The amount one can do is limited by the number of hours in a day. It’s zero sum, focusing one’s time on something means not focusing on something else. It’s useful to think of money as a way of leveraging one’s time by spending it to eliminate tasks one must do. For example, using a wash and fold service instead of going to a laundromat and doing it oneself will save about an hour of time that can be repurposed. In that way, money for time is leverage on one’s ability to focus on the right things.

Most investors use the ‘post-cap’ version of a SAFE note (post-money valuation with cap). The terms to negotiate and how they impact the value of the company are:

• Total amount to be raised (the total cash that will be transferred to you)
• Post-money valuation

When you divide the total being raised by the post-money valuation you get the percentage of the company being given to investors in the round (usually 20% or less).

In addition, the largest investors in the round will typically ask for a side-letter with additional terms like prorata rights, future board seats, and management rights.

See also:

• How a seed round works
• Information asymmetry during fund raising is a big advantage for investors
• Pro rata rights causes conflict between early and late investors

Founders that are fundraising for the first time do not know how venture capital works and need to rapidly learn in time to negotiate terms. Investors have access to more data—they see many deals, know the terms, and how the negotiation went in those deals. Founders need to ask investors about comparable deals or have a network of other founders that can provide this information because it is not public.

See also:

• How a seed round works

Stock and flow is an economics concept referring to static value (stock) and transactions over a period of time (flow). This is a useful metaphor for producing content on the internet.

Flow is like the ephemeral feed of content we create on social media and forums. Stock is the evergreen content we create like blog posts and essays. Flow spreads quickly (viral sharing), but is short lived (pages out of the feed in hours). Stock spreads slowly (Google search), but grows steadily over time.

See also:

• The blog post this comes from by Robin Sloan
• Effects of note blogging on SEO that talks about the advantage of search traffic over social media traffic
• The Garden and the Stream is a similar, but different metaphor about content creation

Companies need to be incorporated and founder stock must be issued before executing a SAFE and taking any investment. There should be some time between issuing/paying for founder stock and receiving the investment, to ensure the founder stock purchased was at the correct price (rather than at the price the investors paid) as this is a potential tax issue.

They first step is to nail down a lead investor. They will set the terms for the rest of the round (usually everyone participating in the round gets the same terms to keep things fair).

You should share a high-level plan for how much you are looking to raise. Most investors will expect that you will give up 20% or less for a round so you shouldn’t low-ball yourself by saying you are raising X amount at Y percent.

If they are ready to commit, a lead investor will offer a term sheet (usually for a SAFE convertible note) for the largest amount of the total round. You negotiate terms (there’s really only a few terms in SAFEs) and then their lawyers send you a SAFE to review with your lawyers before signing. The money gets wired to your bank account on a funding date.

After closing the lead investor they help you fill out the rest of the round by providing introductions (angel investors, other funds), but it’s probably better to find angel investors yourself with people of strategic importance or have contacts in a specific industry (angels have incentive to help you and, since there is an abundance of angels, you might as well get the additional benefit of expertise).

When exact numbers are used to express something that can not be described with exact numbers (e.g. 15% smarter) this is fake precision. When making calculations using data of a certain precision, one can’t claim a result with more significant figures than the original precision (this often happens with floating point math).

The key considerations for how much to raise in a seed round are:

• What are the milestones? (e.g. MVP product, iterate with early customers, early team count and makeup)
• Working backwards from there, what will you need to do it? How much runway?
• What do you need from the funds / angels in the round? (e.g. intros, access to portfolio companies, expertise)
• What similar deals are being made and what are those terms?
• What are the additional expenses or timelines that are needed for the product? (e.g. manufacturing, inventory, professional service fees)

Seed investors are primarily evaluating the team and the space in order to make an investment decision. Having an unknown co-founder they would need to work with in the future is a red flag. If you still intend to do that, be up-front and work closely with them in finding the right person. This is important for dilution in future rounds. You want your investors to share in the dilution if you bring on a co-founder later with material amounts of equity instead of diluting just the current founder(s) share.

See also:

• How a seed round works
• Key considerations for how much to raise in a seed round

The following are remote native companies with all employees working remotely.

• GitLab
• InVision
• Lambda School
• Basecamp
• Zapier
• Automattic

An outsourcing firm that typically offers payroll services, tax withholding, HR, and benefits. Employees contract directly with the company (e.g. the offer letter origin is the company not the PEO) and then the PEO enrolls them in payroll and other services. PEOs charge two to seven percent of payroll.

See also:

• Employer of record
• Back office

A payroll partners that is responsible for employment compliance and liability of employees. Companies contract with them to outsource the work of setting up operations in all jurisdictions in which they have employees.

See also:

• Back office

An EOR is much more expensive because they take on all of the liability and compliance on behalf of the company. Company’s use an EOR to hire employees globally where they do not have a local legal entity.

A PEO is a co-employment model and helps the company set up the compliance, tax, payroll, benefits, and HR processes, but tend to operate more as a consultancy. Company’s use a PEO to outsource HR functions where they have their own local legal entity. Most company’s find it too expensive to have a PEO after 100 employees.

See also:

• Back office

When using AWS S3 as an origin to serve a static website distributed by AWS Cloudfront you need to choose how to enable brotli compression. These choices are mutually exclusive—you can either a) have Cloudfront compress to brotli at the edge with a 20% ratio with fallbacks for gzip or no compression or b) compress to brotli by pre-compressing assets where you can use a much higher ratio (80%), but with no fallbacks.

As an alternative you can use AWS Lambda Edge to rewrite requests based on the Accept-Encoding header, but then you need to pay for that in addition to S3 and Cloudfront costs.d

See also:

• The complexity of AWS Lambda stems from the need to internalize the runtime model (you also need to internalize the architectural model in this case)
• Integrating between AWS services adds incidental complexity

Part of Google’s algorithm for indexing content is determining whether a page is useful. One heuristic for not indexing content or un-indexing it if it has already been indexed is whether or not the page is ‘thin content’. Pages that are thin have few words on the page or might be considered duplicate.

See also:

• Understanding SEO
• Effects of note blogging on SEO

Most business registration requires a company to have a real physical mailing address. This is problematic for remote native companies as they don’t have one. Further, most mail forwarding companies use P.O. boxes which are note allowed. To work around this, remote-first startups use the address of the founders and employees in each state or convince someone to let them use their mailing address.

See also:

• Back office

When selling a compliance product, you often need to sell non-compliance; what happens to the customer if they are not compliant. The challenge with that is there are alternatives, for example selectively ignoring the obligation or doing the bare minimum to avoid the worst of it. This can also present challenges with who the buyer is. If a legal and compliance person is the champion, they can get stuck convincing the decision maker (e.g. CEO) and it can take a long time adding uncertainty to the sales process.

See also:

• RegTech

This note does not have a description yet.

When trying to hire someone in a new country, it can take on average two months to put in place all off the infrastructure for employment. This includes research (local laws, regulations, taxes) setting up local payroll (often through a consulting firm familiar with the location) and even setting up a subsidiary company which requires it’s own research into taxes and maintenance.

The most difficult part is determining if it is worth it to set up a legal entity (subsidiary). Key factors include, payroll, sales tax, legal cost of managing entity, and employment risk due to employment law. To decide, it typically involves researching, speaking with an international law firm, getting a second opinion from an employment law firm, talk to a tax consulting firm, and speaking with accounting.

However, once it is set up properly once you can mostly hire as many people you need.

See also:

• Back office
• Remote native companies, especially in the EMEA face this problem very quickly when hiring
• RegTech

Due to COVID-19, employees are spread throughout the country and moving around. This is a challenge for employers who are obligated to pay taxes in the jurisdictions their employees are working. Remote native companies and companies that support a growing remote workforce will continue to face this challenge.

See also:

• Back office
• RegTech

A chicken sexer is a job where, shortly after hatching, someone determines the sex of the chicken. There is no explicit knowledge on how to do that, accuracy is built up through calibrating an intuition in an apprenticeship model (you can only learn to be a chicken sexer by working repeatedly with a chicken sexer).

See also:

• Thought Leaders and Chicken Sexers makes the analogy of thought leaders that can not be proved right or wrong because knowledge is never made explicit
• This is an example of tacit knowledge like riding a bike

A single company operates as the ledger for all stock transactions in the United States. Cede & Co. essentially own all publicly issued stock and stock is traded through contractual rights.

This is a extreme example of 1 of 1 trust model, but surprising in how much power is centralized in a single entity (that must do the right thing).

See also:

• Trust is an important factor to economic prosperity

When building a company and product, having a singular obsession with working on it and solving the problem is an advantage over competitors that do not. The obsession leads to exploring the area in depth, more than any rational person would do. This leads to all sorts of discoveries overlooked by others.

See also:

• Having genuine curiosity and obsession might be a characteristic for dealing with skepticism
• Time horizons as a competitive advantage has a similar in beating short-term speculators
• Naval Ravikant talks about this at length in ‘how to get rich’

Functions that must be called or handled in a particular way can be thought of as having different colors. The programmer needs to understand the color of functions and this adds complexity (and bugs).

This is particularly bad with callback based control flow (either functions return values or nothing). Promises improves things and async / await is significantly better, but you still can’t call an asynchronous function in a synchronous one, forcing you to structure your program around it.

Read the essay

A staggering statistic about the number of prescription painkillers that have been legally flooding the United States. Highly addictive opiates like Oxycontin have created a drug problem that spans all walks of life. To put it in perspective, there are 319 million people that live in the US so nearly 1 opiate-painkiller has been prescribed per person.

Read the essay ‘Down here they sometimes call it boy.’