https://typefully.com/y_molodtsov Tech PR & Comms. Partner & COO @ ma.family. Former VC @dayonevc. I write about tech, comms, and productivity. Wed, 25 Sep 2024 12:34:39 GMT Wed, 25 Sep 2024 12:34:39 GMT Typefully https://screenshots.typefully.com/screenshot?size=1200x640&url=https://typefully.com/y_molodtsov/card https://typefully.com/y_molodtsov/the-drama-around-wordpress-and-wp-engine-BHB80F6 So fascinated by the drama around Wordpress There are a few stories, but I had to gather the full content through Twitter discussions and forums It shows how difficult it is to build an open-source project, even if you manage to create one of the most successful one financially Matt Mullenweg, th… https://typefully.com/y_molodtsov/the-drama-around-wordpress-and-wp-engine-BHB80F6 Wed, 25 Sep 2024 12:34:39 GMT
There are a few stories, but I had to gather the full content through Twitter discussions and forums

It shows how difficult it is to build an open-source project, even if you manage to create one of the most successful one financially



Matt Mullenweg, the creator of WordPress, called WP Engine, one of the biggest Wordpress hosters, "a cancer" to the ecosystem

Why?

Because they make a lot of money from selling managed WordPress instances and don't contribute either money or man-hours to WordPrress itself

Now, WordPress has two wings:

1. Non-profit Wordpress dot org
2. Commercial Wodpress dot com operated by Auttomatic

So Matt provides the same exact* services as WP Engine and now fights it to stop marketing themselves as such

This is a pretty typical scheme for open source

Create a project that is essentially free to use, benefit from contributors and orgs that choose to use it because of openness, earn money through a separate commercial entity that offers managed service and custom integrations

And WordPress is one of the most successful examples

Matt has over $400M in net worth because of it

WordPress powers >$40% of ALL websites. There's a giant ecosystem of dedicated WordPress hosters, developers and agencies that can build you anything on top of it.

Matt says that WP Engine has confusing language on their website

BUT

1. All other hosters use mostly the same language
2. Auttomatic hasn't trademarked "WP"
3. Instead, they encouraged third parties

And some people say that confusing .com and .org for WordPress is much easier

Matt also says WP Engine "butchered" WordPress and removed key features like revisions

The community qiuckly pointed out that Matt's WordPress dot com limits plugins

That's how open source works. You build a service and you can change it to make the best offer. WP Engine did.

Now the best part

Auttomatic is an investor in WP Engine since 2011

Obviously, they didn't have any concerns about the naming then

And now Matt quietly changed the wording in the licensing agreement – his main weapon

Auttomatic owns the trademark for WordPress, not the non-profit org

And Matt essentially uses it to extort money from WP Engine

He scorched them at the community even they sponsored!

And he doesn't have many options, because they aren't breaking any rules

Using open source software doesn't imply you have to contribute back beyond what is required by the license

Some rare licenses do, GPL doesn't

I'd be sympathetic if Matt was a solo developer who built a project that was monetized by some evir corporation

]]> BHB80F6 thread false null https://typefully.com/y_molodtsov/what-makes-telegram-special-pYGJX2f Telegram is a secretive social media platform with 900 million users. Their employees aren’t allowed to talk about their jobs. It only has one product manager in its founder. And they got to 900 million users without turning into Facebook but also aren’t earning as much. Telegram is not really a s… https://typefully.com/y_molodtsov/what-makes-telegram-special-pYGJX2f Tue, 06 Aug 2024 12:58:54 GMT


Telegram is not really a secure messenger app. It's one of the largest social media platforms. But certain product choices and the location of its audiences make it almost invisible to people based in the United States or Western Europe.

When you first open it, Telegram looks similar to WhatsApp. WhatsApp’s founders famously focused on keeping it simple and clean. For them this meant not adding anything else: “no ads, no games, no gimmicks”. So they added nothing to the app, even years after Meta bought it.

Telegram can get incredibly complex. On top of DMs and group chats, it can host super groups of up 200,000 people. Anyone can create a channel, a publicly-facing broadcast similar to a Facebook page. The largest one now has 55 million followers.

But despite all this complexity, Telegram hasn’t turned into the infamous Facebook main page. All these features are carefully hidden.

Compared to Signal or any Meta’s messaging app Telegram provides the most seamless and polished experience.

But they aren’t using this tagline anymore since it’s not a differentiator, and it’s not true. With Telegram, you have to trust the team not to peek and keep their servers safe and secure.

But most users don’t care. This trade-off makes Telegram easy to use.

In regions where Telegram is popular, channels replaced newsletters as a form of revolt against algorithmic feeds.

In a world where social platforms demand specific content and try to commoditize all content, Telegram feels like a remnant of the past.

While each channel has a URL, the reading interface on the web is extremely basic, and aggressively pushes you to go to the app instead.

Telegram is its own kingdom. No reason to leave the app.


Last month they even added its own multi-tasking to Telegram, where you can collapse the browser and continue talking to people or reading channels.

Telegram is the app people use for everything. Talk to their partner. Set up a dinner party. Discuss work projects. And read the news, of course. You can create a group with dedicated threads that look like a Discord/Slack server.

I know companies with a few thousand employees that use Telegram as their internal comms tool.

With Telegram, you need a phone to set up your account, but you don’t have to share it. This made Telegram especially popular among crypto people and the default communication app for crypto projects, their opps, business development and communities.

Telegram also has a Premium subscription at $5/month. The subscription removes ads and raises some artificial limits in the interface (the number of chats in a folder).

Back in January, Pavel reported 5 million paid subscribers. If we don’t take churn into account, that’s an annual runrate of $300 million. Very impressive, but I’m not sure if it still covers the expenses alone.

Running Telegram takes a lot of money. Partly because they store everything in the cloud.

In 2017, Telegram raised $1.7 billion from investors and announced they would launch their own blockchain TON. The SEC considered their tokens to be unregistered security and stopped it.

Crypto is a big part of Telegram right now. The Hamster Kombat game was launched on this platform and gathered 300 million users.

There aren’t too many useful apps yet, but it’s interesting to watch it develop.

For years, people were looking for the WeChat of the West. I don’t believe there will be such an app, for many reasons, but Telegram is the closest thing.

Pavel Durov is obviously unhappy with Apple and Google. He’s been at them for years. iOS and Android are critical platforms for Telegram, as the app completely depends on their rules and whims, from content moderation to limitations on what and how they can sell inside the app.

But inside this crypto wallet, you can store USDT which is the next best thing to a digital dollar.

This can simultaneously solve Telegram’s problem and push its audience toward crypto.

Telegram is in an unstable equilibrium. They need to perform a careful balancing app with SEC, which already destroyed their original plan and forced them to return most funds, and with Apple, which can destroy their app as they did with Fortnite on iOS.

I believe they’re betting they can do this, and their lives will be made easier with the rising pressure on Apple from regulators and the growing adoption of crypto itself. And Telegram might have the best chance to ride both waves. ]]> pYGJX2f thread false null https://typefully.com/y_molodtsov/what-elon-could-have-done-with-twitter-instead-ALYuXsS What could Elon have been doing instead of all of this? A thread (sorry). 1. Let people confirm they aren't bots and let everyone filter conversation based on this. Charge for it if you want or include it in Twitter Blue. Use an API to let people upload their ID, bring in-house later if needed. T… https://typefully.com/y_molodtsov/what-elon-could-have-done-with-twitter-instead-ALYuXsS Mon, 19 Dec 2022 07:04:12 GMT
A thread (sorry).

1. Let people confirm they aren't bots and let everyone filter conversation based on this. Charge for it if you want or include it in Twitter Blue. Use an API to let people upload their ID, bring in-house later if needed.

The easiest way to beat spam & bots.

2. Start fixing the ad tools. There's less signal on Twitter, but still enough. I've never even seen a trendy techy app advertise to me here and it's quite easy to target me since I might follow some of their peers.

Too many people can say "I've never seen a relevant ad here".

3. Revamp "Explore" and trends. Snapchat is actually fantastic for live coverage of certain events, I don't really use it but remember watching Trump's inauguration. The way they curated a feed of stories both by the media and regular people is insane.

Twitter just has hashtags.

4. Twitter has a cold start problem. A lot of my friends tried it and left. They don't see the value. You have to build an interesting graph first. "Explore" could be a part of this.

Just showing a bunch of people to follow is important but not enough. Build curated feeds.

5. Quite often, it's easier to reach companies' customer support on Twitter. Build tools for them and monetize it, enable messenger marketing and let the ecosystem build a web of solution and educate businesses about this opportunity.

6. Build tools for influencers and professional creators (can charge for this) to help them curate their experience and sell goods/content/services to their audience, for instance by allowing native widgets in their profile/tweets. Revamp analytics to help assess the results.

7. Build a capable messaging functionality and spin it off as a separate app as well. With E2E, good search and anti-spam.

8. Either let everyone use Twitter Notes or make threads a first-class feature, acquire @typefully if needed.]]> ALYuXsS thread false null https://typefully.com/y_molodtsov/how-to-communicate-a-price-increase-wL4aMrV Gumroad, a platform that allows creators to easily sell content (from art to apps and courses) has changed its pricing and this is practically an exercise in bad communications. The business decision also doesn't seem solid, but let's focus on how they present it. 1. The email doesn't explain why … https://typefully.com/y_molodtsov/how-to-communicate-a-price-increase-wL4aMrV Sun, 18 Dec 2022 12:44:31 GMT
The business decision also doesn't seem solid, but let's focus on how they present it.



1. The email doesn't explain why they're raising their prices. Provide a justification, for instance, by listing all the updates you made recently and the new direction you have – the direction which requires more money but will bring benefits to customers.

In another piece of comms, the founder explains they raised prices because Substack's 10% is their benchmark. Why should anybody care? It's a very different product. Stripe doesn't claim Apple's 30% is their benchmark.

2. It's disingenuous. Comparing the new 10% to 9% that were only applied to your first earnings is a massive jump for anyone who has built a business on Gumroad. Plus, they don't state how big CC fees are (at least 3%).

3. The tone itself is obnoxious, making it feel like they don't actually want their current customers and deserve more money regardless of what they achieved.

And the link leads to a long video instead of a dedicated explanation (why does it have to be a separate doc?).

4. There's no legacy option for existing customers. When Patreon wanted to raise its fees they introduced new paid plans while leaving existing customers on a legacy plan.

https://venturebeat.com/commerce/patreon-now-offers-creators-3-plans-with-fees-ranging-from-5-12/

5. Mostly a technical issue. The emails about the price hike were delivered after they posted about this on social, so many customers didn't get any direct communication.

Inform your customers first, then post on social for greater reach and transparency.

Companies change their products and raise prices all the time. But there are certain things you need to keep in mind. Your customers don't have to care about you, even if you're a cozy neighborhood bakery, let alone a big business. You have to "earn" the right to raise prices.

Now let's look at a good announcement of a price hike. JetBrains raised prices for their tools this year.

Let's see what aspects make it better.

https://blog.jetbrains.com/blog/2022/06/29/increased-subscription-pricing-for-ides-net-tools-and-the-all-products-pack/

1. JetBrains provides a justification – the pricing has been the same for the past 7 years despite greatly improved products & inflation.

BTW, Gumroad fees are marginal, so inflation doesn't really affect them as their users are raising prices on sold products.

2. JetBrains provides options for existing customers by extending the maximum permissible renewal period to three years, so you can lock in the previous price for a long time. And if you're using these tools professionally, there's no reason to pay monthly.

3. Doesn't make it sound like raising prices is a good thing. More like it's unavoidable but something the company doesn't want to repeat in the near future.

That's why the comments have been pretty positive or at least neutral.
https://news.ycombinator.com/item?id=31918433]]> wL4aMrV thread false null https://typefully.com/y_molodtsov/can-pr-help-bootstrapped-companies-wA3herK You certainly see fewer stories about bootstrapped companies in the tech media. But probably not for the reasons you're thinking about. Comes down to their product, scale, and creativity. https://twitter.com/FounderEric/status/1577066763166289920 Fewer than 1% of US companies have raised venture … https://typefully.com/y_molodtsov/can-pr-help-bootstrapped-companies-wA3herK Tue, 04 Oct 2022 14:03:09 GMT
Comes down to their product, scale, and creativity.

https://twitter.com/FounderEric/status/1577066763166289920

Fewer than 1% of US companies have raised venture capital. So why are we constantly reading about them in particular?

Because being VC-fundable correlates with other traits the media are looking for.

News publications aren't interested in services businesses.

They don't cover consultants and agencies. Some operators tried to break through by positioning themselves as some kind of a "tech-enabled agency" but usually it's bullshit.

The media are mostly interested in product businesses, just like VCs.

They also want to cover large companies shaping their industries. Can even overlook the services aspect if the company is big enough (you can dig oil and be interesting).

Reaching that scale in a comparatively small time frame without VC money is almost impossible.

Finally, creativity. Nobody is just waiting to write a great story about you. You have to do something great and make a story out of it yourself. That's where PR people can help.

The only truly unique type of coverage VC-backed companies enjoy is funding rounds.

And the media are less & less interested in funding rounds. Most stopped writing individual funding stories altogether. Others have become extremely picky.

It's a reason to write about you one more time, it's not a guarantee someone will.

There are examples of bootstrapped companies that managed to get good coverage, like Basecamp or Todoist.

The common thread is that most of them could easily raise VC funding because they have a scalable product-led business.

There are also companies like 1password, Calendly, or Webflow, which have waited years until their first round or between rounds. Again, their businesses themselves were interesting to reporters.

If you have a bootstrapped tech business, you can land a story in the media, especially if the business is good.

We at ma.family are ready to help if you are interested. DM me.]]> wA3herK thread false null https://typefully.com/y_molodtsov/what-is-pr-and-why-you-might-need-it-fz4Pn3E Why you might need PR and what it can help you with (and can't) A thread 🧵 Most people don't understand what PR is and how it works. PR is about leveraging the developments and expertise of a company or a particular person to secure organic publications in media. You figure out if your announcem… https://typefully.com/y_molodtsov/what-is-pr-and-why-you-might-need-it-fz4Pn3E Wed, 31 Aug 2022 13:00:12 GMT
A thread 🧵

Most people don't understand what PR is and how it works.

PR is about leveraging the developments and expertise of a company or a particular person to secure organic publications in media.

You figure out if your announcements might be interesting to a publication's audience and therefore get picked up by its reporters and editors.

Or you create something from scratch just to get such a placement. Like draft a report on your area of expertise with exclusive data.

When is PR helpful?

1. Fundraising
2. Recruiting
3. (rare) Acquisition of customers & partners

The common theme here is all of these aspects require validation.

Being mentioned in TechCrunch or Forbes gets you that validation in most people's eyes.

I know some VC funds who scrape all TechCrunch stories and tag them so they won't miss an interesting company.

But it also helps to generate buzz and attract attention.

You might not get eyeballs directly. But you can share the link proactively.

Since it's an external source people will be more receptive.

Some of the founders we worked with use stories about their companies written 5 years ago to introduce themselves to new people and it seems to work out well for them.

In a way, announcing a funding round in the media helps you set up the next funding round.

If you'd like to do that yourself, read this:
https://molodtsov.me/2022/06/how-to-get-media-to-cover-your-fundraising/

Or let's talk.

A similar story with recruiting. Candidates need to be able to explain to themselves, their partners, and parents why would they work for your startup instead of staying at Google with a fat salary and RSU.

They also want to know if you have money to pay them.

PR isn't really useful for direct user acquisition. But often it's important to prove to your customers that your company is trustworthy and they can rely on it.

External validation is the key here.

So when somebody googles your company they see a news story that explains in detail who you are and what you're building.

PR is about realizing your existing potential.

If your company does nothing of interest, it's unlikely you will get a stream of great stories about yourself.

It's a shame to have no coverage when you're building something cool though.

If you have any specific questions or think PR might help your business, we at MA Family would be glad to help.

We led PR for anything from seed-stage startups to publicly-traded corporations and VC firms.

Write hi@ma.family

https://www.ma.family/

You can read the unrolled version of this thread here: https://typefully.com/y_molodtsov/fz4Pn3E]]> fz4Pn3E thread false null https://typefully.com/y_molodtsov/how-to-run-a-remote-company-hBS1EpK I’ve been working remotely for 8+ years and now running a team distributed at least across 5 countries. It’s challenging but it’s also very likely the best work environment that can help you attract talented people no matter where they live. Here are the key things I found. Remote work sucks unle… https://typefully.com/y_molodtsov/how-to-run-a-remote-company-hBS1EpK Mon, 29 Aug 2022 13:00:10 GMT
It’s challenging but it’s also very likely the best work environment that can help you attract talented people no matter where they live.

Here are the key things I found.

Remote work sucks unless you're primarily working asynchronously. This was the mistake most teams did when they HAD to go remote in 2020.

It means you should focus on written communications, not spontaneous calls.

When you're in the office, people might just come to your desk to check if you're there. You could go for lunch, a meeting or something else.

If you are remote people don't see that. Therefore, they tend to call you out of the blue when they need something.

Don't.

That approach only leads to anxiety as you end up chained to your workstation. You should set calls scheduled in advance. Of course, something urgent can happen and you will have to call. Treat it as an odd & rare situation.

You can establish SLAs if you really need them.

A good remote work environment follows the same principles as any good work environment does.

Written comms, esp. for repeated info.
Hiring people who can manage themselves, giving them context, goals, and resources they need.
Collecting feedback proactively and acting on it.

Focus on the deliverables and the actual work being done. That's the only way to assess your employees anyway.

Be mindful of peoples' time. Avoid sending them non-urgent messages and emails late in the evening or during the weekend.

All modern communication apps, whether email or Slack, have a scheduling function.

Use it.

Don't set up *unnecessary* calls.

Depending on your time zones it might be OK to have a short daily standup.

Regardless, all materials for the calls should be prepared and reviewed in advance. Nothing worse than a person screensharing and reading out a document they wrote.

It might be a good idea to have regular 1:1 calls with your direct reports though.

Spend that time discussing high-level things and sharing mutual feedback. Have a structure for this and lead with your example.

Another purpose of these calls is to assess your reports' well-being.

When you don't spend time with people it might be difficult and everyone has their own problems.

You have to do it proactively.

You have to build structure and processes to replace that watercooler kind of conversation that might happen offline. That doesn't just happen. Structure your calls and channels, show example, ask people to do specific things.

Ideally, you should gather your team members at a particular location a few times a year. Not cheap but still way cheaper than renting an office 365 days each year.

Have a schedule of activities prepared but leave some free time where people can engage and just chat. ]]> hBS1EpK thread false null https://typefully.com/y_molodtsov/running-an-online-blog-in-2022-is-still-too-DUbg5Cj Running your own blog that actually looks nice is so unnecessarily complicated in 2022. There's no simple way to have your own digital home, so people are still attracted to social networks. And most of these options only expect you to have one type of content, like a blog. Really make me sad ab… https://typefully.com/y_molodtsov/running-an-online-blog-in-2022-is-still-too-DUbg5Cj Sun, 24 Jul 2022 09:45:31 GMT
There's no simple way to have your own digital home, so people are still attracted to social networks.

And most of these options only expect you to have one type of content, like a blog. Really make me sad about the eclipse of Tumblr which had a fantastic idea of supporting multiple post types: shot notes, blog posts, images, quotes, etc.

Wordpress – don't even get me started on that. Unless you're fine with default themes and the way it works it's so difficult to update and maintain if it's not your full-time job. And both their old and new editors are weird.

Ghost does seem like a good option. Its official managed instance is expensive but you can run it on DigitalOcean quite easily. But when I tried it I wasn't able to find a good theme that doesn't look like a corporate blog or a pure newsletter.

Substack is used by many, but the nature of the platform almost forces you to write some kind of educational content. Haven't seen anyone sharing photos of their dog through Substack. Only as a way to prove their economic theory.

There's a whole bunch of "indie" blog platforms. Write․as, Proseful, etc. The only question is their longevity. Even if you can export content, unclear if it'll look good in another platform.

Static blogs in the forms of Hugo, Jekyll, and Gatsby definitely aren't for everyone. It's mostly developers using them because you will likely have to do a lot of stuff manually.

Statis blogs are easy if you only write text. Any git client works. Apps like iA Writer can help you. But if you want images, it's much easier with a CMS.

So you have to also use headless CMS like Forestry and Netlify CMS and they aren't that great.

Micro.blog is an interesting option because it abstracts some of the complexity of Hugo away and also adds a social layer on top. But it's run by a small company and you can see rough edges here and there.

But you have OK mobile and desktop apps to write for it.

I use them for a separate website which is more like my life journal. But had to manually adjust a ton of stuff in templates and CSS. At least I can.

On the plus side, it natively expect multiple types of content which is good if you're building a centralized online presence.]]> DUbg5Cj thread false null https://typefully.com/y_molodtsov/dall-e-learns-just-like-humans-do-yet-gets-uduRprl People are attacking GPT-3 and DALL-E because they produce content after learning from publicly available content. This is the same exact thing people do. We consume everything that's been created before us, rehash it, and maybe add something new in the end. Yes, there were artists who truly cre… https://typefully.com/y_molodtsov/dall-e-learns-just-like-humans-do-yet-gets-uduRprl Sat, 23 Jul 2022 14:37:05 GMT
This is the same exact thing people do.

We consume everything that's been created before us, rehash it, and maybe add something new in the end.

Yes, there were artists who truly created something nobody has seen prior to them (e.g. suprematism).

But mostly we just improve upon a combination of our knowledge.

Based on all the images I've seen produced from all kinds of inputs, DALL-E works on a much finer level and isn't going to just copy parts of someone's drawings and pictures.

And since you can guide it, maybe you can even create something truly new in terms of its visual style.

It is understandable people are a bit afraid and disgruntled. They've been learning how to do this for years. And now there is this machine learning thing that can put them out like hot potatoes.

Writer monks probably felt the same when they saw a printing press. Or painters who just saw the first color photo.

Both of these changes produced a moral panic.

Still, to me, it seems like removing gatekeepers.

With DALL-E and its analogs in the very near future, anyone will be able to visualize their fantastic, however crazy they were.

Imagine trying to do that with a human artist. And how much that would cost.

You no longer have to know how to draw or paint if you want to have something.

But the creation of a photo camera hasn't destroyed painting as a field, merely changed it.

We might see something like that.

I'm sure there always will be a demand for human-produced art. If it's good it will likely trade with a premium. Countless consultants will be earning fees by proving something is human-made.

And then there will be new artists who'll produce content on top of DALL-E and its descendants.

Lots of famous painters in history used their assistants to produce some parts of their paintings. Why not use a machine for this?]]> uduRprl thread false null https://typefully.com/y_molodtsov/the-cheapest-way-to-have-your-email-on-your-jqfR6US Here's the cheapest way to have an email address on your personal domain. While still using it through Gmail or Gmail-compatible apps (i.e. Superhuman) with their superior features. Works for anyone in the iOS ecosystem. You probably already have iCloud+ because you need some cloud storage for … https://typefully.com/y_molodtsov/the-cheapest-way-to-have-your-email-on-your-jqfR6US Sat, 16 Jul 2022 09:19:35 GMT
While still using it through Gmail or Gmail-compatible apps (i.e. Superhuman) with their superior features.

Works for anyone in the iOS ecosystem.

You probably already have iCloud+ because you need some cloud storage for backups and images.

Meaning you have "Custom Email Domain". But Mail.app is a terrible outdated app and Gmail has superior notifications, search, and advanced features even on its own.

Step 1. Setup "Custom Email Domain" for your domain.



Step 2. Using iCloud Mail set up a rule that forwards all incoming emails to your basic Gmail address.



Step 3. Set your own email as the default address.



Step 4. In your Gmail settings add your personal address as an alias you can use to send emails. You'd need iCloud Mail credentials and an app-specific password. Set it as the default.

Done.



Now all your emails will be collected in your private Gmail account, yet everyone else will see an email on your personal domain. And you can create multiple aliases. ]]> jqfR6US thread false null https://typefully.com/y_molodtsov/how-much-vc-funds-actually-earn-and-spend-Thooq9S The situation with Backstage Capital got me thinking. In addition to other hats I wore at Day One, I basically led our back office, so I know the internal economics of VCs. Let's dig in to figure out whether solo GPs are paid $300k and have 6-month vacations. Starting with the basics. VC funds u… https://typefully.com/y_molodtsov/how-much-vc-funds-actually-earn-and-spend-Thooq9S Wed, 29 Jun 2022 12:38:07 GMT
Let's dig in to figure out whether solo GPs are paid $300k and have 6-month vacations.

Starting with the basics. VC funds usually live for 10 years (can be extended by 1/2 years). They charge management fees and carried interest.

The management fee is usually 2% per annum, which is heavily masked "we will take 20% of your investment for ourselves".

The 2% management that is used by practically all funds is one of the weirdest things about the VC industry. That's not much for the first fund of an emerging GP and a ton of money for a $400M fund.

Annual management fees:
$10M * 2% = $200,000
$400M * 2% = $8,000,000

* Usually after the shorter investment period (4-5 years) management fees are charged on the actually invested amount and not the fund size, so they're getting a bit smaller.

The purpose of management fees is to cover the expenses associated with running the fund.

What costs do VCs firms actually have?

1. Headcount (partners, associates, analysts, EAs, etc)
2. Vendors (accounting, legal, audit, compliance, tax, etc)
3. Business & travel expenses, software, banking fees, etc

A couple of notable things:
Setting up a new fund in the first place isn't cheap but is most often covered under the Organizational costs by the fund's LPA (Limited Partnership Agreement). Usually a one-time fee of 1-1.5% of the fund.

Certain things are often covered by the Limited Partnership entity (LP) directly, like filing costs in Delaware or in any offshore locations like Caymans or BVI. Depends on the wording in the LPA.

You can be a solo GP but for any reasonably sized fund that is your full-time job, you will likely want people to support you. Whatever titles they have: principals, associates, or analysts, their salary and benefits come from your management fees. These people are doing VC work.

You also need people for all supporting areas:
– Accounting
– Taxes
– Compliance
– Legal
– Audit

In the US there's a large ecosystem of specialized firms with experience in these areas so most funds hire these vendors to handle this and not in-house people.

There are administrative firms that handle everything from accounting to payroll. Tax advisory is pretty much ordinary. Legal firms help you work on the investment documents, onboard new LPs, and deal with the carry distribution for your GP members (partners, top employees).

You have compliance requirements as a VC. That includes filings for your entities, filings that exempt you from securities registration through Reg D, as well as FATCA and CRS compliance. Your legal firm will likely help you deal with the former or you can do it yourself.

If your GP/LP entities are incorporated in an offshore location like Caymans you also need to file docs there as well.
FATCA and CRS are international protocols to fight tax evasion where you provide info on capital accounts of your LPs to governments.

Something like KPMG is happy to charge a lot to run these filings for you. You can do it yourself, but these government portals are pretty terrible and there are risks that you might not want to carry.

Finally, depending on your agreement with your LPs you might have to go through annual audits which are usually performed by yet another vendor.

These VC-focused vendors like to charge you based on your AUM (assets under management) as this is a relatively good benchmark for the volume of work involved.

So, how much money will you actually have with a $20M fund?

$20M * 2% = $400,000 per year

The admin firm will want around $40-50k a year.
$10k to prepare and file your taxes (getting more expensive with time).
Legal expenses are hard to predict, but you can easily rack $50k a year at least. Depends on whether you actually lead any deals and have to think about terms.

FATCA & CRS filings are easily $10-30k even though it's the quickest thing that KPMG automates with VB in Excel. But carries risks.
Audit gets more expensive with time and investment rounds, so let's say $10-20k.

In the end, you're left with $240-300k for all your employees, their benefits, expenses, and any kind of additional costs you might have, like creating the website.

A new unproven firm likely means lower salaries, but even then your associates will likely need around $80k.

Junior employees and assistants can be cheaper.

Still, that means 3-5 employees tops, including yourself.

As a fresh solo GP, you are very unlikely to get a large salary unless you're truly working alone or have your team in a much cheaper country.

The good thing about VC is that you know in advance how much money you will have for years to come, so overhiring and cutting people is a very unusual thing.

I know first-time managers who raised smaller funds ($3-5M) and either didn't charge management fees or took 1% and lived off other sources. After they proved themselves as investors they raised proper funds and charged like everyone else. That's an option.

The math is a bit different for larger funds where everything is more stable and their headcount usually scales sublinearly with the AUM.

Also, if everything's good you're raising funds every 4 years and stack management fees from several funds at once. That helps. ]]> Thooq9S thread false null https://typefully.com/y_molodtsov/top-little-tools-and-utilities-xqAutmq Here are the best little online tools & utilities you should save to your bookmarks. I've been collecting them for many years and finally decided to put them into a single thread 🧵 Photopea is an online image editor that is basically a free & lightweight Photoshop alternative when you need to mak… https://typefully.com/y_molodtsov/top-little-tools-and-utilities-xqAutmq Mon, 30 May 2022 11:04:51 GMT
I've been collecting them for many years and finally decided to put them into a single thread

🧵

Photopea is an online image editor that is basically a free & lightweight Photoshop alternative when you need to make quick adjustments and already know this interface paradigm.

photopea.com

"Remove background" is a little tool that can very accurately remove background if you need your face/body for something else.

https://www.remove.bg/

I Love PDF provides all kinds of tools for PDF, including compression and conversion. Never send a 30Mb presentation over Gmail anymore.

https://www.ilovepdf.com/

Redacted helps you beautifully blur out and redact anything you don't want to share on your screenshots.

https://marky.space/redacted

OnlineOCR is a very nice OCR suite that works with multiple languages and various fonts.

https://www.onlineocr.net/

FreeConvert is a universal online file converter.

https://www.freeconvert.com/

Tally is a better alternative to Google Forms and Typeform for simple use cases with a generous free plan.

https://tally.so/

JustPaste is like Pastebin but for rich text when you want to share something with the world quickly.

https://justpaste.it/

There is a Markdown-focused Pastebin alternative as well. Type in Markdown, click 'Publish'.

https://rentry.org/

Replier simplifies answering long emails with multiple questions so you can quickly select the stuff you want to address.

https://www.replier.app/

Adobe Color provides all kinds of color wheels and compatibility settings for creating color palettes.

https://color.adobe.com

The.Rip unrolls Twitter threads in Markdown format so you can quickly copy them to your note-taking app

https://the.rip/

Quick Reviews allows you to create visually-engaging images with your reviews of movies, TV, books or anything else to share on social media.

https://quickreviews.app/

Look Scanned allows you to "sign" PDFs without printing and scanning them.

https://lookscanned.io/

Hemingway Editor is a web-based text editor with an in-built Grammarly alternative for concise writing.

https://hemingwayapp.com/

TweetPics allows you to add beautiful frames to your images to share on social.

https://tweet.pics/

emoji finder helps you find a much-needed emoji.

https://marky.space/emoji-finder/#hand

Forward Email allows you to easily forward emails from multiple addresses for free (or cheap).

https://forwardemail.net/
]]> xqAutmq thread false null https://typefully.com/y_molodtsov/how-to-get-media-to-cover-your-fundraising-RtFEqY8FfWoa 5 years ago announcing your funding round was quite a reliable option to get coverage in the press. It all changed. We ran dozens of announcements in recent months and I wanted to share what we're seeing. 🪄 Here is how you can get top-tier coverage for your funding in 2022. First, why do it in … https://typefully.com/y_molodtsov/how-to-get-media-to-cover-your-fundraising-RtFEqY8FfWoa Thu, 05 May 2022 15:29:57 GMT
We ran dozens of announcements in recent months and I wanted to share what we're seeing.

🪄 Here is how you can get top-tier coverage for your funding in 2022.

First, why do it in the first place?
Coverage in the media helps with:
1. Investors
2. Talent
3. (rarely) Customers

The media lend you their authority and give validation in the eyes of the public.
https://twitter.com/yuris/status/1443255579493888000

Easy to say you should go direct but that only works if you already have an audience. Of course Elon Musk doesn't need PR when he can just tweet to 90 million of his followers.

Most people don't have that. Now back to the tips.

The funding is just a reason to think about covering your company. Are there any other good reasons? What makes your startup interesting & unique?

Reporters will cover a $1M Seed and drop a $50M Series B because they focus on the company and its story instead of the financing.

Examples:
– Crazy growth
– Your personal story that explains why you care about this problem
– The social/enviromental aspect of your business (most don't really have one)
– You're bringing something known to a different vertical or even a different region

Also:
– Unique team composition and background, maybe you could position yourself as a champion of a country
– How does your company resonate with what's going on in the industry or in the world right now? (WFH services in 2020, how did you managed to raise a Series C right now)

(can't believe I have to say this)

Close your round before going to the media. An investor might drop out, the figures might change. Most funding round announcements happen months after the round is closed, just don't wait a year.

The sure way to figure out if it's reasonable to expect coverage for your news is to check what has been written before. Look for similar stories, if there is not a lot of these you might be in trouble.

Unique stories take a mountain of effort to secure.

Find reporters who might be interested in your company and announcement. Have to be very relevant.

There are not many major outlets that often cover funding rounds in dedicated stories these days: TechCrunch, Forbes, Business Insider, VentureBeat, etc.

Read through their latest funding stories, look for those which are similar in terms of industry/amount, research them thoroughly.
https://twitter.com/fredericl/status/1371916286104510466

The best way to contact reporters is via email, unless they offer another option themselves. It's usually easy to find contact details either on their profile somewhere on the website of the publication or in their Twitter bio.

Don't try calling even if you somehow got a number.

Draft a great pitch email. If you managed to raise a round you know how. Imagine that nobody cares. Don't use buzzwords, instead focus on facts and reasonable projections. Build a narrative, explain the place of your company in the world and how it relates to biggger trends.

You should include all the basics: the funding amount, investors, what are your plans for these money, etc.

Use quotes to get yours or investor's words into to the story unaltered(potentially).
https://twitter.com/katiedjennings/status/1488966246049755139

Use public stats to prove there's a large opportunity or show your math. Say who your competitors are and what makes you better. Disclose the figures that prove you're on the right path. $ revenue and valuation rather than relative MoM user growth.
https://twitter.com/meliarobin/status/1478778694688817154

The most reliable option is to offer an "exclusive", where you only pitch one reporter at a time. You can say that right in the subject line: "EXCLUSIVE: ...". Forbes and most outlets you know like The New York Times or The Wall Street Journal are likely to cover exclusives only.

There's an "old" but still helpful guide to pitches from @mikebutcher that you should read.
https://mikebutcher.me/2015/07/01/the-press-release-is-dead/


It's OK to follow up with a reporter one or two times in case they haven't replied, but certainly not more than that. Silence means they're passing. You can try another one now, but ensure they're also relevant and might get interested in what you're offering.

Remember, they might be getting hundreds of pitches a week. Be respectful. All you can do is to offer them a story and pitch it in the best possible way. But if they're passing, then they're passing.
https://twitter.com/alex/status/1407069613351968770

If a reporter accepts the story, they will likely get back with questions. Most will ask for an audio interview since that allows them to communicate directly and get the info they need. If you get to that stage, it's usually a very good sign, although they still might pass.

The alternative option is to pitch under embargo. You choose the date & time, you send a much shorter pitch (omit key details) and ask if they're accepting the embargo (put it in bold). If they reply "yes", share the full details. You can pitch multiple outlets this way.

*Very* important things to remember
1. Still pitch only one reporter at a media publication at a time.
2. Give everyone the same embargo time.
3. You're decreasing your chances by going the embargo route but might get more stories. It's a trade-off.

https://twitter.com/bayareawriter/status/1363969027299811330

Reporters aren't your content marketers, they might still pass, drop the story due to the timing conflict or something else. If they actually like it, the exclusive option allows you to work together and find a date that works. With an embargo you have exactly one shot.

Prepare images you can offer as illustrations. That could be photos of the founders, of the entire team, screenshots of the product. The images shouldn't be too marketing-y, otherwise nobody will take them. Shared them in advance, maybe with the pitch itself.

I recommend drafting a blog post explaining the vision behind the company and where you are seeing it in the near future to post after the publication goes live. Turn it into a Twitter thread where you can also integrate the story. Warn your investors and ask them to share.

Basically, it's on you to augment the announcement and leverage the buzz for your goals down the road. ]]> RtFEqY8FfWoa thread true null https://typefully.com/y_molodtsov/why-culture-is-important-UQ2WwJg86vV1 A company's culture is a set of principles that you use to make decisions in novel situations. A mistake a lot of companies make is thinking their culture can be "we're for all good things" – then it's not useful. A thread 👇 It should help you drive conclusions in difficult moments and find the an… https://typefully.com/y_molodtsov/why-culture-is-important-UQ2WwJg86vV1 Wed, 10 Mar 2021 21:51:11 GMT
A thread 👇

It should help you drive conclusions in difficult moments and find the answers. If you have a question like "do we want it quick, cheap, or reliable?" you can't just answer "all those things please!".

You have to choose. That's how your company is different from others.

A culture should be a bit uncomfortable. It's about sacrifice. You lose something in order to gain something.

You tweak the balance, but in the end, it's almost a zero-sum situation. For you personally (or your team) one of those things just matters more.

Here's an example 📖

(Almost) all businesses want more revenue. I presume you do too. Is there a price for preserving the current revenue that you're ready to pay?

We decided early on that we have more important things. We want to feel good and work with great clients.

So I had to fire a client today. We realized they were taking too much effort and energy and were extremely hard to communicate. We're a B2B comms agency and only work with a few clients at a time. So we lose that revenue until we onboard someone from the waitlist.

But for us that exchange makes sense. We'll probably be more productive, could focus on the next great thing and that relationship might go on much smoother.

That decision was the result of our culture that we discussed and wrote down.

A culture can't have any bullshit. It should be falsifiable in the scientific sense (can be contradicted by evidence).
Talk to your team members about it and you'll see the parts where they're smiling or stumble. Some managers prefer not to see that but it's extremely important.

How to define your culture? It's easier at smaller companies. It comes from the top and then, if it's supported by your actions and reflected in your hiring process, it'd stick.

First, discuss your basic principles internally. Write it down. See if that looks reasonable to you.

Iterate. Try to produce the smallest and the simplest list possible.

Then you have to follow it. The writing has zero power unless you actually follow those principles. You can't say "I won't work with bad clients" and continue doing so just for a monthly retainer. Your employees would notice that and accept that behavior.

And then it'd become your culture regardless of any documents you might write and share.

The first people you hire for any business define the culture of the team. So when you talk to candidates try to figure out if they actually agree with those principles. That's why some of the most sought out companies are known for a "stance" they take.

Most people have a basic idea about the culture at Basecamp. Or Stripe. Or Travis-era Uber.

If you make it public and people believe you, your culture turns into a self-fulfilling prophecy. The idea itself attracts people who share those values.

]]> UQ2WwJg86vV1 thread false null https://typefully.com/y_molodtsov/britain-is-the-most-successful-country-on-earth-SBXk8Gs4CfuJ One of the best historical features of the Anglo-Saxon culture is the legacy they built in terms of independent highly-developed countries across the Earth. Almost no other ethnicity has that. Yes, of course, Brits and Americans are different, and both nations are diverged from Australians, etc, … https://typefully.com/y_molodtsov/britain-is-the-most-successful-country-on-earth-SBXk8Gs4CfuJ Tue, 02 Feb 2021 18:51:42 GMT
Almost no other ethnicity has that.

Yes, of course, Brits and Americans are different, and both nations are diverged from Australians, etc, but they are still pretty fricking close and speak the same language.

Spain has Latin America. Portugal has Brazil. There are a few German-speaking countries. That's all.

That is a backup. If one of those countries fails or goes "V for Vendetta", at least some people can move to another one. I suppose it also acts as a deterrent for authoritarian leaders – harder to play the "The whole world is against us" card when you speak the same language.

That's why any limits to emigration are the worst thing authoritarian regimes do and why any country doing that should be punished. It's a deterrent. How many people would stay in North Korea if they could leave freely?]]> SBXk8Gs4CfuJ thread false null