes a piece on a large tech company —
omg, so-and-so is losing billions a year!! — the common response
is "Look, they're incompetent! They don't know what they're
doing! They're broke!!" That's not the point.
To over-simplify the argument... there are two ways to grow a
business: bootstrap, or take outside investment. Neither are
correct or incorrect; they depend on the context.
If you take outside investment, the bet you're making is that by
having more resources available today, you'll grow far larger
tomorrow than you would if you simply grew in a linear fashion.
For a new soccer club, it's often the case that you'll face a
number of steep up-front costs that are hard to recoup in the
short term: paying potentially millions (thanks USA!) to join a
league, providing for training and game-day facilities,
supporting player and staff wages, and about nine zillion other
costs.
The teams Oakland has produced are legendary, globally: Raiders.
A's. Warriors. Roots have aspirations to be in that same boat
(while staying in Oakland, forever). That's really the reason
why it made sense to take outside investment in the first place:
we think there's magic in Oakland, and we want make those
impacts locally and globally in a huge way.
You can measure your approach, too. When Uber went public, for
example, they were losing billions... but they were seeing
certain individual markets hit cashflow-positive. They were
willing to invest in new markets because they thought they had a
formula that would lead to positive cash flow for the whole
business. (A few years after their IPO,
they did, with profitability
a few years after that.)
Don't get me wrong: I have a lot of gripes about Uber. But the
notion has its parallels here. Roots hit their first consistent
game day positive revenue numbers last season, which was a huge
shift from a couple years ago where each game was deeply in the
red. This year's move to the Oakland Coliseum expands us from a
roughly 5,500 capacity to, well, technically 60,000+. But costs
are higher, too. The hope is that we can narrow that game day
revenue-to-costs gap even further in the coming years and
ultimately reduce the reliance on outside investment.
The goal is always to be a self-sustaining club the whole Town
can rally behind... that will never, ever leave Oakland.
Sustainable growth matters to get to that point. And yeah, I
always worry about it. But god, it's been so exciting to see the
impact.
The exit
I have absolutely just written a shit ton of words about what is
kind of a not great investment so far, yes, lol. Obviously I get a
lot of personal joy out of supporting Oakland Roots, but I'm also
not just doing it For Love Of The Game, which is also a
baseball movie by Kevin Costner from a few decades ago that I
fucking hated and was so livid I wasn't getting another
Field of Dreams in that theater.
I invest in startups, and startups are all about The Exit,
which usually means: IPO, acquisition, some sort of
buyback/dividends/profit sharing, or (most likely) you lose all your
money.
Roots are a little different. Though some clubs are on the public
market —
heja BVB! —
it's not likely Roots will go public, barring a huge change to
securities laws (which hey, maybe will happen given the pace of IPOs
over the last few decades, never know).
In my mind, it's most likely that shareholders would be able to exit
their position through share buybacks (someone comes in and offers
to buy your shares because they want more ownership of the club) or
through some sort of profit sharing. Profit sharing is likely to be
*much* further down the line, though: again, we think there is a ton
of growth ahead for Roots and Soul, and by taking money
out of the club, you're limiting how quickly that growth
can occur. So for forseeable future, the club will likely remain in
the red, or fairly break-even.
That would leave selling your shares. And that's been an approach
many teams and franchises have taken over the years. Right now,
number keeps going up:
MLS has had truly meteoric growth lately, with San Diego FC's recent
expansion fee rumored to be
$500M
last year. (Too bad it wasn't San Diego Loyal, which still deeply
bothers me how badly
they were done dirty.) The US's top-flight women's league, NWSL, has also had some
mind-boggling growth as well: in 2020 the Seattle Reign was
purchased for $3.5M and Angel City's expansion fee into the league
was $2M; four years later, Bay FC bought into the league for $53M
and Angel City was valued at $250M.
USL is also seeing positive growth. Valuations for the top-tier
clubs — Louisville FC, Phoenix Rising, Indy Eleven, Oakland
Roots, etc — are probably somewhere around $100M to $250M today.
All the American leagues are seeing this ahead of World Cup 26,
which will immediately be the most-attended World Cup of all
time (surpassing '94, also hosted in the US, although that had
substantially fewer teams). There's also Club World Cup this
summer and likely a women's World Cup in the coming decade, too.
There's a ton of focus on the sport right now.
Valuations, like most financial instruments, can be a tool for
investors. If your valuation goes up, your slice of the pie gets
larger. That means you could de-risk by subsequently selling a
portion of your larger slice of the pie off. This is why so many
clubs can be in the red for so long: you might see a club peel
off a sale of minority shares, which happens
all the time.
This can be a tool for good! In the optimistic case, you're
rewarding those who took a risk with you and came on board early
on, before success was "guarenteed". In many cases those owners
are not leaving club ownership- they're just selling a small
portion of their stake, so you can still benefit from their
connections, passion, and future funding.
Is MLS needed?
I see this a lot- "Oh, Roots are planning
to build a huge stadium
because they want to get into MLS down the line". And yeah,
MLS aspirations were my first question when I first talked to
Steven, too.
MLS would be great. I went from being a decade-long Quakes fan
to hating them due their ownership's total lack of interest in
developing one of the best markets in the world for soccer:
the Bay Area. It'd be fantastic to see an emphasis in
top-flight football again in the region, and I'd love for
Roots to be leading the charge.
But from an investor standpoint, no, I don't think that
needs to be a goal anymore. That's not a phrase that
existed even five years ago, really. Hell, even a decade ago
MLS was still
losing clubs; this stability and growth is really a fairly recent thing.
With USL starting to see stability and growth, there's a great
opportunity to be a long-term, profitable, successful club at
that level of the pyramid, led by clubs like Louisville,
Charleston, Indianapolis, and others. There's plenty of prior
art in Europe, too: clubs like
FC St. Pauli and
Wrexham show you
can have a global impact from lower-tier leagues.
And of course, this can be used for
what's-the-opposite-of-"good"-kinda-like-"evil"-but-less-likely-to-get-me-sued.
You know, like John Fisher, owner of the
Oakland Las Vegas Sacramento A's,
and the San Jose Earthquakes. He doesn't really care about putting
funds into his clubs, because he can benefit from other MLB and MLS
clubs doing the work and pushing overall league valuations up while
he coasts. Eventually,
he can sell a minority stake
to cover interim costs, and if he doesn't need the liquidity in the
immediate future, eventually sell the damn club and ride the monster
valuation increase over the duration of his ownership.
"Everyone's leaving Oakland"
Look: yes, the A's are gone. The Raiders are gone. The Warriors are
across the Bay. It makes sense that fans to worry about Roots
leaving the Town, too. And I see that mentioned online, in person,
whatever. But it's one of those things that, from ownership's
perspective... god, it's not remotely anything that anyone would
ever fathom even to begin to think about. I can't underline how much
more likely the club is going to go broke long before it would ever
cross anyone's minds, lol. Every single person who put money into
the club, whether it's $100 or $10M, wants to see an Oakland club
succeed in Oakland.
Sure, there are detractors about Oakland. Last year I was at a
dinner with an MLS owner — who shall remain nameless — who, out of
nowhere, replied to my conversation with a seatmate with "yeah but
no one wants to go to that shithole anymore!"
No, I'm just kidding. About the nameless part, I mean. It was
Anthony Precourt, owner of Austin FC. That guy who desperately tried
to move the Crew away from Columbus. The idea that a team would want
to stay in the city they love might be confusing to some people. And
I think that can be a financial decision on its own, as well: the
magic of the organization stems from Oakland.
But anyway: that's my schtick on finances for a new soccer club.
Yes, they can be ugly; no, it's not entirely unexpected; yeah, you
can tackle these issues a bit as you grow the club.
But I fucking love being on this ride.
the football: peeking behind the curtain
I'm a soccer sicko.
I watch U-15 tournaments from the other side of the world at 3am. I'm
an unabashed diehard of one of the best cup competitions in the world,
the
US Open Cup,
watching like eight games at once during those fun early rounds. I
have many opinions on why the world needs to adopt
90s MLS penalty shootouts, or why the '00 adidas Predator was the greatest boot of all time.
But these are all from the fan side of things; ownership was
eye-opening, to say the least.
It's kind of like — or actually, come to think of it,
exactly like — moving from being an employee to being a
founder at a company. There's so many cases from, say, your first job
where you suddenly think "oh shit, that's why they did things
that way". I mean, you still don't agree with it, but you at least
have context for why your manager did that stupid fucking decision
you're angry at years later, for example.
A lot of it is just seeing context for the other side of things. Why
did that one crowd favorite leave the club? Well, there are reasons
behind it. Why didn't this player pan out, or that player develop
well? Well, turns out it's really hard to manage people, whether
you're at a startup, or a soccer club, or a McDonald's.
All this has been really interesting to see the other side of the
curtain, so to speak, and there are a few reasons for it.
The fans are morons
Guilty as charged. I'm an absolute shithead when it comes to
my fandom. I played varsity soccer in North Dakota twenty years ago,
and then some soccer for fun every now and then afterwards. Like, I
have no idea what I'm doing. And yet, here we are, at a bar or at home
or on a reddit thread, yelling at each other about some player's
performance on-field based on the 90 minutes we see of them once or
twice a week on TV.
This, like most things in soccer, is not too dissimilar from all sorts
of other things in society. Dunning-Kruger all the way down. Everyone
has opinions, but they're not always opinions worthing
listening to.
If a fan has a Really Wrong Opinion and is pissed about it, though,
it's still important to identify what they're
directionally talking about. Classic soccer example is "THIS
GOALKEEPER IS TRASH!!!" when maybe its the backline with issues, or
set pieces are a disaster, and so on.
This is the case for building product in tech, too- with GitHub we’d
constantly see horrible fucking ideas proposed to us in an
attempt to improve some deficiency in the product. This is exacerbated
when the customer ("fan") has more short-term thinking than you: they
have a problem with the product right now, and they don't
care that you're planning on revamping and improving the entire
feature six months or two years or whatever down the line. They have
real feelings today. Identifying that directional anger, even
though they might be "wrong" about the feature specifically, might
lead to you finding them a stopgap solution in the interim, or moving
up your long-term plans. Or you realize you're the one who's wrong
with all this after all. Or you can simply just offer to talk with
them directly and give them more context; sometimes that alone can
help a ton.
It’s super hard but like… people don’t get pissed off unless they
care. Once you stop seeing feedback entirely... that’s when you’re
truly fucked. Then they don't care at all.
The fans are geniuses
The opposite is true, too: it's unbelieveable what sort of insights
and understanding can come from the fanbase as well.
You can't fake the product in football, not really. Either you have a
great squad and perform well, or you have a great game day
environment, or you make an impact on your community... or you don't.
People have way too much shit going on in their lives right now to
fuck around with a club that isn't putting in the work.
In that sense, fans are incredibly sophisticated these days. They know
what they like, they know what they want to spend their money on. Used
to be your grandpappy would spend -20°F winters with their butt
outside on a bench watching their alma matter lose six straight
decades of college football, because that's what their own pops did,
dammit. Now Taylor's dropping a new album and coming three states away
for a show and you have to drop six months' salary to see her show
because she's goddamn the GOAT, now what are you talking about with
this soccer stuff?
You can only toss so many hot dogs into a silent crowd before they
peace out because of how corny it all feels. Unless it's corn dogs.
Shit, I don't think I've seen corn dog tosses to the crowd very often,
gonna have to send that up idea the tree next.
Technically and tactically, fans can be incredible, too. Even in USL,
merely the "second tier" of soccer fandom in a country that allegedly
"doesn't like soccer", the journalistic side of things is a
never-ending supply of fascination, and tactics, and the human side of
being a fan.
John Morrisey's
tactical breakdowns on
USL Tactics and
Backheeled are
gold-standard. The crew at
RootsBlog do amazing
in-depth analysis and game day threads of everything Oakland Roots.
The Union Report
posts so much about Monterey Bay FC that I feel like I know more about
that club than my own sometimes (just kidding, RootsBlog). And there's
so many in-depth podcasts and videos coming from journalists like
Cheyenne Foster. Really
makes you think... sheesh, we're finally building something incredible
in this league, and in this country. Proper footballing nation, innit.
Supporter groups are sacrosanct
Part of this is talking my own book; I help with the
American Outlaws
both locally and nationally for US Soccer, and I've been a part of San
Jose's supporter groups in the past, too. You'll find me in the
supporters section at any given game I'm at.
Supporter groups are just that: groups of fans who get together to
support the team. They're the ones who sing the songs and wave the
flags. They travel to away games, they bring their friends to games,
they volunteer and donate to the community. It's actually kind of
nutty how much time, energy, and money goes into being a supporter of
a club.
But supporters are the ones that deserve — amusingly — support. Not
really financially, since directly funding them puts them (and the
club) in a pretty strong conflict-of-interest with each other. But
simply supporting their existence, giving them a voice, keeping ticket
prices accessible, and letting them do their thing is so important.
The atmosphere they create is, well, honestly, what many go to games
for. That's why a game
with the Yellow Wall
is a bucket list item for so many, and why some of the stadiums in the
Prem are libraries.
It's a tricky balancing act, because you want them to be independent
groups, but you also want to help them thrive. But again- fans are
sophisticated. You can't force them to feel a certain way, much to the
chagrin of plenty of clubs who give out NFTs or some other weird shit
in the stands. Some of the most memorable atmospheres I've been in
have been a few dozen superfans on a couple bleachers at an Open Cup
game, making up friendly chants about the sideline official's
spectacular calves. It doesn't need to be much, but I refuse to be a
part of a club without it.
Everyone should play Football Manager once
This is entirely stupid to say, but I'm not sure I trust fans who have
an opinion on running a club if they don't have at least one savefile
with
Football Manager. Just
cracks me up. Swear to god, that opened my eyes the most when it came
to how hard it is to build a roster, cope with great signings becoming
mediocre and bad players becoming club legends, and dealing with the
balance of salaries and cap space and various local insanities (I will
forever get a kick out of
confident Europeans trying their hand managing an MLS club
for the first time). It also makes you realize how different being a
great manager is versus being a great technical director. They're very
different jobs, although both need a deep understanding of the other,
too. Fascinating stuff.
how can I non-ironically be helpful?
the hell is an "investor" anyway
There's a phrase in venture capital that normal people take the piss
out of all the time: "How can I be helpful?"
It's kind of an implication that most investors don't really add
anything to the business besides their initial check. They're not sure
what they can add, so they ask, "How can I be helpful?" At the very
least, if you were able to fundamentally change the startup's
trajectory, you'd probably already intimately know what the founders
will need, or what questions to ask.
Roots have been a fun experience to figure out
how I can be helpful!
First bit is enthusiam. I can't underline this enough: I'm sick of
these old, billionaire owners who seemingly don't give a fuck about
the teams that they own. Nothing makes me angrier than seeing the
people in control of the thing that I love just not caring. So I try
to bring that in spades everywhere I go.
For one, I'm a bit of a shitposter reasoned internet
commentator. This was apparent far before Roots; I commented and
posted and tweeted about the Earthquakes previously, and I definitely
was overly-accessible when it came to early GitHub: I probably saw
close to 95% of all tweets directed to @github between 2010-2014 (and
responded to many, many of them). It's just table stakes to me: if you
care about something, you talk about something, particularly if you
can write it in a way to increase transparency, or if it's
interesting, or you just want to talk about something you care about.
I mean, shit, that's what I'm doing here. Breaking the fourth wall and
all of that: I want to write an embarassing quantity of words on this
post because I want you to learn more about Oakland Roots and Soul, I
want you to think about
investing in the crowdfund yourself, and I want you to be more passionate about American soccer.
Regular readers of this blog will notice that, at times, I have
writtenembarassinglylongreads about
things that matter to me. Usually it works out great: people like
learning about how things tick, people like hearing stories, but most
importantly... people love discovering what deeply impacts someone
else, be it joy, sadness, excitement, anger, whatever. Life would be
far too boring to not have strong feelings about certain things. So
yeah, of course I'm going to write loud and proud about my favorite
fucking thing ever. You obviously care an iota about it too, otherwise
you wouldn't have made it this far, either. You're a soccer sicko,
too; greetings.
Most organizations need the same stuff
And that's usually along the lines of: people, connections, money.
That's it, really. All the mindless thoughtleading about venture
capital and endless podcast episodes and it mostly just boils down
into "can you help with people, connections, and money?"
So I've helped with that. I've referred friends and contacts for
hiring, I've made connections between other clubs and investors up and
down the US soccer pyramid, and I've invested money. Part of what I've
learning is that soccer in particular is a more-than-young-man's game:
if you're trying to find other large dollar amount investors, they
tend to skew older and male-r. Like, extremely. It's an area I'm
trying to break into further, but in that sense it's a bit different
from, say, angel investing in tech, where some rando 22 year old might
actually be a billionaire. (I'm turning 40 this year, so I guess I'm
also becoming ancient in some peoples' eyes, but I certainly
feel a decade or two too young in this area.)
Also: if you're part of the younger end of the spectrum and actively
invest or donate money to local soccer issues and facilities, be it
here or internationally,
shoot me an email! I'd love
to chat. I'd also love to write a post about donating to soccer
organizations in the future, really; I've found that a little bit goes
an insanely, stupidly long way, particularly for local soccer
organizations. It's wild, and goes far beyond the game itself.
Some organizations need different stuff
I mean, it's a soccer team, and I love soccer. So there's so much
weird shit that has been a joy to pitch in with.
A huge part of it is just showing up. Again, you purchased part of a
club, so ostensibly you enjoy the actual game itself, no? So going to
games, sending your tickets to others when you can't make games, and
particularly showing up for away games can be a strangely huge
bank-to-buck ratio. USL doesn't have a ton of traveling away fans; for
one, America is big, and there aren't many driveable games. But that
means that showing up for playoff games or regular season games in
enemy territory counts for like, god, six billion bonus points. And
it's almost always easy to strike up a conversation with local fans,
learn more about what they're building, and tell them more about what
you're building.
Celebrating in San Diego with players and fans after our
first-ever playoff win. Ridiculous game, too. Sorry Loyal.
I've found Roots tee + blazer is the best way to dress up and
still advertise at events like this private US Soccer meeting.
No law that says you can't force your dogs to gear up, either.
By far the coolest shit I've done as an investor, in my humble
opinion, is wire an NFL training facility.
For years I had been tinkering with our home network, expanding it
into a full rack, dodging persistent questions from my wife of "well
why do we need to support 1,000 simultaneous clients on our wifi at
home?" Dodging because, no, I had no rational answer. UNTIL I
DID! In January 2022, the investor update mentioned needing wiring
internet in the new training facility:
Years of learning how to wire and set up enterprise networking
connectivity at home had led to a single tear running down my cheek as
I said "HELL YES". And that's how I ended up on the roof of the former
Oakland Raiders NFL training facility — which now Oakland Roots are
the proud tenants of — running ethernet for my club.
Roots have one of the best training facilities in the country.
RIP Raiders.
Some day I will find out who from the Raiders organization
snipped all the ethernet cables only six inches from the wall,
eight feet from the floor. I will punish you.
I swear, years later now and the internet has been rock-solid ever
since. Okay, we lost one AP, but the rest is shockingly humming
along. I'm almost competent.
roots & soul
So that's it. That's a lot of words about putting money into my love
of a club.
I've invested in something like 200 startups; this is by far my
favorite investment out of all of them. Everything hits different when
you can actually bring your friend and feel the atmosphere, see the
smiles. And wins feel fucking fantastic. (Losses, well, not
so much, but hey we're talking about good feels here.)
It's a great time to be a fan of the club: we're moving into the
historic
Oakland Coliseum
in just over a month and a half when the season kicks off. I can't
possibly convey how fucking excited that makes me. Join me for a game
this season! If you're in the Bay
during our season, drop me a line: I'd love
to meet you at the Coli and say hi. Away fans can absolutely take me
up on it, too. Except for Sacramento fans. Just kidding. Probably.
It's a great time to be an investor, too: our second crowdfunding
round closes in a couple days. Minimum investment is $100, with
higher levels getting you more perks. I just got some goddamn
dirt from the Oakland A's infield a couple weeks ago.
That brought me so much joy. I immediately mounted it to my wall
for display. If you're interested in chatting more seriously about
joining the investor group, or if you have any other questions I
could help with, you can also
shoot me an email; more
than happy to chat!
I’ve made like a hundred angel investments over the years, and I get the sneaking suspicion that the most successful startups in my portfolios are the ones that talk to their investors.
Like, that’s it. That’s the nugget for this post.
Holy shit no one can help you if they don’t know you need help
Like most good advice, this is kind of obvious, but writing about it just serves as a reminder and/or a kick in the pants. To wit: it’s hard to give help if you don’t know what help is needed.
Let’s back up a second. First: venture-backed companies are relatively rare, in the grand scheme of things, and that’s fine and dandy. But if you are one of the companies where it makes sense to take outside investment, just cashing the check and moving on is pretty small-minded. The whole point of selling part of your company is to bring on people with a network and experience different from your own. If you’re not doing that… take out a loan or rob a bank.
Lead investors tend to be much more involved in a company- they might have prescheduled check-in periods and have a deeper understanding of what’s going on. But for everyone else, particularly angel investors, the monthly investor update is the only real connection they have to your company, past simply existing on your cap table. Use and leverage them!
Less is more
I swear, if I searched in my inbox for “sorry it’s been awhile since we sent an investor update!” the results would be… high. And I get it! It’s kind of stressful, particularly if you have stressful things in your present or your future. And usually it just keeps compounding until the dam bursts and once a year there’s a “OHMYGOD HERE’S A WAR AND PEACE-SIZED TREATISE ON THE COMPANY BECAUSE IT’S BEEN SO LONG ALSO PS: WE’VE PIVOTED TO SELLING SMALL TREES FOR CATS TO PLAY ON”.
So your easy answer: just send a quick paragraph! Nothing needs to be rocket science. I’ve gotten a number of updates that broadly consisted of:
Hi! This is what we did this last month:
[ some cool hip things ]
Here’s what we need help with this upcoming month:
Nothing! We’re doing good, just heads-down on the product right now.
I love these! This tells me 1) what you did, 2) what you need help on (nothing!), 3) that you’re still alive, which you’d be shocked at how often that’s a real question. I’ve had a couple investments now where the only communications were “thanks for your investment!” and “we’re shutting down the company!” In hindsight: absolutely not shocked the company died.
Better companies communicate
Look: I don’t traffic in shit like “science” or “math”, much less call it “maths” like those weird loveable Brits keep trying to push. I’m an angel investor, baby, so that means all I need are vibes, mannnnn. But I keep getting the feels that founders who are on top of their investor updates are… better.
Almost certainly the best investor updates with the most regular cadence over years was from Sid Sijbrandij, for GitLab’s investor updates. There was a very credible rumor on the street that NIST sets their time servers based on Sid’s email cadence. They were to the point, plaintext (don’t get me started on all the fancy investor updates founders are trying to get by with these days), with clear call-to-actions and jump-off links if I wanted to dig deeper into that particular topic or internal discussion.
I’m not going to say if you take Sid’s same approach you’re also going to also have a $15B IPO like GitLab did… but I’m also not not saying it.
So give your investors a shout. Even if I invested in your company and it’s been awhile but you don’t want to send an investor update after reading this because you’re worried it’s now uncool to send one out right this minute because other companies are prolly going to do it and you want to be a unique cool snowflake? I definitely wrote this for you. Just send it! You’re going to forget it if you push it out a few days anyway. Promise.
I’ve made like a hundred angel investments over the years, and I get the sneaking suspicion that the most successful startups in my portfolios are the ones that talk to their investors.
Like, that’s it. That’s the nugget for this post.
Holy shit no one can help you if they don’t know you need help
Like most good advice, this is kind of obvious, but writing about it just serves as a reminder and/or a kick in the pants. To wit: it’s hard to give help if you don’t know what help is needed.
Let’s back up a second. First: venture-backed companies are relatively rare, in the grand scheme of things, and that’s fine and dandy. But if you are one of the companies where it makes sense to take outside investment, just cashing the check and moving on is pretty small-minded. The whole point of selling part of your company is to bring on people with a network and experience different from your own. If you’re not doing that… take out a loan or rob a bank.
Lead investors tend to be much more involved in a company- they might have prescheduled check-in periods and have a deeper understanding of what’s going on. But for everyone else, particularly angel investors, the monthly investor update is the only real connection they have to your company, past simply existing on your cap table. Use and leverage them!
Less is more
I swear, if I searched in my inbox for “sorry it’s been awhile since we sent an investor update!” the results would be… high. And I get it! It’s kind of stressful, particularly if you have stressful things in your present or your future. And usually it just keeps compounding until the dam bursts and once a year there’s a “OHMYGOD HERE’S A WAR AND PEACE-SIZED TREATISE ON THE COMPANY BECAUSE IT’S BEEN SO LONG ALSO PS: WE’VE PIVOTED TO SELLING SMALL TREES FOR CATS TO PLAY ON”.
So your easy answer: just send a quick paragraph! Nothing needs to be rocket science. I’ve gotten a number of updates that broadly consisted of:
Hi! This is what we did this last month:
[ some cool hip things ]
Here’s what we need help with this upcoming month:
Nothing! We’re doing good, just heads-down on the product right now.
I love these! This tells me 1) what you did, 2) what you need help on (nothing!), 3) that you’re still alive, which you’d be shocked at how often that’s a real question. I’ve had a couple investments now where the only communications were “thanks for your investment!” and “we’re shutting down the company!” In hindsight: absolutely not shocked the company died.
Better companies communicate
Look: I don’t traffic in shit like “science” or “math”, much less call it “maths” like those weird loveable Brits keep trying to push. I’m an angel investor, baby, so that means all I need are vibes, mannnnn. But I keep getting the feels that founders who are on top of their investor updates are… better.
Almost certainly the best investor updates with the most regular cadence over years was from Sid Sijbrandij, for GitLab’s investor updates. There was a very credible rumor on the street that NIST sets their time servers based on Sid’s email cadence. They were to the point, plaintext (don’t get me started on all the fancy investor updates founders are trying to get by with these days), with clear call-to-actions and jump-off links if I wanted to dig deeper into that particular topic or internal discussion.
I’m not going to say if you take Sid’s same approach you’re also going to also have a $15B IPO like GitLab did… but I’m also not not saying it.
So give your investors a shout. Even if I invested in your company and it’s been awhile but you don’t want to send an investor update after reading this because you’re worried it’s now uncool to send one out right this minute because other companies are prolly going to do it and you want to be a unique cool snowflake? I definitely wrote this for you. Just send it! You’re going to forget it if you push it out a few days anyway. Promise.
Quick little announcement: I’m launching my own kind-of-weird-venture-fund today: Tifo.
Over the last five years I’ve been doing a lot of angel investing- I’ve made close to a hundred direct angel investments, and then have made dozens of others through syndicates (which again, I highly recommend as a way to start out with angel investing).
I really enjoy doing it- when you’re focusing on your own startup or career, you get a ton of deep, targeted knowledge, but when you start investing across many different startups you start getting a ton of broad knowledge, too. And you end up running into a lot of fun experiences (for example, one of my investments ended up with me wiring ethernet on top of an NFL training facility… not something I signed up for, but really some crazy shit.)
Did you know you can just say you have a “fund” and that’s all you need to do?
Angel is kind of a weird thing, though: the span of “angel investor” can range from “here’s a check never talk to me again” to “they directly helped us make the IPO possible”. Sometimes it’s easy to get lumped in the former when really you want to be known for the latter!
Raising a full venture fund is a huge pain in the ass these days, though, so I’m kinda going halfway: running my angel investments as a fund, without actually raising the fund. There’s a bunch of brand reasons for this, as well as legal entity reasons. It also lets me better prep for raising a fund down the line if I ever want to do that (if at all).
One nice thing is that since I don’t have LPs, I can continue to do whatever the fuck I want, like include “fuck” in the post announcement. I can also invest in weird areas. Tifo is no different; the two main focuses are devtools and sports. Yeah, fucking weird combination, but it’s my fund, dammit, and I’ll cry if I want to.
Developer tools is pretty obvious if you’re been following along at home over the years: my background of GitHub and GitLab is really unique in the industry, and try as I may, my fifteen years in developer tools hasn’t led me to hate the area yet. Far from it: I still hate how we all code, and still think there’s so much to do.
Sports might be kind of new to some of you, but I’ve been falling into the business side in a deep way the last few years. For one, I’m a co-founder of WorkOn, a sports technology startup that will have some really fun things to announce coming up. Secondly… I’ve loved sports all my life (which is obvious if you understood the etymology behind Tifo), and I’ve been getting futher into club ownership in football (⚽️) the last few years. I also think most sports/tech startups are absolute trash. Rather than being disappointing, I think that fact is wildly exciting.
So Tifo. Already instantly the world’s number one sports-and-developer tools fund on the planet. If you’re working on something new, shoot me an email and let’s chat: zach@tifo.com.
Quick little announcement: I’m launching my own kind-of-weird-venture-fund today: Tifo.
Over the last five years I’ve been doing a lot of angel investing- I’ve made close to a hundred direct angel investments, and then have made dozens of others through syndicates (which again, I highly recommend as a way to start out with angel investing).
I really enjoy doing it- when you’re focusing on your own startup or career, you get a ton of deep, targeted knowledge, but when you start investing across many different startups you start getting a ton of broad knowledge, too. And you end up running into a lot of fun experiences (for example, one of my investments ended up with me wiring ethernet on top of an NFL training facility… not something I signed up for, but really some crazy shit.)
Did you know you can just say you have a “fund” and that’s all you need to do?
Angel is kind of a weird thing, though: the span of “angel investor” can range from “here’s a check never talk to me again” to “they directly helped us make the IPO possible”. Sometimes it’s easy to get lumped in the former when really you want to be known for the latter!
Raising a full venture fund is a huge pain in the ass these days, though, so I’m kinda going halfway: running my angel investments as a fund, without actually raising the fund. There’s a bunch of brand reasons for this, as well as legal entity reasons. It also lets me better prep for raising a fund down the line if I ever want to do that (if at all).
One nice thing is that since I don’t have LPs, I can continue to do whatever the fuck I want, like include “fuck” in the post announcement. I can also invest in weird areas. Tifo is no different; the two main focuses are devtools and sports. Yeah, fucking weird combination, but it’s my fund, dammit, and I’ll cry if I want to.
Developer tools is pretty obvious if you’re been following along at home over the years: my background of GitHub and GitLab is really unique in the industry, and try as I may, my fifteen years in developer tools hasn’t led me to hate the area yet. Far from it: I still hate how we all code, and still think there’s so much to do.
Sports might be kind of new to some of you, but I’ve been falling into the business side in a deep way the last few years. For one, I’m a co-founder of WorkOn, a sports technology startup that will have some really fun things to announce coming up. Secondly… I’ve loved sports all my life (which is obvious if you understood the etymology behind Tifo), and I’ve been getting futher into club ownership in football (⚽️) the last few years. I also think most sports/tech startups are absolute trash. Rather than being disappointing, I think that fact is wildly exciting.
So Tifo. Already instantly the world’s number one sports-and-developer tools fund on the planet. If you’re working on something new, shoot me an email and let’s chat: zach@tifo.com.
Oakland Roots SC
Founded: 2018. Men's team.
League: USL Championship
Oakland Soul SC
Founded: 2022. Women's team.
League: USL-W
Project 51O
Founded: 2019. Academy team.
Leagues: USL League 2 & UPSL
Chart
Oakland Roots: Second crowdfund round
$523k of $500k raised
Minimum investment: $100
Round closes
January 31, 2025