From CEOs: My finance leader is not strategic enough. What should I do?

or

From Finance: I don’t feel like I am a strategic thought partner. How can I fix that?

Ideally, your finance leader does more than just manage a collection of important but inherently non-strategic processes (e.g., expense approvals and closing the books). You want someone who can contribute to the collective thought process about your business’s path forward by adding a financial dimension to decision-making.

Unfortunately, it’s extremely common to see finance leaders not contribute at the strategic level. When that happens, I am often asked either: “How do we coach them to the right level?” or “Should I replace them with someone more strategic?”.

My first push is typically to diagnose why the person isn’t showing up the way you’d hope; depending on the “why,” the answer to what to do can vary. This post lays out a few common reasons, tips for diagnosing, and what I typically see as the solution.

Three Common Reasons for a Non-Strategic Finance Leader:

Disposition: The leader is weaker on the communication and thought-partnership side of finance leadership. They are often not versed in (or maybe uninterested in) navigating pushback on their ideas or educating others.

Diagnosing this is often easy if you look for it. You will repeatedly hear about mixed or bad interactions between the finance leader and other team members where the issue is social, not technical (i.e., “Smart, but they were rude” or “They treated me like I was stupid because I didn’t agree”). When you talk to the finance leader about these things, you will either get non-committal answers about fixing it, or they will question why they need to fix it at all if they are “good at their job”.

Unfortunately, this one is the hardest to “fix” quickly. Your best shot is usually to ensure they get consistent (often very direct) feedback and mentorship focused on improving this part of their work. That said, honestly, I often see the resolution as the leader being replaced or someone being brought in above them.

Bandwidth: They are so bogged down in tactical work that they don’t have the time to think strategically. This is especially prevalent for a leader during the initial build (or rebuild) phase of a function.

If everyone likes this person and generally thinks highly of them, but they are perceived as extremely busy and/or are generally known for their tactical work rather than their strategic contribution. There is a reasonable chance you’re dealing with this phenotype. Another classic indicator is that when you ask this person about adding 1-2 new people to the team, they respond with “I am not sure what I need or what they would do”. That is a classic sign of being so underwater that it’s hard to take a step back and really think through how to design a function. It also means they may be struggling to think about what they should be doing now that they are not.

The nice thing is, if the leader takes steps to build a function/team, this can work itself out naturally. That said, if they don’t or can’t, the issue compounds as the company grows and the tactical needs increase. I’ve unfortunately seen many great finance individual contributors fail to advance beyond a certain point because they were weak function builders.

Perspective: The finance leader doesn’t know the difference between tactical and strategic, or they view tactical work as more valuable (or honorable). I see this all the time with first-time finance leaders. The feedback loop on tactical work is short, and the “value-add” is clear. Strategic work can often feel nebulous in terms of ROI. I will sometimes find these leaders viewing strategic work as fluff.

I often see the leaders people describe as “grinders” gravitate to the tactical work given the clear ROI. The classic point where this emerges is Director or VP. Getting to that point likely did require a lot of individual grinding. If the person in question sits around that level and is considered non-strategic, the first thing I’ll do is have a conversation to try and get a sense of how they perceive the more strategic work. They won’t typically say “it’s dumb” but there will be signs.

Mentorship can be extremely helpful in resolving this issue. Sometimes, just giving the person more concrete examples of how to be a strategic thought partner can be surprisingly effective at elevating their thinking. Other times, it is more about pushing them to go beyond the tactical. To be clear, it is often more than 1-2 mentorship conversations, but this is usually not a terminal problem.

Conclusion: One dynamic not covered here, but extremely important to recognize, is that organizational design and the underlying perspective on finance can heavily influence the strategic value finance brings. If your CEO views finance’s primary function as bookkeeping, they will not look to you as a strategic partner and may not loop you into the right conversations to have a strategic impact.

In later posts, I will cover how to address that more (from both the CEO and CFO sides). There is enough to say about that that it deserves its own post. That said, I think that reason gets a bit overused as a rationale for why finance is not showing up strategically. More often, I see the reasons above, so I wanted to start with those first.

• The Golden Rule of Dilution (Venture Finance)

• Cap Table Math Without Circular Calculations (Introduction)

• Converting Discount SAFEs / Convertible Notes Without Circular Calculations

This post also assumes you have a basic familiarity with convertible investments and know what a “priced” round is. I will not be re-explaining those dynamics here, although I may address them in a different post.

Author’s Note (2): This post focuses on the most common structure of a post-money valuation cap SAFE (as drafted under market-standard terms). It does not cover every edge case or variation, but instead is meant to explain the mechanics that most people will encounter.

I am also not going to cover pre-money valuation caps at all here. That is for another post.

Introduction:

This post is my white whale. I’ve started and stopped writing it too many times to count. Post-money valuation cap math is deceptively tricky. There are tons of primers or explainers for how these caps work online. The challenge is that those primers typically either give a partial or (in some cases) incorrect explanations of how the math works. This leads to mistakes that can have significant cap table impacts.

I’ve wanted to write a primer on these caps for a while, but what I write always ends up denser than I’d like, because this is a dense topic. That said, I’ve reached a point where I don’t want perfection to be the enemy of good enough, so I am going to post this and hope it can help those struggling with this math.

I will start by discussing the common explanation, its strengths and weaknesses, and then we will go through some level-setting and provide many examples.

Speaking as a writer, I am placing a bit of a bet here that people have a longer attention span than we typically assume if it is something they are interested in. My hope is that, for those who need this information, the clarity justifies the density.

Level-Setting:

Common Explanation: The most common partial explanation you will see for how post-money caps work is:

“If you take SAFE Investment / Post-Money Cap, you get ownership at conversion. If you reduce that by dilution from the new round, including the pool creation or refresh, you get your post-money ownership.”

Reality: In many cases, this method will get you to the right answer. The problem is that this math only works if you are converting using the cap (i.e., you get the best deal by converting via a cap instead of a discount or using the terms of the new money). When that is not true (i.e., the cap is not the best deal), the math gets much trickier.

Before we get into the math, I want to do some level setting.

Golden Rule of Post-Money Caps: The point of a valuation cap is that it guarantees the investor that they will never have a worse deal than the investors in the round that is causing the conversion of the SAFE. This is demonstrated in two related ways:

1. The converting SAFE will never have a higher share price than the new money. The share price may be the same (discussed below), but it will never be higher.

2. The converting SAFE will never get less ownership than if they had invested at the post-money of the new round. They may get the same ownership as if they’d invested at the post of the new round, but never less.

If you are ever converting a SAFE with a valuation cap and one or both of these rules do not hold up, you know the math is wrong.

How to Think About Caps: The fundamental framing I want you to use for a valuation cap is that it’s like locking in terms for a round before the round that is causing the conversion, with the option to take the terms of the round causing the conversion if it is better for you.

To illustrate the above in more detail, let’s go through a ton of examples.

Single SAFE (Post-Money Cap Only):

Let’s pretend that you are going to invest $2M into a company in advance of a larger round. As the CEO, I offer you (the investor) two options for how to do that:

Scenario 1:

Option A: You invest in the below Seed, and I immediately raise a Series A after that. The terms of the Seed and Series A are below. What we are calling the Seed will function in the same way as a post-money valuation cap SAFE would.

• Shares: Current share count of 10M. There is no available pool currently.

• Seed: $2M raised on a post-money of $10M (20% at conversion w/ cap).

• Series A: $5M raised on a post-money of $25M (20% at investment).

• Available Pool: 10% of the post-Series A capitalization.

To be clear, you will know the exact terms of the Series A when you invest in the Seed, so you know what your post-Series A ownership is.

Option B:

• Shares: Current share count of 10M. There is no available pool currently.

• Series A: $7M raised on a post-money of $25M (28% at investment).

• Available Pool: 10% of the post-Series A capitalization.

Here, rather than two separate rounds with different valuations, all $7M raised was done at a post-money of $25M. In other words, even if you invested before the new money, you get the same post-money valuation that they would.

Below is a cap table comparing the two options. The “Seed” line reflects the $2M invested by you in either case (even if there isn’t technically a seed round in Option B).

In this scenario, taking the Seed round terms, even when accounting for the dilution, is a better deal for you. Our $10M valuation cap is a better deal than using the Series A terms.

Scenario 2:

Let’s change the terms a bit. The Series A terms are the same as before, but let’s say that the post-money valuation cap (i.e., the “post-money for the seed round”) was $20M instead of $10M. We will assume all of the other terms are the same. Let’s look at how the cap table would look under the two options:

In this scenario, it is a worse deal for me to convert at a $20M cap followed by 30% dilution from the Series A and available pool than it would be for me to invest $2M at a post-money of $25M. In this case, I would opt to convert at the same terms as the Series A investors (i.e., I am not using my cap).

Benefit of the Cap: The benefit of having a valuation cap here is that I get to opt for whichever option is better for me. If I had actually done a priced seed round at a $20M post-money, followed by the Series A described above, I would be stuck having paid a higher price per share than the Series A investors. The valuation cap gives me the ability to wait until the next round occurs to decide which option is a better deal.

Again, a key way to spot which option is better is to look at (1) the share price and (2) the ownership received in the two scenarios. For Scenario 2, you would never convert using the cap, as that gets you a worse deal than the new investors.

Ok, so we’ve talked about this with a single SAFE, how do we do this if there are multiple SAFEs with a post-money valuation cap?

Stacked SAFEs (Post-Money Cap Only):

Dilution Protection: A key feature of post-money valuation cap convertibles is that they are protected against dilution from other convertibles converting as part of the round. That makes our lives easier, as it means that the process to decide if each SAFE converts using the post-money cap or using the new money’s terms (or discount if we have one) is easier than if we had to account for the dilution from other convertibles.

Decision Point: The decision for each SAFE is to convert using the cap or convert using the terms of the new priced round (or discount). Each SAFE makes this decision independently (again, assuming they all have post-money caps).

Let’s go through a couple of examples:

Scenario 1: Both SAFEs Convert Using Their Caps

Premise: This time there are two SAFEs converting at the Series A.

• Shares: Current share count of 10M. There is no available pool currently.

• SAFE 1: $2M raised on a post-money of $16M (12.5% at conversion w/ cap).

• SAFE 2: $3M raised with a post-money cap of $20M (15% at conversion w/ cap)

• Series A: $10M raised on a post-money of $40M (25% at investment).

• Available Pool: 10% of the post-Series A capitalization.

SAFE 1 Process:

• Convert Using Cap: Final ownership of 8.1% (12.5% reduced by 35%).

• Convert Using A Terms: Final ownership of 5% ($2M / $40M).

• SAFE 1 Decision: Convert Using the cap.

SAFE 2 Process:

• Convert Using Cap: Final ownership of 9.7% (15% reduced by 35%).

• Convert Using A Terms: Final ownership of 7.5% ($3M / $40M).

• SAFE 2 Decision: Convert Using the cap.

Below is the final cap table.

Scenario 2: Both SAFEs Convert Under Series A Terms:

Premise:

• Shares: Current share count of 10M. There is no available pool currently.

• SAFE 1: $2M raised on a post-money of $50M (4% at conversion w/ cap).

• SAFE 2: $3M raised with a post-money cap of $60M (5% at conversion w/ cap).

• Series A: $10M raised on a post-money of $40M (25% at investment).

• Available Pool: 10% of the post-Series A capitalization.

SAFE 1 Process:

• Convert Using Cap: Final ownership of 2.6% (4% reduced by 35%).

• Convert Using A Terms: Final ownership of 5% ($2M / $40M).

• SAFE 1 Decision: Convert Using the Series A terms.

SAFE 2 Process:

• Convert Using Cap: Final ownership of 3.3% (5% reduced by 35%).

• Convert Using A Terms: Final ownership of 7.5% ($3M / $40M).

• SAFE 2 Decision: Convert Using the Series A terms.

Below is the final cap table.

Scenario 3: One SAFE Uses Its Cap. One SAFE Doesn’t

Premise:

• Shares: Current share count of 10M. There is no available pool currently.

• SAFE 1: $2M raised on a post-money of $16M (12.5% at conversion w/ cap).

• SAFE 2: $3M raised with a post-money cap of $60M (5% at conversion w/ cap).

• Series A: $10M raised on a post-money of $40M (25% at investment).

• Available Pool: 10% of the post-Series A capitalization.

SAFE 1 Process:

• Convert Using Cap: Final ownership of 8.1% (12.5% reduced by 35%).

• Convert Using A Terms: Final ownership of 5% ($2M / $40M).

• SAFE 1 Decision: Convert Using the cap.

SAFE 2 Process:

• Convert Using Cap: Final ownership of 3.3% (5% reduced by 35%).

• Convert Using A Terms: Final ownership of 7.5% ($3M / $40M).

• SAFE 2 Decision: Convert Using the Series A terms.

This math is always a funny mix of tricky and straightforward. Fundamentally, the method I am applying here is that I am doing the math twice for each SAFE, once using the cap and once using the new money’s valuation.

We are almost done, but I want to address one final item before ending the post: What about if there is a discount and a post-money valuation cap?

Stacked SAFEs (Post-Money Cap and Discount):

Fundamentally, this is not going to look much different from the previous examples. The only difference is that, rather than comparing the final ownership we’d receive based on the cap to our ownership based on if we invested at the new money’s post, we are comparing the final ownership we’d receive based on the cap against the final ownership we’d receive based on the discount.

I cover conversion math with a discount in another post (linked above and re-linked here). As a reminder, to calculate your post-money ownership with a convertible that has a discount you use the formula:

(SAFE Investment / Post-Money of New Round) / (1 - Discount).

For example, if I invested $2M in a SAFE with a 20% discount and then the company raised a Series A with a $40M post-money, my SAFE’s post-money ownership would be 6.25%: (($2M / $40M) / (1 - 20%)).

A crucial thing to remember is, when you have a valuation cap and a discount, at the point of conversion, you use one or the other (i.e., you don’t combine them). Either you convert using the cap or you convert using the discount.

Now that the above context has been given, let’s go through our final example.

Premise:

• Shares: Current share count of 10M. There is no available pool currently.

• SAFE 1: $2M raised on a post-money of $16M and a 15% discount.

• SAFE 2: $3M raised with a post-money cap of $25M and a 25% discount.

• Series A: $10M raised on a post-money of $40M.

• Available Pool: 10% of the post-Series A capitalization.

SAFE 1 Process:

• Convert Using Cap: Final ownership of 8.1% (12.5% reduced by 35%).

• Convert Using Discount: Final ownership of 5.9% (($2M / $40M) / (1 - 15%)).

• SAFE 1 Decision: Convert Using the cap.

SAFE 2 Process:

• Convert Using Cap: Final ownership of 7.8% (12% reduced by 35%).

• Convert Using Discount: Final ownership of 10% (($3M / $40M) / (1 - 25%)).

• SAFE 2 Decision: Convert Using the discount.

While the math is slightly adjusted to factor in the discount, it is not a huge change.

Conclusion:

SAFE math is a prime example of boring but important. You can easily screw up a cap table by not grasping the dilutive impact of SAFEs. I’m not just talking about doing the math wrong on a model. I am talking about actually shifting the fate of a company because the team got too diluted relative to the funds raised and the stage.

Sometimes these mistakes are made by founders who have not fundraised before. Often, these mistakes are initiated or supported by VCs who do not have as strong a grasp of this math as they think they do. The way this can really blow up is when a company raises a ton of money via SAFEs with high valuation caps only to have a priced round at a lower valuation than expected. When that happens, they can suddenly discover that those inflated caps didn’t prevent dilution in the same way an inflated priced round would. This is when rounds get extremely dilutive.

This dynamic happened a TON in 2022 / 2023 when the market first started to turn. SAFEs with caps that had been set in the boom market of 2021 and earlier were now converting at valuations well below expectation, leading to extremely dilutive rounds. Unfortunately, in these moments (which are extremely stressful for leadership teams), it doesn’t help to have investors or lawyers who are not as strong on this math as they’d thought. If the only way you know how to convert a SAFE is when you are using the cap, it can (and did) lead to a lot of incorrect cap tables.

My hope is that this article can serve as a reference point to people going through conversion math in the future. To learn more about these concepts and see examples of how to model this out in more detail, you can learn about my course here. Thank you for reading.

Introduction: In a prior post I described the difference between fundamentals and basics. In the post linked in the author’s note, I lay out fundamental cap table mechanics we will now build on for more involved applications.

This post will show you how to convert one or multiple SAFEs or convertible notes where there is a discount but no valuation cap. All of this math is done without circular calculations.

Convertible math is deceptively tricky, especially when things start to get complicated with other parts of the deal. I see a lot of people get stuck on this math, and so I plan to add quite a bit over time to help people navigate how to convert these instruments.

Part of managing any cap table is minimizing the math. You (typically) are not doing cap table math for the love of the game. You do it to get to an answer. With that in mind, we want to try to get to that answer as efficiently as possible.

Note: This post will refer to SAFEs, but this works for a convertible note or SAFE.

If you’ve ever tried to model this and found yourself stuck (especially when the deal includes multiple SAFEs or an option pool refresh) you’re not alone. This is one of the most common places I see people get stuck or start second-guessing if they have the right answer.

New Formula: When converting a SAFE with a discount you can calculate the post-money ownership with the below formula:

(SAFE Investment / Post-Money Valuation of New Round) / (1 - Discount %).

You will see examples of this below:

Example 1: Single SAFE:

Current Cap Table: A company has 10 million shares. The founders hold 9.5 million shares and the available option pool holds 500,000 shares.

SAFE Terms: The company raised a $2M SAFE with a 20% discount.

Priced Round: The company raises $5 million at a post-money valuation of $25 million. The new investors receive 20% of the company ($5M / $25M). As part of this round, the available option pool will be refreshed to 10% on a post-money basis.

Process:

1. Calculate the post-money ownership of the SAFE. The formula to do this is:
   ($2M / $25M) / (1 - 20%) = 10% of the post-money share count.

2. Calculate the ownership of the SAFE (10%), Priced Round Investors (20%), and Available Option Pool (10%). These three groups represent 40% of the company.

3. Calculate the post-money ownership of those who are not the new investors or the available option pool (in this case, that is just the founders). If the new investors + the available option pool is 40% of the post-money share count, then everyone who isn’t those groups is the other 60% of the total.

4. Now we can calculate the post-money share count for the round. If the founders hold 9.5 million shares, and that is 60% of the post-money total, we can calculate the post-money share count by doing: 9.5 million / 60%. This implies a post-money share count of: 15.8 million shares.

5. We can now calculate the shares received by the new investors and the post-money available option pool:

   1. SAFE Investors = 15.8 million shares x 10% = 1.6 million shares.

   2. Series A Investors = 15.8 million shares x 20% = 3.2 million shares.

   3. Available Option Pool = 15.8 million shares x 10% = 1.6 million shares.

Importantly, this is effectively the same process I laid out in the post on non-circular cap table math. The change is that we need to calculate the SAFE ownership and add it to the new investor + option pool ownership before doing the rest of the math. This ties back to the concept that fundamentals are core ideas with broad application.

The same approach applies even when things get more layered, like when you have multiple SAFEs with different terms. This is often referred to as “stacked SAFEs.”

Example 2: Stacked SAFEs:

Let’s assume the starting cap table, terms for the first SAFE, and terms of the priced round are all the same as before. The one change is the company issued a second SAFE prior to the Series A. This SAFE was $2.5M raised at a 10% discount. This means we now have two SAFEs to convert.

From a process standpoint, once we figure out how much ownership the second SAFE will end up with, we can just run the calculations the same way we did before.

1. The second SAFE will have 11.1% of the post-money share count. This is calculated by taking ($2.5M / $25M) / (1 - 10%).

2. The SAFEs + Priced Round + Available Option Pool now represents 51% of the post-money share count.

3. Those who are not the new investors or the available option pool will be 49% of the post-money share count.

4. If the founders hold 9.5 million shares, and that represents 49% of the company, the post-money share count is now 19.4 million.

5. By taking each party’s post-money ownership x 19.4 million, we can calculate the shares each party ends up with.

As you can guess, I could extend this method to as many SAFEs as I want if they are discount only (i.e., there is no valuation cap). The math is easily scalable and not particularly complex when done this way.

Conclusion: This is just the starting point. In future posts, we’ll layer in more complex round structures and show how these fundamentals help keep the math (and your model) clean, even when the deal gets messy.

With that in mind, let’s talk about ECON-101.

Context: Prior to college I was a bad student. I knew I wanted to be an MMA coach, so I put all of my time into that and spent little to no time on school. When talking about high school, some people say “In high school I never tried but always got As anyway.” That was not me. My grades were… not stellar.

My wife was the opposite; a straight A student for most of her life. She was supportive of whatever I wanted to do, but (understandably) preferred me in college versus fighting.

In an effort to make her more comfortable with the idea of me going back to fighting, I decided to give school a real effort for a semester before deciding whether to stay.

This leads me to Microeconomics 101.

First Test: Second semester freshman year was the first time I really pushed myself with school. The first test that semester was for ECON-101. I studied at least five hours a day, every day, for weeks. For an intro level class on something as simple as econ, that is overkill. That said, I wanted to ensure I crushed it.

The median on that test was an 81. I got a 78. I probably studied harder than almost anyone else in that class and couldn’t crack the median. That sucked and was extremely embarrassing. Even if no one else knew, I knew. I don’t think I spoke to anyone for three days and barely left my room.

I remember talking to a friend about that test. I told him how I scored hoping to hear something like “Hey that happens to everyone. That class is hard!”

Instead, he said “Look man. The tests get a lot harder than ECON-101. If you want to study anything business, you need to figure this out. Otherwise, this may not be for you.” That sucked to hear, but he was right.

Second Test: I went to the professor and said something to the effect of, “It is possible that I am just stupid. I am willing to accept that. That said, I studied so hard that I at least have to ask if there is maybe something obvious I am missing.”

He asked how I studied. I told him I read each chapter of the text book I was supposed to and then did the problems at the end of that chapter. He asked me if I did the practice tests he posted, and I said no. He shared that most of the test was based on the practice tests and not the text book problems.

For the second test that semester he posted two sets of practice tests. Each was ~60 questions. I practiced those questions so many times that if you said the first three words of any problem on either test, I knew what the answer was. I took the test and got a 95. It was a method problem, not an effort problem.

Final: Time for the final. This time he posted six practice tests each with around 60 questions. Just like before, I did each test so many times that I could tell you the answer based on the first few words of the problem. I sit down to take the final, and discover that basically the entire final are just questions lifted directly from the practice tests. It took me two minutes to complete the test and I got a 98.

It was one of those ‘luck meets preparation’ moments. The kind people talk about, but rarely get to feel in real-time. The fact that it was literally word for word from the practice tests was a lucky break. That said, it was lucky because I’d obsessively studied those tests for weeks.

At some point I’ll write a longer post about my view on luck.

Conclusion: There are a few key lessons I think of with that story:

• Failure often comes from either a lack of effort, an incorrect method, or a combination of the two. If you can definitively solve for one (i.e., put in more than enough effort) it can really help clarify where the weakness is.

• In the process of learning something you’re naturally weak in, you may have a moment where you are working harder than almost anyone, but still performing worse. This is a gut check moment. I could tell many stories where this happened to me. It is always hard and a lot of people quit in those moments. Stick with it.

• The learning process is often extremely inefficient in the early days. Efficiency is something you earn through a lot of inefficient reps.

I love telling this story because it gives an example of me failing to meet the moment, which I think is important as it shows my students I’ve been where they are (or worse) too. I also like it because sometimes the best way to make a complex set of points is through a story.

I’d love to say this was the last time something like this happened, but it wasn’t. I got smarter each time, but there were more setbacks ahead. In later posts I will talk about those experiences too and what I learned.

A few years after starting this, during a grappling match, I got poked in the eye so hard that both of my eyes swelled shut. Given how much my eye hurt and the fact that my vision was black, in that moment, the only thing on my mind was:

“I’ve gone blind in my right eye. Nothing I can do about that. I’m not losing too.”

I fought the rest of the match without my vision (thankfully it was grappling so no one could punch me), and I won. It hurt. I wasn’t thrilled. Brittany had never expressed much interest in pirates, so maybe the eye patch wouldn’t land. That said, this was a moment I’d practiced for and I was ready. My vision, thankfully, fully recovered.

No matter your craft, you’ll likely have (many) moments where you’re operating at a suboptimal level but you still need to perform. In those moments, the moment isn’t what determines performance, it is your training.

To be clear, I don’t expect anyone reading this to grapple blind (or at least… I hope you don’t have to do that). That said, I feel the principle of “Train under conditions harder than what you’ll face” is universal.

Practice Framework: This post is for people who’ve already gone through deliberate practice in calm, controlled settings and now want to build fluency under stress. I’ll use financial modeling as the example, but this applies broadly. Whether you're prepping for a presentation, interview, or high-stakes performance, the principle applies: increase the pressure in training so your live reps feel clean.

If you are not able to execute the skill you’re working on in a quiet setting without time pressure, don’t spend time on this post yet. Instead, I’d recommend this post on re-inventing the wheel.

Finding ways to create added tension or challenge when practicing skills is crucial for performing in a “live” setting. You can rarely totally replicate a live setting, but you can get close.

Pressure Acclimation: Here’s the actual progression I used when building fluency in a skill. It absolutely applies to modeling, but you could apply the same constraints to teaching a class, giving a presentation, or running a demo. The is key stacking discomfort in a way that builds control.

1. Set timers for your work. Start with timers that are almost certainly long enough, then gradually shorten the time allotted, while still trying to give yourself enough time that you feel you should be able to complete it.

2. Set timers with less time than you need. By doing this, you will be forced to cut back on certain things to get the key items done. It’s a great way to cut fat and surface the true must-haves in your model.

3. Start to have music play in the background. I’d say start with instrumentals, then add in music with lyrics that you like, then add in music with lyrics you don’t like. Finally, use TV. Do this with and without timers.

Bonus: Practice with another person watching you (likely a video call) while trying to talk to them about what you’re doing. Doing analysis on a call is very challenging. Being able to do it well is extremely valuable.

Double Bonus: Do it while tired. I’m not recommending you intentionally deprive yourself of sleep (I will be honest… I did do that occasionally), but, rather than practicing at a time you’re at your sharpest, push it to times of day where you’re not. Performing while tired is one of the most universal situations I can think of in the working world. Practice with that skill is extremely valuable.

Practicing under complex conditions lets you get even more out of a single model or deal you’re practicing on. You rarely have a ton of material to practice on, so the more you can get out of a single model, the better.

Live Work: The idea that you should practice in harder environments than your live setting is partially achieved by making practice more challenging. The flip side is that you should also do everything you can to make your live reps as easy as possible.

Many people make work harder on themselves by trying to multi-task while performing a complex skill they are unfamiliar with.

I once worked with someone who was well-thought-of and performed well, but always limited his work to what mattered. I watched everything he did because I knew, if he did it, it mattered. When doing complex work, he never listened to anything. He was purely focused on the work. I think that is the right way to do it.

Phase 1: This will be easy. You’re smart and this isn’t that hard.
Phase 2: Why aren’t you getting this faster? This should be easy.

I’ve seen this two-phase pattern play out between managers and their direct reports many times. More often than not, both people are thinking the same thing.

It’s a common tension, caused by the Dunning-Kruger Effect which states that people with limited ability tend to overestimate how easy a skill should be, while people with deep expertise often underestimate the challenge given it’s been so long since they were new that it now feels like common sense.

The unfortunate result of this effect is both sides thinking this should be easy. When things take longer than expected it leads to tension and can lead to both sides eventually asking, “Maybe you’re not a finance person?”.

Sometimes that’s true. But more often, the reason it feels harder than expected is simply because it is hard.

Part of why this effect comes up so frequently is that it is difficult to judge how hard something should be to learn, especially if the two judges are on either end of the spectrum of skill. That gets even more complicated when you account for the fact that people learn at different speeds and that certain phases of learning will naturally suit some people better than others.

So What Do You Do?

• For Bosses: If you consistently hire people with the same background (i.e., analysts out of undergrad), experience will be the best guide. That does not account for deviations in the rate people progress, but it is a good starting point.
  
  If you hire people from a variety of backgrounds, you will need to take your instinct on if they are moving fast enough with a grain of salt. That doesn’t mean you should stretch timelines beyond what’s workable. But ask yourself, “Is this truly unreasonable progress? Or is it just slower than I hoped?”
  

• For Employees: The best advice I can give is to remind yourself, it is harder than it appears. The more you understand it, the more complicated it will feel, not because the work is harder, but because your understanding has expanded.

Personal Experience: I encountered this friction several times early on. I worked with very smart people and I was very unskilled in the finance world. We had many interactions where we both felt like I should be getting it faster than I was. Interestingly, some of my most helpful mentors weren’t the most senior experts; they were the ones just a few steps ahead.

This dynamic is one of the reasons that, when building out mentors, don’t only shoot for people way ahead of you professionally, add in people who are ahead of you, but close enough to where you are to have a clearer memory of what that phase is like and what it takes to the next level (including how long it takes). This is touching on an idea I will cover in a longer post later on related to mentorship.

Conclusion: One of the most common reasons people fail to progress is they give up, not because they lack potential, but because they expected to grow faster.

Sometimes your boss feels the same way. That only makes it worse.

But more often than not, the answer is that you underestimated what it takes to learn the skill well. That’s okay. It just requires an adjustment, not a judgment.

This post is meant to frame how I think of a finance function’s evolution over a start-ups journey from early to growth. I want to do that through using an analogy about pianos and music.

For many finance people, they love the idea of doing complex and important finance work. I liken this to playing extremely difficult music on a piano. This version of work is wonderful, but is more of an end-state versus what most start-up finance leaders deal with. Let’s talk through the stages as I see them:

Early-Stage (Seed / Series A): Someone gives you wood, ivory, metal, and wiring and asks you to build them a piano or, at the very least, something that can play songs. Your job is to MacGyver a piano or at least part of one.

The piano you build most likely can’t play the complex songs you want, and even the songs it can play may be somewhat out of tune or require you to replace certain notes based on the keys you have. Further, at some point, this piano will be largely rebuilt so it can handle more complex music. When that happens, someone might call the piano you built ugly or unsophisticated. You will play songs, but the songs are limited by the piano you’ve built more than your skill at playing.

If your goal is to play complicated songs and / or if you don’t like building and playing an incomplete piano, this is probably not going to be something you enjoy. That may also be true if you like building pianos but want to create the final, beautiful piano on which you (or someone after you) can play complex songs.

The people who fit well here take pride in the idea that, where there was nothing but pieces, you created something that could play music. You may also fit well if you’re the kind of person who is so competent at playing music and / or building pianos that you actually get a kick out of building the minimum viable product needed to do what you want (i.e., you like Macgyver-ing things because it proves you know how). Finally, you could fit if, even if you don’t want to do this sort of work forever, you want to see it done at least once or twice to learn what goes into it.

Moving on, now that we have something resembling a piano built, we go to the next stage.

Mid-Stage (Series B / C): You are given a piano, but it isn’t a great one, and the demand for complex songs is growing fast. Your job is to (1) see what parts of the current piano you can keep using and (2) build the upgraded version while beginning to play increasingly complex songs.

This stage requires that you simultaneously can create a quality piano and play complex songs. If you dislike ambiguity, want a clear division of labor, or aren’t confident in both building and execution, this stage may feel overwhelming.

Those that take pride in building something enduring while also playing complex music can thrive here. They don’t mind the split being (at least early on) roughly 50 / 50 between building and playing. If you like being pulled somewhat hard in two directions, this is a great stage for you.

This stage can also be helpful for those who maybe don’t want to do the 0-1, but do want some degree of proximity to that stage. If you’re unsure if you want to go earlier, later, or stay at this stage, you can learn a lot here.

With that said, we can move to the final stage I’ll talk about here.

Growth-Stage / PE: You have a (hopefully) great piano, but the demand for complex music is very high. You will still need to improve the instrument, but you’re improving on a very solid foundation and ultimately are not going to be judged as intensely on your ability to improve a piano (although it is part of the job). If you like playing complex music and are not interested in building pianos, this job is for you.

The potential downside here is that there is no amount of complex songs you can learn that will result in you also learning how to build a piano. If you’re someone who thinks they may want to learn that part of it some day, you won’t learn it at this stage (unless you join a company that completely screwed up the finance function).

While not a downside, an important consideration for this stage is that it can be harder to move your career as quickly as you may be able to if you start earlier. There is a lot of highly capable competition for these types of roles. To be clear, that is true at all of these stages, but here you’re all competing on one specific dimension, the music you can play. If you are someone who wants to try and advance faster, earlier may be a better opportunity for you.

Conclusion: If you judge a fish by its ability to climb a tree, it will spend its life thinking it is an idiot.

I’ve seen many people fail in start-ups not because of skill issues, but because they did not totally appreciate what they were signing up for. It is tough to watch an exceptional finance mind fail because they didn’t realize building pianos was part of the (or the entire) job. My hope is that this post can provide some context for those considering moving into start-up finance roles to set you up the best for success.

Author’s Note: This article assumes a basic familiarity with cap tables. I am assuming you know what a cap table is, have a basic concept of raising venture financing, and have heard the phrases “available option pool”, and “include the pool in the pre-money” mentioned before. I am also assuming you know what fully diluted shares mean.

If the terms I’ve just mentioned feel totally unfamiliar to you, this article may feel daunting. I cover these topics in much more detail in my class. If you’re interested in learning more, you can apply to the course.

If you’ve ever deleted a number in a cell or accidentally moved something in a cap table model only to see #Ref cascade through the file, this post is probably for you. This post is going to show a method for cap table math that does not require circular or iterative calculations, even if you’re refreshing the option pool.

Avoiding circular calculations is valuable, as it lets you create more durable models and makes it easier when modeling out more complex rounds. Why? Let’s discuss:

What is a circular calculation?

Circular / Iterative calculations in Excel can be tricky to wrap your head around. They occur when a formula refers back to its own cell (directly or indirectly), creating a loop. This means Excel has to perform the calculation repeatedly, adjusting the values each time until it converges on a solution (or hits a limit). It’s similar to a “guess and check” process, also known as iterative calculation. To help explain where you’d use an iterative calculation, let’s use an example.

Example: I want to calculate interest expense in a model. I am doing that by taking the average of my debt at the start of the year and my debt at the end of the year, and then multiplying that by an interest rate. To know my debt at the end of the year, I need to know how much cash I have to pay down debt, which requires that I know my interest expense, which requires that I know my debt at the end of the year, which requires that I know my interest expense, which requires….

A circular calculation in Excel lets me solve a problem like this. That said, circular calculations carry risk. If you (even momentarily) mess up a formula (e.g., by deleting a reference or entering the wrong value) it can break your model, often leading to a ton of #REF errors (as it is often called: The New Hire Special).

Fixing a #Ref-ed out model is doable, but can take time and know-how. Not the end of the world, but a pain in the butt. With this in mind, my general approach is that if I can build a model without iterative calculations, I will.

I always compare using circular calculations when they are not needed to deadlifting with bad form. Under a limited amount of weight, it doesn’t matter. That said, when things get heavy, form becomes extremely important.

Cap Table Mechanics: This post will show you how to model out a round of funding that includes an option pool refresh, without needing to use circular calculations.

Current Cap Table: A company has 10 million shares. The founders hold 9.5 million shares and the available option pool holds 500,000 shares.

Round Terms: The company raises $5 million at a post-money valuation of $25 million. The new investors receive 20% of the company ($5M / $25M). As part of this round, the available option pool will be refreshed to 10% on a post-money basis.

The Problem: How do we figure out how many shares to create so that the new investors get 20% of the new total and the available option pool gets enough new shares added such that it will be 10% of the new total (including the 500,000 shares already there)?

Process:

1) Calculate the post-money ownership of new investors and the available option pool. This would be 30% (20% to investors + 10% in the available option pool).

2) Calculate the post-money ownership of those who are not the new investors or the available option pool (in this case, that is just the founders). If the new investors + the available option pool is 30% of the post-money share count, then everyone who isn’t those two groups is the other 70% of the total.

3) Now we can calculate the post-money share count for the round. If the founders hold 9.5 million shares, and that is 70% of the post-money total, we can calculate the post-money share count by doing: 9.5 million / 70%. This implies a post-money share count of: 13.6 million shares.

4) We can now calculate the shares received by the the new investors and the post-money available option pool:

• Seed Investors = 13.6 million shares x 20% = 2.7 million shares.

• Available Option Pool = 13.6 million shares x 10% = 1.4 million shares.

Of the 1.4 million shares in the post-money available option pool, 500,000 already existed. That means we didn’t create 1.4 million new shares—we only added about 900,000 to the 500,000 we started with. If you’re curious what this means for dilution, this post that can help you think through it.

Conclusion: The method above side steps any circular calculations. For a simple model, the difference between circular and non-circular math is, in all honesty, not game changing. That said, when rounds start to get more complicated, the ability to minimize or remove iterative calculations is crucial to managing complexity.

This post only shows a small part of how you can reframe cap table math to make models easier to leverage. To learn more about different round structures and see how these ideas scale up to more complex rounds, I encourage you to look into my course (website).

Like deadlifting with bad form, using circular calcs when you don’t need to won’t hurt until your model gets heavy. This method lets you stay in control as your cap table gets more complex. No Excel setting tweaks or hidden loops required.

I generally think of frameworks / rules of thumb as one of three types:

1. Entry Points: A way to give a beginner a way into a more complex system. As you get deeper into the system, you learn more about the nuances of the framework and the places where it does not apply.

   1. New investors want valuation lower. Existing shareholders want it higher.

   2. Taking pro-rata signals continued excitement. Going above pro-rata means you’re more excited. Going below pro-rata means that you’re less excited.

   3. In venture, to take a bet, you should believe this can be a $10B+ business.
      

2. Bridging Points: A way for two people at meaningfully different levels of knowledge around a topic to communicate. This is like an Entry Point, but it is applied differently. Bridging point frameworks are really just a pithy way to give the other person a general idea of what you’re thinking.

   1. Venture investors make their money on a limited number of extremely successful investments. Most venture investments fail.

   2. The goal of a fundraise is to give a start-up money to achieve value inflection points. It is crucial to make it clear what you will achieve with these funds.

   3. Early stage investors care about ideas and team, but not performance. Growth investors care much more about performance.
      

3. Completed Thoughts: If you get this, you basically get the idea. When you think of a lot of “life lessons” or famous sayings, they fit into this.

   1. It takes an extremely special person / team to build a billion dollar company.

   2. Incompetence can look like malevolence. Incompetence is more common.

   3. Venture is a get rich slow game.

What I Love: When applied well, I think all three of these types are extremely useful.

As an instructor, I am constantly using Entry Point frameworks, which I can then build on over time. For topics that can feel hard to get a foothold in, Entry Points give you a “win” that helps build confidence to tackle the more involved examples.

I mostly use Bridging Point frameworks when talking with founders / start-up employees / other investors who do not have a finance background. Bridging Points act as a Pidgin language between what they know and what I know.

A classic example of where this comes up is when coaching founders on what investors want in a fundraising. I don’t need a founder to know every nuance of an investor’s motivation, but I do want a reasonable understanding of why they are being asked for what they are asked for and what they can do to give the best answers.

Completed thoughts are great for general purpose coaching, punctuating a point, and getting something across in a pithy and incisive way. These kinds of gems feel great to say, are easy for people to remember, and can make you look smart.

Importantly, Entry Points and Bridging Points are not meant to reflect the whole idea that they are approximating. They are either a starting point or a “good enough” statement. Problems can emerge when people forget that.

What I Hate: There is often a push to boil everything down to a pithy summary. Many people want every complex idea to be something you could boil down to a sentence if you wanted to. The problem is, not everything fits into some nice neat package like that. Some ideas and concepts are, even in their simplest form, complex.

The above dynamic often results in two mindsets, neither of which I love to see.

It’s All Simple: There is a cottage industry of people willing to say they can give you a simple answer to a complex question. I heard once that the first step to building a cult is to offer simple answers to complex questions (that was on a 50 Shades of Gray analysis video… a discussion for a different post).

People can build huge followings with a lot of great-sounding sayings that, if positioned as Entry Points, would be fine (assuming they are right), but instead, they are positioned as a totally comprehensive statement when they aren’t.

The problem with learning this way is you can end up overconfident about a topic because you’ve got a bunch of one sentence descriptors that sound smart but lack depth. This can get you into real trouble when it comes time to apply these ideas. This can manifest with something lower stakes, like messing up a model. It could also show up in a more high stakes situation, like giving a start-up company bad advice about what investors want to see.

It’s All Complicated: On the flip side, I see a lot of experts get a little touchy about the idea that any part of a body of knowledge that they’ve poured their years into can be reduced to a few sentences. That leads to some experts refusing to provide simple frameworks, even for ideas that reasonably can be explained in a framework.

This mindset is (frankly) annoying because it can make complex spaces feel impossible to break into, as it seems like there are no clear places to start. I have definitely fallen into this trap before where I’ve been resistant to offer a framework because I don’t want to oversimplify, but then realized I was being a bit pretentious about how hard that specific subject truly is to explain in a simple way.

To topic experts reading this who work with funds, an unwillingness to (at least occasionally) leverage frameworks can limit your ability to add value. If you can’t meet people where they are at when asked for advice, you hit a point where you are the smartest person they know on a topic, but not someone they can leverage easily.

I have 100% seen people break through in this industry who were not the best on the topic, but were good enough and could explain what they were doing to non-experts. That doesn’t mean some things are too complicated to explain, but I’d challenge you to have an extremely high bar before saying that. Speaking personally, I put an equal premium on my ability to know a concept and to teach it.

Conclusion:

Ultimately, good frameworks come down to honesty about (1) the complexity of the concept(s) and (2) what type of framework you can actually offer (i.e., Entry Point, Bridging Point, or Completed Thought).

From the learner’s perspective, I’d challenge you to have an extremely high bar for any framework posed to you as though it is a Completed Thought, but to also try to be receptive to the other two types of frameworks, as they can be valuable. As a closing thought, here is a way to think about it:

An iPhone is a more versatile tool than a hammer, but I wouldn’t use an iPhone to push a nail into wood.

1. “Discipline is about doing what you hate to do, but nonetheless doing it like you love it.” Mike Tyson

2. “Everybody wants to be a bodybuilder, but nobody wants to lift no heavy-ass weights.” Ronnie Coleman

This article is going to talk about the fairly unsexy art of learning how to do finance in venture / investing extremely well.

Level-Setting: In a previous article I talked about learning finance through the lens of Jiu Jitsu belts. In that post, I make the point that you don’t typically don’t need to master finance in VC; being at an intermediate level of competency is usually good enough. This article is targeted at those who want to go beyond intermediate.

Introduction: If you want to learn how to do this extremely well, you need to know how to make a wheel yourself (i.e., build a model from scratch versus use a template). Does that mean you reinvent the wheel every time for your whole career? No. It means that you have a period where you tell yourself it is worth taking the longer road. This is a short to mid-term investment, (usually) not a permanent state of being.

To be clear, this advice is relevant even if you’re not the one building the models on deals. Building something from scratch repeatedly will teach you how it works at a much deeper level than just using a template. That knowledge can be helpful for executing the work (i.e. if you’re between analyst and principal) or if you’re just guiding / directing / training someone on the work (i.e., partner+).

Personal Experience: When I broke into investing, I was horrible at it. I don’t have a mind for finance. To fix that, I did what I am describing here. I still do this. From when I first started in private equity to now, I remake my models every time. Whether it is something simple or highly sophisticated, I make the model from scratch. Even now, I want every extra high quality rep that I can get.

Constantly reinventing the wheel made my life harder early on. That said, that decision was crucial to why I can teach what I do. I will say that, at this point, it isn’t slower for me to rebuild a model versus adjusting a template, which means the opportunity cost of reinventing the wheel is much lower than when I started.

Tactical Advice: Below are some tactical tips on doing this. I will preface all this by saying it isn’t fun to do any of this, even if you love finance.

1. When you first start doing this, I recommend doing this in a practice setting versus on live deals. Take a deal that your firm has already done and practice rebuilding those models. That gives you an “answer key” to review and means that, if you screw something up, you aren’t messing up in a visible way.

2. Don’t just do step 1 once. Do it fifty times. When I was learning how to build LBOs (when I was in private equity), I’d rebuild the same model repeatedly for days. Once I’d done that, I’d go to a different deal, get more reps, and then return to the deal I’d done before to see how I did with fresh eyes. You don’t need a ton of deals to practice.

3. Start with a focus on correctness. Next, move to speed (i.e., time yourself). After speed, move to complexity (i.e., add pieces that were not in the previous model).
   
   In terms of correctness, have an extremely high bar. Don’t accept close enough. Formatting, structure, and formulas all need to be perfect. To quote Wyatt Earp, “Fast is fine, but accuracy is final. You must learn to be slow in a hurry.”

4. Start big (i.e., rebuilding entire models). During that process, find specific areas where you are weaker, and then practice that in a focused way. For example, maybe you are slow to create cohort analysis structures. Focus on rebuilding those structures, then return to the larger model.

5. Once you feel strong, start to add in distractions. Listen to music, have a TV show on, set an unrealistic timer, do it when you’re tired, etc. This is something I train fighters to do; practice in suboptimal conditions. There will be times you need to do this work with some sort of external constraint that makes it harder.

6. Accept a certain amount of “dead” or wasted time in the beginning. You will have periods where you’re overwhelmed by the task and are unable to effectively get through the work. This is part of the process.

7. All of the above takes time; especially if you aren’t doing this on live deals. You likely will have later nights / earlier mornings / more weekend work than normal. No question, this sucks.

Doing this through live reps can work. The value of live reps is that your work is truly tested. The challenge with trying this on live reps is that your professional reputation can be damaged in the process. If people routinely see you generate subpar work in part due to a highly inefficient process, you will likely struggle to advance (or in some cases, remain) within the firm. I highly advise doing this outside of active processes.

My Class: The courses I teach are not a replacement for what I am describing here, but they do give you models you can rebuild and the chance to dig into areas where you may be getting stuck. If you’re curious to learn more you can check out my website. Thank you for reading.

Basics implies a lack of depth (i.e., a basic understanding of something or getting the basics of an idea), whereas fundamentals are about critical concepts with broad applications (i.e., understanding something at a fundamental level).

For example, let’s say I am teaching cap tables:

Basics: Me saying that a cap table is a ledger the reflects ownership of a company and that ownership changes as funds are raised.

Fundamentals: Teaching someone how to understand and leverage the key cap table mechanics that are relevant for any round of funding they will need to model out. Beyond mechanics, a fundamental understanding of cap tables requires understanding the key motivations of the parties around the table.

The difference between basics and fundamentals becomes extremely clear when you need to do an advanced application of the concepts. An understanding of the basics (even a strong understanding) will not prepare you for the advanced topics. A strong knowledge of fundamentals will.

For example, if you understand the fundamentals of cap table mechanics extremely well, modeling something like a pay-to-play with a pull-through will not feel extremely daunting. Similarly, if you know SAFE conversion mechanics extremely well, stacked SAFEs will not be much more of a challenge.

Where People Get Stuck: In the interviews for my class, I will occasionally have people tell me that they’ve mastered the basics and want to focus on the more advanced topics right away. Sometimes, they (1) mean fundamentals and (2) have mastered (or are extremely strong in) fundamental concepts. When someone says they want to do something more advanced, I ask what more advanced means to them. Often, these people will mention areas that would not feel advanced if they were as strong in the fundamentals as they are presenting.

These students can struggle in the course because they are somewhat tuned out when I am teaching the fundamentals and then feel lost when we get to the more complex topics that rely on them having listened to the fundamental mechanics hit on earlier. Truthfully, when I see this play out in an interview, I am often a bit hesitant to accept the person as a student, as I’ve seen this story play out enough times that I want to avoid it. This dynamic plays into something I’ll cover another time: why I don’t often take on analysts as students.

Where This Came From: My focus on fundamentals comes from coaching athletes. When working with professional athletes, the focus is usually on doing a few things at a world-class-level rather than doing a bunch of things somewhat well. In the martial arts world, most of the best have a limited number of moves they use consistently, but they do what they do better than anyone else. Often, the things that they are doing are built on a strong understanding of the fundamentals behind what they are working on. I strongly believe in this approach and use it when training people on financial topics, too. I’ve seen it play out well consistently enough to believe in the method.

Conclusion: To be clear, I teach advanced applications of fundamentals in my courses. That said, I think the power of building strong fundamentals before going to advanced applications cannot be overstated. If you’re curious to learn more about what I teach and how, you can read other posts on this Substack and go to my course’s website. Thank you for reading!

Four Key Rules:

1. Cover less than you think you need to.

2. Go so slowly that you’re worried you’ll get negative feedback about pace.

3. Time spent answering questions is worth 2x time on pre-planned lecture.

4. Work in more jokes. You’re teaching new technical information. Lighten it up.

Expanded Comments:

Rule 1: Following rules 2-4 relies on me having time. This makes rule 1 the most important. Part of me having time comes from cutting any material that I do not think is mission-critical to get through. Realistically, it also requires me to cut quite a bit that feels mission critical to me when I am first designing the lesson plan.

There can be real pressure on people teaching technical topics to teach at the top of their license. You want to show people why they should learn from you. A problem is that a curriculum can move from teaching someone something new towards existing to showing someone how knowledgeable and credible you are. Remember, the curriculum is about the student and not the teacher.

When I started teaching martial arts, I felt immense pressure to show everyone why I ran the classes. That often caused me to try to teach as much as I knew about a given topic, rather than focusing on what is most critical for students to know.

These days, I have an extremely high bar as to if it really needs to be included. The majority of the time I spend designing a curriculum is focused on cutting, not adding.

Rule 2: If I can get someone to really get 2 - 3 topics over 90 minutes, I will take that over rapid firing 10 - 15 topics. You may feel like you’re doing less initially, but the long term value to the students is so much higher.

At the end of the day, the goal is to arm students with information that they can use. A bunch of extremely high level content covered quickly feels informative during the lecture, but does not tend to stick.

Rule 3: Answering questions is partially about ensuring clarity, but it is also about showing that you care and making students feel heard. Additionally, answering questions lets me gauge if what I am saying is actually hitting or not. If I get a bunch of questions that imply to me that what I just said went over the group’s head, that is a great sign to re-cover what I just went through and consider adjusting the content.

One of the ways I judge how well I did in a seminar was how many questions I received. No questions means I probably need to go back to the drawing board.

Rule 4: In terms of jokes, it is critical to remember that you are teaching some dense, technical, and probably a bit intimidating to the people you are training. A key goal is keeping people engaged enough to retain the information your teaching them.

To be clear, I am not suggesting you turn every seminar into a standup set. Little things like giving unique names in your examples, mixing in a few funny anecdotes, and occasionally poking fun at yourself are often more than enough.

Closing Thoughts: There is a lot more that I can say about rules and guidelines I use when teaching and designing curriculums. That said, to stay true to the rules laid out above, I will stop at just these four for now. In later posts I may add more rules. I hope you enjoyed reading!

If the terms I’ve just mentioned feel totally unfamiliar to you, this article may feel daunting. I cover these topics in much more detail in my class. If you’re interested in learning more, you can apply to the course.

Introduction: Have you ever heard something along the lines of “We will include the option pool in the pre-money.” or “including the pool in the pre is standard.” and thought:

You are not alone. I am going to explain what this means and why it matters. Buckle up. This is going to get (somewhat) technical.

I was so determined to include the above image that I finally learned how to embed a GIF into a write-up. I am sure that knowledge will not impact my writing… anyway…

TLDR: Including the option pool in the pre-money means that any shares added to the option pool do not dilute the new money. When the option pool is in the pre-money, when I say the ownership amount investors are set to receive in this round and the ownership that the option pool will have at the end of this round, these two ownership figures are true simultaneously. This is standard practice.

Bottom line, this is a fancy way to say that the round is functioning in the way that is standard for our industry. It is like saying “today we are going to be breathing air.” That statement is true, but by calling attention to it, you’ve raised additional questions (e.g., are there days we don’t breathe air?).

Longer Explanation:

This is going to be best explained via examples. For this first example we are going to model out a seed fundraise assuming the option pool is in the pre-money (i.e., a normal round of funding). Below are the key terms:

Current Cap Table: A company has 10 million shares. 5 million are held by the founder and 5 million are held by the co-founder.

Investment: The company raises $5 million at a post-money valuation of $25 million. The new investors receive 20% of the company ($5M / $25M).

Available Option Pool: The available option pool will be 10% of the post-money share count. This means that 10% of the final share count will be in shares that have been set aside for current and future employees.

If the new investors get 20% of the post-money shares and the available option pool is 10%, then the 10 million shares that already exist will be 70% of the new total. We can use that to figure out the shares the investors and the option pool receive.

Post-Money Share Counts:

• Total post-money share count = 10M / 70% = 14.3M shares.

• Seed Investors = 14.3M x 20% = 2.9M shares.

• Available Option Pool = 14.3M x 10% = 1.4M shares.

Below are a pre-money and post-money cap table showing what I’ve described above.

Core Point: When someone says “The option pool is in the pre-money.”, the core message is that the percentage they want the option pool to be and the percentage that the investors are supposed to receive based on taking the raise divided by the post-money valuation are true at the same time. Said another way, the shares added to the option pool do not dilute the new investors.

The ownership the investors receive and the ownership the option pool receives is clear. The alternative to this is for the option pool to be in the post-money, which would mean that any shares added to the option pool dilute the new investors, resulting in them receiving less ownership than expected on a post-money basis.

To demonstrate how putting the option pool in the post-money would look, let’s go through an example. All of the terms for the round are the same as above (new investors get 20% and the option pool is set to 10%). The difference here is that the 20% the investors receive does not account for shares added to the option pool.

Share Calculations: For this, we follow a multi-step process. First, we calculate the shares the seed investor would need to be 20% of the total share count excluding the available option pool. Next, we calculate the post-money share count needed for the available option pool to be 10% of the final total. Below is a summary.

As shown above, the “20%” the investors receive does not account for the shares that are added at the same time for the option pool. As a result, the new investors get diluted by 10% (if you’re unsure as to why they were diluted 10%, read this).

From the investor’s standpoint, this is a bad deal. They are getting less than expected. In effect, because they are getting less than expected, the effective post-money valuation for the round is higher than promised. If $5M only gets 18% of the company, then the effective post-money valuation is really ~$28M ($5M / 18%).

From the founder’s perspective, including the option pool in the post-money is (theoretically) a better deal for them as they get diluted less. The problem with this idea is that any investor familiar with these dynamics (most professional VCs) will simply ask for a lower valuation to offset the dilution from the option pool.

The net result of all of this is that it is typically expected that shares added to the option pool do not dilute the new investors. A shorthand way to describe this dynamic is to say that the option pool is in the pre.

Conclusion: Honestly, I hate this piece of terminology. I think it causes unneeded confusion by drawing attention to something that is generally implied. If you tell me what the investors are receiving in the round and the size of the option pool, you’re implying to me those two figures are true at the same time, meaning you’re saying the option pool is in the pre-money. That is why it is considered standard practice.

Bottom line, unless someone explicitly tells me they want to exclude the option pool creation (or refresh) from the pre-money share count, I will assume it is in the pre-money share count (although never hurts to double check the math if someone else is running the model).

For those still awake, I hope this has been helpful. In my courses, I talk extensively about cap table dynamics and a variety of other venture topics. If you’re curious to learn more, you can go to my website. Thank you for reading, and have a great day!

What is a corporate venture firm?

This type of venture capital firm receives the money it invests from a parent company of which the firm is part. A general rule of thumb is that if the fund’s name is “[Company Name] Ventures”, it is probably a corporate venture fund.

This differs from a traditional venture fund where your limited partnership base (i.e., the firms that give a fund the money it invests) are not (typically) connected directly to the firm that does the investing.

How do these firms work?

Corporate Venture firms tend to exist on two axes: financial independence and strategic independence.

Below is an example chart. The higher the number, the more independence the firm has (e.g., at a 10, there is maximum independence. At a 0, there is no independence).

1. Financial Independence:

   1. 0: The firm does not have any dedicated capital to invest. Each time it wants to make a new investment, it has to get approval for new funds from the parent company. This is often called “investing off of the balance sheet”.

   2. 10: The firm has a dedicated fund of capital, the same as a normal fund. While the firm may still require approval from the parent company to invest, there is not a question as to if the money to invest is available.

2. Strategic Independence:

   1. 0: The firm cannot invest in anything without an existing (or imminent) commercial agreement with the parent company.

   2. 10: The firm has an investment mandate (like a normal fund) and can invest in (essentially) anything that meets that mandate, even if there is no clear path to a commercial relationship with the parent.

A corporate venture firm that is a 10 on both axes is (essentially) a normal venture fund that happens to get its money from a single limited partner. The number of corporate venture firms that achieve (and maintain) this status is extremely limited. If the fund is a 10 on both axes, they will typically tell you that directly.

Team Evolution and Motivation:

Most corporate venture firms start at (0, 0). Often, these funds get started because one or a few executives have specific start-ups they want to invest in, after which there became a larger question about whether this should become a dedicated function.

A key dynamic that can lead to this venture investing is a fear of “king-making” a company. King-making is when a company is the anchor client (or maybe just a major) for a start-up, which helps launch the start-up into a huge success, only for the company that helped propel them to miss out on any returns from an investment. Imagine being the first major customer of Nvidia but not investing anything. This anxiety (sometimes caused by a past mistake) can be a key motivator behind a parent company starting to do venture investing.

From the perspective of the team doing the investment work, they often try to move things towards (10, 10). At that point, they are normal VCs. This can happen, but often, the team fails to maintain its independence over time. This failure usually boils down to financial impact. Let’s use two examples:

Example 1 (10, 10): I am a company generating $3.0B in annual revenue and $600M of Net Income. The parent earmarks $50M of dedicated capital for a corporate venture firm. That firm returns a 3x ($150M) seven years later. None of the invested capital results in new commercial relationships with the parent company.

As a result of the strong returns, the corporate venture team starts pushing for carried interest on the proceeds, and they also generally want higher salaries than normal to be consistent with other venture firms. As a company leader, I quickly find myself asking what the point of this is. Is this really the most efficient way to get $150M?

Example 2 (0, 0): Same company dynamics as above, but this time, I invest $50M exclusively in companies with a direct need for the solution within my company. The value I receive back from the investments is $100M (so 2x my investment), but by offering the services these start-ups provide to my customers, I increase annual revenue by $150M (a 5% increase) per year, driving $30M in profit per year. I’ve set myself up for a much more meaningful (and sustained) financial impact.

A critical dynamic to consider in example 2 is that just because a company has received an investment from the parent does not mean they are “protected” within that organization. Put another way, if this company invested $5M in you because of your potential commercial impact, the investment is not the reason to keep doing business with you if the strategy changes or they find a better alternative.

For a company the size I am describing, a $5M investment is a rounding error of a rounding error. Unfortunately, I have seen many start-ups overestimate how much an investment from the parent means regarding their status within an organization.

Implications:

For Potential Employees: Regardless of your goals, it is always important to do all you can to understand where the firm you are interviewing sits on the above spectrum and to try to get a sense (you can’t always) of what the future direction will likely look like. Asking questions in the interview process and talking to others who have done business with this fund are good steps to take.

If you are someone who wants to work in traditional venture, a (0, 0) venture firm (or even one that is above (0, 0) but is far away from (10, 10)) may not be the right place to go. There is a real risk that, even if they want to, the firm may be unable to move to the part of the spectrum you find interesting.

Some will say there is no point in working for a (0, 0) corporate venture firm. While it is not for everyone, I do think there is value in that experience. When you are (0, 0), you need to understand how the parent company works and its goals. This requires you to develop a knowledge of your organization that is far above what is needed if you’re just investing from a dedicated pool of capital without any need to tie into the parent’s objectives.

For Start-ups: I strongly encourage you to do whatever you can to understand the motivation of any corporate venture firm you are considering as a potential investor. If the entire goal is to get a commercial contract, a (10, 10) fund may not be particularly helpful. On the other hand, if the goal is to bring a new and meaningful source of capital around the table, just because the fund is part of a massive organization, that does not mean they will have a lot of capital available (i.e., they may need to actually go back to the parent every time to get approval for investment).

As mentioned above, it is also important to remember that just because you’ve received an investment, that does not mean you are somehow protected within the organization on the commercial side. Sometimes, taking an investment is a condition for the company doing business with you, but that doesn’t mean that the fact that there is an investment will stop them from terming you if they go in a different direction strategically (which, depending on where you focus, has varying degrees of likelihood).

Job Titles: Job titles can often be confusing at firms that are not (10, 10). Corporate venture employees usually have job titles consistent with the parent company’s titling rather than those consistent with venture capital. That may mean that someone with a Sr. Analyst, Manager, or Director job title could lead the investment process in a corporate venture firm. This makes the process even more opaque.

For those considering investment from a corporate venture fund, I encourage you not to overly index on job titles before fully understanding what the person with that job title does.

Conclusion: Corporate venture firms are an important part of the venture ecosystem, but I don’t see them talked about enough. My hope is that this article gives you a framing you can use to think through how these firms fit into the ecosystem, the different structures you may see, and what to watch out for. Thank you for reading!

Introduction: One of the most common questions I receive from investors taking my course who are new to the finance side is:

“How do I calculate (or approximate) dilution incurred in a round of venture funding?”

If you don’t know the answer to that question, it is great to prioritize learning how to answer. With that in mind, let’s answer it! Before that, let’s answer, “What is dilution?”

Dilution: The rate of change in fully diluted ownership (i.e., ownership including unexercised options and warrants) caused by new shares being issued.

Dilution is never an ideal outcome in a round. Rather, it is (often) viewed as an acceptable outcome of a round of funding. Dilution is typically caused by a company raising new funding, which hopefully helps create a more valuable company. Even though you may own less of the company than you did before the round, your ownership is of something (hopefully) more valuable. Put simply, would you rather own 100% of something worth $10 or 10% of something worth $1 billion?

Formula: (Post-Money Ownership / Pre-Money Ownership) - 1 = Dilution.

Golden Rule of Dilution: The dilution of any and every individual share will be equal to the total ownership of all newly issued shares.

To demonstrate this idea, below is an example:

Base Example:

Current Cap Table: A company has 10 million shares. 5 million are held by the founder and 5 million are held by the co-founder.

Round: The company raises $5 million at a post-money valuation of $25 million. The new investors receive 20% of the company ($5M / $25M).

New Shares: To give the investors 20% of the company, we are going to issue new shares (standard for a venture round). Below are the key steps:

Pre-Money Details:

• Share Count = 10 million. This is currently 100% of the company.

• Founder Ownership = 5 million / 10 million = 50%.

• Ownership of 1 Million Shares = 1 million / 10 million = 10%.

New Share Details:

• Post-Money Ownership of 10 million Shares = 80% (100% - 20% investors receive).

• Post-Money Share Count = 10 million / 80% = 12.5 million.

• Shares to New Investors = 12.5 million x 20% = 2.5 million.

Post-Money Ownership Details:

• Founder Ownership = 5 million / 12.5 million = 40%.

• Ownership of 1 Million Shares = 1 million / 12.5 million = 8%.

Dilution Details:

• Pre-Money Share Dilution = (80% / 100%) - 1 = 20% Dilution.

• Founder Dilution = (40% / 50%) - 1 = 20% Dilution.

• 1 million share dilution = (8% / 10%) - 1 = 20% Dilution.

Key Takeaways: Every share was diluted by the same percentage. That percentage was equal to the ownership of the newly issued shares. To restate the golden rule, the dilution of every individual share is equal to the ownership of any newly issued shares.

Importantly, it does not matter if the newly issued shares are for investors or employees. It also does not matter if the shares are common stock or preferred stock. Anything that increases the total share count causes dilution.

Expanded Concept: What if there were also an option pool being created? How would that change things? Let’s go through it. We can assume all of the same pre-money share figures and terms for the investors, but now we will assume that there will also be an available option pool equal to 10% of the post-money share count.

Redone Numbers - Including 10% Option Pool:

New Share Details:

• Ownership of Option Pool and New Investors = 10% + 20% = 30%.

• Post-Money Ownership of 10 million shares = 70% (100% - 30%).

• Post-Money Share Count = 10 million / 70% = 14.3 million.

• Shares to New Investors = 14.3 million x 20% = 2.9 million.

• Shares to Option Pool = 14.3 million x 10% = 1.4 million.

Post-Money Ownership Details:

• Pre-Money Share Ownership = 10 million / 14.3 million = 70%.

• Founder Ownership = 5 million / 14.3 million = 35%.

• Ownership of 1 Million Shares = 1 million / 14.3 million = 7%.

Dilution Details:

• Pre-Money Share Dilution = (70% / 100%) - 1 = 30% Dilution.

• Founder Dilution = (35% / 50%) - 1 = 30% Dilution.

• 1 million share dilution = (7% / 10%) - 1 = 30% Dilution.

Application: So how do we leverage this golden rule? For starters, if I know how much ownership new investors will receive, I know the minimum dilution I am going to experience if I don’t invest in the new round. The ownership of the new investors.

Once I know the targeted size of the option pool, I either know the total dilution (if there is not an available option pool currently), or I at least have a sense of rough dilution (if there is an existing pool that is being refreshed).

In later articles, I will talk about how refreshing an option pool changes things. The short-answer is that, if there are already some of the shares needed in the available option pool, the number of shares we need to add to the pool is lower, meaning less dilution is incurred.

Conclusion: The above is a small part of what I cover in my standard course. If you’re interested in learning more, you can visit my website. I will add more articles on this topic over time as well to help people further round out their understanding.

As a black belt in Brazilian Jiu-Jitsu (BJJ) and a mixed martial coach, I’ve trained many (many) people in martial arts. In this post, I want to share three key learnings I’ve gained from watching others learn and learning myself.

1. There are different stages of learning a skill.

2. Each stage requires a different attitude and aptitude.

3. It is extremely rare that you will be great at all of the stages.

With the above in mind, I want to talk about the stages and the mindset and skills required to succeed at each stage. There are five belts in Jiu Jitsu: White → Blue → Purple → Brown → Black. The stages I am going to discuss map against those belts.

Five Belts:

1. White Belt - Going from 0 - 1. To establish a basic foothold in this new skill, you will need to go through a phase where you are practicing moves and drills where you do not have sufficient context behind the “why”. You are so new at this point that it would not make much sense even if the why was explained.
   
   Venture Finance: I often see students focused on understanding the why before trying the math. While I get the rationale, this approach can be limiting. Imagine trying to fully understand driving a car academically before ever getting behind the wheel. At some point, there is diminishing utility to conceptual learning without spending adequate time in a hands-on setting.
   

2. Blue Belt - Going from 1 - 100. A mature blue belt knows substantially all of the moves in the common core of BJJ. That does not mean they are experts in those moves; they just know them and can perform them at or above a basic level.
   

   Success at this stage requires taking in and memorizing a lot of information, even if a meaningful chunk of it does not feel relevant to your day-to-day application (i.e., you need to remember a bunch of moves you may never use).
   
   Venture Finance: People often instinctively narrow the types of analysis they learn to the stage and industry-specific metrics they hear about most often. That is not a bad instinct, but it can be limiting. I prefer to start with industry and stage-agnostic analysis techniques first, as they give a broader picture. The next stage is when you can begin to refine the techniques you use.
   

3. Purple Belt - Developing a “game”. If I watch a mature purple belt spar, someone who they are far better than in 100 sparring sessions, the fight should look the same. This is because that person has a game that they can consistently deploy to achieve success.
   
   Venture Finance: In this context, having a “game” is partially about having certain analyses you like to use (often partially based on your industry and stage) and having a playbook for how you approach breaking down a company. The corollary to the above example of a fight going the same way every time is that I’d expect a diligence process to generally flow in a similar way each time you see a new deal. You are asking for the same things and leveraging them in a consistent way.
   

4. Brown Belt - Adding to an established game. The goal of brown belt is to take your base game, add components to it, and start to build a plan B (and sometimes a plan C) for when your game is not working. This belt is about showing you can expand beyond the tried and true formula to make yourself a more multi-dimensional athlete.
   
   Venture Finance: At this stage, you can mix in new analysis techniques and leverage additional resources (e.g., new datasets or expert calls). You may also start seeking out opportunities to analyze companies outside of your fund’s typical stage and / or industry; you may even contemplate moving to a new fund.
   

5. Black Belt - Finding expansion opportunities. Improvement at this level is more esoteric. You are well past the point where just showing up is enough to improve. A key dynamic to success at this stage is seeking out areas of improvement in your game and then working to find or develop patches for those gaps. You may also start to experiment with totally different approaches and games than what you’ve previously used; this could include even looking at other martial arts for ideas about new techniques and approaches to bring into your martial art.

   
   Venture Finance: At this point, you are looking for ways to do your analysis faster, go deeper, and explore unique angles. You may also spend more time diving into how other parties in the ecosystem think (i.e., diving into the analysis process of downstream investors, potential acquirers, or those in the public markets).

Personal Perspective: I am a terrible white and blue belt. I don’t think in the ways needed to be successful at those levels. For me, that means that if I am going to do something, I need to accept it will be a slog for a meaningful amount of time while I get my feet wet in the space. That said, I am fairly good at being a purple, brown, and black belt, so I know that it will not be hard forever. For those I am teaching, I am always trying to identify (1) what belt they likely are now and (2) what belt(s) I think fit well with them / are an area of weakness. This helps hone my approach with each student that I work closely with.

Closing Thoughts:

How Far To Go: Unless you work at a firm that invests in a complex industry or is routinely investing across multiple stages and industries, if you can get to the skill level of a solid purple belt, that is good enough. Having a reliable playbook to break down a company at a level good enough for your firm to make an investment decision is a reasonable place to get to before refocusing your time on developing other skills and relationships needed to be an investor.

Bigger Picture: In investing, you don’t need to be a black belt in every discipline. Your job is to be able to do all of the different elements of investment diligence and (sometimes) company support at a passable level. The role of an investor expands far beyond any single discipline.

Specializing in an individual skill can absolutely have benefits, but the trade-offs in terms of time, energy, and focus may not make it worthwhile to go as far as you possibly can with this (or any) skill.

My Teaching: For many of the students I train, the goal is not to get them to a black belt level. It is not needed. For anyone reading this, a question to ask yourself is, how far do you really want to take learning these skills? There is no wrong answer, but how you approach learning this skill changes depending on the objective.

Current State: I have three jobs. All revolving around the practice or teaching of venture finance.

1. Pivot Education (Founder): Venture Finance executive education company. I’ve trained >1,500 people across 20 countries. I’ve trained investors from many of the top funds and worked with people of just about every background. My specialty is training those from non-finance backgrounds.

2. Google Ventures (Operating Partner): I am an operating partner focused on venture finance. My work has included acting as fractional CFO, helping develop company budgets, supporting the build-out of finance functions and teams, assessing acquisition opportunities, designing board materials, and navigating fundraising. I also work with the life science investment team to assess investments and structure deals for private and public companies.

3. Harvard Business School (Executive Fellow): Think adjunct instructor. I help teach classes on venture capital and entrepreneurial finance. I am also on the board of a life science fellowship.

One might read the above in mind and assume I’ve always been strong in finance and teaching. Nope. I come from about as non-finance a background as you can find.

Career Path:

Mixed Martial Arts: I started my career as a mixed martial arts (MMA) coach. I trained professional fighters, hobbyists, and everything in between. I had no plans to do anything else, that is, until I tore my ACL training for a kickboxing match.

An ACL tear is not a career-ending injury, but it does take you out of action for 6 - 9 months. To stay busy, I decided to go to college. Although it had not been the plan originally, college seemed fun in movies. I went to the University of Minnesota (I’m from MN). The plan was to have fun for a few months and then go back to coaching. That plan changed when I met my (now) wife during the first week of school.

My wife was a finance major and told me what finance was. I did not have any preexisting knowledge of finance (I don’t come from a business family). The idea of not getting punched for money was intriguing… so I decided to study finance.

Breaking In: During my sophomore year, I had the opportunity to intern at a private equity fund. The internship came from an alum who told me someone had helped him break into the industry, so he wanted to pay that forward.

He knew that I didn’t know anything about private equity but knew how much it could help me professionally to give me a door into the industry. He changed the trajectory of my career and life. Moments like this are why I am such an extreme proponent of opening doors for others. I’ve seen the immense power that can have.

I was a terrible intern. It was not an effort issue. I was missing too much context about the role and the industry. In investing, we talk a lot about “reps” as a way to learn. Getting something out of a rep requires enough base knowledge to understand what you’re doing. Hard to get that on the job, even with good mentors.

Private Equity / Debt: I finished the internship and went back to finance classes. After a few more finance classes, I back-solved into what I had just spent the last year doing and realized (1) what I was doing was generally pretty interesting and (2) if I wanted to do that again, I should find a way to not be awful at my job.

I set out to find the biggest private equity fund that would hire me so I’d have no chance but to learn how to do this work. The place I ended up going was Northwestern Mutual Capital (NMC), an investment arm of the life insurance company. I did not sell insurance (please believe me).

At NMC, I was on two deal teams simultaneously; one focused on European transactions and one on the US. It was trial by fire, and I learned a ton about finance while making my fair share of mistakes (a story for another time).

NMC was based in Wisconsin, but my wife (then fiancée) lived in Minnesota. As a result, I was commuting about 5.5 hours twice a week to be in Minnesota on weekends. Not great work-life balance. I joined Blue Cross Blue Shield of Minnesota in the corporate development and venture group to move closer to home.

Corporate Development / Venture: In addition to standard corporate development work (mergers & acquisitions, joint ventures, divestitures, etc.), BCBS MN was building out a venture portfolio. We invested in venture funds and in start-ups.

I realized quickly that, while similar, venture and private equity finance were different. There are a lot of nuances that separate the two. Key differences include the types of analyses you do and how you interpret a company’s performance. I had a strong enough base knowledge at this point to make the transition, but it was definitely a change from what I had been doing.

Pivot → Current State: Through the venture-side of my work, I kept meeting people who were extremely bright and often had amazing credentials, but did not have a finance background (e.g., doctor, lawyer, engineer, start-up experience, etc.). These people were incredible, but frequently I’d hear these people say that, while they loved their job, they felt frustrated by the finance portion of their work. The sentiment was:

“It feels like I was supposed to have just picked up this specific version of finance knowledge somewhere. I didn’t, and now I don’t know what to ask, where to go, and the resources I see online are not great.”.

I empathized with this. It is how I felt. To help people with a problem I’d had, I started teaching. Pivot started as a hobby. My first batch was for two friends of mine and two friends of theirs. Through word of mouth, the course grew. Along the way, I met the Google Ventures team and joined them as an advisor and then as an operating partner. I also got connected to Harvard Business School.

Conclusion: This brings me to who I am today. I like to tell this story because I want anyone who learns from me (through these posts, my classes, or something else) to understand that I am not naturally talented at the things I teach. I learned what I know through reps and many (often painful) mistakes. With that in mind, there are no stupid questions, and there is nothing I am expecting you already know. I want my courses and educational content to be a safe space for people to learn what they need to know without fear of judgment.

As you go through the other posts on this site (and potentially take a course of mine), I hope they always feel welcoming and valuable. If that ever isn’t the case, let me know! Thank you for reading.