Category: Culture

The Hard Thing About Easy Things

By Allison Baum,

An anecdote

I’m a modern girl but I fold in half so easily

When I put myself in the picture of success

Rilo Kiley, “Pictures of Success”

Several months ago, I was attending a conference in Arizona. The venue was on the outskirts of town and the only way I could actually get there was by renting a car. At the time, I had never rented a car before.

By this point in my life, I had already attended Harvard, worked on Wall Street, joined a startup, moved halfway across the world (twice), started a business, built teams, and raised a venture capital fund. All of those things were pretty challenging, yet I was having an immense amount of anxiety about renting a car. Every time I sat down to get it done, I would become paralysed by questions and situational permutations. My mind would run in circles wondering, “Where exactly would I pick it up? What size was appropriate? Which rental agency was the best price? What if I had to return it to a different location than where I picked it up? What if they were out of cars? Where would I park it?” The potential pitfalls were seemingly endless.

Finally, just days before I had to acquire said rental car, I shared my angsty internal dialogue with a trusted friend. She listened, nodded, and then opened my browser to Google and said, “Just do it right now.” Her lovingly intimidating demeanour left me no choice, and I dove into the task of renting this car.

In summary, it took twenty seconds to Google “rental car Arizona”, another ten seconds to compare rates, and another thirty seconds to complete my reservation. Done.

An extrapolation

They warn you about killers and thieves in night

I worry about cancer and living right

But my mama never warned me about my own

Destructive appetite

Jenny Lewis, “Happy”

To date, renting a car is one of the easiest things I have ever done in my entire life. The only thing that made it difficult was my own questioning, uncertainty, procrastination, and inability to move forward. I was overwhelmed by the number of variables I needed to optimise. But the only variable for which I really needed to account was me.

There are many things in life that are actually challenging. Yet, as humans, we specialise in turning the easy things into a struggle as well. So often, doing something as simple as figuring out what to eat, who to call, or what to Google can feel like such an insurmountable task. However, the difficulty is not the problem itself. The real burden is managing your own perceptions, framing your response, and bringing yourself to action. That’s it. The hard thing about easy things is you.

And managing yourself is actually really fucking hard. Especially if you have a questioning mind, an ambitious spirit, or a beating human heart. We are a constant swirl of emotions, reacting to our current context through the lens of our pasts, and attempting to find the balance between what we need, want, and believe is possible. It’s a lot to navigate, and we often lack the tools necessary to find our way.

A conclusion

Cause it’s a new you every day

Puttin’ on a different face

And the farther that you run from it

How will you overcome it?

It’s a new you every day

Jenny Lewis, “The New You”

Our current education system is geared toward teaching us information we can use to accomplish tasks. Facts. Events. Equations. These are the easy things. Not only are they easy to begin with, but technology has made their storage, access, and recall infinitely easier. In many cases, all you need is a good friend to open your browser to Google.

Instead, we should be focusing on equipping individuals with the tools they need to manage themselves. This is the hard part. Education should provide you with the aptitude to understand the problems at hand, the awareness to determine what is possible, the ability to break the problem down into pieces, and the strength to get started. This is one of the many reasons why, at Fresco Capital, we are investing in tools for STEM education. Learning to code is not about memorising facts, learning a language, or creating a cool app. There’s much more to it than that. It is about learning that you are in the driver seat, and providing you with the processes you need to break things down and move forward, piece by piece. After all, that’s the only way to get through the hard parts.

Why Go Global?

By Allison Baum,

As I write this, I am sitting in a hotel in Moscow, Russia. I was recently invited to speak at an event called Startup Village, a 15,000 person strong summit encouraging tech and entrepreneurship in Russia. The organizing team at the Skolkovo Foundation reached out to me several months ago offering to fly me to Russia to give a keynote speech about our global investment approach at Fresco Capital. What can I say, I’m a curious character and have the tendency to say “Yes!” to new and strange experiences, so… here I am.

Now, as I sit here alone and slightly intimidated in a new, strange city I never even knew how to imagine, I thought it would be a good moment to reflect on why and how I ended up here. While that’s a fun personal exercise, the point is really for you, Dear Reader, to understand exactly what is the point of venturing out of your comfort zone. Why take a global approach if your market is right in your own backyard? Whether it’s for your life, for building your startup, or for your investment strategy — what are the reasons why taking a global strategy is worth the trouble?

Why go global 1

By way of background, let me tell you a little about Fresco Capital, the global, early stage venture fund where I am a Managing Partner. We are different from other VC firms in that our core focus is helping companies expand globally. All of our partners have built cross-border businesses. We have all lived in different parts of the world. We have ventured far away from what we know, both personally and professionally.

We know first hand why it makes sense to take a global approach. We also know how fucking hard it is. Moving beyond where you came from takes a lot of guts, perseverance, and help. So, that’s exactly what we do. We invest in companies and help them expand globally.

Why go global 2

In order to do that, our team is global at its core. We have team members in Silicon Valley, in Oakland, California, in Dubai, Hong Kong, Singapore, and I am based in Tokyo, Japan. We have more than 45 portfolio companies in California, Canada, Utah, New York, Texas, London, Barcelona, Estonia, Hong Kong, Shanghai, and Manila. Over the past few years, I have been lucky enough to spend time with startups and looking at companies across the United States, South America, India, Asia, and New Zealand. And now, Russia apparently!

I guess I feel a bit egotistical telling you all this, because frankly, I never thought I’d ever be qualified to be talking about international opportunities. In fact, who I am and where I came from is actually the opposite of global.

Why go global 3
Why go global 4
Yep, I’m from a boring (sorry Mom and Dad, but it’s true), suburban town in Illinois. Below, you will find a picture of me playing with corn, because the area where I grew up used to be farmland. I went to a big, public high school. The same one that my parents went to. And even some of their parents went there too! When we went on family vacations, we loaded up our car and drove out West to Colorado, Wyoming, and Montana. Don’t get me wrong, I had a wonderful upbringing for which I am eternally grateful — but my point is that it was very American, and not very global at all.

Why then? Why go through all the trouble of not only building a global business myself, but now raising a global venture fund, from LPs all around the world, that specifically invests in businesses and helps them expand globally? Lucky for me, the number one thing I’ve learned is being “global” is not about where you’re from. It’s not even about where you’ve been. It’s about how you think, and what you do about it.

Here are the TOP 5 REASONS why you should be thinking and investing globally, no matter where you are from.


Why go global 5

What are the largest companies in the world? In fact, the largest companies are global. They are selling internationally because no mater where you live, even if you live in China, I 100% guarantee you that there are more people in the world outside of your country than there are in it. Apple now derives 25% of it revenue from China, +170% growth over the past 3 years. Facebook is seeng its fastest user growth in Asia. Amazon. Uber. Airbnb. All worth billions and billions of dollars and all have expanded globally to fuel their continued growth.

Setting up global operations can allow you to keep costs low and leverage the best talent globally. Many of our portfolio companies have kickass engineering teams in Canada, India, Costa Rica, or Taiwan, all at a fraction of the cost of one Silicon Valley engineer. Manufacturing out of Shenzhen can save hundreds of thousands of dollars vs. doing it domestically. Leveraging global partnerships and distributors can help you keep sales teams lean and mean. Lower costs, better talent, longer runway means you have more time to find product market fit, you can adapt to market needs more quickly, and you don’t have to rely on money-hungry VCs like us to keep growing!

Why go global 7

If you’re trying to build or invest in the next unicorn, let me tell you one thing. You’re not the only one. Once you start to see traction, to see success, there will be copycats. Grabbing marketshare while the field is still green can allow you to not only get a headstart on your competition, but also to gain mindshare and brand capital with future customers, suppliers, and investors. We all know this isn’t a sprint, it’s a marathon, and starting first significantly improves your odds.

Why go global 8

Let’s face it. Markets have changed. Successful companies stay private longer. Instead of going public, we’re seeing companies like Uber, Didi Kuadi, Airbnb, and Palantir raise billions of dollars in private fundraising rounds instead of going to IPO. Whether its governments, VC firms, strategic corporate investors, family offices, or Private Equity funds, a global reach and a global brand will open up access to pockets deeper than you ever could have imagined. And if you play your cards right, your later stage investors can also add significant value to your business by acting as trusted partners in their part of the globe. There’s nothing better than aligned incentives for ensuring mutual success.

Why go global 9

Whether you’re looking for liquidity in public markets, or via M&A, opening yourself up to cross-border exits increases your likelihood of exiting, as well as your potential valuation. We have portfolio companies that have found themselves in discussions with multiple potential acquirers, from both the US and Asia. In each case, the awareness of other players involved has drastically affected both the timeline and the valuation of the transaction. We had a Hong Kong based company IPO in Australia. Chinese investors spent US$15 billion last year on US-based transactions and that number is set to double this year. Your options get a lot more interesting once you start thinking outside of the box.

Bonus Reason: Meeting different types of people, being exposed to different ideas, opportunities, and challenges, opens your mind to things you never thought possible. I don’t know about you, but I’m in this whole technology and startup thing to change the world. It so happens the world is a pretty big place, so it’s a damn good time to get started exploring it.


Why go global 10

Stop Trying to Imitate Silicon Valley

By Stephen Forte,
HBO's Silicon Valley


Planners from all over the world try to replicate the success of Silicon Valley with varying levels of success. Everyone from New York City (Silicon Alley) to London (Silicon Roundabout) to Hong Kong (Silicon Harbour) to Moscow (Skolkovo) has mimicked Silicon Valley in an attempt to build their own version of the lucrative startup hub.

The problem is that Silicon Valley has unique features that have allowed the region to become the world’s center of gravity for innovation. Simply copying the things that allowed Silicon Valley to become such a success won’t work, as some regions have already discovered. The tech hubs need to play to their strengths and evolve in their own unique ways.

Silicon Valley’s Recipe for Success

It’s easy to see why governments want to create their own version of Silicon Valley when looking at the valuations the California region is blessed with. There are now at least 74 startups there valued at more $1 billion each. The total value of these so-called “unicorns” is $273 billion.

The reasons for Silicon Valley’s success are many and most of them can’t be easily copied. Geographically, the region is perfectly located near San Jose, San Francisco, and Oakland. Historically, Silicon Valley has experienced decades of success with well-established companies like Google, Facebook, Apple, Fairchild Semiconductors, Intel, Tesla, and other esteemed companies.

In Silicon Valley, everyone knows somebody who has gotten rich off of stock options they think they’re smarter than…which in turn propels them to take a risk at a startup. Perhaps most important for the region’s growth is this competitive and creative culture that continues to allow so many companies to thrive. Not to mention, an endless supply of elite students from Stanford and Berkeley graduate (and dropout) each year to create the next crop of potential tech giants right in the Valley.

But this formula can’t be bottled upon and shoehorned in anywhere. The wealthy people in San Francisco might work at Google and the likes, yet in Hong Kong and New York, the upper class tend to come from finance, and in Los Angeles it’s Hollywoodhopefully you get the idea. This still doesn’t stop governments and business people from trying to replicate Silicon Valley without taking culture and demographics into account.

Being Unique: Playing to Your Region’s Strengths

Every would-be tech hub has its own unique characteristics and features that need to be taken advantage of. If you go to a Starbucks in Los Angeles, you’re likely to bump into a celebrity or similar entertainment personas. For Hong Kong or New York City, odds are high that you’ll fall into a conversation around recent market performance and SEC developments.

Playing to a specific region’s strengths helps lead to success. Modeling a hub exactly from Silicon Valley in areas that don’t carry the same characteristics becomes a major disadvantage. New York, Hong Kong, and London are better suited to be fintech startup hub than Silicon Valley. Los Angeles is better suited to be an entertainment startup hub than Silicon Valley. Playing to those unique strengths make more sense than trying to replicate Silicon Valley.

Fostering Growth

Government benefits are a welcome way to help foster startups, yet they’re only the baseline and not the endgame. All those helpful benefits (friendly tax policies, real estate deals, subsidies, incubators, etc) only go so far. The barriers of entry to create a tech innovation center in the vein of Silicon Valley are so high that these benefits are simply the table stakes. A bigger, greater hook is needed for regions to succeed.

Regions need to embrace what makes them unique and build off of that. With everyone trying to copy Silicon Valley, there’s plenty of room for new players with their own strengths. Any place that simply tries to do exactly what Silicon Valley is doing will pale in comparison to the original.

Hiring the Ideal Startup Team

By Stephen Forte,

In the early days of your startup, you might have heard you should have a hacker, a hustler, and a hipster on the founding team. That makes a lot of sense in the initial stages of your company due to the experimental nature of the business. Remember what Steve Blank says: a startup is not a “real” business but rather “an experiment searching for a business model.”

Once you start to move out of the coffee shop and build your initial team, you’ll have to make some careful hiring decisions. I’ve seen founders hiring for new “formal” positions right out of the gate when all they need are operators to validate the business and find product market fit. Instead of finding your next VP of whatever or Chief whatever Officer, you should have no titles until you have paying customers and a product market fit.

I advise all the founding team to call themselves “product” on slide decks and email signature (if you do that sort of thing). Early stage team members should not be going to conferences and don’t need business cards, so the title doesn’t matter.

Here are a few other ways to manage the early stage hiring processes, and run your startup more effectively.

Maintain Equilibrium

Last year, I wrote a piece called “The Holy Trinity of Product Development.” I argued that it’s important to maintain balance in a company. Often, a startup’s first hires (besides the founders), tend to skew either to the technology side (we need 5 developers!), or the marketing side.

Generally, if the founding team is more marketing-minded, they overhire engineers, and vice-versa. Instead, a company should be customer-centric. To achieve this “holy grail,” the company needs both technology and marketing expertise.

Be Well-Rounded

In another article, “Why CTOs Should Know Accounting,” I suggested that CTOs also need to understand the business side of your company. It’s important for all of the high-level employees in a company to be able to converse with the rest of the employees.

Just like the CEO of a company should be able to at least pronounce the word “kanban,” (con-ban not can-ban) and know the difference between Java and JavaScript, a CTO should be relatively familiar with balance sheets, income and cash flow, annual statements, and budgets.

How to Hire

I’d argue that it’s better not to even bother with interviews. Rather, have coffee first. Discuss why they want to work at such an early stage company and review their skills there.

If that goes well, then have the potential employee give a presentation to the entire team. It can be on any topic (Was “The Force Awakens a remake or not?” is a perfect choice), and it gives the team a feel for the candidate’s analytical skills, seriousness about the position, and ability to do something different, while it also provides a unique experience for the candidate.

If the person is successful on their hiring presentation, I’d suggest the “can we have a beer with them” final check. This one’s really complicated – take them out for a beer with the team (or another social engagement if team members don’t drink). Get to know them on a personal level. When companies scale to be over 25 people, it is much harder to do this with the whole company, but each functional area (marketing/sales, tech, backoffice) can do it with their group and a select few members from other functional groups to join.

Avoid Founder Disputes

Early stage companies sometimes have no cash and bring on someone as a “co-founder” with little to no pay. It’s also crucial that you do your best to avoid founder disputes. I wrote a piece on this called “Dynamic Founder Agreements,” but I’ll give you a short summary. I described this agreement like a typical IF/THEN/ELSE.


The CTO works full-time and performs all of coding and technical duties of V1, his equity is 50% vested over 4 years, 1 year cliff.


The CTO works part time, is disengaged, or we need to hire developers sooner than expected, his vested equity is reduced by half and he forfeits his unvested equity. Loses board seat.


The CTO has to leave the company because he needs a job or a family emergency: if the CTO built V1 then the buyout is a one time payout of $50,000 USD cash or 2% vested equity, if the CTO did not build V1, the buyout is 0.5% vested equity. Loses board seat.


While you might not avoid all disputes, this agreement will go a long way.

Hiring for Bigger Companies

Once your company grows and matures, deliberately hire slow. “Scale” and “move fast” does not mean “hire crazy fast.” Rather, hire for a role only when it is obvious the company is suffering without it.

There is a Silicon Valley secret that dictates that “you make a decision to join a company ONLY if they are resource-constrained. Once they have enough people, time to move on.” The idea behind this secret is that creativity needs constraints. Translation: if your plan calls for ten people, see what you can do with five.

Use these tips when building out your initial team. Don’t fall into the hiring trap.

The Secrets to a Venture Capital Career Path

By Tytus Michalski,

What are the secrets to a venture capital career path? Some people think operating experience. Others believe it’s all about the right connections.

My path to venture capital started as a waiter.

It was my second year of university and the lessons learned from having worked as a waiter have been surprisingly relevant to venture capital. To me, these lessons are the real secrets to becoming a VC.

Great service never goes out of style
In any business, service is important, but especially where the business itself is a service. A waiter and a VC are both ultimately supporting someone else who is the primary decision maker. In the case of a waiter, it’s the customers sitting at the table. In the case of venture capital, it’s the founders building the companies.

But it doesn’t end there. As a waiter, you have to work with bussers, kitchen staff and other servers. As a VC, you must build strong relationships with dealflow sources, limited partners and co-investors. That doesn’t mean you have to be a pushover to everyone. Of course you have to stand your ground for important principles. But it does mean that you should think about the service you provide to everyone. Create value for others and you get more in return.

Know your customers and customize
The best business relationships transcend the first transaction. For a waiter, that means repeat customers who return and ask for you by name. To build that relationship, you have to go beyond the basics and get to know their individual food preferences. You need to know the who loves extra cheese and who has a dairy allergy.

In venture capital, putting entrepreneurs through a factory style assembly line process is not the answer. Every company is different and, more importantly, every founder is unique. You have to go beyond standard founder/investor sound bytes to truly understand individual motivations. You need to know who loves aggressive debate and who prefers open ended questions.

Be a T-shaped person
As a waiter, of course you have to understand your restaurant and the food it serves. That’s your area of expertise. But to be truly successful, you need to know a little bit about everything. Sometimes that means being a tour guide to visitors. Sometimes that means being entertainer to large groups. Sometimes that means simply being a good listener who asks thoughtful questions. Fortunately, these are all skills which are generally useful and not specific to being a waiter.

There is a similar situation in venture capital. The basic area of expertise is understanding the unique dynamics of venture investment and returns. But to be truly successful, that’s not enough. You need to understand technology and the impact it has on people. You need to be able to discuss legal issues in depth with lawyers. You need to have the soft skills to find the best teams and deal with a wide range of personalities. A T-shaped person has both depth and breadth.

Align incentives for performance
Intrinsic motivation is ultimately the key to sustained long-term performance in anything. But incentives help. For many waiters, tips from customers can make more than 50% of total compensation. This additional upside beyond the base aligns incentives for better service for customers.

In venture capital, the numbers are bigger but the basic concept is the same. The classic VC structure means management fees as the base and performance fees as the true upside. If the fund size and management fees are excessively large, that is precisely when investors in the fund start to wonder if incentives are truly aligned.

Find gaps in the market
There is no shortage of restaurants in the world and people who think they can serve food. Yet some restaurants remain empty while a few have lines around the block. The difference is that the successful ones have filled a real gap in the market. Filling a gap may be as simple as emphasizing family friendly service to attract children, who then bring their parents along. Or maybe you prefer to focus on serving the best tempura in your city. Find the gap and fill the market demand.

There is no shortage of money in the world. At its core, venture capital is a service of pooling and allocating money, so the only way to stand out is do something different. It may be as simple as focusing on companies in a specific city, like startups based in Vancouver. Or it may be as ambitious as building the bridge between startup ecoystems globally. Find the gaps and you will find the opportunities.

The road to a venture capital career
Venture capital is fundamentally a service industry. Although there is no conventional career highway to venture capital, there are many unconventional ones. If you want to learn about venture capital, a good place to start is working anywhere in the service industry.

Forget the rigid highway, follow the winding pathway.

  Category: Culture, Investing
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Scar Tissue

By Tytus Michalski,

Building a startup is intense and going through the many challenges creates scar tissue. This is not physical scar tissue, it is intangible.

Although it may seem like this would be difficult to identify, it is generally quite clear when someone has this kind of scar tissue. One reason that many investors prefer experienced startup founders is because they typically have scar tissue.

When we started PMA in 2002, the macro environment appeared to be terrible. Everyone was pessimistic and building a startup at the time was definitely a contrarian idea. Nevertheless, our first few months went relatively smoothly.

Then SARS hit Hong Kong. There were real heroes working in the hospitals, putting their lives in danger everyday, and many did not survive. In comparison, we were actually in minimal physical danger. Shops and restaurants became deserted, which was especially noticeable given that the population density of the city is among the highest in the world. In addition to the health issues and the economic impact, Hong Kong went through a massive crisis of confidence, and we were certainly affected. I would like to say that we all had enough foresight to be practically optimistic but that was not the case. We were simply hunkering down to make it through the challenge.

Eventually, we emerged from the crisis, and Hong Kong rebounded. There were many more challenges building PMA, but that experience helped us to become more resilient and eventually the company was acquired in 2006 for over US$200 million.

But the intangible scar tissue never went away. Even writing about it now, the impact is still there. More generally, everyone who was connected to SARS and Hong Kong during that time was affected in some way.

While building a startup is difficult, events like SARS remind us that there are bigger challenges to deal with in life. Many first time founders have already experienced challenges far greater than building a startup. They have intangible scar tissue.

  Category: Culture, People
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What is the Startup Culture Cascade?

By Tytus Michalski,

Where does culture at startups come from? It is not from logos, slogans or websites. It is from actions, decisions and habits, especially by the founders.

What influences the behaviour of founders? If the startup has external investors, they are typically one of the strongest forces of impact on the founders through the way they communicate both formally and informally.

What influences the approach of startup investors? If the investors are venture capital funds, then the team’s interaction with their own investors, the limited partners, is a critical factor in determining how they engage with startups.

In order to fully understand the culture of a startup, it helps to look at their investors and even the limited partners of their investors: the startup culture cascade.

If the founders of a startup are originally mercenary and their investors are mercenary, then there is likely to be a clear outcome: extremely aggressive behaviour. This can lead to financial success in certain cases because of the sheer pressure applied but many times it simply results in a mess.

If the founders are mission driven and their investors are mercenary, then there is likely to be some confusion: a company with strong ideals but an inconsistent implementation of those aspirations. The mercenary influence of the investors will be in conflict with the core mission of the founders.

If both the founders and the investors are mission driven, then there will be alignment on purpose and culture. Of course, this does not mean everyone sitting around a campfire and singing songs all the time. There are always going to be difficult decisions that need to be made, but at least those decisions will be made based on a shared set of values in terms of priorities.

As mission driven investors, we start with people first. Our philosophy applies equally to choosing both startups and limited partners. For example, we have a significant mix of female co-founders in our startups (currently 50% of our startups have at least one female co-founder) and also women as limited partners because of our approach. To be clear, we do not have quotas in either case but we do make a proactive effort to communicate our beliefs, which attracts people with shared values.

Rather than seeing a false trade-off between mission and financial returns, we believe starting with people first actually leads to higher financial returns. It also means that we say no to both mercenary startups and mercenary limited partners because of the misalignment in philosophy and values.

Like a waterfall, there is a cascade of culture from limited partners to investors to startups. When trying to understand the true culture of a startup, go upstream to find the answer in the startup culture cascade.

  Category: Culture
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