CM2, Loom's PMF journey, Peter Attia on not overthinking nutrition & the Goldilocks fund
Sajith Pai's somewhat irregular newsletter #24
Welcome to the 24th edition of my rather irregular newsletter! For the 347 new subscribers who have signed up since my last newsletter, welcome aboard. Enjoy your 1st newsletter!
Quick housekeeping announcements. The newsletter has two permanent sections: Writings - where I usually write and / or refer to one or more original pieces that I published in the previous months, typically about venture or the startup ecosystem, and Readings - about what I read and learnt about. My reading diet is tilted heavily in favour of podcast transcripts (and of course books) and against articles / newsletters. This will naturally reflect in the reading list.
This is a long newsletter - think of it as akin to a monthly magazine from me (only the frequency may not be monthly!). I don’t know if you can read this entire newsletter (and peruse the links) in one sitting, and even if you do a second run (or more which I very much doubt), you will have to pick and choose what to focus on. A good way to read this newsletter is to certainly read my original writing(s) below, and then glance through the rest and pick 1-2-3 items that pique your interest. Anything more is a bonus.
Writings
(1) I wrote a piece on CM2 or Contribution Margin 2, a distinctive startup framework, and how to use that as a proxy for measuring product-market fit.
Link to the piece.
(2) I published the 14th episode of PMF Convo. These are 1:1 zoom or in person conversations I have with founders, operators, VCs as part of my research on PMF (product market fit). I transcribe these, and if the guest is willing, I release the edited transcript (no audio). This time as an experiment I tried releasing a few videos too.
This episode featured Vinay Hiremath, CTO and cofounder of Loom. Vinay is the first tech leader I interviewed as part of the PMF (product-market fit) Convos and here he covers how tech leaders should approach their craft and work, in the prePMF and post PMF phases. In addition, he covers the backstory of Loom and how they arrived here post a pivot after maxing out their credit cards, the key metric that they focus on at Loom, and of course his recommended reads and listens for founders and tech leaders.
Link to the episode transcript, and here is the twitter thread containing the videos i mentioned above.
Readings
Now to Part II of the newsletter where I share what I read and found interesting. Many of you know that I have been deliberately eschewing articles in favour of podcast transcripts (given the higher signal to noise ratio in these). That trend continues.
Here are five podcasts whose transcripts I enjoyed reading, with my learning notes on them. For the last two podcasts in the list below, I organised the transcript, as the podcast publisher doesn’t provide the transcript. You are welcome!
1/ Peter Attia on Colossus
Peter Attia is a well-known longevity and wellness guru; has a popular podcast The Drive, covering these topics. Recently, he published Outlive, a how to book giving advice on living to 100+ years. The podcast gives you a quick overview of his thinking and perspectives on this topic. Some excellent advice here that can be readily implemented including 1) the importance of primary prevention, especially that of diabetes which accentuates the popular killers such as heart attack, strokes, cancer etc. 2) why exercise is disproportionately important of all of the steps you can take to enhance your life and health span and in particular the importance of VO2 3) why we overthink nutrition and nutrition advice too much - much of the advice around nutrition comes down to a balanced diet and not eating too much (and he gives a good hack for managing this). Far more attention gets paid to nutrition than it deserves he says.
Link to podcast + transcript. Link to my public notes & excerpts.
2/ Jonathan Becker of Thrive Digital on the Lenny Rachitsky Podcast
Jonathan Becker runs Thrive Digital, one of the leading digital / performance marketing agencies. He talks about how founders should approach performance marketing a) dont put all eggs in one basket, instead use performance marketing as one of a few channels you focus on b) because performance marketing has the affordance of being hyper-attributable there is a tendency to invest more into it, but your success at performance marketing may be the result of several factors such as higher brand awareness or product quality, so excessive reliance on performance marketing runs the risk of you underfocusing on what may be supporting it c) the importance of high quality creatives in enhancing performance marketing click through rates.
Link to podcast + transcript.
3/ Dave Yuan of Tidemark Capital on Colossus
Dave Yuan is founding GP at Tidemark which exclusively does growth investing in vertical saas. This was a really good episode by an investor who is laserfocused on the vertical saas software market. The clarity of thinking about how to play and win in vertical market saas, and the ability to ransack his memory for interesting anecdotes such as Fareharbor and the unnamed actor casting software co is impressive. In particular I found his framework for looking at saas plays that have a strong handle on control points (or act as the system of record) for the SMBs and then use this power to expand into adjacencies such as payments, procurement, payroll etc. There are other frameworks and thinking tools he brings into the convo like how the turnover in the industry, such as how hyperstable industries give you less at bats or opportunities to push your software in, why you need to be careful about burning through your leads (your TAMs may be much smaller) etc. Overall a good episode especially for vertical saas founders and investors.
Link to podcast + transcript.
4/ Mike Maples on the Kaufmann Podcast
I have always found Mike Maples’s views interesting. He is a provocative thinker, and backed by a terrific track record. So that makes his views always worth a listen. As was this podcast episode. A few thoughts stood out to me – a) success in the first five years helps a lot in your career as VC. I cant but agree here and wrote about it in my essay on my five years in venture as well b) the allocation between upfront and reserves, and how that needs to be an intentional decision was fascinating c) the three groupings of their 30 or so mental models d) each investment decision is written out as a bet (an assumption etc.) and this is put into a time capsule at the time of the decision. They revisit this later (at the time of the growth decision?) – did the assumptions or presumed outcomes work out?
Link to the podcast, and the transcript that I organised.
5/ Elizabeth ‘Beezer’ Clarkson, Sapphire Partners, on 20VC
Beezer is one of the few LPs who shares her thoughts publicly on social media. She continues in much the same vein here, sharing her perspectives in an entertaining chat with Harry Stebbings, on how LPs view the venture market post the end of the go-go years of ’20 and ’21. What I found interesting in Beezer’s comments: a) funds that returned 3x+ typically have a dragon (an investment that returned the fund) b) the historic maxim that you need to ride your winners all the way through, is getting a rethink, in light of the high multiples that are available to early stage investors when they sell to later stage investors c) the overwhelming preference amongst LPs for a fund in the $300-700m range, the Goldilocks sized fund d) interesting data points on breakages; the breakage between fund one and two is 50% (i.e., half dont raise a second fund), by fund four, it is 17% (that is, only one in six funds reach fund four) e) they typically except a seed fund to return 5x and a Series A fund to return 3x. Overall an interesting podcast, though a much more contextual, useful to understand the present state of the venture market and relationship between LPs and GPs podcast, than something more permanent and lasting. Useful for venture nerds and VCs; less useful for founders.
Link to the podcast, and the transcript that I organised.
Bye
It is time to wrap this! As I shared earlier, you should think of this substack as akin to a monthly magazine - you don’t have to read it all in one sitting, and you don’t have to read all of it!
That is all for now folks. Feedback, or your own ruminations in the comments or at sp@sajithpai.com (Please don’t send pitches or CVs or anything work-related at my personal id; I may / may not respond to them; instead please use sp@blume.vc for pitches please).