Fast edition: My take on Fast shutdown the immigrant founder advantage, and the Grizzlies
Stretch Four Insights Volume 20
Happy Saturday everyone,
I missed you all last week as Whitney and I are adjusting to having a month old baby boy at home.
This week I want to share my thoughts on:
A busy startup that blew up in flames this week and how it raises another question— why immigrant founders have more of an advantage in raising venture capital?
And a review of how the Grizzlies owner has a small market juggernaut built to win for years to come
Fast and the Immigrant Founder Obsession in Silicon Valley
The big news in he tech and venture capital this week centered around a company called Fast, which provides one-click checkout for the long tail of online retailers who do not use other more popular providers. The company raised over $100 million in venture capital while only producing $600,000 in total revenue with over 500 employees in 2021. Fast shut down this week after attempting to raise additional funds and then a buyer. What stood out mostly was how the founder, Domm, built a huge personal brand, raised massive amounts of venture capital, all the while having a sketchy reputation back in his native country of Australia.
These stories always center around the founders, other companies were quick to offer opportunities to the Fast employees who were affected. This story got me thinking about my founder journey and how the venture and startup community work. It seems like these stories perpetually repeat at some level. You can turn on your TV and watch Super Pumped, WeCrashed, or the Dropout but this Fast story particularly brings up the point of how much easier immigrant founders rise to power in Silicon Valley.
Generally, a non-American born founder arrives in Silicon Valley will raise large amounts of capital at a faster rate than others. It speaks to how Silicon Valley has built an obsession around the immigrant founder narrative, and their sheer force to make it as entrepreneurs. Whether its that they work harder and have much more to lose or have a better chance to be the next Elon Musk it shows the unconscious bias and pattern matching that pervades venture capitalist to disproportionately deploy dollars into people and teams that are predominantly white and immigrant and are not scrutinized in the same light as others.
Another caveat to this story is what I wrote about here previously, as Ryan Breslow, founder of competitor to Fast, hinted that the only reason Fast got funded was because Stripe wanted to kill his company. The VC twitter tribe said some bad things about Breslow’s perspective, but within only a few months his take on Fast came true.
My dark horse to win the finals this year and beyond: The Memphis Grizzlies
As the NBA’s regular seasons winds down, I have been fairly evident in the last few weeks that the Memphis Grizzlies are for real. They beat the NBA’s best team, the Phoenix Suns, with all their bench guys last week and are, in my mind, the team built to not only win a finals this year, but also to win multiple finals in years to come.
The Grizzlies have a bright future because 1) one of the wealthiest people in the country owns the team 2) They have been strategic to draft well in a small market where recruiting popular free agents is not an option.
The Grizzlies owner keeps a fairly low profile. His name is Robert Pera, he’s 44 and worth over $15 billion. This will allow the Grizzlies to pay the luxury tax. Currently, the Grizzlies have the second to lowest payroll in the NBA only ahead of the OKC Thunder.
This means they are drastically overachieving now, but they have a young core that are all going to see huge pay days.
At the least they will need to pay:
Ja Morant: Ja has evolved into a superstar this season. He represents a cultural moment in the NBA and he has become the face of this Grizzlies bunch. Ja becomes extension eligible on July 1, 2022 and it is almost unanimous that the Grizzlies will pay him the max on the first day.
Kyle Anderson: Anderson is an unrestricted free agent this summer and it will be interesting to see what the Grizzlies decide to do. Notoriously known as “slo-mo” Anderson is a nice compliment to Morant as he can handle the ball and or play off the ball. He had a career season last year, and will demand $15-20 million a year on the market.
Desmond Bane: Bane is a big over achiever already. He shoots the ball at a high level and has doubled his PPG this year while maintaining a 43% percentage from three. Bane is one of the most underpaid players in the league right now, and he the Grizzlies have him on a rookie deal until 2023.
The Grizzlies have been one of the most successful teams at drafting young players. When you look at the core of their team it includes Ja Morant, Jaren Jackson, Desmond Bane, and Dillion Brooks. Each of these core players were acquired through the draft. In a day and age where teams sell off their draft picks, the Grizzlies have used it to build their core. With that in place, they have made strategic acquisitions of complementary players like Stephen Adams and Kyle Anderson. The Grizzlies set the example of how small market teams need to operate from the player personnel side of things to be successful in a league where larger market teams typically focus on attracting free agents. The bonus is having an owner who will spend to keep the young core intact, while Vegas does not have Memphis in the top five to win the title this year, I would not be surprised if it happened.
What’s Next
ModernTax: Q2 Kickoff + scaling faster
I took off this week for paternity leave, so returning to the office next week will be quite a culture shock on a few levels. As Q2 kicked off, I will be putting together my Q1 investor update. There is a lot to be done this quarter as we are closing new deals in our pipeline, hiring, and adding new features to our product suite. We have also started to received some unique opportunities that may allow us to scale to new customers at a much faster rate than we can on our own.
Stretch Four: long form + audio + more
We have our next long form post scheduled to be out this month. I’m highlighting a friend building a company in an adjacent space. His company is building a fully automated business tax return solution. We had an interesting conversation and I am excited to write about his journey and the winning and losing case for what he and his team is building.
I am going to add audio to the newsletter, which will start by me reading the long form post and expand into a series of interviews with top 10 employees at unicorns across the valley.
Your feedback means the world to me so drop me an email at matt@stretchfour.co on what you would like coverage of, provide me with feedback on my format, and what you think is the best day of the week you would like to hear from me.
Lastly, if you found this newsletter interesting and know someone else who would, please forward it to them or tell them to subscribe here. It would make my day if you do!
Back to the trenches.
Best,
Matt