Blog

September 3rd, 2018 – „We Are the Hot Girl in Town“ (by Ondrej Fryc)

Your investor is your partner in good and in bad times. You need to get along well with him – similarly that you need to align values with your partner for life.  And that requires some picking, right? Are you selecting your life partner by sending an unsolicited email to all the girls you were able to get the contact to? Showing off your refined muscles, time of your last Iron Man race, a carefully selected picture of your striking BMW and inviting them to tender offers?

Yet many startups are doing exactly that. They download an extensive database of investors somewhere. The more, the better – they do not care about the profiles. They send out an unsolicited bulk pitch … and hurry up, you stupid investors, we are the hot girl in town, so send us your proposal by August 12, 12:00 PST. As little diligence they put into selection of the investors, the pitch itself is almost inadequately rehearsed. The best colors, photographs, charts, buzzwords, the right CAGR of 60% and 30% EBITDA … and skillfully hidden “projected numbers” disclaimer :-).

This behavior is unfortunately endorsed by many investment boutique advisers, who only care about their commissions. The higher the valuation gets, the higher fee they charge. Nothing else matters – a contract with a devil with higher fee is better than a contract with a real partner. Who gives a fuck?

We at Reflex Capital do not believe in partnerships that are only based on money values. We do not need a superpitch. On the contrary, our bullshit detectors start flashing when we get one. We need to see your desire to have us as your partner. And then, maybe, the desire will be mutual and we’ll create a partnership that lasts.

August 28th, 2018 – “Two Dimensions of Tech Scalability” (by Michal Taborsky)

Every investor, and we are not an exception, is interested in the scalability of business. And because many companies are built on technology, it involves scalability of technology. In conferences, you hear about systems scalability – how to build a website to handle millions of visitors; how to store petabytes of data and search them; how to pass a hundred thousand messages per second thru your Kafka cluster.

These topics are sexy for geeks, me included. And they are necessary from a certain point. But that’s just one dimension of scalability and I dare say the easier one to handle. That’s because it’s already fairly well established field and there is a ton of material and tools to help you. Cloud platforms removed the necessity to build datacenters. Thanks to tools like Kubernetes it’s easier than ever to run auto-scaling apps. Traditional relational databases are able to handle unbelievable workloads these days.

Don’t get me wrong. I’m not saying these things are easy, but it’s easier to tackle than the second dimension of scalability and that is scalability of your tech team.

It’s great that your product was developed by your genius of a co-founder and it’s the most efficient piece of code on the planet. But how about when you actually do get that investment and you’ll need to hire ten more developers to work on it? Suddenly, things other than your search algorithm being 10 milliseconds faster than your competition begin to matter more.

Is your code understandable and readable? How long does it take for a newcomer to deploy their first task to production? Is your system divided into logical modules or microservices, so more people can work on it? Do you have a fully automated build and deploy process? Does the build include a test run? Do you monitor and measure all important business and technical metrics so you can immediately react when deployment goes wrong?

These are the questions we consider when evaluating scalability of technology. It’s not just about those thousands of requests.

August 21st, 2018 – “Quid Pro Quo” (by Ondrej Fryc)

I’m always shocked by emails that I call “I have a dream, but I’m not willing to sacrifice anything for it.” They usually come from people over the age of 40, who often have a pretty good idea, but they aren’t willing to give up anything from their living standard.

They mostly don’t need anything to start their dreamed-of project, except courage. Absolutely nothing, or at worst a twenty grand or so to code an app, which is something they should have saved up, considering their age.

Instead of gathering their courage and undertaking a bit of risk, they come to us and say: “I need a ton of money to hire this many people, so I can get rich and live the life I’ve dreamed of. I do not want to live the corporate life anymore! But of course, I need a paycheck, because I have bills to pay…. now I make $300,000 a year, but I’m willing to go down to $250,000!”

These people usually have an amazing presentation, which they mastered in the corporations where they have worked and where they haven’t been happy (as they all say). Basically, they think we’re here to give them the money. And we often feel the contempt when we reject them, because …. isn’t it unfair that others got money from us and they did not?

In the end, despite the negativity, I love even this part of my work. I gain even more respect for those who were able to build something amazing. Who sacrifice what it takes to make it. Who give up their free time and invest massive energy, while taking on all the risks of starting a business. Those are the ones we welcome with open arms.