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March 17th, 2019 – Don’t Waste Energy on Yourself Too Much (by Petr Kral)

I’ve noticed that certain young start-up founders are developing a bad habit. There are only a few of them, but some individuals get caught up in promoting themselves as part of marketing their company. Now, I know this is hard to resist, especially at a younger age: There is the constant stream of profiles that focus on new start-up stars; self-proclaimed experts flood the market with their latest motivational handbooks; Forbes is also full of it; and not a week goes by without some sort of conference with the opportunity to give a talk or record a podcast. Social networks are full of pulp wisdom and you’re admired by throngs of followers that inundate you with likes despite being wannabes themselves. I understand it all, I really do. But let’s be real here: Reading the biographies of Elon Musk and Steve Jobs and being slapped on the back by your high school buddies doesn’t make you a global innovator. Not by itself anyway.

Now it’s not my place to criticize what someone does in their free time, but when that sort of self-promotion is presented as an investment for the company, it’s a bit worrying. Those are usually the types that haven’t achieved all that much, but they’re able to endlessly discuss the right way to build a start-up at three conferences each month all while mentoring others, organizing conferences, writing books, and adding to an ever-expanding list of other accomplishments. “It’s good for the company. It’s great PR,” we often hear. But is that true? The boundary between corporate communication and massaging one’s own ego is paper-thin and submitting to the latter can be oh-so tempting. Yes, educating oneself and representing the company at events is important, but it shouldn’t be something that becomes a burden for your marketing team. And it certainly must not become something that’s the butt of jokes.

The chief disadvantage to this approach is the clear and direct comparison to people who keep working with their eyes on the prize; building a great product while motivating the people in the team. That’s the type that isn’t thinking about posting a motivational status to their profile and waiting to see how many likes it gets; it’s the type that supresses his/her own ego in favour of building the brand.

When I see that sort of behaviour, I have to stop and wonder what would happen to the company if the energy put into promoting the individual went into the team. What if instead of networking at a conference where everyone knows him, he’d take his team out for a fantastic dinner? It’s an example of poorly allocated energy.

I had two bosses in my life and I can’t recall either of them speaking at conferences, much less organizing them. They gave all their time to their companies and led by example. Neither of them wanted us to spend time presenting ourselves. I can’t imagine taking them seriously if they criticised me for my effort while they just came back from the printers where they posted the first copy of their new book to Instagram. Could I really respect someone like that? An entrepreneur needs to be a true leader and not just a face that spends a third of his/her time representing himself or the company to the outside world.

Work hard and let your results speak for themselves. Once you make it, then you’ll be a star in your own right without having to force it.

March 8th, 2019 – How Samepage restored sanity to our comms (by Michal Taborsky)

This article was originally published at Michal’s blog.


At Reflex, we are using Samepage as our central communication tool. We send an occasional e-mail here and there, but most of our Powerteam agenda is covered by Samepage these days. But that was not always the case.

In the past, apart from in-person meetings, we used an e-mail group and it was, for the lack of better terms, madness. The issues we discuss are fairly complex. An e-mail might spark three separate topics for discussion. An answer to one question could raise two new. After few rounds of e-mails, we usually gave up and postponed the discussion to our next team meeting.

Samepage works on desktop and mobile

Samepage works on desktop and mobile

It’s not just about chatting, as a lot of the communication involves documents of some sort or other. We discuss pitch decks, P&L statements and patent applications.

Samepage is a team collaboration application, which combines team chat, voice and video calls with tools for collaborative work on documents. You can imagine it as a combination of Slack and Google docs. It’s closest competitor is actually Microsoft Teams, which provides similar all-in-one suite. However, for usage of Teams in a company you need the Office 365 license, which can be hefty. Not to talk about the complexity of running 365 in the first place.

Samepage is also a Reflex Capital portfolio company, so I have the privilege to know the team and work with them. It might surprise you, but the development of this world-class app happens in Pilsen, Czech republic, though the team is international with offices both in US and CZ.

Most functionality of Samepage revolves around Pages. These are shared documents, which can contain not only text, images and videos, which is pretty standard, but also things like embedded files, tasks, meetings and more. And you can of course chat and make video and audio conferences around the Page. This is a little different concept from Slack, which puts the chat room as the center piece and the documents and files you have to handle on the side.

We usually create a page for every company we are interested in, gather all the documentation in this page and chat about it within the team. We sometimes also create a special page with questions towards the founders of said company and invite the founders to participate in this page. This is also one of the nice features of Samepage: You can grant access to external people to specific pages and the great thing about it is, you do not have to pay for these guest users.

And speaking of free stuff: Samepage has made their chat feature completely free recently. I know that Slack also has a free tier, but it’s very limited and most importantly, will allow you to retain only limited number of messages.

If you haven’t yet, give Samepage a try, you might find it refreshingly useful, as did we.

February 5th, 2019 – The Valuation Trap – Part 3, Downround (by Ondrej Fryc)

Imagine: You have a really good company, an investor agrees to invest $5m at a wow valuation of $25m pre-money ($30m post-money) and everyone is happy. Happy … until it turns out that things are more complicated, that more money will be needed, and that no-one is now available to invest at $30m+ valuation. Yet you only need an additional $1m!

From your point of view, not such a big deal. Your stake is now 83.3% and the investor’s 16.7%. So, the hell with it, you raise at $20m, nobody dies… But it sucks. What looks like a no-brainer for you, that with such a small investment, dilution of shares is not so drastic and so let’s do it, has huge consequences. The situation described above is called a “downround,” and here’s what’s wrong with it:

The smallest problem is psychology, disturbing the valuation story. In the future, when you raise more money or sell your business, everyone will want to see the cap table, who owns what, who, when, and for how much people invested. Everyone wants to see an uncomplicated curve up. And sure we want the buyer in the mood to imagine how much higher the curve will be in a few years of his ownership. But instead of dreaming high, he would be now focusing on problems: “hey, what happened two years ago? Can not it happen again?”. It may hit the spell-binding moment hard.

Another issue is that the $1m will probably cost you much more than you imagined. Your first investor may have had some sort of “anti-dilution protection” in his legal documents. There are basically two types, weighted average, and the dreaded full ratchet. With that, the original investor will get additional preference shares issued as if he originally invested at $21m post-money valuation, i.e. his shareholding goes up from 16.7% to 23.8% … and you just lost 4.8% for the new investor + 7.1% for the previous one, so you sacrificed 11.9% of your company for $1m. By the way, it is the same as if you were raising at not $20m, but at $7.4m pre-money valuation (!).

Another reason why all investors hate downrounds and sometimes even block it with their veto-rights is their own accounting. If the investor does not enjoy a super anti dilution provision, the downround means a huge blow to his own profit and loss statement. In most cases, the investor would account its portfolio on so called “mark to market” value, so typically with startups, on valuations priced by a third party in arm’s length transaction. So, in our example above, you raise $1m, and it will create a whopping $1.5m loss for your previous investor (!). And some investors, as we already know, are somewhat corporate mannered and now it’s not the right time to report a loss …

And then the most important thing:

Nobody likes downrounds. Not even a new investor.

Okay, your company is still great, but not that great to support the higher valuation. You start fundraising and go on a roadshow. But now it’s very different from the last time, when you talked about the bright future, all the fabulous metrics, the potential etc. Now everyone is focused on problems. You will be defensive all the time. You will talk about what is wrong, why, what the original investor says about it, if it can happen again… everything wrong! Spirit is lost. Yet your company is still awesome! But no-one cares. You have a downround. You may think you offer a great deal for the new investor, that you offer a discounted valuation… but in reality, you present a problem. In such an atmosphere it is almost impossible to excite someone.

Not so long ago I met a company that was exactly in this position. Super product, people, industry, all good … to the point that their original investor a bit overshoot the valuation at the beginning and set the bar too high. It ended so we did not even give them a term sheet. Because giving a termsheet should always be an exciting moment, and you just simply cannot submit an exciting downround termsheet.

Investors do not want to buy companies that are not doing well. Investors want to be on the hockey stick curve. And no valuation discount will solve it.

To summarise: If you excite the first investor too much with your great projection and he gives you too high of a valuation, it’s a short-sighted victory. In the long run, you made a mistake, which can even be fatal.