Capital Chronicles #28

Hello there! Welcome to Capital Chronicles, saving you hours every week with ~2-3 minute summarised insights from the best venture builders, investors and capital allocators out there.

As subscriber #TBD, read on for the latest…

🛠️ On venture building…

Key "Growth hacking" concepts are often misconstrued (Lenny's Newsletter): The "Sean Ellis test" is a leading indicator of PMF, not a definitive measure. Focusing on activation and onboarding before acquisition can dramatically improve growth potential. A North Star Metric should reflect value delivered to customers and correlate with revenue growth, but shouldn't be revenue itself. Startups should systematically prioritize growth ideas using the ICE framework and proactively reorganize teams as growth strategies become more complex.

Learn how to crack product-market fit from Sean Ellis, the original growth hacker.

🧭 On venture investing…

Different personality traits are beneficial at various stages of a startup's lifecycle (Data-Driven VC): researchers analyzed 10,541 founders' personalities based on the Big Five model and correlated these traits with startup performance metrics from Crunchbase. The findings reveal: (1) openness and agreeableness positively correlate with raising initial funding rounds; (2) conscientiousness helps raise more funding early on but decreases the likelihood of a successful exit; (3) neuroticism is consistently detrimental across all startup outcomes.

Pay closer attention to personality on the investment process and help founders identify potential strengths and weaknesses.

📖 Learning resource…

Less is more when mastering metrics and managing boards (Bessemer Venture Partners): Successful CFOs focus on a limited set of 5-6 core KPIs that drive action, evolve these metrics as the company grows, and build a "Financial Hypothesis" to align stakeholders. They present data to the board using simple visual systems and balance meetings with strategy and operations. They position themselves as strategic advisors, emphasizing usage metrics, particularly for B2B companies, as crucial leading business performance indicators.

Look for CFOs who can translate complex financial data into actionable insights and strategic recommendations.

📊 Market insight…

Tech budgets increasing, AI wave still coming and stabilised hiring downside (Battery Ventures): the September 2024 survey of 100 CXOs on enterprise tech budgets show 74% planned increases with 59% focused on experimental initiatives. There's a notable disconnect between AI ambitions and actual implementation with only 5.5 % of identified AI use cases in production, materially lower the original Q1’24 projection of 52%. But the overall business climate is stabilising as evidenced by reduced hiring freezes (down to 27% from 46% in Q1 2023).

Stay up-to-date with the latest enterprise technology spending trends.

🎲Lucky dip essential reads…

• Multimodal capabilities unlock new opportunities in Vertical AI.

• The latest net revenue retention trends from 2,500+ SaaS businesses.

• Why ‘Execution’ is a Bankrupt Management Concept

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Have a great week!

Josh