The WSJ’s own Spencer Jakab – Research Analyst Turned Journalist on the Revolution that Wasn’t

Hello Coronado…And Chart Of The Day – Bond Hell

I finally made it to Coronado for the summer.

Not much ever changes here which is what I love.

One thing that has changed this year in the US Markets is the crash in bonds. I have two charts that put it in perspective.

The first…

The second:

The bond markets are screaming this year and it definitely has me scared to take any big risks in the market.

Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors

What we’ve got here is failure to govern!

My buddy Brad Feld who is a mentor of mine and great venture capitalist wrote a new book and I wanted to share it here because so many young investors and founders should be taking the time to build and lead an effective board.

Startup Boards is a comprehensive guide on creating, growing, and leveraging a board of directors written for CEOs, board members, and people seeking board roles.

The first time many founders see the inside of a board room is when they step in to lead their board. But how do boards work? How should they be structured, managed, and leveraged so that startups can grow, avoid pitfalls, and get the best out of their boards? The Authors have collectively served on hundreds of startup and scaleup boards over the past 30 years, attended thousands of board meetings, encountered multiple personalities and situations, and seen the good, bad, and ugly of boards.

The book provides seasoned advice and guidance to CEOs, board members, investors, and anyone aspiring to serve on a board covering a wide range of topics with relevant tips, tactics, and best practices, including:

Board fundamentals such as the board’s purpose, legal characteristics, and roles and functions of board members;

Creating a board including size, composition, roles of VCs and independent directors, what to look for in a director, and how to recruit directors;

Compensating, onboarding, removing directors, and suggestions on building a diverse board;

Preparing for and running board meetings;

The board’s role in transactions including selling a company, buying a company, going public, and going out of business;

Advice for independent and aspiring directors.

Startup Boards draws on the authors’ experience and includes stories from board members, startup founders, executives, and investors. Any CEO, board member, investor, or executive interested in creating an active, involved, and engaged board should read this book—and keep it handy for reference.

Get your copy here and share with CEOs, board members, and aspiring board members.

Goodbye Toronto and Chart Of The Day

As we battle through this bear market, I get so many questions about what I am reading, doing, thinking. I get so much research in my feeds and inbox I figured I will start sharing a chart or two a day that I find interesting.

If you want a great daily (free) look at the world from technicians I recommend The Chart Report which I skim everyday.

As the bear market torches the Nasdaq the hardest, the S&P has quickly melted down the last 3 days as energy joins the selloff. I thought this chart/tweet was interesting:

My US dollars (cash) are not burning a hole in my pocket, but I have the feeling it is time to put some of the overvalued dollars to work and buy some equities.

If this was just a typical selloff in a bull market, I would be allocating good money to the markets right here. Obviously, not the case today, but interesting nonetheless.

Onwards…

I am back in Phoenix (it is freaking hot) and off to Coronado today finally for the summer.

I do my best work from the porch!

My Toronto weekend with Rachel, family and friends was really great.

I met my new ‘great’ nephew Wes…

I had dinner with my best pals (from left – John, Steve, Rob) at House of Chan which we have been going to together for 40 plus years…

And I got my bagels at Bagel World.

One thing that I was surprised to see so much of in Toronto were the Cannabis stores. They are EVERYWHERE and the radio ads were endless. Puff City was most memorable to Rachel and I. Here is my beloved Bagel World store with two cannabis stores in the same little strip mall.

Toronto is not a city I miss like San Diego or New York or Amsterdam or Tel Aviv, but at my age, the friends and family make up for it. Post Covid, I am excited to make it back there more often on my way to and from Europe trips.

Have a great day.

Momentum Monday – Oil up, interest rates up and us dollar up…You Do Not Want To Know …

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

Good morning…

I will get right to it this morning.

Ivanhoff and I toured the markets and do not like what we see.

You can watch/listen right here. I have embedded the YouTube below on my blog:

Here are Ivanhoff’s thoughts:

The past few weeks’ bear market bounce was based on the premise that maybe inflation has peaked or is close to doing so. The most recent CPI numbers from Europe and the US are showing that this line of thinking might be a bit premature.

Most stocks had their usual pre-FOMC selloff last week. Now it remains to be seen if they have their usual post-FOMC bounce. A lot will depend on how the Fed interprets the latest record inflation readings. If they panic and talk about an acceleration in interest rate increases and balance sheet reduction, we might see a further selloff. If everything remains on the current trajectory, there’s a good chance of a short-term bounce in the second part of the week. Overall the trend remains lower. Downtrends typically end in one of the following ways – either panic selling that scares you out or a prolonged sideways choppiness that wears you out.

The best-performing stocks during the latest bear market rally were the ones that held the best year-to-date (oil & gas) and the ones that were hit the worst year-to-date (mostly cloud, Internet, retailers with very high short interest). It seems that move has now ended and the market is working on new trends. One that stood out last week was the weakness in financials. The Treasuries Yield curve has become flat as a pancake and banks don’t make a lot of money in that environment. The market is clearly discounting a recession and inflation due to supply constraints in the energy space. This is also known as stagflation and it is one of the worst things that can happen to an economy.

I remain focused on short-term trade on both the long and short sides. Buying breakouts don’t work more than one day in most case in this environment. Buying pullbacks in strong stocks and shorting rips in weak stocks have a better probability of working out but these are rarely great risk-to-reward setups.

On the blog yesterday I shared the Stanley Druckenmiller interview and I wanted to make sure to share another link here.

With my own high cash position, I am trying to find good long term risk reward ideas and any new ideas I am keeping a much tighter stop. Interest rates are not high enough and stock valuations not low enough in the growth sector for me to do much.

Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.

Sunday Reads and Listens (State of Macro, Enterprise Software and Crypto), A Cash Rant and a Celebrity Story

Happy Sunday.

I had a fun Saturday seeing family and friends in Toronto. Of course, no Toronto stay is complete without multiple trips to Bagel World. I have had the same order since I was six. A poppy twister with cream cheese. The memories are all good and the taste is just the same:

Onwards…

Investors and founders seem to be ignoring the macro even though interest rates continue to push higher along with inflation.

I watched this gem of an interview with Stanley Druckenmiller yesterday that covered the macro and some investing lessons. Do yourself a favor and have a listen.

Crypto is crashing again. I sold a lot along the way up but now that we are down 70-80 percent on most ‘blue chip’ crypto, I can safely say NOT ENOUGH.

I do not have any advice to offer. I treat it like venture capital and I have too much venture capital :) .

The team at A16z has shared a ‘State of Crypto Report‘ and it is a good read. Crypto is only down 30 percent since they published it in May! A16z has billions to invest and you probably do not, so please remember where you sit in the capital and pain food chain.

This Twitter thread from ‘buccocapital’ summarizing Docusign CEO’s explanation of sales rep retention is excellent. Brain drain is real and so are the multiplier effects of it.

That is enough of that…

I have a short cash rant now. Not enough founders are taking it seriously. Many take comfort in blaming the venture capitalists for mood swings. That is fine and dandy but does not solve for the reality.

For the last year as I have shared here my higher allocations to cash, I continue to be told I am stupid because you know ‘inflation’ or told to ‘buy Bitcoin’.

In hindsight peak ‘cash’ or ‘cash is a commodity’ was last March. I know where I was. I was raising money for my SPAC.

Here is a chart of the US dollar the last year:

Cash is becoming scarce and likely scarcer for startups, not just because of the mood swings, interest rate hikes, inflation or global tensions…but because these new macro events create unintended wild new trends that will attract the cash that might have been earmarked for you.

End of cash rant.

Finally, my celebrity story…

Rachel and I are staying at the Four Seasons in Toronto and the weekend started with me running into George Hincapie who is here for a charity ride. Was fun to say hello and introduce Rachel to him. But, that’s not the story.

Last night, we were coming home and saw Arnold Schwarzenegger as we entered the hotel. We ended up riding the elevator together and had a funny short conversation. He had been ‘enjoying’ some red wine at ‘Soto Soto’ a great Toronto Italian restaurant. Arnold is 74 and was much shorter than I had imagined. I think I could take him is what I told Rachel as we left the elevator. She laughed at me. I tell you though, it is a bummer to have never met/seen Arnold until the ripe old age of 74. Getting old is messy.

Have a great Sunday.

The Down Round Reality

Happy Saturday

‘Down Round’ is trending around my feeds this week.

It should be. A lot of young founders and young venture capitalists should be talking about it now. I liken this moment in the private markets to the Wile E. Coyote moments in the cartoon where he is out past the cliff and still spinning his legs …right before the plunge.

My very experienced friend and venture capitalist Brad Feld has been talking about it lately. This TechCrunch piece has a good summary:

Many companies are now facing a Hobson’s choice between trying to maintain the high-flying valuation they’ve established over the last year — no matter the contortions necessary to do it — or conducting a “down round,” a financing that results in a lower valuation. And industry experts suggest the latter often makes more sense.

Brad Feld, who has been a venture capitalist for more than 25 years, is among those who advocate for embracing the down round in cases where a company needs capital and hasn’t yet grown into a previously established valuation. Feld says that he has participated in financing rounds for startups so married to a particular number that they’ve agreed to anything to maintain it. He has also participated in deals where the company and its board agreed to bite the bullet and readjust the company’s valuation downward.

Based on both experiences, he says his “strong belief” that “just doing a clean resetting — at whatever the valuation so that everybody is aligned and dealing with reality — is much, much better for a company.”

He’s not alone. “As a young investor in the early 2000s, I ended up spending a lot of time restructuring cap tables” after the dot com bust, says Frederic Court, founder of the early-stage firm Felix Capital in London. Court says he learned then that “trying to readjust things or maintain an artificially inflated price through structure is a recipe for disaster.”

Here are Brad’s thoughts in a recent blog post.

It had been a long, fantastic up cycle.

This painful and nasty market pullback is not likely over.

What if it is just the beginning is the question great founders and investors should be asking themselves.

Goodbye Amsterdam

Good morning.

I’m off to Toronto to see my mom and sisters and new nephew (I am a great uncle again). Rachel is flying over from New York city as well to hang out.

I had a fantastic week in Amsterdam with my partner Matt seeing a few of our portfolio companies (Secfi and Alpaca).

A lot of my fintech friends were in town for the Money 20/20 show so it was a good excuse for us to brainstorm, share notes, strategize and discuss the macro and markets.

I caught up with some of my LP’s, family offices, allocators and took a bunch of pitches from local entrepreneurs.

Amsterdam has always been a favorite city of mine, but when you get great weather and long summer days, it is unreal.

I walked over 30 miles this week and I was struck by the post COVID vibrance, the cleanliness and the continued increase in quality of the food. I stayed at the Conservatorium hotel for a second time and it is by far the best urban hotel I have ever visited. The lobby, location, rooms, food and vibe are second to none.

Amsterdam is the home of some massive tech companies like Adyen and Elastic so the amount of money in this small city is putting a lot of upward pressure on home prices. It will be interesting to see how the city looks in five years.

I will run through some of the highlights – mostly centered around food – below:

Here I am with Matt and Etoro founder Ronen Assia at a fave Chinese restaurant – Oriental City:

I met with my buddy/fintech investor Sheel of course for Fintech and Falafel and also was joined by Matt and Israeli fintech investor Adi Levanon (who I have not seen in years):

The Israeli food at Martinot was fantastic…menu below:

I finally met Richard Betts in person. Richard is an American living in Amsterdam and building Komos a now very fast growing Tequilla product and brand. I am a small personal investor. I had Richard on my podcast back in 2020 and they have come a long way.

Richard loves food and is a sommelier as well. He took me to for one of the best steaks I have ever eaten at ‘Sagardi’ and we had this incredible bottle of Spanish wine:

Until next time Amsterdam…

Ross Mason of Dig Ventures on Going Down the Crypto/NFT Rabbit Hole

Investing is Hard

Good morning from Amsterdam.

We got a break in the 24 hours of rain this morning so I did a rare run in the awesome Vondelpark. It was hard to take a break from eating.

As I meet with investing friends, LP’s and portfolio founders here, I can’t get away from discussing the obliteration in technology growth but public and private.

Yesterday it was the WSJ piece on Tiger Global that is probably behind a paywall and probably not worth reading.

It turns out writing a check a day into overvalued, illiquid and even liquid late stage growth companies at the end of a boom was not a great market beating strategy.

The headline says ‘Tiger Global is Humbled’.

The one thing they are not is humbled.

I have no idea what it would take to humble these people.

Investing is not hard for them because raising money is not hard for them. Raising money has always been hard for me and these ‘humbled’ people have sure made my job harder than ever.

Onwards…