PsychTech

I was watching the above video where Vinod Khosla, the co-founder of Sun Microsystems and founder of Khosla Ventures, was talking to a group of Stanford GSB students. The first thing that stood out to me was his brutal honesty. There’s honesty, and then there’s the way Mr. Khosla speaks. His explanation for his honesty is explained in the video, and the justification he provides is actually sound. The other thing that stood out was his explanation of the two types of venture capitalists: 1) those who have experience working in a startup before making the jump to venture capital, and 2) those who go from business school to a venture capital firm without having startup experience. He stands firm on the belief that venture capitalists should have some startup experience in order to qualify as someone who can advise founders on building their company. As someone who works in a company that used to be a startup, I would have to agree on that.

I’m not a venture capitalist yet, but from my experience, rolling up your sleeves and getting your hands dirty at an unproven company is undoubtedly one of the most valuable jobs I’ve performed. I have learned how to build relationships with clients, keep them satisfied, implement the software they paid for, build internal resources to make people’s jobs easier, get a front row seat into how software upgrades work, understand market shifts before they happen and prepare for it, assist in running a part of global user conferences, and work with Product Managers and software engineers to bring useful features to life that customers find as differentiating. All in the span of 19 months to date. That’s not the kind of activity you can find anywhere else. An MBA certainly helps in the venture capital industry, but to actually be a resourceful venture capitalist, you have to understand the founder.

A venture capitalist advising startups without having startup experience is like a law professor teaching a course on trial procedure without having any courtroom experience. You are more prone to giving founders wrong advice, which could actually make or break their company. There are likely going to be specific situations that arise that a founder will need guidance in. If you are that founder, would you trust the advice you receive from someone who doesn’t know the first thing about what it’s like to be in that situation? Would you, as a law student, put your education in the hands of a professor who doesn’t have real-world experience of cross-examining witnesses or speaking to the jury? Scary thought.

In the end, I strongly believe that any startup experience will prove beneficial not only to the venture capitalists, but to the founders seeking advice from them. Wearing multiple hats allows you to attack a problem of focus from almost any angle, and this is absolutely crucial when founders come asking questions. These aren’t lessons you can just find on the internet or in a textbook either.

Apple’s newest toy, the Apple Card, is due this summer. Not quite as revolutionary in terms of purpose as its past inventions, but it will nonetheless attract a great number of people. It does have some unique differentiators that may make it more secure and private, but there are also a few things to watch out for if you’ve read their fine print. Let’s dive into the pros and cons.

Pros

Simplicity is in Apple’s DNA, and they seem to have implemented it into the Apple Card. For starters, you don’t even need a physical card to pay for anything – just use the Wallet app on your iPhone. For those who do want to use a physical card, no worries; Apple’s titanium card can still do the trick. Even the card is simple; there are no numbers, no cvv code, no signature required. It simply has your name, the EMV chip, and a few logos , all engraved into the card by a laser. To pay with a physical card, you will need access to your phone anyway. Each transaction generates a one-time security code that will need to be approved through either FaceID or TouchID. For those still worried about privacy of information, Apple partnered with Goldman Sachs, which agreed not to sell your data to or share with third-parties for marketing or advertising purposes.

There is also the fact that there are no fees at all – late payments will still be charged normal interest rates. Speaking of which, their interest rates are about on par with other credit cards (depending on your credit score), so nothing out of the ordinary there. You can even see what interest you’ll be paying as you decide how much to pay.

Although they don’t have a sign-up bonus, Apple does give cash back and offers rewards. The major differentiator here is that the cash you get back will be given to you on a daily basis, which is huge compared to other credit cards. In terms of the rewards, it’s broken down by the following:

• 1% – all purchases made with the titanium card
• 2% – all purchases when you use Apple Pay
• 3% – all purchases from Apple

Cons

This isn’t a one size fits all solution. No credit card really is. First off, it’s great that there aren’t any fees tied to Apple Card, not even late fees. However, looking at the fine print, Apple will still report late payments to the crediting bureaus. So if you think you can just let payments slide and still be okay, your credit score will tell you otherwise.

The one thing lacking with the Apple Card that almost every other credit card has is a sign-up bonus. However, this is something that doesn’t concern me. These bonuses are used by credit card companies to entice customers to sign up and use their card, and with Apple having a cult following, they really don’t need to implement this gimmick.

The last concern I have is regarding the extent of integration between the Card and the iPhone. It’s not surprising that they have integrated yet another product into their ecosystem, but this makes it a little different considering that your finances are tied to it. Since you also need your phone to create a transaction, that gives it a little too much responsibility for one device. If you were to lose it or forget it somewhere, it would be a pain to have to go through the process of getting a new phone and a new card. Plus, there’s the fact that your fingerprints and face are held by Apple.

So in the end, like many of their products, the Apple Card is really designed for those using other Apple products. It’s not a revolutionary product by any means, but the way it is designed certainly makes it different from the rest of the credit cards out there. There are still some concerns that need to be addressed, but in the end, it doesn’t really matter. People are going to sign up in droves…because it’s Apple.

If there’s one thing that venture capitalists love more than anything else, it is the idea of network effects. The idea that the value of a product or service to a user increases as the number of users also increases. This was first seen in the coming of the telephone network, where Robert Metcalfe explained that the effect of this network was actually proportional to the square of the number of users that are connected to the system. It’s this fundamental idea that drives platforms like social media and buy/sell marketplaces and is the reason why companies such as Airbnb have become as enormous as they are now (among other reasons).

Not all network effects are created the same however. There is a positive effect and a negative effect. When the value of the product or service increases as the number of users does, we have a positive network effect and everything looks great. If, on the other hand, increasing the number of users actually decreases the value of the product or service, we have a negative network effect start to appear, also better known as congestion. When too many users are on a site and the server starts to slow down or even crash, the users experience congestion. This includes symptoms like frustration, slow connectivity, and a drop in usage.

In order to culminate a positive network effect, there is a point in a company’s lifetime where the value obtained from a product or service equals or exceeds the price that is paid for that product or service; this is known as critical mass. Startups that implement this model need to find a way to reach this point, otherwise they will not survive. This explains why startups that do work around network effects don’t always see the same success that others do who implement the strategy. A great example of this is the “freemium” model that apps commonly use to attract users in the beginning. (Note: the app store itself is considered to have a strong network effect as well).

The most likely reason venture capitalists become interested in startups that use network effects (Union Square Ventures even has it instilled in their investment thesis) is because, if implemented correctly, it becomes a massive magnet for users, which in turn can generate massive numbers in revenue depending on the model. The more users a product has, the more difficult it becomes for those users to stop using that product. This is mostly either because a lot of their peers are also using the product (think Facebook) or that the product is tied to something else and cutting off this product makes it difficult to access other parts of their lives (think cancelling an Amazon Prime membership). This is indeed what makes network effects so powerful and also attractive to venture capitalists.

A few weeks ago, Fortune magazine released their annual Fortune Global 500 list, which is composed of a list of the top 500 companies in the world with respect to revenue. History was made when the list showed China as having more companies in the top 500 than the United States (129 vs 121 if you count the 10 in Taiwan).

Now there has been a lot of cooperation between the U.S. and China, but nowadays it seems like there has been nothing but competition. The Trade Wars. Huawei. Now the Fortune Global 500 list. The U.S. had been a runaway superpower for quite some time, but that appears to be fading. With the extremely rapid rise in technology and the shifts that come as a consequence, China seems poised to make a run at the United States. They have reason to be confident: 3 of the top 5 companies in the Global 500 are Chinese SOEs (State-Owned Enterprises), and only 1 company in the top 5 is American (Wal-Mart, being no. 1 overall on the list). There is certainly reason for China to be giddy.

However, when diving into the numbers, statistics based on data from the 2010-2014 lists show that this has been a long time coming for China. They doubled the number of companies on the list in that time frame, and have only been increasing their total year-over-year. Compared to China in that same time frame, countries such as the United States, Japan, France, and Germany have seen their numbers decrease or stagnate. Clearly, China has been doing something different and the fact that their total has nearly tripled since 2010 shows they are not a country to be trifled with.

However, the United States still reigns supreme when talking profitability. American companies had a net margin of about 7.7%, higher than the global average of 6.6% and beating China, which stood at 5.5%. Still, this doesn’t mean that America should pat its companies’ backs. If being king of the new, new world means being the first to master the current wave of technology like artificial intelligence and blockchain, there is no doubt that China is lighting a fire under the United States.

Getting into the startup scene is one of the best decisions I’ve made. It’s not for everyone, and it takes a certain kind of neurotic personality to thrive in a startup setting. Working in a startup consists of taking on high risks, wearing multiple hats, and understanding that you may sacrifice certain parts of your life (work/life balance, lower pay) to gain invaluable rewards (experience, fast track to promotions). For people trying to crack into a startup or the startup environment in general, there’s a couple things that can be done:

Work at a Startup

This is without a doubt the best option. Not only do you get direct exposure to how business works, but you can work in different departments at a very accelerated pace. The earlier stage the startup, the steeper the learning curve and the more experience you’ll receive. Of course, there’s the aspect of risk involved and the potential lack of balance in your personal and work life. But if you crave experience, learning how to build a potentially great product or service, and understanding what it takes to acquire and retain customers, there is no better environment. You can apply this experience to creating your own startup or getting a higher-ranking job elsewhere. 

Take Advantage of Social Media

By social media, I am referring more to LinkedIn and Twitter specifically. A ton of different communities and people live on these platforms. Follow groups that interest you. Create interesting content and post it there. Comment on other people’s posts. Just do something that you can participate in instead of being just a passive observer. Being active will get you noticed much faster. If you can connect with people and try to meet offline, even better.

Join/Start a Meetup

Meetup.com is teeming with various startup-related meets around the globe. Essentially, groups are created around a certain interest or hobby and people meet to discuss and hang out. It’s a great way to connect with others in the startup community. If you don’t see a meetup that you’d like to be a part of, why not create one? That shows your serious interest in the startup community. By being an organizer of a meetup, you also get a chance to gather people around with exactly the same interest as you, giving you immediate exposure.

Volunteer at a Tech-Related Event

It can be hackathon or a TedX talk. Chances are you’ll meet people with a startup background. All you have to do is find out where the next event is happening and reach out to the coordinator and see how you can help out. This will get you on the radar of some important people, especially because of the connections they’ll have. You’ll also get a firsthand look at the kinds of people and settings that make the startup community a great place to be in.

Partake in a Hackathon

Expanding on the above suggestion, hackathons are extremely valuable to understanding how startups work. With hackathons, the idea is to gather a large number of people over a weekend, split them into groups, and have them compete to come up with a great product or service. Usually the winning team gets a prize and more often than not, recognition from companies looking to hire smart people. Universities are a hotbed for finding hackathons. The biggest hurdle is just joining. After that, you’ll find a great group of people to connect with, along with understanding what it takes to build a product or service.

Ask Someone to Meet

This is usually tough for most people because they’re either scared of what the response is or they don’t know where to start. All it takes is 1) identifying what kind of person you want to meet, 2) going on LinkedIn/Twitter to find them, and 3) sending them a message to connect or go out somewhere and meet, usually a coffee shop. Sometimes the person you want to meet has a personal website you can use to find their email and other contact information too. Don’t be afraid of getting no response or a decline. It’s usually a numbers game – the more people you reach out to, the more acceptances you’ll get.

Find an Incubator/Accelerator

In bigger cities, there will usually be a company dedicated to helping startups out by renting out space or providing dedicated resources to help them expand and grow. That’s what incubators and accelerators are made for. Usually they are always looking for volunteers to help in some capacity. This is another way to get involved because you can get directly in front of budding startups that need assistance. You can reach out to these incubators and accelerators and check if there’s anything they need help with. More likely than not, there will be something you can help out with.

For someone interested in joining the startup community, there are a lot of paths that you can take. Nothing beats working at a startup, but that isn’t the only option. There is no other community that has a great group of people trying to change how the world operates. The only thing you need to do is just take action and the rest will come.

It was recently announced that OneTrust, an Atlanta-based SaaS company and a leader in Privacy, Security, and Third-Party Risk Management software, raised $200 million in a Series A funding led by Insight Partners. There are three special items to note about this announcement: 1) the investment puts the valuation of the company at $1.3 billion, 2) OneTrust was able to accomplish this feat in just three short years of existence, and 3) as a member of OneTrust, I have had the pleasure of personally seeing this company grow from a startup to a full-fledged leader in its industry.

Any company that can raise $200 million in a Series A round must be doing something right. OneTrust, which is part of a company bloodline that includes AirWatch (sold to VMware for $1.54 billion) and Manhattan Associates (publicly traded), did something that is very hard to do for a lot of companies: it created an industry. In the early days, the company was solely focused on Privacy Management, which was often an overlooked component in most companies. However, when the EU passed the GDPR (General Data Protection Regulation) and set an official date of May 25, 2018, it set off a reaction of global proportions. Companies around the world who operated in the European Economic Area (EEA) or collected personal information from people in the EEA were required to adhere to this new regulation, which meant that a lot of companies were vastly underprepared. Kabir Barday, founder and CEO of OneTrust, saw a golden opportunity for this in the early stages of the GDPR draft and quickly took advantage of it. $1.3 billion later, it’s safe to say the opportunity paid off.

Speaking of $1.3 billion, this new fundraising annoucement officially makes OneTrust a unicorn (although like Fred Wilson, I prefer to think of companies with a $1+ billion valuation as whales instead). Doing some research in the Atlanta startup scene, I found that there are only 3 unicorns in the area (the others being Kabbage and Mailchimp), compared to over 60 in California alone. Atlanta still seems to be nascent in the tech/VC scene, so it’s exciting to see OneTrust on the list.

That OneTrust reached unicorn status in three years is a feat in itself, especially considering it usually takes much longer for the average unicorn to reach that status. This is a result of a multitude of factors. The first being that there is a strong market for privacy, along with security and third-party risk. The market is shaped by the different privacy regulations that are being drafted (like the Californian Consumer Privacy Act) and passed all around the world. These regulations directly affect companies of all sizes and enforce them to demonstrate their compliance. That is exactly the problem that OneTrust solves; it holds a series of different products or modules designed to solve most, if not all, needs related to compliance in the privacy, security, and third-party risk industries. From GDPR to ISO27001 standards to vendor management, there is something for everyone. That is what makes OneTrust such a comprehensive SaaS product and well worth the valuation.

Being at OneTrust for over half of its existence has taught me a lot of things. I joined when there were only 150 people (now it’s closer to 1000) and I was directly exposed to the idea of wearing multiple hats. Working at a startup (when OneTrust was one back then, I don’t consider it a startup anymore) is not for everyone, but I decided to take a shot because that’s the kind of work I’ve known in my working life. There’s something about learning different roles that I have always been attracted to, especially when compared to a corporate environment. I have worked on different teams throughout the company, from Support and Consulting to Sales Engineering and now Product. That amount of experience in such a short amount of time has been nothing less than invaluable. I can’t think of another kind of environment where you can take on new roles in which you have no prior experience and be given the chance to excel in. 

Aside from the opportunity to move within the company and grow, there are a few things that have stood out to me during my time at the company. The company operates at a very efficient rate, where client feedback is king and the product is continuously augmented by the users who use it. The other noteworthy observation is the culture within the company as it relates to the people who work there. The teammates I’ve had the pleasure of working alongside have been absolutely phenomenal. Everybody is willing to help you if you need it. Everybody knows one another (although at the rate at which the company is growing, it may get slightly more difficult) and they are each willing to put the work in every single day. This kind of work environment only helps make the big picture goal possible, which is to become a leader in a newborn industry. Looking back, it’s easy to see why OneTrust is where it is.

Priorities. People who can set them correctly usually end up going much further in their careers and lives than others. Setting the right priorities is much like what happens after cleaning your sink pipes with drano – everything just runs smoothly. Priorities are like the different steps you need to take to get from point A to point B in your GPS route. Unfortunately not everybody sets priorities, which would explain why so many people are unhappy in many aspects of their lives, from their work to their relationships. Setting the right priorities is especially critical not only in running your personal life, but also in running a startup from the ground up. 

Now this isn’t some self-help article designed to tell you how to manage priorities and lay out a framework for you to swear by. If there’s one thing that can be agreed upon, it’s that your personal life and your work life can be greatly improved by accomplishing a set of tasks on a daily/weekly/monthly/yearly basis in the correct order. That order is something you need to figure out yourself because it varies from person to person.

For starters, it certainly helps to identify what’s important to you. Figuring out what makes you get out of bed is a good starting point. If the first answer that pops into your head is money, there’s something wrong. What do you stand for? If you still don’t know, I’d recommend reading up on Shalom Schwartz’s Value Theory. Once you figure this part out, it becomes a continuous cycle of assessing your priorities, ensuring they are being met, and reassessing your priorities over time. It is vital to figure out what you want personally before exploring how to prioritize the needs of something bigger, such as how to run a startup.

Prioritizing needs for a startup is a monster in itself. There’s always something on fire, someone asking questions, and somewhere you need to be. Now depending on where in the journey your startup is, your priorities may change, but overall there are 3 things every founder should be keeping at the top of the list: staying on top of the money, steering the ship, and selling. 

A founder’s capital is the company’s bloodline; the rate at which that capital is being used to keep the company afloat is known as the burn rate. Smart founders should have a plan allocated to how the money is being used and how that money will be returned and at what time frame. This could be done by increasing sales, finding new ways to generate revenue, and even meeting with investors for a potential funding round if needed. If a founder can’t maintain positive cash flow, that is a major red flag. The exception to that would be those who bring in ridiculous amounts of revenue but are still in the red (think Uber, Lyft, and the other massive companies that you are probably not in the same league as).

Let’s say you are able to maintain enough cash flow to keep the boat afloat for a while. The next priority that should be inspected in parallel is what direction do you steer the ship? What is the plan for the company in the next quarter, year, and beyond? What are you doing about the culture within your organization? How are you attracting the best talent and keeping them? There are usually three departments of a company that make it thrive: sales, support, and recruiting. Sales brings in the revenue along with potential long-term clients. Support keeps the client happy and using your product. Recruiting brings in the best talent to help make the first two happen. You need a great culture to make all three possible in the first place. 

Once you solve the culture and hiring process mentioned above, you have to plan out what your next move is. It helps to be paranoid and understand what your competitors are up to. As the market shifts, so should your priorities. The items you plan at the top of the board should reflect that. Even if some of the priorities are more of a calculated risk than a sure bet, they need to be moves that will define the company’s trajectory for the next few quarters if not years. Doing so will help you not only stand out among your competitors, but it will also solidify your company as an entity that is the best in its industry.

Selling is something that all founders and leaders have to do. If you come from a more technical background, selling is going to seem like a new challenge. It might be difficult at first, but this is an absolute requirement if you want your startup to continue surviving. Nobody is going to advocate for your product or service more than you are, so you need to do whatever it takes to close sales every single day. As the company grows and you hire more salespeople, they can take some of the responsibility, but you shouldn’t take it easy on the selling. As a leader and founder, you know what you’re selling more than anybody else, because you have a vision for it and know what your product or service is capable of. I’m not saying you need to be one who sells snake oil, but it is imperative you understand what you have to offer as well as what your competitors don’t and what the market needs. All of that together will help you win sales, which in turn will make the company thrive and grow.

Having priorities is vital to accomplishing whatever it is you want to do. When it comes to setting them up, personal ones matter just as much as work ones. Identify what it is you want and what is important to you, and the rest will follow. With building a startup, there a good set of priorities every founder or leader should maintain. These priorities may change based on competition and market trends, but as long as you understand what you need to prioritize, your chances of survival will only increase.

Picture this: As a founder of company looking to raise capital, you decide to meet with a few seed investors. You present your pitch deck, address any concerns surrounding your product/service or its market, and knock the meetings out of the park. Now each investor has presented you with a document outlining the basic agreements and conditions under which an investment will be made, but you don’t know how to read it or what any of the terms mean. Liquidation preference? Convertible notes? Redemption rights? Unfortunately, this scenario can happen more times than is necessary. Founders who can interpret these documents, called Term Sheets, have a significant advantage over founders who can’t when it comes to how much of their company to give away and what they’re getting in return. It actually pays not to have a basic understanding.

Term sheets can be easy to understand at a high level, but when it comes down to analyzing them, the devil is in the details. The first thing to note about Term Sheets is that they are not legally binding. They are more of an understanding between parties while the final paperwork gets drafted and due diligence is done. Now there are some concepts like exclusivity and confidentiality that are binding, but everything is else fair game to change. Exclusivity refers to the agreement that the founder will not shop the term sheet around to other investors to get a better deal, while confidentiality means that the founders cannot disclose the terms on the term sheet to anybody outside those involved in the negotiations without the investors’ consent. This is how founders and investors can act on the basis of good faith.

There are a lot of terms that appear on a term sheet that may confuse some people with no prior knowledge. It always helps to gain an understanding of these terms before meeting with investors to raise capital. It is also critical to have a legal advisor/lawyer in your corner who can dissect term sheets as well as a CFO who can attest to whether both sides are getting a fair deal from negotiations. Most investors mean well and are looking to build a long-term relationship while generating a return for their firm, but there it always takes that one person who’s in it solely for the returns. That’s why it will always be well worth it to invest in someone who can read the finer details in a term sheet.

Some items on a term sheet are almost ubiquitous. The following terms lay out a rough idea of what to understand:

• Liquidation Preference
  • Describes the order of who gets paid out first if a liquidation event occurs (company gets acquired or goes public).
  • Usually investors, who often have preferred stock, will be first in line and will have a multiple tied to them (i.e. they will get 1x/2x/3x/Nx the investment they put in)
  • This is also true in the event that the company turns completely around and ends up failing or crashing
• Pre-/Post-Money Valuation
  • Pre-money valuation is how much the startup is worth before investment
  • Post-money valuation is the worth of a company after an investment has been made
  • Post-money valuations require some basic math to help understand how much equity is being given up, how much capital you’re receiving, etc.
• Equity
  • Equity on a term sheet refers to what percentage of your company you’re willing to give up to receive capital from investors
• Option Pools
  • Usually an amount of common stock reserved for employees and other members of the company
  • There are two ways Option Pools can play a factor in the term sheet: including it either in the pre-money valuation or the post-money valuation
  • Pre-money valuations are better for investors because in the case of dilution, it falls upon the founder
• Anti-Dilution Provisions
  • Clause that protects investors from a round of financing where the stock valuation is lower in the next round than in the previous round (“down round”)
• Voting Rights
  • Rights given to shareholders to be able to vote on certain decisions of the company
• Board Rights
  • Rights for an investor to be a part of the Board of Directors
  • Usually only one is given per investor per round
• Preferred vs. Common Stock
  • Investors will usually receive preferred stock over common stock
  • Preferred stock gives investors a greater share of the company’s earnings and are first in line in a liquidation event
  • Common stock is usually handed out to employees and other members of the company and are paid only after the preferred shareholders get their slice
• Convertible Notes
  • Technically considered a type of debt that instantly turns into stock when a founder raises additional rounds of capital
  • Usually much easier and efficient to finance than other methods, and should be done when raising lower amounts of funding

If founders can get a general sense of how each of the above terms play a role in landing additional capital for their company, they will have a major step up during the negotiating phases. A few percentage points can potentially mean giving up millions down the road if not negotiated correctly. It always pays to do your homework and have a set number or goal in mind with Term Sheets. If all else fails, hopefully there’s a good lawyer or CFO in your corner.

Since the announcement of Libra, the new cryptocurrency by Facebook along with 27 other founding members, it’s become the norm to debate whether Facebook, of all companies, should lead the creation of a new cryptocurrency. It certainly seems ironic that a company that’s been plagued by multiple privacy-related violations is the same one designing a new way for people to securely send and receive payments. When reading the whitepaper laid out by Facebook and the other joining members, known as the Libra Association, there may be potential for this ambitious project. With Libra not set to roll out until mid-2020, it may help to delve further into what Libra really is about and what makes this ambitious project a potential win-win for all parties involved.

Libra is both similar to and different from Bitcoin. They are both built on the blockchain, but are backed differently. Libra, once available, will be backed by various fiat currencies and a mix of bank deposits and short-term securities. This gives Libra the classification of a stablecoin. Bitcoin on the other hand is backed simply by the trust that people give it. This explains why the value of it has been so volatile over time and continues to be. With Libra being a stablecoin, the Libra Association is tying its value to existing currencies, making it less likely to ride the ups and downs that Bitcoin has experienced.

In addition to Libra, Facebook plans to roll out its own digital wallet called Calibra to store the Libra tokens. For those concerned about their privacy, Facebook says it will not mix the data it gathers from the wallet with other entities of Facebook so it can be used for targeting ads (unless you specifically opt in). Your personal information and anything that can be used to identify you will not be tied to any transactions made publicly visible. Although adopters of the wallet will have to go through a thorough investigative process to use Calibra (known as ‘Know Your Customer‘), any data collected won’t be used to target users with specified ads. If this still doesn’t satisfy some people, they can use any digital wallet that can carry Libra, so there’s some flexibility there.

Where it gets interesting is how Libra can provide a potentially massive ROI to the founding members. The idea is that members put in $10 million a piece to build a reserve for Libra and to help kickoff the momentum. With that, the problem the Libra Association hopes to solve is the lack of a proper banking or other financial system that can serve the 1.7 billion people who would benefit from the stablecoin. The hope is that if those people, along with everybody who adopts Libra, have access to send money easily to others and receive it as well, it can become a global payment option. With that in mind, it can be mouth-watering to imagine the amount of money the founding members will be raking in from interest that Libra will generate from daily usage. It’s also possible that Facebook would use this momentum build out other financial services to strengthen its portfolio and keep people connected to its massive ecosystem.

Libra benefits don’t stop at the feet of the founders and people with no access to financial systems. If Libra does take off, it is very likely that it will be used within Facebook’s social platform to purchase things through ads and ecommerce pages. With the ability to pay for something almost as easily as sending a message through Messenger or Whatsapp, it will be a tremendous boost for those business owners with Facebook pages as well. Even looking at the big picture, that can only help the global economy by boosting spending across the board.

With all the potential advantages of Libra, there are some potential risks to keep in mind as well. The biggest is the uncertainty that Facebook and the other members will be able to handle the privacy and data protections that are a must for any financial system, let alone a cryptocurrency. Although it is given that Facebook will not merge Calibra information with other entities without user consent, people have seen this before. Trust is a hard thing to buy, and with all of the scandalous behaviors and privacy violations that have overshadowed Facebook, it’s possible people may become hesitant to adopt Libra (which would explain why they recruited other members in the first place and made it an association based in Geneva, Switzerland). Still, with nothing guaranteed until at least mid-2020, one can only imagine how powerful and world-changing Libra and Calibra can be if they reach their full potential. If successful, Libra will be what Bitcoin should have been: the next global game-changer.

Competition. It’s one of the more ubiquitous aspects of life; species of all kinds compete for some kind of scarce resource on this planet. Peacocks compete among other peacocks to find the most desirable female using their vivid tailfeathers as a sign of dominance and fitness. Sharks that are still in the womb (likely from different fathers) eat one another until only the biggest baby and its sibling remain. And of course, people compete in sports until only one team or individual remains standing at the end of the season.

This Darwinian notion can be seen across most industries and subjects. We are taught from the beginning that if we want to get into the best colleges, we need to have better grades, SAT scores, and extracurriculars than everybody else, even though that isn’t always the case. Even on the internet and through the use of social media, which fundamentally manipulates the Social Comparison Theory, people vie for the best digital life, even if it means portraying one that is completely different from their reality. It’s a sad but true state.

Although in most cases competition results in playing a zero-sum game, that may not always be the case in the Venture Capital world. In fact, a recent study discovered that competition in the VC industry doesn’t behave exactly as it would in most other industries. One reason for this is the fact that because the VC industry is not nearly as big in number as other industries are, the members of the community tend to know who most of the people and firms are, resulting in the culmination of strong networks and relationships. That creates an opportunity to know who everyone is and how each member can help one another. Even though each firm and individual is striving to find startups to invest in that will return the money back to the LPs, it’s not nearly as cutthroat as other industries might be, such as banking or healthcare. There’s a certain “you scratch my back” approach here that creates strong relationships. In fact, it’s not absurd to say there’s more of a cooperative nature in the VC realm than there is competitive.

Now that’s not to say competition is dead in the tech world, especially among startups. Far from it. Darwin’s Theory of Evolution doesn’t apply to just peacocks and sharks. Those startups that are best able to pivot and adapt to market needs are the ones left standing. The classic Netflix vs. Blockbuster case comes to mind. How often is the phrase “Kodak Moment” still being thrown around? Startups that have rivals or that compete in a crowded industry always have to look for ways to out-adapt their competition. That could mean having the best customer service, the best quality product, or the best sales team.

Competition in the startup world can be both an excellent and cautious thing. Competition usually spurs innovation, which tends to have a national, if not global, ripple effect. Companies that can innovate the fastest to meet consumer demand usually stick around longer compared to others in the same field. Having a rival or two can definitely intensify this because startups are even more motivated to go above and beyond to outperform their competition. However, going too far against a rival can lead to consequences that can be deemed irrational, like buying a company away from a rival, even though it’s a sinking ship. And irrational behavior has no place in companies trying to adapt and survive.

Competition can bring out the best and it can bring out the worst. Although some fields can be slightly cooperative in nature, others are heavily competitive, and Darwinism has its fingerprints all over them. To survive, startups (and sometimes VC firms) have to adapt to their market, competition, and needs to stay alive longer than their rivals. Even though rivalry is a subset of competition that can magnify performance, it is only helpful as long as it doesn’t go too far in a rational sense. In the end, competition is just as omnipresent as it is a driving force in the world.