Angel investing for Software Engineers
Software Engineers peak early in their career and especially in places in the San Francisco Bay area, New York, and Seattle attain accredited investor status early on in their career. Hearing stories of Jason Calacanis and Chris Sacca, many consider trying their hands-on angel investing in startups.
If you are considering it, here are my few suggestions for that.
Should you do it?
Angel investing, just like many other exotic ventures such as buying arts and vintage coins, is optional. It is much more safe to make money by investing in publicly listed companies. So, don’t do it for money. Find a better reason to do it. For me, the opportunity to connect with other entrepreneurs makes it worthwhile.
How much to invest?
Don’t invest more than 5-10% of your net worth. Most angel investments fail; it is best to diversify. In the early stages, don’t invest substantial check sizes (50K-100K) in a single startup.
How to start?
Get your feet wet via Angellist Syndicates. You can invest a small amount and gain confidence. These investment opportunities come without the information rights, so, you learn a little less than what you get when investing directly.
Once you are confident, watch more pitches either at local pitching events or online pitching events like Stanford’s StartX and Alchemist Accelerator Demo day.
Whether you are looking at companies on AngelList or the pitching events, the quality will vary a lot. More often than not, you will say no, but occasionally, you will come across a gem to invest in.
Dealflow
Good deal flow is crucial. Either you will have to scout a lot of good deals, or you need to be friends with people who are going to make it big. Also, try to have some VC friends, so that, you know what not in trend. Here’s the hard reality, almost every angel investment of yours will need VC money at some point. If most VCs are going to reject the opportunity outright, for example, because it is located in unacceptable geography or is in a crowded space, then that startup is almost bound to die.
In the case of a hot oversubscribed deal, you will have to convince a founder to take money from you. And that’s where you have to answer what value-add do you bring beyond the capital. Put some thought to prepare that. Here’s mine – “I can help you with thinking around engineering as well as product. My background ranging from backend engineering at big companies to mobile development for emerging markets to blockchain gives me a unique engineering + product perspective. You can see my writings at https://ashishb.net/category/tech-thoughts/ and my prior investments at https://angel.co/ashishb“.
Learn to say no
You will be saying no most of the times. Say that fast and move on. Don’t waste your time or the founder’s time.
Don’t give up on pro-rata
Angel investing is way riskier than late-stage investing. And if you end up investing in a gem, you don’t want to miss out maintaining your pro-rata, fight for this right.
Understand the different type of investments
SAFE is the most popular now. Convertible debt creates phantom tax implications. Equity investing is less prevalent in early stage than the late stage.
Criteria
Develop some criteria to decide what would you invest in and what would you not invest in. For example, I don’t understand health tech and pharmaceutical, and I would not invest in it. Similarly, for the lack of understanding, I avoid startups targeting Latin America or Africa. Remember that laws are different everywhere; for example, in India, a minority shareholder can block an acquisition, in the USA, they cannot.
Process
Decide how you are going to invest. Are you going to decide over a phone call or multiple in-person meetings? Have a written questionnaire which you ask to ensure you are not missing on something.
Android Security: Don’t leave WebView debugging enabled in production
WebView debugging can be enabled via “WebView.setWebContentsDebuggingEnabled(true)”. Leaving WebView debugging enabled in production Android apps is a bad idea. Anyone who gets hold of the unlocked phone can access the app’s data forever.
A short guide for MBAs looking for a job in the tech world
Why Tech
In the past decade, interest among MBA grads towards tech companies has drastically gone up. If you are one of those, take a pause and ask yourself “why”. Of course, there are upsides; the tech sector is growing faster, pays well, has a much better work-life balance than finance, private equity, or consulting. But at the same time, do remember that you spend almost 50% of your waking hours at your workplace, so, you must as well enjoy it. If you enjoy flashy presentations, regular travel, or an opportunity to think about big M&A deals, then these things come much earlier in your career on the east coast than that on the west.
Why Product Manager
Product Manager is the dominant choice for an MBA grad. That does not mean this is the only possible role. Anecdotally speaking getting into a PM role at Google is harder than a Software Engineering role. And if you are an international student looking for visa sponsorships, then some tech companies are not willing to do that for the PM role. Lastly, if you are not from the Computer Science/Electrical Engineering background, it is harder to get shortlisted and clear interviews. My goal is not to discourage you from applying but make your expectations realistic.
Beyond Product Manager
Facebook, Google, Apple/Amazon, Netflix (FANG), and Microsoft are big businesses. They deal with a wide range of functions such as real estate to supply chain to short-term/long-term cash management. There are all sorts of finance-world equivalent roles beyond the PM role. I won’t be surprised if Google pays more in real-estate rents than say, WeWork. All big companies engage in regular M&A as well and have a full-time team staffed for that. Cisco, Apple, and Google, in particular, are known for M&A. Also, many companies have roles like Product Strategy and Product Marketing Manager. These roles are similar to Product Manager but attract much less attention since these titles do not look as coveted as the Product Manager. You can use these roles to get in and then can transition to a Product Manager role later.
Beyond tech companies, many venture firms, both domestic and foreign (like Rauketen and Softbank), invest in US tech startups. And for that, they hire analysts, principal, and associates. The job responsibilities range from scouting to deciding on the deals.
Does company size matter?
I like quantifying companies in three stages – stage 1 (pre-product market fit), stage 2 (post-product market fit, growth stage), and stage 3 (mature companies like FANGs). Do note that in a big company like one of the FANGs, you will find products which are in stage 1, stage 2, or stage 3.
If you need visa sponsorships and have loans to pay, then stay away from stage 1 companies. The risk-reward ratio is more skewed towards risk here. If this succeeds, even a small acquisition can net you a million-dollar or two easily.
In a stage 2 company, the likelihood of broad responsibility is higher. You could be doing inside sales one day and scouting for a new office lease the other. If you are willing to take the risk, then the long-term financial rewards are much higher here. If you need visa sponsorship, then you should join a stage 2 company with a non-US office as well. So, in case you don’t get H1-B before your OPT expires, the company can move you to one of the international offices. Confirm this after getting the offer letter and before signing it. Some companies like GitLab have a strong remote culture; this can be extra beneficial to someone concerned about the visa sponsorship issues.
In a stage 3 company, your role is going to be much more structured, narrow, and focused. The company won’t die overnight and would likely have international offices to move you to in case the visa situation does not work out. One caveat for those looking to apply for permanent residence (green card), join a company which did not do layoffs recently and is not planning to do in the next year. If a layoff happens than the permanent residence applications from that employer are usually rejected by the USCIS.
B2B, B2C, and marketplaces
B2C, Business-to-consumer startups, in their pure form, was thriving in the valley till about 2015. The users have swayed away from installing new apps, and more prominent companies have become good at making the whole startup a feature in their product. So, in 2019, software-only B2C exists, primarily, inside FANG and Snap. Two exciting classes have emerged beyond software-only B2C. One is prosumer (professional consumer) companies like recently-IPOed like Slack and startups like Savvy. The other exciting direction is the D2C, direct-to-consumer, startups like allbirds and brandless.com. D2C, in my opinion, requires a lot of operations and marketing experience. I notice more B2C startups focused on India, Latin America, and China than the USA these days.
B2B, business-to-business, are all in rage today. From Google cloud/Azure to small companies like Narmi, a lot of companies are capitalizing and building products for other businesses. While B2C is about understanding consumer psychology, B2B is about understanding the needs of another business.
Two-sided marketplaces are hard to grow. Most of them, in the US, are trying to build pieces of Craigslist, and some are doing well.
How to apply
Don’t apply directly for an off-campus opportunity. Go via a referral. The referral route ensures that you will get a response, even if it is a rejection. A lost of time direct applicants never get a response. And you don’t need to find someone you know. You need to find someone willing to spend 5 minutes submitting your resume internally. Culturally, it is not frowned upon to submit referrals for acquaintances. And if you get hired the person referring you will make referral fee which is usually a few 1000$.
Where to find stage 1 and stage 2 jobs
Vienna in two days
Vienna is a historic city. First, a pivotal battle between the Ottoman Empire and Western Europe was fought in 1683, and then, during the second world war, significant support to Hitler came from Vienna.
Some tips for the first-timers
- The dominant spoken language is German, but it is not hard to find English speakers.
- Public transport is great and a 24-hour pass costs 8 Euros.
- Most of the good spots are near the city center, so don’t stay too far away.
- Toilets inside shopping malls, big grocery stores, and restaurants are usually free. Outside ones charge 0.5 Euro.
Cryptocurrency trading
Background
There are three major types of financial exchanges
- Stocks and bonds
- Commodity exchange
- Foreign exchange (Forex)
Stock exchanges, where stocks and bonds are traded, are highly regulated and don’t transcend national boundaries. The listed companies have to follow disclosure protocols decided by the government and the exchange. The stocks that are traded on these exchanges are mostly unique to the exchanges. For example, Google is only listed on the American exchange of NASDAQ. So, to buy Google stock, you need to conform to American laws. Also, you can only sell these shares back on NASDAQ and that too only within certain hours of the day. Therefore, these exchanges have some monopoly power.
However, commodities can be easily resold and delivered on other domestic exchanges and with some effort across national boundaries as well. Therefore, unlike stock exchanges, commodity exchanges do not have a monopoly over what’s being traded on them. The only advantage they can offer to the traders is a marketplace where they can find counterparties to take a position against their trade. Traders don’t have to arbitrate, that is, buy from one market at a lower price and then sell to another at a higher. Just the fact they can do it ensures that prices differences are minimized. Crude oil is the most actively traded commodity in the world and unlike Google stock, a trader can trade in crude oil, practically, in any commodity exchange in the world. Some other commodities could be traded in exchanges specific to a country.
Foreign Exchange (forex) markets are different. In theory, one can be run a US Dollar – Euro foreign exchange in Nigeria. Therefore, these transcend national boundaries. Most forex markets, however, are regulated. Forex markets are practically 24-hours a day, 7-days a week. Since major currency pairs like USD-EURO can be traded in any major forex exchange on the world, these markets practically never close. This distinction is subtle but important. For example, consider Apple Inc. which is listed on NASDAQ in the USA. If some bad news related to say Apple is published in media on Friday evening after NASDAQ is closed for trading then the traders cannot trade their Apple stocks till the Monday morning. But if Britain’s exit from EU (Brexit) is canceled on a Friday evening then the forex market will react immediately to the news.
Another subtle distinction is that big stock exchanges can enforce their rules and if a trader behaves badly then they can ban him/her for life. Getting banned from a major exchange is career suicide. A trader who, say specializes in tech stocks or healthcare stocks of a country cannot simply move to another country and learn the rules there. Commodity and forex markets are different. One can simply register in a different jurisdiction and start trading. Thanks to the Internet, being registered in Malta does not require one to live in Malta.
| Type | Monopoly | Restricted to a country | 24-hours a day |
| Stock exchange | Yes | Yes | No |
| Commodity exchange | No | Partially | Yes |
| Foreign exchange | No | No | Yes |
Crypto Exchanges
What’s traded on crypto exchanges is not unique to those exchanges. Just like USD can be purchased on pretty much every exchange, one can buy Bitcoin from any exchange, 24-hours a day. But while Forex markets are trading on the optimism or pessimism around a nation’s economy, commodity markets are pure speculation around demand and supply of a commodity. Therefore, cryptocurrency exchanges are akin to commodity exchanges. And since the goods are virtual, they easily transcend national boundaries. Therefore, inter-exchange trading implies price arbitrage will be rare in the longer run. So, what decides one exchange will win over another? Given that an exchange does not have the monopoly over what’s being traded, the only major barriers I can think of are either regulatory or higher liquidity.
Diet action plan from “How not to die” book
Checklist for Good Health
- 3 servings of Beans
- 1 serving of Berries
- 3 servings of other fruits
- 1 serving of Cruciferous vegetables
- 2 servings of Greens
- 2 servings of Other Vegetables
- 1 serving of Flaxseed
- 1 serving of Nuts
- 1 serving of Spices
- 3 servings of Whole Grains
- 5 servings of Beverages
- 1 tablet of Vitamin B12 supplement
- 1 workout session
Book Summary: How not to die by Dr. Michael Greger
The book is a detailed introduction on how what we eat can kill or save us and how the modern diet is making people sick. This book’s companion website is NutritionFacts.org.
This book and its summary are pretty long, I extracted the useful advice in a shorter article.
Salient Points
- Major killers in 1900’s USA were Pneumonia, TB, and Diarrhea that are pathogen based while major killers in 2000s are heart diseases, cancer, and lung diseases that are lifestyle diseases. The developing world, which has shifted to a western diet, is seeing the same fate.
- Aging is tied to Telomeres, a tiny cap at the end of chromosomes, which prevents DNA from unraveling. Some amount of it is lost on every cell division. So, shortening of Telomere indicates aging. Smoking triples that rate. Meat, soda, dairy, fish, and refined foods are associated with shorter Telomeres. Plant diets with rich antioxidants are associated with longer Telomeres. Plant-based nutrition is the only intervention which helps in growing Telomerase, an enzyme which helps in regrowing Telomere.
- Vegetarians transitioning to meat once a week experienced a 146% increase in odds of heart attack, 152% increase in odds of stroke, 166% increase of odds of Diabetes, and 231% increase of odds of weight gain. India, despite a low increase in per-capita meat consumption, is facing high lifestyle disease rate due to an increase in refined foods like white rice. So, don’t just go for a vegetarian diet. French fries + Coke is vegetarian but not healthy. Go for an evidence-based diet. The current evidence suggests a whole plant-based diet is healthy. Calories in junk food are cheaper but when you take nutrition beyond calories into account then junk food loses out to whole plant-based diets. Moreover, farms with animals are associated with a higher rate of cancer. Plant-only farms are not. Poultry farms are the worst. Pet companionship is associated with lower cancer rate though.
- A healthy lifestyle is key. Not smoking, not being obese, 30-mins daily exercise, and a plant-based diet is sufficient to wipe out 80% chance of chronic diseases. Non-genetic factors account for 80-90% of the major diseases today. For example, colon cancer rates were 1/5th in Japan compared to the USA in 1950. Now, due to increased meat consumption, they are almost the same. Diet is a gradual process and not all or nothing. If you eat Pepperoni Pizza once a week, going down to once a month is better than not giving it up at all.
- Thanks to dairy and meat lobbies, you will hear “eat more veggies” message but no “eat less meat” message. The latter message will be made more cryptic by saying “avoid saturated and trans fat”. But in reality, no amount of trans fat is safe as it always leads to a risk of Coronary Heart Disease (CHD). However, trans fat is unavoidable in a non-vegan diet. Order of nutrition quality: Unprocessed plant food > Processed plant food = Unprocessed animal food > Ultra-processed plant food = Processed animal food.
- Patients regularly overestimate the benefits of drugs. Doctors are hesitant, to tell the truth since no patient would take a drug which has only a 5% chance of success. Big pharma spends a lot on advertisements. They advertise drug, not diet changes. Drugs make money for them, diet changes do not.
- Washing vegetables remove 50% of pesticides. Washing in 5% vinegar (expensive) or 10% saltwater (cheaper) is much more effective. Rinse again after saltwater though.
- After consuming acidic food, rinse the mouth with water to avoid enamel decay. However, don’t brush since that will damage the already softened enamel.
Daily Dozen checklist of Good Health
- 3 servings of Beans
- 1 serving of Berries
- 3 servings of other fruits
- 1 serving of Cruciferous vegetables
- 2 servings of Greens
- 2 servings of Other Vegetables
- 1 serving of Flaxseed
- 1 serving of Nuts
- 1 serving of Spices
- 3 servings of Whole Grains
- 5 servings of Beverages
- 1 workout session
Prague in Two Days
Prague, or “Praha” in Chezch, is probably the most famous city in Eastern Europe. The city boasts medical castles, museums, and quite a few quirky attractions.