Not Boring by Packy McCormick

Welcome to the 596 newly Not Boring people who have joined us since Monday! If you haven’t subscribed, join 125,666 smart, curious folks by subscribing here:Hi friends 👋 , Happy Thursday! This really will be the shortest Not Boring in history. You have a Memorial Day Weekend to get to. But since odds are you’ll be in a car for a couple hours at some point in the next few days, I thought it would be the perfect time to listen to my favorite episode of Not Boring Founders yet. Not Boring Founders is a twice-weekly podcast on which I talk to founders — often Not Boring Capital portfolio founders — about what the world looks like if they’re wildly successful, and how they’re making that version of the world a reality. Normally, the episodes are about 30 minutes. For this one, with Replit co-founder and CEO Amjad Masad, we went a full 1 hour 41 minutes, covering a wide range of topics:* Decentralized software creation* How the internet could have been built differently * The history and future of coding (aka when Wordcels rule the code)* Amjad’s story: from Jordan to Codecademy, Facebook, and Replit* Authenticity Alpha * Balancing theory and just doing things * Replit’s hiring spree and talent density* The software economy being built on Replit* Aggressiveness vs. caution in the current marketI hate listening to myself talk, and I listened to this one all the way through. Amjad has quickly become one of my favorite people in tech, and is someone who I genuinely believe will play a big role in shaping the future. I believed that when I wrote about Replit in December, and I believe it even more strongly after this conversation. You can listen to this episode right in this post — just press play above — or wherever you like to listen. All Not Boring Founders episodes are available on Spotify… Apple Podcasts… …or on the podcast player of your choice. If you liked this conversation, we’d really appreciate it if you subscribed and rated.Big thanks our friends at FTX US for sponsoring all of Season 2.For more Not Boring Founders — including links to all Season 2 Episodes with show notes and links — check out this fancy Notion page we made.That’s it! Told you, short and sweet. Not Boring will be off for Memorial Day. Have a great long weekend! Thanks for listening,Packy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.notboring.co

Welcome to the 1,912 newly Not Boring people who have joined us since last Thursday! Join 48,356 smart, curious folks by subscribing here:🎧 To get this essay straight in your ears: listen on Spotify or Apple PodcastsToday’s Not Boring is brought to you by … SecureframeSecureframe helps companies get enterprise ready by streamlining SOC 2 and ISO 27001 compliance. Secureframe allows companies to get compliant within weeks, rather than months and monitors 40+ services, including AWS, GCP, and Azure.Whether you’re an enterprise or a small startup, if you want to sell into enterprises, you’re going to need to be compliant. Secureframe makes the process faster and easier, saving their customers an average of 50% on audit costs and hundreds of hours of time.Secureframe’s team of compliance experts and auditors are happy to help answer any questions and give you an overview of SOC 2 or ISO 27001, even if you don't need it today. Schedule a demo and learn how:Hi friends 👋 ,Happy Thursday!There are a lot of things that confuse me, but maybe none more than prescription drug commercials. People eating ice cream while a voiceover talks about herpes. The Cialis couple in the bathtubs in a field (backstory revealed below). The long list of side effects that seem much worse than whatever disease the advertised drug claims to cure. I’ve been curious about why prescription drug commercials are the way they are forever; challenge was, I don’t know very much about healthcare. I haven’t been to the doctor in years. I’m not the guy to solve this mystery. But I know the guy. Nikhil Krishnan’s twitter profile says it all: “Thinkboi. Making healthcare understandable through memes, shitposts, and novelty products.” He writes the funniest healthcare newsletter out there, approachable for newbies (like me) and deep enough to be valuable to industry professionals. You should subscribe: He’s the perfect guy to explain something as simultaneously ludicrous and technical as prescription drug commercials. Mystery solved. Let’s get to it. Prescription Drug CommercialsA guest post by Nikhil KrishnanAs the Meghan/Harry + Oprah interview aired in March, Americans were shocked. How could the British Royal Family treat them that way?Meanwhile, people in the UK watching the interview were also shocked. At the fact that pharmaceutical companies were advertising during the interview. There are only two countries in the world that allow for direct-to-consumer pharmaceutical advertising: the US and New Zealand. The only other thing these two countries share are people buying a lot of property in New Zealand. But why exactly do pharmaceutical companies advertise to us? Does it work or affect care? What’s the deal with the million side effects they list at the end? I’m here to talk to you about the world of pharma marketing and how it works. But I actually want to get into how pharma marketing is evolving with technology, look at whether consumer advertising is definitively bad, and suggest that we should actually be focusing our scrutiny on physician marketing.Why Do Pharma Companies Market to Consumers?The first question is an obvious one. It’s the one the Brits had. Why do pharma companies market to the consumers when the consumers need to go to the doctor, and the doctor’s going to decide anyway?Pharma advertising has largely two main goals. First is for undiagnosed patients. Increasing general awareness about a disease is going to make you more likely to see a doctor in the first place, which increases the chance of you getting the drug prescribed. For example if you hear a commercial that says, “If you suffer from insomnia, hot sweats, or are having nightmares that you have no idea where your social security card is,” you might suddenly realize that you have those issues and there might be something to fix them. You’ll especially see that for disease areas which are lifestyle hampering or easily self-diagnosed (sexual issues, skin and hair issues, pain, mental health, sleep issues, weight issues, stomach problems, and more). Below is some data on advertising spend by disease area.Fun fact, Claritin was really one of the first significant direct-to-consumer pharma campaigns with their “blue skies” campaign in the mid 1990s. Now allergy meds are all over-the-counter, so the spend has dropped like crazy.For already diagnosed patients, these ads are helpful for patients who are especially active in looking for different treatments for their diseases. This happens a lot in diseases for which there’s high variance in physician recommendations. Areas like cancer or rare diseases want to arm you with information about a drug so you actually ask your doctor if the drug might make sense for your cancer type. As personalized advertising gets more targeted and the therapies themselves target smaller and smaller patient segments, ads for these drugs become a better investment. They have exploded accordingly. What Are the Rules Around Marketing to Consumers?As you can imagine, pharma marketing is murky and there are tons and tons of rules around what you can and can’t do. But I thought I’d just go into a few.Rule 1: The product name has to be memorable for consumers but cannot be even close to confused with any drug that’s already on the market.Quick game, which of these is a drug name and which are Lord of the Ring Characters? Galadriel, Horizant, Zestril, Elendil, Denethor, Afinitor. Be honest, you got less than 50% right.Drug companies want you to remember the name (feat Fort Minor) but also will 100% get sued for trademark issues by other drug companies if you even slightly seem to be riding the coattails of their brand success. Plus, the FDA obviously doesn’t want consumers to get two drugs confused; taking the wrong one can cause serious health issues. That’s why you have these very strange sounding, un-Googlable drug names, advertised directly to consumers.Rule 2: The advertisements need to say the name of the drug (brand and generic), at least one FDA-approved use for the drug, and the most significant risks of the drug.While there are some nuanced differences between print, television, radio, etc. the general gist is that drug manufacturers need to give a “fair and balanced” view of the drug. That means including the major side effects.This is usually the most jarring part of pharma advertising. When an ad airs, it sounds like the drug is just as likely to kill you as it is to help you, and the side effect listing will happen over some lovely couple running through a field of tulips or whatever so it doesn’t actually seem that bad. Non-US residents can see an example here.Rule 3: There are different rules between “product claim” advertisements, “reminder” advertisements, and “help seeking” ads.I was on the subway the other day and I saw what I thought was possibly the worst advertisement I’ve ever seen. Oh you wanna know what this product is? F*** you.This is an example of a “reminder” advertisement. It’s not actually making any claims about what the product does. It’s just reminding people who might already know about the product that it does in fact exist. Really high-risk products will still have to include a “boxed warning” on these ads. These are different from the “product claim” advertisements I’ve been talking about where the drug actually says what it treats and how well it works.So those are two types of pharma ads, but to make it even more confusing there’s a third called “help seeking” ads. These are ads that actually aren’t about a product at all, they’re just talking about symptoms of a condition generally and HAPPEN to have the logo of a drug company on it without talking about the drug itself, and will say things vaguely like, “There is help, ask your doctor today.” These kinds of ads actually fall under the FTC instead of the FDA.Pharma Marketing is EvolvingLike every part of healthcare, eVeRyThinG ChAngEd WiTH TeCh. Here are some examples.* Ads shifting to the point-of-care: Every ecommerce native company salivates at the thought of getting an ad as close to the checkout cart as possible. Pharma is no different. Wouldn’t it be great if they could advertise to you right when you’re about to talk to your doctor? Outcome Health installs TVs in physicians offices to display ads, Phreesia has sponsored content during the check-in process at a doctor’s visit and sends follow up messaging, and Semcasting would use Wi-Fi in physician offices to serve up information about pharma products. Even virtual waiting rooms for telemedicine are getting ads, in case you missed the experience of sadly sitting at a doctor’s office and reading the pamphlets. * Pharma site telemedicine plug-ins: One shift is to bring ads to the point of care, but another is to bring the point-of-care to pharma itself. This happens by adding buttons on the drug brand website that can link you out to a telemedicine consultation in one touch. A person looking at a drug’s website is pretty high intent, so the telemedicine buttons make it easy for you to connect with a doctor to get a prescription written if you want. The physicians are usually part of a separate company unaffiliated with the pharma company, but if you came from the website you’re probably going to request that brand of drug during the visit. * Shifting the marketing to D2C pharmacies: Why do the marketing yourself if you can work with a company that specializes in it? Companies like Ro are partnering with the generic divisions of pharma companies like Greenstone to supply medications to patients exclusively. Thirty Madison partnered with Biohaven to create the Cove brand for their migraine drug, Nurtec. The pharmacies build up the branding, spend on marketing, and acquire customers while the pharma company gets the distribution for their drug. * Patient influencers: Along with the rise of social media, influencers in different disease areas have risen to fame. They’ll typically talk about living with their disease and attract followers that tend to have the disease as well who are looking for tips and a community. Even everyday influencers like the Kardashians are getting in on the pharma action, with the FDA being less than pleased. These influencers are becoming ad channels for pharma companies, with companies like WeGo Health connecting pharma companies to the different influencers.* Memes: I cannot believe this, but pharma companies themselves have now discovered advertising with memes. Below are some examples I’ve seen. Imagine asking the compliance department if you can fire these off lmao. The Nurtec one isn’t even using the meme correctly! What’s doubly funny about this is that they’re still still trying to include the side effect profiles so they comply with the “fair and balanced” view, but as you can imagine, it’s super difficult to do that in 280 characters or an Instagram square format.So... Is Marketing to Consumers Bad?The popular stance to take is “pharma marketing bad”, and it’s frankly not super hard to argue. Why should pharma companies be spending money to induce consumer demand when they could instead take that money and reinvest it into R&D? Just for fun and my love of angry emails, I’ll play a little devil’s advocate.One question is whether these ads are a net negative societal cost. This means that the dollar cost going into these ads (and the value of where they could be otherwise invested) is higher than the benefits they provide. Here’s a paper that found prescriptions for statins, a very important cholesterol lowering drug, dropped when there were less statin ads due to the 2008 political campaign taking up all the ad space. And we want relevant people to take statins; it’s bad if they don’t! Another paper argues that a 10% increase in antidepressants ad spend demonstrated an 0.3% increase in antidepressant prescriptions followed by a decrease in workplace absenteeism (they estimate worth $770M).This is a very hard area to study but in general you can probably argue there are some beneficial effects of ads to get people to take useful drugs. On the flipside, a dollar invested into pharma R&D has gotten steadily much worse over time, dropping to 1.8% return on a dollar invested.So, is it possible that pharma ad investment might have a higher societal benefit than we think? I’m not going to say definitively yes, but I don’t think it’s as black and white as people say.Another question is whether pharma marketing is misleading patients or disrupting the physician visit where the prescription decision is made. The FDA themselves actually ran a survey in 2002 to understand this.* 73% of physicians indicated that their patient in this encounter asked thoughtful questions because of the direct-to-consumer ad exposure.* 91% of physicians reported that the particular patient they recalled did not attempt to influence their treatment in a manner that would have been harmful to the patient* 58% of physicians thought direct-to-consumer ads made patients more involved in their health (“somewhat” + “a great deal”).* On the flip side, 65% believe the ads confuse patients about the relative risks and benefits of prescription drugs and 22% of primary care physicians felt “somewhat” or “very” pressured to write a prescription.So I think there are pros and cons that are more reflective of healthcare in America as a whole, where our ethos is to give patients as much information as possible. This inevitably leads to some tensions with physicians. This is not dissimilar to the tensions that exist with physicians and patients Googling their symptoms before they come for a visit. Not saying either way is right, it’s just an ideological difference on whether we want consumers armed with information when talking to their doctor (even if their information might be biased). The final point I’ll argue is that at least we KNOW when we’re being advertised to if we see a TV commercial. Patients are pretty clear about the motivation of the company doing the advertising. However, in 2016, $20.3B was invested into advertising to physicians. That’s more than 2x the spend going directly to consumers. I would argue this is actually much worse, because consumers are less privy to the fact that their physicians are ALSO influenced by drug company marketing. A disproportionate amount of the conversation focuses on the direct-to-consumer advertising aspect, when physician marketing is more problematic (though tackling one doesn’t mean we can’t also be addressing the other).In Part 2 of this series I’ll talk about the more opaque world of pharma marketing to physicians and how that’s also changing as well. Sign up for Out-Of-Pocket to get it.Just to reiterate: I’m not some sort of pharma shill lol, but just wanted to surface some of the less common viewpoints on this issue. And hopefully you learned a bit more about why some of the ads you see are the way they are.Thinkboi out,Nikhil aka “pharma I’ll help you with your memes, call me”P.S. Everyone definitely remembers that Cialis commercial with two people sitting side-by-side in bathtubs. Turns out that was a decision made last minute on set and I guess they just had two bathtubs laying around??? Now they just roll with it because it’s so iconic.How did you like this week’s Not Boring? Your feedback helps me make this great.Loved | Great | Good | Meh | BadThanks for reading and see you on Monday,Packy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.notboring.co

Explore how the internet transforms interactions into a 'great online game' that impacts our real lives. Discover the parallels between video game mechanics and everyday tasks, especially within remote work. Delve into the art of online networking, where feedback loops and community ties shape unique career paths. Learn about the importance of personal branding in the digital landscape, and how crypto and NFTs redefine ownership for creators. Embrace authenticity and experimentation as keys to becoming an active contributor in online communities.

Welcome to the 225 newly Not Boring people who have joined us since last Thursday (Substack confirmed they dropped some)! Join 46,444 smart, curious folks by subscribing here:Today’s Not Boring, the whole thing, is brought to you by … TrueworkRead on to learn how Truework is building the verified identity layer of the internet.Hi friends 👋 ,Happy Thursday!I met Ryan Sandler, Truework’s CEO, via an introduction from Ramp co-founder and CTO Karim Atiyeh. Aside from running NYC’s fastest ever unicorn, Karim is also a top angel investor. One mutual friend told me that no one is better at identifying strong engineering teams than Karim. So when he told me I needed to look into Truework, my ears perked up. Karim was right. Truework reminds me a lot of Ramp, a Not Boring favorite: Rabois-backed, fintech, Harvard founders, going after an absolutely enormous market led by a too-comfortable incumbent, strong technology chops, and a long-term, worldbuilding strategy starting with a smart wedge.It’s different than Ramp, too. First, it’s not starting with a product that the end-user touches. It built a platform and API used mostly by employers and verifiers. It’s intentionally unsexy. Second, it has a different ambition, which required it to act differently, more quietly, in the beginning. (Until now. That’s why we’re here.) And third, Truework is a privacy-first company. Truework’s story has lessons for founders, investors, anyone who works in regulated industries, and even incumbents. It’s a masterclass in Worldbuilding.This essay is a Sponsored Deep Dive on Truework. For those who are new around here, that means that Truework is paying me to write about their business, but that I would have written about it anyway. You can read more about how I pick and work with partners here.Let’s get to it. Truework: A True Strategy MasterclassThis is a story about strategy. It’s also about privacy, identity, income verification, credit bureaus, breaches, regulations, and owning your data. It’s about worldbuilding and unsexiness. It’s about the ability to fill out a mortgage application simply by clicking “login.” But mostly, it’s about strategy. Truework launched in late 2017 with a vision: empower people to own and control their personal information. That’s one of those “much easier said than done” visions. Others have tried and failed. To succeed, you need a strong wedge, and a master plan. Truework has both, and is executing on one of the most patient and ambitious worldbuilding strategies I’ve seen, backed by Keith Rabois at Founders Fund, Alfred Lin at Sequoia, and Steve Sarracino at Activant. You don’t assemble that board if you’re fucking around. Its master plan starts with employment and income verification, a process that touches all of us. If you want a house, a job, or a car, your lender or employer needs to confirm where you work and what you make. It’s a $5+ billion market with one dominant incumbent, a bunch of small players, and a lot of pen, paper, emails, and faxes. It’s broken, unsecure, and slow. But employment and income verification is a wedge into a much bigger opportunity: to become the verified identity layer for the internet, giving people control of which data they share, and where, and speeding up transactions that require trust. Truework’s journey thus far, and it’s plan for the next half-decade, is a case study on how tech startups can win huge markets controlled by dominant incumbents without using low-end disruption. Let’s study: * Meet Truework* How to Win a Legacy Industry * Regulatory Counter-Positioning* The Verified Identity LayerMeet Truework In 2017, after product managing LinkedIn Salary (a Glassdoor competitor) to launch, Ryan Sandler left LinkedIn and linked up with his Harvard roommate, Ethan Winchell, and fellow LinkedIn-er, engineer Victor Kabdebon, to explore ideas for their own thing. Having gotten interested in data ethics in college, Sandler knew that he wanted to start a company in the data privacy space, but he didn’t know exactly what the idea was. He did know which boxes it needed to check: * Unsexy * Overlooked by Silicon Valley * Lots of data* Large marketOnce they identified spaces that met their criteria, they cold emailed companies to pick their brains, narrowed the list down, and started talking to customers to validate the top ideas. After speaking with mortgage lenders, they chose employment and income verification. Sandler told The Venture Brief they chose the category because of: How overlooked it was, yet such a big market, and so important in the economy. Every time someone gets a loan, apartment, a new job, there’s sensitive information that needs to be verified about them. Most prominently, their income, employment, assets, credit, other pieces of their identity. And consumers have no idea that this information is being verified and being shared with a ton of third parties.Employment and income verification checks all the boxes. * Privacy has been a huge issue, despite the sensitivity of the data. ✅* It’s unsexy. ✅* It’s overlooked by Silicon Valley (quick, name your favorite employment and income verification startup). ✅* There’s a ton of data: the product is all about collecting and sharing data, fast and securely. ✅* It’s a massive market. ✅In 2020, the industry leader did nearly $1.5 billion in revenue, up 51% YoY. Income is one of the best measures for underwriting; verifying that income is the glue that holds lending together. Dodd-Frank, the consumer protection legislation that came out of the housing crash in 2008, even mandates that lenders verify the data before approving a mortgage. Verification of employment (VOE) and income (VOI) is so critical that even after a data breach that exposed over 145 million Americans’ data, Morningstar analyst Brett Horn told CNN, “I think, frankly, it’s not in the interest of the industry or even regulators to shut down [a credit bureau involved in the leak]. They provide an essential service for consumer lending.” Until 2017, the industry and regulators didn’t have much of a choice. Enter Truework. Starting with employment and income verification, Truework is building a digital-first credit bureau that makes it faster for consumers to apply to loans, apartments, jobs, and more, while maintaining privacy. It’s a three-sided network: * Verifiers: Lenders, landlords, employers, and others need to verify your data in order to give you a loan, rental, or job. They’re the payers in the network, paying each time they need to verify information. * Employers: Employment and income data lives, unsurprisingly, in HR and Payroll systems. Truework works directly with companies, and with payroll providers like Gusto, to access that data directly. * Consumers: The people whose data is being accessed and shared are typically overlooked in this network. They often don’t even know that Employers, Verifiers, and credit bureaus are sharing their information behind the scenes. Truework brings Consumers into the loop. Employers provide data to Truework, but Truework never shares that data with Verifiers without digital consent each time the data is shared. That seems like it’s obviously the right move, but it’s not the way it works today. To make the process smooth, fast, and easy for Verifiers, who are the paying customers, Truework has three products that roll up into a one-stop solution for income verification.The bread and butter is the Instant product. This is what lenders and other Verifiers care about most: with the Consumer’s consent, data is returned cleanly and instantly, without any user friction to cause drop-off. Truework has spent the first 3.5 years of its life building up partnerships with companies and HR and Payroll providers like Gusto, Zenefits, and Paylocity to create a database of 35 million employees. It’s already the second-largest network, and it’s growing quickly (100x in the past year alone).Truework recently added Credentials to its waterfall. There are a number of players now attacking this part of the waterfall, including Payroll scraping APIs, and Truework partners with them. This is an important piece of the waterfall, but not a full solution by itself and not as preferred as Instant. Payroll scraping APIs have high drop-off rates (think of the number of times you’ve dropped off when asked to provide your banking credentials in Plaid, and multiply that by how hard it is to remember your payroll system password). That’s why it’s just a fallback for Truework, albeit an important one. For everyone who isn’t covered into those two buckets, Truework has an automated Smart Outreach system backed by a team of employees using proprietary technology to get in contact with HR teams quickly. The difference between the current, fax-heavy process and Truework’s is the difference between dealing with customer service at a bank and at a startup, plus a lot of automation and machine learning to route thousands of requests per day to the right person at hundreds of thousands of HR departments.The magic of this approach is that Truework is the only one stop solution for Verifiers. They realized early on that until they have all of the data on one network, they needed to become an aggregator, not in the Thompsonian sense, but in the more traditional sense: aggregate access to the data, whether first-party or third-party, via a single, easy-to-use access point in one place. Because of that, Truework is able to verify any applicant, through the waterfall described above: Instant, then Credentials, then Smart Outreach. In order to make sure they have complete coverage, they even work with other credit bureaus and payroll scraper APIs on the backend to fill in gaps. The one-stop approach is working. Truework now works with over 15,000 SMB lenders using its self-serve product, and the largest mortgage providers in the country now use Truework’s API.But for Truework to hit its massive vision, it’s going to need to grow its Instant network from 35 million people to over 100 million. To do that, it’s going to need to transform the credit bureau market itself. How to Win a Legacy IndustrySome startups create new markets. Others come into established markets and compete with entrenched incumbents. Often, they do it via low-end disruption: find an overserved segment of the market, build a pared down, good enough, cheaper product, and then move upmarket. Truework is competing in a legacy market without low-end disruption, by building a better, consumer-first experience and playing the long game.  To date, the traditional credit bureaus have reigned supreme in identity, including the employment and income verification space. The largest player still covers 80-100 million people compared with Truework’s 35 million. These credit bureaus are so entrenched in verticals like identity that even after multiple massive data breaches, nothing changed. The major credit bureaus almost seem like quasi-governmental institutions, beyond reproach. (That said, the Biden Administration is contemplating creating a governmental credit reporting agency to compete with, and potentially replace, the existing big three - but it will be an uphill battle.) That’s why no one’s been able to take them head-on, and why Truework’s market checked the “overlooked by Silicon Valley” bucket. It’s why payroll scraper APIs try to go around the credit bureaus instead of competing directly. But Truework is going head-to-head. This is where this becomes a story about strategy. Start with the why now. What’s changed? First, technology. On the Employer side, HR and Payroll platforms recently launched open APIs that make it easy for employers to connect data with Truework. On the Verifier side, more and more lending is going digital, with companies like Roostify, Blend, Better, SoFi, Rocket Mortgage taking a greater share of the market. That created an opening for a tech-first solution like Truework that connects the two sides seamlessly, securely, and instantly. Credit bureaus, on the other hand, are not known for the quality of their APIs. Second, privacy. Since the Cambridge Analytica scandal, online privacy has become a louder part of the global conversation. Europe passed GDPR and California passed CCPA. Both regulations require consent before sharing employee data. When hackers breached one of the major credit bureaus in 2017, they shone a light on the previously shadowy verification industry, and consumers didn’t love what they saw. It’s a tough time to be a company that shares data without consent. But privacy is one of those things that people say they care about without opening up their wallets to prove it. The startup graveyard is littered with companies whose main value prop was privacy. Instead, Truework needed to compete by building a better product with internet-native distribution that also happened to have privacy baked in. It needed to play the long game. It needed to be a Worldbuilder. In Two Ways to Predict the Future, I wrote that there are two ways that companies go after big markets. “Shotcallers find an obviously big market, guarantee that they’re going to transform it, and try to spend their way into making that happen.” Worldbuilders, on the other hand: * Predict something non-obvious about the way the world is moving before others see it and before the market is ready for their ultimate vision.* Create a wedge into the market and leverage it into a much larger opportunity. The public often ridicules or dismisses the initial wedge product. * They timestamp their vision, whether in public announcements or confidential documents. Obvious Worldbuilders include Musk and Bezos. This video is classic Worldbuilder:* Predict something non-obvious: Commerce on the internet is going to be massive. * Create a wedge: Books were not the biggest category, but they benefited the most from the internet’s capabilities, and were the right category in which to build the muscle.* Timestamp the vision: Bezos never said books are the end-all-be-all. He said that they were the “first and best product” to sell online. Truework is a Worldbuilder, too. * Predict something non-obvious: As HR systems and lending move online, there’s an opportunity to build a privacy-first identity layer across the internet. * Create a wedge: Employment and income verification is a vertical of identity that everyone needs that has the least digital competition; it allows Truework to build up its most important asset: data. * Timestamp the vision: The team shared with me a 10-year vision that they set out to accomplish in 2017. They’re executing on it almost perfectly so far, and have big ambitions for the next six years.Truework found a market with a non-technical incumbent with an approach that was non-obvious to other startups. It had to lay two foundational pieces down before executing on its master plan. Its first decision, which is common among startups, was to be product-and-engineering first. The incumbent had a distribution advantage -- it worked with most of the large enterprise companies -- so Truework had to win on product. It built a team of top product, engineering, security, and marketing talent from Airbnb, Coinbase, Stripe, Gusto, LinkedIn, Patreon, and Facebook. From that base, Truework has executed against a master plan to grow its Instant network. Get more Verifiers on the platform to attract more Employers, use more employers to attract more Verifiers, use those Verifiers to attract HR and Payroll Platforms, and so on. It’s Truework’s Flywheel, and its network effect.It starts with SEO. SEOBeing technical and internet-native gave Truework the seeds of a distribution edge, as well. Search Engine Optimization (SEO) for employment and income verification was wide open. So, as Sandler told Harry Stebbings, “When you look at how we built our product, it was really with SEO in mind rather than building a product and then trying to send traffic to it, if that makes sense.” When they entered the market, thousands of relevant search terms were wide open.There are two types of search terms: head terms and tail terms. For employment and income verification, the head term, the thing that most people search for, is “employment verification.” Go search it. It’s littered with ads, and Truework doesn’t even try to compete there. Instead, it focused on the tail terms, which, like it sounds, are the long tail of search terms related to the main topic. In Truework’s case, that’s “[company] employment verification” or “employment verification [company].” Try it. Go search “employment verification [your company].” Chances are, Truework comes up first. That’s free marketing, and for the first three years, Truework didn’t spend any money on paid acquisition. 95% of submissions came from organic channels. To compete, any incumbent would need to re-architect its system for tail SEO and play catchup to Truework’s 3+ year head-start. It’s too late. This advantage will compound. Mid-MarketWith the early product and SEO infrastructure built, Truework picked a wedge within a wedge to kickstart the market: it decided to go after the HR departments at mid-market companies. Sandler told Stebbings:People often want to go start at the smallest of SMBs and work their way up. But what a really small, 10 person company, 50 person company, what they want is very different than an enterprise. So, what a mid-market company wants, a company with 500, 2,000 employees, is much more similar to what an enterprise wants. And the sales cycle is much faster. There may be less security requirements. You can actually close these quite large companies in the early days of your company.Plus, most enterprises already worked with the big incumbent, while most mid-market companies still used manual processes. They had a greater need. As Verifiers needed to verify employees at mid-market companies, they needed to use Truework, bringing demand onto the network. Verify Any EmployeeBy 2018, Truework was getting traction in the mid-market. It raised a $2.9 million seed round from Miami CEO Keith Rabois (then a partner at Khosla Ventures). Rabois laid out a framework in 2017 that Truework followed:While the incumbent dominated the enterprise portion of the market, the overall market was still largely fragmented. There was no one place to go to verify any employee. The incumbent only really verified employees on its network. There were 10-20 smaller, industry-specific players. Truework needed to be the one place where a Verifier could verify any employee, something that’s only feasible for a tech-first company that can easily plug into other systems and automate manual processes. Still, working with third-parties and automated-but-still-manual processes was lower margin and slower than getting employees on network. Luckily, attracting Verifiers with a one-stop solution let Truework leg up into the next part of its plan. Embed into HR PlatformsTruework started by selling to mid-market companies. It went door-to-door, signing up one company at a time. 1,000 employees here, 4,500 employees there. It grew quickly enough to raise $12 million from Sequoia’s Alfred Lin (who had a pretty good day on December 9th last year when two of his companies, Airbnb and DoorDash IPO’d on the same day). It was time for the next step: exclusive distribution through HR and Payroll platforms. HR and Payroll platforms, like ADP, Gusto, Paylocity, Zenefits, Bamboo HR, and more, each work with thousands of Employers and millions of Consumers. They want to work with the employment verification companies that work with the most Verifiers, partly because they get a small cut of every verification transaction, but most importantly, they want to work with consumer-first partners because their own customers are HR professionals tasked with protecting their employees. As Truework used mid-market sales and SEO to attract more Verifiers, HR and Payroll platforms signed up. In April, Truework announced an exclusive partnership with Gusto, bringing over 100,000 small businesses and their employees into Truework’s network in the click of a Docusign. Gusto chose Truework because the two companies share the belief that employees should control their own data, and because it makes their customers’ -- Employers’ -- lives easier. With Gusto and other payroll platforms onboard, Truework now has 35 million employees in its network, up from 300 thousand just twelve months ago. Importantly, because partnerships like the one with Gusto are exclusive, Gusto will only work with Truework, and not its competitors. Verifier API More Verifiers meant more Employers, either directly or via HR and Payroll Platforms. More Employers meant bigger Verifiers. In 2020, Truework achieved a few big milestones: * SOC2 and ISO20071 Certified. As I wrote about in Secureframe, SOC2 and ISO20071 are a prerequisite for working with enterprise companies.  * Launch an API. In March 2020, Truework launched a Verifier API that lets big lenders put Truework verification right in their workflows and to easily handle large volumes of verifications. * Series B Led by Activant. Truework raised a $30 million Series B, led by Activant, a B2B2C-focused venture firm, which fits perfectly with Truework’s B2B2C strategy. Just a little over three years in, Truework has laddered up from one-off Employers and small, self-serve Verifiers to work with some of the largest lenders and HR platforms in the country. It has over 35 million employees in-network, ready to be verified instantly, covers all out-of-network employees, and works with 86k users across 15k financial institutions to verify employment and income information. As it grows and unlocks new partnerships, it’s building up a secure database of employee information that puts employees in control, and which it can use to expand into other parts of the verified identity stack. That’s a hell of a start, the result of a smart strategy executed well. But we haven’t even gotten to the part that I find to be the most fascinating.  The most brilliant and unique weapon in Truework’s arsenal is its use of regulation. Regulatory Counter-PositioningOff the top of your head, how many startups can you think of that send regulators letters asking them to strengthen regulation in their industry?Some crypto startups, like Coinbase, work with regulators because many institutions need more regulatory clarity before investing. Crowdfunding platforms, like Republic, embrace regulators and work with them to help implement more common sense regulation, of which they are the beneficiaries. Big incumbents, like Facebook, often pretend that they don’t want to be overly regulated, but as Ben Thompson has pointed out many times, regulation typically favors the big, rich incumbent at the expense of the startup. Zuck is Brer Rabbit: pleading not to be thrown into the regulatory briar patch so that he ends up there. But for most startups, the dominant model over the past decade has looked something like Uber’s under Travis Kalanick: ask for forgiveness, not permission. Move fast and break things. Startups have huge growth goals and limited resources and regulation can slow them down and waste money.That’s why it was notable when Truework wrote a letter to the Consumer Financial Protection Bureau asking it to hold Truework and its competitors to higher standards as it makes rules related to Dodd-Frank Section 1033.  Why would they do that? Its biggest competitor has so much more money, and so many more lawyers. You’d think that more regulation would favor the incumbent. It typically does. In 7 Powers, Hamilton Helmer writes about regulatory capture as one of the ways to achieve the Cornered Resource power. Flo Crivello calls it, “A particularly vicious form of cornered resource,” which is fair, because it’s what happens when a regulatory body is corrupted to serve the interest of the group it’s supposed to be regulating. When regulatory capture occurs, it’s typically the incumbents who benefit, because they have the advantage of the time in market, money, and lobbying power it takes to flip regulators.  But in this case, because Truework’s interests are aligned with the Consumers they built the company to protect, and because Truework is nimble enough to build product to fit any new regulation, regulators can help Truework by helping consumers! Check out the recommendations Truework is making in its letter to the CPFB: In case you don’t want to read it, Truework is arguing that consumers should have meaningful control over their data and that trust is a precondition to consumers wanting to exercise that control. The beauty is in the details though. Truework is recommending common sense things that would clearly be better for consumers, and that are so much easier for a tech company to implement than, say, a large, non-technical incumbent. Aside from the technical stuff, its recommendations fly in the face of the way that credit bureaus work today: use-case specific instead of broad sweeping access, accurate data and the obligation to correct inaccurate data, direct responsibility for API functionality and security. This isn’t regulatory capture. It’s Regulatory Counter-Positioning. It’s Jiu Jitsu. It reminds me of the scene in ~half of 80s movies in which the 5th grader bullies the 3rd grader, but then the 3rd grader calls in his much bigger 8th grade brother. Or something like this:That’s the best part of building a business that’s truly aligned with consumers’ in a space in which that hasn’t always been the case. You can do well by doing good, and tie your competitors in knots in the process. So where are we? 3.5 years in, Truework has executed on every step of the plan it laid out in 2017, on schedule:* It’s legged up on each side of the three-sided network, and has reached enough scale that regulators now have to take it seriously. * If the CPFB takes its recommendations, it will be in a particularly good position relative to its biggest competitor. * It’s doing all of this while creating an employment and income verification product with a Customer Satisfaction (CSAT) score of 90+. * Plus, it’s sneaking privacy into a product experience that is good enough to stand on its own, and making headway towards letting consumers control their own data. It’s well on its way towards building the verified identity layer for the internet.The Verified Identity LayerThe thing you need to understand about great API-first companies is this: they don’t seem very sexy at all, until they do. The best ones are often Worldbuilders. They start with a small, non-obvious wedge, and work their way towards a bold long-term vision. For Truework, that bold long-term vision is to empower people to own and control their information. As we’ve learned at this point, that’s harder than it sounds. The incumbents make a lot of money owning and controlling that information currently. Given Truework’s consistent execution against its 2017 10-year plan, though, I wouldn’t bet against them. So what does that master plan look like going forward? This year, Truework is focused on “broadening the waterfall.” That’s right...That means more ways to verify from the API to increase the coverage of instant requests. That will bring more big Verifiers onto the system. Meanwhile, it will continue to add new HR and Payroll platform partners and Employers, and continue to improve the consumer experience and gain their trust. All of this is in service of the larger goal of winning identity, which Truework believes takes three things: * Source of Truth Data: first-party data on 100 million or more Consumers* Large Network of Verifiers: Truework needs to be a trusted source for anyone giving mortgages, loans, or jobs. * Consumer Experience and Trust: While Consumers have thus far played a more passive role, approving when and with whom their data is shared, the next parts of the plan are more Consumer-focused. Next year, the Consumer is front and center as Truework goes after more of the $100+ billion Identity Verification market. Employment and income verification is important for large, infrequent transactions like mortgages and apartment rentals, but identity verification more broadly, including credit, assets, education, criminal record, driving history, address history, and SSN/DOB, is used in all sorts of places: marketplaces, ecommerce, payments, gig economy onboarding, bank account applications, and more. The average Consumer has their identity verified 300 times per year.Starting with smaller transactions, like rentals or account creation, anyone verified on Truework will be able to send a Truework profile instead of paperwork or a credit pull. By 2023, you’ll be able to Login with True on any site that requires verified identity and information, and can choose which information to share with whom. You can create fake Facebook profiles or burner Gmail addresses; your True identity will have all of the verified information, bridging your online and offline identities. Renting an Airbnb? Prove that you are who you say you are. Applying for a job. Log into Indeed with True. Angel investing? Show your accreditation by logging into AngelList with True. Want to trade crypto? Never take another picture of your ID, and then retake it when it inevitably doesn’t work, ever again. The possibilities are endless, because many of the experiences that can be built on top of the True API wouldn’t be possible without it. Stripe, Twilio, Plaid, Agora, and the rest of the API-first companies enabled previously impossible or prohibitively expensive use cases. New technology originated lending classes like Buy Now, Pay Later (BNPL). True will make it fast and cheap to verify that you are who you say you are, expanding the possibilities for existing lending classes and making entirely new ones possible. As Consumers take back ownership of their data, they may even be able to sell it for money or trade it for access or experiences themselves. That’s what Facebook, Google, the credit bureaus, and anyone who “owns” your data today already do. Why not you?How did you like this week’s Not Boring? Your feedback helps me make this great.Loved | Great | Good | Meh | BadThanks for reading and see you on Monday,Packy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.notboring.co

Welcome to the ??? newly Not Boring people who have joined us since last Monday - on Thursday, Substack suddenly cut my subscriber count by ~1,200 and I’m not sure why. But onwards: join 46,123 smart, curious folks by subscribing here:🎧 To get this essay straight in your ears: listen on Spotifyor Apple PodcastsToday’s Not Boring is presented by… MasterworksIn January I wrote about Masterworks. As a refresher, Masterworks is the first and only platform that lets regular folks (like me) invest in blue-chip artworks at a fraction of the entry price. At the time I had invested in three Masterworks offerings. Since then I have added three more pieces to my portfolio: a Haring, a Bradford, and another Basquiat. Fancy. Not only do I think it’s prudent to have real asset exposure to hedge against inflation (thanks J Pow 😉 ), but I also love learning about these artists and their markets, and Masterworks brings some intense data analysis to the table.Art can make sense in everyone’s portfolio. Contemporary art returned 13.6% from 1995-2020 with a low loss rate and virtually no correlation to equities. Plus, unlike other collectables or even BTC, supply is constantly decreasing. It’s kind of like ETH … ultrasound art 🦇🔊I teamed up with Masterworks to let you skip their 11,500 person waitlist. Try it.**See important infoHi friends 👋 ,Happy Monday! Mario Gabriele is one of my favorite writers. Read the opening paragraphs in this essay and you’ll understand why. He somehow makes business writing beautiful. Between his briefings, Startup Ideas, and The S-1 Club, Mario’s The Generalist is can’t miss content. If you like Not Boring, you’ll like The Generalist. Aside from a general business nerdiness, Mario and I share a few things in common:* A fascination with conglomerates. * Large Indian readerships. This week, with India’s COVID crisis continuing to escalate to frightening heights, we decided to team up to explore the past, present, and future of one of India’s most beloved companies, and one of the leaders in the fight against COVID: Tata Group.In addition to bringing awareness, Mario and I have both made donations to organizations aiding India's fight against the coronavirus. We'd encourage those of you that can to do the same. Both New York Magazine and the New York Times have lists of reputable NGOs putting funds to good use. If you’re in India, my friends at Pesto put together a website with resources including ICU beds and oxygen supplies.Let’s get to it. Transforming TataA message to all the tycoons out there: beware of your grandchild. Though the Bible advances the parable of the prodigal son — the wasteful offspring that fritters a father’s money — statistically, it is the third generation that marks the end of a family fortune. One American study indicated that 90% of wealth evaporates by that point, the casualty of frivolous investments, generational dilution, and dwindling determination. Even the colossal wealth of Cornelius Vanderbilt — worth $227 billion when adjusted for inflation, giving him a cool $96 billion edge over Bezos — dissolved in his expanding gene pool. All of which is to say: that Tata is here at all is remarkable. Four generations and more than 150 years after its founding, Tata is not only still standing but essential. Just this week, the company aided in India’s coronavirus response, agreeing to contribute 800 tonnes of oxygen per day to health facilities in need. Far from an isolated example, such civic-mindedness is at the heart of Tata’s history, no doubt part of the reason one Twitter commentator referred to it as India’s “parallel government.” Over a century and a half, the conglomerate has supported (and commercialized) Indian life, unlike any other company. In the process, Tata has constructed a dizzying tessellate of over 100 businesses, from automobiles to apparel, steel production to tea. And yet, there’s the sense that despite its durability, Tata’s may be in decline. With infighting beleaguering the founding families and legacy businesses struggling to adapt to a digital world, Tata will need to work hard to ensure it remains a potent force. To do so, the company will need to shed legacy baggage, embrace the opportunities the tech sector presents, and lean into the essence of what makes Tata an enduring brand. In today’s piece, we’ll explore: * Tata’s rich history, beginning with the opium trade* The complexion of a messy conglomerate* The necessary moves to perpetuate the dynastyHistoryThe story of Tata Group is the story of modern India. The conglomerate’s creation and ascent both influenced and responded to seismic changes in the country beginning under colonialist rule, adapting under socialist independence, and flourishing in an open economy. It all begins in 1822 in a city on India’s Western Coast. Nusserwanji: Zoroastrianism and family businessEvery company is defined by its culture. On that count, Tata can lay claim to an especially ancient heritage: the religion of Zoroastrianism. Founded in the 6th century BC, Zoroastrianism is defined by a stark delineation between good and evil, and a gentler gospel of kindness. As noted in the excellent The Tata Group book, adherents believe to attain happiness you must help others, and that salvation is achieved by “Humata, Hukhta, Hvarshta” or “good thoughts, good words, good deeds.” Hundreds of years later, those three words were inscribed on the mausoleum of Tata’s Chairman, emphasizing how Tata’s civic and philanthropic orientation is inextricably linked with the religion. Nusserwanji Tata must have been something of a rebel. Born in 1822 in India’s Gujarat region, Nusserwanji was the first family member in over fifteen generations to eschew the call of Zoroastrian priesthood and enter the private sector. He learned the ropes by training with a Hindu banker before setting out on his own, founding an export firm with a focus on opium, and other less scandalous commodities. As the firm grew, Nusserwanji began to rely more on his son, Jamsetji, bringing him into the fold in 1859. Educated at the English-influenced Elphinstone College, Jamsetji had the privilege of a more global worldview than his father, fostered by business trips to London and Manchester. The latter city, seething with industrial energy, was believed to have made a particularly strong impact, with the young Jamsetji simultaneously enraptured by Manchester’s industry and disgusted by the “medieval vision of hell” in which workers toiled. But amidst the smoke and chaos, he saw promise. It was time to build a “Manchester in the East” with a humanity that would put India’s colonists to shame.  Jamsetji: Founding Tata GroupIn 1868, Jamsetji officially founded Tata Group, beginning with an investment of 21,000 rupees. Over the succeeding 36 years, he would establish a generational business and set in motion a series of ambitious infrastructure plans, earning the nickname of “the man who saw tomorrow.” That growth would be achieved while treating workers with uncommon dignity and respect. It started with the acquisition of a decrepit oil mill. Jamsetji promptly transformed it into a cotton production facility before selling for a quick profit. (Let’s get that IRR, Jamsetji.) Aided by a fact-finding trip to Lancashire and the recruitment of English specialists, Jamsetji parlayed that win into the creation of Empress Mills — a new cotton facility that drew on global knowledge. Two additional mills followed. Those four cotton mills set the financial groundwork for Tata’s later expansion, as well as pioneering the company’s legendary culture and care for its employees. Among other innovations, Jamsetji took pains to ensure workers had access to filtered water, sanitary facilities, low-cost grain, credit, a library, a pension fund, accident compensation, and much more. All of this at a time when the notion of managerial benevolence was effectively non-existent among Western industrialists. Decades later Upton Sinclair’s The Jungle would show American manufacturing was a theatre of callous peril.Jamsetji was savvy enough to realize that these investments also paid off, aiding recruitment and drastically lowering attrition. It was not uncommon for absenteeism to reach 20% in textile production; Tata’s was essentially 0%. As Jamsetji’s wealth grew, his sights widened. With travel to both Europe and Japan sharpening his worldview, he became increasingly nationalistic. The second half of his career focused on four critical initiatives designed to elevate his homeland:  * Patriating the manufacturing of iron and steel* Empowering science and technological education in India* Growing the national tourism industry through the construction of hotels* Bringing low-cost, safe electrical power to his beloved city of BombayJamsetji saw the first two of these as essential if India was to gain independence, noting: Freedom without the strength to support it and, if need be, defend it, would be a cruel delusion. And the strength to defend freedom can itself only come from widespread industrialization and the infusion of modern science and technology into the country’s economic life. Of these four goals, Jamsetji would live to see only one brought to full fruition. In 1903, he opened the iconic Taj Hotel in Bombay. Not only did it feature air conditioning, a rarity at that time, but it was the first building in the city to boast electric lighting. Jamsetji would make serious strides with regard to his other goals, but he would need his son Dorabji to turn them into a reality. In 1904, at the age of 65, Jamsetji passed away. Among his last words were these, directed to a family member:  Do not let things slide. Go on doing my work and increasing it, but if you cannot, do not lose what we have already done.Dorabji: Manifesting the visionA keen sportsman in his youth who began his career as a journalist, Dorabji stepped into his father’s shoes after his death and in a blockbuster three-year span brought Jamsetji’s dreams to fruition, launching a hydroelectric power division, a best-in-class technological university, and a steel business. In 1910, more than three decades after his father had been bewitched by a visit to Niagara Falls, Dorabji launched the Tata Hydroelectric Company, bringing clean energy to Bombay. It represented a titanic achievement that was, once again, aided by knowhow from overseas. From The Tata Group: An army of 7,000 workers installed pipelines from Germany, waterwheels from Switzerland, generators from America and cables from England on the steepest slopes and roughest terrains of Lonavala and Khandala. Showing frankly ludicrous foresight, Dorabji recognized (as his father had) the dangerous climatic potential of Bombay’s smoke-spewing coal-powered textile mills, taking the time to educate local owners and offering to buy back the steam engines they used to help make a transition to sustainable power. Dorabji followed up that success with the 1911 opening of The Indian Institute of Science (IISc). Bringing the project to fruition required significant political savvy with first Jamsetji and then Dorabji lobbying the office of the British Raj over the years. Since its inception, IISc has become one of India’s finest institutes of higher learning, training a steady stream of scientists and technologists. The final piece of Jamsetji’s dream arrived in 1912 and in many ways, it has proven to be the most enduring: The Tata Iron and Steel Company (TISCO). That Dorabji succeeded at all was proof of a political shift in India. Rebutted by British investors, Tata sought to finance the project in India, floating shares in 1907. With the Swadeshi movement — the push for self-rule — growing, Tata’s offering was met with huge interest. Investors hounded management and even showed up at the company’s headquarters to try and make their case. Within a matter of weeks, the requisite capital was secured — the largest raise of its kind in India, in the industrial sector. Beyond executing Jamsetji’s wishes, Dorabji also added to the Tata empire, starting a cement manufacturing division, a construction business, a life insurance line, as well as making forays into consumer staples like sugar and toiletries. Not all of these extensions would last; with World War I artificially inflating the demand for many of Tata’s industrial products. The company’s financial state reached such tenuous levels that Dorabji had to put up his personal capital (and his wife’s jewelry) to secure the loan that would save TISCO from dissolution. That maneuver — a show of impressive dedication and a willingness to take risks — has been referred to as “the finest hour of Dorabji’s leadership.” JRD: Expansion and decentralizationJehangir Ratanji Dadabhoy, better known as JRD, was a cosmopolitan man. Born in Paris to a French mother and Indian father, he was educated in the French capital, London, Tokyo, and Bombay. Fittingly, he boasted the elegance and good looks of a matinee idol, sporting a refined moustache for much of his life. As his name suggests, JRD was a member of the Tata family, but he wasn’t a direct descendant of Jamsetji. Rather he was a cousin-once-removed, chosen to step into a leadership position because of the relative dearth of available grandchildren (Dorabji had no children, his brother adopted one), his notable intellect, and a strength of character that brought to mind Jamsetji himself. Throughout his life, JRD would prove to be someone that played by the rules when it mattered — he was famous for ensuring Tata employees never took bribes — but was willing to push the boundaries.In 1938, after an interregnum in which a cousin presided over the business, JRD ascended to Tata Group’s hot seat. When he arrived, the conglomerate managed 14 businesses; by the time he left, there would be 95. Critical additions included: * 1939, Tata Chemicals. * 1945, Tata Engineering and Locomotive Company (TELCO). * 1948, Air India. * 1949, National Radio and Engineering Company (NELCO). * 1952, Lakmé, a cosmetics business. * 1954, Voltas, an air conditioning business. * 1960, Tata Exports. * 1963, Tata Tea, grown through the acquisition of Finlay tea. * 1968, Tata Consulting Services (TCS), the basis for the now-dominant tech practice.These were just the tip of the iceberg, of course. Dozens of others — from palm oil to precision machinery — peppered JRD’s period of innovation. Just as impressively, this growth was managed during a period of extreme political instability and change as India regained its independence and responded to the demands of different political parties. For example, under Nehru, both Air India and Tata’s life insurance business were nationalized. Losing control of the former was a particular tragedy for JRD who had a love for aviation that traced back to his father’s friendship with Louis Blériot, the first man to fly across the English channel. JRD was actually the first person to receive a pilot’s license in India. (JRD also loved fast cars; he met his wife when got caught for racing his Bugatti down a Bombay boulevard and needed a lawyer. The lawyer’s daughter became his betrothed.)But Nehru giveth as well as taketh away. After banning non-essential imports, the Indian government found itself pressured by a surprising group: “the elite women of Delhi.” Without a native cosmetics supplier, women were left without make-up; to amend the problem, Nehru asked Tata to enter the space, leading to the creation of Lakmé. Indira Gandhi’s tenure required yet another adjustment with legislation forcing each of Tata’s subsidiaries to operate independently, governed by a board of directors. Though there were plenty of nuances to the change, the upshot was profound: the parent company couldn’t directly control its component pieces. Thankfully, JRD didn’t need to rule by force. His natural magnetism and the steps he had already taken to push more responsibility down to individual companies, advancing a decentralized approach, was repaid. Even with Gandhi’s new rules, the conglomerate’s strategy was still defined at the top, with individual chiefs happy to follow JRD’s lead. At the age of 87, JRD finally stepped down from his role as Chairman. He had turned Tata from a strong national player into the country’s defining enterprise. He turned to a younger face to take the company forward. Ratan: Collaboration and controlLike JRD, Ratan Tata had spent some of his formative years abroad, completing high school at Riverdale Country in New York. After graduating, he completed a degree in architecture from Cornell — a qualification that some suggested encapsulated Ratan’s well-roundedness: he was methodical, certainly, but creative, too. After illustrating his business acumen in turning around NELCO, Tata’s radio division, Ratan was tapped by JRD to take his place. In 1991, he officially became Tata’s chairman, a position he held until 2012 (and again as interim chair between 2016 and 2017). Tata’s current incarnation owes much to his vision. During his tenure, Ratan focused on two critical initiatives: more tightly controlling the conglomerate, and positioning Tata as a global collaborator and dealmaker. What looks like a masterful move in one context can look limiting in another. If JRD showed dexterity in pursuing a decentralized approach under socialist rule, his successor was just as wise to reverse the strategy in later years. Operating in an open, global economic market, Ratan concluded that Tata Group needed to own a greater share in its constituent companies and foster closer collaboration. Between 1992 and 2002, Ratan meaningfully increased the parent company’s stake in key units, growing its holding in Tata Steel from 8% to 26% and expanding a 17% position in Tata Motors to 32%. At the same time, Ratan instituted stronger central governance, codifying core values, and setting up both a policy board and quality management group. This final initiative ensured best practices were distributed between different units, in addition to facilitating meetings between leaders. As noted in The Tata Group: Meetings across group companies marked the change in the Tata Group culture from independent identities to a unified Tata family.While Ratan clearly saw an open market as something of a threat, he was quick to recognize it as an opportunity, too. While Ratan sunsetted or sold under-performing business lines (including Lakmé) he also expanded Tata’s purview through partnerships.Just as Tencent now serves as the ferryman to China (think Roblox with Luobulesi), Tata has often played the same role with India, collaborating with Daimler to manufacture Mercedes-Benz in the country, delivering insurance alongside behemoth AIG, and partnering with Starbucks to offer coffee from Kargil to Kochi. (You: Did they just look up the northernmost and southernmost Indian towns with a hard “C” sound? Us, intellectuals: Tumhari himmat kaise hui?)Ratan also bolstered Tata’s existing positions through M&A. Among his key purchases: * 2000, Tetley Group for $450 million* 2004, a unit of Daewoo for $102 million* 2005, NatSteel, Singapore’s largest steel provider, for $365 million* 2006, the Ritz-Carlton in Boston for $170 million* 2007, Cronus, a steelmaker, for $11.3 billion* 2008, Jaguar and Land Rover for $2.3 billion* 2008, General Chemical Industrial Products for $1 billionStill, a key figure, Ratan’s reign served to consolidate Tata’s operations and modernize it. Immediately followed by Cyrus Mistry (more below), Ratan found a truer success in Natarajan Chandrasekaran (“Chandra”). For an empire so steeped in the tenets of Zoroastrianism, it was a significant appointment: Chandra was the first non-Parsi executive to take the helm. Tata Today“You would not probably look at the Tata Group as a modern conglomerate. The most important [thing] is to define themselves.”-- Anonymous source close to Tata Group, Financial Times, April 2021Today, despite its first outside Chairman, Tata’s corporate structure reflects its history. Ordered chaos. Juxtaposition of rich and poor. Proud legacy transitioning to tech-led future. Layers of new structures built on top of old. It looks more like India itself than like other conglomerates. Most of the world’s largest conglomerates are structured in a couple of ways: * Publicly traded parent company with wholly-owned subsidiaries or investments. (Tencent, Reliance, Alibaba, Berkshire Hathaway, Constellation)* Private all the way down. (Koch)Tata is built different. First, the parent company, Tata Sons, is a Private Limited Company. It has just 28 shareholders, who fall into four buckets: Tata Trusts, Mistry Family (via Shapoorji Pallonji Group), Individuals (mainly Tata family members), and Subsidiaries. Tata is unique among multi-hundred billion dollar companies in that it is majority owned by charitable trusts. Corporate social responsibility is a buzzphrase for most companies; for Tata, it’s structural. That structure has allowed the company to support India through COVID, with more than token gestures. While we noted that this week saw Tata step up its oxygen contributions, the firm has also donated $200 million to relief efforts, spent heavily on bringing supplies to India, and helped improve rapid testing capabilities. The Tatas and their trusts are in the process of consolidating their ownership even further. After a falling out related to Ratan Tata’s removal of Cyrus Mistry as Tata Group Chairman in 2016, and a March Indian Supreme Court ruling against Mistry’s claim that the ouster was illegal, the two families are negotiating the Tatas’ purchase of the Mistrys’ 18.4% stake. As Tata Sons cleans up its ownership, it’s cleaning up the entities it controls as well. In 2019, under now-Chairman Natarajan Chandra, Tata reorganized its 30 listed companies and their roughly 1,000 subsidiaries into ten verticals. The reorganization was part of Chandra’s process of simplifying, synergizing, and scaling (3S). Starting under Ratan and continuing under Chandra, Tata Sons is working to take advantage of its combined resources and expertise. That’s no small task given the ownership structure and the fact that each company has its own Board of Directors. It requires a light touch, sharing best practices instead of dictating. Ravi Arora, Tata’s VP of Innovation, described that loose influence on the Stretch Thinking podcast:Every company in the TATA Group impacts others in the group because we are one family, although every company is independent. But we do influence each other, and we also learn from each other.That’s hardly the top-down decision-making you’d expect from a company like Reliance, but it seems to be working. Tata’s seventeen public holdings combined are now worth more than Reliance, making Tata India’s largest conglomerate.To be sure, Reliance Industries, helmed by Mukesh Ambani, is still cleaner. Invest in Reliance, get everything that it owns. The company is complex -- it has 158 subsidiaries and seven associate entities across six business lines -- but it’s all wrapped up in one publicly traded stock. It’s the most valuable publicly traded Indian conglomerate with a market cap of $176 billion. And it’s more nimble, a point we’ll return to shortly. Tata, on the other hand, isn’t publicly traded. Instead, it owns stakes in thirty-one companies, 17 of which are publicly traded, across ten verticals. Many of the subsidiaries use the Tata name, which the parent company licenses to them under Brand Equity and Business Promotion agreements. The Tata brand alone is the most valuable in India, with an estimated value of $20 billion. Each company operates independently under its own board of directors. As of March 31, 2020, in the early throes of the pandemic, Tata said the combined market cap of its companies was $123 billion. Today, the combined market cap of its 17 publicly traded subsidiaries has nearly doubled to $234 billion, $58 billion higher than Reliance’s market cap. (For a live tracker of all 17 companies’ market caps, check out: Tata Subsidiaries Market Cap)That said, because of the company’s long history, through good economic times and bad, the Group only holds partial stakes in most of its companies. In some cases, that’s because it sold off stakes to raise cash. In others, as with Titan, of which it only owns 25%, that’s because it decided to let its executives start the business on the condition that they could raise the capital themselves. This chart gives an outdated but directionally-correct overview of Tata Sons’ ownership. That presents challenges, chief among them that it’s much harder for Tata to force its affiliated companies to do anything. Instead, it needs to provide guidance, share best practices, and try to use its heft as the largest shareholder to shape outcomes. It also means that while Tata Sons doesn’t get all of the upside from their companies, its name allows them to lever up, creating a heavy debt load on its businesses. It’s all a bit of a mess. But there’s a bright spot: Tata Consultancy Services (TCS).Tata Consultancy ServicesA key indicator of the company’s importance is the fact that Chandra, the first Tata Chairman not born into the Tata or Mistry families, served as TCS’ CEO before ascending to the top spot. TCS is a monster. It employs 488,000 people, counts Microsoft, GE, SAP, and Thomson Reuters among its global clients, and offers the full range of IT services, consulting, and digital transformation, from cloud to AI to cybersecurity and even blockchain. It is the largest IT services and consulting company in India, and does battle with Accenture and IBM for the crown of world #1. TCS benefited from companies around the globe’s COVID-fueled race to digitize. TCS is worth 40% more than it was at the beginning of 2020, and is up 85% from March 2020 lows. Now, TCS is worth twice as much in the public markets as all of Tata’s other companies combined, and worth nearly as much as all of Reliance Industries on its own. Just as the football team at a large state school funds all of the athletic programs, TCS funds Tata Sons. In 2019-2020, the company spit off ₹73 per share in dividends, of which Tata Sons, as 72.19% owner, received $3.1 billion at today’s exchange rates. TCS regularly generates over 70% of all dividends paid to the parent company. That makes sense. In a recent article, FT pointed out that while Tata Motors is Tata Group’s biggest revenue driver (pun intended), TCS generates most of its profits. Those charts highlight TCS’ relative importance, but they’re also a flashing neon sign pointing to Tata’s biggest challenge today: Tata is carrying a lot of dead weight. Tata’s Dead WeightTata Consultancy Services contributes 70-90% of Tata Sons’ revenue in the form of dividends. It’s one of very few Tata Group companies, along with Titan, Tata’s watches, jewelry, and accessories maker, that has actually grown profits over the past few years. Many of Tata’s other companies are dead weight. According to BusinessToday and annual report analysis:  * Tata Steel generated $2 billion in 2019-2020 profits, but has net debts of $11.6 billion  and is dragged down by the performance of its European units, which it has been trying to sell. It will need to refocus on the Indian market, where it is hugely profitable because of captive iron ore mines.* Tata Power saw its profits cut in half from $351 million in 2019 to $177 million in 2020, and has net debts of $4.9 billion. It did decrease its net debt to EBITDA ratio from 6.2x to 5.2x between 2019 and 2020, but will need to further pay down debt and transition to renewables in the coming years. * Tata Motors, including Jaguar Land Rover, brought in a whopping $35 billion in FY2020 revenue, but generated negative $1.2 billion of free cash flow. It also carries $7.4 billion in net debt. While motors is one of Tata’s sexiest and most well-known businesses, it has a ton of work to do to transition its lineup to electric, and is paring down its offerings to focus on Indian passenger cars, commercial vehicles, and Jaguar Land Rover. At home, it’s under pressure from an increase in foreign car sales. These are just a few examples across Tata’s sprawling portfolio. Over the years, the Group leveraged its brand trust to acquire or launch new products and raise debt to fuel expansion. Some, like Jaguar Land Rover, were the result of overeager and misguided acquisitions. Many were the result of a strategy that once made sense but no longer does. For a while, particularly before imports came to India in a meaningful way, it worked. Packy’s father-in-law told him that Tata introduced many products to the Indian market for the first time. When you have consumer trust, and consumers have no other options, going wide makes sense. You can sell them anything.But today, faced with best-in-class products from across the world, many of Tata’s companies are overextended and uncompetitive. Ratan’s early aughts buying spree only exacerbated the problem. When he took over as Chairman in 2017, Chandra’s goal was to right a lot of his predecessor’s mistakes. He used a corporate-friendly tagline: “simplification and synergies.” He’s working to bring order to the chaos, and focus the Tata companies on the right things:* Combined Tata Chemicals and Tata Global Beverages into Tata Consumer Products. * Reorganized Tata Steel into four separate businesses and has transitioned production from majority-European to majority-Indian as it looks to sell off European units.* Moving Tata Powers’ renewable power assets, and their debt, into an infrastructure investment trust (InvIT) and is selling a stake to private equity to pay down debt. Tata Power is also looking to sell African and Indonesian assets.* Considered selling stakes in some of the company’s financial services units.* Disposed of some of Tata’s more random assets, like a chain of car dealerships. It’s a start, but if Tata wants to win the future, it needs to go further. Even after simplifying and synergizing, Tata still follows an extreme version of the Pareto principle, with more than 80% of its profits coming from less than 20% of its efforts. TCS is still the Group’s engine, and most of the other companies are too sprawling, disconnected, minimally (or un-) profitable, debt-heavy, and backward-looking to help Tata build a modern conglomerate that wins the next century and brings India along with it. What is a Modern Conglomerate?When you think of the word “conglomerate,” you probably think of something that looks a lot like Tata does. Inspired by In Search of Excellence, many companies that generated a lot of cash by focusing on one thing and doing it really well decided to diversify. Good at selling concrete? Buy a chain of pizza restaurants. Made your money in telecoms? Get into defense contracting. That method of conglomerate building has fallen out of favor. It didn’t really work. Surprise surprise: being good at one thing doesn’t mean you’ll be good at doing another. In fact, there’s probably some Dunning-Kreuger effect at play: you know just enough to get overconfident and make bad decisions. But that doesn’t mean that conglomerates are dead. Both of us are fascinated by the new breed of modern conglomerates. Mario has written about IAC, Constellation Software, and LVMH. Packy has written about Tencent, Alibaba, FEMSA, and Reliance. The difference between those conglomerates and Tata is that those conglomerates have a thing.* IAC has a playbook for winning on the internet: Identify, Accumulate, and Spin-Off. * Tencent has a Traffic + Capital Flywheel -- find hot companies on WeChat, invest in them, and give them a distribution advantage. * Alibaba started with ecommerce, and expanded into fintech to serve its core. * Reliance leveraged cashflows from legacy businesses into Jio and Retail, its farm-bets on the future, and serves as the Gateway of India for foreign tech giants. * FEMSA has a chain of Oxxo convenience stores, close to its customers, that serve as a physical version of the internet in Mexico and a jumping off point into a digital wallet.* LVMH buys heritage luxury brands and empowers creatives to drive their vision, unfettered.* Constellation Software acquires vertical market software companies, and lets them operate independently. The Bobs from Office Space would have a field day with Tata, though. What would you say you do here? Tata does a little bit of everything. Cars, steel, hotels, watches, tea, consulting, power, communications infrastructure, TV. Called a “parallel government,” Tata purchased some of its former colonizer’s crown jewels -- Tetley, Jaguar Land Rover -- and looks a bit more like an Indian heritage museum than a modern business. For much of its recent history, Tata has looked backwards. Whereas other conglomerates milk their cash cows to fund the next big thing, Tata uses its own to support a central office that tries to infuse modern best practices into its loose constellation of old and decaying businesses. Five years ago, Reliance was in a similar situation. The company made its fortune in oil and petrochemicals, and to this day, generates the vast majority of its revenue (69%) and profits (63%) in the Oil-to-Chemicals (O2C) business. But it recognized that those businesses are the past, and tech is the future. As Packy wrote in Reliance: Gateway of India, Mukesh Ambani’s company sold 49% of its fuel retailing business to BP for $1 billion, and is in talks to sell 20% of its O2C business to Saudi Aramco for $15 billion. Meanwhile, it used the cash that that business spit off, and a mountain of debt, to undertake one of the most aggressive balance sheet investments in corporate history, plowing $32 billion into Jio’s national 4G network before recently selling stakes to a global who’s who of tech and investing giants. Those investments, plus the asset sales, moved Reliance back to zero net debt, ahead of schedule. Reliance’s transformation is one of the two ways to create a modern conglomerate:* Tech-first: Start fresh, with technology at your core, like Tencent, IAC, or Constellation. * Reinvented: Use the cash and unique assets at your disposal to transform yourself into a tech-first company, and sell whatever you need to make it happen, like Reliance or FEMSA.  Either way, there’s no escaping it: modern conglomerates combine technology and focus on a unique thing. Diversified conglomerates are out; focused conglomerates are in. Transforming Tata So what’s Tata’s thing?Start with the brand: after TCS, Tata’s brand, valued at $20 billion, is its most valuable asset. After 152 years, Indian consumers trust Tata, and that’s likely to be even more true after the group used its heft to support the fight against COVID. The second piece is India itself. Tata’s brand carries the most weight in one of the world’s largest and fastest-growing markets, one full of tech talent and an internet population that’s expected to reach 1 billion people by 2030. Next comes Tata’s distribution, which touches nearly every Indian consumer and business in a market in which distribution is a particularly hard problem to solve. Finally, there’s TCS. It’s not just that the company drives ~90% of Tata Sons’ revenue, but how it drives that revenue. TCS is an IT services and consulting business whose revenues increasingly come from digital transformation work.So how do you leverage those strengths into one thing, one offering that makes sense to the market? How do you make it easy for people to complete the sentence, “Tata does…..?”You undergo a digital transformation of your own. In August 2019, Tata launched Tata Digital, a startup incubator inside the 152-year-old behemoth. The logo screams this is not your great great grandfather’s Tata. To launch the group, Tata tapped homegrown talent, former TCS Global Head of Retail, Travel, Hospitality, and CPG, Pratik Pal. It’s the kind of move we’d normally dismiss: big company taps consultant to lead digital center of excellence. But somehow, it fits. Reinvention is what Tata does. Tata Digital is tasked with executing the third part of the 3S plan Chandra’s been executing all along: scale. It will build or acquire digital products for Tata Group, and scale them up to internet size. On the B2B side, the obvious place to start is with TCS itself. Tata should double down on TCS’ dominance and try to disrupt itself from within. Tata Digital and TCS can work together to create products that extend monetization beyond the initial engagement. It might build or buy Robotic Process Automation (RPA) or intelligent automation capabilities that it can sell through its existing global distribution channel. That would add valuable licensing and SaaS revenue to TCS’ already monster business. It might also build products to enhance the capabilities of many of the Tata Group companies that survive further paring down. Tata Power is going renewable, Tata Motors is embracing the EV revolution, and Indian Hotels will need to better compete with a new class of internet-native competitors like Airbnb. Tata Digital has the potential to support and embolden all of these initiatives (and many more) by providing the right resources and making smart acquisitions.  If Tata manages everything we’ve just mentioned, it would be a meaningfully different and more modern conglomerate. But Chandra has bigger ambitions. He wants Tata to build a  Super App. Super Apps, which bring a wide array of services into one app, are not a new concept. Think WhatsApp meets Uber meets Venmo meets Instacart meets DoorDash (and on and on and on). In China, Tencent’s WeChat and Alibaba’s Alipay are battling for the top spot, along with Tencent-backed Meituan Dianping. In Singapore, it’s Grab. In Indonesia, it’s Gojek. In Latin America, Colombia’s Rappi and Argentina’s MercadoLibre are leading contenders. Super Apps aren’t even new to India. Alibaba-backed PayTM has a publicly stated mission to become the country’s first Super App, and recently expanded from payments into gaming. Reliance is entering the fray, too, with a powerful partner. Facebook’s $5.7 billion investment last summer was the dowry in an arranged Super App marriage between Reliance’s Jio and Facebook’s WhatsApp. WhatsApp has 400 million users in India, and PayTM had 350 million as of 2019. Those are massive, bigger-than-the-whole-US-population headstarts. It seems like a me-too, too-late idea. We both dismissed it at first as the kind of thing two ex-consultants, Chandra and Pal, would cook up in a whiteboarding-fever dream. But the more we thought about it, the more we saw the vision. A Super App would leverage Tata’s unique assets -- brand, distribution, India, and TCS (via Tata Digital) -- and provide a clear focal point for the business. Plus, the Group already has a strong portfolio of retail assets and brands that it can plug in from Day 1. The pieces are starting to come together: * Retail: Tata subsidiary Trent ( the name is a portmanteau for Tata Retail Enterprises) signed an agreement to list all of its brand apps, most importantly Westside, on the Super App. Trent sells fashion, books, music, and more. Online shopping in India is tracking ~8 years behind China, after growing from 1% penetration in 2012 to 11% in 2019. It’s a huge growth opportunity. * Healthcare: Tata is in the final stages of acquiring online pharmacy 1mg. Tata’s ability to roll out the first CRISPR-based COVID test, along with its relief efforts, should give it some credibility in the medical space among Indian consumers. India still only spends 3.6% of GDP on healthcare, lagging the US (16.9%), Germany (11.3%), and China (5%). * Finance: Aside from payments, an important missing piece, Tata has an Ant-lite suite of financial offerings, from mutual funds to insurance products.* Groceries: Tata Digital invested around $200 million into BigBasket, India’s largest online grocery platform, as part of a plan to acquire a 60% stake in the company for $1.2 billion. It will buy out Alibaba’s share as part of the deal. It’s making the acquisition despite the fact that BigBasket is competitive with Trent’s Starquik service. That last point is sneaky huge, and almost Tencent-like. It turns one of Tata’s biggest weaknesses -- it’s decentralized, non-controlling corporate structure -- into an advantage. Verticalization and integration are in Reliance’s DNA. Decentralization and loose control are in Tata’s. Whereas Reliance will push its own products and services through its Super App, even when they’re not the best on the market (as they’re not in many categories), Tata has publicly stated that it wants to take a more open, partnership-driven approach to its own offering. That should be Tata’s thing: a decentralized constellation of products and services, delivered by a trusted brand, that make Indian consumers’ lives simpler and more convenient.Intriguingly, while that no longer works so well for a modern conglomerate of capital intensive companies competing with global alternatives, it works perfectly for Super Apps. These next-gen omni-killers compete domestically based on the breadth and quality of their offerings. Reliance’s strategy was smart: be the Gateway of India for two of the world’s leading tech companies -- Facebook and Google -- and build or acquire products that serve all of the Indian consumer’s needs. Tata can counterposition against them by working with everyone else. Internationally, that means serving as a more open entry-point for the rest of the world’s tech companies. Domestically, it means using some of those sweet, sweet TCS dividends to invest in and support Indian startups. The country is becoming a unicorn factory: last month, six Indian companies became unicorns in four days. Tata should lean in if Reliance won’t.There will be challenges -- Tata doesn’t do messaging, social, or payments, all glue that hold a Super App together. But that lack of homegrown solution offers opportunities, too. After listening to Balaji Srinivasan on the Tim Ferriss Show, for example, we wonder if Tata won’t lean into its decentralization thing even further. What would it look like if Tata used its brand trust to help India, and its people, take advantage of the opportunity to use crypto to become the world’s third superpower?While that may sound faintly ludicrous, and out of keeping with a tech consulting and industrial company, it’s exactly the kind of visionary move on which Tata was founded. Jamsetji himself would be proud.How did you like the Not Boring x The Generalist collab? Loved | Great | Good | Meh | BadThanks for reading, and see you on Thursday,Packy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.notboring.co

Welcome to the 867 newly Not Boring people who have joined us since last Thursday! If you aren’t subscribed, join 45,133 smart, curious folks by subscribing here:🎧 To get this essay straight in your ears: listen on Spotify or Apple PodcastsHi friends 👋 ,Happy Thursday!Startup stock options are one of those things that startup employees should know a ton about but just don’t. There’s a never-ending debate in tech around whether stock options make sense for employees, or whether they’re just a way for companies to pay less cash. Even when things seemingly go really well for a company, employees’ situations are often murkier than it seems. That’s why I was so pumped when Shanna Leonard, who runs marketing at Secfi, reached out about working together. I’ve been wanting to write about this forever. This essay is a Sponsored Deep Dive on Secfi. For those who are new around here, that means that Secfi is paying me to write about their business. You can read more about how I pick and work with partners here.This one is a little bit different though. The Secfi team really just wants more startup employees to know what their options are, make a plan, and not leave millions of dollars on the table. Each person I’ve spoken to there has their own personal startup equity horror story, and they want to make sure that you don’t go through the same thing. I, too, gave up cash for equity, and it was a terrible financial decision. This one is personal.Obviously, if Secfi can help you make smarter decisions, that’s a win-win, but more thoughtfulness around employee equity is a win in itself. So we’re going to go deep on how equity works, why people don’t exercise, and what happens when they don’t. (One note: I wanted to call this post ESOP’s Fables, but ESOPs are a public company thing more than a private company thing. But I thought it was clever, so I couldn’t not share.)Let’s get to it. Startup Stock Options Options with SecfiIn 2020, startup employees left $4.9 billion on the table by not exercising their pre-IPO options. Not exercising pre-IPO means employees missed out in two major ways:* They let the typical 90 day window pass after leaving and forfeited unexercised options, either all of their options or a portion. * They stayed at the company through IPO, but didn’t exercise before the IPO and had to pay short-term capital gains or ordinary income instead of long-term capital gains because of “cashless exercising.” Costs can soar post-IPO.That combination cost employees four point nine billion dollars. $4,900,000,000. 4,900 million. At Snowflake alone, ex-employees left 72 million options worth $1.27 billion unexercised. Ouch. Those numbers are so big as to feel kind of meaningless, but they represent years of blood, sweat, tears, uncertainty, and financial trade-offs down the drain. Most people who work for early stage startups take less cash compensation than they’d be able to get at a more mature company in exchange for a few things: a more fun work environment, the chance to change the world, more responsibility than they’d get elsewhere, and a host of soft benefits, but mainly, they do it for the employee stock options. Employee stock options are the lifeblood of a startup. Options are the main way startups compete on comp with big companies like Google and Goldman that can afford to pay infinity times more cash. They offer the promise of millions and millions of dollars if things go really, really well. When I left Bank of America Merrill Lynch and went to Breather, I took a 70% pay cut on the cash side, but I got options worth 1% of the company in exchange. Even coming from finance, I didn’t fully understand my options. I just did some hyperoptimistic expected value math (1% * $1 billion = $10 million!) and that was good enough for me. I’m certainly not alone. Most startup employees don’t understand their options. Some don’t even know they need to exercise them or put out money at all. Because options feel like lottery tickets at the early stage, employees don’t think all that much about things like the tax implications of when they exercise, what happens if they leave the company, and all of the little details that can mean hundreds of thousands or even millions of dollars. Which is crazy, because those options can often represent, on paper, a huge percentage of their net worth. For a group of ostensibly intelligent people, startup employees put surprisingly little thought into managing their options. These are builders. They get so immersed in their day-to-day and building great things that they lose sight of their own personal gain at times. Plus, it’s kind of taboo to talk about maximizing the value of your options when there’s real work to be done. And most companies don’t do much to help. It’s (generally) not because they don’t want to, but because this stuff is really complicated, and so far in the future, and startups have dozens of more pressing fires to put out at any given time. In the Eisenhower Decision Matrix, employee options fall into the “important, not urgent” bucket...UNTIL all of a sudden, your company is all over the news. It’s going to IPO. Everyone is talking about it. You did it. Finally! But, wait, what the hell happens to your options? It costs HOW much to buy them and you owe WHAT in taxes? Now, it becomes personal. And urgent. A lot of startup employees are going through that emotional arc right now. 2021 looks like it’s going to be even more painful for ex-employees who didn’t exercise their options (and even for current employees who will pay higher taxes if they haven’t planned properly, but it’s hard to feel too bad for them). The year is less than four months old, and there have already been 429 IPOs on US exchanges. This time last year, there were 40. That’s a 10x increase. To be fair, a lot of the new IPOs are SPACs -- 308 SPACs have raised $99 billion via IPO already this year versus $83 billion in 248 IPOs all of last year -- but there have been some major tech IPOs already this year: That’s an incomplete list, plus those 308 SPACs and many of last year’s 248 are lurking with bags full of money that they need to spend on taking companies public within two years. For people who own equity in those startups, this is going to be an amazing year. Thousands of people will become millionaires for the first time, some will generate multi-generational wealth, and a few will even become billionaires. But each of those companies also has tons of former employees consumed by regret at not having purchased their options, and many others who will end up giving the government nearly as much as they take home. Secfi wants to change that, starting by helping you get smarter on startup equity: * How Startup Equity Works* Why Employees Don’t Exercise * Options Exercise Options * Meet Secfi* The CAC Arbitrage* Secfi’s VisionThe best time to start thinking about how to handle your options was when you got your offer letter. The next best time is now. Secfi can help. I could (and will) nerd out on this problem for hours, but Secfi is paying me and I want to make sure you check them out, so I’ll introduce you to Secfi now, then we’ll come back to them later. Secfi is a team of equity experts 100% focused on helping startup employees understand, maximize and unlock the value of their stock options and shares. If you’re an employee at a startup, Secfi wants to make sure you’re on the right track. Really. I badly want this piece to go viral mainly because the team genuinely cares so much about helping startup employees. So here’s an ask: if you know an employee at a unicorn startup, share this essay with them to make sure they’re thinking through things properly.Secfi has educational resources, tools (including tax calculators), and real live people who can help you think through your equity. Secfi’s equity strategists have deep experience as financial advisors, wealth managers, investment managers and analysts, and tax professionals, and have worked with employees at the vast majority of US unicorns. They can help you. If you have options, stop reading, check them out, and then come back:Welcome back. Let’s learn why startup equity is great, but not as simple as it seems. How Startup Equity WorksFirst things first, stock options are pretty great. A century ago, even a couple decades ago, the idea of an employee sharing in the upside with the owners of a business would have sounded absurd. When we spoke, Secfi’s CEO Frederik Mijnhardt pointed out that startup employees owning 20% of their businesses on average is a great step (but only a first step) towards minimizing wealth disparity.Silicon Valley is built on the back of stock options. They represent a chance for employees to become capital instead of just labor. They reward people for early belief in an idea, and the hard work it takes to make that idea a reality. Without options, it would be hard for cash-poor early stage companies to attract the top talent it needs to succeed. Goldman and Google will always be able to pay more cash than any startup. But ~*options*~ are a Golden Ticket. A major part of the allure of joining a startup is the chance to work really hard for a few years and make millions. Join a startup when it’s young, get shares in the company, help it grow into the next big thing, exit, and retire rich. It sounds simple, but it’s so much more complex.First, you don’t just get equity in the company. If you work at a company long enough, you earn the right to buy equity in the company. Those are called options. Just like options on public equities, they give the owner the right, but not the obligation, to buy shares in the company at a certain price. If you’re really early, that price might be $0.01 per share or $0.10 per share or some other very low number, meaning it’s mostly upside. But either way, options do not mean that you own shares in the company. You need to actively buy them.  Plus, you don’t earn them all upfront. Typically, if you stay for a year, you earn a quarter of your options, and then you earn a little bit more every month for the next three years. That’s called vesting, and this particular case is the most common: four year vesting with a one-year cliff.As those options vest, employees have the right to exercise them, or to keep them as options. Exercising means plopping down cash upfront for shares that may or may not be worth something, but it also means potential tax benefits down the line. While you’re employed, you have the option and some time to figure it out. Once you leave, you don’t.If you leave at any point -- whether you’re fired or leave voluntarily -- you typically have 90 days to decide whether you want to exercise the portion of your options that have vested aka buy equity in the company. Some companies offer longer time periods, but after 90 days, Incentive Stock Options (ISOs) convert to Non-Qualifying Stock Options (NSOs), which come with higher taxes. Exercising has a direct cost -- if you own 50,000 options that give you the right to buy shares at $1 per share, you have to pay $50,000. That’s a lot of cash to plop down, and if you have meaningful equity, the number may be much higher than that. Worse, you often have to pay taxes based on the delta between your strike price (the $1 per share number) and the company’s most recent valuation (talk to a tax professional or Secfi about your specific case). This is based off something called a 409a valuation, in which an outside firm analyzes the business based on comps and ballparks what the company is worth. The better your company is doing, the higher your tax bill is going to be when you exercise, even though you might not be able to sell your shares and make any actual money for years.Up until an actual exit, either via an IPO or an acquisition, most employees don’t know how to turn their valuable equity into cash. Even if things are looking good, they can all fall apart. Most startups fail. Many once-hot startups end for selling for less than they raised. In those cases, employees typically get nothing for their options, even if they exercised, or worse. When WeWork filed to go public, many employees took out loans against their options to buy houses; when the IPO imploded, they were stuck with mountains of debt backed by equity whose value had collapsed 80% and many were fired from their job. If your company is one of the lucky few that does have a successful exit, you’ve won the lottery. If you still work for the company, or left and exercised your options (bought the shares), you stand to make life-changing amounts of money. But the $4.9 billion number we started this piece with represents the fact that there are thousands of employees who left companies that ended up having successful exits but didn’t exercise, or simply never exercised pre-IPO. They had the golden ticket, and they gave it away, either completely or in chunks to Uncle Sam. Why would they ever do that? Why Employees Don’t ExerciseThere are two ways to think about exercising options: * You can exercise your options as they vest while you’re still employed. * If you leave, voluntarily or involuntarily, you typically have 90 days to exercise. There are different consequences for each. * Not exercising while remaining employed can mean tax consequences later, through a higher delta between your strike and current valuation and through the difference between short-term and long-term capital gains. But you still hold onto the right to exercise and to benefit from a liquidity event like an IPO or acquisition. * Not exercising after you leave means forfeiting the right to buy shares in the company, and means missing out on all of the upside in the case of a liquidity event. That sucks. While both cases are very different -- the former means an unbelievably amazing exit becomes slightly less unbelievably amazing, the latter means a lifetime of regret -- they both have the same root causes. * Lack of awareness* Uncertainty about the company’s prospects * High costs of exercisingWe’ll take each in turn: Lack of Awareness Most startup employees simply don’t think deeply about managing their options. They often make lower salaries than they would at other jobs, savings are tight, and they don’t save up money to exercise. They often don’t even realize that exercising while employed is even an option, and don’t understand why it might be beneficial. Even while Breather was growing quickly, from a $20 million valuation to $250 million while I was there, I never once thought about exercising my options. I didn’t even realize it was a thing. (In retrospect, thank god.) Consider yourself aware. You need to think about this. Might I suggest Secfi’s Equity Academy and Options Exercise Tax Calculator as starting points? Uncertainty About the Company’s ProspectsSometimes, you’re at a startup and you’re just not sure it’s going to work, or how much it’s going to work. While you’re employed, you’re willing to pay higher taxes in the future so you don’t have to spend your hard-earned money today on an uncertain bet. They’re called options for a reason.When you leave, you need to make a hard choice: spend my money to buy these shares now and hope that there’s a good liquidity event in the future, or forfeit most of the on-paper comp earned through years of hard work. It’s never easy to give away those options, and many people just buy so that they don’t feel regret if things do go well. But it’s expensive. Sometimes, employees even leave, exercise their options, and then sell when given the opportunity because they think the buyer believes in the company more than they do. If you haven’t listened to my podcast with my friend Brett, he was the first employee at Drizly and sold most of his shares in the secondary market when he got the chance. He thought he was real smart, until Uber recently acquired Drizly for $1.1 billion dollars. For a raw take on what it feels like to miss out on all of that upside, give it a listen: High Costs of ExercisingIt can be really, really expensive to exercise your options. That’s because there are two costs when it comes to exercising: the direct cost and the tax bill. The direct cost is straightforward. You own 50k options at $1, you pay $50k for the shares. That’s a lot of money, but ideally you’re doing it because you believe that what you’re buying is worth a lot more. Let’s say, for example, that the company was recently valued at $100 per share Nice! Free money! Well… that’s where the tax bill comes in. According to Secfi’s research across 69 late-stage unicorn companies (companies valued at more than $1 billion), taxes make up 85% of the cost of exercising stock options. 🤮Since most people are unaware they’re going to have to pay taxes, Secfi calls it the surprise factor. They call the overall expense the unaffordability factor. I’ve seen this firsthand (unfortunately, I haven’t felt it firsthand, but close enough).At Breather, I worked with an ex-Uber employee who needed to exercise his options within 90 days of leaving Uber to join Breather. He was early at Uber and left when they were worth $10s of billions of dollars. Pretty amazing, right? Not so fast. Exercising meant he owed hundreds of thousands of dollars in taxes, even though Uber wouldn’t IPO for another two years. He couldn’t sleep because of the tax bill hanging over his head. He spent the better portion of a few months on calls with people he was trying to sell shares to in order to generate the cash he needed to buy his options. He asked me if I had any friends who might want to buy. Finally, he was able to find some people to buy some of his shares in the secondary market and used the proceeds to pay off the tax bill, but that meant giving up his hard-earned upside after months of stress. It’s easy to dismiss that as a Champagne problem, but it really sucks. Upside is what your startup promised you, and why you took a pay cut in the first place. Try choosing between owing the IRS hundreds of thousands or giving up equity you earned from years of grueling work. Uber was not known for its work/life balance. Luckily, he was able to figure it out, and he did really well when Uber IPO’d (as did the people who bought his secondary). Selling some of your shares to cover the tax bill is just one way to exercise options. Let’s go over the full menu.Options Exercise OptionsIf you have options, you have some options. Secfi not only didn’t ask me not to list other options, they actively encourage you to shop around and figure out what works best for you. Remember, the #1 takeaway here is to be educated and have a plan. So what are the options?Don’t Exercise. This is always an option. Particularly if you think your options are at an inflated strike price, that the company will struggle to exit, or will fail altogether, not exercising is certainly an option, and maybe the best one. I didn’t exercise when I left Breather. Pay Out-of-Pocket. If you’ve planned ahead or happen to have enough money saved up, you can pay to exercise your options out of pocket. That’s great because it means not selling shares or owing anyone anything. Unfortunately, this option makes the most sense before the company has grown its value too significantly, and gets harder as the company gets more valuable, and therefore as the likelihood of a liquidity event increases. Borrow From Friends and Family. Like paying out-of-pocket, borrowing from friends and family means that you don’t need to sell shares or owe money to anyone who would repossess your home. That said, it comes with the social pressure to make sure you don’t lose your friends’ and family’s money. Sell Secondary to Outside Parties. Like my ex-Uber friend, one way to raise the money to exercise is to sell some of your shares to other people. There are funds set up to do this, and platforms like Forge and EquityZen that will collect pools of secondary shares and match them with buyers. Or, if you own shares in Stripe or Epic, please give me a call and let’s work something out. One limitation here is that companies often limit whether or how much employees can sell on the secondary markets, another is that selling triggers capital gains tax.Tender Offers. Sometimes, typically at Series C and beyond, companies orchestrate tender offers in which (often existing) investors make an offer to buy shares from employees to give them a little liquidity. Sounds great, but tender offers are historically underpriced. Sacra wrote a thorough piece on how and why this happens, but the long and short of it is that tender offers are typically priced at the last round’s valuation, which gets stale as hypergrowth companies grow. The longer from the last round the offer comes in, the more mispriced it is. As a result, tender offers typically only get 37% participation.Take a Loan from a Hedge Fund or Bank Against Your Shares. There are plenty of funds out there, and even some banks, willing to lend you money to exercise your options if you’re at a later stage company with good prospects. As happened with WeWork employees, these can potentially get you into trouble if the company never gets liquidity or takes a long time to reach a liquidity event. Of course, there’s a better way… Meet SecfiI remember sitting in my office and texting my friends Nick, Tucker, and Tommy the day that Secfi announced its first funding in 2018, led by Howard Lindzon’s Social Leverage. It seemed like such a good idea. We all knew (or were) people who’d been killed on their startup options in some way or another, and we were all kicking ourselves over text for not thinking of the idea first. So what does Secfi do? Secfi is the first “pre-wealth management platform” for startup employees. They work with late stage startup employees who are in high growth mode on path to exit by doing a few things: * Educate them on what their options really mean* Help understand what it would cost to exercise them* Scenario plan* Offer non-recourse financing This last piece is the bread and butter of Secfi’s product. Secfi will give startup employees non-recourse financing to exercise their options. It’s not a loan, but you can think of it in the same way you’d think about a loan, except that if your company never exits, you don’t owe Secfi anything. Even if your company IPOs and it doesn’t do well, and your shares are worth less than Secfi financed, you only owe the lesser amount. It’s really no-risk financing.It starts with figuring out where your options stand, and what your options are: * Sign up for Secfi and enter information about your company and some personal details.* Access a set of tools to help you figure out the value of your shares and the costs to buy them (including taxes). They’re sophisticated. They’ll even help determine the different costs for exercising now versus waiting until an exit event. It’s fun. I sadly do not hold employee options in any unicorns, but I pretended that I did a few times. You can (and should) do those things if you’re at all curious about the real value of your equity. If you want to secure financing to cover those costs, submit a request and they’ll get back to you with next steps. They currently work with over 80% of US unicorns, and if you work for one of those companies, 1) congrats, and 2) the process can be fast... like a few days. Here’s how that works:* Secfi determines how much financing you’re eligible for (if you have $1 million worth of options, you might be eligible for something like $250k in financing) and at what rate. * Secfi doesn’t take the risk itself. Instead, it acts as an intermediary between capital providers and employees. Last January, Secfi raised $550 million in financing from Serengeti Asset Management.* You never pay cash interest - it compounds and is taken out of your profits in the case of a liquidity event. You may pay an equity share which allows the investor to share in the upside of your equity in the case of a liquidity event.* When your company goes public or gets acquired, you pay the financing back along with the accrued fees and keep the rest of the upside yourself.That’s it. Compared to other options, Secfi is preferable to:  * Selling secondary: you keep the upside, don’t trigger capital gains, and keep your Qualified Small Business Stock (QSBS) tax treatment. * A loan in that you’re not on the hook in case things don’t go well. * Not exercising your options: you retain your chance at upside while Secfi and its capital partners take the risk. That said, Secfi encourages startup employees to shop around and do their homework. For early employees at unicorn companies, exercising options ranks as one of the top lifetime expenses. If anything, Secfi just wants people to treat their options with the same amount of thought and care with which they treat which car to drive or which house to buy. After shopping, many employees decide to go with Secfi. They work with employees at 80% of US unicorns and host $13 billion worth of equity options on the platform. Check out the case studies from anonymized employees at three of last years’ biggest IPOs: Airbnb, DoorDash, and Snowflake. Once your company is worth a few hundred million dollars, you should start talking to Secfi (and you should read the resources in their blog and Equity Academy before you even sign your stock option grant, or today if you’ve already signed). Secfi almost seems too nice, and too riskless. Even I, the optimist, was a little skeptical. But that desire to help startup employees comes from two places: where Secfi comes from, and where it’s going. Secfi was born after one of its founders got burned himself. He left his company and discovered that to exercise his $50k worth of options he would need to pay $1.8 million in taxes. He had to walk away from the options. He built a company to make sure that his experience didn’t happen to other startup employees. In talking to Secfi’s teams and investors during this process, that mission rings loud and clear. And it’s genuine, because it’s an issue most of them went through themselves. * Frederik told me that he “had to learn the hard way that startup equity can’t just be neglected, that I couldn’t just wait to figure it out later.”  * Shanna Leonard, who now runs marketing at Secfi, sold shares on the secondary market, her CPA messed up the tax calcs, and she ended up in a messy tax situation. * Martin Malloy, who runs content at Secfi, recently joined Secfi from a newly-IPO’d company after realizing that he and so many of his co-workers were unprepared to go public. He had to scramble at the last minute to avoid a massive tax bill, ended up working with Secfi to exercise his options, and then decided to join the company.That shared experience comes through. When I asked Howard Lindzon, who led Secfi’s seed, the most underappreciated thing about Secfi, he told me: “It’s really employee-centric.” Unprompted, on a separate call, Rucker Park’s Wes Tang-Wymer, who led the A with the biggest check his fund has ever written, said “The company is incredibly employee-centric.”Part of that comes from the Secfi’s history and its employees’ past experiences, and some of that comes from the company’s vision. In this business, being employee-centric is good business.The CAC ArbitrageSecfi wants to build a modern wealth management platform that serves startup employees from pre-wealth through post-IPO riches. They feel that options financing isn’t the end of the journey, but the beginning. From that perspective, one way to look at the non-recourse financing and employee education that Secfi offers is as a customer acquisition channel that becomes profitable on the first transaction. It’s part of a newer generation of fintech startups that do well by doing good.Broadly, there have been two waves of fintech from a customer acquisition perspective: * Companies built modern versions of old financial products and spent a ton of money to acquire customers. One very smart person told me that the problem with a lot of fintech companies is that you’re competing for customers with whoever is able to build the most optimistic Lifetime Value model. Google and Facebook are the real winners here. * Companies give benefits directly to customers upfront to acquire them more cheaply, and then add on additional services over time. Customers are the winners here. This new model is structurally better for customers and businesses. A lot of ideas that you hear and ask “what’s the catch?” might fall into this category. The catch is that they’re paying less to Google and Facebook to acquire you. This is the holy grail in fintech (and really any business): low CAC, high LTV. Acquire a specific customer segment cheaply by owning a specific niche channel or offering highly-relevant products, and then sell them other financial products they need.I’ve written about a few companies that work this way before: * BlockFi uses high-interest crypto deposits to acquire crypto-wealthy and crypto-curious customers, and is adding on new products like credit cards to increase LTV. * CashApp uses viral mechanics and influencer-led giveaways to acquire lower-income customers cheaply (CACs were under $5 last year) and has added products like rewards (Boost), stock trading, Bitcoin, direct deposits, business accounts, and Cash Card.* TrueAccord actually has companies send them customers for free so TrueAccord can help collect debts, and can layer on additional services that on-ramp them to the financial system. * MainStreet gets small businesses and startups the money the government owes them, and will roll out financial products that help them grow. * Ramp helps businesses save money so that they stay in business longer, grow faster, use more Ramp products, and spend more money with Ramp. The beautiful thing with these businesses is that they’re actually incentivized to be good actors. I specifically called out how nice the Ramp and MainStreet teams are in my posts on them; at the time, I didn’t realize the connection. There’s even theory to back it up.  Game theoretically, these companies are playing infinitely repeated games. Unlike single shot games, in which the preferred strategy is often to defect, to maximize for yourself in the short-term, in infinitely repeated games, the preferred strategy is cooperation. These companies are often profitable early in the relationship because of low CACs, but they’re incentivized to keep customers happy so that they can increase their literal wallet share over time. If they mistreat customers at any point early in the journey, they would miss out on selling them the whole universe of other products on the roadmap. That description fits Secfi to a T.Secfi’s VisionIn Secfi’s case, they acquire a very specific set of high-value customers -- employees at valuable startups -- by educating them and offering them the best product on the market for a very acute need. There’s no better way to engender goodwill than saving or making people hundreds of thousands or even millions of dollars. Plus, increasing the number of wealthy startup employees, and minimizing the taxes they need to pay, directly increases Secfi’s total addressable market (TAM). So far, Secfi has focused on this pre-IPO stage, on making sure that employees are smart about their options and offering non-recourse financing that lets them minimize taxes while retaining upside. That’s been a three-year Phase I. Secfi is in this for the long-haul, and it plans to support startup employees from pre-IPO to post-IPO. Since it works with so many startup employees across 80% of US unicorns, it will focus on adding new products to help them manage their newfound wealth. Rucker Park’s Tang-Wymer pointed out that there’s no good solution for people with between ~$3 million and $10 million in wealth -- they’re tweeners. That’s too much to just plop in Wealthfront or Robinhood, but not enough that high-end wealth managers like Citi Private Bank want to work with them. For that band of people, the tech is insanely behind. Wealth managers who serve the ultra-wealthy never built modern tech to serve them because older high-net worth people expect white glove treatment. Without software, it’s not easy for them to come down-market and retain their margins. By building solutions that combine software and experts, Secfi can not only serve more clients at better margins, more importantly, it can serve them in the way that they expect to be served. These are people who made their fortunes in tech; they expect to manage their wealth in a similar fashion. That may mean all sorts of things: diversification (many of these peoples’ wealth will be highly-concentrated in one stock), angel investing, charitable giving, mortgage lending, cash management, and more. Think of all the things you’d want if you woke up with $5 million in your bank account, and you have a pretty good sense of Secfi’s product roadmap. Secfi won’t build all of this in-house; they’ll partner with companies like AngelList or AltoIRA or Wealthfront or any of the number of companies that provide specific solutions, while building where no good products exist today. They can serve as the glue between all of these products and give wealthy startup employees comprehensive tools, advice, and insights on how their whole portfolio fits together, and the tax implications of all of it. One obvious question about Secfi is: what happens in a downturn? What happens in a world in which there’s not a multi-billion dollar IPO every week, or if companies worth billions in the private market now come back down to earth? Won’t Secfi get stuck holding the bag? That was actually the question that Nick, Tucker, Tommy, and I had on that first text chain about Secfi. There are a couple of answers, one technical and one more broad. Technically, Secfi’s capital partners take the underwriting risk. If they were to offer financing to too many companies that failed to exit, they could face losses. They’re compensated for that risk with interest rates and stock fees.  More broadly, though, Secfi’s bet is that the largest group of wealthy people in the coming decade will be the startup employees who took pay cuts to take a chance on early ideas, and poured their blood, sweat, and tears into making them realities. While there will certainly be cyclical downturns, the secular trend is towards more ownership in the hands of the people creating the value, and Secfi exists to serve those people. There’s over $200 billion of wealth in non-founder startup equity in the US alone, and Secfi wants to make sure that those employees keep it and manage it well. Ultimately, Secfi’s north star is to help startup employees build wealth. That’s the catch: the better startup employees do, the better Secfi does.If you’re a startup employee, you should make a plan today: * Educate yourself on your options* Ask your company to give you more education and resources * Run your situation through planning tools* Talk to Secfi* Secure the bag 💰How did you like this week’s Not Boring? Your feedback helps me make this great.Loved | Great | Good | Meh | BadThanks for reading and see you on Monday,Packy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.notboring.co

Welcome to the 974 newly Not Boring people who have joined us since last Monday! If you aren’t subscribed, join 44,858 smart, curious folks by subscribing here:🎧 To get this essay straight in your ears: listen on Spotify or Apple Podcasts (in ~30 mins)Hi friends 👋 ,Happy Monday! We have a special one for you today. Back in January, I wrote a piece about Alibaba. Lillian Li, whose writing on Chinese tech I’d read and respected, but who I’d never met, DUNKED on it on Twitter. She said that “the piece missed local context.” Which, fair. She also wrote a more complete response on her Substack, Alibaba: from growth to value.I loved getting Lillian’s perspective -- one of the reasons I write is so people who are smarter on a particular topic share their knowledge. And when it comes to China tech, Lillian, who worked as a VC in Europe but is now based in China, is as smart as it gets. She writes a great newsletter called Chinese Characteristics. You should subscribe if you’re interested in China tech, and you should be interested in China tech: Lillian and I got to know each other after that exchange. We decided to team up. Reprise the ol’ bull and bear schtick, but together this time. In other words, we shifted our debate method to Real-Time Engagement (I promise, this will make sense /maybe be funny in a minute).Let’s get to it. Today's Not Boring is brought to you by PublicAs you read above, the fastest way to get smarter about investing is to put your ideas out there and get dunked on by … errr... have a conversation with other smart investors. That's why I use Public. Public is an investing app AND a social network for talking about business trends, and the social features make it fun and easy to share ideas. I'll be discussing today's piece on Public. Hit the link below and follow me @packym to join the conversation. Btw, if you’re looking to transfer your account from somewhere else, they’ll even cover the fees.*Valid for U.S. residents 18+ and subject to account approval. Transfer fees covered for portfolios valued at or over $150. See Public.com/disclosures/Agora: Bull & BearIn 1997, two Chinese engineers joined the founding team at early video conferencing startup WebEx. A decade and a half later, each started his own company.One, Eric Yuan, founded a company you’re all too familiar with: Zoom. The other, Bin “Tony” Zhao, founded Agora. If you’ve joined a conversation on Clubhouse , attended a virtual event on RunTheWorld, or binged livestreams on Bilibili you’ve experienced Agora. It’s been sitting there, in the background, making sure the audio and video come through clearly. Agora builds real-time audio and video capabilities and delivers them as a Software Development Kit (SDK) and Application Programming Interface (API) for app developers. It’s an API-first company that makes it easy for developers to add real-time video and audio into their product. Stripe for Real-Time Voice and Video Engagement, if you will. The company is so API that its ticker is API. Agora is also a great excuse to cover a few different relevant topics:* API-first businesses and business models* Live video streaming and all of its use cases, like telemedicine and education * The audio chat warsBecause Agora sits in the background -- it’s a “picks and shovels” company -- it doesn’t care who wins as long as more people communicate, learn, heal, play, and “live real life online,” in real time. Agora, dual-headquartered out of Shanghai and Santa Clara, went public in June last year. It was relatively quiet for its first six months as a public company, bouncing around the $3-6 billion market cap range, until investors picked up on the Clubhouse connection in January and sent shares soaring. In February, the company topped out over $12 billion before crashing after providing conservative 2021 guidance on its last earnings call. Source: Atom FinanceToday, the company is trading at a $6.5 billion valuation on projected 2021 revenue of $182 million. It’s cheaper, but it’s not cheap. As Packy was browsing atom for its numbers, he was confused when he saw that FY21 consensus Enterprise Value (EV) / EBITDA was 4.06x. Seemed like a steal. Then he looked more closely: that’s 4.06 thousand times EBITDA. It’s less than eight years old and still growing quickly (74% YoY revenue growth) and most of its revenue still comes from China (~80%). It’s young and fast-growing enough that whether you’re bullish or bearish on the company depends less on today’s metrics, and more on how you think about its growth potential and defensibility going forward. There’s a good case to be made on both sides, and we’re going to do just that. Packy’s going to take the bull case, and Lillian’s going to take the bear case. Then we’ll fight it out and let you know where we end up. To get there, we’ll cover: * Agora’s History* $API’s API* China’s Livestreaming Boom* What Agora Looks Like Today* The Bull Case for Agora* The Bear Case Against Agora* Bull or Bear? To kick it off, let’s go back to the granddaddy of online video communication: WebEx. Agora’s History: From WebEx to YY to APIWho knows what video communication on the internet would look like today if WebEx just embarrassed its employees a little less. Eric Yuan explained to Bessemer partner Byron Deeter, “Every time I talked to a WebEx customer, I felt very embarrassed, because I did not speak with a single happy WebEx customer.”After fourteen years at WebEx, the last four under Cisco, which acquired WebEx in 2007, Yuan left to found Zoom in 2011. He set out to build what he couldn’t convince Cisco execs to let him build at WebEx, a new version of the product rebuilt from the ground up with customer happiness in mind. Bin “Tony” Zhao, another WebEx founding engineer had similar feelings. After building and releasing real-time audio sessions, he said on GGV Capital’s Next Billion Podcast, “I started to regret taking that job, because I got a lot of complaints after the first release, and I realized there are some complaints that I believe I cannot solve at that time.”Zhao didn’t have Yuan’s patience. He left in 2004 to start NeoTasks, which he describes on his LinkedIn page as: “P2p streaming technology and service provider for various companies in media, advertising, video sharing industries.”In 2008, Zhao sold NeoTasks to Chinese streaming site YY.com and joined the company as CTO. That experience shaped what he would build at Agora. YY during the early 2010s was China’s Second Life. The documentary called People’s Republic of Desires gives a glimpse into this brave new world where fortunes were made and lost overnight. According to Interconnected’s Kevin Xu, “Is one of the first livestreaming platforms to reach scale in China, if not the world. It is arguably one of the first instances where people were ‘living real life online.’” Like Tencent’s QQ, which was early to new forms of online monetization like avatars and digital gifting, YY was early to gifting and tipping with virtual goods and real money, a behavior that’s now common online. The company also pushed the boundaries on real-time engagement. Xu told TechBuzz China’s Rui Ma that under Zhao, YY could handle 8 million concurrent users, and up to 100k in the same room, back in 2011. That year, it handled 421 billion voice minutes, more than Skype. After working in B2B at WebEx, YY opened Zhao’s eyes to the potential of the consumer internet. He told GGV’s Next Billion Podcast: I start to realize this technology is not going to be only sitting in the conference room, not only serve the purpose for people to negotiate or discuss certain business topics, it actually helped people to live online. Like they can play, they can have a party, they can sing karaoke, they can actually make friends online through video chat, audio chat. I can envision from there, people can actually live online and that’s part of the inspiration that led to Agora as well.In 2013, realizing the opportunity to accelerate the transition to rich online experiences through real-time audio and video, Zhao left YY to start Agora. Unlike Yuan, who wanted to build a better version of the user-facing product the two built at WebEx, Zhao wanted to build products that helped developers build new user-facing products like WebEx and YY. He wanted to build APIs.Like Yuan, Zhao’s track record made fundraising easy. He raised $6 million a couple of months after forming the company, and went on to raise $126 million from top investors including SIG, GGV, and Coatue.Zoom was praised for raising so little -- $146 million -- before going public. Agora raised even less. Zoom took eight years to go public, Agora took less than seven. But while Zoom is a household name, chances are you haven’t heard much about Agora. That’s because of what it builds, and who it builds for. $API’s APIsAgora builds APIs and SDKs for real-time voice and video communication. It’s one of a growing number of Communications Platforms as a Service (CPaaS) companies, along with Twilio and Vonage, and more specifically bills itself as a Real-Time Engagement Platform as a Service (RTE-PaaS). (This is getting out of hand). It provides a Software-Defined Real-Time Network (SD-RTN) solution to deliver high-quality video and audio across a wide range of devices and environments. (OK, I’ll stop.)With the acronyms out of the way, what does Agora actually do? Like any good API-first company, Agora lets developers build some superpower into their products with a few lines of code. Stripe lets companies accept payments. Stytch lets them onboard and authenticates users. Agora lets them embed high-quality real-time audio and video. Agora is not for static video or audio. The next YouTube, Netflix, or Spotify won’t be built on Agora. It’s for interactive, real-time video and audio, like one-to-many livestreams, audio chat rooms, or one-on-one use cases like telemedicine or tutoring. Before Agora, and even occasionally today, companies spun up their own products by building on top of the open source WebRTC standard. WebRTC is built on the public internet, which is a “best-effort network” - it will make the best effort to deliver your data. In many cases, that best effort is not good enough, leading to laggy or glitchy video and audio. If your business relies on video and audio, you need a better solution. That’s what Agora built. According to analyst Richard Chu: Agora builds on this (WebRTC) with over 200 co-located data centers globally, dedicated to processing real-time audio and video data. To further improve performance, Agora uses intelligent algorithms to monitor requests and optimize data transmission paths to ensure low latency (~300ms) and resilience to packet loss (up to 70%) which ultimately translates into a superior end-user experience. This virtual overlay network is called the SD-RTN.Agora does a ton of engineering work and spends a ton of money on co-located data centers behind the scenes to make real-time audio and video just work. The result is that someone on WiFi in Ghana and another person on 4G LTE with spotty signal in Florida can sit in the same Clubhouse room with thousands of other people and hear the conversation crystal clear. In fact, Clubhouse was apparently built in a week on top of Agora’s voice APIs. Because Agora’s product is an SDK and over 200 specific APIs, all of which work seamlessly with a wide range of programming languages and devices, it makes something previously expensive, slow, and complicated, cheap, fast, and easy. In fact, one Agora customer interviewed on a Tegus expert call said that his company tried to spin up its own product using WebRTC, but shifted course when they achieved only 80% reliability internationally. After building on Agora, he said that going back to WebRTC to save money is “probably not a feasible option in a way that we want to focus on what we're good at as a company.”That’s the power of API-first businesses. As Packy wrote in APIs All the Way Down: This is the beauty of API-first companies. They allow customers to focus on the one or two things that differentiate their businesses, while plugging in best-in-class solutions everywhere else.Instead of wasting time trying to re-solve all of the hard technical problems, not to mention setting up 200 co-located data centers around the globe to ensure global reliability, Agora’s customers just write a few lines of code to plug in the best technology on the market, which constantly improves as Agora’s team ships updates. Plus, Agora’s customers pay as they go, making it easy to get started. Agora is free for the first 10,000 minutes each month, and afterwards, it charges per 1,000 minutes, with different rates for different products and quality levels. It applies automatic volume-based discounts: free up to 10k minutes, 5% off from 100k-500k, 7% off from 500k-1mm, and 10% off from 1mm-3mm. Putting that in perspective, assuming that Clubhouse gets the 10% discount and nothing special on top, each hour-long Clubhouse room with the max of 8,000 people in it costs $427.68. The same room in standard video would cost $1,723 per hour, for standard quality. Premium would run you $3,883 per hour. It’s no wonder Clubhouse’s founders have said they want to keep the product-audio-only. Video is expensive! While Agora can serve all sorts of use cases -- one-on-one telemedicine consultations, audio rooms, in-video-game chats, and more -- its bread and butter, and where it makes the most money, is on one-to-many video livestreams.It’s hard for westerners to appreciate the magnitude of the livestreaming opportunity without experiencing it firsthand, but it’s central to the Agora thesis. Luckily, Lillian can give the local perspective. China’s Livestreaming BoomSaying livestreaming is big in China is akin to calling your phone a smartphone. Technically correct but so obvious it’s redundant. Since the advent of 4G and the roll-out of 5G, livestreaming and short videos are the two new mediums of the Chinese internet.As a delivery mechanism, since 2015, livestreaming has come to encompass entertainment, education, socialisation, and, bolstered by COVID-19, commerce. In 2020, 560m people in China watched livestreams -- roughly 39% of China’s population -- and the Chinese market livestreaming e-commerce is estimated to be worth RMB 1.05 trillion ($165bn USD). In China, livestreaming is the metaverse’s manifestation that’s eating the world. A leisurely stroll down the streets of Shanghai shows the donut light of livestreaming as a familiar fixture in boutiques. Occasionally, in particularly touristy or scenic spots, you’ll see livestreamers in the wild, talking to their fans who are flooding them with messages and gifts. In quieter cafes, students stream tutoring courses from superstar teachers. Every other night, Lillian’s mother tunes into her Chinese stock course with her favourite Key Opinion Leader (KOL) along with thousands of others on a WeChat mini-app. Whatever Chinese consumer app Lillian opens these days, be it Taobao or Pinduoduo or JD or Xiaohongshu (China’s closest equivalent to Instagram), the first prompt is to view the current livestreams for different products.In Livestreaming monetisation models, Lillian wrote: Livestreaming as a medium is a conflation of a product as well as as a distribution channel. It exists on a spectrum of being pure entertainment on one-side and a new go-to-market strategy on the other, with different kinds of monetisation models for each side. While western startups have centred around the 'livestreaming as product' theme, China, with its enabling infrastructure in payment and fulfilment, have been quick to adopt livestreaming as a new distribution channel. This June's 618 Shopping Festival, saw Alibaba and JD.com report a combined total of $136.5 billion of livestreaming sales. Kuaishou surpassed 170 million daily active livestreaming shoppers in June and Pinduoduo also wants its ~500m users to start streaming as well. No longer just for small ticket items -- houses, cars, phones have all been sold during the lockdown -- livestreaming is climbing up the value chain.Livestreaming’s journey looks a lot like our familiar Gartner Hype Cycle: The great un-lock for China’s livestreaming industry was monetisation, but since then, it has entered the culture. It has created an entire ecosystem of new livestreamers and the talent agencies (called Multi-Channel Networks) that spot talent and nurture them (or lure unsuspecting folks in to fleece them. New industries are grey areas). Remember this video? That’s a training camp for livestreamers. Everyone is training to be the next Viya - who is essentially Oprah incarnated as a livestreamer. She can command 37m viewers (bigger than the audience for the Oscars or Game of Thrones finale) during a stream. Even Kim Kardashian had to pay a pilgrimage to the Don when she came on to Tmall to sell her KKW branded perfume. With Viya’s support, she sold out all 150,000 bottles in 1 minute. Was this a representation of one of social media’s biggest stars  acknowledging her successor in the dawn of a new medium? At this point, hopefully we’ve convinced you that livestreaming in China is big, and that livestreaming e-commerce is an established distribution channel. We should also highlight that it is also enabled by local factors in China including embedded digital payment system, robust logistics chain for next day delivery and returns, an ecosystem of Multi-Channel Networks (MCNs) cultivating talent, fandom culture which allows for a frictionless checkout and buying experience. A lot of foundational pieces need to fall into place before the flywheel can really take-off for livestreaming e-commerce (which is a very specific form of livestreaming). This means, China’s livestreaming is not so much the future as much as a potential future for the world.What Agora Looks Like TodayLivestreaming, and particularly livestreaming in China, has been Agora’s core focus. It’s the hardest to get right, and no one does it better than Agora for the price. But it’s beginning to diversify. Today, Agora offers the following product lines, all supported by its Real-Time Engagement platform:As more competitors enter the space, we’re seeing an increasing verticalization and internationalisation of their product range. One focus area is education. As education moves online, and superstar teachers livestream to much larger classes than was possible physically, Agora is flexing its muscles to accommodate new needs. At the beginning of the pandemic, the company worked with New Oriental Education, a publicly traded private education company, to bring the school online in a week, supporting classes as large as 20,000 concurrent students. It’s leaned into education heavily since. Later last year, Agora announced the release of flexible classroom, a low-code application targeting education providers. They’re augmenting the education product suite with acquisitions, including Easemob (an instant messaging API provider) and an interactive whiteboard API provider. The company has also been on a roll in obtaining a slew of security clearances such as HIPAA, which allows them to serve the booming telemedicine market, and GDPR, which should give western companies more comfort embedding Chinese tech. The future of product for Agora will be moving towards greater localisation as it tailors their offerings to the requirements of regions outside of China. CustomersIn China, Agora focuses on education, entertainment, gaming, healthcare with emerging categories for finance, IoT, and e-commerce. As it makes an international push, it’s seeing success with customers who share those use cases, including Hallo in education, Clubhouse in entertainment, Unity in Gaming, and talkspace in telehealth. Over the past couple of quarters, non-China revenue has grown from 20% to nearly 30%. Its Nasdaq listing and Clubhouse’s meteoric rise have no doubt helped give western customers more confidence. Together, Agora’s customers now consume 40 billion minutes per month, or nearly half a trillion minutes annually. Those minutes translate directly into top line growth. FinancialsAs its customers consume more minutes, Agora is growing tremendously quickly. Growth naturally slowed from a COVID-charged 166% in Q1 2020, but it still grew 74% YoY last quarter.The company has solid gross margins of 60%, but they’re on a slight downtrend. As gross margins compress and SG&A and R&D expenses increase, Agora dipped back into the red for the past two quarters after being profitable in Q1 and Q2 of 2020. Those two quarters of profitability are a good sign that as top line grows, Agora can generate profits, but it has ramped up spend in R&D to continue to build its lead on the technical side and improve localisation, and SG&A to acquire more international customers. Agora is an API-first business, which means it grows in two ways: * Acquires new customers* Existing customers’ usage expandsIt tries to get into companies early and grow with them as they grow, and it’s working. Agora reported comically high 179% dollar-based net revenue expansion in 2020, meaning that the same customers spent 79% more last year than the year before on average, even accounting for any customers that churned. That’s top percentile stuff, and a testament to Agora’s stickiness.That kind of growth and retention doesn’t come cheap. Based on Public Comps’ data, it’s the sixth most expensive company in the BVP Cloud Index at a 29.5x EV/2021 Revenue multiple. But it’s also the fourth best based on the Rule of 40, a SaaS heuristic that says that companies are strong when their YoY revenue growth plus free cash flow (FCF) adds up to more than 40%. Agora is at 77%, behind only Zoom, Square, and Shopify among BVP Cloud companies, and right ahead of Twilio. Agora is young, expensive, and fast-growing. It’s the only company in the BVP Rule of 40 Top 5 with a market cap under $10 billion. The next closest, Twilio, is 10x more valuable at $65 billion. Each of those companies exist in categories -- video conferencing, ecommerce, and messaging -- that are more mature than livestreaming. Can livestreaming catch up? Agoraphilia: The Bull CaseI’m making my bull case on growth, not price. Agora is certainly expensive today. To be an Agora bull, you need to believe three things: * Livestreaming will continue to grow* Agora has the best product in the market * It’s defensible against bigger incumbents and startups alike. That’s it. Let’s take a look at each. 1. Livestreaming will continue to grow.As Lillian highlighted, livestreaming is massive in China. Livestreaming ecommerce in China alone is a $165 billion market. That’s e-commerce sales via livestreaming. Market Research Future expects the livestreaming market more broadly to reach $247 billion globally by 2027, growing at a 28.1% CAGR between now and then. There are some major catalysts: * 5G: As 5G rolls out, it will be cheaper, faster, and easier to create and consume livestreaming content from anywhere. * Audio Chat: Clubhouse just announced a Series C valuing the company at $4 billion, on the heels of a January Series B at $1 billion. Whether you think that’s ridiculously overvalued or not (I do for the record), it’s a good sign for Agora’s most prominent western customer, and it’s accelerating the adoption of audio chat as a feature. Twitter rolled out Spaces, Spotify acquired Locker Room to build its own Clubhouse competitor, Facebook is of course jumping in, Slack announced its own Clubhouse competitor on Clubhouse, and even fucking LinkedIn is building Clubhouse-like functionality. While these platforms are big enough to roll their own tech, even if they don’t go with Agora, they’re signaling to new companies in Agora’s target market that they, too, should be adding audio chat into their products. If audio chat is a commoditized feature, that’s a good thing for the companies that sell audio chat picks and shovels. * The Verticalization of Zoom. Zoom’s rapid COVID ascent attracted countless startups building products that take live-streaming video for granted, and embed it to create tailored experiences that solve particular user needs. JJ Oslund wrote about this trend in The Verticalization of Zoom.  All of these new video-based products fighting it out for customers is a great thing for Agora and other video APIs. We haven’t even talked about VR, AR, and the Metaverse, but at this point, you know I’m bullish. Zhao has hinted on his ambitions in VR in particular, and Agora is already integrated in some VR education products. There will be no shortage of demand for products that make it easy to embed real-time voice and video into products as the world continues to move online. The question is, will Agora capture that opportunity? 2. Agora has the best product in the marketWe’re going to assume that most of the large players like Facebook and Twitter will build (or acquire) their own video and audio products, but that startups are not going to build for themselves. It’s too costly and time-consuming, and they’re not going to be able to match Agora.  So which product will they use? Agora has become a go-to piece of the tech stack for companies building video streaming products. In Zoom’s Blank Check, Packy wrote: Akarsh Sanghi, who recently launched a video streaming platform for lifestyle creators called Reach.Live out of YC, told me that all the new YC companies are building on the same stack: “React application on the client side, typescript, hasura, Postgres, WebRTC and Agora APIs for the video player.”Agora targets companies with scale ambitions. It’s built for developers and pursues a bottoms-up go-to-market strategy. It gives away 10,000 minutes per month so that builders can try the product, and then retains them with affordable pricing and a quality experience. According to the company itself, its advantages come from the SD-RTN and 200+ global data centers, which minimize latency, its flexibility via a suite of customizable APIs, its ability to scale to millions of users, and compatibility with a multitude of development platforms and devices. Agora is so confident in its product that it’s piloting the XLA (Experience Level Agreement), a play on an SLA that’s based on experience instead of just uptime. Customers shouldn’t have to pay for laggy video or audio just because it technically gets through. That’s a move you make if you believe you have the best experience and want to force competitors to play by your terms.According to multiple customers interviewed on Tegus, all of whom evaluated multiple competitors for their products and whose uses range from video-game audio chat to one-to-many online video education, Agora’s advantage comes down to a combination of price, ease, scalability, and quality. Some competitors do certain things better than Agora -- Dolby.io has more top-end audio functionality, for example -- but the sentiment is that no product works as well across video and audio, for close to the price, as Agora does.  Agora is currently used by some of the biggest livestreaming platforms in China -- YY, Momo, Bilibili, New Oriental Education, and Huya -- and as livestreaming takes off in the west, it’s well-positioned as the safe, scalable, affordable choice. “Nobody ever got fired for buying Agora.”3. It’s defensible against bigger incumbents and startups alike. Agora is not alone. In Unbundling Zoom, Oslund expanded on that trend, highlighting the many players in the “Video API Wars.” First, there is a wave of startups building video APIs. Hopin, one of the fastest-growing startups in history, is built on Mux, as are SoulCycle and Equinox’s streaming and on-demand classes. Not Boring portfolio company Teamflow is built on Daily, and CEO Flo Crivello told me they love it. Daily counts Y Combinator, Icebreaker, and Tandem among its clients, too. Twilio offers solutions more geared towards less price-sensitive enterprise clients who may already use Twilio’s original messaging products. There are more, as seen in the chart above, and more even beyond that. Meanwhile, incumbents and large cloud players like AWS and Tencent Cloud have ambitions to enter the real-time engagement space. But Agora has moats against both, starting with scale economies. Scale economies against startups make sense, and are similar to those enjoyed by any API-first first-mover: Agora’s 200+ data centers are a hard-to-replicate advantage, and it’s able to spread the costs of developing better solutions to edge cases across more customers. When the difference between excellent and terrible performance is measured in milliseconds, the little things matter. Startup competitors will steal particular use cases like 1-1 chat or high-end audio from Agora, but I don’t think they’ll be able to catch Agora’s quality and scalability across the full suite of real-time engagement products. Interestingly, that scale advantage extends to its battle against larger, better-funded cloud giants. One expert, an exec at a competitor, told Tegus that Tencent Cloud and AWS are limited by where their own data centers are because they’re not willing to rent from cloud competitors. Tencent will struggle to compete for customers with global audiences, for example, because it’s not willing to partner with AWS. Agora can rent from anyone, which gives it better global coverage, which gives it lower latency on calls with global participants. Another advantage is switching costs. One customer interviewed on Tegus summed it up: One thing I can tell you is that when it comes to price, if a company is not able to provide a model that is literally twice cheaper than Agora, it would be really hard for me to switch. Like if one of the Chinese companies says, "Hey, I can give you 100% discount from Agora's pricing," like I might consider, but if it's like 50%, like 40%, 30%, even like 20%, like the cost of switching is so high.Finally, there’s Agora’s head-start combined with its focus. While this isn’t a traditional moat, it is an advantage. The competitor exec on Tegus said that even if the cloud giants poured a ton of resources into catching up to Agora, it would take them a year just to get to where Agora is today, by which point Agora would be another year ahead. Outside of Amazon with AWS, where they really created the market, there are no good examples of companies shifting from a customer-facing product to a developer-focused API product and winning. I have doubts that Zoom, which is making a big push on its own APIs, will be able to effectively compete with Agora, either. In fact, I think Zoom should just buy Agora.I’m bullish on Agora. Real-time engagement is exploding, and will become table-stakes in many products. Standalone livestreaming will continue to boom in China, and it’s already beginning to spread to the rest of the world. Agora is best-positioned to capture the opportunity, and it has moats to protect its profits as competitors enter the space. All that, and it’s only worth $6.6 billion.Over to you, Lillian. What am I missing? Agoraphobia: The Bear CaseSo let’s go through each of Packy’s assumptions and unpack-y them. Livestreaming’s revolution will not be global The thrust of the bull case for Agora is that livestreaming will become as ubiquitous in the rest of the world as it has been in China. This glorious future where every dear reader will be half in the metaverse and half out. But what if this livestreaming phenomenon doesn’t become a successful Chinese export like the 2019 scooters and bike co-shares waves, but rather like that of mobile payments? The enablers for livestreaming in China was not just the roll-out of 4G and 5G; but also effective monetisation models and payment infrastructure that made it lucrative for livestreamers, companies and platforms to focus on livestreaming. China’s payment rails and systems have not just leapfrogged their western counterparts, they are built by the tech giants like Alibaba and Tencent themselves. As such they are tech-led rather than finance-led. Will embedding frictionless payment systems within livestreams for the world be as easy as spinning up an instance of Agora? Without a credible monetization model, livestreamers wouldn’t be incentivised to consistently livestream, and platforms wouldn’t achieve content marketplace liquidity. We’ve seen the downfall of Meerkat, Periscope and Facebook Live; why is this time going to be different? Those didn’t fail because the technology wasn’t there, but because other enabling factors were not. But let’s assume, we’ve got 5G, we’ve cracked payment, what else? Sounds strange but the world needs to know to make livestreaming fun. I recently tuned in to Amazon Live, and promptly shut the window after 2 minutes. It was so bland. The livestreamers didn’t know how to engage with the audience; the audience asked bad questions, there were no stickers or mini-games that made it engaging. It was all functional and no fun, and I was not going to waste my precious procrastination hours on there. I’ve noticed a similar thing on Clubhouse: people’s conversations are meandering and not that engaging. Once the shininess of listening to your favourite tech celebrity wears off, the dopamine hits are far and few in between. All of this is to say, livestreaming the technology is here, but livestreaming as a medium is not. That will take time and deliberate UX decisions to cultivate. If not done correctly and soon, people might lose patience for the technology altogether. After all, every form of entertainment will be competing against Fortnite. Also why entertainment as the default format you ask? Because that’s the format that makes money for Agora when you are charging by the minute. “A technology is merely a machine. A medium is the social and intellectual environment a machine creates” - Neil Postman, Amusing Ourselves to Death I’m reminded of Eugene Wei’s seminal Status-as-a-Service blog post. He talked about how dull the early days of Twitter were, with people posting mundane life updates before tighter feedback in the form of status acquisition kicked in. This is where livestreaming is now in the West and it’s got fiercer competition for attention than Twitter had. For China, there were many years of cultural cache and user training built on tipping livestreamers, on livestreamers knowing how to perform for the camera and to engage an audience of thousands. This kind of cultural medium knowledge doesn’t spring up overnight. Fundamentally what I’m pushing back on is saying that a technology will get adoption because it is big in China, when really we should be asking what made it catch on there in the first place. Agora has the best product for specific use cases in the market and their business model is built around thisAgora was born and bred in a Chinese world of one-to-many livestreaming transmissions. Their killer feature revolves around the fast and steady scaling needs when a streamer turns on their camera and talks to thousands of viewers. Even their pricing is aligned to this model, having frequent 1:1 livestreaming convos might not break the 10,000 free minutes a month mark, but a livestreaming with a few thousands concurrent users gets you there fast. Basically, Agora makes a lot of money when they get used for the use cases for which they were built. Other use cases are doable, but it’s not affecting the bottom line as much.  As Packy said above:Startup competitors will steal particular use cases like 1-1 chat or high-end audio from Agora, but I don’t think they’ll be able to catch Agora’s quality and scalability across the full suite of real-time engagement products.But what if we’re in a best-of-breed world for livestreaming and Agora’s market share gets eaten one by one by startup and enterprise competitors? And what if they are left with use cases and verticals that don’t play to their pricing strengths? I can see a world where the Zoom API takes small-scale internal enterprise conferencing, MUX takes enterprise grade quality video that gets recorded in the US, and big tech such as Twitter and Facebook will use their internal video options which they can also white label to others. In a market where you’re competing against best-of-breed, death will come in the form of a thousand cuts. Can Agora be all things to all people in livestreaming? And if they can’t, are they getting into the verticals that allows them to maximise their revenue?Agora’s historical strengths have been in social, gaming and education apps. They got into these apps early in China and grew with the company. Their growth, similar to the growth of other API-first companies, has been scaling with emerging companies. Have they arrived at the right time for that in the rest of the world? How many more Clubhouses can there be for Agora? Customers who churn because they want to do it in-houseChinese tech companies are like western tech companies but more so. By which I mean, they tend to do things by extremes. One thing they particularly love is building things in-house. For a core use case such as livestreaming, once it gets big enough, almost every Chinese tech company will have the conversation of whether to bring it house. One comparative advantage Chinese tech firms hold is that labour is cheaper, and theoretically, the thinking goes, that should lower the total cost of ownership. I am skeptical of whether this trend will play out in the long term for Chinese firms or western firms. Twilio went through the same journey that Agora now is, and customers found the costly piece wasn’t the labour but the on-going maintenance. WhatsApp still pays Twilio hundreds of millions of dollars per year. I don’t think that will stop them from trying in the short term. It’s interesting to note that on the customer page for Agora, heavy hitters such as Bilibili, Meituan, and Huya have disappeared during 2020. While they might come back to Agora in a few years, the churn is still a concern in the short term. The Chinese company spectreThere is a narrative tax on being a Chinese company these days. I’m commenting on the meta-narratives and the baggage associated with China in all fields, but particularly tech.It’s debatable whether it’s warranted but it’s definitely present and it’s not pretty. There’s increasing concerns around being a Chinese affiliated company among your buyers, among your employees and among the population at large. Zoom had to go through it as they exploded during Covid-19. Agora had to go through the public commentary cycle as Clubhouse got big. What we also know is that private conversations are happening behind closed doors on precisely the same topics. It affects buyer’s perception and trust outside of anything that Agora does or doesn’t do (even as it has obtained ISO27001, ISO27017, ISO27018, and SOC2 Type1 certifications and passed third-party GDPR, CCPA and HIPAA compliance testing/ auditing). It’s a shame but also a reflection of our current geo-political climate onto the private economy. How much this will affect Agora’s actual progress is hard to say, but the ambiguity is what makes it tough.Bull or Bear?So which is it? Bull or Bear? Agora is in a tricky spot, full of natural tensions: * It wants to serve the broadest range of real-time engagement use cases well to appeal to the customers who need everything to just work, but faces competition from more geographically and use-case focused competitors. * It wants to expand to the west, but hasn’t made the proactive PR push that Zoom has to appease westerners security concerns.* It wants its customers to get very big, but not so big that they build in-house. If Agora keeps growing at industry-leading rates in China while expanding to the west, the one-to-many thousands use case takes off outside of China, and Agora’s product continues to beat competitors on the combination of price and quality at scale, we might look back on $6 billion as the steal of the century in a few years. Agora is a bet that people will live more of their lives online, and that large scale one-to-many livestreams become more common. The internet rewards the best. Instead of 10 million teachers with ten students each, the hundred best teachers will stream to a million students each. The same dynamic plays out across industries.  If and when that happens, Agora is well-positioned to win. But if competitors out-focus Agora by serving particular use cases better than it can serve those use cases as part of a broader suite, and if Agora’s not able to shake its “Chinese company” label in the West, its growth may be limited and its revenue multiple will be hard to grow into.Ironically, Lillian is actually long $API and Packy doesn’t own any shares. Will we switch positions? And what about you? Bull or bear? Let us know on Twitter @lillianmli & @packym.How did you like this week’s Not Boring? Let me and Lillian know if we should do this again, and who you want to see us cover next:Loved | Great | Good | Meh | BadThanks for reading, and see you on Thursday,Packy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.notboring.co

Welcome to the 1,091 newly Not Boring people who have joined us since last Thursday! If you aren’t subscribed, join 44,266 smart, curious folks by subscribing here:🎧 To get this essay straight in your ears: listen on Spotify or Apple PodcastsToday’s Not Boring is brought to you by… BlockFiBlockFi is a new kind of financial institution. With BlockFi, you can use cryptocurrency to earn interest up to 8.6% APY (I’ll explain how below), borrow cash against your crypto holdings, and buy or sell crypto. No minimum balances or hidden fees. Tip: signup is smoother in the mobile app. Set up your BlockFi account today, and get up to $250 in free bitcoin:Hi friends 👋 ,Happy Thursday / Tax Day! Today’s post couldn’t have been timed any better. I’ve been talking to the BlockFi team for a couple of months, and we picked April 15th about a month ago. We didn’t know that Coinbase would be IPO’ing yesterday, or that I’d be so deep down the crypto rabbit hole at this point. It’s fate. This is a Sponsored Deep Dive on a company I’ve been wanting to dig into for a long time. BlockFi offers up to 8.6% APY on deposits, which is obviously tempting and also confounding. I’ve had so many text conversations with friends that go something like, “I want to do this, but it has to be bullshit, right? How does that even work? We need you to do a Not Boring on this.” I’m happy to report that it is not bullshit, and I have the receipts to prove it.Let’s get to it.Is BlockFi the Future of Finance?Coinbase IPO’d yesterday to wild success. After touching $420.69 and going as high as $429.54, it closed at $328.28, up 31% from its reference price of $250. It peaked at a market cap of over $100 billion, and closed at $86 billion. I’m more excited about BlockFi, though, and not because they’re sponsoring this post. It’s a more selfish reason, one that makes the sponsorship money seem like peanuts. See, if BlockFi existed in 2013 instead of Coinbase, I probably wouldn’t even be writing this newsletter. On May 16, 2013, when Coinbase was less than a year old, I set up an account and bought my first bitcoin. I forget why, but I just looked up when Union Square Ventures first invested, and that must have been it: That was good enough for me. I bought 10 BTC on May 16th, another 15 on June 14th, and another 13 on July 12th. That September, after quitting my job in finance, I flew my unemployed ass to Oktoberfest for a fun weekend with a few friends. On September 24th, after ten too many steins, I woke up in my Munich hotel room a little hungover and feeling dumb for spending so much on the trip and the night out... and made the stupidest financial decision of my life. I just sold some of those silly bitcoin I’d bought, and bingo, free Oktoberfest. It felt like such an obviously responsible thing to do that three days later, I sold ten more, then I sold eight in October, five in November, and the last five in May (for a nice little 4x, I might add!). I sold all 38 bitcoins for a total of $7,232. At current prices, those 38 bitcoins are worth $2,450,050. Gulp. If BlockFi had been around at the time, I could have taken out a USD loan against some of those bitcoin and earned interest on the rest while they sat safely in my account. If BlockFi paid interest on bitcoin that whole time, like they do today, I’d have more than 40 bitcoin today, or over $2.6 million. Double gulp.  I’ve told you before that I’m an idiot, and I wasn’t kidding. But that’s enough self-chastising for one day. We’re here to talk about BlockFi.Is BlockFi Legit?BlockFi, which just announced a $350 million Series D led by Bain Capital Ventures, Pomp Investments, Tiger Global, and partners of DST Global, is building a full-fledged financial institution for crypto investors. BlockFi offers four products to retail investors: * BlockFi Interest Account (at rates up to 8.6% APY)* Trading Accounts* Crypto-Backed Loans* Credit CardIt also acts as a prime broker for institutional clients, with custody, financing, execution, and margin. BlockFi is building SoFi plus JP Morgan’s prime broker desk, for crypto. There’s a race going on among everyone in the financial services space -- centralized crypto companies like BlockFi and Coinbase, neobanks like Chime and Monzo, public fintech companies like Square and PayPal/Venmo, and large brokerages and banks -- to become the financial super-app, the place that customers go for loans, credit cards, trading, insurance, cash management, and more. BlockFi has a unique wedge: a growing suite of products that earn clients high interest rates and free crypto.The first question anyone has when they hear about BlockFi is: “What’s the catch? 8.6% APY sounds too good to be true. That can’t be legit.” I went DEEP to understand how they do it, and it’s legit. Essentially, BlockFi arbitrages the fact that traditional finance and crypto don’t like to deal with each other. To understand how it works, we’re going back down the crypto rabbit hole. We’ll cover topics like bitcoin, stablecoins, DeFi, and CeFi, and basis trades. You’ve probably heard the terms, but probably, like me, didn’t fully understand what they mean. We’ll change that. At the very least, we’ll all sound smarter at our next party.There’s so much to dig into here that it’s hard to know where to start, but we’re going to try:* What Does a Bank Do? * What BlockFi Does* Stablecoins and 8.6% APY* Grayscale Bitcoin Trust* The Race to the Finance Super App* The OfferAfter doing the research for this piece, I moved some of my money into stablecoins on BlockFi, and transferred all of my (much, much smaller than 2013) bitcoin holdings to BlockFi from Coinbase. Yesterday, I was on a YouTube livestream with Ben Carlson talking about the Coinbase IPO, and unprompted, he said that he’d done the same. If you want to check it out for yourself, sign up with the Not Boring link to get up to $250 in free bitcoin when you fund your account. If you’re still wondering what BlockFi is and how it pulls off such high rates, keep reading. There’s a lot to learn. Let’s start somewhere obvious… What Does a Bank Do? Banks make money in three main ways: * Net Interest Margin. Customers deposit money. Banks lend that money out to other people and businesses at a certain rate, pay depositors a lower rate, and keep the difference.* Interchange. When you use a credit or debit card at a store, the store pays your bank and its bank, typically as a percentage of the transaction and a small fixed amount. * Fees. Banks charge customers money when they overdraft, take money out of an ATM, and for all sorts of other things. For our purposes, Net Interest Margin is the most important. It’s the spread between what banks pay on deposits and what they earn on loans. Let’s do the math on a mortgage as an example.Right now, the Annual Percentage Yield (APY) on a standard Bank of America bank account is 0.01%. Let’s assume they can lend money to a homebuyer on a 30 year fixed rate mortgage at 3.0%. Bank of America’s Net Interest Margin is 3% - 0.01% = 2.99%. It’s not that banks want to pay next to nothing on deposits. It’s just that with low rates across the board, banks aren’t able to pay much more and make enough net interest margin to pay for overhead and still generate enough profit to keep shareholders happy. When they could lend money at a higher rate (30-year mortgage rates were 18% in the early ‘80s), savings accounts paid higher rates too. Banks would love to pay high interest rates on deposits. Banks compete with all of the different things you can do with your money -- buy a house, stocks, or crypto, pay off loans, travel. The higher the interest rate, the more likely you are to keep your money sitting there. More money sitting there means the banks can lend more means higher income for the banks. Given the low rates they earn from borrowers, they just can’t.BlockFi, however, can. Meet BlockFiFounded by Zac Prince and Flori Marquez in 2017, BlockFi is a crypto-native financial institution. But while BlockFi is for crypto investors, it’s not decentralized. It has over 700 employees, a headquarters in Jersey City, and is regulated. On the spectrum between a traditional financial institution (“TradFi”) and a Decentralized Finance (“DeFi”) protocol, it falls somewhere in the middle. Like Coinbase, it’s what’s known as Centralized Finance (“CeFi”).To a client, BlockFi looks and feels like an online bank. When I set up my account, it felt very much like setting up a regular online bank account. * I signed up, verified my identity, and waited a day for everything to get approved. * Once I was in, I connected to my bank account via Plaid and deposited money via ACH. * The money hit my account instantly and BlockFi converted it to GUSD (a stablecoin). * Without me doing anything special or crypto-y, it’s now earning 8.6% APY. * With Flex, I chose what currency I get interest paid in. So I deposited in USD, converted automatically to stablecoin, and get 8.6% interest paid out in ETH. * Then, I transferred my BTC from Coinbase. It took about two minutes, and now I’m earning 6% APY on that, in bitcoin. (Rates vary by coin deposited)Within two days of starting the process, I now have a meaningful amount of my net worth in BlockFi. I wouldn’t recommend it if I didn’t trust it for myself. And it was easy. That familiar bank feeling with backend crypto superpowers is by design. Early BlockFi clients were crypto natives (they had to be to use a new crypto-based product during crypto winter), but the company is making a push to attract crypto-curious clients, kind of like us. They want to be the on-ramp for millions of people to get involved with crypto. A couple of interesting things happened in the setup process: * It Felt Like a Regular Bank. BlockFi’s on-ramp to crypto feels smooth and familiar. * Crypto Superpowers. I transferred a good chunk of money from Coinbase to BlockFi in minutes, not the hours or days it would take to send a wire or transfer money between accounts. BlockFi thinks that instant settlement gives it a big advantage over traditional financial institutions. That combination of ease and power is working. In early March, BlockFi announced a $350 million Series D that valued the company at $3 billion. Traditional venture/hedge funds Bain Capital Ventures, Tiger Global, and DST Global joined crypto-focused Pomp Investments as co-leads. At the time of the announcement, the company announced some eye-popping stats:* $50 million in monthly revenue, up from $1.5 million a year earlier* $15 billion in assets on the platform, up from $1 billion a year earlier* 0% loss rate across its lending portfolio * 50% month-over month growth $50 million per month is an absurd amount of money for a company that’s less than four years old. It would be a great annual revenue number for a company that age. BlockFi generates revenue in three (soon to be four) ways: * BlockFi Interest Account: Earn up to 8.6% APY on stablecoin deposits, 6% on BTC, and 5.25% on ETH.* Trading Accounts: No fee trading of Bitcoin and other cryptocurrencies* Crypto-Backed Loans: Loans on crypto balances as low as 4.5% APR* Credit Card: Visa credit card with 1.5% bitcoin back on every purchase (coming soon)These look a lot like the ways that banks make money. Let’s break down each, saving the most complex for last. Trading AccountsBlockFi lets clients buy and sell cryptocurrencies. The product is similar to Coinbase in that it’s a centralized and easy-to-use way to buy crypto, but there are a couple key differences. Coinbase Offers More Currencies. Because Coinbase’s business is all about buying and selling crypto, it offers a lot more assets than BlockFi. You can buy nine assets on BlockFi, and 44 on Coinbase. While BlockFi will add more assets over time, it’s not the focus of the business. Trading on BlockFi is really about giving people a way to build up crypto deposits that BlockFi can lend out, and it only offers trading in coins that it lends. BlockFi Has Lower Fees. Coinbase makes most of its money by charging retail traders fees. Coinbase charges normal accounts 3-4% transaction fees per trade, plus a spread on top. That drops to 0.5% plus a spread for Coinbase Pro accounts. It nets out to a 1.25-1.5% take rate on retail trades. Institutions pay much less, around 0.05%.In Coinbase and the cryptoeconomy, Tanay Jaipuria wrote: Over 95% of the revenue that Coinbase generates comes from transaction revenue, i.e., commissions on trades from retail and institutional clients, so let’s focus on that. Digging one level further, Coinbase’s institutional trading volume makes up about 60% of total volume. However, Coinbase makes 95% of its transaction revenue (and 90% of its total revenue) from retail trading volume.BlockFi does not charge transaction fees, but it does take a spread on trades that averages at around 1%. It’s cheaper than Coinbase, but more expensive than exchanges like Binance and FTX that are more powerful but harder to use, particularly for people new to crypto.Importantly, like Coinbase, FTX, Binance, Uniswap, and other exchanges, but unlike non-crypto platforms like Robinhood and PayPal, BlockFi lets you move your coins in and out. At this point, trading is a feature on BlockFi, not a full standalone product. It’s a way to onboard people to crypto and get them earning yield. Bitcoin Rewards Credit CardBlockFi is launching a credit card, with Visa, that feels like a regular credit card in every way -- you can use it everywhere -- except that it gives you 1.5% back in Bitcoin whenever you use it, and up to $750 or more in bonus bitcoin rewards. This one is straightforward. Credit card providers earn an annual fee and interchange, and it’s up to them to use it in a way that attracts customers and strengthens the business. Traditionally, that’s meant points, miles, or cash back. In Ramp’s Double-Unicorn Rounds, I wrote that instead of points: ...it rewards them with better software. Better software drives more usage, which drives more revenue, which drives better software, and so on. The faster the flywheel turns, the further ahead Ramp pulls. The same principle is at play here. Instead of points or cash back, BlockFi gives people bitcoin. It seems like a minor distinction, but it’s potentially massive, for two reasons. One, they’re rewards that can increase in value over time. If you’re bullish on bitcoin, then you believe the rewards you earn will be worth more in the future. You’re getting long bitcoin every time you buy anything. (Of course, they can also go down over time). Two, bitcoin rewards are an on-ramp. There are a lot of people who don’t want to spend their hard-earned cash buying bitcoin, or feel uncomfortable depositing money in an account and trading it for bitcoin. Those same people might be happy to just get free bitcoin for doing something they’d be doing anyway. Once they do, it kicks off BlockFi’s money flywheel: * Earn bitcoin* Bitcoin automatically deposited in BlockFi account, BlockFi lends it out* Client earns 6% on bitcoin holdings in bitcoin, building up the stack* Client can take USD loans against that bitcoin The bitcoin credit card is an on-ramp, a way to get the next 15 million people to dip their toes in crypto. It’s an on-ramp to BlockFi, too, and likely a low CAC one - who doesn’t want free bitcoin? Once clients are in the ecosystem, BlockFi can monetize them in all sorts of ways as it builds out more financial institution functionality. Crypto-Backed LoansThere’s this tension in crypto: thousands of people have made millions of dollars by buying and hodling bitcoin, ETH, and other coins. On-chain, they’re very wealthy. But to actually use that wealth to buy things, they need to sell coins. That’s a problem, because selling triggers capital gains taxes in the US, and because most crypto-wealthy believe bitcoin will only keep going up in value over time. Historically, doing anything but hodling has caused major regret.The internet is littered with cautionary tales. See: my ~$2.5 million Oktoberfest experience, or even more painfully, Bitcoin Pizza. On May 22, 2010, programmer Laszlo Hanyecz bought two pizzas from Papa John’s for 10,000 BTC. At the time, those 10,000 BTC were worth $41. Today, they’d be worth $645 million.  The examples are painful and comical, but it’s a genuine problem: there’s nearly $1.2 trillion in wealth tied up in a currency that people don’t feel comfortable spending. BlockFi solves that by offering USD loans collateralized by bitcoin at rates as low as 4.5% APR. BlockFi is able to offer competitive rates while protecting its downside by holding onto your bitcoin (or ETH, Litecoin, or PAXG) as collateral. Loans start at a 50% Loan to Value (LTV), meaning that you need to put up bitcoin that are worth twice as much as you’re borrowing. If you want a $100k loan, you need to put up 3.12 BTC, currently worth $200k. If the price of bitcoin crashes, that gives BlockFi a 50% cushion. If the price drops below certain thresholds, it will ask borrowers to post more collateral. In the worst case scenario, it can liquidate some of your bitcoin to cover the loan. That said, even in the sharp drawdown in March 2020, it didn’t have to liquidate any clients, while DeFi protocols like Maker did. That’s good, because selling into a massive selloff is typically the worst thing you can do. This highlights an important and obvious distinction between DeFi and CeFi: CeFi companies have teams of real people who can proactively work with clients to get ahead of issues before getting to the point at which a liquidation needs to occur. Protocols have dashboards and warning signs, but not customer support and risk teams whose job it is to avoid catastrophe. Everything is a trade-off. DeFi protocols typically have lower fees and are more open and transparent. Many people believe in “not your keys, not your coins,” the idea that if you keep your coins in a centralized account, you don’t really control them. (Balaji made this point in an excellent Tim Ferriss Show interview.) Plus, one person’s comfort in having people on the other side is another’s discomfort in having people on the other side. For BlockFi’s target customers and institutional partners, though, the trade-off can be worth it. BlockFi has a 0% loss ratio on loans. It’s the lower risk option. BlockFi Interest AccountUp to this point, everything feels pretty normal: no-fee trading, credit cards with 1.5% back, and collateralized loans at 4.5% APR are things we’re used to. BlockFi just does it all with crypto. The BlockFi Interest Account is normally where people start to give me quizzical looks, because BlockFi offers up to 8.6% APY on stablecoins and 6% APY on bitcoin. That’s an insanely high rate, and it makes a huge difference. Over 30 years, $100k at 8.6% APY turns into $1,188,214. At the standard 0.01% APY I earn at Bank of America, it turns into $100,300. Obviously, there is no free lunch, and there is especially no free lunch over thirty years. The biggest risk with BlockFi is that its accounts are not FDIC insured. If BlockFi gets totally wiped out, your money is gone. There’s a trade-off: for accepting more risk, you earn higher interest. BlockFi takes that risk very seriously. Watch this video with the company’s Chief Risk Officer Rene van Kesteren, a former Managing Director in Equity Structured Finance at Bank of America Merrill Lynch, to understand how they think about it. Still… 8.6% is a lot. It beggars belief. I didn’t understand it at all, which is why I wanted to write this piece in the first place, to dive in and see if I could figure it out and explain it. Here goes. Stablecoins and 8.6% APYRemember from earlier that banks want to pay high interest rates. It attracts deposits, which enable more lending, which makes more money. A lot of challenger banks will even pay unsustainably high rates on deposits as a customer acquisition cost (CAC) in the form of a bonus rate on top. Those are typically limited to some period of time, like the first six months, after which you go back to earning normal APY. BlockFi is not a bank (technically, it’s a secured non-bank lender), but it makes money like one. It’s able to offer 8.6% APY on stablecoin deposits and 6% on BTC not as an introductory offer, but because it is able to make a lot more than that on its loans. According to crypto research and media firm The Block, BlockFi was running a 10% average weighted APR on its retail loans in early 2021. That leaves plenty of room for 8.6% APY on stablecoins, especially when blended with lower rates on other assets. These rates are not directly tied to crypto prices; most of BlockFi’s life has been during a bear market. They’re based on the availability of arbitrages. Hedge funds can generate high, nearly-riskless returns on certain trades if they can get leverage, and banks won’t make the loans, so funds are happy to pay BlockFi rates that make 8.6% APY accounts possible. The main arbitrage is something called a basis trade.A basis trade is the purchase of an underlying asset and the sale of a related derivative, like a future. You make money on a basis trade as the price of the underlying asset and the derivative converge. In this case, bitcoin futures, which trade on traditional commodities exchanges like the Chicago Mercantile Exchange (CME) or smaller futures exchanges like Deribit, trade at a significant premium to the “spot” price of bitcoin, which is the price that you’d pay if you went into the market right now and bought bitcoin. When a commodity’s futures price is higher than the spot price, it’s called contango. Typically, contango occurs when investors believe the price of something will be worth more in the future than it is today. In the oil markets, for example, that could happen if people expect a very cold winter in a few months, and want to lock in a price. With normal commodities like oil, you’re OK paying a premium on the futures because owning the futures means you don’t have to take delivery of actual barrels of oil and store them somewhere until the winter. Bitcoin, of course, costs practically nothing to hold, and yet, at the time of writing, June BTC futures are trading at a 46.4% premium to spot on Deribit.A hedge fund can buy bitcoins today at $63k and sell an equal amount of futures contracts for $67.5k, sit there while time passes, and collect the difference. Bloomberg’s Joe Weisenthal gives the example of December futures trading on the CME at $63,000 last Friday while Bitcoin was at $58,300. In either case, the ~45% annualized return comes from rolling 3m futures four times per year.Weisenthal wrote, “What this means is in theory (I stress, *in theory*) you could go long spot bitcoin, while shorting the December future, and if you just wait for the two to converge, that’s an easy 8% in 12 months.” (Note: I think he meant an easy 8% in eight months). That is (again, in theory) free money, a riskless trade. Hedge funds love finding riskless trades. They can borrow tons of money, “lever up,” and make way more than 8%. And the 8% number is relatively low. JP Morgan rate derivatives strategist Josh Younger put out a report last Friday saying that the “June CME contract was offering a 25% annualized yield relative to spot.” Normally, when there’s nearly free money lying around, it doesn’t stick around for too long. It gets “arbitraged away.” In this case, that would mean enough people borrow money to buy bitcoin, and enough people sell the futures contract, that the spread between the two compresses to next to nothing. But in this case, that’s not really happening, for a couple reasons: * What Institutions Can Buy. Some big, traditional financial institutions can’t really go to Binance or even Coinbase to buy large amounts of bitcoin, but they’re very used to buying commodities futures on the CME, so they buy up futures, bidding up the price.* Who Lends Money for Crypto Trades. Arbitrageurs want to borrow to lever up on the trade in a big way, but banks don’t like to lend money for crypto trades. That’s BlockFi’s opportunity. As Matthew Leising wrote in Bloomberg: Some of the largest non-bank firms in cryptocurrency including BitGo, BlockFi, Galaxy Digital and Genesis are stepping up to meet investor demand for dollars amid a long-standing weariness by banks to lend to individuals or companies associated with Bitcoin and other digital assets. In this case, they’re lending to hedge funds that need cash to buy Bitcoin for a trade that is almost guaranteed to pay out at annualized returns that have recently hit 20% to 40%.Banks won’t lend to hedge funds on a free money trade because it stinks of crypto, and neither they nor their shareholders want anything to do with crypto (for now). BlockFi, which is crypto-native and understands the market as well as anyone, is more comfortable with the risk and is very willing to lend hedge funds the money for the basis trade at the right price.Banks won’t lend to BlockFi to turn around and lend to hedge funds to make the basis trade, so where does BlockFi get the money to lend? You guessed it. Deposits. Specifically, stablecoin deposits.Wait, what are stablecoins? Stablecoins are cryptocurrencies that peg their value to some external reference, often USD. They allow funds to dollar denominate trades on the blockchain.  The best explanation I’ve come across is that stablecoins are just tokenized dollars. In the case of one of the most popular, USD Coin, “tokenizing USD into USDC is a three-step process:1) A user sends USD to the token issuer's bank account.2) The issuer uses USDC smart contract to create an equivalent amount of USDC.3) The newly minted USDC are delivered to the user, while the substituted US dollars are held in reserve.”Stablecoins are regular dollars that are compatible with the blockchain, and are typically backed by actual dollars in an account. They’re important here because hedge funds need them to make sure the basis trade is actually delta neutral. If the trade is dollar-denominated, meaning prices are all quoted in dollars, they’re not taking currency risk, or a directional bet on where bitcoin ends up. That’s why BlockFi is able to pay 8.6% on stablecoin deposits. (They automatically turn your USD into stablecoins when you deposit money via ACH). BlockFi lends out stablecoin deposits to hedge funds to lever up on the basis trade. If hedge funds are able to pay BlockFi 15% because they’re making 40%, BlockFi can afford to pay depositors 8.6%. This trade won’t last forever, and the 8.6% rate will likely come down in the long run, although it’s been stable at 8.6% for many months. A few things may happen to tweak the trade in the short-term:* Demand for bitcoin and bitcoin futures may decline. There is historically high bitcoin demand right now, and if that decreases, there will be less premium on the futures, which means less juice to be arbed.* Bitcoin ETFs. Bitcoin ETFs are coming -- there are three in Canada already. That will have opposing impacts on the trade. On the one hand, it will make it easier to run the trade, which would mean more demand for dollar-denominated loans. On the other, it will decrease the demand for futures, which may tighten the spread and make the trade less profitable. It will be interesting to watch where that nets out. * More Lenders Come Into the Space. Over time, assuming crypto keeps getting bigger and more legitimized, new startups, existing competitors, decentralized protocols, and big banks will all compete to lend money against crypto trades. In a low-rate environment, companies don’t just let other companies take all of the juicy yield for themselves. As the supply of dollars available to run the arb increases, rates come down.That said, even if the basis trade goes away, BlockFi is still able to earn more than 8.6% by lending out dollars for crypto-backed loans, and there’s still a massive gap between what people want to borrow to buy crypto and what they’re able to borrow: It will take some time for the basis trade to get arbitraged away, and crypto is still the wild west. New opportunities are popping up all of the time that a crypto-native financial institution like BlockFi is better equipped to understand and move quickly on than traditional ones. Grayscale Bitcoin TrustEven today, the basis trade is just one of the things BlockFi does in order to pay out seemingly-too-good-to-be-true rates. The rates aren’t based on any one specific trade, but on BlockFi’s ability to accumulate and lend crypto assets for which there’s more demand than supply. Stablecoins are the most in-demand because they’re needed to dollar denominate all sorts of trades, but BlockFi offers competitive rates on 10 crypto-assets. Rates are based on how much BlockFi can generate by lending each type of asset out, which is based on supply and demand. Putting one BTC or ETH in if you have them pays out 6%, but it tiers down to a more standard 0.5% from there as you deposit more because there isn’t as much demand to borrow bitcoin or ETH. While stablecoin rates have remained consistent, bitcoin APY’s on BlockFi have come down recently as the most profitable trade -- Grayscale -- went away. There are all sorts of reasons someone might want to borrow bitcoin, including shorting (although there’s not much demand for that today outside of hedging), but the biggest was to arb the Grayscale Bitcoin Trust premium to NAV. The Grayscale Bitcoin Trust (GBTC) is one of the few indirect ways (i.e. not owning bitcoin) for people to get bitcoin exposure. It holds bitcoin in a trust, and then sells shares in the trust in the stock market. Like futures, GBTC traded at a premium to the Net Asset Value (NAV) of bitcoin it held because people could buy it more easily, in ways that they were used to, than bitcoin itself. I can buy shares of GBTC in my Schwab account or 401k. To many, that feels safer, and it comes with tax advantages. (AltoIRA lets you own crypto in your IRA directly, FYI.) As a result, GBTC has traded in a 5% - 30% premium to NAV range over the past couple of years.Institutions took advantage of that premium. The way GBTC works is that people and institutions can put Bitcoin in the Trust, keep it there for six months, and then get GBTC shares which they could turn around and sell to retail buyers at that 5-30% premium. Same story: nearly riskeless trade, borrow bitcoin to exploit it, profit. 5-30% premium in six months meant 10-60% annualized returns, boosted by margin. In order to borrow bitcoin, they turned to BlockFi. BlockFi generated strong yield from the trade, which they gave to depositors in the form of high yields on bitcoin. Over the past couple of months, though, the GBTC premium turned into a discount as buyers got new ways to get bitcoin exposure indirectly: like Tesla and Square, which hold BTC on the balance sheet, Microstrategy, which holds so much bitcoin on its balance sheet it’s essentially a BTC ETF, and three Canadian Bitcoin ETFs, launched in the past couple months, already have $1.3 billion in assets under management. BlockFi itself launched its own Bitcoin Trust. More supply for the same indirect bitcoin demand meant lower GBTC prices. With no premium, and a discount in its place, the demand to borrow bitcoin to put in the trust went away. As a result, BlockFi lowered its bitcoin APY. The Grayscale illustrates two things: that BlockFi’s rates may come down over time, but also that it has a diversified enough business that it’s not reliant on any one trade at a given time. As long as there are new, legitimate trades that investors want to borrow crypto to put on, BlockFi will be able to generate enough yield to pay out above-market interest on deposits. The question is: can it expand from that wedge into the full suite of financial institution services faster than competitors can get comfortable with crypto? The Race to Become the Finance Super AppA smooth and familiar interface, crypto-backed loans, and legit high interest rates have propelled BlockFi to dizzying heights in less than four years: $50 million in monthly revenue with $15 billion in deposits and a $3 billion valuation. According to The Block, BlockFi was already profitable entering 2021. But this is just the early stage of BlockFi’s master plan to reimagine what a modern financial institution looks like on crypto rails. In its report, BlockFi Company Intelligence, The Block wrote: From one perspective, BlockFi can be viewed as one of the world's largest crypto-native neobanks: part non-bank crypto-secured (collateral) lender, part digital asset depository institution. But even that framing provides an incomplete picture.What BlockFi is building, according to its CEO Zac Prince, is a lot like a crypto-native SoFi plus the prime brokerage desk of a large bank like JP Morgan. SoFi started with student loans as its wedge into a young, underserved customer base, and has expanded what it can offer those customers. Today, in addition to student loans, SoFi offers cash management, a credit card, stock and crypto trading, personal loans, home loans, auto loan refinancing, credit tracking, and life insurance. SoFi, which invested in BlockFi’s seed round, recently announced a merger with one of Chamath Palihapitya’s SPACs (IPOE). It’s currently trading around a $13 billion market cap. Similarly, BlockFi started with crypto loans as its wedge to attract a wave of newly wealthy crypto investors who were underserved by the market to make deposits. They’ve added no-fee trading and a credit card, and will continue to roll out new product lines. It’s not hard to imagine cash management, stock trading, wealth management, mortgages, and all of the financial services that crypto holders might need, all built on crypto rails. Now, it’s trying to expand its addressable market by building more on-ramps that make it easy for crypto curious people to get involved in the space. An 8.6% APY is one way to pique peoples’ interest, but credit cards and other products that let people easily earn and grow their crypto holdings without feeling like they’re dealing with crypto will unlock new client bases. But the race is on. As a public company with an $86 billion market cap, Coinbase is undoubtedly going to expand its offering to try to infiltrate more of its customers’ financial lives. It already launched bitcoin-backed loans last August. DeFi is still confusing and hard to use, but it’s improving rapidly and attracting more people beyond the hardcore crypto community. Projects like Aave and Compound offer lower fees and more decentralization than BlockFi. Non-crypto companies like Square, Fidelity, Monzo, Robinhood, Mastercard, PayPal/Venmo, and even SoFi are moving into BlockFi’s space: * Square said 1 million customers bought Bitcoin in January, and it holds over 3,000 bitcoin on its balance sheet * Robinhood said that 9.5 million people traded crypto on its app in Q1 * PayPal lets customers buy, sell, and hold crypto* PayPal’s Venmo will let people pay each other in crypto* Mastercard is supporting crypto on its network * Visa built a crypto API that it’s piloting with neobanks. The list goes on, and new runners are entering the race every day. Many of these companies have more robust financial services offerings than BlockFi, and are betting that adding crypto into the mix is enough to retain existing users and attract some new ones. BlockFi’s bet is that crypto, or at least digital currency, is just better than the existing financial system in a lot of ways that have nothing to do with decentralization, and that CeFi, which combines the benefits of centralization and digital money, is the winning combo. Software is eating the world, and at some point, they think crypto will eat the way we store and exchange money by building money directly into the infrastructure itself. If that turns out to be wrong, or in a more extreme case, if bitcoin crashes and BlockFi’s clients and counterparties explode, BlockFi could struggle, and there’s no FDIC to back up its deposits.But if that’s true, if crypto is fundamental to building better financial products, then BlockFi’s wedge and singular focus on crypto will be an advantage versus incumbents and startups that try to add it on after the fact. Robinhood, for example, doesn’t even let users transfer crypto outside of the app. If people accept that money moves more easily and equitably on crypto rails, bolt-on solutions built for speculation won’t cut it. If they’re right, and CeFi wins, the battle may end up being BlockFi vs. Coinbase. BlockFi board member Anthony “Pomp” Pompliano believes that BlockFi’s decision to start with deposits gives it a clearer path to product expansion, drawing on Robinhood vs. Square: Robinhood remains a brokerage-focused business. They have tried to scale by adding new products (crypto trading, cash accounts, etc), but that appears to be a much more difficult road than originally anticipated. Square on the other hand has been able to build a serious ecosystem of products that includes payment infrastructure, point-of-sale technology, CashApp, Bitcoin brokerage, and fractional share brokerage for public equities.The not-so-subtle implication is that Coinbase is Robinhood and BlockFi is Square, and that BlockFi can build Coinbase before Coinbase can build BlockFi. Coinbase’s IPO just adds fuel to the fire. More companies will enter the space. Spreads will get arbitraged away. Yields will compress. 8.6% APY won’t last forever, but if BlockFi can build a robust suite of financial services with crypto tools for an expanding base of crypto owners, it has a shot at building a lasting institution in a competitive and lucrative space. The OfferBlockFi is offering Not Boring readers up to $250 in free bitcoin for opening up and funding an account. I did it myself, and it was smooth and easy. That said, do your own diligence, read reviews. You probably shouldn’t put all of your money in BlockFi. I put less than 10%. If you own crypto and want to earn on or borrow against your holdings, or if you’re just curious and want the easiest on-ramp to earning and growing your crypto holdings, check it out:Thanks to Dan for editing, and to the BlockFi team - Russell, Chris, and Shayne. How did you like this week’s Not Boring? Your feedback helps me make this great.Loved | Great | Good | Meh | BadThanks for reading, and see you on Thursday for a special edition.Packy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.notboring.co

Welcome to the 537 newly Not Boring people who have joined us since last Monday! If you aren’t subscribed, join 42,205 smart, curious folks by subscribing here:🎧 To get this essay straight in your ears: listen on Spotify or Apple PodcastsHi friends 👋 , Happy Monday! This is a big one for me: Not Boring’s first birthday. Instead of writing about a very big company, which I normally do on Monday, I’m writing about a very small one: Not Boring. It’s been a crazy year, I’ve learned a ton, and it’s just going to get better from here. But it was not at all obvious that this was going to work out a year ago. Before we get to it, I just want to say a big thank you. Nothing in this story would have happened without you reading, commenting, conversing, and sharing. I feel very lucky that you’re willing to take time out of your day to read what I write. If you want to bring some smart, curious friends along for year two: Today's Not Boring is brought to you a Not Boring Day One-erFun Fact: Public was the first company ever to sponsor multiple Not Boring newsletters. They sponsored Knock Knock. Who's There? Opendoor. and have been with us ever since.Public and Not Boring are a perfect match: like Not Boring, Public makes the investing conversation fun. Public is an investing app AND a social network for talking about business trends, and the social features make it easy to share ideas.Thank Public for making Not Boring possible by hitting the link below and joining me over there. If you want to transfer your account from somewhere else, they’ll even cover the fees.*Valid for U.S. residents 18+ and subject to account approval. Transfer fees covered for portfolios valued at or over $150. See Public.com/disclosures/.A Not Boring Adventure, One Year InThis has been the wildest and most rewarding year of my life, both personally and professionally: our son, Dev, turned 6 months old yesterday, and Not Boring turned one on Friday. A year ago, we knew that Dev was coming, but I had no idea what I was going to do. I had quit my job, launched an in-person company that got crushed by lockdowns (and was probably a bad idea anyway), and to top it off, I caught COVID the week I decided to start writing Not Boring. I was lost. Somehow, since then, with all of your help, I’ve built my dream job. Over the past 365 days, I’ve:* Written and sent 417k words. That’s more than all seven Chronicles of Narnia. * Grown from under 500 subscribers to over 42,000.* Run a syndicate which has invested nearly $2 million in fourteen companies. * Generated more revenue than I’ve ever made in a full-time job. I legitimately didn’t believe this was possible. I would see people with big followings on Twitter or big subscriber lists and think that they had some special je ne sais quoi. I still think that it could end at any moment. Today, I want to share the Not Boring story as honestly as possible -- it often looks way easier from the outside -- with lessons I’ve learned on writing, growth, business models, investing, and creator psychology sprinkled in. We’ll cover:* Getting Here: Per My Last Email → Not Boring Club → Not Boring* Growth: Luck, Shares, Ups, Downs and Tommy* The Writing Process and Psychology* Business Model: Optimize for Growth and Opportunity* The Not Boring Syndicate* The Present and Future of Not BoringIf anything in this story seems planned, premeditated, or in any way clean, that’s just my brain going back, filling in gaps, and connecting dots. As much as I write about strategy, this story is about working hard even when it seems silly and following serendipity. My biggest lesson so far: this is neither as impossible nor easy as it looks.The Winding and Uncertain Road to Not BoringPer My Last EmailI’m cheating a little when I say that it’s Not Boring’s one year birthday. I wrote a different newsletter -- Per My Last Email -- for almost a year before. In early 2019, the board at Breather, where I worked, had just brought in a new CEO, who himself was in the middle of bringing in a new, experienced executive team. A couple weeks into the new regime, Ben Rollert (then VP, Product at Breather, now CEO at Composer) and I presented at an exec team offsite about the need to differentiate and dig moats in an increasingly crowded and bubbly flex office market. We got cut off halfway through with something to the effect of: “Moats? This is a big market, we don’t need to worry about moats. We have a brand. That’s what Apple has.” I realized that my brain was going to shrivel up and rot if I didn’t do something. Ben’s always been smarter than me. He saw the writing on the wall and quit. I couldn’t quit right then -- I managed a 150 person team and didn’t want to abandon them -- so instead, I used my annual learning & development budget to take David Perell’s Write of Passage course.  That was one of the best decisions I’ve ever made. One of the assignments for the course was to launch a Substack and get twenty people to subscribe. I reserved packym.substack.com, named it Per My Last Email, and begged my few hundred Twitter followers to sign up:Two days later, I had 28 subscribers, and we were off to the races. I wrote Per My Last Email on the side, spending a few hours each weekend or early in the morning curating links to essays, books, podcasts, and videos with a dash of commentary. It grew to about 400 subscribers in eleven months. It didn’t make a dollar and I didn’t expect that it ever would. But I had always told Puja and my family that if I ever got really rich and retired early, all I’d want to do is read and write and talk to really smart people. Per My Last Email let me start doing that in a small way. As someone who’d been so singularly focused on work for a decade, it felt good to have a hobby. Lesson: Make room for hobbies, even just a few hours a week. Not Boring ClubWriting was also a way for me to test out a startup idea I had in a really lightweight way. The idea was Not Boring Club: a mashup of social club and continuing education, Soho House meets college extracurriculars for busy grownups. I wrote about education and IRL Member Communities to make sure there was a real opportunity. One of the problems with being good at writing is that you can convince people that bad ideas are good. You can even convince yourself.In October 2019, I quit Breather to start it. I wrote business plans, memos, started a debate club, made decks, built a website, and tried to write my way into a business model. I couldn’t quite figure it out. I knew what I wanted to exist, but the business model wasn’t clicking.  The people around me -- my sister, Puja, even my mom -- tried to gently tell me that this wasn’t it. They were, in hindsight and in the back of my mind even then, so obviously right. But I persisted, and announced the launch in a blog post. Thankfully, I didn’t raise money or sign a lease. Instead, I decided to start experimenting with a Slack group and a series of in-person events. By February, I started onboarding the first 150 (free) members with a series of small group dinners. On March 10th, we had to “postpone” a welcome dinner. Then a Debate Club. Then the next dinner. Then the next dinner.  We quickly moved Not Boring Club online with cocktail making classes, lightning presentations, book clubs, and trivia nights. One day, I was frantically making slides for that night’s Trivia Night. Puja kind of gave me a look, and I realized how fucking ridiculous it seemed. How fucking ridiculous it was. That night, eight people showed up to play trivia. That was the final straw. I needed to do something different, but I couldn’t figure out what. One thing I knew for sure: I was a terrible online community leader, and I kind of hated it. If I’m being honest, COVID was a good excuse to erase my mistake. The Not Boring Club went on the back burner. Lesson: Don’t be afraid to admit that something you thought was a good idea turned out to be a bad idea. You’ll know it in your gut. Trust that instinct and cut bait.Not Boring NewsletterOne year ago, I was locked in my Brooklyn apartment with COVID, feeling incredibly stuck and a little hopeless. Not Boring Club was on indefinite pause. In February, Puja and I found out we were having a baby, and I had zero income. The pressure was on. My brilliant plan? To turn the newsletter into something that could at least pay rent at some point in the future while I tried to figure out what I wanted to do next. Maybe it would even help me find a new job. At the time, I had weekly coaching calls with my mom. (Yup, you read that right.) On one of those calls, when I told her that the newsletter was the thing I was enjoying most and that I wanted to give it a shot, she said, “Why don’t you change the name of the newsletter to Not Boring?” So I did, and announced the change in the Last Per My Last Email in late March 2020. When I sent that email, there were 473 people subscribed to Per My Last Email. I got aggressive and changed my goal from “1,000 subscribers by the end of the year” to “1,000 subscribers by the end of April.” (At the time, I thought “end of April” was synonymous with “end of quarantine.”)After I announced the name change, I got a few replies saying, “Oh man, I loved Per My Last Email.” I called my mom and said that I thought I’d made a terrible mistake, that I’d messed up the newsletter too. Things were dark. But then they started to look up. The biggest change from Per My Last Email to Not Boring, other than the name, was that instead of curating links, I started writing long (ok, very long) essays myself. When I started writing, I wanted to write about tech and strategy (one of the first pieces I wrote was on Natively Integrated Companies and another was on Shen Yun and Startup Economics), but I thought the space was too crowded (the first piece I ever wrote was the Best of Ben Thompson). With Not Boring, I went back to the things I wanted to write about all along, the things that I cared about and spent my free time reading and talking about anyway. It got really fun, really quickly. I wrote about Jeff Bezos’ Fashion Flex, then I wrote about Creative Destruction through the lens of the Mickey Mouse Club, then Supply Gluts and Hey Arnold. I realized that I could write about the things that I liked writing about -- strategy, finance, economics, and tech -- even though they were crowded, as long as I wrote about it with my own, unique voice. That was a huge unlock, and a lesson in counter-positioning. Counter-positioning, my favorite of Hamilton Helmer’s 7 Powers, is when, “A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing business.” Technically, combining strategy, finance, and pop culture isn’t a new business model, nor is it better, but it’s still a moat. Ben Thompson might be better, smarter, more experienced, and more popular, but can you imagine Ben Thompson explaining creative destruction with this image? Now I wasn’t intentionally counter-positioning -- there wasn’t that much foresight -- I was just having fun. In hindsight, I realize that there aren’t a lot of serious analyses out there that don’t take themselves seriously, because when people do serious analysis, they put on their serious analysis pants. The pop culture thing was a lucky accident.After that post last April, something started to click. People were sharing Not Boring. It got picked up by the Financial Times. Subscribers grew 53% in one month. Not Boring was still tiny, but it was starting to find that elusive *product-market fit*. Plus, people were stuck at home and bored. It was time to start focusing on growth. Lesson: Lean into the intersection of what you’re passionate about and what’s different about you.Growth: Luck, Shares, Ups, Downs, and TommyIn May 2020, one year into writing a newsletter, I wrote Looking Back, Forward, and Up to reflect on one year of writing and set goals for the future. My first goal was to hit 5,000 subscribers by the end of the summer, and then turn on paid subscriptions. From that piece: Goal #1: Grow to 5,000 Subscribers by Labor Day and 10,000 by May 21, 2021It took ten months to get to 500, but less than two to get from there to 1,294. I’ll be testing a bunch of tactics over the next few months to get to 5,000, but the most important will be continuing to improve the content and provide more value so that you want to share it with your smartest friends. Last April, my brother Dan and I I retreated to the beach, shaved off our overgrown pandemic hair, and brainstormed. We decided the best path was to come up with a list of 100 growth ideas. We got to eleven, and did maybe three of them. I’m not a growth hack person.The most important growth levers over the past year ended up being really simple: quality and consistency. Show up enough for good things to happen every once in a while. From the 473 people that received the last Per My Last Email, we’re now at 42,205 a year later -- 8,803% growth 📈 . That growth didn’t happen in a straight line. Not Boring has grown through a series of fortunate events, and a lot of help from friends and internet strangers. A few of the highlights: Polina Sharing Per My Last Email in The Profile. In November 2019, Polina Marinova shared Per My Last Email in her excellent newsletter, The Profile, after I won a contest to receive a tote bag full of some of her favorite books. I picked up 49 subscribers in two days, and I thought that was the most incredible thing in the world. Thanks, Polina! Asking People to Share and Launching Not Boring. While I wrote Per My Last Email, I was afraid to ask people to share -- it felt so self-promotional -- so I buried the ask at the bottom of emails. When I announced that I was switching to Not Boring and making it a thing, I asked people to share front and center. People did, and over 100 new subscribers joined that week. Tommy: Product Hunt and ReferralsIn May, I linked up with my friend Tommy Gamba, who came up with a few big unlocks.First and foremost, he said that we should set up a landing page for Not Boring so that we could launch on Product Hunt. He built a landing page using Usmo, I sent an email introducing the homepage to our 1,885 subscribers, and we launched on ProductHunt. Because people read the email and went over to Product Hunt to upvote, we ended up as the #2 Product of the Day, and in the top 5 for the week. We more than doubled subscribers in two days, from 1,800 to 3,700. I remember having dinner with Puja in Athens, NY as the signups rolled in and realizing for the first time that this actually had potential to be my full-time thing. That wouldn’t have happened without Tommy -- thank you, Tommy!! Tommy also launched a Referral Program through which many of you have invited over 2,000 people to join the Not Boring family -- thanks to all of you for telling your friends! Props to the top three referrers: Joakim Jardenberg, Hunter Walk, and Johannes Sundlo. NB 💙  🇸🇪 .  Writing Essays That People ShareAfter Product Hunt, Not Boring started to pick up momentum. The more people there are reading, the more people who might potentially share. This has been the biggest growth engine for Not Boring, and it’s been totally unpredictable. Some weeks, I write things that I think are great and no one shares them. Others, I’m embarrassed to hit send and they blow up. A few of the most popular posts include: * Tencent: The Ultimate Outsider and Tencent’s Dreams (107,980 combined views) - I sat in the basement for hours and hours looking up Tencent’s investments, and when I asked Dan and Puja to edit the essay, I could tell they both hated it. They told me to break it into two posts, and they became two of the most popular I’ve written. But it didn’t happen on the first send; it took a thread blowing up to get most of the views.* Stripe: The Internet’s Most Undervalued Company (62,159 views) - This highlights an unintentional growth trick I’ve discovered: when you write about a company with passionate employee bases, they share. * APIs All the Way Down (108,421 views) - On Sunday afternoon, I told Puja the essay was terrible and I couldn’t send it. She said she actually loved it, so I sent. It quickly got great feedback and a bunch of shares, then Patrick O’Shaughnessy shared it essay and brought in a ton of subscribers. * Power to the Person (80,376 views) - Li Jin, who coined the phrase Passion Economy and whose work I cited throughout the piece, shared it. Her stamp of approval meant a lot. * Excel Never Dies (207,818 views) - I co-wrote this one with Ben Rollert, and we got to the top of Hacker News, linked in the New York Times twice (in Dealbook and Paul Krugman’s column) and The Browser, and the Excel twitter account even retweeted us. That’s been the formula: write a bunch of essays, and sometimes, people will want to share the ones that resonate most with them. Random Dumb Luck and TwitterSo much of Not Boring’s growth has come from dumb luck. * A bunch of people subscribed after this tweet about Amazon’s investor slides went viral. * Dan Teran included me in a list of newsletter writers he likes reading in May, and I remember watching my inbox that night and seeing names of people I couldn’t believe would ever read what I wrote. * Just yesterday, Web and Lenny including me in lists of writers they like brought in over 100 subscribers. * Hundreds of other examples, big and small. I’m missing a ton of you, but every time I see anyone tweet about Not Boring, it means a lot. Shoutouts from people other people trust go 1000x further than me saying things about Not Boring ever could. The past year has been a series of me turning to Puja in disbelief, saying, “Woah! Person X just tweeted about Not Boring. I love Person X. Holy shit.” Some of those people have become good friends. I hope that never stops feeling mind-blowingly cool. There have been countless small examples of being in the right place at the right time, and often, that right place has been Twitter. I’ve made great friends there, and have gotten the chance to interact with so many of you. To join the conversation, follow me and say hi.Not Boring’s subscriber growth looks almost like the hockey stick that startups dream of, but that masks a lot of the bumps. Every time I write something and it doesn’t do well, and every week subscriber growth slows, I feel like the whole thing might be coming to an end. Lesson: Sustainable growth comes from a consistently quality product that people want to share. Growth hacking doesn’t work long-term, but it does help to kick things off. Writing Process and PsychologyEven though Not Boring has grown so much faster than I expected it would, I can’t shake that feeling that each week is going to be the last, and that soon, you’re all going to wake up to the fact that I’m just some idiot in a basement writing about things I’m deeply underqualified to write about. A few weeks ago, I went on ConvertKit founder Nathan Barry’s podcast. A writer I really respect reached out after listening and wrote:I'm listening to your podcast with Nathan Barry. The fear of the lack of interesting topics... I literally thought it was just me.It’s not. I think it’s everyone. The #1 question I get about Not Boring is what my writing process looks like: how do I choose what to write, research, and put out two essays per week. Let’s take the last one first. I was a runner in high school. I didn’t look like a runner -- I was kinda fat -- but I was good. Steve Prefontaine was a hero, and this quote of his is one of my all-time favorites: I’m writing this on Easter Sunday. I’ve been up since 7am after sleeping six restless, post-COVID-vaccine hours. I’m physically and mentally exhausted. But I’ve been at the computer for eight hours today. I was at the computer eight hours yesterday. I don’t think I’m smarter than anyone, but I do think I can outwork everyone. I haven’t taken a day off this year other than the two days I had COVID, the four days after Dev was born, and a week around Christmas, including weekends. Seven days a week, 352 of the past 365 days. That’s not a brag. I wish I could take time off. It seemed particularly silly when I was making no money on this newsletter and had to turn down socially distanced hangs with friends or dinners with family to write it. I couldn’t be luckier that Puja was so understanding; I don’t know if I would have been. But I’m genuinely petrified that each week, if I don’t give it everything I have, could be the last week that Not Boring grows. Even just taking those four days off for Dev’s birth, growth slowed from a consistent 1,000 new subscribers per week to 400-500 for the next few weeks. This is a momentum game as much as anything. That’s what I mean when I say that doing this is neither as impossible or as easy as it seems from the outside. It’s taken a ton of hard work. Part of the need for hard work comes from my lack of process. I have a running list of topics that I want to write about in Roam, and every week, when I look at it, I realize that I don’t want to write about anything on that list. Instead, I spend a lot of time on Twitter and talking to people to figure out the most interesting companies and things going on that people don’t quite understand, and then I try to understand and translate. For a Monday piece, that typically means figuring out what I’m going to write about sometime on Thursday afternoon or Friday morning, and starting to research. For APIs All the Way Down, I knew that APIs were important, but I didn’t quite understand what made them special. Then Stripe and Shopify announced a deeper partnership and I wanted to figure out why. So to start, I did a couple things: called two people who could point me in the right direction, and then found every article and podcast I could and dove in. Here’s what my Roam looks like: Each gray dot has rows and rows of notes collapsed under them. I try to absorb as much as possible, and try to figure out what the interesting angle is. Sometimes, there isn’t one, and I need to start over. More often than not, I say there isn’t, whine to Puja that I’m not going to be able to send something out, and then sit in the basement reading and listening until some idea hits. Often, I’ll try to outline what I’m going to write about in Google Docs. Most of the time, it looks empty, like this: I’m not an outline person. Instead, I just start writing. That little chunk about Stripe and Shopify seemed like a good enough hook to start with, so I went with it. This is how I started my draft in Google Docs:And then I just write, get blocked, mess around on Twitter, hang out with Puja and Dev, start writing again, complain that I’m not going to be able to get it done again. Then I get back in front of the computer, open up Figma to make some graphics and get the creative juices flowing. That helps -- when I’m stuck writing, I’ll pull data, make a chart, create an image-- and at some point, I find some bolt of inspiration, some thread to pull on that will take me most of the way through the essay. Once I have a bad draft, I send it to Puja and my brother Dan, (and occasionally to my sister, Meghan, if I really want it shredded) with some variation of this text: Sometimes Puja edits; Dan always edits. He’s a hero. The thing I love about having my brother as my editor is that he’s not afraid to tell me when something is terrible, and the reason I like Dan specifically as my editor is because he thinks about all of this stuff as much as me and can give input on the content as well as the structure and form. Then I pace nervously while Dan edits. Sometimes he rips them apart, sometimes he tells me they’re actually good and gives a few copy edits. This is normally Sunday night. Then I read through, make the edits, leave notes for what to do in the morning, and go to sleep. I wake up around 5:30am on Monday, read through with fresh eyes, make more changes, and make any last graphics, like the title image. Then I copy it over from GDoc to Substack, open up Descript, and read the whole thing into the mic for the audio version. Sometimes, I run out of time and need to hit send before finishing the audio version, in which case I send, tweet, and go back to recording. I publish the audio version, go upstairs, and fret over my open rate and how many likes my tweet about the essay got. Then I take a couple hours off and start over for Thursday. Every. Single. Week.  In August, I tweeted that my writing process looks like this: Eight months later, it’s still the same. It’s a psychological roller coaster. I legitimately think it’s all over every week. That may never change, and I think Not Boring will be OK as long as it doesn’t.Lesson: You should take no lessons from my process other than, “If he can do it, I can do it.”Business Model: Optimize for Growth and OpportunitySomehow, despite that process, Not Boring has survived and grown. Growth is one side of the coin, but growth alone doesn’t put food on the table, and it’s an awful lot of work to do for free. So the second goal that I laid out in May 2020 was to start making money: Goal #2: Make Enough Money From the Newsletter to Cover RentWithin the next 6 months, I want to launch a paid version of the newsletter. By this time next year, I want to be making enough from it to cover rent or mortgage payments.The Passion Economy is taking off, enabling thousands to make a living off of what they create. Personally, I love the idea that covering the basics doing something that I love will allow me to take bigger swings elsewhere.At the time, after listening to all of the Substack hype around subscriptions, I assumed that I, too, would charge people to read the newsletter. Ultimately, I decided that was the wrong move for Not Boring. Why? As with everything, there’s not one right answer for everyone. The key is this: your product, growth strategy, and business model need to be connected. Both subscription- and advertising-based models have pros and cons, and make sense for different types of writers:  Subscriptions have pros and cons:* Pro: generate predictable cashflows* Pro: allow writers to focus on writing quality content for their core audience instead of optimizing for clicks (the argument goes)* Pro: subscription-based writers aren’t beholden to their advertisers and can therefore write whatever they want without fear of retribution* Con: Harder to grow because content is behind a paywall* Con: People will only pay for so many subscriptions* Con: When someone subscribes for a year, you need to write for a year * Good for: Topics with a clear focus, especially work-related ones that can be expensedAdvertising does too:* Pro: Free content means readers can share and drive growth* Pro: Makes content more broadly accessible. Another way to look at it is that advertisers are paying for everyone’s subscription* Pro: Writers can experiment and dance around more since people didn’t pay for a particular type of content* Pro: Optionality* Con: Need to spend time doing ad sales and writing ad copy* Con: Ads take space that people need to read before getting to the meat* Good for: More general content with wider appeal For Not Boring, a few of things pushed me over to the sponsorship side, where I happily live to this day. * Product/Content. Not Boring is a little all over the place. It’s not focused on a particular niche. The most successful subscription newsletters are focused: Pomp writes about Bitcoin, Lenny writes about Product Management, Web writes about commerce, Mario writes about tech from idea to IPO, Ian writes about fintech, and Polina writes profiles. A less clear focus means that it’s harder for people to justify expensing Not Boring. * Growth. Not Boring grows mainly through word of mouth. Putting the best content behind a paywall means that people can’t share the best stuff. I want as many people as possible to read and share what I write.* Math. I did some rough math when I was making the decision, and realized that I could probably make a lot more money over time with sponsorships assuming that keeping the newsletter free meant growing faster. If you want to run the model with your own assumptions: Subscription v. Ads ModelIt turns out that I undershot a little bit. Sponsorships were definitely the right call for Not Boring. But how to find sponsors? First, fake it ‘til you make it. I did Cost Per Acquisition (CPA) deals with The Hustle and Readwise. I only got paid if I drove results. They were not big money, but they were examples I could point to and say, “Yes yes of course, I have a booming advertiser base.” Second, rely on a little help from friends. Ankur Nagpal, the founder and CEO of Teachable and a good friend, read Not Boring and said he wanted to sponsor it to promote Teachable’s Share What You Know Summit. Third, put it out into the universe. Puja was infinitely patient with me: seven months pregnant, and married to a free newsletter writer who hadn’t made a dime. She gently suggested that I make a deck and use it to start selling sponsorships. Finally, I listened. I surveyed Not Boring readers to learn more about their backgrounds, professions, and preferences, and with examples of previous sponsorships in hand, put together a rough sponsorship deck. Instead of doing outbound sales, because I hate selling, once I had the deck, I decided to tweet it out into the universe. The Twitter thread worked: it brought in all of the sponsors for the rest of 2020, including today’s sponsor, Public, and other Not Boring Sponsors that you know and love. From there, sponsorship has spread, like the newsletter itself, through word of mouth. Today, Not Boring makes money directly in two ways: Top of Newsletter Sponsorships. This is the sponsorship format you’re familiar with from newsletters and media everywhere: 150 words and a logo at the top of the newsletter. I charge a little more for Mondays than Thursdays because Mondays tend to go more viral. I picked rates out of thin air in the beginning, and then upped them at Jacob Donnelly’s suggestion. I’ve grown rates in line with audience size ever since. Sponsored Deep Dives. A couple times a month, I dedicate a Thursday newsletter to a paid deep dive on some of the startups I think are most fascinating or encapsulate an important trend. The companies I’ve written about would make a strong venture portfolio: Ramp, MainStreet, Pipe, Masterworks, Fundrise, AltoIRA, UserLeap, and Secureframe, with some more great companies on the way: This format was a risk -- sponsored content can be hit or miss, and people generally have mixed feelings about it. It’s particularly challenging for me because I’m so naturally optimistic. When I write a Sponsored Deep Dive, I try to write it in the same way that I’d write a normal Monday post, but since I’m being paid, I get feedback that I need to be even more critical about the company than I normally would. (Read how I choose which companies to write about here).Generally, though, these Sponsored Deep Dives get more positive feedback than I was expecting, and give people a behind the scenes look at companies that normally don’t share much information publicly. They’re here to stay, and I’m going to be tweaking and evolving these based on feedback in the coming months. So far, sponsorships have proven to be the right path for Not Boring. After many months of generating no revenue, the business side of Not Boring is starting to pick up steam, and April is set to be the best month yet: Not Boring is going better than I expected and just hit an inflection point, and I’m incredibly grateful for that. One of the challenges with the newsletter business, though, is that there’s “key man risk.” To a potential buyer or investor, that means that it’s a tough investment, because if I get hit by a bus, the business is dead. That’s even tougher for me and my family: if I get hit by a bus… you get it. That means that even though this is my own business, I’m still the labor, and we all know that capital makes more money than labor. Fortunately, a happy accident of the decision to stay free is that Not Boring’s increased surface area has opened up new and unexpected opportunities, the most exciting of which is the ability to invest in startups together. Lesson: When your business model, product, and growth strategy align, magic happens. The Not Boring SyndicateBack in June, my friend Fed Novikov reached out. After some time running the Backyard project at Airbnb’s Samara, he and his brother, Petr, were starting their own company, Apt. Fed and I had discussed the Natively Integrated approach before, and the Novikovs were using it to build their business. He asked if I would be up to write about Apt and why the Natively Integrated approach makes sense for real estate development. I was. We also talked to Jonathan Wasserstrum, who runs a leading AngelList syndicate, and he agreed to syndicate the deal. In July, I wrote the first Not Boring Investment Memo: Apt: The Natively Integrated Developer, and accredited readers were able to invest through Jonathan’s syndicate. It went well, and Fed suggested that I start a syndicate for Not Boring. I hadn’t thought about doing anything venture-related before he suggested it, but agreed there was a compelling opportunity. On one side, I could help founders explain what they do. On the other, I could demystify startup investing, which seemed like a dark art reserved for a chosen few.Just writing about companies is one thing, but putting my money where my mouth is, and giving readers the opportunity to do the same, gave me more skin in the game. Plus, I thought that we could give portfolio companies an early advantage by helping them tell their story to potential customers, employees, and investors.In late July, we launched the Not Boring Syndicate with a memo on Composer. Since then, over 900 Not Boring readers have joined the Syndicate, and together, we’ve invested $1.88 million in fourteen startups: The things that we hoped would happen -- companies can attract customers, employees, and investors -- are actually happening. Plus, having a big group of investors and a loud microphone behind you can tip the scales in founders’ favor. These tweets from Kaeya, Ben, and Ian, the founders of Swaypay, Composer, and Outfit, are what it’s all about: As an added bonus, the Syndicate has been a fun way to let readers participate and build relationships without launching a traditional community. Michael Batnick wrote about the experience as an LP in Everyone is an Investor. That made my week. Until the day we sent the Apt memo, I never imagined that Not Boring would be able to invest in the companies I write about. Even though I worked at a startup, I was still very much an operator and an outsider. As I hope comes across in my writing, I’m consistently blown away by the companies people build. I know how hard it is; I failed when I tried to do it myself. This is just the beginning of Not Boring as an investor. More to come on that front very soon 👀Lesson: More people getting involved in startup investing shifts the balance of power to founders, where it should be. The Not Boring FlywheelPractically everything good that's happened for Not Boring so far has been a happy accident. For someone who spends so much time writing about strategy, I’ve put surprisingly little thought into the strategy behind Not Boring. It’s just a newsletter.  But over the past few months -- I think mainly because I’m doing something that I genuinely love doing, analyzing companies and telling their stories, so when adjacent opportunities arise, I seize them -- things have started to come together in powerful ways. Not Boring is developing a flywheel. In early March, Jake Singer wrote a piece on Not Boring called Million Dollar Newsletter in his newsletter, The Flywheel. I didn’t want to do the piece originally because I thought I would come across as an asshole for having an essay written on me (Not Boring and I are one in the same, it’s different than a normal company). But here I am 5,000 words into writing about myself, so we’re past asshole level now, and the Not Boring Flywheel is worth exploring. Jake wrote:Packy is a better investor because of his writing, and he’s a better writer because of his investing. You can’t make up a better flywheel even if you tried:I think he nailed it, but I want to give a concrete example of how it works, and how I decide what to do now that it’s spinning. It starts with writing about tech companies and trends. Writing (or podcasting, TikTokking, YouTubing, etc…) attracts people who are interested in the same things you are, and people are the most important part of all of this. Putting your thoughts out there also repels people who don’t like the way you think -- that helps too, it saves time. * Writing essays led me to reconnect with Fed, which led me to write the Apt memo, which led to the Syndicate. * Investment memos for the Syndicate showed other startups that I could help tell their story, regardless of whether they’re raising. That’s how Sponsored Deep Dives were born.* Working closely with companies on Sponsored Deep Dives has created some of my strongest relationships in tech, led to investment opportunities for the Syndicate, and introductions to more companies to write about and invest in (thanks especially to Nick Abouzeid and Mike Wenner for spreading the word about Not Boring!) * They also pay the bills, and give me access to companies building the future, which means I can do this full-time and informs my Monday essays, which kicks the whole thing off again. As the flywheel spins, the audience grows, which gives Not Boring access to new ideas, people, and companies and (hopefully) makes Not Boring more useful to readers, partners, and portfolio companies. As I think about what’s next for Not Boring, new things need to feed the Flywheel.Lesson: Flywheels work, even if they’re accidental. The Present and Future of Not BoringI hope I’ve made this clear throughout, but if I haven’t, let me say it again: I find it incredibly fucking wild that so many of you read the words that I write. I still view this newsletter today as just a bigger version of the little thing it was a year ago with a few friends and random internet people, but I also realize that with more readers comes more responsibility. That said: I am not a journalist. I’ll never lie and I’ll always tell the truth, but what I said at the top of the first Not Boring Newsletter remains true today: The only things I’m not optimistic about are cynics and “well, actually…” people. It’s easy to dunk. It’s easy to look smart saying why things aren’t going to work. But those people are not our people. Not Boring is for the optimists, and for the people trying to make crazy things happen. I’m definitely going to be biased. I’m going to have the backs of the companies in which we invest, and the companies that support Not Boring. So what’s next for Not Boring? The answer is, just like a year ago, I have no idea. Unlike a year ago, though, I have 365 days of not knowing, growing, and figuring it out under my belt, and I’m ecstatic to see where serendipity leads us over the next 365. What I do know is that I unapologetically want Not Boring to be a big business. I want to blur the lines between analyzing, experimenting with, investing in, and promoting the companies and products that I can’t stop thinking about. I want to help companies tell their stories.In the immediate future, there are a few things I’m incredibly excited about. I can’t share details on two of them quite yet, but one involves investing and the other involves experimenting with some of the Web3 tech I’ve written about. Both are expressions of Power to the Person. Expect more Twitter Spaces: Spaces Cadets with Austin Rief and The Idea Dinner with Mario Gabriele and Acquired’s Ben Gilbert and David Rosenthal.  Long $TWTR!I’ll also probably start building a little infrastructure under Not Boring -- a new website, maybe a part-time employee or two (perhaps an EA?) -- just in case I get hit by a bus. Mostly, though, I’m just going to keep writing and following this thing wherever it takes me. When I asked for questions that my Twitter followers had about Not Boring, Tom Critchlow, one of the first Not Boring subscribers and a great writer himself, replied with this: He’s right. This has been an entirely iterative process. There have been big ups, and even the littlest down feels like the end of the world, but I’ve tried to listen to your feedback to move it in the right direction. This only works if we’re all into it. I’ve gone from having one boss to 42,200. Let’s keep iterating and building this together:THANK YOUThis is just a newsletter, and I probably spilled way too many words on it, but I’m bewildered and grateful to have this opportunity. It wasn’t guaranteed by any stretch of the imagination, and still isn’t, but I wouldn’t even have a chance without:* All of you who give me your time each week* Everyone who’s helped grow Not Boring by sharing essays and saying nice things* Nathan and Dan for bringing together the Type House and giving me the opportunity to meet so many people who I’ve read and loved for a long time* Tommy for kickstarting Not Boring’s growth* Everyone who has written guest posts: Ali, Jeremy, Reuben, Gil, Dan* Everyone who’s collaborated with me on posts: Ben, Dror, Marc, Ryan* Sponsors who let me tell their story * Founders who let the Not Boring Syndicate join their adventure * My mom for being my coach, my sister for telling me when I’m an idiot (and for letting us invest in her company), and my dad for bouncing ideas back and forth and being supportive about me writing a free newsletter after everything he spent on my education.* My in-laws, who let me turn their basement into Not Boring HQFinally, there are two people I couldn’t do this without, and for whom I’m incredibly grateful: * My brother Dan for being my thought partner, calling me on my bullshit, and giving up countless weekend and late-night hours to edit nearly every Not Boring essay this year.* My wife Puja for letting me take a big risk on writing this with no income for months and months as I told her “trust me it’s just a math problem, once I hit a certain number of subscribers I’ll be able to make a little money,” even with a baby on the way. Now that Dev is here, I couldn’t ask for a better mom for him. Thanks for putting up with my moaning every week while doing 100x more than I do and making it look easy (and looking good while doing it all). Thanks for a very Not Boring year :) Thanks Dan, Puja, and Meg for editing! How did you like this week’s Not Boring? Your feedback helps me make this great.Loved | Great | Good | Meh | BadThanks for reading, and see you on Thursday for a special edition. Packy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.notboring.co

Welcome to the 873 newly Not Boring people who have joined us since last Thursday! If you aren’t subscribed, join 41,936 smart, curious folks by subscribing here:🎧 To get this deep dive straight in your ears: listen on Spotifyor Apple PodcastsToday’s Not Boring - the whole thing! - is brought to you by… SecureframeSecureframe helps companies get enterprise ready by streamlining SOC 2 and ISO 27001 compliance. If you don’t know what that means, I’ll explain. If you do, talk to them:Hi friends 👋 ,Happy Thursday! It’s been a wild week for Not Boring Deep Dive sponsors. Following up on MainStreet’s $60 million Series A a few weeks ago, news came out about two more Deep Divers this week:* Ramp: On Monday, The Information reported that Ramp raised $65 million from D1 and others at a $1.1 billion valuation, followed immediately by $50 million from Stripe at a $1.6 billion valuation. When we did the Ramp Deep Dive in December, they had just raised $30 million.* Pipe: Yesterday, TechCrunch reported that Pipe raised a fresh round of $150 million funding at a $2 billion valuation. When we talked about Pipe in October, they had raised $66 million total. The bar I use for whether I write a Sponsored Deep Dive on a company is whether I would invest my own money in the company if given the chance (disclosure: I invested a small amount in Ramp, MainStreet, and Pipe after writing about them). You can read more about the Deep Dive selection process here.Today’s Deep Dive Sponsor, Secureframe is fresh off an $18 million Series A itself. I think that’s just the beginning. They make companies more secure, and security has never been more critical. (I always tell you how I’m paid for Deep Dives — CPA, CPM, or equity. Today is CPM).Let’s get to it. This is How They Tell Me Secureframe Saves the WorldLet’s start with a riddle. What do Ukrainian accounting software, Southwest Airlines, and Secureframe have to do with each other? Any guesses? No? I’ll give you a clue. Secureframe is security compliance software that companies, from 3-person startups to enterprises, use to automate SOC 2 and ISO 27001 compliance, complete audits, and continuously monitor their security. It’s how modern software companies stay safe and compliant with less time, effort, or cost, so they can unlock sales and focus on growing their business. But what does that have to do with Southwest and Ukraine? Read on to find out.This is How They Tell Me the World EndsRemember the old Southwest Airlines commercial in which a bored employee clicks on an email titled “Sick of your job??” and infects her whole office? Wanna get away? It actually sums up why cybersecurity is so petrifying: all it takes to take down a system is finding and exploiting the weakest link. One employee opening the wrong file can infect an entire company’s network; even worse, in an interconnected world in which every company runs on top of a stack of other companies’ software, one employee ignoring a software update can bring down major companies all around the world. In This is How They Tell Me the World Ends, New York Times cybersecurity reporter Nicole Perlroth recounts the story of the most damaging cyber attack to date: NotPetya. (Wired tells it here if you don’t want to read the whole book). On Wednesday June 27, 2017, the day before Ukraine’s Constitution Day, hospitals, banks, ATMs, power plants, the government, and practically all businesses in the country were hit, seemingly simultaneously, with what appeared to be ransomware. It locked computers, deleted files, and spread at breakneck speed from computer to computer, and company to company. Messing with Ukraine on its Constitution Day had become a Russian hacker pastime -- Ukraine’s neighbor routinely shut off the power or deleted files -- but this was different, more vicious. It was also harder to contain. NotPetya spread via “two exploits working in tandem”: EternalBlue and Mimikatz (technically, Mimikatz is not an exploit but an application used to take advantage of the EternalBlue exploit). EternalBlue was a backdoor into any unpatched Windows computer, and Mimikatz used those computers to steal passwords and break into others. Together, they preyed on the weakest links. The virus was so hard to contain that it jumped from Ukrainian companies into any company that had an office or even an employee in Ukraine. NotPetya took down systems at: Danish shipping giant Maersk, American pharmaceutical behemoth Merck, FedEx’s European subsidiary TNT Express, and even boomeranged back on Russian state oil company Rosneft. Once the virus was unleashed, there was no stopping it. And it started by finding a weak link, or more precisely, a weak Linkos. Linkos Group is a small, family-run Ukrainian software business that makes M.E.Doc, a tax product that’s like a Ukrainian TurboTax or Quicken. Practically anyone who does business in Ukraine uses M.E.Doc. That’s how the Russians got in. According to Wired: In the spring of 2017, unbeknownst to anyone at Linkos Group, Russian military hackers hijacked the company’s update servers to allow them a hidden back door into the thousands of PCs around the country and the world that have M.E.Doc installed. Then, in June 2017, the saboteurs used that back door to release a piece of malware called NotPetya, their most vicious cyberweapon yet. All told, NotPetya did over $10 billion in damages, according to a White House assessment. It’s an extreme example, one of the most devastating cyber attacks in history, and a distant one, launched halfway around the world. But the book is chock full of other examples, big and small, of hackers, private and state-sponsored, finding their way into the networks of the largest companies and richest governments. Cyber is the new global battlefield, but unlike traditional warfare, it’s much harder to contain the impact to specified targets, as NotPetya showed. Now, companies are often casualties of war. They fall victim to civilian and state-sponsored hackers alike. All of those hackers are constantly looking, or paying, for a way in. They form a global, multi-billion dollar, public-private market for weak links. How Not To Be the Weak LinkosOK, did you solve the riddle? If M.E.Doc and the woman in the Southwest Airlines commercial were Secureframe customers, they wouldn’t have unleashed malware on their co-workers or customers.Chances are, your company isn’t going to be the weak link in the next NotPetya. But if you’re building a software company of any size, you need to care about security.In order to sell into enterprises, companies need to prove that they’re secure. After reading the NotPetya story, the reason why should be clear: enterprises can’t afford to let in weak links. Previously, this prevented smaller companies from selling into larger ones early in their lives. “Bottoms-up” or “product-led” growth is in part a response to slow enterprise sales cycles, which are slow in part due to each enterprise’s bespoke security compliance requirements, which could take months and tens of thousands of dollars to pass, for each company. Over the past couple of years, though, a standard called SOC 2 has emerged as the de facto security compliance standard. Since SOC 2 is generally accepted as the gold standard, getting SOC 2 certified means that you can sell into large companies much earlier. That’s a huge revenue unlock for young companies. SOC 2, the humble security compliance standard, is partially responsible for sky-high early stage valuations.  Today, most software companies are SOC 2 compliant by the time they hit 20-30 employees, with some even getting it when they’re just three people. In a competitive environment, they can’t afford not to be. If your competitor gets its SOC 2 and you don’t, they have free reign to scoop up large customers while you’re stuck down-market. But even though SOC 2 (and a host of sector-specific standards like PCI, HIPAA, and FedRAMP) level the playing field by eliminating the need for a new security compliance process for each potential customer, the process is still a massive pain. It takes months, tens of thousands of dollars, and an endless back and forth of screenshots and process documentation with auditors.Enter Secureframe.Secureframe makes the whole process faster, cheaper and more effective by integrating with the tools you use to automate the process. Typically, startups spend $25-50k on their SOC 2 compliance process. With Secureframe and all of its automations in place, companies save months of time and 50-70% of the cost of a typical SOC 2 certification. Luckily, standardization doesn’t just make it easier for companies to get certified and sell into large companies, it also makes it possible for startups like Secureframe to build tools that make the whole process faster, cheaper, more painless, and more effective. To understand why that matters, we’ll cover:* Security Compliance: Important but Not Top Priority* The Compliance Maze* The Value of Standards in the Consumerization of Enterprise* What Secureframe Does* How to Win a Nascent, Massive, Competitive Market* This is How They Tell Me The World SurvivesIf you want to learn a little something about cybersecurity, standards, and competitive dynamics, come with me. Security Compliance: Important, but Not Top PriorityImagine you’re building a B2B SaaS startup, thousands of miles away from Washington, or Moscow. Maybe you’re in Silicon Valley, or Miami. There are two of you. You have an idea, a couple new M1 MacBook Pros, and cases of Red Bull. You just raised a small pre-seed (what’s that these days, like $5 million?) and IT’S TIME TO BUILD. It’s easier than ever to build a startup, and harder than ever to stand out. So you mix and match a bunch of off-the-shelf software, plug in Twilio to message customers, Stytch to handle authentication, and Stripe to start taking payments. Security is important to you, obviously, and you read something about NotPetya once, but that’s not the top priority for now. Startups, you’ve read, are all about ruthless prioritization. So you trust that security is important to the companies that build the software on top of which you’re building. With more plug-and-play back-end tech, you’re content to trust (for now, until you have a bigger team). You spend a lot of your time on your points of differentiation, on the front-end -- designing, testing with customers, re-designing, getting feedback, iterating, re-testing. Uh oh! A competitor just got funded -- a $6 million pre-pre-seed! -- and you need to pick up the pace. You hire a couple of engineers, a lead designer, and a salesperson. Something’s working. You have product-market fit! The land grab is ON, and you decide to go upmarket before your competitors do, to start selling to enterprise customers. Everything is moving so fast. And then it slows down. Because your enterprise customer asked you to respond to an RFP or RFI (Request for Proposal / Information) and to include your security compliance certification. Damn. The Compliance MazeGiven the potential attackers lurking around every corner, it’s no surprise that large enterprises and even fast-growing startups need to make sure the software they use is secure. That means understanding the software itself, the software that the software is built on, and the processes that the company itself uses to screen employees, manage permissions, and even undertake performance reviews. Until about a decade ago, each company created its own security compliance hurdles for vendors to jump over. If you wanted to sell into Microsoft, that might mean one set of things, if you wanted to sell into Salesforce, another set of things, and if you wanted to sell into the government, godspeed. As more software moved to the cloud, the AICPA, one of accounting’s governing bodies in the US, developed the Service Organization Controls (SOC) standards, of which there are three (technically, SOC3 is more of a general use report instead of a full fledged standard). SOC 2 is really the only one you need to care about. While an accounting-governing-body-created set of system and organization controls sounds tedious, and it is, it’s also way better than going through a new bespoke process for each potential customer. Instead, you can get your SOC 2 certification and proudly display that on your site and in RFI/RFPs to prove that you’re a trustworthy vendor. SOC 2 tells potential customers that you probably won’t, accidentally or intentionally, give hackers an open door into their networks, or into their customers’ networks. The AICPA created SOC 2 in 2011, and has iterated on it a few times. After the last iteration in 2017-2018, SOC 2 became the de facto industry standard. SOC 2 is now table stakes. By the time a company hits 20-30 people, they’ve likely gotten their SOC 2 compliance. Many get it when the company is just the co-founders and a few laptops. That’s because not only do large customers require that their vendors have SOC 2, but that their vendors’ vendors have SOC 2. It’s SOC 2 all the way down. Getting SOC 2 certified requires companies to do a bunch of things. According to WorkOS, those include: * Quality oversight of the company as a whole (performance reviews, independent voices, background checks, etc.)* The SDLC (software development lifecycle) is transparent, trackable, and controlled (issue tracking, unit testing, version control, etc.)* Your application and underlying infrastructure are secure and monitored (encryption, logging, APM, vulnerability scans, etc.)* You’ve implemented access controls for internal services and SaaS (de-provisioning accounts, 2FA, malware detection, etc.)A lot of these things are best practices anyway; SOC 2 just makes you prove and document everything. First, startups typically get SOC 2 Type I, which is just a snapshot in time, and then get SOC 2 Type II, which is audited over 3-12 months, to satisfy customers’ compliance requirements. Plus, they need to get recertified annually, all signed off on by an auditor. And that’s just SOC 2. There’s also ISO 27001, published jointly by the International Organization for Standardisation and the International Electrotechnical Commission, which was recently revised in 2013. ISO 27001 has ~75-85% overlap with SOC 2, but adds on a few information security-specific requirements. If you deal with credit cards, there’s Payment Card Industry (PCI) Standards. Healthcare has the Health Insurance Portability and Accountability Act (HIPAA). The Federal government has the Federal Risk and Authorization Management Program (FedRAMP), which is so onerous -- it takes about two years and $1 million to complete -- that less than 300 vendors are FedRAMP certified. The Department of Defense recently introduced the Cybersecurity Maturity Model Certification (CMMC), its attempt to make it easier and more accessible to sell software to federal agencies. The average CMMC audit costs $10-30k instead of $1 million. All of that sounds like a ton of work, and it is. It all sounds bad and overly onerous, but it’s not. Standards actually level the playing field and make it possible for companies to sell into enterprises and other startups more quickly and cheaply than ever before. The Value of Standards in Consumerization of EnterpriseSince the last iteration of SOC 2, it’s become the de facto security compliance certification. That doesn’t mean that all of a sudden, companies who never required any security compliance now require SOC 2 from their vendors; it means that all of the companies that had created their own compliance requirements began accepting SOC 2 instead. SOC 2 is a lot like the Common App in college admissions: do it once, use it in many places, sometimes with a little supplemental work required for specific schools / enterprises. That makes it dramatically easier for small companies to sell into bigger ones. And increasingly, bigger ones are open to that. The “consumerization of the enterprise” refers to the idea that companies are full of people who use smooth, well-designed software in their personal lives, and have come to expect the same at work. In Bill-A-Bear, I highlighted a list of the work software people on Twitter told me they loved the most. With the exception of Excel (which is a whole ‘nother story), all of peoples’ favorites are modern, smooth, consumer-like. No one wants to use shitty software all day, and new software is often easier-to-use than old software (people typically build new software startups to replace old, shitty software), but at the same time, enterprises and startups alike need to maintain their procurement standards. If startups want to sell into enterprises earlier, it’s on them to be enterprise-ready sooner.SOC 2 makes that possible more cheaply and easily than was previously possible (as do ISO 27001, CMMC, and the rest). That means that startups are able to land bigger clients, earlier. Much Substack ink has been spilled over high early-stage startup valuations, but some of the valuation increase can be explained by the fact that companies are landing bigger clients at a stage at which they previously would have been limited to selling into other startups. That said, getting compliant is still a painful process. SOC 2 and ISO 27001 mean that you only need to go through one painful process per year, but it can still take tens of thousands of dollars and many months of manual back-and-forth with auditors to get certified. That’s where Secureframe comes in. What Secureframe DoesSecureframe helps companies get compliant in weeks rather than months, typically saving customers an average of 50% on their audit costs (which can traditionally run over $50k). Founded by Shrav Mehta and Natasja Nielsen in 2020, Secureframe integrates with over 40 of the most commonly used products companies use to automatically understand their security posture and automate an increasing amount of the security compliance certification process. Maintaining a SOC 2 gets more complex over time. As Secureframe highlights, “Every new contractor, employee, customer, and vendor requires more security controls.” Growth is great, but it makes compliance messier. That’s why Secureframe is focused on automating as much of the process as possible. * If companies plug in their HR system like Gusto or Justworks, Secureframe knows when a new employee joins. * By connecting to a company’s device management software, like JAMF, Fleetsmith or AirWatch, Secureframe can ensure that devices are secure and accounts are properly controlled. * Integrating with cloud providers like AWS, Google Cloud, or Azure gives Secureframe insight into the security of a company’s infrastructure. Instead of asking employees to regularly screenshot their workflows and emailing them to auditors every week, Secureframe does as much as possible automatically, and provides auditors with detailed reports. There’s still a lot of manual work in the process, which may hamper Secureframe’s ability to scale efficiently -- some because Secureframe needs to hire more engineers and build more integrations, and some because parts of the process are structurally manual. For example, you can’t pull board meeting minutes with a direct integration, but Secureframe lets customers easily upload them instead. The team is hiring aggressively to automate the process as much as possible, and already features three times as many integrations as competitors like Vanta.The approach seems to be working. Secureframe has hundreds of clients and has grown nearly 20x in the past year. Just a couple of weeks ago, it announced an $18 million Series A, led by Kleiner Perkins with participation from Base10 Partners, Gradient Ventures, Soma Capital, and others, just five months after its $4.5 million Seed round co-led by Gradient and Base10, with participation from Soma Capital, BoxGroup, Village Global, Soma Capital, Liquid2, Chapter One, Worklife Ventures, and Backend Capital.Secureframe’s business model is straightforward: it’s a SaaS business, with pricing based on company size and the certifications a company wants to get. Once it wins a customer, it’s incredibly sticky. Setting up all of those integrations takes upfront work, and as long as Secureframe makes the SOC 2 and ISO 27001 processes faster and smoother, companies are unlikely to churn. Quite the opposite, actually: Secureframe should see strong Net Dollar Retention, meaning that each customer spends more every year, for a few reasons: * Companies need to recertify every year. In order to continue to sell to large companies, they need to remain compliant, which means they need Secureframe. * As companies grow, they pay Secureframe more money. * Secureframe will add new standards like PCI, HIPAA, and CMMC, which have overlapping requirements with SOC 2 and ISO 27001. It makes sense to use the same company for all of them. More security compliance certifications means more potential customers for Secureframe’s customers. One of their investors told me that “the thesis around Secureframe has revolved around them ‘enabling a new generation of enterprise software companies.’" Clients like Hasura, Instabase, and Fabric rely on Secureframe to get SOC 2 and ISO 27001 compliant earlier so that they can begin selling to large companies, and to maintain their certifications over time. But Secureframe isn’t alone in the security compliance space. How it plans to win is a lesson for other companies in competitive, non-winner-take-all markets.How to Win a Nascent, Massive, Competitive MarketThe security compliance market is massive. Just 3-4 years into its life as the gold standard, about 40,000 companies get SOC 2 alone every year, at an average cost of $25,000-$50,000. That’s $1-2 billion per year, not counting ISO 27001, PCI, HIPAA, FedRAMP, CMMC, or any number of other security compliance certifications. Secureframe and its competitors believe that as they bring down the cost and effort required to get certified, they’ll expand the market. Secureframe isn’t the only company that noticed. Companies like Vanta, Laika, and Tugboat Logic also streamline security compliance. Plus, security compliance software is incredibly sticky, not just for Secureframe, but for its competitors. As long as it works as advertised, customers will stick around and grow. That means there’s urgency to win customers early.What do you do to compete and win in this kind of market? First, you build a differentiated product with a superior customer experience. This is the most important part. Secureframe is a relatively new entrant, but it’s the fastest-growing and best-funded for a reason. Secureframe stands out from competitors on a few key dimensions: * In-House Compliance. Head of Compliance was the company’s first hire, and Secureframe has one of the industry's only in-house compliance teams to make sure that customers aren't just checking the box; they're actually secure and implementing the best security practices. There's no worse customer experience than being hacked after you paid to be safe.* End-to-End Support. Head of Customer Success was one of the first five hires. Secureframe works with clients all the way through certification, even once they’ve handed off the process to auditors, and is committed to a smooth customer experience in a space where “smooth” isn’t a thing. * Most Integrations. Secureframe’s industry-leading 40+ integrations (3x as many as Vanta) means less manual work for customers, faster turnaround times, and ongoing systems monitoring.* Agentless. Secureframe uses an Agentless approach to get access to customers’ data. Some competitors have customers install agents on their devices, which can be time consuming, difficult to set up, and less secure. You want a security compliance company that’s the most… secure. Second, you grow really fast and acquire as many customers as possible. This is why Secureframe is sponsoring Not Boring today. It’s also why I keep hearing about SOC 2 on my favorite podcasts. When I hit play on Invest Like the Best, Patrick is there singing Vanta’s praises, and when I switch over to 20 Minute VC, Harry’s doing the same for Secureframe. It’s a good old fashioned land grab. Agreement on new standards unleashed a new market, and the rush is on to win customers. Every customer that Secureframe wins is a customer that a competitor can’t. (If you’re reading this, you’re on Team Secureframe. That’s the rule. Go sign up!)Secureframe has raised more money than any of its competitors, despite being a newer entrant. Capital isn’t a moat in and of itself, but it can certainly help in a space in which speed is key. Shrav told me about a few other really clever things that Secureframe does to acquire customers, but he swore me to secrecy (for now) because he doesn’t want the competition to pick up his tricks. Third, you build in switching costs so that customers don’t leave once you’ve acquired them. Secureframe does this in two ways:* Integrations. Integrations create a better customer experience; they also dig moats. Once a company integrates all of their tools, and everything’s running smoothly, they’re less likely to leave and go do it again with a competitor. Soon, Secureframe will open up an integration marketplace so that the companies coming to them today saying, “We want to build an integration with Tool X” can do it, and open up the integration to other Secureframe customers. This requires being the biggest (see: point 2, grow really fast) so that it’s worth it for companies to build integrations on your platform. If they pull it off, it will give Secureframe platform network effects, like Windows or the App Store. * Vendor Management. One of the challenges with security compliance is that you don’t just need to prove that you’re secure, but that the vendors you use are secure too. It’s all about minimizing weak links. Since a 100 person company uses 50 vendors on average, this process can be a huge headache. Secureframe works with companies to find and upload all of their vendors’ security compliance certifications, and is building the largest database of vendor security information. In the future, if one company uses AWS and uploads their compliance certifications, the next company that comes in can just pull that off the shelf, saving time and money.  Next, you add more compliance certifications. Secureframe is using its fresh funding to grow beyond SOC 2 and ISO 27001 into PCI, HIPAA, FedRAMP, HITRUST, CMMC and beyond. More certifications can be a deciding factor when comparing Secureframe versus its competitors upfront, and can be a reason for companies to switch from one platform to another despite high switching costs. Since it’s mainly a software business with most costs going to engineering, sales, and customer success, Secureframe has massive margins. It can spend to acquire customers, and spend on R&D to make sure that it has the products it needs to keep them happy and grow their business. Secureframe isn’t constrained by capital, it’s constrained by its ability to hire and execute. And it doesn’t need to win the whole market. With market dynamics like these, competition can actually be a good thing. The industry only coalesced around SOC 2 as the standard a few years ago, and the competitors are sharing the cost and effort of getting the word out. I was more receptive to Secureframe after hearing a Vanta ad, and likewise, potential customers might be more receptive to Vanta after hearing a Secureframe ad (or reading this piece) (but seriously, use Secureframe).Ultimately, though, what it’s really about is making companies, and the internet broadly, more secure. The biggest risk to any competitor, including Secureframe, is that one of its customers gets breached. It’s a reputational landmine, and given the interconnectedness of the system, a potential security threat to many customers. That’s why Secureframe is building more than a “check the box” product. It’s great that SOC 2 lets companies sell to more customers, but the real goal is to actually secure them. This is How They Tell Me the World SurvivesSecureframe’s mission is to secure the internet and help businesses trust their vendors. If Secureframe is maximally successful, there won’t be another NotPetya. Today, that means making it as easy as possible for customers to get their SOC 2 and ISO 27001 certifications. Plus, its compliance team already provides recommendations on best practices that go beyond certifications. Tomorrow, it’s adding more certifications. But certifications meet the basic requirements, and Secureframe thinks that there’s so much more companies can do to secure themselves and their customers. As Secureframe reviews more vendors and assesses their risk, it can help all its customers better manage their own risk. It can recommend vendors based not just on their certifications, but on what Secureframe knows about their security practices more broadly. And as each new vendor comes on, Secureframe can automate and speed up the process for everyone else. Beyond that, Secureframe is working towards building its own standard, drawing best practices from existing standards and from the vendors and customers that work with Secureframe. Combining its own standard with the world’s largest database would give Secureframe the holy grail: the ability to set a higher bar that actually makes the internet secure and make the bar easier, faster, and cheaper to clear so that companies can focus on what they do best.SOC 2 compliance… not as boring as it sounds, huh? If you want to learn more about getting compliant and securing your business, schedule a call with the Secureframe team. Don’t be the weakest link. Goodbye. Thanks to Shrav for telling me the Secureframe story, Anant at Soma for the great insights, and Dan and Puja for editing.How did you like this week’s Not Boring? Your feedback helps me make this great.Loved | Great | Good | Meh | BadThanks for reading and see you on Monday,Packy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.notboring.co