Divergent Year End Review

Overview:

I am still in the middle seat. That will not change, but given my flying I have gotten some upgrades. Staying true to oneself is key. Never back down when things are tough is key. Don't change and don't allow yourself to be manipulated or bullied. If you are special, the talent and drive will shine through.

Most firms measure themselves by "mark ups". I couldn't care less. Its my own money so marked up means nothing. I look at substantive progress and not just financial growth. I explore team growth, community around a company and true differentiation. There was a time when differentiation really mattered, decades ago. I feel that is coming back-- developing technology has become cheap. Many can do it. You need to distinguish yowith things that are HARD to do. Easy wins and shortcuts will come back to bite you as someone will catch you from behind.

As for what will do in 2025- likely more investments. I haven't yet had many returns but I intend to put aside more cash for worthy entrepreneurs. Its part of what I want to do. I have nothing to prove and everything to prove. I want to make a difference with my wealth.

To summarize, it was a good year. Even a great one. Some companies died off including, ironically, some mid or even later stage plays. We had some that went sideways. We had some that maintained and we had some that kept barreling ahead. Its always like that. On balance I got a lot more good news than bad in 2024.

No 12 months ever makes or breaks you. The journey is longer than that. Don't get too high or too low. 2023 sucked. 2024 was pretty good. 2025 may be a bonanza (or it may suck). In the long term it all fades away and what is left is the compound value you and your commitment bring to a growing ventures mission and vision. Don't time the market. As an investor, just keep investing and going long. It has paid off in incredible ways for me- just that simple discipline of always long and always invested in the US stock market and private companies I believe in.

Dealing with investors, boards, VCs, outside influence:

I got a disproportionate number of calls about this over 2024. I think its because coming off a tough year there was a lot of nervousness from the community around my entrepreneurs. I could see very clearly those that had a tough community around them and those that had a good one.

This is not a 2024 issue. If there is one big thing to learn from the last few years, its to build the community around you very thoughtfully. Ideally, do it slowly. You cannot afford to have people working against you. I see it all the time- interests diverge and suddenly people are scheming or working against you.

At the same time, you do answer to your board and investors. So how to navigate it? I tell entrepreneurs you should be willing to work together. But you cannot compromise your mission or vision. Once a culture, mission or vision is polluted there is no coming back.

And most importantly, if you are lost to the company, whether you left, or were forced to leave, all hope is lost. I haver never seen a company come back from that. Take the time build your community wisely and the odds of this every happening to go way down.

The Rosetta stone for entrepreneurial complaints: Be True to yourself in 2025- you may or may not be cut out for this. We rag VC's but some entrepreneurs are no better.... The painful calls and the rosetta stone translation:

Sometimes I invest money and regret doing it. I can usually get some kind of return still financially but my. biggest regret is enabling someone to do something they should not be doing.

I got a number of calls this year from entrepreneurs, without going into details, who basically complain, place blame or make excuses. A few common whiny calls and the rosetta stone interpretation:

1) We are growing but won't quite hit our numbers and miss - by like 80%

Translation: We were way to optimistic, don't know how to execute but we also were clueless about what customers were really telling us.

2) Our cash out date has moved up- by 1 year

Translation: We don't have financial control of our business and believe money is a birth rite. Someone will bail us out or I guess its not my problem.

3) We are seeking product market fit:

Translation: Our business doesn't work and we are going to use whatever money is left to throw a hail mary

4) Our margins are lower than expected:

Translation: We are slowly realizing the business we are in sucks and is not worth it. Its too late to change course. But rather than tell you that I will try to "Grow out of it"

5) We took a low margin contract but we expect to be able to renegotiate higher (healthcare)

Translation: Our margins will continue to suck. We are a startup with no leverage with anyone so it will be decades before we can get to higher margins.

6). We intend to be an AI leader and are releasing a product next week

Translation: I must get on the bandwagon. I know nothing about AI beyond the basics but something is better than nothing.

Outlook:

So here we are, at the end of 2024. As I look back to when I started writing these, there have been so many ups and downs. We were all in massive froth in 2020/2021 and part of 2022. We were all in deep trouble in 2023. And now we are in this limbo which seems frothy yet, expect for the non-AI companies (which is most of us). So what has happened?

The answer is next to nothing. A long game is a long game and even 4 volatile years is very little in the grand scheme. Smart companies managed the downturn in 2023 by conserving cash, cutting costs aggressively and staying the course. Bad boards and bad management were reactive, short term minded and in many cases went of course or destroyed significant shareholder value.

As we go into 2025, I will give a few simple thoughts:

• Don't be distracted. Its clear froth is coming back, at least in some sectors. Pay no mind to it. Execute heads down much like when the market was tough. There are good years and bad.
• Don't chase trends or try to change your stripes- stay the course. Every random software company is now trying to be an AI company. Some commerce and non-software companies as well. Don't bother with that you can't fake it.
• Reinvigorate core growth. Cutting back the last few years and getting to break even is one thing but if your business doesn't grow or innovate it has no value, or the value is diminishing rapidly.
• Don't run out of money or even come close. Despite the growing froth, those who run themselves into a brick wall will face the consequences anyway. I thought the new found disciplines of giving yourself 6-9 months for a fundraise for example was worthy of keeping.
• Team build. Build your community. Its a great time to do it, as it always is but don't put it off any longer. If we are getting back to growth mode you will need the help.

I have some general predictions:

1) Being private remains totally in vogue. This is something not many understand- going public can be a burden and if you don't have to, you probably shouldn't. Investor liquidity is not a good enough reason because a good company can get liquidity nowadays. I realize the glut but as someone who once ran a pre-ipo company, I would tell you if you can get to capital and liquidity without going public, so be it. What you may see is mediocre or lesser companies come public. Not sure the implications of that.

2) AI zombies and difficulties emerge. There is bound to be commoditization and if its not happening it soon will. With the money raised many will survive but you will see winners run away with this prize. In the .com the cycle was a bit longer but I think this one may be compressed, at least to the winners. AI is a real long term trend but the staying power of some of these ideas is questionable.

3) Fintech, including bitcoin are totally back. I think you will see this sector specific as well- I can speak to ag for example - you will see incredible emerging growth there. But I think across the board. As for bitcoin and crypto, I think we will start to see use cases. I am working on a hobby project myself and I never thought I would...

4) Winners take all, and then some. This has been happening, but seeing the Databricks 10B round really drives this home. You get out in front and own a sector, you can run away with the prize. Just remember to think big and don't bet he #3 or #4 player. Go for the gold there is no other way these days. You can't build a small company these days...

Portfolio year end updates:

I can't update everything here so I thought I would update some standout firms, by sector. I have many more investments but some may be smaller or what not. I am proud of all my investments as I feel they are impactful. Please reach out if you ever want to meet one of these!

Agtech:

Connectedfi: ConnectedFi

CEO: Kaushik Chakravarti

Notes: Ramping ARR, profitable growth, huge growth overseas and now in the USA. Small team, incredible capabilities and margins and key strategic partnerships.

Aanika Bio: Aanika Biosciences, Inc.

CEO: Vishaal Bhuyan

Notes: Bringing insurance and warranty solutions to the ag and food markets with science and underwriting. This has real momentum and could be the first game changer in parametric insurance in this market.

Conduit Ag: Conduit Ag

CEO: Matt Carstens

Notes: Incredible idea with significant B2B growth and an almost unassailable model. Combining technology with the benefits of a cooperative.

Compass Regulatory: Compass Regulatory

CEO: Ben Harms

Notes: Substantive traction in regulatory SAAS and AI for ag technologies. Great team, which I know very well!

Axia Seeds: Axia Vegetable Seeds

CEO: Alois van Vliet

Notes: Total breakout winner in genetics for indoor seed. incredible growth and market gains with brown rugose resistance. Only 11 years in the making :)

Healthtech:

Linus Biotech: LinusBio

CEO: Manish Arora

Notes: Commercializing an incredible exposomic test that can detect autism at birth. The implications of this platform are beyond comprehension and it will soon expand to more conditions.

Begin Health: Begin Health

CEO: Madeline Zephyr

Notes: Really buckled down and they have created a true brand for kids digestive health. Madeline is a dynamic CEO that you should meet. I am impressed by how they have navigated- performing very well!

Beaming Health: Beaming Health

CEO: Christopher Olmanson

Notes: Has become the go to site for parents seeking autism care-- doing hundreds of referrals each month now. Also introduced a new model around speech and OT that has real traction.

Floreo: Floreo

CEO: Vijay Ravindran

Notes: Got to give it to vijay sticking with this. The tipping point may be near for this highly scaleable therapy that can improve access to care.

Juniper Behavioral Health: Camber

CEO: Christophe Rimann

Notes: Rapid progress and excellent growth with a very impressive tech team. Have made a real impact in this market in a few short years.

Passage Health: Passage Health

CEO: Bill White

Notes: Becoming a real leader in ERP for autisms clinics. Bill has executed tremendously well and the product is robust, while continuing to expand the features.

Marker Learning: Marker Learning

CEO: Stefan Bauer

Notes: Marker has become a market leader in psych services for schools and has really gotten off to a fast start. Very big need they are addressing in a big market.

Soar Autism Center: Soar Autism Center

CEO: Ian Goldstein, MD

Notes: Have dominated the colorado market for ABA therapy and now expanding. Ian has done a great job and has great investors and partners.

Manatee: manatee

CEO: Damayanti Dipayana

Notes: Good work navigating the downturn and really starting to find their stride. Dama is very talented.

Other/Edtech:

Meca Therapies: MECA Therapies - Las Cruces

CEO: Jeff Flores

Notes: Jeff is a true entrepreneur building the states leading EI clinic from scratch over many decades. I feel honored to be a partner (in multiple ventures) and to learn from him.

Spirited Play Labs: Spirited Play Labs

CEO: Lindsay T.

Notes: What an incredible concept- sensory space for kids who are neurodivergent and their families. Lindsay has done great bootstrapped and now just opened a second facility in Berkeley!.

Learnfully: Learnfully

CEO: Kevin Organisciak

Notes: Learnfully has carved out its place in executive functioning and is now ramping with its new test prep opportunities for parents. Kevin has brought this great new element to the table.