Tippets by Taps - Issue #131
New week, new issue! As always, I hope this finds you and yours safe and healthy during this pandemic. This week we explore how Marc Andreessen’s call to arms, the ‘Burn Multiple’ as a measure for startup efficiency, frontline workers as unnatural heroes (this piece really hit hard), COVID’s silver lining and more. Enjoy!
How Tech Can Build
Last week Marc Andreessen, Netscape founder and now prolific investor at eponymous venture fund, penned a much debated article titled It’s Time to Build (I encourage you to read it if you haven’t yet…the last time an Andreessen essay made the rounds like this was in 2011 when he said software is eating the world).
The essay serves as a call to arms but to some rings hollow. Ben Thompson of Stratechery breaks down the piece essay quite well, pointing out where and why the disconnect exists.
Software eating the world, with zero marginal costs, all from Silicon Valley…The sort of building Andreessen calls for is very much in the real world, costs real money both up-front and on a marginal basis, and would surely make the most sense anywhere but Silicon Valley.
I do believe that It’s Time to Build stands alone: the point is not the details, or the author, but the sentiment. The changes that are necessary in America must go beyond one venture capitalist, or even the entire tech industry. The idea that too much regulation has made tech the only place where innovation is possible is one that must be grappled with, and fixed.
Well worth reading the original essay and this response.
The Burn Multiple
As the economic crisis continues to unfold, without a clear line of sight to shelter-in-place rules being lifted and the start of the gradual opening of businesses, for startups managing cash becomes paramount. Fundraising in this environment is going to be challenging, regardless of how much investors shout from the rooftops that they are open for business. This piece by David Sacks of Craft Ventures nicely outlines the ‘burn multiple’ metric, one that both startups and investors alike should pay attention to as they try and get a handle on the cash efficiency of a company.
Burn Multiple = Net Burn / Net New ARR
This puts the focus squarely on burn by evaluating it as a multiple of revenue growth. In other words, how much is the startup burning in order to generate each incremental dollar of ARR?
The beauty of the Burn Multiple is that it’s a catch-all metric. Any serious problem will eventually impact the Burn Multiple by either increasing burn, decreasing net new ARR, or (most tricky) increasing both but at disproportionate rates. For example:
A gross margin problem — If the company spends too much on COGS in order to deliver the product or service, its burn will increase rapidly as it scales. If there’s not operating leverage in the business, the Burn Multiple will not improve with scale.
A sales efficiency problem — If CAC is prohibitive or sales productivity is diminishing, burn will increase relative to new ARR, causing the Burn Multiple to worsen even though growth continues.
A churn problem — Churn will net against the denominator of the Burn Multiple, causing the multiple to increase. A leaky bucket makes it hard to grow efficiently.
A growth challenge — If growth is stalling, the company may seek to compensate by spending more on marketing, give-aways, discounts, or promotions. That will be picked up in a higher Burn Multiple, as burn rises faster than new sales.
A founder leadership problem — If the founder lacks the skill or will to control burn, that will show through in the Burn Multiple.
I Work in a Grocery Store; Don't Call Me a Hero
This article is one of those that, despite being a modest in length, packs a punch so strong that, if you’re like me, it will have you thinking about it long after the browser window has been closed. A beautifully written piece by a grocery store checkout clerk, she politely but unabashedly questions the motivations behind society calling frontline workers ‘heroes’.
I’m grateful to be acknowledged for the risky work we’re doing. Being in an environment where morale is up despite global uncertainty is encouraging. But I have a problem with all this hero talk. It’s a pernicious label perpetuated by those who wish to gain something—money, goods, a clean conscience—from my jeopardization.
Before the close of the meeting, my boss led us in a round of applause for our own hard work and dauntlessness. Though I clapped, something didn’t sit right with me. Unlike medical personnel and emergency responders, we didn’t sign up for potentially life-threatening work. We can’t check the temperature of people entering our store or maintain a safe distance from one another. At the time that memo was read, we were discouraged from wearing masks, because their efficacy against the coronavirus was undetermined. I felt this advice had little to do with pointlessness and more to do with optics. Consumers wouldn’t feel comfortable coming into our store if it looked like the inside of an operating theater.
Cashiers and shelf-stockers and delivery-truck drivers aren’t heroes. They’re victims. To call them heroes is to justify their exploitation. By praising the blue-collar worker’s public service, the progressive consumer is assuaged of her cognitive dissonance. When the world isn’t falling apart, we know the view of us is usually as faceless, throwaway citizens. The wealthy CEO telling his thousands of employees that they are vital, brave, and noble is a manipulative strategy to keep them churning out profits.
Indian Police Force Tourists Who Violate Lockdown To Apologize 500 Times In Writing
This one made me LOL. Violating India’s strict lockdown can lead to a year in prison. Police in one Indian state instead made tourists write, “I did not follow the rules of lockdown. I am very sorry” 500 times. That’s definitely one way to get people to follow shelter-in-place.
It Took a Global Pandemic, But I'm Finally Calling My Mom
COVID-19, as with all terrible situations, has its unique silver linings. One of mine is how frequently I now talk with my parents, sister and brother-in-law, and other relatives. Every day there is some combination of a WhatsApp video chat, exchange of photos and articles, and the occasional ridiculous group-thread forwarded video or meme. Seven weeks in to shelter in place conversation has moved past the previous focus on infection growth rates, coping mechanisms, and how to get groceries, to the more light and mundane. How was work? What did the baby do today? What are you cooking? This article nicely articulates this bright spot during these uncertain times, reminding us all to call our moms.
I realized recently that, even though I’m not physically with my mom, at home with her like she’d prefer, we are speaking more during quarantine than we ever have before. Most days of the week, we’re on FaceTime trading recipes or cooking together, or she’s watching me unbox the latest shipment of baked goods she’s sent to the apartment. Sometimes we are both quiet, going about our routines, comforted just knowing that a person we love is on the other side, healthy and doing their best.
It may have taken the fear induced by a global pandemic, but I think I finally grasp the scope of my mother’s love. I understand the incessant yearning that came from my mother when I moved away—and the kind of heartbreak that comes from not being able to reach out and see me when she wants to. I’m beginning to understand why, whenever I’m home, she clings to me like I’m already gone, like I’m disappearing before her while she’s holding my sleeve.
Fever Dreams - Anthology Volume 1
A collection of short stories written during the time of COVID-19, imagining a hope-filled future reality.
The following stories were written and refined between March 18 and April 8, 2020. They share a common theme, a question really—one that’s been on all our minds since we were told to stay home, stay six feet apart, and wash our hands for twenty seconds. When we, the authors, first asked ourselves and each other this question, we were coping with sadness and fear for the world, worried about our families and wondering what would happen next. It seemed like everyone else felt the same way. So in addition to following a theme of What will life be like after COVID-19?, we challenged each of our stories to bring their readers a little bit of hope. The tales that emerged aren’t overly happy or optimistic—that rarely makes good fiction—yet they remind us that new worlds still await.
Sometimes, hope is made of the mere idea of the future.
Quote I’m thinking about: “Any organism that has evolved to be violent is a member of a species whose other members, on average, have evolved to be just as violent.” - Steven Pinker, The Better Angels of Our Nature