SaaS had a great week as the WCLD cloud index was up 13% to close at $32.96.
See ya later Bear Market!
Oops. Maybe not? Larry Summers, the former Treasury Secretary, who has been right about inflation for the past year, is worried that the Fed is not taking strong enough measures.
Summers isn’t alone - there are a bunch of very smart people who think we are still far from taming inflation. If you subscribe to this view, then you should probably be bearish about the stock market.
On the other hand, there is always a view that the markets are about to nosedive. There’s something about pessimism that sounds smart.
Jamin Bell, one of the best Twitter follows to keep current on public SaaS multiples and trends, addresses the most interesting question right now in SaaS: did we hit bottom in mid-June?
Podcast recommendations of the week:
Great interview on product management with Shreyas Doshi, former PM at Stripe and Twitter. Doshi has a number of gems. He mentioned a great saying from Amazon that I hadn’t heard - “Leaders are right a lot.” When it comes to product management at startups, there is no substitute for being right a lot.
As an angel investor in biotech diagnostics leader BillionToOne, I’m a long-time admirer of their CEO and co-founder Oguzhan Atay. While this interview doesn’t cover SaaS, it offers a high-level overview of their diagnostics platform and its potential to revolutionize the treatment of cancer (their 125m Series C earlier this year is evidence that the company has many fans besides me) .
Oguzhan is one of the best CEO’s I’ve ever seen. Every time I hear him talk about his business, I learn about best practices in company-building that are applicable across all startups. I love how (at around minute 28) he talked about the trade-offs involved in having very high standards in recruiting:
…we have set a bar for hiring that is extremely high. That sounds really good but it is actually extremely painful…we are not going to lower that bar just because we really need someone for this function or this department or this role is a constant struggle that you have to keep having…and you have to hire your executives that have the same mindset because then they will have the same mindset when they are hiring. [Right now] we are almost 250 employees - I interview every single person before we hire them and I will continue to do that because I want to make sure that every single person who is coming here is coming for the right reasons and that they have the same bar and that we are hiring only superstars.
Interesting read of the week:
Besides the links from above, I didn’t see a blog post or article this week that was worthy of this highlight reel. So let’s turn to the Blog Hall of Fame: a classic from Paul Graham, How To Think For Yourself.
The first two paragraphs are gems:
There are some kinds of work that you can't do well without thinking differently from your peers. To be a successful scientist, for example, it's not enough just to be correct. Your ideas have to be both correct and novel. You can't publish papers saying things other people already know. You need to say things no one else has realized yet.
The same is true for investors. It's not enough for a public market investor to predict correctly how a company will do. If a lot of other people make the same prediction, the stock price will already reflect it, and there's no room to make money. The only valuable insights are the ones most other investors don't share.
This a struggle for VCs as well. It’s clear from the returns of today what formulas worked the best in the past. So there’s a natural tendency to cluster around those formulas, making them so crowded that they become much less likely to produce the greatest returns in the future.