Founder Fridays No. 52
Helping startup founders and operators scale smarter.
Happy Friday.
Last week I announced Ace - Chat GPT for startup law.
Ace is the world’s first AI legal assistant for startup law.
You may not know this, but before I was a lawyer I was a startup founder. I remember how frustrating it was to get solid answers to basic legal questions. Ace is the tool I wish I had when I was a founder. I hope it makes your startup journey just a little bit easier.
To get first access to when Ace launches, make sure you sign up for the waitlist below.
Move Fast and Beat Musk
Meta — a company in crisis — went back to basics to deliver the viral hit Threads. But can Adam Mosseri’s bare-bones Twitter clone reinvigorate an aging tech giant? Threads being created by a small group in such a short amount of time has become something of a marvel inside Meta. Many see its quick rise as a reminder that well-executed product launches might not need all the bureaucratic trappings that a company with some 66,000 employees had grown accustomed to. This is a behind-the-scenes look at how Threads came together. Washington Post (14 minutes)
Network Effects
Metcalfe's Law, which states that the value of a network grows as the square of the number of its users, became popular during the dot-com boom to justify high valuations for internet startups. However, it has limitations in explaining network effects for many startups, as it doesn't consider factors like user engagement, multi-sided networks and overcrowding. To address these limitations, the concept of Allee thresholds from biology is proposed. Allee thresholds represent tipping points in a network's growth, where having too few users leads to collapse, and having too many users results in overpopulation, causing negative effects. This concept can be applied to technology products, such as messaging apps and ride-sharing services, to understand how network effects influence their growth and saturation. a16z (9 minutes)
Subtle Influence
How can we help our colleagues grow and change when they may not yet recognize the issue? We can find a solution in a surprising place: addiction research. 1) Preserve autonomy. Preserving autonomy involves noticing and letting go of overt attempts at change while reinforcing a person's autonomy to build trust and openness. 2) Utilize natural consequences. When someone is ambivalent about change, the goal is to help them recognize the consequences of their behavior and the costs of staying the same. 3) Reward positive behavior. Specifically acknowledge and praise concrete actions or behaviors that deviate from the person's usual way of interacting. 4) Invest in the relationship. Shared positive experiences and continued investment in the relationship help maintain warmth and trust, making the person more receptive to feedback when the time is right. 5) Manage your own reaction. Acknowledging and owning your emotions as opportunities for self-learning can help you respond more skillfully and utilize effective strategies to address the situation constructively. Every (8 minutes)
Founder FAQ: Can you have multiple closings in a funding round?
The short answer is “yes.” The most practical advantage of multiple closings is that they allow startups to get money in the door while they are finalizing terms with slower investors. When the financial runway is getting short, this can be extremely helpful. While there are benefits to multiple closings, there are also potential drawbacks that should be considered. One disadvantage is that they can create more administrative work for the startup and its investors. More administrative work also increases legal fees on the deal. Each closing requires legal documentation and additional due diligence, which can be time-consuming and costly. Another potential drawback is that they can lead to uncertainty for both the startup and its investors. If a subsequent closing fails to attract enough investors, it may signal to others that the company is struggling, which could harm its reputation and make future fundraising efforts more difficult. Westaway (5 minutes)
Startup Funding Guides
I’ve put together a series of guides to equip founders to excel at fundraising. These guides break down the deal term by term and give you negotiation tips so that you can speak to investors with confidence.
Convertible Note: Guide / Video
Move Fast. Don’t Break Things.
Hi! I’m Kyle. This newsletter is my passion project. When I’m not writing, I run a law firm that helps startups move fast without breaking things. Most founders want a trusted legal partner, but they hate surprise legal bills. At Westaway, we take care of your startup’s legal needs for a flat, monthly fee so you can control your costs and focus on scaling your business. If you’re interested, let’s jump on a call to see if you’re a good fit for the firm. Click here to schedule a 1-on-1 call with me.
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