Scatter Brain highlights
Farming, fintech, venture capital, sales, streaming, creative tools, demo videos
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Happy New Year! I hope you had a great weekend and are off to a great start this week.
Today’s edition is a roundup of a few ideas and quotes from my old chats with founders and executives back in September last year.
I talked to Jayce, CEO of FarmRaise, about helping farmers get public funding for investing in growth. She grew up on a farm in Virginia, worked in policy advocacy in DC, and is now a founder. Her transitions from farms to policy to tech gave her a unique vantage point to explore cultural tensions in these worlds.
Cost-share funding is free money from the government. It’s a financial incentive for farmers to adopt regenerative practices like cover cropping and sustainable grazing. But the process of applying requires stacks of jargon-packed paperwork and has questions that farmers struggle to answer. Some farmers get in their trucks, drive to their local USDA office, and wait in line for help with paperwork.
The negative optics of compromise (elevated by social media), the short election cycles, and the infusion of money in election campaigns are significant forces that deter members of Congress and other stakeholders from effectively working together across bipartisan lines to enact strong policies. There is so much opportunity in Washington, but I saw more talking, thinking, and posturing than meaningful traction.
I wondered for a long time if I was the “right person” to start a company. What type of experience is necessary to be successful, and when would I have enough of it? I realize now that it is less about intelligence, experience, or creds. You have to be comfortable taking one step forward at a time into the unknown, find positive, resilient people to share the journey with, and be ready to bounce back when you hit those rejection roadblocks.
I talked to Priyanka, CEO of Falcon, a BaaS startup based in India, about the evolution of India, her time in the States, her creative pursuits, her early interest in micro-finance, the first bootstrapped innings of her company, the journey of pivoting and raising venture capital, her plans for Falcon, and her perspective on UPI, BaaS, business models, evolving RBI guidelines, and more.
When I was working on microfinance before going to the US, I wrote an article for the Economic Times about the problems in lending right before the microfinance industry faced a similar whiplash in 2011. And at that time, RBI (India’s central bank and the banking regulator) formed a committee and said, we can't allow this. And many regulations came out and led to a new license, the NBFC-MFI license. Many microfinance institutions had to reinvent themselves. And in the last five years, the largest share of new licenses has gone to MFIs. The microfinance industry is doing exceptionally well today. That’s my macro-level view. Everybody, including the RBI, realizes that fintech is inevitable. So the banks either have to work with them or compete with them. Some flows will have to change, and compliance costs will increase, which is why BaaS has become even more important.
Today, I can't use UPI for business payments at all. There's so much that has to be built as an experience layer. Lending as a use case doesn’t exist right now. I can't use the UPI rails the same way I can use the card rails. That’s why there's still money to be made in prepaid and credit.
There is a cost of loading funds, and there is a cost of capital, which is why you can charge the interchange on debit and credit cards. You can program those cards to enable many different use cases, both commercial and retail, right? Right now, the basic use case for UPI is free because the government has certain adoption goals. The Indian government is pushing UPI aggressively.
I talked to Finn Murphy, Partner at Frontline Ventures in Ireland, about the current climate, American firms setting up in London, Ireland’s ecosystem, AUM expansion, why VC firms are homogeneous factory lines, and more.
Growth in AUM triggers this series of events that results in Sequoia opening an office in Europe. And you can tell the story to do that, and that's fine - it’s a risk to do anything outside the box in a big firm. Opening that office was no different. It’s not ‘buying IBM.’ These factors play in venture firms too. A version of “nobody gets fired for buying IBM” also plays out in recruiting. Many people entered the venture business by ticking many right boxes. Those boxes (Harvard, Stanford, Palantir, etc.) signal high ambition & competitiveness in young people. Those are key skills for climbing the VC totem pole.
Everyone’s trying to be a GP. Everyone knows the way to become a GP is to do an absolute banger, then use the leverage from that with the rest of your partners to be brought in. If they don’t, you can leave. This is why people fight for deal attribution. All the LPs have to know that you were the person that made money. That's a key part of a firm’s leverage in career building. Often, the GPs are not doing the more junior/entry-level hiring. That's now delineated to another layer of junior partners, particularly in the bigger firms. For those people hiring someone who turns out to be great is another thing that can massively boost your career within the firm. But it’s not as beneficial as nailing a great investment, and the downside of hiring a dud is much higher than the upside of them being fantastic. So you resort to hiring the ex-Morgan Stanley Harvard-educated or ex-Mckinsey Stanford person. It wasn’t a stupid decision if that person didn’t work out.
I talked to Alexa, CEO of Pocus, about all things product-led sales.
I think the word PLG is a buzzword right now. Some people are very precious about the definition, saying, ”you're not PLG unless you're Atlassian or Slack, or you need to get to 10 million in ARR before adding a sales team, and it's a viral product.”
Product-led growth, to me, means the product gets the user in the door, and the user can get value out of the product before talking to a salesperson. What matters is someone interacting with the product gets value from it without talking to a salesperson. Buyers want to try the product before they buy it. Sellers would rather sell to the people that already know and love the product.
We're replacing tools that sales reps are using that were never built for sales reps to be used. BI tools like Looker are in that category; companies try to get sales reps to use them. Looker was not built for a salesperson. It doesn't allow you to go from insight to action.
Smaller companies are more open to adopting a new CRM system, and it's been interesting learning. Smaller companies are looking for more traditional CRMs for pipeline management, forecasting, etc., so we’d be working towards feature parity. Whereas larger companies are looking for a purpose-built product-led sales tool.
I talked to Jimmy, CEO of Propel, about everything from working with the government to help Americans on food stamps and his journey in figuring out the product to his philosophy on business models in servicing the low-income population and balancing venture capital-fueled growth with social good.
If you had asked the policymakers in charge of the budgets for administering the food stamp program nationally or at the state level, hey, I've built you this awesome app that improves the EBT balance-checking experience, they wouldn't have bought it. That's because it wasn't a problem that they identified. If you did a Ph.D. on the social safety net in the United States, and you wrote recommendations for policymakers about how to improve the experience of being poor in this country, you probably wouldn't have come up with "we should replace this 1-800 number with a free app instead." It's so in the weeds. Generally speaking, governments buy software top-down.
Every state runs its own EBT card and its SNAP program. We had to explore how to do this across the country in all 50 states. No state provides perfect APIs. We took on a big operational challenge.
We believe that consumer access to data ought to extend to government benefits because government benefits are a proxy for money. It is patterned after how payments in the private sector are supposed to work. If we believe that consumers have the right to their financial data when it comes to banks, we think consumers should have the right to their financial data regarding government benefits.
One recurring debate is around paternalism in serving our user base. Since we are the most popular digital channel to reach low-income Americans, we often debate our role in shaping the content they see. Is it our role to teach people to budget and eat vegetables? Or should we be laissez-faire and be willing to show ads for payday lenders and cigarettes if they pay us?
I talked to Vinay, CEO of STAGE, about the maturation of the Indian startup ecosystem, his first company, media as a medium of mass influence, his humble upbringing, what prominent streaming players got wrong, how cities are not the right determinant of what Bharat entails, his vision to create local content industries across India, and more.
We started with the idea that premium and sensible content for Bharat didn't exist when we looked at that space. When you want to do premium, you cant do UGC. You have to do professionally made content. And we were doing OTT to own the distribution, learning we had from our last company. There are 27 active OTT platforms in India. Everyone will tell you they're building Netflix for Bharat. So what is so unique that we are going to do here? What's the missing piece? We went back to our village and spent some time trying to understand the missing piece. What is it that they're not getting, which they should be? And we found that everyone does language-based content in the name of vernacular-based localisation. That includes Hindi, Punjabi, Bangla, Gujarati, Telugu, etc. I grew up speaking Haryanvi, a dialect, not a language. It is part of the dialect group of Hindi.
We have created our own local Bollywood here in Haryana. There was no industry before us. We build it from scratch and have it now. While working here, one cliché insight you discover is that talent is universal, and opportunity is not; so many people want to create Haryani content, but who will buy it? Who will distribute it? Theaters won’t release it. How are they supposed to make money? So, what we did was we brought together this community, mentored them, incubated them, trained them, and sanctioned their first web series projects. We will take a chance on people to create the first project of their life.
My father used to run a small general store in our village. I remember we sold P&G, Pepsi, Coke, and Unilever products. It's a relatively small village with primarily agricultural income. And people would buy all of that stuff. So the problem is not a brand problem or about paying capacity. The problem has always been about providing value. India is a very value-conscious society. Everyone wants to take the easy path when selling digital services. Everyone wants to create a third-class experience, put more ads than content on their apps and then make people want to pay. And then they claim Bharat doesn’t want to pay.
I talked to Joseph, CEO of Univer.se, a mobile native website creator, about how Univer.se has evolved, his reflections on company building, software as appliances versus language, the nature of constraints, and the relationship between ease of use and power of tools, among many other things.
Constraints are inevitable, and constraints are very generative. The question is, which constraints do you want? There are good constraints and bad constraints in my mind. In other words, our product has constraints. We designed a grid system that allows you to put blocks in certain areas and not other areas on the screen in our app. We have that system not because it’s technically easier to have those constraints but because people need them to make decisions.
If you have an infinite choice, it's impossible to start. So some constraints are valuable. The way I think about constraints is almost like architecture. In an elegantly architected system, there are principles and a foundation. In Notion, you can nest components, build and reference them. So it's infinitely complex but built on strong principles.
Microsoft Word has many features, but the product's architecture has no logic. They bolt on features, and you end up with this sprawling Frankenstein. So I would argue that a system like Squarespace is much more like Microsoft in its architecture design than Notion.
Our customers are what I call creative entrepreneurs and entrepreneurial creators. A creative entrepreneur is someone who's starting a new fashion brand. They created a brand from scratch, and they're making their website for the brand. An entrepreneurial creator is a musician who wants to make it big. They're building their brand.
I’ve long been interested in grid systems and modular systems. Grid systems divide space and make it easier to wrap your mind around. Grids are used for all types of design: graphic design, architecture, apps, and cities. Modular systems have simple components that ladder up to complex possibilities. Our GRID system combines both to make building the internet feel like playing with Legos. The GRID is less intimidating than a blank canvas and way more open-ended than a form-based template editor. It’s a modular system composed of blocks that can be used for anything you want to add to a website: an image, text, or a buy button.
I talked to Caroline, Cofounder of Arcade, about making product demo videos interactive.
I will never forget the first day of my job. My manager said, "Oh, you need to go to a conference and sell the product to new customers.” I was completely unqualified. I had no idea what this product was. I'm trying to make a great impression. I tried hard and got 250 signups at the conference. I was excited to tell my manager about the results of the conference. He looked at my sheet and was horrified. He’s like, this is way too many names. And I'm like, what? That’s the opposite reaction of what you would expect. He said there was no way that many people were interested in the product. He was right. We did the campaign to follow up with those people. It was a poor-performing campaign. The lesson that has always stayed with me is that you must earn the customer’s trust. You have to earn the right for them to want to be able to understand what a product does to sign up for it. This culture at Atlassian – of earning customers’ trust every step of the way – is what inspired me to start Arcade. We started with interactive demos, but long term, it’s about supporting the customer journey.
The hardest thing about being a founder is the gray area. I'll give an example of a gray area, which I haven't specifically handled, but this is along the lines of what will come up a lot. Let's say you have an employee who is 11 months into the job, and you do not think they are a great fit for the next stage after they have been at the company for a while. Do you let them go even though they have contributed a lot for that year, or do you let them vest an additional month? Letting them vest means those shares are unavailable for a potential future employee. To be clear, I would let the person vest. It's perfectly acceptable and legal not to let the employee vest, and many founders opt not to do it. There are many of these emotional issues with no straightforward answers.
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I recently wrote about how I believe startup life will get worse and introspection on how we haven’t had too many frauds in an environment primed for shenanigans, and that’s a cause for optimism.
Here’s an issue with some highlights from chats with founders and executives back in August last year.
Recent chats:
Mobile-based esports streaming for the world with Pooja Dubey, CEO of Turnip
All things ecommerce with Amazon Pay's 1st PM with Sujayath Ali, CBO of Bangladesh's ShopUp
Making presentations less boring with Keith Peiris, Cofounder & CEO of Tome
India's growth, geopolitics, technology, and superpower potential with Rajeev Mantri, Managing Director at Navam Capital
Safeguarding data on the internet with Shane Curran, CEO of Evervault
Modern entertainment payroll for the project economy with Ali Javid, CEO of Wrapbook
Road projects in Toronto could use a few product managers with Brandon Chu, VP of Product Acceleration at Shopify
Building compact, intelligent, retractable solar awning systems with Rohini Raghunathan, CEO at Xponent Power