Cost structure of a startup changes when ambition is staged thoughtfully

Based on experience from fintech investor QED’s portfolio, Fintechjunkie walks through a number of actions and results startups have taken to lower losses or even get to profitability.

I think one of the key points is: “The cost structure of a startup changes when ambition is staged thoughtfully.”

This is why it’s possible for startups (and many large technology companies on the stock exchange) to e.g. layoff large parts of the company and invest less in marketing while still growing revenue (even if slower revenue growth than before).

He also writes “A startup with healthy unit economics growing at 50-75% is more attractive to most Investors than a startup with challenged unit economics growing at 100%+.”

I think the challenge for startups with less than $10 million in revenue growing 50-75% per year is that it needs to be profitable (or very close to) to be a good match for any type of investors. If not profitable venture capitalists see “it’s only growing 50%”, growth investors see “it’s still a pretty small company, let’s wait until it gets to $20 million” and most other investors see “it’s not profitable”.

Once there is cash in the bank, a deep founder-VC partnership is a very important thing

Max Niederhofer, partner at Heartcore, writes about the increased transactionality of VC-founder relationships.

I, and Alliance as a whole, strongly believe that a true founder-VC partnership is possible. And given that startups take 5+ years to build, it makes a lot of sense to think about fundraising more as relationship than a transaction. If you have the luxury to do so…

Most startups receives one term sheet in a successful fundraise. That doesn’t leave a lot of room to be too picky about the relationship, even if that would be preferable.

Waiting to sign a term sheet a couple of weeks in hope of finding a hopefully better investor isn’t appealing, as cash in the bank today instead of tomorrow is equivalent to a lot of relationship.

Nothing is something

The startup funding market is, even among good startups, split between haves and have nots. Carl Pei and Nothing is in the haves category. Big congratulations to raising $96 million from Highland Europe, EQT Ventures, GV, C Capital and Swedish House Mafia and others.

Experienced founder, good response to initial products and a very large market are some of the reasons (from the outside) that has allowed Nothing to be able to raise $250 million in total.

Marc Andreessen on founders & startups

A 9 minute clip from a longer interview with Marc Andreessen on the Lex Fridman Podcast. What Marc says about founders and starting a company rings very true. It can be extremely rewarding being a founder of startup (even if it is often romanticized), but it also has real costs in terms of long workweeks, work-life imbalance, and loss of social relationships (or relationships put on pause).

Databricks to acquire AI service MosaicML

Databricks has signed an agreement to acquire MosiacML for $1.3 billion. MosiacML lets companies train large language models on internal data at lower cost than e.g. OpenAI and build generative AI tools. It is noteworthy that MosaicML only has 62 employees. Not quite Instagram size at time of acquisition, but still not many employees.

In startup land there are always great counter-examples

In startup investing there are a bunch of great rules of thumb. The problem? There are almost always a few great counter-examples. See e.g. Kjetil Holmefjord’s There Are No Rules.

In a business where one exception to the rule can make all the difference, it makes it very dangerous to blindly follow ‘the rules’.

The way to deal with that? Understand why the rules are there, but stay curious and open-minded so you know when to break them. Evaluate each startup individually. Keep working.

Improve your odds to profit as an angel investor

I was taking angel investing with one of Sweden’s more well-known angel investors and a friend of his a few weeks ago. We got into what our first piece of advice for new angel investors would be.

Mine was to invest the same amount into several companies to diversify.

His was even more simple, only invest money you can lose (which I agree should be the foundation).

Once an angel investor is past those two, I believe thinking about and incorporating Incisive Ventures meta themes thinking will be useful:

  • Software eats everything
  • Great founders figure shit out
  • Disruptive innovation creates new markets
  • Platforms win
  • Laziness wins!
  • Invest only when I can be helpful to the company
  • Invest alongside other very smart, committed people

Finding the arguments to prove your point

Microsoft’s potential $69 billion acquisition of Activision Blizzard is a major event in the games industry. Some interesting things coming out of litigation after the US Federal Trade Commission has tried to block the transaction.

Microsoft is arguing that it has “lost the console wars” and an internal email with an initial assessment from PlayStation CEO seems to be counter to Sony’s public reasons for opposing the acquisition.

I think both sides are best understood if one tries to understand their business interests. Microsoft want a stronger position for its games business (as it is not winning currently) and Sony doesn’t want a stronger competitor. And they will find arguments to support their respective positions, which likely also goes for FTC who doesn’t want big tech to become even bigger.

Stockholm and Copenhagen top 10 European cities for software engineering talent, according to Sequoia Capital

Sequoia Capital has created a guide to technical talent in Europe.

Some notes on how Nordic cities did:

Stockholm has 1.74% talent share (place 6) and Copenhagen has 1.57% (place 8).

Gothenburg with 19,100 engineers is highlighted for systems and hardware

Helsinki with 28,900 engineers is highlighted for graphics & gaming, devops, front-end frameworks and hardware.

Stockholm with 46,900 engineers is highlighted for graphics & gaming, application development, systems and hardware.

Lower margins to drive scale

“Your margin is my opportunity”, is a saying referred to Jeff Bezos. Uber CEO Dara Khosrowshahi expressed the same feeling in his interview with

Dara said he would rather have a business with a 20 % take rate (the percentage a marketplace business keeps after paying sellers) instead of a 30 % take rate.

“I will answer somewhat seriously, which is high takers are dangerous. Our job as a company is to grow volume as much as we can, as fast as we can, and make our shareholders happy enough, minimizing the take rate, which is taking as much of that dollar and giving it to drivers and couriers. Last quarter, gross bookings grew 22% or so, which is really good. The money that drivers and couriers, including tips, made on the platform grew by 30% higher. At the same time, we’re able to expand our margins brief free cash flow positive.”

“I’d say I take the 20% take rate business. It’s more lasting. The growth can go on for much, much longer.”

Full interview transcript at and more on take rates from Bill Gurley in the oldie but goodie A Rake To Far.