Black Friday Edition: Down goes a DAO, Forever Rising IPOs, Low Revenue Unicorns, #TaxTech Spotlight: Column Tax
Stretch Four Insights Volume 5
Hello All,
It's the day after Thanksgiving meaning you've probably eaten too much yesterday and/or you're taking a break from the rush of never-ending Black Friday emails. Hopefully, you got to spend the day with family or friends.
I hit this short work week coming off a full 18-day East Coast trip and the scale indicates I did not keep my diet and workout regime. It's safe to say my healthy routine has the best chance of survival on the West Coast so I am happy to be back to my normal grind.
Beyond that, I had an amazing time catching up with family, friends, and both old & new colleagues.
Places I spent time in during my 18-day journey:
Baltimore, MD —> Washington, DC —> Harrisonburg, VA —> Hershey, PA —> New York City, NY —> Charlotte, NC —> Charleston, SC
With that said, let's get into it. And if you want to hear more or spread the word, subscribe and tell your friends!
📚 What I'm Reading
This week I kicked off my first book exploring the world of being a full-time parent. This book by Emily Oster comes as a highly recommended book. It focuses primarily on the back half of having a child: after the baby is here.
Whitney is very attentive to all the things our baby will need before he arrives. Of the 75+ items we have in our registry I have only added maybe five. I think this book is a great start for me on what it is going to be like when our son arrives.
Oster takes a very data-driven approach to things like circumcision, sleep patterns and places, and bathing. With this being our first child, this will be a good primer that will help me develop my own ideas about how we will make decisions when these things come up.
Startup Spotlight
Column Tax is building the future of personal income tax APIs and hopes to reroute a percentage of $350B in annual US tax refunds through its API that adjusts W4 withholdings in real-time.
I wrote my first Tax Tech Spotlight. Check it out here on my premium substack or my personal blog for free where I do longer-form pieces on startups, business empires, and the business of the NBA.
📰 Recommended Readings
This was an insightful piece on ideas which was timely considering there seems to be so much happening in the Web3 and crypto space. The article drives the point of McCormick comparing ideas to compounding interest in finance. Creating your own idea factory is one of the most beneficial things you can do as a creator, artist, entrepreneur, or writer. The real winners in the world of tech and finance right now are not the savviest engineers (although they are doing well) or financiers, but the people with great ideas.
Key takeaway:
"Idea composability is one of the main contributors to all of the progress and speed we’re experiencing. Ideas are building on each other more quickly than ever before, too."
Raising More With Less | Eric Newcomer
Newcomer sheds light on one of the more interesting facts of the startup valuation and fundraising climate: all bets are off. What he makes clear is there are no revenue thresholds being tied to valuations in the early stages. He highlights at least ten unicorns, that have yet to hit eight figures of revenue. This was anathema not even a few years ago, but now we are seeing companies hit the unicorn valuation target within as little as two financing rounds. Newcomer suggest Tiger Global is the driver of these valuations and with their rapid fast term sheet and research-based diligence they have made other firms speed up fundraising and increase the price they are willing to pay in early bets.
Key takeaway:
"In one sense investing tens of millions of dollars in companies before they’ve hit $10 million in revenue is a small price to pay for a stake in what could be a $120 billion company like Snowflake."
‘Buy the Constitution’ Aftermath: Everyone Very Mad, Confused, Losing Lots of Money, Fighting, Crying, Etc. | Jordan Pearson & Jason Koebler
First off, DAO governance tokens are a $40 billion market themselves. So last week's ConstitutionalDAO phenomenon is not necessarily a completely brand new concept or idea. What was new is the complete train-wreck people experienced when 1) the DAO did not win the auction and 2) people wanted a refund. While Web3, crypto, and DeFi are all very new concepts on the internet one thing is clear it is hard to move "digital money" and getting your money out is much more complicated when things go sideways. Pearson and Koebler had some great insights in this piece and it shows how things like DAOs have a long ways to go before becoming a safe and secure place to store value. The bigger question then becomes we be able to make the returns we expect when these issues course-correct?
Key takeaway:
"In order to get a refund, we have to do this in reverse, basically. And so to get our ETH back from Juicebox, we would have to pay gas fees again, meaning essentially the entirety of the amount invested would be wiped out."
What's Next
As I've mentioned in previous newsletters, I am launching my first business-in-a-box course for new tax professionals that are starting, growing, and expanding their firms in 2022. It will be geared toward individuals looking to do at least one of the following three things within the next six months:
Start an online tax business
Expand their current tax business
Grow their team of certified tax professionals
If you or anyone you know is interested, shoot me an email.
My experience in the industry over the last five years has afforded me the knowledge to understand what can be improved on.
Much more to come on this next week with our first cohort which will be a few small select firms set to start December 6th.
Check out last week's Stretch Four Insights Volume #4 here and tell a friend to tell a friend.
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