GoFundMe’s $500 Million Valuation – How Medical Crowdfunding is Eating the World – Part 2

When TechCrunch reported last week that GoFundMe was raising capital at a $500 Million valuation, I decided to write a two-part blog post discussing how a crowdfunding site not named Kickstarter could attract such a high valuation. The short answer is that it has to do with the exponential growth of medical crowdfunding.

Part One of the post laid out the reasons why medical crowdfunding is quickly becoming the largest category in crowdfunding. Part Two of this blog post answers the question of “why now?”

To recap from Part One, the rapid growth in medical crowdfunding over the last five years has to do with three underlying factors:

1.  There is a massive healthcare problem in the US

Americans spend $400 Billion on out-of-pocket medical expenses each year for things that insurance doesn’t cover like co-pays, travel to and from treatment and lost wages)

2.  Healthcare costs are rapidly outpacing wages.

Increasing income inequality is hurting average Americans.  Healthcare premiums have increased close to 200% over the past 15 years while wages have only increased marginally.

3.  Medical crowdfunding changes lives.

Medical Crowdfunding campaigns have become the modern day way of letting someone know “we love you. You’re not alone.”

But Why Now?  

Modern day crowdfunding sites have existed since around 2008. Yet the New York Times reported in January that the tidal shift in the  medical crowdfunding space is just beginning.  If medical crowdfunding truly is eating the world, the next big question is why now? Why 2015?  The answer has to do with changing demographics and the evolution of social norms.

1.  Demographic shift –  Crowdfunding is moving beyond the twenty-something-early-adopter and towards the thirty-something early majority.

To understand the story of medical crowdfunding, we need to first understand the history of crowdfunding and who were the early adopters.  The story begins with Kickstarter and artists.

If we imagine someone starting a Kickstarter campaign in 2010 to produce a new album or a documentary, we could imagine that he might look like this guy.  Let’s call him Sebastian.

Hipster dude

Or if he was launching a really successful successful campaign maybe he even looked like this mustachioed  gentleman.


In general, the Sebastians of the world were twenty-something, tech-savvy, early adopters. The people using Kickstarter were cool, the projects they were creating were cool, and everything about Kickstarter exuded cool.  Had crowdfunding started with a different category like medical, it probably wouldn’t have caught on because it doesn’t have the same “coolness” factor, and the tech-savvy, early adopter cool kids never would have tried it.  To be absolutely clear, while crowdfunding existed before Kickstarter, modern crowdfunding would never have taken off without Kickstarter.

Flash forward to 2015.  If we imagine a person starting a GiveForward, GoFundMe, or IndieGoGo Life campaign she might look more like this. Let’s call her Jenny.

soccer_mom (1)

Jenny is a busy mom in her thirties raising money for her high school friend battling breast cancer.  She’s at the age where for the first time someone in her peer group might have an early cancer diagnosis.  Jenny’s not a technology early adopter. She’s the early majority.  She doesn’t use crowdfunding because it’s cool.  She uses it because it’s useful.  

In short, crowdfunding is growing up. It was popularized by Sebastian and the cool kid crowd (arts and technology) between 2009-2011.  Between 2012-2015, it began to cross the chasm beyond early adopters.   Over the past few years, much of the growth in the sector has been due to the early majority adopting this technology.

Put another way — remember when your mom first joined Facebook or got a smart phone? Crowdfunding is starting to go through a similar maturation process.  It’s not just for the young’ns any more.  It’s for everyone.  Because like Facebook and smart phones, crowdfunding is moving from cool to important.

2.  Changing Social Norms – The Shift Away from American Rugged Individualism

The other tidal shift we’ve seen in the past few years has been a shift in an American values system that has traditionally placed a stigma around asking for or accepting help.  This stigma stems from a false narrative of ‘American rugged individualism’ and has caused millions of families to suffer in silence rather than accept help from those who love them.

Over the past few years, however, social norms have begun to evolve.  This shift, at least in part, can be traced back to 2013 after the Boston Marathon bombing when tens of thousands of people across the country rallied for the victims by setting up crowdfunding campaigns on their behalf.

One such fundraiser on GiveForward raised close to $900,000 for a young newlywed couple that both lost limbs in the bombing.  Another on GoFundMe raised over $800,000 for a double amputee.  At the time, these were the two most successful medical crowdfunding campaigns to date.

The Boston marathon fundamentally changed something in the American psyche and the way we perceived crowdfunding.  We realized this wasn’t just about the victims. This was about all of us.  Crowdfunding was our way of simultaneously giving the finger to the perpetrators of this horrible crime and offering our unified support to those who were injured or killed.  It was at this moment in time that crowdfunding became a legitimate vehicle to voice our collective will.  Crowdfunding had moved beyond arts and technology.  Crowdfunding had become patriotic.

Most importantly, with the Boston Marathon fundraisers, there was no stigma attached to accepting help. And why should there have been? These victims didn’t deserve what happened to them, and there’s no way they could have ever planned financially for these types of expenses.  Why should their financial futures have been ruined because they happened to be at the wrong place at the wrong time?

So, for a lot of people, that’s when it clicked.  It took a horrible tragedy to bring us to our senses and help us realize that placing a stigma around accepting help for things outside our control is inherently unjust.  Once this wall cracked, we started applying the same logic to similar events in our lives like when a friend got diagnosed with cancer or had a child born premature.

In essence, the Boston Marathon fundraisers helped break the stigma and normalize the idea of medical crowdfunding for much of the country. To be sure, in 2015 the wall has not fully crumbled.  But the cracks are getting bigger and it seems only a matter of time before love and compassion triumph over shame and the damaging lie of American rugged individualism.

GoFundMe’s $500 Million Valuation – How Medical Crowdfunding is Eating the World

Yesterday, Techcrunch reported that GoFundMe was raising capital at an expected $500 Million valuation.  Some folks have been surprised at how big the valuation is but when I heard the number I was surprised how small it was.

I’ve been saying for a while that GoFundMe is a $1B company.  Here’s why.

Medical Crowdfunding is Eating the World.  

Last May I gave a presentation on the trends in the medical crowdfunding space at NYU Stern’s crowdfunding conference. The presentation was called “Medical Crowdfunding is Eating the World” and argued that within five years, medical crowdfunding would be the biggest vertical of all crowdfunding.

Less than a year later, I think it is safe to say that this prediction is going to come true, and probably a lot sooner than I thought. Medical crowdfunding is already the #1 category of three of the world’s top ten crowdfunding platforms including GoFundMe, GiveForward and YouCaring with medical crowdfunding accounting for anywhere between an estimated 25%-70% of the dollars contributed on these platforms.  On top of that, the world’s the second largest crowdfunding platform IndieGoGo, recently joined the club this past December with the launch of IndieGoGo life.

Why is Medical Crowdfunding Eating the World

There are three reasons.

1.  Medical crowdfunding is an insanely massive market.

2.  Our healthcare system is shit and trending shittier.

3.  Medical crowdfunding changes lives.

Massive Market

Deloitte estimates that Americans spend $400 Billion a year on out-of-pocket medical expenses.  This is an insane amount of money.  And these are just the expenses that insurance doesn’t cover like, co-pays, travel expenses to and from treatment, and lost wages.   These are the things people raise money for when they run medical crowdfunding campaigns.

When you compare the potential size of the medical crowdfunding vertical with the size of, say, the technology crowdfunding vertical, it’s not even close.  The need for medical crowdfunding is far greater than the need for technology crowdfunding.  As a rough comparison, in 2013 venture capitalists invested $29.3 Billion into early and late stage technology companies.  Even at the height of the bubble, the total amount invested by VCs topped out at $105 Billion.

$400 Billion vs $29 Billion

If I had to hazard a guess, I would estimate the potential size of the medical crowdfunding market at roughly an order of magnitude bigger than potential size of the technology crowdfunding market.   Simply put, not everyone needs seed capital to start a business or a Bro app. But EVERYONE does need healthcare.

Our Healthcare System is Shit and Trending Shittier

Every 30 seconds an American family goes bankrupt due to medical costs, and the situation is actually getting worse for the average American.

This graph below is called the Milliman Medical Index.  It shows that the cost of healthcare for an average family of four more than doubled between 2002 and 2012.

Millimen Index

The average family of four now has more than $20,000 per year in healthcare costs.

On top of that, families are paying more out-of-pocket today than ever before as insurance premiums and workers’ contributions continue to outpace wages.

Screen Shot 2015-04-24 at 12.20.03 PM

In sum, our healthcare system is broken, and over the past decade or so, it’s only gotten worse for people.  In comes a solution.

Medical Crowdfunding Changes Lives

Medical crowdfunding saves lives.  It keeps people out of bankruptcy.  And it provides millions of people with hope in their darkest and most difficult days.

All you have to do is watch either one of these videos below and you intuitively “get” why these campaigns are popping up everywhere.

(Justin’s GiveForward Campaign) (Mark and Jenny’s GiveForward Campaign)

Medical crowdfunding is not a frivolous activity.  It’s not potato salad.  It’s not a fad.  Medical crowdfunding is the same thing people have been doing for centuries when a loved one is sick — coming together and letting that person know that he is not alone.

Medical crowdfunding is empowerment. It’s compassion. It’s love.  And that’s why it’s eating the world.


Part II

If Medical Crowdfunding truly is eating the world, why now?  In part two, I’ll discuss the evolution of crowdfunding from 2008-2015, the demographics of the space and why medical crowdfunding is just now crossing into the mainstream.

The Evolution Of The Chicago Startup Community – Going From Zero To One

I had a great conversation with Jeff Carter yesterday on Twitter about the evolution of the Chicago startup ecosystem. (H/T to Chicago Inno and this interview of J.B Pritzker for prompting the conversation).  The question at hand was: how do you build a startup ecosystem?


In building anything significant, there is always an order of operations.  For instance, for legendary 1980s Miami startup entrepreneur, Tony Montana, the order was as follows:

1. Build high-margin pharmaceutical business (get the money); 2.  Whack boss/competitor, Frank Lopez (get the power);  3. Proceed to order the Peking duck (get the duck).

In the world of startup communities, the order of operations looks something like this: 1. Build Big Sexy Startup that draws in top talent; 2. Talent spills over to rest of community helping fuel new startups; 3. Venture capital begins to pour in.

Or…if we’re using the parlance of Scarface, first you get the startups, then you get talent, then you get the money. Here’s a brief history of how this has played out over the last seven years in Chicago.

Chicago Startup Community Timeline

2008–2009: The Tech Desert Era

When we launched GiveForward in 2008, the startup ecosystem didn’t really exist in Chicago. In fact, I honestly don’t think I even knew the word ‘startup’ at the time.  That’s not to say there weren’t a few burgeoning tech companies and tech meetups sprinkled throughout the city, but it was still very much an underground movement.  If you were looking to join a startup or invest in a startup in 2008, it was pretty much a tech desert we aint found shit

Today, it’s easy to take for granted all the mentorship programs, accelerators, co-working spaces, and educational events that take place every night of the week in the city, but in 2008 none of that existed. There was no Techstars, no Technori, no 1871, no Lightbank, no BuiltIn, no Techweek, no Starter League, no Dev Bootcamp, no Internet, no Impact Engine etc. Here’s what did exist:  Midventures, BARcamp and Ron May. MidVentures (which later became TechWeek) was three dudes, (Geoff Domoracki, Jonathan Pasky,  Brian Mayer) and a lobby. Every three months or so they’d have a startup event called MV Mixers where four or five companies would give a 10 minute pitch in front of 15-20 people in the fancy lobby area of Geoff’s apartment building.

Here’s some photos from a February 2009 event where GiveForward and Groupon were both pitching.

Midventures Gropon GiveForward 2009

In early 2009 Groupon was a side project and Andrew Mason was actually still pitching The Point.

Midventures 2009 MV MIxer with GiveForward and Groupon

This also happened >> People had Blackberries.

midventures 2009 blackberries

BARcamp Then there was BARcamp.  If MVmixers were for the suits,  BARcamp was for the true nerds and it was even scrappier than the mixers in Geoff’s lobby.   Anyone who wanted to be a BARcamp sponsor pretty much could be, including GiveForward. Hooray!

Screen Shot 2015-04-19 at 1.03.37 PM

Mind you, in 2009, we were bootstrapped, we had made a whopping $6000 in revenue at that point and our website looked like complete ass.  We had no business sponsoring events but we did it anyway, because why not. We were like, you know, one of the biggest startups in the city. Yep, we were total big shots!


The startup bench was pretty thin in 2009, so event organizers would take any crap sponsors they could get. Hell, they even took us!

That was 2008-2009 in a nutshell. In general, there was some small underground stuff going on but there was no national spotlight on Chicago. That would all change in 2010.

2010: Groupon blows the fuck up and Techstars comes to Chicago

In 2010 Chicago got its Big Sexy Startup.   Groupon started blowing up, big time coastal VCs invested, and all of a sudden people are starting to look at Chicago in a different light. At the same time, something else awesome is taking place: Excelerate Labs (now Techstars Chicago) launches.  GiveForward was super-lucky to be part of the inaugural class.  For us, it forever changed the trajectory of our business.  But I think from a more meta-standpoint, Excelerate Labs helped change the trajectory of the entire Chicago startup community. Everyone wanted to be the next Groupon, and now there was a program that could help make that a reality.  It was a paradigm shift for the city.

2011: GrubHub blows up.

In 2011 GrubHub quickly followed Groupon as the next big success story when they announced they were raising a massive $50M round of funding. The business was going gangbusters and by this point they are well on their way to an IPO.

2011–2015: The Groupon + Grubhub Talent Explosion

As much as our low-interest-rate fueled, Techcrunch addicted startup culture lionizes the ginormous funding rounds and valuations we’ve all witnessed in the last few years, investment capital is not the primary driver of a startup ecosystem’s success.  The real driver is a deep talent pool. The effect of Grubhub and Groupon on the Chicago talent pool cannot be overstated. Engineering, product, ops, and marketing talent all moved into the city from elsewhere to be part of these rocketships. And once these companies IPO’d, many of their employees eventually spilled out to join the city’s new generation of startups.

Screen Shot 2015-04-19 at 10.08.43 AM

At GiveForward, I can say we’ve been very fortunate and have benefited in a huge way from all the post-IPO talent on the market from Groupon and GrubHub. Our online marketing manager came from Groupon, our Dev Ops guy, came from GrubHub, our CTO was formerly the CTO of Grubhub, and Mike Evans, the founder of GrubHub is one of our board members. On top of that, two more of our engineers are graduates of Dev Boot Camp, a three month intensive engineering program started by two former Groupon guys, Dave Hoover and Elliott Garms. All in all, about 15% of our team came from either Groupon, GrubHub or some derivation thereof.

Silicon Valley is Silicon Valley not because of access to capital.  It’s because of access to talent. As, Jeff Carter, founder of Hyde Park Angels and West Loop Ventures and one of the pioneers in the Chicago angel investing community stated so perfectly on Twitter, ‘Talent plays the biggest role.  Without it, there is no investment capital.’

With this influx of talent coming into Chicago in 2011-2014, the Techstars, 1871’s and Starter Leagues of the world began to spring up.  The Mentorship, office-space and educational programs that these organizations provided were instrumental in helping the Chicago startup community take hold.

2015 and Beyond: The Final Piece of the Puzzle

The final piece of the puzzle is capital.

While it’s great to have coastal VC firms investing more and more in Chicago, it’s critical to have homegrown firms ready and able to invest into Chicago companies.

Though this last piece of the puzzle has been the slowest to progress, I think we’re close to a tipping point where we are soon going to see an influx of early-stage investors moving into the midwest.    Last week alone, I had conversations with three next generation investors who are raising seed funds right now. All three of them are under 40. One of them is under 30. And two of the three were in Chicago.

You’re Awesome Dude


This awesome picture was stolen without permission from Alexis’ awesome blog about stuff that is awesome.

Last week I got a call at 9 AM from a buddy I hadn’t spoke to in a while.  It went something like this:

Me:  “Yo, what’s up?

Amigo: “Hey, I just actually wanted to call you to say thank you.”

Me: “For what?”

Amigo: “For making an impact on my life.”

Me:  “Okaaay…Wait.  What do you mean?”

Amigo: “Well, remember when we were at that Dodgers game a few years back?”

Me:  “Yeah…”

Amigo:  “I was struggling with my business at the time, and you said to me ‘if you believe in what you’re doing keep going.  You’ll figure out a way to make it work’.  Well I stuck to it like you said, and the business today has never been better. Two weeks ago, we hit $1M in revenue.  So I just wanted to say thanks.  That conversation had a huge impact on my life”

Me:  “Well holy shit, man!   Do I get a cut??”

I didn’t actually say this last part.  It was more like this:

Me:  [stammering and kind of speechless]  Uh…I don’t even know what to say.  Thank you, man.  That means a ton to me.  I’m really at a loss for words.

After I got off the phone I thought to myself. “Jeez, well that was a pretty radical way to start off a morning.”  So, knowing how good it had made me feel, I decided to pay it forward and give this same gift to others.  Over the next few days I emailed three people to let them know how they have impacted my life.

The nearly uniform response I got back from everyone was something along the lines of: “Wow, thank you.  This means more to me than you realize.”

I recommend trying this out yourself.  It’s easy.  It’s fun. And it makes you feel good.

If someone has made an impact in your life, whether it’s a friend, a parent, a teacher, a sibling, a boss, let them know, and be as specific as possible about the piece of advice that helped shape your life. They likely have no idea that what they said had an impact on you, and I guarantee it will make their day.  It will probably make yours too.


Why You Should Focus On Distribution Before Focusing on Product

Winning companies have either a remarkable product that ‘sells itself’ or a strong product with remarkable distribution. As a startup founder, one of the fundamental questions you have to ask yourself early on is: should we focus our energy on product or distribution?

95% of the startup world answers, “product, no questions asked.”  I disagree.  Either option is a viable path but if you are a first time founder nailing distribution is going to be a helluva lot easier than nailing product.


The big problem with focusing all of your startup’s energy on product is that the “build it and they will come” argument only works if your product is an order of magnitude (10x) better than your competitors’  (H/T Peter Thiel).  If it’s not at least 10 times better than your competitor, then you’re essentially still competing on marketing.

Think about that for a minute. In order to win on product alone, you need to build something 10X better than anyone else!!!  It’s not impossible, but as anyone who has ever tried to build a product will tell you, it’s really, really, hard.

To build a 10X-better product you need a team of extremely skilled individuals (think Tony Fadell).  On the other hand, to nail distribution you only need one person who’s willing to hustle and understands how to play the game (think Gary Vaynerchuck).

When making a decision on which route to go, it’s important to be honest with yourself and leverage the skillset you actually have, not the one you wish you had.  When you look in the mirror, do you see Tony Fadell?  If so, by all means go the product route. It’s your best best. If you don’t see Tony Fadell and there are no Tony Fadells on your team, then the Vaynerchuck route will probably give you a better shot at success.  The beauty of the Vaynerchuck route, especially as a first-time founder, is that you don’t need specialized skills to pull it off.  Anyone can do it.  You just need to commit to out-CARING your competition.

That’s primarily why I have a bias towards distribution.  It’s not because I think distribution is an inherently better lever. Truthfully, it’s probably an inferior lever.  But it’s just a bit easier to pull off.  In the startup world, the odds are so stacked against you.  If you can continually make decisions that move the odds slightly more in your favor, you give yourself the best chance of catching a few lucky breaks.


The second reason I have a bias towards distribution is because even if you nail product, it doesn’t guarantee success.  More often than not, the difference between commercial success and commercial failure is the distribution.  A great example of this is Kickstarter’s coolest cooler, which raised $13M and is the most successful Kickstarter project of all time.

So what is the coolest cooler?  Well, it is exactly what it sounds like.  It’s like the fucking swiss-army-knife-Megatron-bad-ass-MoFo of coolers with everything from a built-in blender to stereo speakers to LED lights to help you locate your beverage after the sun goes down.  Is it 10X better than the competition? Dude, seriously? IT HAS A BLENDER IN IT!!!!!! it’s probably 20X better than the competition.

So, they had this amazing product.  It must have just sold itself, right?

Of course not.

I think the most interesting part of the Coolest Cooler story is that it wasn’t initially a success.  The dude who pulled in $13M for his cooler, posted the same cooler on Kickstarter eight or nine months before and only reached $100,000 of his $125,000 goal.

So what changed? He made a few tweaks to the design and launched it in the summer when people were thinking about margaritas. But the biggest difference between the two campaigns is that the second time around he had a bunch of loyal fans from his first campaign who were willing to shout from the rooftops to get the word out from the start.  These raving fans were enough to seed the campaign, build momentum and get the flywheel spinning.  From there, the press [i.e. a distribution channel] got hold of it and it took off.

In essence, during the first go-around, Dude had great product but no distribution strategy. When he got a second bite at the apple, he succeeded because he had figured out how to play the game; second time around, he already had his distribution channel built-in.

Same product.  Different distribution strategy.  Wildly different results.

Here’s another example:

A few months back I wrote a blog called “Nobody has a clue what they are doing.”  It was an decent post, but certainly nothing groundbreaking or novel. For the most part, no one really cared about it.  Then, a few days in, a VC by the name of Hunter Walk found it and tweeted it out to his eight-five thousand followers.  Shortly after that, Marc Andreessen who must have seen it on Hunter’s feed, tweeted it out to his two-hundred-eighty thousand followers.  And then BOOM!  All of a sudden, it seemed like everyone in the startup universe got blog FOMO, shared it like a billions times on Twitter and collectively decided it was a brilliant post.

Hooray! I just nailed distribution.  My formula: create a okay-to-solid product, catch a lucky break, and then stumble my way into the distribution jackpot of Hunter Walk and Marc Andreessen.  For about one day, I won the Internet.

So, if my blog was a startup and I wanted to scale it, what would my next steps be?  Well, I’d basically have two choices, the product route or the distribution route.  I could either magically become a really smart, insightful, amazing writer like Tim Urban at Wait but Why and draw people to my blog because of my brilliant writing (odds of this are about nil) or I could try to build a relationship with Hunter Walk and Marc Andreessen so that when I write decent-to-above-average blog posts in the future, I can ask them to tweet them out for me.  Neither of these are easy to pull off, but the latter is slightly more feasible.


To become a company that can last for decades, you really need both great product and great distribution. The point of this blog post isn’t to say, you should only focus on one lever for eternity. That would be silly. The point is help you think about which lever to focus on first.   If you’re a first-time founder and you don’t initially have the resources to bring a Tony Fadell into your team, you’ll likely increase your odds of success by focusing more of your early energy on distribution.  Once you’ve achieved product market fit and you have figured out enough of the distribution side to see real adoption, find your Tony Fadell, inspire him or her to join your team, and go out to build your 10X-better-product that changes the world.


some great blog posts (several of which take a different view point than this post) see below:

Short reads:

How to Avoid Delusional Thinking In Startup Growth Strategy

Why You Should Find Product Market Fit Before Sniffing Around For Venture Money

Why Growth Hacking Isn’t BS

Long Reads:

Zero to One

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150M+1 New Reasons to be Thankful at Techstars

Earlier this week David Cohen wrote a wonderful blog post entitled, 150M New Reasons to be Thankful at Techstars where he announced a massive new $150M Techstars fund for early-stage ventures involved with the Techstars network. In the post, David gave thanks to the people who helped make Techstars what it is today.  Of course, with typical David humility, he failed to include one very important person: David Cohen is reason 150M+1 to be thankful for Techstars.

David invested in GiveForward as part of his original $5M fund back in 2010.  He has been one of our biggest advocates over the past four years and there is no way we’d be where we are today without him.  I can’t truly thank him for what he has created, but here are a few of the things I am grateful for.


I’ll never forget our first big conversation with David.  It was shortly after Excelerate Labs Demo Day in 2010 and we were sitting in the board room of a Chicago VC who had just offered us a term sheet with horrible terms.

We were scheduled to have a call with David right after our meeting with the VC.  But the meeting ended up going an hour long, so we awkwardly asked the VC firm if we could use their boardroom to make a call to another investor.  When we got David on the phone, we let him know of the situation.  We told him that we were excited to get our first term sheet.  But the term sheet kinda sucked.  Unfortunately, we didn’t have any other offers and we didn’t know what to do.  We were a little paranoid that the VCs were listening in on our conversation, so we whispered into the speakerphone: “David, they want to give us $1 million at a $2 million post money valuation.  Should we take it?”  Without any hesitation, David whispered back.  “Run.  Run away as fast as you can!”

This turned out to be great advice.  We declined the offer and instead managed to close a $500K seed round with a group of incredibly supportive angel investors, among them David Cohen.

Belief in Us

After we closed our seed round we didn’t have much interaction with David for awhile.  He told us that he was going to be a “passive” investor, and for the first few months, I don’t think we recieved an email from David longer than six or seven words.  But in the third month of our relationship, everything changed.

On April 14th, 2011, we sent out our monthly investor update.  The title of that month’s investor update was called:  The Power of Hugs.  Here was the actual intro paragraph.

This month, the theme of our newsletter is hugs. I know you’re probably thinking “Hugs?!?!!  What the hell is he talking about? I want to hear about numbers.”  But I think it’s important for you all to understand GiveForward beyond just our revenue and monthly traffic numbers [which are really good this month by the way].  I think it’s important for you all to understand our culture which is the foundation for everything we do.  So without further ado, let me tell you about the power of hugs.

I remember feeling really insecure and almost deleting the entire email before hitting send.  We had just closed our seed round with all these high-powered investors. We had a billionaire in the group, an entrepreneur who had taken his company public, a dude whose name was on the U. Chicago business school, and several other uber-successful tech founders. My partner Desiree and I, on the other hand had no idea what the hell we were doing and I was about to send an email telling them about the power of hugs.  Um, yeah, great idea, Ethan.

After mustering up all the courage I had in my entire body, I finally decided not to delete it.  Instead, I hit send, closed my eyes and hid under my desk, confident that I was going to get laughed out of the room and they were going to ask if they could take all their money back.

To my surprise, David wrote back the following email to us and cc’d all of the investors.

You are simply awesome. Your updates are awesome. Your outlook is awesome. You are inspiring.  I love companies that care. It’s how I try to build companies too – the rest usually “just works”. And I love the 85/15 thought. Spot on.  Congrats on the progress. I’m back in Boulder or I would have loved to hang in NYC. I’m coming to Chicago in early June, let’s be sure to get together then.

He signed it,


For me, this singular email was a huge turning point in my career as an entrepreneur.  It gave me so much confidence that we could be ourselves without worrying about being second guessed by our investors because we were a little unorthodox in our approach.  The fact that three months into our relationship with our new investors, David was not only tolerant of our weirdness but that he embraced it, meant everything to us and gave us the courage to go out and build a great company and a culture we could be proud of.


By far, one of the most important things an investor can do for you is intro you to other VCs and investors. In this regard, I cannot think of a better person in the universe than David Cohen. David literally intro’d us to all of our Series A VCs and several of our angels.  Founder Collective, First Round Capital, Jason Seats, Howard Lindzon, Tom Peterson – all of them are investors in GiveForward because of introductions that David made for us.  I often joke that what you say in your pitch meeting is less important than who introduces you.  But it’s not entirely untrue.

And it’s not only investors.  David has connected us to all sorts of people through his network.  One that stands out in particular to me was Rand Fishkin. A few years back I was struggling with how we could build a strong company culture.  I asked David who was the best person he knew who could help us build this strong culture.  A few hours later, David hooked me up with one of my business idols, Rand Fishkin, who was kind enough to jump on a call with me.  Rand gave me advice about values and culture that stuck with me ever since and had a profound impact on our company.


In 2012, David invited us to present to the LPs of his Bullet Time Ventures Fund at their annual meeting in Boulder.  Only three or four of his portfolio companies presented and the other ones were bigger companies like Twilio and Mocavo. I remember it felt like a really big honor to be invited.  But more than anything what stood out to me about that trip was how David went out of his way to make me feel comfortable while visiting. He not only offered me a spot to crash on his couch and took me to my favorite Boulder eatery for lunch (Chipotle), he went out of his way to organize a meetup with a handful of local entrepreneurs so I would have people to hang out with at night.  That’s just the way David rolls.  He’s good people.  All the people in his universe are good people.  And that’s what makes him so awesome.   He cares about you as a person as much as he cares about you as a portfolio company. He’s not just an investor.  I consider him a friendvestor and someone I know I’ll be able to count on for the rest of my life.


whatsapp techstars

The Whatsapp Message I sent to David when I heard the news about the $150M new fund.

Last but not least, when David invested in GiveForward, he brought us into his family.  Not his biological family, but his Techstars family.  And it truly does feel like a family – a crazy one, but one that I’m extremely proud to be a part of.  Thank you, David, for bringing us in.

PS – also thankful for the introduction to Whatsapp before it was an $18B company, for helping my friend land a job in Portland, for connections to guys like Brad Feld and Micah Baldwin and for always being there when we’ve needed it. Fistbump

The Habit of No

via the femonite.com

Most people at startups are in the habit of saying yes.

This new year if you are looking for a resolution that will transform your startup, get in the habit of saying no.

The Habit of Yes

The habit of yes occurs when a founder asks you to help him with something that “will only take half an hour,” or when a co-worker asks you sneak in a “quick” bug fix to the weekly sprint because it’s an “easy fix and should only take ten minutes.” We’ve all been there and our natural inclination is to say yes.

There are lots of reasons why we say yes but most of them have to do with the fact that saying no feels rude. Yes, on the other hand, leads to happy co-workers, happy founders and a conflict-free environment. Yes, for lack of a better word, is nice. It is pleasant. It is agreeable. And everyone likes yes.

The Danger of Yes

But yes is a dangerous habit to fall into. Saying yes here and there might seem harmless. But all those little yeses add up. They compound on each other, and they can transform a decisive strategy with clear objectives into an all-you-can-eat buffet of tactics and activities with no common goal.

The true cost of yes is far greater than most of us realize. When we say yes to the small things, we’re also saying yes to switching costs. We’re saying yes to scope creep. We’re saying yes to shipping late.

Falling into the habit of yes is like running a marathon where every three miles you decide to run in a different direction for a quarter mile before getting back on course.

The habit of yes means never crossing the finish line before your competitors, or worse yet, never crossing at all.

Everyone wants to be respectful of their co-workers but invariably saying yes to every request is actually disrespectful to the company. Yes leads to mediocrity. Yes is execution’s achilles heel. Yes is a non-confrontational cop-out. It circumvents the reality that we need to make hard choices.

Ultimately, yes isn’t respectful. Yes is the insidious startup killer.

The Habit of No

The habit of no is one of the healthiest habits your startup can develop.

At its most basic level, the habit of no is about accepting the reality that all ideas are not equal. The habit of no means ruthlessly prioritizing ideas, setting goals and then sticking to them. No is having the conviction to eliminate the good in order to get to the great.

The Path To Greatness is Paved with No

The reason that no is so important is simple: no company has ever achieved greatness by being good at ten different things. They achieve greatness by being best-in-the-world at one thing.

The best companies have a singular thesis about what the future looks like and then maniacally execute against that thesis. They ignore the outside noise. They know exactly where they are going and then say no to any ideas that don’t take them closer to achieving their goal.

Take Google for example. Today Google offers everything from cloud storage to grocery delivery but that is not how Google won the Internet. Google won the Internet because long before you could use Google to video chat with Nana halfway across the country, Google figured out how do one thing 10X better than anyone else in the world: sell ads on the search engine results page.

The same idea can be applied to investing in public stock markets. No one has ever become a billionaire by betting on index funds. Investors win big when they have a thesis about what the future looks like and then place all their chips on the sector or company they think has the greatest chance of creating that future. The greater the risk, the greater the reward. The startup world is exactly the same.

Moonshot or Bust

To fully understand why the habit of no is so critical for startups, it’s necessary to understand the binary dynamic of how venture-backed startups operate.

If you are at a venture-backed startup, by definition your singular objective is growth. You’re not aiming for single or double digit growth. You’re shooting for 1000% YoY growth.

Your objective is to land a moonshot or die trying.

Startups that fall into the habit of yes never hit the moon. Instead, they divide their time between a handful of activities and end up doing all of them at a B+ level. In the real world getting a B+ is an okay outcome, but in the binary world of startups a B+ is the same as an F. B+ work might get you 85% towards the moon, but it will never, ever, ever get you all the way there.

Once you realize that B+, A- or even A work isn’t good enough to hit the moon, it necessarily changes the way you have to operate.

Developing a Habit of No at Your Startup

When a startup has a culture of yes, the people who have the courage to say no may get labeled as unhelpful, selfish or “not a team player.” But this couldn’t be further from the truth.

The habit of no is actually all about teamwork. It’s about acknowledging what is required for everyone to reach a common goal, respecting this common goal and giving your company and your co-workers the best shot of achieving it.

If your startup’s goal is to land on the moon, the next time someone asks you to do something that pulls you off course from achieving this goal, you should politely decline.

If you’re afraid you might ruffle some feathers, share this blog post with them in your response.

Or even better yet, have an open discussion with them. Show them your prioritized list of tasks you are working on in order to achieve the overarching company goals. Once all the information is on the table, decide together if the new task is more or less likely to move you closer to your company goals.

The habit of no can be scary but it can also be transformative. It starts with one person and then it spreads. It’s certainly not the easiest habit to develop, but if you can commit to keeping your head down — to executing on a common goal, and inspiring others around you to do the same, you might all look up one day and realize: “Holy shit! We’re on the moon.”

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No One Has Any Clue What They Are Doing

dog no idea cart

I recently asked a friend who just finished his first year as an associate at a big VC firm what was the biggest thing he learned in his first year.

His answer:  “No one has any clue what they are doing.”

“What??”  I said to him.  “How is that possible?  You guys are printing money. Don’t you have some type of magic formula?”

“You’d be surprised,” he responded.  “Almost all the decisions are just kind of based on gut.”

When you’re on the outside looking in, it always seems like the people on the inside know what they are doing. They seem smart and confident and generally on top of their shit.  But when you’re on the inside, you know the truth:  Everyone is clueless.  Those who try to tell you otherwise are suffering from delusions of grandeur.

I’ll give you an example of what I mean.  Last month, the tech media fell in love with a new startup touting them as the ‘next big thing’. Everyone from TechCrunch to NPR was writing about them as their user base grew from zero to millions overnight.

I was lucky enough to get an insider’s look at this hypergrowth, as their CEO and I are on the same founders’ email distribution list. While the CEO may have appeared cool as a cucumber to the public, in front of his peers, in the “circle of trust” that is our founders-only email list, he was scrambling like mad, asking a million questions a minute and seeking advice from anyone willing to offer help.

I’m sharing this with you not because he is a fraud that needs to be exposed, but rather because he is the norm.

The emperor has no clothes.  He never does.  Even the great CEOS — Mark Zuckerberg, Tony Hsieh, Elon Musk — as cool as they may appear on the outside,  I guarantee they’re just as scared and insecure as the other seven billion people with whom they share this planet.

And of course, this doesn’t just apply to tech founders and VCs.  It applies to everyone in the freaking universe.  (except for maybe this guy)

The moral of the story here is that if you ever think to yourself, I’m not smart enough or I’m not brave enough, or I’m not fill-in-the-blank-enough to do X, you are wrong.  No one doing X is any smarter or braver than you are.  The only thing that makes them different is that they have learned to get comfortable being uncomfortable.

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I’m Donating $2500 to Fight Climate Change and I Will Pay You to Join Me

Climate March NYC

400,000 people march on Sept 21, 2014 to force action on climate change

Yesterday, 400,000 people marched in New York City to demand U.N. action on Climate Change.   According to Time Magazine:
“The showing was the largest climate protest in history and largest social demonstration of the past decade.”
All I can say is WOW!!  If this wasn’t THE wake up call, I’m not sure we are ever going to wake up.
In the spirit of yesterday’s Climate March, I’m pledging to donate up to $2500 to Climate Cycle, a K-12 climate change education non-profit based in Chicago.
If you’re wondering what you can do to help, here’s what you can do right now.
Tell the fossil fuel industry that you’re breaking up with them, and then drop them like a bad habit.   In fact, I’ll even give you $30 to do it.
It’s actually a lot easier than you think.
A few months back, I came across an incredible startup called Arcadia Power that gives people the opportunity to switch their electric bills from dirty fossil fuels to 100% clean renewables with just a few clicks.  It’s like Geico.  Except 15 minutes doesn’t save you 15%.  It saves Miami.
I was so inspired by what they are doing, I decided to become an advisor (disclosure, I have a tiny amount of equity in the company) and shortly thereafter I made the switch to 100% clean energy myself.  In the first month alone, I planted the equivalent of seven trees and prevented twenty-eight gallons of gasoline from going into our atmosphere.  Awesome, right?
I’m sharing this with you all today because knowledge = power.  Like the cab companies fighting Uber right now, the energy companies have had monopolies in this space for a very long time.  They’d like you to believe they’re still the only show in town.  While that used to be true a few years ago, it’s not true anymore.
You have a choice.   If you want to make the switch to clean energy, use the promo code below and you’ll get $30 off your first Arcadia Power electric bill.  
For every person that signs up in the next 30 days using the promo code, I will make a matching $30 donation to Climate Cycle, up to $2500.
Win-Win :)
Here’s the code.  Please feel free to share it with friends.  And thanks for being part of the solution.
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Michael Brown, Ferguson and the Problem We’re All Ignorning

Michael Brown Housing discrimination

As we near the 30-day mark from when Michael Brown was killed in Ferguson, MO, I’m glad that our country has taken the opportunity to bring issues of racial profiling and the militarization of our police force into the national spotlight. But as we begin to examine our country’s race issues under a microscope, I hope we don’t just look at the issues on the surface – the ones that are acute and obvious and make for good television ratings.  Examining these issues is a necessary start but it’s not the finish line.

What I mean by that is that we have a tendency in this country to distort our priorities based on the squeakiest wheel rather than focusing on the insidious problems that pose the greatest threat. Pink ribbons, for instance, drive sales and marketing budgets. As a result, we spend seven times as much on cancer research as we do on obesity even though obesity and it’s partner-in-crime, type 2 diabetes, is what will eventually bankrupt our healthcare system. Fear mongering is another example. Peddling fear leads to votes come election time. As a result, we’ve spent trillions of dollars over the past fourteen years fighting terrorism. Yet, we refuse to spend any money fighting climate change, when in fact, the slow but steady creep of climate change poses a far greater threat to our existing way of life.

My fear with the Michael Brown tragedy is that we’re heading down this same pathway on the issue of race. Racial profiling is certainly an important issue but it’s not THE issue we should all be focusing on. It’s a secondary issue that doesn’t go nearly deep enough. Rather, if we want to truly honor Michael Brown’s life we must start a deeper national dialogue, not on racial profiling, but about why racial profiling exists.

[Disclaimer: This blog post has nothing to do with startups nor delicious, delicious burritos. But I think the issues we’re facing right now as a nation are too important not to write about.  So, if you’ve never given a thought as to why racial profiling exists, I hope this blog post can serve as a starting point.]

Kobe Bryant, Stars and Bars, and the Black Guy on the El.

I guess I should start by giving you my background.  I grew up in a city in California with like three black people. Kobe Bryant was one of them. Dennis Rodman was another. And for a brief period, Karl Malone was the third. I didn’t see racism growing up. All I saw were white people. For most of my childhood, I never gave racism much thought.

This changed for the first time when I went to college. I went to school in Atlanta. While the city of Atlanta did not appear outwardly racist, I remember taking my first road trip outside the city and stopping at a gas station filled with confederate flags souvenirs. I thought to myself “what the fuck? They really must not like black people at this gas station.” Shockingly to me, the next gas station was exactly the same. And the next one after that was the same. Holy shitballs. They were all the same.

And that’s when I came to realize that gas stations in the south are not for black people.

The next year, I remember taking another road trip with some of my Phi Delt fraternity buddies. We went to Vanderbilt University in Nashville, which also had a Phi Delt chapter. We knocked on the door to see if we could come hang out for a bit. They were totally cool and told us to come in. That is until they realized that a few of our members were black. Then they told us we couldn’t come in.

And that’s when I came to realize that the South is not for black people.

After graduating college, I moved up to Washington, DC to start law school. During the 2004 presidential election, I volunteered with a bunch of other law students to go to West Philadelphia and serve as poll watchers to make sure that black voters were not being intimidated out of voting. I’d heard of these types of shenanigans happening in the south, but I had a hard time believing anything like this could happen in West Philadelphia. Sure enough, about two-thirds through an otherwise uneventful election day, we encountered a group of white dudes driving up to polling stations in a black suburban with out-of-state plates trying to intimidate black people out of voting.

And that’s when I came to realize that the North is not for black people either.

Fast forward to 2014, I was on the El in Chicago. The train was super crowded and this black dude with neck tattoos and a bunch of papers in his hand gets on next to me. He starts asking everyone for ten cents, twenty cents or fifty cents to make some copies of the fliers. No one responds. In fact most people in the vicinity put their head down to avoid eye contact with him. I started talking to him and asked him what was going on. It turns out his uncle was murdered the week before and he was putting up fliers with the picture of the suspect on every El train in the city. He had come in by bus from a neighboring state with no money and had been sleeping on the El train at the end of each night. He hadn’t showered in two or three days but was determined to catch his uncle’s killer even if he had to spend the next week sleeping on the train, away from his wife and four month-old-twins. Exasperated by peoples’ utter lack of compassion, he starts telling me how no one was helping him because he’s black. I thought about it for a second, and then sadly, I concurred and told him he was right.

And that’s when I came to realize that the Midwest is not for black people either.

So if the South is not for black people, and the North is not for black people, and the Midwest is not for black people, where is the place for black people?

The ghetto. The ghetto is for black people.

Over the last fifteen years, I’ve come to realize the same thing black people realize at a very young age – that America has a racism problem. It’s not a Southern problem. It’s not a Northern problem. It’s not a Midwestern problem. It’s an everywhere problem.

Now, as ugly as all these experiences were, none of them made me nearly as sad as what I would learn just a few months ago when I clicked a link on my Facebook feed.

Donald Sterling, Bomani Jones and America’s History of Housing Discrimination

In the midst of the seemingly buffoonish Donald Sterling-Clippers saga this past April, I stumbled upon a video of ESPN analyst Bomani Jones speaking out about how housing discrimination was the real evil in the whole Donald Sterling scandal. “Housing discrimination?” I thought to myself. “What is that?” What I would learn was eye-opening and disturbing.

Housing discrimination is the insidious evil that has plagued our country since the end of the civil war. Through housing discrimination we have systematically created an America for white people and a separate America for black people. Housing discrimination is the root cause of the ghettoization of black America.  It has robbed generations of African Americans from trillions of dollars of accumulated wealth and has placed an entire race in an endless cycle of violence and generational poverty.

If you’re not familiar with the issue, here are the spark notes.

(1) Housing discrimination started with bigotry: In the post-civil war era, white people saw whites as a superior race and blacks as an inferior race.  If you were black in post-civil war America, white people didn’t want you living in their neighborhoods for fear that you would rape their daughters and bring sin upon their race.

(2) State sponsored discrimination: In order to keep you out of their neighborhoods, federal, state and local governments worked in collusion with banks, mortgage lenders, appraisers and real estate agents to enact racist laws and business practices to prevent you and your family from living amongst white people.  For instance until 1917, fifteen states had laws on the books denying black people from living in white zoned neighborhoods.  From 1917-1948 nineteen states allowed real estate developers to place restrictive covenants into their deeds forbidding white property owners from selling to blacks.  It wasn’t until 1968 (103 years after the end of the Civil War) that the federal government finally made it illegal to outwardly discriminate against black people in the housing industry.

(3) Terrorism: During this period, if you somehow managed to navigate around the laws and restrictive covenants forbidding you from living in a white neighborhood, white supremacist neighborhood associations created for the sole purpose of keeping blacks out, would instigate a mob to swarm around your house and terrorize you and your family with violence until you agreed to sign away the deed to your house and move back to the neighborhood where you belonged.  That’s what happened in the northern states.  If you were a black family trying to exercise your constitutional rights in the South, there was a good chance you would just be lynched.

(4) Ghettoization:   Forbidden from living anywhere else, you were forced into segregated ghettos.  The creation of the ghetto was 100% intentional.  It was the result of state sponsored housing discrimination and outright terrorism.   The goal was to keep you where they belonged.

(5) Systematic theft:  To add insult to injury, even if you had the means to own a home in the ghetto, you were denied access by the federal government to mortgage loans offered to white people.  This practice was known as redlining.  Without access to capital your only option for owning a home was to buy an overpriced property through a predatory practice known as contract buying, where the title to a property would not be transferred to you, the buyer, until all contract payments had been made.  If you missed a single payment, you forfeited the house and all prior payments. The owner of the house would then kick you and your family to the street and sell it again to another unsuspecting black family

(6) Generational poverty:  Faced with nearly insurmountable hurdles to homeownership, you, along with most other black families ended up renting instead of owning, all the while paying exorbitant rents to slumlords who allowed their properties to become dilapidated because knew you had no other options. While white Americans began to accumulate wealth and pass this wealth on to their children through homes purchased using subsidized capital from the U.S. Government, you and other African Americans were intentionally impoverished and systematically denied the ability to pass on generational wealth.

The end results of housing discrimination have been disastrous for this country.  Think about this: where you live affects everything in your life.  It affects your safety, the schools you attend, the role models you see in your neighborhood, your chances of incarceration, and ultimately your opportunities for work.   All these factors compound on each other creating a feedback loop that is near impossible to escape. By choosing to institutionalize our racism through local, state and federal housing laws, we have chosen to create two different Americas — one where the American dream exists and one where it doesn’t. And what’s really fucked up, is that most of us are okay with that.

Michael Brown, Accountability and Changing the National Dialogue.

There’s no denying that we’re failing as a country when it comes to the issue of race. At the very least, it’s time to look in the mirror and start asking ourselves why.

In the case of Michael Brown, it’s easy to single out the police as the bad guys. It’s easy to call them racist and place all the blame on them. But singling out the police is a cop out (no pun intended). In doing so, we attempt to absolve ourselves of any blame. We try to limit the scope of our country’s race problems to a few rotten apple police officers, when the reality is it’s not just a few apples that are rotten – it’s the entire system. At the epicenter of this system is housing discrimination. And whether through commission or omission, we’ve all helped to create it.

When we don’t speak out about racism, we are the problem.   When we accept as normal and never think twice about the fact that white people and black people don’t live in the same neighborhoods, we are the problem. And when we see Frankenstein kill another black teen, and then blame Frankenstein but fail to acknowledge our very role in creating the monster, we are very much the problem.

Change starts with taking responsibility for the system we created. As long as we choose to continue segregating our cities, robbing our black youth of quality educations, and impoverishing 10% of our population — we’re going to continue fostering an environment for high urban murder rates, racial profiling and the killing of unarmed black teens.

If we really want to see change in this country, we must stop looking at the surface for answers and hoping one will magically appear. We’ve seen this narrative enough times to know that it doesn’t change. Scapegoating the police is not going to solve our problems. Eventually, we’re going to need to look a lot deeper both into our history and within ourselves and come to grips that we are all part of the problem. And until that day happens, we can safely conclude that America is not for black people.

Further Reading 

If you’re interested in further reading about the issue of housing discrimination, here are three pieces of various lengths that heavily influenced my thinking.

10 min – Bomani Jones Nails the Part of the Controversy Everyone Has Ignored  (Eye-opening.  At least it was for me)

1 hour –  The Case for Reparations by Ta-Nihisi Coates  (this essay is the single most powerful piece of writing I’ve read in years)

1 week – The Arc of Justice by Kevin Boyle  (Excellent book about housing discrimination in 1920s Detroit. Reads like a novel)

















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