In June I announced that Calm Fund was taking a break from making new investments. This quarter we made the decision to return called-capital to our Fund IV investors and release them of the remainder of their subscription, effectively closing Fund IV to just its current investments.
As the year comes to a close, I’ve made the decision that Calm Fund is not coming back in anything resembling its prior form of small funds investing early stage checks for minority stakes in calm companies.
Calm Company Fund LLC, the small management company that manages the portfolio of Calm Company Funds 1-4 (sometimes called “the GP” for short), has been decimated by litigation from SureSwift, private equity fund with whom we co-hosted the Founder Summit event series. More than two years since the last actual summit, the litigation remains an ongoing persistent drain of money and time. On top of the actual costs, and for reasons I can’t get into here, the litigation has made basic operations of the fund—like hearing founder pitches, advising portfolio companies, or communicating with LPs—almost impossible. We are defending ourselves, but there remains a real risk that Calm Fund at some point cannot afford the costs of litigation. There are too many ‘it depends’ to summarize what could happen from there.
The management company currently has no employees, but I am personally committed to managing the funds to their conclusion as best as I can by myself.
Looking forward, 2025 is going to be a year of building. I’m switching my primary focus to building my own products, operating businesses, and compounding cashflow.
I want to switch things up this year and inject some new energy and ideas. I’m interested in collaboration, consulting projects, experiments, and other explorations.
I’ll be focusing my energy into two areas:
1/ Leveraging AI to build software products rapidly, with a small team (of one, to begin with). After nearly a decade since I last did any programming, I jumped back in to see first-hand how much more efficient one developer can be with the latest AI assistance and tools. The short version is I am blown away by how powerful they are and more excited than I’ve been in a long time to build products myself. I can already feel the builder part of my brain fully revving back up.
2/ Opening a rock climbing gym in Brooklyn. After an entire career building remote companies and products in the cloud, I’ve felt a strong calling to build something physical IRL that contributes to the community in New York City. My partner and I will be building our first climbing gym next year.
I shared the details about the challenges facing the Calm Fund management company because I want to be transparent about my plan/hopes for the future of that business. In 2021 we raised what amounted to a seed round of $1.3m from 746 investors to try to find a way to scale up Calm Company Fund LLC, the GP/fund business. Rather than investing in any particular fund, those investors are entitled to a share of the carried interest (aka “carry”) that all current and future funds would potentially generate. If we stop raising new funds entirely, those investors are unlikely to see a good return on investment just off the carry. I would like to do as well as possible by those investors, so my hope is that I will be able to fold any new software businesses I create next year into the management company, and voluntarily convert the Wefunder investors to also receive upside in those businesses too, effectively turning it into the holding company for any kind of a calm company SaaS business I might build, acquire, or take a stake in. But it also doesn’t make sense to place entirely unrelated ventures inside a business that continues to be pummeled with legal exposure and costs. So for now, these new businesses will be separate. When we come to a resolution on the litigation or win at trial, I will evaluate the best way to give Wefunder investors some upside in whatever businesses might come out of this next phase.
Ok, that’s what’s happening, now for some more details…
Why Calm Fund Is Not Coming Back
I’ve come to the conclusion that it is time to close this chapter on Calm Fund. A tough decision like this breaks down into two questions for me:
- Why isn’t this working now?
- Is it worth continuing to iterate to try to make it work or not?
The first one is answered by the same reasons I gave in my June announcement:
1/ Building this business on the back of micro-funds still isn’t sustainable. I still have not seen a glimmer of real interest from institutional investors in the general thesis. For reasons I discussed in many prior posts, bringing in large investors is likely the only path to build a sustainable long-term fund business. Ultimately there needs to be some amount of product-market fit between what we are offering and what large investors want to invest in and that hasn’t shown any signs of changing. For the same reasons in my June post, building a business that is a lead investor in almost all of its deals and manages 100s of investments on the back of tiny micro-funds just isn’t viable.
2/ We have been decimated by litigation against us by SureSwift, a firm with whom we co-hosted the Founder Summit: a series of fun in-person and online events to foster connections between founders of calm companies. The litigation continues to drag on more than two years after the last actual summit and has sapped a huge amount of our financial resources and my team/personal bandwidth over that period. The overall litigation has also made basic operations of the fund—receiving pitches, advising portfolio founders, communicating with investors—almost impossible.
We probably could have survived either one of these individually, but combined they’ve brought the entire business to an interminable standstill. The net effect is that we have had to lay off the entire team and remain largely unable to do anything at least until we resolve the outstanding litigation.
The second question, of whether to continue trying to iterate and build is a tougher one.
In 2021 we raised essentially a seed round of $1.3m from 746 investors to try to find a way to scale up Calm Company Fund LLC, the GP/fund business. Commitment in part to those investors has motivated me to try to work through every possible way to keep Calm Fund in business.
For the past few years I’ve iterated through every possible pivot and permutation I could imagine. I invested in myself and fought hard to manage through some pretty intense personal burnout. I wrote, I brainstormed, I got incredible feedback and support from our investors and community.
But I believe the correct decision is to close this chapter on Calm Fund as an early stage investor and to put my focus on building businesses rather than investing in them. It’s a complex decision that is incredibly hard to summarize, but the most salient and clear-cut reasons I can share here is:
AI-assisted development is fundamentally changing the market
No investment thesis should be written in stone. The market evolves and a good investor/fund adapts accordingly. But sometimes the market shifts in ways that cause a fundamental re-evaluation. A transition I’ve been tracking for years now is starting to become fully realized in the market for software businesses.
Everything is Micro-SaaS now … the “micro” in Micro-SaaS refers not to the size of the company or product, but to the scope of the problem being solved. I would usually define it as a product tackling a problem that could be truly solved with a solo founder or very small team. …
But, by that definition, everything is a Micro-SaaS now.
The scope of what problems can be truly tackled by one founder or a very small team has expanded so much that it includes virtually all SaaS businesses.
Almost two years ago I wrote:
“AI-assisted software development is a massive boost to the Peace Dividend of the SaaS Wars and will make the last wave of “Micro-SaaS” pale in comparison. Individuals and small teams can now take on enormous incumbents at a fraction of the cost/time”
A few weeks ago, I decided that, after nearly a decade since I last stopped programming, I would re-learn to code myself using the latest AI-assistance. After just two weeks exploring first-hand, I’m fully convinced, these tools are absolute superpowers for technical founders.
The effect of all this is clear to me: solo founders or very small teams are increasingly going to ship high quality scalable products and leapfrog to higher revenue milestones before they ever need to hire more people.
Although we invested across a fairly wide range of opportunities, the Calm Fund thesis hinged around providing capital to solve a particular pain point where founders were juggling coding, customer support, design, etc but revenue was not yet high enough to hire an extra 1-3 employees.
I think strong founders will increasingly be able to simply leverage automation and AI to power through this phase without needing outside capital. The ones that do choose to raise will have a lot of leverage over investors on terms/valuations. Of course, this change won’t happen overnight, but I don’t want to be deploying a fund thesis into a stage where the opportunities are getting rare and the leverage is accumulating only to founders.
If I had to pivot around this market transition, I would be looking at investing both earlier (pre-product) and later (”early growth equity”) as well as beefing up the non-cash benefits we offered. But I think the better adaptation, for me at least, is to become a creator of equity in these companies, rather than trying to buy a slice of equity as an investor.
Feeling All The Feels
Honestly, it’s been a frustrating and painful 2-3 years.
I’ve been stuck in purgatory for more than a year: needing to make big changes to save Calm Fund, but unable to make decisions or execute plans without clarity on whether we would be forced to continue to spend enormous amounts of time and money on litigation. It has tested to the core my capacity to sit within a persistent shroud of uncertainty and stress while staying patient and optimistic.
I’ve spent the past several years having the trajectory of my future, and the ability to retain an awesome team, entirely dependent on the off-hand decisions of people I barely know and who have put <1% as much thought into the situation as I have. From judges and lawyers to institutional investors, I’ve been completely at the mercy of random waves of herd consensus and individual mercurial opinions.
I’m feeling a very strong desire to be able to wake up every day and just build great things that happy customers pay for; to be able to work hard and directly create value for a team, for myself, and for a community.
But it’s also been an incredible and fulfilling 5-6 years
The fact that we got this idea off the ground was a minor miracle. The fund business is not exactly fertile ground for new ideas. Funding for bootstrappers was, and largely still is, heresy to the investing community. But we made it happen. And even though I didn’t manage to build a sustainable fund management business, large chunks of the investment thesis are mainstream now.
I learned that you can just listen to what people really want and build those things for them. For years I heard so many founders say that what they really wanted to build was a real profitable business that grew sustainably and how they wished there were investors who would back that kind of business. Hopefully the work we have done nudges more funds and individual investors in that direction.
I got to work with so many incredible founders. For many of them we were the only investors who would have or did make a bet on them. In many cases we wrote the check that allowed them to go full-time into a business that has become a life-changing outcome for them. I can’t describe how much joy that brings me.
I got to learn so freaking much. For five years I got the pleasure of having 1,000s of entrepreneurs distill years or decades of their personal experience into insights about markets and products I didn’t even know existed.
I had the privilege of bringing together an incredibly talented team that helped us build an amazing brand, a connected community, and powerful internal tools.
And, so so many people that I met through the fund have become real genuine friends.
And honestly, even the challenging parts have ultimately been rewarding
The value of vulnerability, transparency, and authenticity has gone from something I intellectually knew to something I feel bone marrow-deep. Every time I was nervous to share more bad news and challenges with the team, the portfolio founders, our investors, and even publicly… Every. Time. I got nothing but waves of understanding and support from every direction.
I learned a hell of a lot about the US legal system, and the ways in which it can be totally absurd. I hope these hard-learned lessons will serve me well and allow me to help other founders navigate, or avoid, similar situations.
I cultivated a new level of internal resilience and presence. The overall stress of these past few years kicked off a deeper journey of personal growth and healing. Something I hope to share more about in the future.
What Happens To Calm Company Fund
To reiterate what I said at the start of this post:
- I will manage our existing funds and support our portfolio as best as I personally can on my own.
- I will continue to try to defeat or resolve SureSwift’s litigation against us and re-evaluate our if gameplan once we put that behind us.
- If and when we resolve the litigation, I will explore the best way to turn it into a holding company and convert Wefunder investors into something with upside across more than just carry from funds.
The Next Chapter: Code & Concrete
As I look ahead to 2025, I’m incredibly excited for the next chapter.
The broad theme is that it’s time for me to re-sharpen my entrepreneurial edges. I’m going to get back to building products, selling things for money, consulting and recurring revenue, and operating and growing businesses.
I’m going to be focused on creating equity rather than paying for it, and returning to a focus on building and compounding cashflow. This transition is an opportunity for me to apply the lessons of the Calm Fund experience and refocus on areas that I am truly energized by right now.
1/ Building Software Businesses in the AI Age
Through Calm Fund I’ve been following the market for “AI products” closely. We also did a lot of internal testing of LLMs for internal tools. For the most part my conclusions were that for most jobs, AI still wasn’t good enough or reliable enough to delegate much of the work to. However, writing code was one domain where it seemed clear that AI was already good and getting better. Though, because that was not a focus area of the fund, I didn’t actually roll up my sleeves and use these things to write some code until recently.
After nearly a decade since I last did any real programming, I decided to re-learn to code using the latest AI assistants like Cursor and v0 and I am blown away by how much faster (and fun!) it is to build products with these tools.
I’m just dipping my toe back in and I’m already more excited than I have been in a long time to be able to go from idea to live product on my own in days (or, very soon, probably in hours).
Am I just jumping on the AI bandwagon? Not exactly. I think my overall AI thesis from two years ago remains sound. “AI startups” and thin wrappers around fast-changing models are not likely to prove good long-term investments. They are potentially a way to learn first-hand about the cutting edge of model capabilities while earning some revenue along the way though. But no, I see this as a doubling-down on one of the core principles of my entire career since I first started talking about Micro-SaaS: that very small teams can build surprisingly impactful products and companies.
Threads i’m excited to pull:
- Micro-SaaS + AI: What mainstream customer demands can be solved by businesses with a massively lower cost structure (like 1 person) and relieve customers from the out of control B2B SaaS price inflation?
- Where can we use AI to introduce creativity and joy rather than just to complete a task?
- What kind of totally new ideas will I think of by getting my personal shipping velocity incredibly high?
As an example, the first app I’ve shipped in a decade is Sparks. It’s a simple tool for nudging you towards deeper conversations with your friends, family and internet pals. It’s a simple v1 right now, built in about 2-3 days, which is mind-blowing to me.
2/ Brooklyn Uprising rock climbing gym
I’ve spent my entire adult life living and working remotely and building companies and products “in the cloud.” Having moved back to NYC two years ago, I’ve been feeling incredibly motivated to bring local humans together to do fun things in real life.
To begin with, my partner Emily and I are building a rock climbing gym in Brooklyn! We’ve found a space in DUMBO and hope to have it opened by Fall 2025. I’ll be sharing much more about this soon.
Climbing and the climbing community has given me an immense amount of joy, health, and personal growth. I’m excited to contribute something back.
IRL is hard, especially in NYC, and I like new challenges.
Emily and I had our small trial run of collaborating to bring something to life IRL at Burning Man last year and it went great!
And heck, AI is not going to disrupt climbing gyms any time soon.
3/ Sharing the Journey
Do interesting things and share the journey has been and always will be my North Star. I’ve never been more excited about what’s next. The intersection of AI-powered development and community-focused business feels like exactly the right place to be. I’ll be sharing every step of the journey as we:
- Build lightning-fast with AI-assisted development
- Create joyful products that solve real problems
- Build an amazing climbing community in Brooklyn
- Explore the future of sustainable business
I’m particularly excited to share:
- The nitty-gritty of building a climbing gym in NYC
- How AI is transforming what small teams can accomplish
- Building a business with your partner
- The intersection of digital and physical community building
Want to follow along? Join me at codeandconcrete.com