Switched hosts — from Bluehost to WPEngine (made in Texas). Hope this works better.
A good friend and his wife are about to become parents for the first time. Thinking about it reminded me of this story from 13 years ago:
The year was 2004 and my wife had just delivered our first child and we were at the pediatrician’s office for her first doctor’s visit. The check-in nurse handed me a clipboard, asking me to fill out my new patient paperwork.
Patient name… address… insurance info… I filled out the form.
I got to “Father’s name” and instinctively filled in “Durga Agrawal” (my Dad’s name) and continued on, with a vague sense that I had made a mistake. And then a few seconds later:
“WAIT. A. SECOND. FATHER… THAT’S ME!?!?”
A friend of mine, who would prefer to remain anonymous, is a successful investor and also an expert in corporate governance. We’ve invested in a few deals together and over time, my friend has became comfortable with SAFE notes, somewhat to my surprise. Here’s a write-up from my friend on why:
You asked me to write about how I got comfortable with the YC SAFE as an investment vehicle. I believe we are on the same page, but for clarity I’m going to say that this discussion is about using a SAFE vs. convertible debt for first financings of early stage companies. There are other instances in which I might be agreeable to a SAFE; but, as we said, we want this to be short.
1. I will do only a SAFE with a cap. I will not do a discount structure, SAFE or convertible debt, because I am unwilling to let a company use my money to increase my price. When companies say that the discount is to compensate for the price change over time, it often is the case that the company wants a long period, perhaps two years, before the conversion and the discount is around 20%. If a company can’t increase its value more than 20% in two years, that investment isn’t interesting. This said, if a company wanted to give me a cap and a discount, that would be okay of course. (Historically, convertible debt typically did not have a cap and the tenors were short. Tenors have been longer for quite a while now (for over 10 years), but I’m only recently (past 2-3 years) seeing capped convertible debt.)
2. On the topic of a SAFE not having an interest component, my response is that this is only a pricing issue.
3. On the topic of a SAFE not being superior to equity, this simply isn’t important to me as a practical matter. I don’t recall ever seeing a convertible debt that got repaid. In a bad situation, there generally is no money to repay the convertible debt holders and, if there is any money, the SAFE’s liquidation preference puts it before the common anyway.
4. So, you probably can see now that the “benefits” of convertible debt over SAFE are not important to me as a practical matter. This brings me to the fact that I’m not only comfortable with a SAFE, I like the structure because it is administratively better for the company – no debt on the balance sheet, no dealing with the administrative burden of changing maturity dates (which typically happens as necessary), no fussing with interest calculations. Importantly, the legal fees for a SAFE typically will be cheaper than the fees for convertible debt.
5. I have had the YC SAFE reviewed by multiple lawyers with relevant expertise and they are fine with it.
6. This final topic you asked about is more complex – the risk of getting hammered by the next round of investment. This always is a risk. Even preferred issues with extensive investor protections can get hammered if a company isn’t performing well and doesn’t have choices for new money, and this situation can be exacerbated when the new money doesn’t care about its reputation. There also is the very unfortunate instance of the company not caring about its early investors, and it collaborates with the new money to hammer the existing investors. In this instance, my opinion (which I have discussed with lawyers) is that a SAFE is in a stronger position than convertible debt because the company’s board and management have a fiduciary duty to the SAFE holders since the SAFE is equity. Fiduciary duty to debt exists only in the face of insolvency. It’s a bad situation when reliance has to be on fiduciary duty, however.
Bottom line is this: is the company committed to integrity and is it capable of performing such that it can attract new money that will treat investors fairly? It is much more about this investment criterion than about the instrument. (As an aside, I will say that I caution both companies and investors regarding situations in which prior investors aren’t respected because guess who is going to be disrespected next? There are situations in which investors reasonably take a hit for poor performance as more money is sought; but, don’t do business with the bad guys.)
By Anu Lal (guest post from my sister!)
India has its own street food that’s effectively unknown in the US landscape of Indian food (there are a few restaurants that specialize in Indian street food like Vik’s in Berkley and Balaji Bhavan in Houston).
Most Indians-visiting-India-from-the-US would avoid Indian street food because it doesn’t always meet Western standards for hygiene– it’s usually served streetside in open markets, prepared by bare hands, and served in dried banana leave bowls. For most of us, even the well-travelled in India, we would err on the side of being conservative to protect our delicate Western bellies from the possibility of falling sick.
When I was growing up in States, what I ate on the table was truly foreign to my friends and the country… by the time I was in my twenties I was working with folks who had had Indian roommates in college whose mothers shipped them food regularly so I would be often asked… do you know how to make aloo gobhi (potato and cauliflower) or do you make those honey ball things (gulab jamuns)? Today Indian food in the States ranges from the creamy saag paneer to the flash fried spinach at a Zagat rated 27 in DC. I digress… street food is what we are talking about and even if you “LOVE” Indian food, it is unlikely you have had it… especially not this way!
For my sister’s reveal party (for 20 of which 7 were children—family only), my Mom made, at her request, street food favorites and it was perfect. Perfect in terms of tastes, textures, temperature, presentation, and consumption. The menu:
Virgin Blood Mary Shooters
Gol gappas (also known at paani puri)
Eggless Flaxseed Pancakes (PPK)
My mother is the mastermind. In her book, nothing can be too “fresh” for my Mom. For example, I’m defiantly a lackey because I cook my family’s dinner mid afternoon rather than right before dinner. Her standards are high and she is demanding of us and herself in what she creates for all of us to enjoy. She loves through her food and feeding us. She loves every part of all of our being… if you could only see what she can whip up in an hour!
We are always on the sidelines learning and listening and taking direction. If you are from the subcontinent you know what “taking directions” means—- shut up, listen, learn, and do what you are told. Think about it later. My mom began cooking that morning—none of this “prep the night before” except for the chutneys (which were made free of pulp and additives, of course).
The tamarind chutney consisted of pods soaked to soften the tamarind fruit and then cooked with sugar and cumin.
The mint chutney was the family go-to: one box of mint, two bunches of cilantro, cumin seeds (1 table spoon), salt to taste, lemon juice, jalapeño.
The cooking the morning of (for a 2 party) began with cooking the garbanzos (no cans, folks!) and were seasoned with dried pomegranate seeds, ginger, tomatoes and onions.
The aloo ki tiki was stuffed with soaked and seasoned lentils
Gol gappa pani – This is the spicy tangy liquid that’s poured into the crispy gol gappa shells right before you place it whole into your mouth. To prepare it, raw rocklike mango was baked for an hour to pulpy perfection and then blended with lemon juice, mint, agave, and black salt.
Pau bhaji, the sloppy joe of India, was started by chopping cabbage, potatoes, bell peoplers, carrots, peas, onion and tomatoes… served with buttery griddle crisped slider buns.
My mother has always done this perfectly, but as we have become young adults she has humored us and allowed us to get involved in presentation and flow of the food under her tutelage. When I say we, I speak of my Delhi-hite bhabhi (sister in law) who has absorbed the ways of her ABCD family that she has married into, my sisters, my brother, and myself. We are the ops people—we get this from my PhD father, who got his PhD in industrial engineering before it was sexy to get an MBA and Harvard graduated 1500 people a year. We have DNA that makes us get things done.
Our task is simple —- take into account our food cultural needs (temperature, taste, freshness), keep the menu simple with little overlap in flavors (my Mom is big on this), presentation should be a pleasure to look at, and the food should be a joy to eat — this means flow around the table, size of the dishes (street food is often eaten standing) and of course, taste, but since my Mom was cooking this was a non issue.
Our innovation for this meal was the gol gappa and gol gappa pani service. To understand why was such a big deal you have to know the how and what of a gol gappa. Traditionally gol grapes are served to you by the vendor to you piece-by-piece while you are standing on in a market or street corner… again, most of us cannot partake because of the flora in our bellies that may get off kilter. Shells cannot be refilled with liquid because they will get soggy and spill so they must be eaten immediately. What did we do? We filled individual wine decanters with the gol gappa pani and everyone was able to serve and feed themselves for a perfect bit every time in without having to get up for each bite or shell. We went through almost 100 gol gappas and over 2 gallons of gol gappa pani. Mind you, we still had all at the other food items that we enjoyed.
BTW, this was just the food. The party was fabulous too. Take a look…
I’ve been evangelizing the Apple Airpods since I got mine 2 weeks ago. A friend asked me what was special about them and here’s what I told him:
- They’re comfortable and don’t fall out (because there’s no cord pulling on them)
- Two ear sound (without a wire connecting them)
- The pairing process is magically simple (pairs seamlessly across iPhone iPad and MacBook)*
- The AirPods case is a great place to store the buds and make it easy to carry them in your pocket and bag. Plus they recharge them so they last a long time.
- They pair with my iPhone, iPad and Macbook Air, so I’ve been able to eliminate two cables from my bag (lightning wired earbuds + 1/8″ jack wired earbuds)
* The process of switching the pairing from my Macbook Air to by desktop (a Mac Mini) to my iPhone and back could be easier than it is, I wouldn’t be surprised to see Apple innovate here in subsequent updates to iOS and OS X.
I recently wrote an article for the Houston Chronicle on the future of personal technology. Re-posting it here so I have an easy-to-link-to copy of it:
How technology is changing everything
By Rakesh Agrawal
October 26, 2016
Late one night in the first days of 2013, a California delivery truck unloaded my new all-electric car, a Tesla Model S, in our driveway. Our then-4-year-old daughter observed the scene and openly wept, saying through tears: “Everything’s changing!”
As a Houstonian, an investor in innovative companies and a technology enthusiast, it’s fun to consider the question: How will technology shape the future? To answer this question, I enlisted the help of a few fellow Houstonians.
Among the topics I polled friends about, transportation and self-driving cars came up the most. Between Uber launching self-driving cars in Pittsburgh, Tesla’s Autopilot feature and General Motors buying a self-driving car startup, Cruise, for $1 billion, autonomous vehicle technology seems to be at a tipping point.
There is no doubt: Fully autonomous vehicles will radically transform our cities, including Houston. Car utilization will go up and the amount of real estate required for parking will go down. And many commuters, especially those in Houston, will reclaim the one resource that we all have a limited amount of: our time.
John Long, the executive director of Bike Houston, believes that “driving and parking your personal car will be less desirable than other options – including the use of electric, self-driving and ride-share vehicles.” And John points out that this is already happening. “Many of today’s young urban dwellers already eschew automobiles, opting instead for a smorgasbord of transportation options including bicycle, light rail, bus, walking and ride share.”
Christof Spieler, a Rice engineer, a Houston Metro board member and a public transportation enthusiast, believes more information will mean new ways of getting places. “In the future, I’ll be able to find out if there’s an empty parking space or how safe the sidewalk is. This will make it easier to use multiple modes – walk sometimes, Uber sometimes, transit sometimes – as opposed to, say, driving everywhere.”
Education is also poised for transformation. Much of our education system traces its heritage back to the industrial revolution, often referred to as the “factory model of education.”
Tory Gattis, a native Houstonian, Rice University graduate and founder of the Talent Unbound school for children ages 5 to 18, believes education will become “extremely personalized through eLearning technology, allowing each student to progress through the material at their own pace and achieving mastery before moving on to the next level.” Gattis believes this personalization will lead to students spending more time “engaging in project-based learning where students learn real-world skills like collaboration, innovation, and entrepreneurship.”
Money will also change, thanks, at least in part, to cryptocurrencies such as Bitcoin and the technology that underlies them known as the blockchain. Blockchain enables a software-based system for currency and transactions that is decentralized, meaning it does not require any government or bank to uphold or maintain it. As blockchain tools become better and gain more adoption, they could eventually eliminate large financial institutions. Blockchain will also drastically lower the cost and logistics involved with money moving across international borders since it enables a system of money not tied to any government.
Grace Rodriguez, one of the co-founders of Station Houston, a coworking space that focuses on early-stage software startups, had this to say about blockchain: “I think blockchain will change the face of information storage and exchange, and completely disrupt how all transactions are done, in general.”
One thing that will remain the same is the love Houstonians have for eating good food. Yet, the entire value chain of food will change, from farming being affected by data and artificial intelligence to food preparation using robotics, to apps and drones transforming food delivery. Many Houstonians are already enjoying the benefits of apps such as UberEats, Favor, DoorDash and, most recently, Amazon Restaurants.
I recently walked into the Freshii in Midtown Houston at lunchtime on a weekday and heard an iPad behind the counter repetitively making a “ding” sound – it sounded like a slot machine that had hit the jackpot. I asked the server behind the counter what was going on and he told me, “Oh, those are lunchtime orders from UberEats.” More restaurants will optimize around delivery, lowering their costs of real estate and staff for delivery orders and accordingly lowering prices of delivered food for consumers.
Scott Tranweaver, co-owner of Jenni’s Noodle House, cautioned against too much technology at the counter: “You may be able to order and pay for your food from an iPad and have zero employee contact, but do you really want this? Our staff is dynamic, kind and memorable and they make an effort to get to know our customers. At Jenni’s Noodle House, we will avoid technology that gets in the way of making personal connections with our customers.”
Drones, or unmanned aerial vehicles (UAVs), are another personal technology that will transform our everyday lives. Amazon has been conducting drone package delivery trials for a few years now, promising deliveries in 30 minutes or less. At the same time, drones are getting smarter and cheaper, with computer vision and other algorithms allowing them to automatically navigate from point to point and avoid obstacles. Maybe in the future, when you’re in a classic Houston traffic jam, you’ll deploy your personal drone to fly ahead of you so you can see what what’s causing the back-up.
But like any technology, there are potential negative consequences of drones. When cars became popular people bemoaned the noise and visual pollution of cars. And today, this is something we simply accept about urban life. With an increase in popularity of drones, the same could eventually be true of our skies. While we are used to clear and quiet skies today, in a few years we may look up to a horizon that is dotted with Pizza Hut and Amazon drones.
In 2011, Marc Andreessen, the inventor of the web browser and co-founder of venture capital firm Andreessen Horowitz, wrote an editorial in the Wall Street Journal entitled, “Software is Eating the World.” In the article, he lays out the case for software companies taking over large swathes of the economy ranging from financial services to oil and gas to education and health care. And five years later, we are seeing this play out, with every sector of the economy being altered by software. And with the rise of entrepreneurship in our culture, from hit TV shows like “Shark Tank” to movies like “The Social Network” (about the founding of Facebook) to startup accelerators that focus on different vertical markets, I can only imagine that the rate of change is going to increase.
To conclude the story of my daughter, who had shed tears as I replaced my internal combustion engine car with an all-electric car: One week later, the Tesla was the only car she would ride in because it could play all her favorite music on-demand via Internet radio.
Next time you’re in Delhi, treat yourself to the ridiculous and awesome tasting menu at Indian Accent (located in Friends Colony within an unassuming boutique hotel called The Manor).
Thanks to Anubhav for taking us:
These bubbles (not sure if they are air or water? If I had to guess I’d say air) showed up last week. Service said they had seen the issue before, asked me a bunch of questions about where I park my car (inside or outside, shaded or unshaded) and they have a screen replacement scheduled for later this week. Screen functionality is 100%.
Earlier tonight, I tried Blue Apron, which just started operating in Houston. Delicious home-cooked meals with fresh ingredients. Here’s my experience.
I signed up on their website, I chose the option for 3 weekly meals for 2 people for $60. I chose their vegetarian menu. Great options, these are this week’s and next week’s menus:
There’s a lot I like about Blue Apron: These guys make it easy for non cooks to make fresh home cooked meals. No having to figure what to buy at the store or how much. No extra ingredients at the end of the process. They solve the problem of, “What should I make?” And the meal was delicious and fun for me to make. We cook a lot of fresh food at our house (and by “we” I mean people other than me!) so I’m spoiled where it comes to fresh home cooked food. But even still I could see us doing Blue Apron regularly.
But I’m not sure about the distribution model. I ended up with these two big ice packs with the packaging which seems wasteful. Maybe that’s temporary as they get started in Houston, a way to bootstrap this market? Also though, it seems like this is a product, a way of delivering a recipe, that would be very successful it if it was available in grocery stores. Right? And the grocery store, it seems, would have a significant cost advantage over someone shipping all that stuff to you. (I think Central Market here in Houston does a bit of this, though it’s not as well “kitted” there.)
Ok now I need to go clean the kitchen. Make a product for that, THAT would be magic 🙂