Narrative Distillation

The shifting sands of tech IPOs

If the IPO process is like a debutante ball, the top investment banks are akin to a finishing school. They help gussy up companies, teach them proper manners like how to do GAAP accounting, and bring them around to call on prospective investors and eventually debut to society.

This is the role investment banks have played for decades, but in recent years this dynamic has begun to break down. Not in all sectors—in most sectors investment banks still occupy the same role—but in tech, the importance and role of investment banks has shrunk and commoditized.

Historically, raising capital was difficult and public market investors had little awareness of the companies going public. Investment firms were not focused on tech companies. And especially for enterprise startups, retail investors had no exposure or familiarity with them. In this environment, it was the idiosyncrasies of the capital markets that mattered, not the uniqueness of each company. In this model, the company is not that special. Instead, what matters is the standardized process for making the company fit the mold investors expect from an investment asset. Companies may have potential, but they don’t know how to introduce themselves to the investor community in the public markets.

In every marketplace one’s power is proportional to their value added to the transaction. While investment banks view themselves as having an important role in guaranteeing the quality and rigor of which companies are ready to IPO, that seems less true today.1 Banks used to be gatekeepers because markets needed to be told which companies were good. However, discovery is no longer the constraint. Companies are more known and thus the relative leverage and importance of the sell side is falling. And as investment banks increasingly manage only the logistics of the IPO process, they become less important in dictating its terms.

The best founders have figured out that owning their narrative gives them meaningful leverage. Founders and companies can increasingly communicate their narrative in a direct and compounding way to investors. And the roadshow is a progressively smaller component of investors’ views on the company.2 What makes SPACs and Direct Listings notable is not their cost structure, but that they allow companies to much more directly market their IPOs.3


i honestly wrote this entire piece only as a setup for this joke. and i have no regrets.

The ability for companies and public market investors to connect more directly has never been easier. Many of the tech equity funds now do both public market and private pre-IPO investing (and increasingly even earlier stage). Firms like Tiger, Coatue, Durable, and D1—or even T Rowe Price or Fidelity—don’t need to be introduced by bankers to companies. They already have been tracking companies for years and want to know the founders and their companies directly. Founders have the ability to directly build a relationship with the investors that will anchor their IPO. In fact, letting that relationship be primarily mediated by the investment banking process adds friction to the process and is less effective.

Most tech startups are also way better known by the time they go public. This is especially true for consumer startups. Companies like Airbnb, Roblox, Robinhood and Coinbase are widely used and known. When your product is used on a regular basis by investors (or their families) and has been covered extensively by the media, the incremental investor roadshow meeting is less important. Direct daily experience using the product is better marketing than any roadshow presentation. Even non-consumer companies are increasingly well known. By the time companies go public today, they have orders of magnitude more traction than companies going public decades ago did. But also investors just care about tech more. With companies able to IPO at $50B rather than $500M, they are more important and known.

Another characteristic of the current landscape is that the revenue multiples companies can get in the public market have a very wide range. Look at the multiples we’re seeing: everything from 2x to 2000x. This is true both for small SPACs and large direct listings. What separates these companies is how effective they are at conveying a compelling narrative to the public markets.

When the multiple range is so high, the difference between an alright and amazing IPO is a function of people’s belief and confidence in the future potential of business. It can be speculation. It can be based on traction. But also can be on the founders competence in explaining how to think about business today and why that sets it up not just for consistency and predictability but for continual compounding.

As a founder in a world where capital is easy to get, what matters is how to explain yourself, distill the company, and get public markets to understand you in the right way.

Narrative already drives venture fundraising

If this description of the public market sounds familiar, it should.

Where the public markets are heading should be no surprise—it’s what is already done in the early stage venture ecosystem.

In startup fundraising over the last decade, rounds have grown in size, and more importantly, bifurcated into different classes of companies. There are orders of magnitude across the range of valuations for companies with the same level of revenue. Some companies raise at 5x while others can raise at 300x+ ARR multiples. Among pre-revenue companies, the spread of valuations is even greater.

More crucially, in the venture ecosystem, there is universal acknowledgement that founders should drive their fundraising process and pitch directly to investors. A half century ago, companies used to hire bankers to help them raise capital. Today, no VC would take a company doing that seriously.

Being able to best convey the progress and promise of a startup is the job of the CEO. No one has better context on and ability to change the business. And no one is more responsible for conveying that not just during fundraising, but every day—to everyone.

There are three types of fundraising pitches: narrative, inflection, and traction raises:

  • Narrative pitches are driven by a compelling story of what could be
  • Inflection pitches are driven by secrets discovered. The company has hit some inflection point that, if investors were astute enough to understand, would make them realize now is the ideal risk-adjusted time to invest

Traction pitches are driven by the results of what’s already been done. The company could be a black box and investors would invest solely off the metrics


the original ngmi. see i am hip with the kidz terminology

The dirty secret is that there is no such thing as traction pitches anymore. Because as every company knows—our best days are always yet to come.

Ironically, the companies with the best traction want to be given credit for their future potential the most. No one wants to rest on the laurels of the past. And achieving the highest multiples requires having a narrative of why even more is to come.

Fundraising and IPOs are natural loci for companies to take a step back and shape their narrative. They are natural points for companies that are often mired in the day-to-day to think hard about their business from a multi-year standpoint. However, while fundraising is a good prompt for companies to think about their narrative,4 the importance of carefully distilling a company’s narrative is increasingly ubiquitous.


there’s a lot going on in this chart. I was told to cut down graphics so i just jammed them all into one gif. malicious compliance.

Narrative leverage in an anomalous world

The more static and predictable the world is, the less narrative matters. Historically most businesses followed clear precedents and fit neatly into paths. If starting a restaurant, the potential range of revenue and costs is known. There are few surprises, so it’s easier to look at the current state of the business and know what it will look like in a few years. There is little volatility.

Tech startups radically break this mold. By definition they will be unrecognizable in five years, whether that’s because they are a unicorn or because they are extinct.

One essence of the tech industry relative to others is the ability of tech companies to precisely select their atomic units and where they sit within their ecosystems, leading to hugely different outcomes.

Empirically, one way to see this is in the widening spread of valuation multiples. Every week, we hear of another company raising at high valuations, but more importantly wild revenue multiples. At the series A and B rounds, we’ve seen multiples of 100x+ or even 200-300x+ ARR become regular occurrences. They’re not common; most companies’ rounds are still raising nowhere near this multiple. But they do exist: there is a subset of companies that are able to raise at orders of magnitude higher revenue multiples. The spread in revenue multiples is widening. Companies with the same amount of revenue increasingly get wildly different valuations. This is the power of narrative, in contextualizing the snapshot of a company’s performance.

There are a number of reasons narrative is becoming more important:

Large dynamic range of outcomes. Startups have a huge range of outcomes. They can be worth nothing and a decade later be worth billions. And this spread is expanding. The largest tech companies are now worth trillions. More topically, over the last decade the distribution of outcomes for most tech IPOs has increased by an order of magnitude. Enterprise investors, for example, used to assume that beyond the once-in-a-generation company, most enterprise IPOs were hard capped at single digit billions in market cap. The entire business model of enterprise venture investing was built on this assumption. And it is no longer true.5 When the potential range of outcomes of companies has many orders of magnitudes within it, then one’s confidence level in the probability distribution of outcomes becomes incredibly important.

Back-weighted LTV. Increasingly tech companies don’t make the majority of their revenue from the first interaction with customers. In each sector this is done via a different approach, but fundamentally SaaS, freemium, Open Source, etc are all examples of this. This is one of largest trends in tech over the last few decades and is worth further exploration*. Revenue being a lagging metric isn’t bad, but it means that understanding the value of a company requires a rigorous understanding of the leading metrics that will drive future revenue. This again means that a company’s ability to explain to others how to think about the business and why they are so confident in the inevitability of future revenue based on current product metrics is crucial.

Sequencing to Multi-Product / Platform. With enough scale, there is a truth about modern public tech companies: you either die a single product company, or live long enough to be multi-product or a platform. This is the inevitable path for almost every successful company, but the likelihood of success is hard to tell while the company has a single product and has never tried to make the leap to multi-product or platform. The best companies get valuation multiples that give them credit in advance for future business model sequencing This again puts the onus on the company to explain why they can become multi-product and what it will mean.

Compounding loops. Finally, we are still very early in our understanding of how to quantify and predict the returns of compounding loops. Network effects, economies of scale, and still unnamed types of loops all can have a very disproportionate impact on long term value of a company—but there is no simple way to infer it from an early snapshot of performance. Companies must work on explaining the compounding loops they are building, what leading metrics to look at to see their potential, and why they will be so powerful.

Self-fulfilling prophecies: When is narrative justified

Narrative leverage in tech is most commonly understood in the sense of Steve Job’s Reality Distortion field.

Personally, I like to think of this narrative leverage as a form of PE ratio (Price to Earnings ratio). I sometimes call it the PR ratio (Perception to Reality ratio).

How do we know if narrative leverage is good? It’s easy to think of many companies where the reality of the company didn’t live up to the hype. Some of these were fraudulent and illegal, like Theranos. But tougher are the ones that lie somewhere on the spectrum of over promising. There’s a blurry line between the need to project confidence in order to gather all the resources to make the hype a reality and lying about things that will never happen. And while there’s no perfect way to separate these, how should one think about that spectrum and about the appropriate amount of narrative leverage a company should have?

It’s also important to note that narrative is not just stories founders make up isolated from reality. At their best they are distilling for outsiders truths already known internally. These can be explaining the leading cohort metrics or early signs of TAM expansion potential that give confidence.

Here is where I think the analogy to PE ratios is useful.

In the public markets, the PE ratio of a stock is the ratio between its market cap and earnings. This is a reflection of how high investors will value a company relative to its current earnings.

If a company’s value is the net present value of future cash flows, its PE ratio in a rough sense is a proxy for how confident investors are of high future cash flows.This is a simplification, but you can generally view a company with much higher PE ratio than another company with the same earnings as one investors think will have higher growth and future cash flows. Over time the rate of Earnings growth will help catch up to the expectations, bringing the ratio down—or investors will continue to believe, keeping the ratio high.

When we talk about revenue multiples of startup funding rounds, this is the private market equivalent of PE ratio.

What is the benefit of a high PE ratio? It is cheap cost of capital. It allows companies to raise capital with the benefit of getting credit for what they will be in the future. It is a loan pulled forward from the future.

Is a high PE ratio good? The answer is not a simple yes.

A PE ratio is good if there is appropriately high ROIC (return on invested capital) by their usage of it. If getting a loan on a future promise allows you to deploy it effectively to better live up to those aspirations, then it was not just worth it—the aspirational perception helped catalyze and make its own prediction inevitable.

That is some kind of magic, creating something from nothing.6 An ouroboros eating only itself yet somehow growing. Perhaps modern time travel is our ability to take a loan out from our future success to ensure we achieve it.

PE ratios are a promise continually renewed—and they can be warranted or misplaced. When companies’ earnings cannot keep pace and live up to these expectations, we see the price and PE ratio eventually fall to reflect this, even more so where companies don’t have the ability to take advantage of their PE ratio and the lofty expectations of them to improve the business now.

Outright frauds like Theranos cannot live up to their valuations. Their PE ratios are bad since with or without the benefit of a high multiple, they can never grow into their valuation.

More complicated are companies like Tesla. For years there were vicious debates over whether Tesla was over or undervalued, with vitriolic takes from both sides. What made the question hard to answer was that they were both right. Elon takes on industries where new approaches can work as the industry cost curve improves, but require massive and cheap access to capital for extended durations to work. Elon is not unique in this dynamic. It can also be seen in fields like AI research.

Thus Tesla’s PE ratio is in many ways self-fulfilling. If Tesla could get people to extend the access to capital it needs for long enough it will be successful. If it could not, then it would have collapsed. Ironically, this means that far from Elon’s antics being distracting, his ability to maintain these high PE ratios might be the most important driver of the company’s ability to succeed.

But this general concept is not unique to the public markets, or to money. In some sense, even people have a social capital PE ratio. PE ratios in the public markets are just one instance of a more general concept of having some view of what something can become—and giving them today the benefit of that future tomorrow accordingly.

Narrative leverage is the PE ratio of a company. Not just for cheaper cost of future capital, but also for everything else companies care about too. Cheaper cost of recruiting, customer development, and perhaps most importantly—internal coordination.

Venture as social staking: the future is founders

Modern venture itself is not just about money and the cost of capital. Most founders would give a discount in pricing to the top VC firms. What the top VC firms are selling today isn’t money—they’re lending their own brand to startups. Having Sequoia invest will lend the stored PE ratio of Sequoia to the portfolio company. This will help give them a cheaper cost of capital, recruiting, and customer acquisition.

LPs may care that a firm has good returns, but that’s not intrinsically relevant to founders. It only matters insofar as those returns translate to stronger brand value or direct relationships that can be used on behalf of the founder’s company. This is why venture today exhibits power laws with the top firms attracting disproportionate returns.

In today’s ecosystem, however, companies are increasingly able to have as much, if not higher, narrative leverage than VC firms. The top companies—and especially their founders—are more known than their VCs. At the extreme end, Patrick Collison has much more ability to attract investment, customers, and hires than any of the VCs on his cap table. Every year there’s an increasing number of founders at each stage who have higher brand leverage than what VCs can bring to the table. This is both due to the growing primacy of founders as well as the relative stagnation venture has had beyond brand network effects.


employees is on this chart. oh you can’t see it. oh…how weird.

And founders have so much more surface area to compound this brand leverage than their investors can. Founders can uniquely refine their narrative hand in hand with building the business to make it best resonate with all their prospective investors, hires, or customers. They also have the full resources of their company to bring that narrative to bear.

Narrative distillation is a core part of company building

The largest trend in every function within companies is that they’re being pulled internal. Engineering was the first. The birth of modern software companies began when companies first understood that engineering wasn’t a back office job to outsource, but a core part of the primary job of a company. Core, not commodity.

Endogenous compounding is increasingly the foundation of all modern successful companies. In a world where it is hard to be successful and unknown, all external channels increasingly get arbitraged. Companies that discover some novel market or promising acquisition channel quickly find themselves joined by many competitors. And the outsized returns they briefly got fall back down to earth under the weight of competition. It is internally compounding advantages that fight the gravity of this reversion to the mean. This is why we talk so often about network effects & economies of scale. Because like any polynomial equation, as scale rises & approaches infinity, only the highest order bit matters. And it is the aspects of the company that are internal to its organization or ecosystem that can most compound unimpeded by the outside world.

While engineering was first, it is not unique. Every function whose returns on iteration are high and non-commodity will follow the same path.

The transition from marketing to growth was this exact same process. Traditionally marketing was something done after the work on the product was already complete. Companies would finish the product and throw it over the fence to the marketing team. The easiest way to know if a function is core or commodity is 1) whether the function is identical at other companies, or unique to the particulars of their company and 2) whether it has feedback loops in the company or purely uses external channels.

Modern growth teams are impossible to remove from the core flow of their companies. In fact, they are fused to core product and engineering. How can you do growth without it being inextricably tied to the core flows of the product?

Brand marketing is still important, but on a relative basis it is increasingly shrinking compared to paid acquisition and more importantly core product driven distribution. If you think about bottoms up, product driven SaaS companies or viral social networks, they are examples of how impossible it is for traditional marketing to compete with the product itself. The best companies understand that distribution is a first party concern when thinking about a product, not some checkbox to finish after.

In “Why Figma Wins” I wrote about how design is undergoing this exact same transition. Design at the best companies cannot be relegated to artists told what to make after all the decisions have been made. They must be part of the core decision making throughout the entire process and all its iterations. This doesn’t just fall on the companies. It also means designers must accept more responsibility. The best designers want to be at the table. And they understand that they must not just think at a creative level, but also in how their design process and output shapes the core business. The best designers not only do this, they relish it.

The same is happening to the narrative of companies. Increasingly, narrative isn’t primarily about external framing. It’s not something done after the work has been completed.

Adobe has continually shown over the last few decades how core managing the narrative is to getting the support and coordination of investors and employees as the company makes fundamental shifts to their business model. Whether that be in adding new products, transitioning to the faster internal cadence of a SaaS company, refactoring into a cloud-first infrastructure and pricing model, or the myriad other endeavors Adobe has undergone from building printing software to the full expanse it is now.

Those shaping the narrative must intimately understand how employees, investors, and customers think about the company. Refining and expanding the narrative is entwined with the company’s progress. Narrative is shaped by each iteration of a company’s processes and products. And in turn a company’s evolving narrative shapes how it focuses its processes and builds its products.

Founders are responsible for holistic narrative distillation

Too often we focus on how much money a company can raise. But money is rarely an ends. Instead, it’s a resource to spend to functionally derisk the company. Historically, capital was the scarcest resource. Venture capital as an industry was built and structured around capital scarcity as the most important blocker on company success.

But increasingly it isn’t scarce anymore. And it certainly isn’t the main blocker for many of the top companies. Talk to top tech companies today and raising capital is ironically one of the easier aspects of building and derisking the company. Hiring and retaining a talented team is far harder. Acquiring and retaining customers is harder. Understanding and getting the team coordinated on what to build is harder. Oh, and did I mention that hiring and retaining a talented team is far harder?

This is the CEO’s job: to raise and allocate the capital needed, but also to build a team capable of building the product needed and getting distribution. All while understanding what the company needs to build and helping the team understand and orient around it.

Narrative leverage is not just an advantage on the cost of financial capital. And not just a PE ratio with the financial markets. It exists in the leverage with all stakeholders both external and internal. It’s what makes prospective employees excited to apply and work for your company—despite all the tech companies fighting for talent. It’s what gives your customer confidence you will not only not go under—you’ll be focused on building a product that’ll continue to blow them away.

And perhaps most importantly, it’s what makes the team understand not just what the company looks like today—but what it could look like in five years. And makes employees able to see beyond their role, to how they fit into the larger picture of the company’s strategy.

Who’s in charge of that narrative? The answer is complicated and different depending on the audience.

From the employees’ perspective, it’s internal comms. From the customers’ perspective, it’s marketing—or perhaps the product itself. From the investors’ perspective, it’s investor relations.


i buy loops in bulk now.

But at most companies, these are primarily teams who manage how the narrative is distributed and shared. They are rarely the ones shaping and iterating on it, especially where it must bend the direction of the company itself.

There is no team that owns the narrative of a company. No team that determines its atomic concepts. This is why we often see large disagreements within a company on how to think about itself.

Some of these differences are natural. After all, customers care about different aspects of a company than its investors. And employees in different roles may have good reason to be focused on different timescales. But too often, the disagreement is unintended and harmful.

At most companies, only the CEO or founders can shape and reshape narrative.

Top companies already recognize primacy founder led narrative

Suggesting CEOs should prioritize this narrative distillation and go direct to their audiences isn’t idle prognosticating. The top CEOs already do care, and spend significant time on it.

The company that was first and best at building their brand is Stripe. There may be no company with higher narrative leverage than Stripe and the Collison brothers. From its earliest days, Stripe has excelled at this.

Stripe has long since grown into much more. But in its early days a significant amount of its value was simply in its ability to get great engineers to work on payment integrations and internationalization. Today, working on developer-first API companies may be sought after, but that did not used to be true. If a company tried to get its best engineers to work on internationalization of payments, they’d just refuse. Or quit. Stripe was able to get great engineers to work on these distinctly not high profile areas. And that alone, is worth a lot.

It’s not that the Collison brothers set out with some deliberate master plan to build a brand, culture, or personal reputation that would attract developers to work on Stripe. More likely, is that they filled a structural hole around payments. Payments needed a company that was developer first and engineering driven, and only founders with the predispositions of the Collisons could attract and build that kind of team in a space that those engineers would have otherwise dismissed.7

KK Note: Even today, the ability to get strong engineers to work on a problem engineers normally don’t want to work on remains a very strong formula for returns.

The Collison brothers may not have started with narrative in mind. But they have been quick to understand and capitalize on it. Stripe’s brand leverage among prospective employees in tech is incredibly high.

Stripe’s slogan, “Increase the GDP of the internet” points at a far loftier vision and more ambitious goal than the mundanity of payment processing. And this is reinforced in both much of Patrick Collison’s projects outside of Stripe as well as initiatives like Stripe Press.

And if Twitter is an increasingly strong channel for hiring and customer acquisition of tech startup customers, Stripe is the most dominant brand among tech Twitter. So much so that there appears to be an entire genre of Twitter content that is new Stripe employees tweeting about their onboarding experience.

You can increasingly see other top companies shifting to invest more in their company and founder brands. Shopify and its CEO, Tobi Lutke, are a good example of this.

In the last few years Tobi has become much more visible publicly. He goes on podcasts, hangs out in Clubhouse, does AMAs while streaming videogames on the Internet, and much more. If allocation of attention is the best proxy for prioritization, Tobi has strongly signaled his view of the importance of building personal brand and shaping Shopify’s narrative.

Increasing brand awareness and expanding the CEOs’ reach is real leverage. Reinforcing that Shopify is a tech company doesn’t hurt their multiple in the public markets, but cheap cost of capital is likely not what limits Shopify. Like all tech companies of this scale and success, their ever present constraint is recruiting. Having a strong brand and easy access to capital helps, but all their competition have that as well. The red queen race for talent is unceasing. Especially as Shopify has expanded its executive hiring outside of Canada to the US where it is relatively less known.

Founders have a unique ability to build brand for their companies. But of course companies must build it beyond them. Shopify has many other initiatives, like a studio producing TV shows and movies on entrepreneurship and starting an esports team.

Shopify is not alone. Spotify is now making podcasts about how they build their product, and Daniel Ek is doing interviews on podcasts and blogs. Twilio is launching a magazine for their customers. And of course Elon is…being Elon.

It’s an advantage today. And will be table stakes tomorrow.

Final Thoughts

Narrative is the other side of the coin of functional derisking. If a company is a series of functional derisking loops, then narrative is the leading edge of what is to come.


my editor told me no one would understand this chart. so it’s for me, not you.

Founders want credit not just for what they have already done, but what they are going to do: launching new product lines, changing their business model, becoming a platform. They want to pull forward credit for these future developments to the present to help make them inevitable.

Even more so, they want their team to have synchronicity around what is most important for the company’s future and how to prioritize and make tradeoffs.

What’s the difference between future investors and potential hires thinking a company is distracted and unfocused versus inevitable and defining? It’s in the coherence of the company’s logic for each sequencing of steps and how legible that narrative is made to them.

And in today’s market it is increasingly the founders who are able to distill and manage the overall narrative. This is only increasingly as companies undergo significant business model changes as they scale and the capital markets treat startups more as a fungible asset class.

Product market fit is just narrative distillation for customers. It only makes sense that this same process is as crucial for investors and employees, too. And just as we have spent so many years reinforcing the primacy of founders focusing on product market fit—and the process of how companies converge on it—so too must founders take distilling their narratives for all audiences equally seriously.

Appendix: Making companies that matter

Recently8 I tweeted that I was glad to see Discord hadn’t sold and that there’s some list of companies I hope never sell. While I do think it would have been underpriced, this isn’t the reason I don’t want them to sell.

Companies like Discord are not important because of the returns they may have. There is no shortage of companies that can drive returns. There are far fewer that can change their industries. And Discord is not alone—there is an entire rising generation of companies this applies to. Companies like Figma, Canva, Flexport, Benchling, and others are all at the cusp of getting to meaningful scale within their industries. (KK note: I don’t think I need to worry about any of them selling. But yes if you are a founder of any of these companies please don’t sell).

In prior essays I wrote on how we should judge venture firms not on their returns but on the value they added above replacement to companies. This is true for companies as well. Companies should be evaluated on the value they add above replacement.

Many companies simply occupy a structural hole in the market. In a world where they did not exist, some other company would simply have occupied their slot, without loss of generality. These companies may have significant profits, but they don’t matter. In some sense the profits were going to be realized regardless, and should not be attributed to their contribution. Great companies pull forward the future. They introduce solutions or business models that would otherwise take many more years to come about.

And the most defining companies change their industries’ trajectories and hurtle their ecosystems into shapes that wouldn’t have otherwise wouldn’t have been seen at all.

There are only a few dozen companies at a time that have line of sight to being defining companies in their industry. While correlated to profitability, this isn’t about their ability to generate money. It’s about the gravitational force they will exert, re-orienting their industry into a new structure and alignment and proving out new business models whose structure will be replicated by all companies to follow.

This is the most compelling narrative that a founder can create around their company: that they have bigger ambitions than just succeeding as a business, that they have a chance to change the nature of business itself. For a select few, it’s not just a pipe dream—it’s the truth.


[1]: The current public markets are like a bar, and the investment banks are the bartender trying to regulate how many IPOs get served. But investors don’t want to be held back from more IPOs, whether they have had too many or too few drinks. And at this point investment banks have given up on trying to regulate this. Whether investors have had one drink, or one too many drinks, is an exercise left to the reader. Or rather how leveraged long tech beta the reader is.

[2]: If we are mutuals and you are planning to IPO soon. First, congrats. Second, please let me convince you to not let the investment banks run your IPO process the traditional way.

[3]: Direct listings have financial benefits relative to traditional IPOs, but I think these are secondary. And for example, modern DPOs seem to shift who gets the preferential pricing from the investment bank’s clients to a friendly hybrid fund that gets the pre-IPO floor setting round. This is a positive shift, but more incremental than transformational. It is the shift to companies owning their own narrative and marketing that is overlooked but most important.

[4]: Ironically, the hotter and more founder friendly the fundraising environment is, the less it is a fitness function forcing narrative clarity from founders. For many founders lucky enough to have VCs throwing money at them, there is no longer anyone but themselves who can force them to really refine their narrative.

[5]: Over a long period of time, the form of the venture industry is dictated by the scale, expected value, and risk distribution of the ecosystem of startups. If that distribution shifts, so too will the venture industry.

[6]: No, seriously. That is true magic.

[7]: Paul Graham has a great essay about schlep blindness. In it he posits that the reason we see founders avoid building companies addressing schlep problems is an unconscious avoidance of unpleasant work. This may be true, but I suspect the larger reason is that we don’t value solving these schleps appropriately. Historically the social capital in working on these areas was far less than on public facing products. Which made it hard not just to get excited about personally working on them, but also to hire teams and bring on investors. The best solution then is not ignorance as Paul Graham suggests, but rather a collective reappraisal of schlep industries. Which seems like what has happened over the last decade, as areas like b2b SaaS have become desirable. Also suspect the bigger macro driver is demand side fragmentation and growth. But shhh.

[8]: Given how long ago I started this essay “recently” is no longer accurate.


Many thanks to Keila Fong for all the help editing this piece.

Additionally, thanks to Kane Hsieh for advanced gif manufacturing assistance.

All graphics in this piece were created with Procreate and Figma. An integration between these two might have a target audience of only me. But I would love it. Many many thanks to Rogie for creating this amazing Procreate Import for Figma plugin. I’ve been very excited to take it for a spin, and it is life changing. Being able to import all the layers of a procreate file into Figma allows for so many more powerful combinations of the two tools. If you read my blog you don’t need me to repeat my love for Figma and what its plugin ecosystem enables. But this really is a perfect example to me of the power of Figma’s plugins—and even more so its community. Also, the power of twitter. heh.

  • Further pieces to be written on these subjects**
  • *I’m probably lying about this. To you, but mostly to myself.