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Leo Polovets
@lpolovets
, 3 tweets, 1 min read Read on Twitter
As an engineer, I hate tech debt & love refactoring.

As an investor, it's complicated. It's important to weigh technical risk vs existential & business risks.

IMO a good framing is: you have X months of runway. What level of tech debt lets you get the furthest w/in that time?
Note that this means if you have a lot of runway, you can afford to attack tech debt, because maybe 1 month of refactoring now lets you build much faster for next 11 months. If you have little runway, existential risk trumps everything.
There are other considerations like how fast competitors are moving, external deadlines, employee morale, etc, but I think viewing tech debt in the context of what you can accomplish before you need to fundraise again is a good framing.
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Leo Polovets
@lpolovets
1/ Ok, this might ruffle some feathers, but here are some thoughts on taking money from next round's investors now (e.g. taking Series A investor money at seed, or seed investor money at pre-seed).

TL;DR the cons usually outweigh the pros.
2/ As a caveat, I have a vested interest because I don't like competing against Series A investors in seed rounds :). In the rest of this thread I'll talk about Series A firms investing at seed, but it's a placeholder for Stage N+1 firms investing at Stage N.
3/ Series A investors typically invest in seed rounds because they want to improve their shot of investing in your Series A. They don't care about the seed investment's performance itself. This isn't true 100% of the time, but probably 80-90% of the time.
Read 12 tweets
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Leo Polovets
@lpolovets
1/ Diminishing returns for money are well-documented. I.e. an extra $100 is worth a lot more to someone with $1k than to someone with $100k.

But focusing too much on diminishing returns can blind us to high leverage opportunities.

Two examples:
2/ If you're optimizing for saving, you probably undervalue raises. If you make $100k post-tax and save $20k, then finding a job that pays $120k is only a 20% raise, but you'll 2x your savings. That is, one year in the new job lets you save as much as two years in the old job.
3/ If you're raising a seed round, you probably undervalue runway. It may take 6 months to reach product/market fit & 4 months to raise a Series A. 1 year of runway gives you 2 months to build traction. 2 years of runway gives you 7x more time to build traction w/2x more funding.
Read 4 tweets
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Leo Polovets
@lpolovets
The tweet below got me thinking: what are examples of intangible assets that are valuable but hard to factor into valuations? A few to start:

- strong social media skills (@Austen, @wendys)
- proprietary data (Google)
- moonshots & high risk/reward experiments (Google)

Others?
To elaborate on a few of these:
#1 -- Lambda recently raised $. Let's say it was a $100m valuation. I bet VCs didn't say "based on metrics the valuation should've been $95m, but @Austen is great on Twitter, so that bumps it up to $100m." But the tweets have clear value/ROI.
#3 -- A few years ago, Google started doing tons of valuable moonshots: self-driving cars, Google Fiber, Google Loon, etc. One could argue each of these is "$500b+ market cap potential * several percent chance of success." My hypothesis is the stock market doesn't price this in.
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Emeka Azuka Okoye
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This is a thread on the list of #technologies #Nigeria should start taking seriously if she has the ambition of becoming number 1 in #Africa and maybe among the top 30 countries in the world as we enter the 4th Industrial Revolution.
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David Mullings
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Here’s a little lesson in business registration for my US and Jamaican followers:

Most US companies are gusteres in Delaware because it has the most favourable laws for businesses AND “has a separate Court of Chancery to hear cases involving corporate law”

No corp taxes either
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“..manufacturers like Nestle, Coca-Cola and Procter & Gamble also face growing scrutiny from investors who want to know what business #risks they face from #climatechange before deciding whether to buy their stock”

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Will Larson
@Lethain
Software migrations are a way of life at rapidly growing companies, and increasingly I think your ability to migrate effectively is the defining constraint for your growth.

lethain.com/migrations/
Teams hate tech debt. If they can locally reduce it, they'll do it. So at some point all remaining avenues to reduce tech debt require ~everyone simultaneously adopting a new platform: migrations! Moving everyone? A *lot* of coordination!
My approach to migrations is three phases: (1) derisk it by ensuring the approach can succeed, (2) enable the change by building tools and automation, and (3) finish the damn thing while minimizing disruption to other folks. (Migrations are rarely other folks top priority.)
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