The business of Deion Sanders, networking and cap table management rules and guidelines for 2023
Stretch Four Insights Volume 46
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Happy Sunday,
I am a day late this week, but better late than ever. It has been an interesting week with lots of things happening across business, tech, and sports. As 2022 comes to an end it is like more things are happening day to day. This will likely be the last weekly recap I do this year as I move my focus to end of year reviews with ModernTax, planning for 2023, and a year end recap essay I plan to do here.
This week I want to highlight a few big news items and ideas from the week:
the “Business of Deion Sanders” is he a black race hustler or the future of college athletics?
A recap of a podcast I listened to on how hedge fund managers think about networking.
How activating your current investors should be more of a process for founders heading into 2023
Let’s dive in.
Quote of the Week:
“The company that raises the most almost never wins.” - Co-founder who sold for over $1 billion in December 2021
I had an interesting conversation this week with a founder who sold his startup for north of a billion dollars at the end of 2021. One of the fascinating things he revealed were how many of his venture-backed competitors raised $100 million or more rounds while he struggled and in aggregate to raise raise less than that total. He was able to exit prior to this year and all of these companies are still private with substantial down rounds likely to be their only option and one that went public via a SPAC is now valued at less than their revenue by the public markets. Timing is so critical in startups and the more money you raise the more likely you are to lose focus at worst and with the current reset across the technology and venture ecosystem you may get signifiant haircuts and never be able to return any reasonable returns on the amount of capital you raised.
Chart of the Week:
Tweet of the Week:
I like this tweet because it is the exact reality of being a founder. I wish I learned this way earlier but your role early is a glorified sales rep for your startup. One of my must read books that I read last year was Jeb Blount’s Fanatical Prospecting. It is one I will return to to kick off 2023. Founder activity including cold calling, email prospecting, and networking is super critical now as sales is the lifeblood to any business that plans to survive and thrive in 2023.
Great Investors Build Networks and Never Stop Learning with Alix Pasquet III
I listened to a very provocative podcast this week that went deep on networking as an investor. I think there is a lot of correlation to what I do — one of the interesting themes piggybacks on the obsession Warren Buffet has with reading.
The guest highlights that just reading S1s all day is not the main factor for why Buffet is so great, it is that he spends just as much time or more networking. It brought to mind another theme that Naval Ravikant talks about as to how he’s become such a brand as an investor.
Ravikant says that “people do deals through you” becomes the effect of having a strong network. The podcast covers lots of topics and how Alix Pasquet III thinks about things like personality tests, how performance correlates to networking, and more.
The Business of Deion Sanders
Deion Sanders sent shockwaves through the sports world this week by accepting the head coaching job at the University of Colorado. Despite the news, most of the internet reacted more to where he was leaving as opposed to where he was going.
Deion left Jackson State University after leading the team to an undefeated season. He had a 60 minutes feature back in October and was portrayed as a savior of sorts for HBCU college athletics. Two months later and Sanders has moved on which he also alluded to in that same 60 minutes special.
My take comes from a place of understanding. My mom is an HBCU alumni (one that actually beat Jackson State last year in the black college football championship), but as I grew up attending football games at her alma mater the highlight of HBCU football has and always will be the halftime band performances. Deion brought a spotlight to HBCU sports that maybe no one else could and he’s taking it with him. I correlate what he did with Beyonce’s Coachella performance in 2018 or Robert Smith paying for tuition of Morehouse students in 2020. These were once-in-a-lifetime moments, but never intended to drive some kind of revolutionary change.
The bigger story in my opinion is that the business of Deion aka Primetime has taken over college sports like no other. This should be the conversation — with this new opportunity he’s taken an obscure big five university in what many would say is a declining conference and made the program, the school, and the athletic program the topic of conversation overnight by driving earned media to the toon of nearly 100 million impressions across their social media platforms.
The rude awakening for HBCU athletics is capitalism. These schools will never compete on a national scale as other universities with larger budgets, endowments, and alumni bases. Even when I think of my own alma mater James Madison University, who recently became a BCS football school by joining the Sun Belt conference, HBCU are decades if not centuries behind even being in that conversation with those schools.
The next challenge for Deion now resides in turning around the University of Colorado. While the welcoming has been a red carpet style affair for him, he will be on the clock and need to win football games. The Buffs are a forgotten program in one of the most lagging big five college football conferences, the Pac-12 so his job will not be easy.
How to activate your investor network
Sam Corcos is know in the valley as a very process driven founder. His company Levels is all about metabolic health management. This week his guest post on Lenny’s Substack hit home as he walked through his tactical approach to managing his cap table. Sam definitely comes from a place of privilege as he is clear that he has more people who want to invest in his company than he needs money but his advice is useful. I made an unsuccessful thread (comment if you have any thoughts) this week about taking investor money from venture scouts.
Final Thoughts
Deion Sanders will have a large target on his back as he moves into his new role at Colorado — and I think one of the most intriguing things about him is how he is using social media to influence and attract fans. He is one of the most consistent content creators on instagram and with a new budget I expect that to only increase.
Investor networking is something I had not thought about as deeply as was presented in the Neckar’s Mind and Market’s podcast and this is an area I always need to increase my thinking and processings.
Lastly, cap table management is critical moving into 2023. The deadweight equity owners in startups will be exposed as the fundraising climate becomes more challenging, I am definitely making sure I use some of Sam’s tactics ahead of the new year?
What’s Next
I am head off the grid for six days starting on Wednesday. This will be my first time in the Caribbeans and I am very excited about it. It is also the first time traveling out of the country with our nine month old son so the flight which has two legs is not necessarily something Whitney and I are looking forward too.
I hope you all are having a great weekend!
As always, I would love your feedback especially if you are new please email me at matt@stretchfour.co
Back to the trenches.
Best, Matt
The section about how to activate your investor network was really good. Please post more thoughts about that topic in the future. Good work!