Podcast Summary
Independent Journalism Thrives Through Substack: Former Bloomberg journalist Eric Newcomber succeeds as an independent journalist through Substack, charging $150/year or $15/month for exclusive content including weekly reports, monthly data posts, and a Tuesday podcast, amassing over 2,300 subscribers and substantial revenue.
Eric Newcomber, a former journalist at Bloomberg, is now thriving as an independent journalist through his Substack newsletter, Newcomer.co. He charges $150 a year or $15 a month and publishes weekly reports, monthly data posts, and a Tuesday morning podcast. Newcomers' business has grown significantly, with over 2,300 subscribers generating substantial revenue. The independent journalism movement is becoming a sustainable business model for journalists, allowing them to have more control and potentially earn more than traditional media salaries. Another topic discussed was the recent news of Silicon Valley Bank's stock price drop and potential bank run due to depositors taking their funds out. This news, along with the increasing funding for generative AI, was also explored in depth during the show.
From Employee to Business Owner: Understanding the Business Side of Independent Journalism: Shifting from being an employee to a business owner requires a new appreciation for time management, productivity, and financial optimization. Substack is a valuable tool for smaller operations, but larger revenues may necessitate exploring alternative hosting solutions to minimize unnecessary expenses.
Transitioning from being an employee to a business owner, specifically in the field of independent journalism through platforms like Substack, brings about a new perspective and appreciation for the intricacies of running a business. The focus shifts from criticizing business leaders to understanding the importance of time management, productivity, and financial optimization. While Substack is a valuable tool for smaller operations, larger revenues may lead to exploring alternative hosting solutions. The speaker's personal experience shows that having multiple infrequently used lists can lead to unnecessary expenses, making a free platform like Substack an attractive alternative.
Subscription Platforms: Balancing Value and Cost: Creators weigh benefits of subscription platforms against high take rates, with ease of use and potential for free subscribers attractive but higher fees a concern. Success depends on providing more value than taken in fees, and community building tools like chat features and Discord groups play a role.
Creators are weighing the benefits of using subscription platforms like Substack against the cost of high take rates. The ease of use and potential for free subscribers through referral systems are attractive, but once creators start generating significant revenue, they may consider other options. Some creators have moved away from platforms with higher take rates, like Apple, due to public pressure. The value of a subscription platform lies in providing more value to creators than they're taking in fees. The use of chat features and Discord groups for community building is also a topic of interest for creators, but its success depends on the level of engagement and investment in the community. Ultimately, the decision to use a subscription platform comes down to the balance between the value provided and the cost incurred.
The importance of delivering quality content in newsletters to retain subscribers: Delivering quality content consistently in newsletters is crucial to retain subscribers, as the fear of losing them due to weak content keeps authors on their toes. The chat feature on Substack can foster a community, but the expectation of insightful and intelligent content remains.
The value of a newsletter lies in the equal delivery of every piece to subscribers, creating a healthy dynamic where each piece matters. The fear of losing subscribers due to weak content keeps the quality high. The chat feature on Substack has the potential to turn a mailing list into a community, but the fear of unsubscribing also exists due to the expectation of insightful and intelligent content. The author also shared an anecdote about calling out a writer for dunking on Sequoia Capital in a public article, warning that such actions could lead to unsubscribes in a newsletter context. The author also mentioned their admiration for the Marc Andreessen-Mark Zuckerberg saga, highlighting the human element in Silicon Valley deals. Lastly, the author recently published a scoop on Stripe raising a massive $6 billion in funding.
Stripe Raises $6 Billion to Address RSU Taxes and Buy Back Shares: Stripe raises $6B for RSU taxes, share buybacks, growing despite slower revenue and losses, but faces competition and investor pressure
Stripe, the fintech company, is raising $6 billion in a funding round led by Sequoia Capital and other investors. The primary reason for this round is to address an expiring restricted stock unit (RSU) problem for early employees, which will cost around $3.5 billion in taxes. The remaining funds will be used for a tender offer to buy back shares from employees and ex-employees. This round values Stripe at around $50 billion, down from its peak valuation of $96 billion. Despite a slowdown in revenue growth, Stripe is still growing, with net revenue increasing by 85% year over year. However, the company's losses last year and slower revenue growth compared to previous years have raised concerns among investors. Stripe's competitors, such as Adyen, have been growing faster and more profitably, which adds pressure on Stripe to perform. The funding round is significant as it will help Stripe address the RSU issue and provide liquidity for employees, but it also highlights the challenges the company faces in achieving the growth and profitability expected by investors.
Laid off tech employees react with mixed feelings: Some tech employees understand layoffs as natural, while others feel entitled to continued employment and high pay, fueled by attractive perks and salaries in Silicon Valley. Post-layoff career trajectories and remote work culture may challenge talent in the industry.
The recent layoffs in tech companies have led to a range of reactions from employees, with some understanding it as a natural part of business and others feeling entitled to continued employment and high compensation. The culture of entitlement in Silicon Valley was fueled by companies like Google, who used attractive perks and high salaries to win the talent war. However, this strategy has left some employees questioning their career trajectories after being laid off, particularly those in non-technical roles who may have reached peak compensation early in their careers. Additionally, the insistence on remote work and the ability for managers to closely monitor employees' output may create headwinds for talent in the industry.
Managing Teams in the Age of Remote Work and AI: Remote work allows for a flexible, global workforce and better work-life balance, while AI adds uncertainty by automating jobs. Managers must focus on output and adapt to these changes.
The way we work and manage teams is evolving with the rise of remote work and artificial intelligence. Managers now need to focus on output rather than physical presence, looking at commits, code, reports, and productivity levels. This can lead to a global redistribution of salaries as workers in lower-cost areas can be hired for less. Remote work also eliminates the need for lengthy commutes and allows for a better work-life balance. However, the integration of AI in the workforce adds an element of uncertainty, as it's difficult to predict which jobs will be replaced. Additionally, while AI can be a useful tool for generating ideas and answering questions, it still lacks the ability to fully understand and respond to human nuances and emotions. Overall, the future of work is becoming more flexible and global, with remote work and AI playing significant roles.
Asking insightful questions during an interview: To make an interview with Reed Hoffman or any other successful person engaging and valuable, ask questions that delve deeper into their motivations, inspirations, and perspectives on various topics. Avoid generic questions and be open to exploring unexpected topics.
During an interview with Reed Hoffman, it's essential to ask questions that provoke thought and add value to the conversation. Asking generic questions about a person's career or achievements might not yield the most interesting or insightful responses. Instead, try to ask questions that delve deeper into their motivations, inspirations, and perspectives on various topics. For instance, inquiring about the original inspiration behind LinkedIn or seeking advice for aspiring entrepreneurs can lead to more engaging and meaningful discussions. Additionally, be open to exploring unexpected topics and allowing for some spontaneity in the conversation. This can lead to surprising insights and memorable moments.
Leveraging experienced developers from platforms for cost-effective growth: Experienced developers from platforms like lemon.io can help startups grow efficiently without overspending on salaries. These vetted professionals can significantly contribute to a startup's success, especially in the competitive AI industry where top talent is in high demand and can command high salaries.
Leveraging experienced, vetted developers from platforms like lemon.io can help startups grow efficiently without breaking the bank. These developers, who have strong portfolios and are hand-picked, can significantly contribute to a startup's success. The industry is seeing a surge in funding for companies working on large language models, with OpenAI being a notable leader. Contenders like Anthropic and Character AI are also massively funded, making the competition for top talent intense. With limited resources and high demand, AI developers can command high salaries, making it essential for companies to hire smartly and efficiently. The future of the industry seems to be star-driven, with key researchers playing a significant role in a company's success.
Investment surge in generative AI technology: Companies are investing heavily in generative AI, with potential applications in SaaS businesses, but the market is becoming saturated, leading to potential price wars and undercutting of costs. Understanding the competitive landscape and differentiating from competitors is crucial for success.
We are witnessing a significant investment surge in generative AI technology, specifically in large language models, with numerous companies entering the market. These investments range from hundreds of millions to billions of dollars. Some notable ones include Stability AI, Perplexity, and Jasper. With over 25 competitors in each space, the market is becoming crowded, leading to potential price wars and undercutting of costs. This situation resembles the ride-hailing industry's competition between Uber, Lyft, DoorDash, and Postmates. Despite the market saturation, the potential applications for generative AI in various software as a service (SaaS) businesses are vast. Companies are exploring the integration of AI into their offerings to remain competitive. Notion and Quora are examples of established companies trying to adapt to this technological transformation. As an investor, it's crucial to recognize the current market conditions, where software multiples have collapsed, and AI companies are raising significant valuations. Understanding the underlying fundamentals of these investments and assessing the competitive landscape will be essential for making informed decisions. The success of these AI startups will depend on their ability to differentiate themselves and adapt to the rapidly evolving market.
Investors prioritize high-quality investments for future funds: Investors are cautious, selective, and focused on generating returns to secure future funds, while learning from past experiences and considering the importance of every investment.
Investors are driven to deploy capital into high-quality investments that they believe will return and allow them to raise their next fund, rather than being motivated solely by the need to deploy capital. Despite the current economic climate, investors are being cautious and selective with their investments. They are mindful of the potential risks and the importance of every bet they make. While some may have faced losses in previous funds, they are learning from their experiences and becoming more cutthroat about their capital deployment. The current environment has highlighted the need for investors to be efficient and focused, as they strive to generate returns and secure their next fund. The strategy of investing in multiple funds with top-performing managers is also a common approach, as LPs understand that vintage years can vary in performance. Overall, the goal is to make informed, strategic investments that will yield positive returns and ensure the longevity of the fund.
Momentum investing in private markets faces challenges due to market uncertainty and high cash burn: Investors need to stay informed about market conditions and adjust strategies, including exit plans, to mitigate risks from high cash burn and market volatility.
While momentum investing in private markets can be lucrative, it's important to remember that you can't eat IRR. Investors need to exit and realize their gains. However, the recent market conditions have made exits challenging, leading to lower valuations for companies going public in 2023 and 2024. The SVB stock price plummeting is a stark reminder of the uncertainty in the market. The bank, which holds a significant portion of U.S. venture-backed tech and life science companies' funds, reported that client cash burn remains high, leading to lower deposits. SVB sold $21 billion of its securities portfolio, resulting in a post-tax loss of $1.8 billion. Despite this, the company is raising a $2.25 billion round to offset the loss. As investors, it's crucial to stay informed about market conditions and adjust strategies accordingly. The recent market volatility highlights the importance of having a solid exit strategy and being mindful of cash burn.
Venture debt and economic downturns: Raising too much debt without sufficient revenue or product-market fit can lead to financial instability during economic downturns. Companies may face a prolonged period of 'indigestion' before growing into their valuations, and a bank run could exacerbate financial instability.
The use of venture debt to fund operational expenses instead of building a factory or purchasing equipment, especially by startups without product-market fit or a stable revenue stream, can lead to serious financial issues in the future. The speaker expresses concern about the potential fallout for private companies that have raised large amounts of money but have not yet felt the full impact of the economic downturn. Companies with overvalued stocks and insufficient revenue may face a long period of "indigestion" before they can grow into their valuations. The speaker also mentions the potential problem of a bank run, as people may panic and withdraw their cash or debt facilities from a bank like Silicon Valley Bank, leading to financial instability. Overall, the speaker advises caution and prudence in managing debt and investments, especially during uncertain economic times.
Growing concerns about Silicon Valley Bank's financial stability: VCs advise against keeping funds in SGB due to cash crisis, causing panic and uncertainty, CEO urges calm, but risks remain, emphasizing the importance of cash diversification and risk management.
There are growing concerns about the financial stability of Silicon Valley Bank (SGB), with some venture capitalists advising their portfolio companies to keep minimal funds in the bank due to its severe cash crisis. New York-based venture firm USB sent an email to its founders warning them not to accept any offers from SGB to keep their money there, even if incentives are offered. This situation has caused panic and self-fulfilling prophecies, with some fearing a potential bank run and even the involvement of the US government in a bailout. SGB's CEO, Greg Becker, has urged calm and assured clients of the bank's ample liquidity, but the situation remains uncertain and complex. The potential risks and uncertainties surrounding SGB's financial situation underscore the importance of diversifying cash holdings and maintaining a cautious approach to managing financial risks.
Media landscape shifting towards subscriptions and sophistication: Frustration with negativity and wealth disparity in media, desire for insider discussions, and merging of creator and journalism worlds with high standards based on reputation.
The media landscape is undergoing significant changes, with a shift towards subscription models and a move away from clickbait and sensationalism. Katie Benner expressed her frustration with the repetitive negativity towards tech companies and wealth disparity in media, and her desire for more sophisticated, insider discussions about startups and global events. She believes that media criticism has become exhausting and that the focus should be on the conversations themselves rather than the referees (the media). The collapse of traditional media and the rise of new, independent publications are part of this rebuilding process, and Benner hopes for a merging of the creator and journalism worlds where everyone is held to the same high standards based on reputation.
