👋🏾 Hi friends!

The older I get, the more I open myself to moments of planned serendipity.

Yes, I know that is a contradiction in terms. But hear me out.

When I go to events, I usually get overwhelmed by the sheer number of people there are. Having conversations in rooms where it’s so loud you can hardly hear yourself think isn’t really my cup of tea.

So I flipped the script at last week’s London VC Network event that EmergeOne sponsored.

I ran a podcast studio - in amongst the flowing free drinks - and ended up having ten super high quality conversations with VCs, founders and operators.

It was valuable one-on-one time to get to know each of them and form an actual connection with the added bonus of getting some super cool ‘podcast on the move’ content.

And I had never met most of the folk I ended up interviewing.

So you can rely on serendipity… or you can simply engineer your own.

In this weeks Off Balance, I’ll be chatting about:

🥽 How the Metaverse just got interesting
🐺 Early stage predators
📈 VC Fund metrics worth understanding

Also if you have any feedback or if there’s something you’re desperate to see me include, just reply to this mail or ping me online - I’m very open to conversations.

Give me a follow on LinkedIn, Twitter (do I really have to start calling it ‘X’ soon?), Instagram and drop me a note :)

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

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Now let’s get into it.

Crossing the Rubicon

If you only consume two pieces of content this week, it should be this:

1. Read the rest of this newsletter 🧠 

2. Watch Lex Fridman’s interview with Mark Zuckerberg 🤯 

And in that particular order.

I’ve no doubt that many of you will have seen the cartoony style Metaverse adverts Zuck and the Meta team made a year or so ago. You may have even rolled your eyes and laughed at its absurdness like I did.

This interview, however, is anything but absurd.

Lex and Mark have a conversation in the Metaverse as photorealistic avatars.

But, as you will see from the video, photorealistic feels like a bit of an understatement.

All I can say is that, we will continue to see technology such as this and AI improve almost exponentially with mind blowing speed (anyone see that ChatGPT can now write code by looking at a sketch you upload?) whilst at the same time costs continue to move to zero… we are going to see some pretty incredible stuff that most of us probably haven’t even imagined.

How can did I add value?

Recently one of my team reached out to me for a steer on a situation they had come across.

Here are the facts:

➡️ Founder had engaged an agency to build their product.
➡️ Agency had invested £150,000 into the business.
➡️ For the £150,000 investment, they had bought ~16% equity.
➡️ Which would value the business in the region of £950,000.
➡️ The agency had then taken £300,000 to build the tech.
➡️ i.e. an additional £150,000 over their investment.
➡️ The founder also had a non executive director (NED) on board.
➡️ The NED was associated with the agency that built the tech.

This sort of thing REALLY gets on my last nerve.

Here’s why:

✔️ Market salary for decent full stack dev (below CTO) - £80k p.a.
✔️ Market salary for decent front end dev - £60k p.a.
✔️ Market salary for decent product person - £70k p.a.
✔️ These numbers could be reduced if equity on offer.
✔️ If they’d hired a co-founder / CTO on salary + equity it would have cost less.
✔️ £100k salary reduced to £80k with say £20k in equity x 2 years.
✔️ Based on £950k valuation, this would have been 4.2%.
✔️ So they have spent more money and sold more equity than necessary.
✔️ Future investors coming in would have massive issues with the cap table.
✔️ This much equity to an external agency? Massive 🚩.
✔️ Not to mention, £300k for a product build? Sounds very high.
✔️ And who owns the IP? And who’s going to maintain the product?
✔️ Oh, and let’s not forget the ‘NED’.
✔️ They have essentially had their cake and ate it.
✔️ And whilst I don’t know this, I bet you they had advisory equity too.

Moral of the story?

At the earliest stages of your business there are A LOT of sharks out there looking to prey on unsuspecting founders.

It is worth finding and taking the advice of a few people who are:

a) completely impartial

b) experienced in early stage businesses

c) preferably founders themselves, because they are the most likely people to give you proper guidance - warts and all.

And of course, read this newsletter - I have a habit of being open to the point of it costing me business because I refuse to take money from folk that can’t afford it or don’t need it.