July 2024 - Speed, Shoplifting & SSO:
This month, we discuss the challenge of impatience in a start-up, the late Charlie Munger's unique take on Costco's membership and two start-ups making waves in Silicon Valley.
The Double Nudge: A relatable guide to personal growth
The words in this newsletter are entirely our own, but the insights and ideas have been inspired by others. Our goal is to synthesise the best information we have consumed each month, and relate it to our everyday lives.
This is our attempt to get better each day, and we would love you to join us.
Quote of the Month: “Those who cannot remember the past are condemned to repeat it.” George Santayana
Our Challenge of the Month - Impatience:
Bill Gates once said that “most people overestimate what they can achieve in a year, and underestimate what they can achieve in ten years”. I have tried to remember this power of compounding and patience when scaling Bounce, but it’s difficult.
The funny thing about building a start-up is that if you let it, nothing is ever good enough. You are never the biggest or best company, you lose a lot more than you win, and most importantly, you are never growing fast enough. If you asked every founder in Ireland, they would wish they were growing faster - it’s a strange environment to exist in.
You have to hold two thoughts in your head at the same time: impatience and speed. These are your greatest strengths in disrupting a market.
The truth is, I’m a deeply impatient person. If you ask my family or friends, few things anger me more than people being late, slow walkers, and someone spending ten minutes gathering their things when we’re ready to leave (I’m a joy, really).
Similarly, I am deeply uncomfortable with an unplanned day. I thrive in a high-energy environment, sprinting towards getting a task done or achieving an outcome, which in a start-up, is a good thing. Personally, I fight this disposition constantly.
However, this month, I’ve been twisting myself in knots, desperately impatient for more at Bounce. I find myself switching between my hyperactive brain with unreasonable growth expectations and the more logical requirement to remain calm, maintain a long-term mindset and trust the process.
Bounce, by almost any reasonable measure, is growing very fast. As an individual, I am out of my comfort zone and growing each day, surrounding myself with the most incredible people.
The issue is, these are words on a page that I struggle to ingest. My true feelings are that we are not growing fast enough, that I am not learning quick enough, that I am not doing everything I should be doing, that I am the problem?
Ultimately, what I’ve learned is that impatience is both the silver bullet and the undoing of a start-up. It can push you to accelerate at a speed competitors cannot match, but also wear you down before you break through.
It is just one of the many balancing acts you must perform as a founder.
Our Trend of the Month - Charlie Munger’s Intelligent Loss of Sales:
This month, Costco hiked their annual membership fees for the first time in 7 years. Membership fees account for only ~2% of Costco’s revenue, so their membership policy has long been under scrutiny.
For many years, investors and financial commentators have been implying management to increase their membership fees and capitalise on these sticky customers.
The late great Charlie Munger took the opposite side. He was a Costco advocate for many years and is on record saying that he “wished everything else in America worked as well as Costco did” calling himself a “total addict”.
Berkshire board member, Chris Davis spoke on The Knowledge Project about Munger and Costco. Munger’s insight was incredible. When discussing Costco’s paid membership scheme, Charlie argued against abolishing the customer scheme i.e. missing out on increasing the number of customers at Costco.
Instead, Munger highlighted that the cohort of non-members were the people unwilling to sign up with their ID and he argued that this cohort would likely account for 100% of Costco’s shoplifters.
In addition, this group would generally shop in smaller basket sizes, take up car parking spaces diminishing member experience and over time, relative to GDP, this cohort would be shrinking.
Unlike Canadian Dividend Investin’s humorous take above, Charlie called it the intelligent loss of sales.
More is not always necessarily better, we should also account for who we keep out. Quality of customers matters and even more so in hard times.
Late last year we lost one of the great minds in Charlie Munger, but his insights will live on. Now more than ever is an opportune time to read poor Charlie’s Almanack and maybe next time think a little deeper about the second-order impacts of pricing decisions.
Start-Up / Founder of the Month - Aglide, Making Painful SSO a Little Better:
As the old adage goes, build a solution for a problem you face personally. Well, Aglide founders Patrick McGuckian and Oliver Colebourne did just that after struggling with access management and SSO (single sign on) taxes at their last startup.
Aglide offers full SSO, without requiring SAML (Security Assertion Markup Language) - basically cutting startups software bills in half by helping them avoid the SSO tax. In essence, Aglide gives its customers the same secure SSO with less cost and complexity.
Currently, large SSO players like Okta rely on SAML to manage apps.
There are many issues with having your apps outside of SSO such as:
Security risks: unmanaged accounts are more likely to be breached (no two-factor authentication, re-used passwords etc.)
Compliance: without proper access management, companies often fail to meet compliance standards
User experience: users don’t know what they have or how to access
IT inefficiency: offboarded users are often forgotten about, leading to users being inadvertently kept on
Aglide lets you manage access to any SaaS account without SAML. Thereby customers benefit from enabling conditional access/permission preferences, revoking access where and when required, enabling two-factor authentication and making sign-in seamless.
Since YC, the small team has been shipping and iterating fast. Recently, friend of the letter, Eimhin O’Neill joined the team focusing on product and growth. For those interested in learning more get in touch with Eimhin.
We love seeing solutions like this, where predatory pricing is attacked and company runways extended. Hopefully, the team keeps shipping fast and overtime SSO tax is one less thing for founders to worry about.
Investment / Fundraise in Focus - HeyGen Raises $60M Series A:
You might have heard of the company HeyGen when Jon Finger posted this video on Twitter / X showing the ability to translate fluently between French and German with their Generative AI technology.
They also captured the global stage when they translated new Argentinian president, Javier Melei’s speech at the World Economic Forum for the whole world to consume, showcasing the speed and brilliance of their technology.
The company was founded in 2021, before rebranding to HeyGen in 2023 to create a future where traditional cameras are replaced by AI generation, transforming the landscape of visual storytelling.
Just over a year later, they have now raised a $60M Series A, led by Benchmark. The company has grown from $1M to $35M in ARR in that period and has been profitable since the re-brand in Q2 2023 with more than 40,000 paying customers globally.
They have already pulled in some high calibre talent, including Dave King, former CMO of Asana, Rong Yan, former VP of Engineering at HubSpot, and Lavanya Poreddy, formerly of Match Group and Meta.
This is a company who has leveraged the requirement for almost every business to integrate visual storytelling into their marketing strategy, with this new wave of technology that has transformed that space in terms of scale and accessibility - now, it’s all about execution.
To learn more about how they plan to execute, Harry Stebbings has announced a podcast coming soon with the founder, Joshua Xu, following “the hottest Series A round of 2024”.
As a final note, it’s great to see another friend of the newsletter, and an active member of the Irish start-up ecosystem, Cathal Canavan join the company back in February 2024 and drive their sales effort from their offices in San Francisco.
Content Corner:
First Irish person in space, Dr. Norah Patten here
No nord stream, no problem how Russia is using nuclear power to win global influence here
Struggling with job offers? Maybe take off your wedding ring and see how you could have more success here
With the latest EU bureaucrats hitting the headlines it is time to revisit Patrick Collison’s piece on if Stripe could be started in Ireland here
The Guinness revival: Women and Guin-fluencers lead Guinness’ revival here
Bonkers grocery baskets: man re-orders his same grocery basket from 2022, there was a 4x increase here
Thought Provoking Graphics:
Inflation measured in tastier terms.
Is EU regulation really winning?
Irish population density continues to amaze.
The oil of the 21st century shows no signs of stalling.
Meme Corner: