The unexpected new world

Second Newsletter done at Bright Pixel – subscribe here!

Life as we know it has changed in the last few months. It started as something that was only happening in China to something that’s keeping us all awake at night and concerned. Some said it was inevitable; that, sooner or later, something like this would happen. 14 years ago, Larry Brilliant, the epidemiologist who helped eradicate smallpox, described to a TED audience what the next pandemic would look like. At the time, it sounded almost too horrible to take it seriously.

We’re not facing the end of the human race, but what everyone failed to predict were the human and economic consequences of such an impactful event. Research, medicine and, unfortunately, even some lives will help us overcome this situation and build a better world, based on our learnings from our previous errors.

However, once we are back to our daily lives – even before that – we will face a new economic reality. Right now, our lives and markets are frozen still. As USV founder Fred Wilson noted, while all assets are probably subject to a sell-off in a crisis, the market begins sorting winners and losers fast.

It’s time to look at this atypical situation as an opportunity to change, to start creating and implementing solutions that we wouldn’t dare to think about before in such a globalized, interconnected, fast-paced world. Let’s take the time we have been given to reinvent ourselves and face a new market reality.


A brief look at the world
Tribe Capital warns that a downturn can take years of cascading developments to fully express itself, if we consider similar past events. The international issues that have marked 2020 so far led to a spike in market volatility leading the S&P 500 declining 30% from its peak in just 16 days. In the 2008 debt crisis, it took 350 days to decline almost 60% from its peak and it still didn’t bottom out for another 200 days.

While ones are experiencing the need to dismiss their employees, others like Amazon or Walmart are surfing the wave and foreseeing the possibilities ahead of them. This tech giant announced plans to make 100 thousand new hires for its logistics operations and the Walmart is hiring another 150 thousand. Moreover, specifically in venture capital, there are new attempts emerging to counter the panic by mediating between firms still cutting checks and the companies that need the money. A new program called Luma Launch out of LA has already gathered 400 names of investors seeking activity. There is a sense of irony, however… because Luma itself will not be among those investing…


The VC narrative

There is more than one voice advising to prepare for tougher times, so investors are slowing down their analysis of new opportunities whilst reaching their portfolio companies with important recommendations to keep their businesses sound. Priyamvada Mathur lists the need to cut unnecessary expenses to extend cash runway, expand the customer base, be sure to have a dependable board of directors and, at last, but not least, how to become a great storyteller about how the company is successfully solving a problem…

Redpoint Ventures’ managing director Tomasz Tunguz also leaves six startup disciplines for challenging times, including the focus of the team: while sales teams need to keep pipelines primed by wooing existing customers, CEOs need to think about transitioning from management to leadership roles. Sequoia also warns their founders and CEO’s for the effects of Coronavirus, the black swan of 2020: some companies may experience softening demand; some may face supply challenges. While the Federal Reserve and other central banks can cut interest rates, monetary policy may prove a blunt tool in alleviating the economic ramifications of this global health crisis


What’s coming next?

We don’t know exactly what that world will look like – although Sequoia has published a matrix with several economic macro scenarios -, we can imagine some of it. Basically, take the trends that were already in motion and hit the fast-forward button. Virtualization of events, activities, and interactions – the MIT Technology Review says that social distancing is here to stay for much more than a few weeks. Automation of processes and services. Political and economic decentralization. “Now is the time when we need to think about what we would like the new world to look like, and start planning for it and building it”

What do the numbers say? CB Insights sees a 16% quarterly decline coming in Q1’20 – second only to the 36% fall between Q2’12 and Q3’12 – and it is expected to decrease even more in the next quarter. While the analysts at Pitchbook see COVID-19 as, at least in part, exacerbating old trends. Sustainability and profitability, which are quintessential to surviving any downturn, had re-entered the VC lexicon no later than the WeWork debacle. The founder-friendliness in term sheets had already taken a blow, with investors simply demanding more, and that should be expected to continue. Exits, which had already receded somewhat after the IPO frenzy, will also fall again; despite SoftBank’s considerations mentioned above, many firms will also probably be less than willing to sell assets at lower valuations. At the same time, there is no lack of potential dry powder, so even with fewer exit possibilities, investments will probably not be hit in the same way as in 2008

A moment to enhance the Portuguese entrepreneurs

Some Portuguese startups, among them some of our portfolio companies, such as Jscrambler, Probely, Automaise, Taikai, Reckon.ai, or EatTasty, are taking efforts to become even more relevant and put their know-how and solutions at the service of the society and health entities. We’re proud to see that when needed, there’s no competition

 

backcasting

One of the best articles I’ve read in a long while…

Great concept that makes us all think that we should be looking at our reality in a different manner!

BACKCASTING RULES!

How to build a breakthrough …the secret of Backcasting

“I don’t care, I don’t care, so call me crazy. We can live in a world that we design.” — from the Greatest Showman

The future doesn’t happen to us; it happens because of us

READ HERE THE REST OF MIKE MAPLES JR.‘s ARTICLE

Investing like family

Our first edition of Bright Pixel Newsletter – subscribe here!

Live, Learn, Iterate, Share, Collaborate, Research, Recommend, Discuss, Think, Act.

Recently, we had an interesting discussion at Bright Pixel about our willingness to share more and give back to our community.

We have been dwelling about the fact that we have constant and regular access to interesting information related to tech investments, namely to some privileged and/or highly relevant content that could benefit a wider audience. We also have specialised knowledge and a growing experience related to early stage tech investments that are trying to scale in several geographies and explore different market opportunities.

So, we decided to launch a monthly newsletter, where we will share with you things that caught our attention, stuff that we have learnt, ideas for you to explore and research about.

We hope this newsletter can be useful for investors like us, entrepreneurs that are exploring their own projects, people in love with tech, innovators and curious minds. This is the first edition of many, we hope. Please send us feedback and help us improve. This is from us, with bright intentions, to you, the bright minds that will change the world.


Top Early Stage Investors – a family business?

Rocket Internet is a well known story, led by Oliver Samwer and his two brothers, Alexander and Marc.

When we started Bright Pixel based on a venture builder studio model, we looked at several players with similar approaches, namely the aggressive and highly criticized strategy, followed by Rocket Internet, that was known for extensively applying copycatting techniques in its portfolio companies, inspired by successful and proven formulas of companies in other geographies. At the time, we did not like that type of approach and built our startup studio with a different DNA.

Nevertheless, if you fast forward 4 years, clearly it looks like their aggressive approach has paid off. Now, they have reached a considerable size in terms of portfolio and assets under management, under now the umbrella of GFC. Oliver is also co-author of the entrepreneur’s handbook “America’s most successful startups”, that gathered several fans and haters (e.g. professor Jürgen Seitz identified 4 things Silicon Valley can learn from this investor)


To be a copycatter, or not to be?

Bright Pixel is reaching its fourth year of existence as an early stage tech investor focused on emerging tech opportunities. We have now 15 portfolio investments and we are always discussing how we can be a better investor, differentiate ourselves from the pack and add extra value to the entrepreneurs that we work with. That’s why we frequently look at what other more established players are doing in the market.

Dealroom is one of the many great sources of truth about the startup world. They have recently launched a European VC 2020 ranking that ranks all the players, based on quantitative and transparent criteria. As the European VC space has been steadily growing and maturing in the last years, Dealroom has improved their rankings, distinguishing the Top Seed VC investors from Top Series A Investors.

Global Founders Capital, tightly linked to the german based incubator Rocket Internet, leads the Top Seed VC ranking. They now have a 220+ portfolio with 36 deals in 2019, 7 potential unicorns and 8 realized unicorns, closely followed by LocalGlobe and Seedcamp in the second and third spot


We’re a family too

We actually respect more and see higher value in the approach followed by another family of VCs, based out of the UK, that currently are in the second and third spot of the Top Seed VC ranking. Localglobe was founded by Robin Klein, considered by many as a pioneer of Europe’s venture scene, and his son, Saul, that later also founded Seedcamp with Reshma Sohoni.

In 2015, Robin Klein shared his vision on what were the biggest mistakes startups should avoid making – something worthwhile reading! – and you can also listen to him talking about LocalGlobe’s approach when evaluating early stage startups, how he sees the european ecosystem and the next wave of disruption in the world.

At Seedcamp, where we have a well-represented Portuguese batch within their startup portfolio, it is interesting to understand and hear Sohoni talk about their vision of how Seedcamp can help their companies rise from difficult times to household names in the market. They also shared a great deal of information about essentials for startups


Powered with love… in what we do!

First principles

The term “first principles” was coined more than 2,000 years ago by the ancient Greek philosopher Aristotle, who believed that the best way to understand a subject is to break it down to its most fundamental principles.

In a 2012 interview with Digg founder Kevin Rose, Musk explained how to apply the first principles method, using the cost of car batteries as an example:

Step 1: Identify the problem and its common assumptions.

“Somebody could say, ’Battery packs are really expensive, and that’s just the way they will always be. Historically, it has cost $600 per kilowatt hour,” Musk said, referencing the “common assumption” about car batteries.

Therefore, he continued, most people would just accept that “it’s not going to be much better than that in the future.”

Step 2: Break the problem down to its fundamental truths.

This is often the most difficult part, and the key is to ask the right questions — by challenging the common assumptions. Keep digging deeper and deeper until you are left with only the fundamental truths.

“With first principles, you say, ‘What are the material constituents of the batteries? What is the stock market value of the material constituents?’ It’s got cobalt, nickel, aluminum, carbon, some polymers for separation and a seal can,” explained Musk.

Then, he continued, “you’d break that down on a material basis and say, ‘If we bought that on the London Metal Exchange what would each of those things cost?’ It’s like $80 per kilowatt hour.”

Step 3: Use the fundamental truths to plot a new course.

Fundamental truths are like building blocks. Once you’ve gathered them, you can use them to create an entirely new and innovative solution.

With the batteries, “you just need to think of clever ways to take those materials and combine them into the shape of a battery cell,” Musk said. “Then you can have batteries that are much, much cheaper than anyone realizes.”

A ‘powerful, powerful way of thinking’

Musk has referenced the value of first principles thinking several times. “I think it’s important to view knowledge as sort of semantic tree,” he wrote in a 2015 Reddit AMA. “Make sure you understand the fundamental principles, i.e., the trunk and big branches, before you get into the leaves/details, or there is nothing for them to hang on to.”

In a 2014 commencement speech at the University of Southern California, he offered a similar piece of advice: “Don’t just follow the trend. It’s good to think in terms of the physics approach — the first principles,” he said. “This is a good way to figure out if something really makes sense, or if it’s just what everybody else is doing.”

He added: “It’s very hard to do. You can’t think that way about everything. It takes a lot of effort, but if you’re trying to do something new, it’s the best way to think. It’s really a powerful, powerful way of thinking.”

Other cool links

2013 Elon Musk TED talk

Warren Buffet also follows a similar decision-making strategy

tech giants

A great read!

Benedict Evans’ great trends analysis – if you have something that you really should read to put your brain thinking about the future, is this excellent report – mobile & smartphone disruption is reaching its peak and its end in the typical S curve rollercoaster ride… What happens when everyone is online? What will be the next big thing in our lives?

Click here!

mindfulness

I started off with Headspace but lately I’ve used with some success the Calm app, but never wanted to pay for it!

Now I am testing two free alternatives to then stay with one!

Smiling Mind is in testing mode now!

 

Top picks for the best meditation apps of 2020:

1. Ten Percent Happier

2. Headspace

3. Simple Habit

4. Insight Timer

5. Calm

6. Stop, Breathe & Think

7. Smiling Mind


What is meditation and what does it actually do?
Mindfulness — the goal of meditation — means being fully aware and present in the moment you live in. To achieve it, practitioners recommend paying close attention to your thoughts and feelings, observing your breath, and focusing.
Essentially, mindfulness is “this little kindling of interest in the most mundane fact of your existence,” Clifford Saron, a research scientist at the Center for Mind and Brain, tellsInverse.
Anyone can achieve it. But some people learn how to be mindful by regularly practicing specific techniques, including meditation, yoga, and breathing exercises.
The evidence is mounting that meditation is beneficial for both the mind and the body. Studies show that mindfulness may curb anxiety and depression, and may even improve your heart health. Other research shows mindfulness may treat alcohol addition, or increase resiliency in the face of stress. Other studies show that even just a brief introduction to mindfulness meditation may lessen pain and negative emotions.
Most recently, a pair of research papers to be published in March 2020 suggest that mindfulness may benefit you at work, too, by boosting attention and resilience in high-tension professional settings.
Mindfulness may go even further — a 2012 brain scan study found eight weeks of meditation quite literally changed participants’ brain structure.
But, while the science behind meditation and mindfulness grows, experts in the field believe the lay market in mindfulness may have gotten a little ahead of itself.
“This is a fraught area with inconclusive and highly variable results in which the press about the effects of meditation is way ahead of the actual data and the methodological issues involved,” Saron says.

Smiling Mind— A go-to for younger users interested in meditation.
Founded in 2012, this Australian app has quickly become a go-to for youth mindfulness meditation.
The app provides users with a survey to assess their base levels of happiness, contentedness, and alertness. It is customizable, meaning it can be tailored to enable younger users — especially those in school — to meet specific goals they have for their mental health and well-being.
Smiling Mind made it into the top picks because of its sports meditation programs: The app includes 6 modules with 12 sessions (made in partnership with Cricket Australia) designed to help users in their athletic performance.
There are longer sessions ideal for training and off-season periods, and shorter booster-style sessions that may help users get ready on the day for the big game.

building blocks

Building Blocks Planning
This is an outline of a simple tool for planning innovative technology businesses which helps consider sequences and consequences.
Powered by:  Mick Liubinskas

Product Focus for tech companies in San Francisco

This method uses the metaphor of building blocks to plan the major steps from now to your big goal. The principle is that each block builds on the block under it and must be a logical extension forward. It stops ‘hope’ as a strategy or ‘dreams’ without structure. It gets you to ask the question, what foundation am I building and, when it is finished and strong, what can I build on that base to grow towards my vision.
It’s useful for the management of tech businesses who are trying to plan when there are complex interactions between parts and many paths to take.
Planning is significantly harder with innovations because there are a number of large unknowns or, at best, hypotheses, including;
Who are we building this for?
What problem are we solving?
What is it we are building?
How should we build it?
What resources will it take to build?
How long will it take to build?
How much will it cost?
Will the customers want/like/use it?
Will the customers pay for it and how much?

Continue reading “building blocks”