OnlyFans is a social media company that’s surged in popularity since the pandemic. The company has a less-than-stellar reputation because of the type of content creators post on the site. I’ve never used the site and don’t know a lot about it, but I read an article about the financials that caught my attention.

The parent company, Fenix International Limited, is based in the UK, so its financial statements are public. I looked at its latest financial report covering 2022 and noted the following:

• Creators on the platform grew 47% to 2.16 million
• Fans (i.e., users) on the platform grew 27% to 187.9 million
• $1.09 billion in total annual revenue
• ~67% of annual revenue is generated in the US
• ~48% of revenue is subscription
• ~52% of revenue is transactional (take rates from purchases)
• Net profit (after taxes) of ~37% or $403 million
• Dividend of $338 million paid in 2022
• Dividend of $310 million paid in 2021

Bloomberg says the company is owned by a single individual, to whom all dividends are paid.

Again, I don’t know anything about the platform and haven’t used it, but its financial performance is something to take note of. The revenue, net profit, and dividend figures surprised me.

I’ve been learning about successful entrepreneurs who happen to be investors—I call them “investor entrepreneurs.” I heard about Stanley Druckenmiller and have been learning about his journey as an investor.

Druckenmiller is a hedge fund manager, which I’m less familiar with. I’m still learning about that investing style and about hedge funds, but one thing has stood out to me from learning about Druckenmiller: there are many creative ways to deploy capital and achieve outsize returns. There’s no set path that all investors must follow. Some investors like to invest in what others might consider unorthodox ways, and they can still be successful. 

I’m excited to continue to learn more about Druckenmiller, his approach, and why he was successful. 

I’ve been chatting with several founders who put off raising in 2022 and earlier this year in hopes that fundraising conditions would improve. They’re now at the end of their runway—they must raise new capital. It’s a tough spot to be in, and I suspect it may be more common than not for early-stage founders who raised in 2020 or 2021. 

Summer vacation season is over, and public markets rebounded through July (August has been a down month so far). The optimal window before year end in which these founders can raise capital opens in September and closes around Thanksgiving. This two-and-a-half-month window could be make or break for many early-stage start-ups this year.

I’m curious to see how many early-stage founders begin fundraising in September and how the number of investments completed in this year’s window compares to last year.

I was chatting with a kid interested in entrepreneurship recently. He wants to start some sort of business and asked me where to begin. That’s a broad question, so I shared my story.

When I was a teenager, I was obsessed with fixing up cars and spent tons of time learning about it. What are the best parts? Who makes them? How do you buy them? How are they installed? I was more knowledgeable than most people. My friends ended up paying me to help them fix up their cars. And that morphed into a large business years later.

I ended by advising him to find a problem he’s obsessed with and keep feeding his obsession. Eventually, the obsession will lead to figuring out how to solve the problem. Others will think his obsession is odd at first. But once he masters the problem and solves it, they’ll think he’s a genius. They may even end up being his customers.

I recently watched COIN: A Founder’s Story. It’s a documentary about Coinbase CEO Brian Armstrong and his journey from software developer to CEO of a publicly traded company worth tens of billions of dollars.

Coinbase wasn’t a smooth ride. Its trajectory was far from up and to the right. The journey was full of twists, turns, and obstacles (many of which persist today). The documentary covers all of this. Some of it was new to me: specifically, how Coinbase found product–market fit, the tension between Armstrong and his cofounder Fred Ehrsam, and how Armstrong evolved as a leader as the company grew.

Anyone interested in hearing about the early days of Coinbase and Armstrong’s journey as a founder should check out the documentary here.

I’m friends with an entrepreneur running an automotive service business focused on consumers. He’s been at it several years and is thinking about possibly selling the business one day. He would need to grow revenue and increase margins to make it attractive for acquisition. He has various ideas about how to do this, but his current model creates obstacles:

• Consumers need his service only once every five to ten years, so he must acquire new customers every month.
• Consumers view his service as an expense (i.e., its cost exceeds its perceived value) and negotiate hard, which negatively impacts margins.
• Managing relationships with consumers is a constant pain point for his staff and requires that he run at elevated staff levels, reducing margins.
• Each consumer has a different car, which adds operational complexity to servicing vehicles and reduces throughput.

He recently shared an idea he’s experimenting with. The automotive service he offers is something fleet owners can use too. Instead of continuing to focus on consumers (B2C), he may switch to targeting businesses (B2B). Here’s what he learned from some customer discovery:

• Small fleet owners are growing in his area.
• Each vehicle in a fleet needs to be serviced annually, so he could expect monthly repeat business.
• Down vehicles reduce revenue, so fleet owners view his service as helping them generate revenue (i.e., its perceived value exceeds its cost), which positively impacts margins.
• Working with repeat fleet owners simplifies relationship management, reducing the burden on his team and making it possible to operate with a smaller team, thereby increasing margins.
• Fleet owners buy the same vehicles, which simplifies operations and increases throughput.

Through trial and error, this entrepreneur has learned a valuable lesson: why some businesses are better suited to focusing on other businesses (not consumers) as their core customers.

It’s early, but I suspect this entrepreneur will pivot his business from B2C to B2B and finally reach the scale and profitability that’s eluded him thus far.

This week, Atlanta-based LeaseQuery announced that it has acquired Stackshine. LeaseQuery is a software company that was started to help accounting teams accurately record lease obligations in their financial statements. It has since created additional solutions that simplify accounting. Stackshine is spend management software. It helps organizations detect and manage software subscription spend and usage organization-wide.

George Azih has built an amazing company with LeaseQuery. He’s one of the smartest entrepreneurs I know. He has an incredible founder story that includes bootstrapping the company to around eight figures in revenue before raising outside capital.

Congrats to George, the LeaseQuery team, and the Stackshine team! I can’t wait to see what’s next for LeaseQuery!

This week WeWork included a warning in its quarterly results report:

[A]s a result of the Company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the Company’s ability to continue as a going concern.

Translation: WeWork is struggling to survive. It may or may not make it through a rough patch. To turn things around over the next 12 months, management has a plan that includes the following elements:

• Reducing rent by renegotiating lease terms
• Increasing new sales and reducing churn
• Scrutinizing expenses and capital expenditures
• Raising capital by taking on debt, selling equity, or selling assets

Crunchbase says that the company has raised over $22 billion in equity and debt financing over the years. Its valuation peaked in 2019, when it raised a reported $6 billion from Softbank at a $47 billion valuation. As of Wednesday, August 9, 2023, its public market capitalization (i.e., valuation) is $272 million. Dropping from $47 billion to $272 million is about a 99.5% reduction in valuation in roughly four years.

I’m not sure what the future holds for the company, but its fall from grace is stunning. I’m curious to see what impact WeWork’s struggles will have on start-ups who depend on it for office space and on the owners of office buildings that house WeWork’s locations.

I was at a social event where aggressiveness in deal negotiations was discussed. The main questions being asked were how aggressive should a party be in negotiations and when have they taken it too far.

This gathering was attended by founders (early-stage and mature), VC investors, people in the start-up ecosystem, people not involved in start-ups, and a few non-start-up lawyers. The perspectives were diverse, which made for an interesting conversation.

After a while, people mostly ended up in one of two camps:

• There’s a point in deal negotiations where you can be too aggressive and jeopardize the long-term viability of a deal. Negotiate to that point but don’t take it further (even if you have the leverage to do so), because it will have negative consequences down the road.
• Deal negotiating is an example of what has applied to humans for a long time: survival of the fittest. You must fiercely negotiate for your best interest in any deal. Not doing so leaves an opening for others to take advantage of you. Negotiate like your survival depends on it.

The conversation was much more involved than that, but I’ve tried to simplify it. I really enjoyed hearing the different perspectives. At the end of the conversation, most agreed that how people thought about aggressiveness was influenced by their upbringing and professional experiences.

I don’t think there’s a right or wrong way to think about aggressiveness. I’ve come to believe that the answer to how aggressive one should be in negotiations is it depends. It depends on the dynamics at the time, on what you’re negotiating, on what leverage you have, and on the parties you’re negotiating with.

One thing holds true in all negotiations. Be mindful of this when deciding how aggressive to be: no one will look out for your interest more than you will. If you don’t look out for yourself, don’t expect the other party to do so.

In April, Apple launched its savings account product. A few weeks later, a Forbes article reported that Apple saw inflows of almost $1 billion in the first four days after the launch. At the time, I wrote that it was a sign of a huge unmet need and perfect timing (right after the Silicon Valley Bank failure).

This week, Apple shared that its savings account product has reached $10 billion in deposits. An astonishing amount in just four months—especially when you consider that the savings product is available only to people who have an Apple Card. I wonder what the deposits would look like if the account were available to iPhone users who don’t have an Apple Card.

This product is off to a strong start, and I can’t wait to see how it does over time and what Apple’s next banking move will be.

iBank coming soon?