Wednesday, January 15, 2020

Reading :: Together

Together: The Rituals, Pleasures and Politics of Cooperation
By Richard Sennett

I read this book (Kindle edition) because I was interested in the author's contrast between dialectic and dialogic forms of interaction. Sennett, a sociologist, is interested in the question of cooperation, which he says is a craft (loc 52) and defines as "an exchange in which the participants benefit from the encounter" (p.4). Specifically, rather than destructive collusion, he prefers cooperation in which people with conflicting interests can be joined (p.5). He argues that "modern society is 'de-skilling' people in practising cooperation" (p.8).

To explore the issue, he turns to dialogics, which "names attention and responsiveness to other people" (p.13). He contrasts dialogics with dialectics: dialectics' aim is to come to a common understanding (p.18), while dialogics' aim is to better understand each others' position even though common ground is not established (p.19). He links sympathy to dialectics and empathy to dialogics (p.21). Dialectics has an end, but dialogics is open-ended. Dialectics involves "a play of contraries leading to agreement" while dialogics involves "bouncing off views and experiences" (p.23). Unfortunately, our society is much better at the former than the latter (p.23). He specifically discusses the ill-fated Google Wave as a technology built on the dialectical form of cooperation (pp.26-27 and following). He concludes the introduction with this thought: "people's capacities for cooperation are far greater and more complex than institutions allow them to be"(p.29).

Later, he argues that "the one path emphasizes coming to shared conclusions, which is dialectic's goal; the other path emphasizes the dialogic process, in which mutual exchange may lead to no result. Along the one path, cooperation is a tool, a means; along the other, more of an end in itself" (p.45).

Overall, Sennett's book helped me to get a handle on the distinction between these two forms of interaction, although I would have liked to see a more structured and cited argument. As is, although Sennett has done a great job of drawing the contrast, I'll need to review sources myself to confirm whether others see the distinction in these terms.

Reading :: Startup Success

Startup Success: Funding the Early Stages of Your Venture
By Gordon Daugherty

This slim and highly readable book, by the president of Austin-based CapitalFactory, overviews early-stage venture funding. For readers of this blog (mainly academics), this topic may not seem that interesting. But Daugherty makes it interesting with clear and organized discussion, strong illustrations from his deep experience, and clearly drawn lessons. The illustrations, he acknowledges, are mainly from early-stage tech ventures, specifically a software subscription company. But the lessons apply more broadly.

I've been researching early-stage tech pitches for a few years, but this book helped me to put these pitches in greater context. For instance, Daugherty clearly spells out the early stages of startup fundraising (Figure 1.2) and the different types of investors who are pitched in each round (Chapter 3). He also clearly articulates the connection between pivots and fundraising (Figure 1.3). He provides a clear framework for understanding how much you should attempt to raise in each round (Figure 2.1 and following) and how fundraising interacts with valuation (Figure 2.3).

Daugherty also suggests focusing your pitch efforts, saving them for the right investors (ones with reasonable odds of investing) (p.89). And he advises that, at least in the startup phase, the CEO should be the chief fundraiser—which means that an introverted CEO should do some "soul-searching" (p.90) and perhaps find someone else to head the company.

During fundraising, "your most important fundraising tools will be your elevator pitch, pitch deck, and financial projection model" (p.93). Daugherty discusses how to develop each one.

The elevator pitch only has to pique enough interest for the listener to ask a question, any question (p.93). It should answer the questions "What do you do?" and "So what?" (p.95).

The pitch deck serves as a summarized, visual version of the business plan; its most important aspects are (in order) storyline, flow and content (p.102). It should demonstrate that you're building a company, not just a product (p.109). It should cover the following:

  • problem
  • market
  • solution
  • business model
  • traction
  • team
  • call to action (pp.105-113)

And it should have a "backup section," which contains details to answer questions that you anticipate coming up in the Q&A (pp.113-114).

He suggests two versions: "one for 5-minute onstage pitch competitions [8-10 slides] and another that is longer and used for in-person investor meetings [12-15 slides]" (p.117). He adds that a pitch deck for a Series A round will be longer than one for a seed round, since it has more to report (p.117).

Daugherty suggests signing up for multiple pitch competitions, since doing so forces you to tell your pitch story in 3-5 minutes (p.119).

The financial model is important for demonstrating that what you're building is not just a product but a business (p.129).

Beyond these three important tools, Daugherty also mentions monthly updates and one-pagers (p.129).

Daugherty then gives us a couple of chapters on fundraising, which I won't summarize. In Chapter 8, however, he discusses interacting with investors, a process that he says involves "a transfer of enthusiasm from founder to investor" (p.208). To find out how an investor makes decisions, he says, talk to other companies that s/he has invested in, like a reference check (p.211).

Overall, this was a great book—highly readable, clearly organized, full of details without being too weighted down by excessive illustration. I learned a lot. If you're interested in the startup investment process, definitely pick it up.