Month: May 2020

Posted on

Two Ways Investors Measure Founder Coachability

As much as investors love founders with passion (or obsession) and grit, they also want to invest in founders who have the capacity to grow as individuals as much as their startup grows. And that boils down to how curious and open-minded they are. In other words, how coachable are they? In the past 2 weeks, I’ve had the fortuity to talk to 2 brilliant angel investors – each with their own respective formula for measuring founder coachability.

Formula #1: Assessing Peer Coachability

Last year, I shared a post about the importance of all three levels of mentorship – peer, tactical, and veteran. With the most underappreciated one being peer mentorship. For the sake of this post, let’s call the first angel, Marie. Similarly, Marie finds that peer coachability acts as a useful proxy for founder coachability. And she approaches peer coachability in a very unique way:

What do you and you co-founder(s) fundamentally disagree on?

Following that question, usually 1 of 3 scenarios ensue:

  1. The co-founders can state what they disagree on. And by follow-up question, share how they resolved that disagreement, then how that applies to their framework for resolving future disagreements.
  2. They figure it out on the spot. Better sooner than later.
  3. They say, “Nothing.” And quite possibly, the worst answer they could provide. ‘Cause that means they just don’t understand each other well enough. It’s highly unlikely that given how complex human beings are, that there can be two ambitious individuals who have the exact same outlook on life. Even twins have variations in their perspectives.

Knowing what co-founders disagree on assesses not only how well founders know each other, but also, how they’ve learned from each point of friction. Whether intentionally or not, they become each other’s coaches and push each other forward.

Formula #2: Assessing VC-Founder Coachability

Jerry, on the other hand, tests the waters by offering a controversial opinion about building a business or an insight into the industry, but one he has conviction and experience in. Then, he waits to see how the founder responds. The founder(s) can either:

  1. Disagree, and subsequently walk through where the dissent starts and offer a sequence of data and analyses as to why he/she believes in such a way.
  2. Agree, but still offer how he/she reached the same conclusion.

In either case, Jerry is looking for how mentally acute a founder is and how much room for discussion there is between them. On the other hand, the strike-outs regress to 2 categories:

  1. Disagree, and spend time trying to convince Jerry why he is wrong, rather than working to persuade Jerry to possibly see a bigger picture he might not have considered before. And sometimes, this bigger scope includes a marriage of Jerry and the founder(s) insights.
  2. Agree or disagree, but unfortunately, is unable to substantially back up their claim. Becoming a yes-man/woman in the former, or an argumentative troll in the latter.

The Mentorship Parallel

Unsurprisingly, just like how VCs use these methods to assess founder coachability, I’ve seen mentors use similar methods to assess potential mentees. Many aspiring mentees seek mentorship for its namesake – that metaphoric badge of honor. Not too far from the apple tree when people start a business or come to Silicon Valley to be called a CEO or for their company to be ‘venture-backed’. A category of folks we designate as “wantrapreneurs”.

And unfortunately, many aspiring mentees find bragging rights to be the mentee of [insert accomplished individual’s name]. Yet they don’t actually mean to learn anything meaningful, much less accept constructive criticism. Realistically, no mentor wants to go through that mess. “If you want for my advice, you better take it seriously,” as my first mentor once told me.

In closing

A great VC’s goal is to be the best dollar on your cap table, but they can’t be that Washington if you don’t let them be one. And though it doesn’t call for your investors or board members to micromanage, it does mean you are expected to be candid in both receiving and using (or not using) feedback.

Photo by Xuan Nguyen on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

Posted on

A Telltale Sign for a “VC No”

telltale sign, conviction, leap of faith, how to find a lead investor

Three moons ago, I jumped on a call with a founder who was in the throes of fundraising and had half of his round “committed”. And yes, he used air quotes. So, as any natural inquisitive, I got curious as to what he meant by “committed”. Turns out, he could only get those term sheets if he either found a lead or could raise the other half successfully first. Unfortunately, he’s not the only one out there. These kinds of conversations with investors have been the case, even before COVID. But it’s become more prevalent as many investors are more cautious with their cash. And frankly, a way of de-risking yourself is to not take the risk until someone else does.

I will say there are many funds out there where as part of the fund’s thesis, they just don’t lead rounds. But your first partner… you want them to have conviction.

Just like, no diet is going to stop me from having my mint chocolate chip with Girl Scout Thin Mints, served on a sugar cone. I’m salivating just thinking about it, as the heat wave is about to hit the Bay. An investor who has conviction will not let smaller discrepancies, including, but not limited to:

  • Crowded cap table,
  • No CTO,
  • College/high school dropout,
  • Lower than expected MRR or ARR,
  • No ex-[insert big tech company] team members,
  • Or, no senior/experienced team members,

… stop them from opening their checkbook. And just like I’ll find ways to hedge my diet outlier, through exercise or eating more veggies, an investor will find ways to hedge their bets, through their network (hiring, advisors, co-investors, downstream investors), resources, and experience.

So, what is that telltale sign of a lack of conviction?

I will preface by first saying, that the more you put yourself in front of investors, the more you’ll be able to develop an intuition of who’s likely to be onboard and who’s likely not to. For example, taking longer than 24 hours to respond to your thank you/next steps email after that pitch meeting. Or, on the other end, calling someone “you have to meet” mid-meeting and putting you on the line.

It seems obvious in retrospect, but once upon a time, when I was fundraising, I just didn’t let myself believe it was true. That investors just won’t have conviction when they ask:

Who else is interested?

A close cousin includes “Who else have you talked to?” (And what did they say?). If their decision is contingent – either consciously or subconsciously – with benchmarking their decision on who else is going to participate (or lead), you’re not talking to a lead (investor). And that initial hesitation, if allowed manifest further, won’t do you much good in the longer run, especially when things get bumpy for the company. Robert De Niro once said, in the 1998 Ronin film,

“Whenever there is any doubt, there is no doubt.”

You want investors who have conviction in your business – in you. Who’ll believe in you through thick and thin. After all, it’s a long-term marriage. Admittedly, it takes time and diligence to understand what kind of investor they are.

In closing

Like all matters, there are always other confounding and hidden variables. And though no “sign” is your silver bullet for understanding an investor’s conviction. Hopefully, this is another tool you can use from your multi-faceted toolkit.

From spending time with some of the smartest folks on both sides of the table and from personal observations, even if it’s anecdotal, the sample size should be significant enough to put weight behind the hypothesis. And, if I ever find myself wanting to ask that question, I aim to be candid, and tell founders that I’m not interested.

Photo by Manuel Meurisse on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

Posted on

Candor Comes First – How to Navigate Tough Conversations

relationship, candor, truth, how to navigate tough conversations

The other day, I jumped on a call with a friend who was going through a speed bump in his relationship. Though I’m no behavioral scientist nor expert in all matters regarding relationships, I’ve been privy to cousin cases between other couples, dorm-mates and roommates, as well as startup teams. And like most people out there, I’ve been through my fair share as well.

From my own experience, as well as from being a fly on the wall to others’, a large portion of the drama starts with the time spent dancing around the elephant in the room. And the longer a pair (or more) dances, the worse it gets. At the same time, it’s easier said than done. Rationally, we know that we should start with the truth. But frankly, it’s hard for many of us, myself included, to speak the truth when we need to. And in my hesitation, I usually regress to thinking: “Maybe it’ll get better over time. Maybe he/she will just forget about it. Maybe someone else will solve it in my place.”

Though I’ve gotten better at getting straight to the point, I’ve, by no means, mastered my approach.

Last week, I tuned into Elizabeth Gilbert, #1 New York Times bestselling author of Eat, Pray, Love and Big Magic, on her recent episode with Tim Ferriss. Quoting her late lover, Rayya Elias, at the 13:48 mark of the episode, Elizabeth shares this brilliant comment:

“The truth has legs. It’s the only thing that will be left standing at the end of the day… And since that’s where we’re going to end up, why don’t we just start with it?”

The Boiling Frog Problem

As all drama goes, we end up beating ourselves and others up in the process. Yet, when the dust settles, we still come back to the one left standing. There’s a similar concept that I learned in a college business course called the boiling frog problem.

If you put a frog in boiling water right away, it’ll jump out. But if you put the frog in lukewarm water and slowly heat it up, it won’t notice until it’s too late. And for the sake of the analogy, end up dying in the latter case.

The emotional turmoil we go through in our daily lives is no exception. It’s much easier to address the problem from the get-go, then let it rot you inside out. To put it into perspective, let’s say you address the problem at the beginning. There are only two outcomes possible:

  1. It’s not as bad as you expected, and you’re able to resolve it easily.
  2. It’s just as bad as you thought it’d be (as your mind regresses to the worst case possible). And well, you get burnt, as expected. But you will come out as a stronger person than when you went in. A phoenix reborn.

In closing

In tricky times, many of our relationships have been put on the rocks. The important part isn’t the conflict itself, but how we resolve the conflict. A frame of mind where there is no blame to dish out, but taking mutual responsibility to come out stronger in finding the resolution. Mike Maples Jr, co-founder of Floodgate, one of the most successful VC firms in the Valley, once said:

“Ego is about who’s right. Truth is about what’s right.”

Photo by Alex Iby on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

Posted on

An Underappreciated Way to Get a VC’s Attention

message, fundraising, investor list, how to get a VC's attention

It’s been a trying time for founders to fundraise in these turbulent times. On one end, you have investors who took a U-turn on plans to invest this year. On the other, you have investors still deploying or looking to deploy capital. The latter further breaks down into: (a) investors who are taking more calculated bets – raising the bar for the kind of startup that gets the capital, and (b) investors who find the opportunity to invest in the down markets. The latter cohort of the latter cohort seems to hold truer at and prior to the pre-seed stages among microfunds and angel groups.

The Tightening of the Market

Disregarding the investors who aren’t deploying capital anymore, it’s been harder than ever to raise. Here’s why:

  1. Anecdotally, more startups are looking to fundraise. Many have pushed up their fundraising schedules.
  2. The standard is much higher now than before. And that includes a stronger consideration for the problem you’re addressing. Is it anti-fragile? Is it recession-proof? If your numbers are down now, will they eventually ‘flip’ back on track post-quarantine?
  3. Valuations are taking a hit. Where before your startup may have been overvalued (especially in Silicon Valley), many startups are facing “more realistic” round sizes. And flat or down rounds are more prevalent.
  4. When investors can’t meet founders in-person, they’re resorting to data, data, data. Investors no longer have the luxury to benchmark a gut check over Zoom/email, as they would have in noticing micro-gestures and other situational context clues. Anecdotally, investors are spending much more time and putting much more weight on diligence than before.

And, that’s why founders, more than ever, should (re)consider fundraising strategies. This was something that I learned when I was on the operating side and at one point, working on the fundraising front for Localwise.

Much like when high school students apply for college, founders should have a three-tiered list – SMR, as I like to call it:

  • Safety,
  • Meet,
  • And, reach.

Safety

Safety investors are those that are definitely going to take the meeting. And will most likely invest in you (i.e. at the idea stage, this mostly comprises of family, friends, and colleagues, maybe even early fans via crowdfunding). Admittedly, they can only contribute small sums of money. Each check also carry little to no strategic weight on the cap table.

Meet

Meet investors are investors that will most likely take the first meeting, but you’ll need to do a little leg work to get them to invest. Many of these will most likely stick to being participants than leads in any round. They carry some strategic weight on the cap table – in the capacity of their network, their brand, or advice.

Reach

Your reach investors will be your greatest sponsors. The people who have the highest potential to get you hitting the ground running. These folks usually have crowded inboxes already. And you’ll need to figure out how to best reach them. Unless they reach out to you, you will most likely fall just short of their gold standard. But once you stget these onboard, your relationship will set you up for reaching your next milestone better than any other individual partnership. At the same time, they will be the ones who are most likely going to have true conviction behind your product, your market insight, and your team. They typically lead rounds, and carry great strategic value to your startup (i.e. top tier investors, SMEs, product leaders in your respective vertical). For lack of better words, your ‘dream girl’ or ‘guy’.

Your Priorities

When pitching (and practicing your pitch), go for a bottom-up approach. Safety, then meet, then finally reach. And ideally, by the time you’re pitching to your ‘dream girl’ or ‘guy’, you’d have refined your pitch that best fits their palate.

When prioritizing time and effort, go top-down. Since you have limited bandwidth, spend the most time doing diligence on your reach investors. Then meet. And if you still have time, safety.

Diligence and Reaching Out

During your diligence process, look at their team, their individual and collective experience. Is their partnership, especially the checkwriters, diverse? Were they former operators? Or career VCs? And based on what they have, what do you, as a founder, need the most right now? Also, to better understand the marriage you’ll be getting in to, talk to their portfolio startups and investors that have worked with them before. Pay special attention to the the venture bets that didn’t work out. Was there a break up? If there was, what was it like? How did the investor help them navigate tough times?

It’s easy to be positive and cohesive when things are working out, but how does that investor react when things aren’t going as expected?

After talking to the (ex-)portfolio founders, if you feel like they have a good grasp on what you’re working on and are excited for you, ask them for an intro. Focus on those founders who have gone through the idea maze in your respective vertical, or an adjacent one. If you’re defining a new vertical, or that investor has just never invested in your vertical, but has expressed public interest of pursuing investments in yours, ask founders who have the same or a similar business model to yours. After all, that’s going to be the kind of solid warm intro you want.

In Closing

Though there are other ways to get in front of investors (some more questionable and/or gutsy than others), including, but not limited to:

  • Warm intros from friend/mutualLinkedIn connection,
  • Cold email/DM,
  • Reaching out to a more junior team member (scout/analyst/associate/principal),
  • Presenting at accelerator/incubator Demo Days,
  • Presenting at a hot conference, like TC Disrupt or SXSW,
  • Volunteering at the same non-profit as them,
  • Auditing their lecture at Stanford,
  • Or, squeezing into their elevator (although most VC offices are pretty lateral)…

… anecdotally, it seems many founders overlook the means of getting an intro from a VC’s portfolio.

Photo by Marvinton from Pixabay

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

Posted on

#unfiltered #10 Idea Journals – How to Start, Prompts that Stretch your Parameters, The “Right” Setting, Embracing Imperfection

idea-journaling, sunrise, sunset

Three weeks ago, in the prelude to this post, I mentioned the art of ideating and how I personally pursue the expansion of my creative horizons. Though I have or had other systems in place (i.e. whiteboard in the shower, pen in pocket everywhere I go, meditation), idea-journaling has been, by far, the most impactful in stretching my creative muscle.

When you start:

  • Dedicate your time to doing it daily, with no cheat days. Set aside ten minutes each day to do so.
  • Invest in a journal you love. Don’t skimp. I fell in love with the Moleskine sketchbook at first sight. Though I have graduated to the Leuchtturm1917 sketchbook now. For me, investing in a higher end journal made me more inclined to journal daily – not wanting my Hamiltons go to waste.
  • Don’t worry about completeness or complexity. A journal entry can be 1 sentence or 5 pages or even a drawing. Regardless, dedicate a minimum of 1 page to each entry, even if you only fill it in with 1 sentence.

Explore different mediums of thought. Here are some of the prompts I started with:

  • Write a short story.
  • Draw a picture.
  • Design a logo.
  • Compose a tune.
  • Jot down a recipe you think could work. And after, how would you plate this dish?
  • Create a new language.
  • Write a poem in that new language (or language that’s not your native tongue).
  • What stood out to you today?
  • Write out a conversation you would have with your role model, a celebrity, your boss, your friend. Or even what your follow-up conversation would look like with someone you talked to today?
  • How would you resolve a problem that’s plaguing you now?
  • If you could change or add one fundamental universal law, what would you change and why?
  • And, if you’re still stuck without a prompt, what should be the question or prompt you ideate with today?

Why? By exploring different avenues of creative output, you give your mind more degrees of freedom to think. Expand your parameters. That’s why multi-linguists are able to host such a vast vernacular bandwidth.

The Setting

Just like the process of idea-journaling, the setting in which you do so is equally as important. Why? You ideate best in a positive or neutral environment, when you won’t tie down emotions and biases to the environment you’re journaling in. Find your sweet spot, and make it a routine. When and where do you find yourself to be the most relaxed and/or the most creative?

For me, although I don’t shy away from ideating throughout the day, I find my mind the most expansive: (1) right after I work out, and (2) right after a good hot shower. And though rare, if the above two don’t work, I take at least a 20-minute walk, tuning into either a podcast episode I’ve heard before or a non-lyrical playlist.

Once I find peace in the preamble of my ideation “ritual”, then I settle down in a place where I feel comfortable and at home. Before the crisis, my go-to spot in the city was Sightglass Coffee on 7th. Now it’s in my backyard garden. With good lighting and a cup of chamomile or green tea.

Embracing Imperfection

My idea journals are a sanctuary for me to be imperfect. And arguably, its is where I found myself to be the most courageous. I didn’t have to cower in fear of judgment and biases from other eyes. And I can be unapologetically myself. Over the past 2 years, I’ve been lucky for that same courage to have bled outside of the book-bound acid-free pages.

If I can quote a line from the prologue of Bob Iger‘s brilliantly wicked book, The Ride of a Lifetime…

“True innovation occurs only when people have courage[…] Fear of failure destroys creativity.”

Give yourself room to fail. You’re not going to like every single one of your ideas. In fact, if you’re like me, you might end up hating 4 out of 5 ideas you have when you first start off. But keep at it. Make it a habit. And one day, you’ll notice the distribution of good-to-bad ideas shift in your favor.

If you’re anything like me, when I get stuck, take some time to look up at the jewel-studded indigo canopy above. As your mind hops between one twinkle to the next, you might pick something up in the traversal.

As you make it a habit…

Although an unintentional upside when I embarked on this journey, the endeavor is truly meditative, perpetuating a positive feedback loop of euphoria. And over time, you’ll find yourself concepting more robust and intricate ideas. Hopefully, unbounded by your situational constraints. The sky’s the limit!

Photo by Leon Biss on Unsplash

#unfiltered is a series where I share my raw thoughts and unfiltered commentary about anything and everything. It’s not designed to go down smoothly like the best cup of cappuccino you’ve ever had (although here‘s where I found mine), more like the lonely coffee bean still struggling to find its identity (which also may one day find its way into a more thesis-driven blogpost). Who knows? The possibilities are endless.

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

Posted on

How Marriage Counseling Advice Applies to Managing Team Dynamics

marriage, relationship dynamics, team dynamics

Last Friday, I jumped on a call with my wickedly-creative founder friend. Given his cognitive flexibility, our conversations usually span a multitude of topics. And our Friday call was no exception – from product design to community management to de-stressors. Then, finally, marriage counseling and its applications in managing team dynamics.

Empirically, I focused my attention on co-founder dynamics when sharing an exercise I learned in my expedition to find the curiously passionate and the passionately curious. But I realize now that there are so many direct parallels on a broader scale to teams at large. From none other than a marriage counselor.

I want to preface that this exercise isn’t designed to be universal. And there’s a good chance it may not be useful for the situation you’re in or have been in. But nevertheless, hopefully, it can be another tool in your toolkit. So, if ever, when you do feel the need, it’s something that you can pull from your arsenal.

The Exercise

  1. Start every day gauging your individual gross energy level (i.e. motivation, excitement, emotional state) on a percentage scale with your partner(s)*.
    • * Yes, this was shared to me from a perspective that was inclusive of various forms of romantic relationships, including polyamory. Though I find it to be equally useful, when used among multiple co-founders/team members.
    • To put it into perspective, I usually sit around a 60-70%. When I’m inspired, motivated, or feel I can take on the world, I’m at 90-110%. Although extremely rare, when I’m down (i.e. sick, depressed, sad, unmotivated, stressed, in emotional turmoil, burnt out, or when I just want to regress to my shell), I’m usually at a 10-20%.
  2. Assess if you and your partner(s)’ collective energy level add up to 100% or more.
    • If one of you is feeling down, can (the rest of) you make up for that energy deficiency?
    • If I’m feeling 10%, and I just find it hard to get shit done, can my partner make up that 90% and help us as a team champion the day?
    • And let the person hovering 10% take the day off.
  3. If the collective energy just isn’t there, then the team falls on 2 types of contingency plans.
    1. Can you design a system (or if you already have a system in place) where all of you don’t have to put in 100%, but can still get things done?
      • Maybe this is the day to clean your house. Or wash the car.
      • For founding teams, maybe this is the day the whole team just does data entry.
      • For content creators, I hear this is the day to go through fan mail.
    2. Take the day off. Yes, the full day. And, no halfies. As great philosopher, Ron Swanson, once said:

“Never half-ass two things; whole ass one thing.”

  • Go take a day trip into the wilderness. Play video games. Read a fiction book. Draw. People-watch in a cafe (well, after the quarantine). Netflix-binge. Go tackle something on your bucket list.
  • And cap the downside – the potentiality of a slippery slope. I usually cap it at 3 days. Any longer, the counselor recommended seeing a relationship specialist.
    • Relationship counselor, if romantic.
    • Therapist/psychologist, if emotional.
    • Executive coach, if pertinent to co-founders.
    • Organizational therapist/psychologist, if pertinent to team.

What I didn’t realize until the Call

It seems obvious in retrospect, but it didn’t click until my buddy and I were thinking aloud. Subsequently, we realized how pertinent that exercise can be in understanding team workflows, as well as knowing when to double down and when to backpedal. Productivity has taken a sharp decline in this pandemic. For many, they’ve felt busier and working longer than before. The lack of diverse human interactions – for both extroverts and introverts – is really taking a toll. After all, we’re a social species. For managers, co-workers, and lateral teams, this exercise can be a way you can proactively assess your team’s morale and mental health. Assess early and optimize flexibly.

Photo by Sandy Millar on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

Posted on

The Third Leg of the Race

swimming, the third leg

I dedicated three-quarters of my life before I turned 18 to swimming. More than half of which I spent competitively. Although I never amounted to a Michael Phelps or Katie Ledecky, the years I spent swimming were some of the happiest, yet character-building times of my life.

I was a mid-to-long-distance swimmer – anything between 200 yards (or meters) to miles-long open-water swims in the SF Bay. By golly, the waters in the latter ‘pool’ were dirty. I couldn’t see my own hand when I reached out underwater. But I digress. As a distance swimmer, the biggest lesson I learned was how to fight the mental battlefield.

The Legs of a Race

Coach taught me to break every race down into 4 quarters. The first leg, the second leg, the third leg, and the last leg.

The first leg is comparatively the easiest. You’re brimming with energy, motivation and (potentially nervous) excitement. As long as you don’t exhaust yourself in this leg, but put in enough effort to break away from the pack, you’re golden. And in doing so, you’re going at 80% of your top speed.

The second leg is when you start engaging in a psychological battle with your competitors. Understand where they are in the race, as well as their racing personas.

  • Are they a front-half or back-half swimmer?
  • Are they a sprinter from the blocks?
  • Do they typically negative split in a race?
  • In an individual medley (IM) race, what’s their best stroke? Their worst stroke?

I typically dial back to 70% speed.

The last leg is probably the second easiest. You burn everything and anything you have in the tank. The goal is in sight – within reach. It comes down to how well you’ve raced the first three legs, and how much you trained. Effectively, it is a battle of strength – a Hail Mary. 110% speed.

Now let’s rewind back to the crucial leg I skipped. The whole reason I started writing this post.

The Third Leg of the Race

Whereas the second leg is based on ‘external warfare’ and the last leg is based on ‘physical warfare’, the third leg, and arguably the most important, is one based on ‘internal warfare’. By this point in the race, you’ve exhausted more than half of your energy, yet you’re expected to output more than when you started. You’re worn and tired. And, you can’t see the goal yet, so you know you have to save some strength for the last leg.

Yet, if you can hold this leg, it can mean the difference between a win and a loss. If you lose this leg and succumb to your thoughts, your chances of winning are slim. Quite frankly, it sucks.

So I made bets with myself.

“If I can finish this lap in 14 strokes, where I’m reaching out and scooping that ice cream just out of my arm’s reach, I’m going to treat myself to some Haagen Dazs after. One scoop for every lap I succeed in.”

“I’m going to flip turn faster than my opponents. And if I can do this thrice in a row, I’m going to get rock-solid abs when I finish this race.”

“I’m going to hold my breath till the other side of the pool, so I can smell and taste the teriyaki chicken.” *At swim meets, they’re always selling teriyaki chicken and rice for lunch. It’s greasy, super salty. But if you add some sriracha, it is a hungry swimmer’s heaven.

As you might notice, some of my bets were outright ludicrous. But it was because they were crazy that I was motivated to keep going. When there were no tangible goals, I made my own.

Why am I sharing this?

Life, seeking employment, running a business, and so much more run in the same way. After your academic career, no one really tells you what your goals are or can be. You have to make your own. When you’re job-seeking and no interviews are coming your way, you have to muster the strength to continue applying – either spraying and praying or finding creative ways to obtain certain opportunities.

In startup land, day 1 till day 365 (or even till day 730) will be a honeymoon. It’ll be the first leg. You’re hacking away by yourself or with pals on something you feel strongly about. For many, your next leg is scoping out the competition and pacing yourself.

  • Should you launch with press releases on TC, NY Times, etc?
  • Should you stay in stealth?
  • Can you continue bootstrapping?
  • Do you need to hire more people to help you out?
  • Which distribution channels are the most effective? Overlooked by competitors, but you think there’s a lucky draw in it.

And then, there’s the third leg. The leg that will decide if your adoption curve forms a hockey stick or a pitcher’s mound. You have a vague idea of where you need to go, but you haven’t hit critical mass. You’re questioning your initial assumptions. You might even be questioning yourself. Did you make the right calls? Is there anything you missed? What went wrong? Should you have just taken the job your friend offered?

But if there’s anything we’ve learned from some of the best entrepreneurs out there. It’s the ones who weather the storm – the ones who have that grit – that often make it. Being able to weather that third leg doesn’t guarantee success. But not being able to weather it is close to a sure-fire for failure.

As a world…

We’re on the third leg now.

And what we do now will decide if we win or lose the race.

Photo by chuttersnap on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

Posted on

Finding the Sweet Spot – Iterating What and How You Measure Product Metrics

iterating product metrics, measure, measuring tape

Many founders I meet focus on, and rightly so, optimizing their core metrics – a set of units that surprisingly don’t change after its initial inception. But metrics and the way you measure them should undergo constant iteration. Metrics are a way to measure and test your assumptions. 9/10 assumptions, if not all, are honed through the process of iteration. And by transitive property, the metrics we measure, but more importantly, the way we measure them, is subject to no less.

Though I’m not as heavily involved on the operating side as I used to be, although I try to, the bug that inspires me to build never left. So, let’s take it from the perspective of a project a couple friends and I have been working on – hosting events that stretch people’s parameters of ‘possible’. Given our mission, everything we do is to help actuate that. One such metric that admittedly had 2 degrees of freedom from our mission was our NPS score.

The “NPS”

“How likely would you recommend a friend to come to the last event you joined us in?” Measured on a 1-10 scale, we ended up seeing a vast majority, unsurprisingly in hindsight, pick 7 (>85%). A few 9’s, and a negligible amount of 5s, 6s, and 8s. 7 acted as the happy medium for our attendees, all friends, to tell us: “We don’t know how we feel about your event, but we don’t want to offend you as friends.”

We then made a slight tweak, hoping to push them to take a more binary stance. The question stayed the same, but this time, we didn’t allow them to pick 7. In forcing them to pick 8 (a little better than average) and 6 (a little worse than average), we ended up finding all the answers shift to 6s and 8s and nothing else. Even the ones that previously picked 9s regressed to 8s. And the ones who picked 5s picked 6s. Effectively, we created a yes/no question with just this small tweak.

There’s 3 fallacies with this:

  1. Numbers are arbitrary. An 8 for you, may not be an 8 for me. Unless we create a consolidated rubric that everyone follows when answering this question, we’re always going to variability in semi-random expectations.
  2. It’s a lagging indicator. There’s no predictive value in measuring this. By the time they answer this question, they’d already have made their decision. Though the post-mortem is useful, the feedback cycle between events was too long. So, we had to start looking into iterating the event live, or while it was happening.
  3. Answers weren’t completely honest. All the attendees were our friends. So their answers are in part, a reflection of the event, but also in part, to help us ‘save face’.

In studying essentialism, Stoicism, and Rahul Vohra‘s Superhuman, we found a solution that draws on the emotional spectrum that answered 1 and 3 rather well. Instead of phrasing our questions as “How much do you value this opportunity?”, we instead phrased them as “How much would you sacrifice to obtain this opportunity?” Humans are innately loss-averse. Losing your iPhone will affect you more negatively and for longer, than if you won a $1000 lottery.

So, our question transformed into: “How distraught would you be if we no longer invited you to a future event?”, paired with the answers “Very”, “Somewhat”, and “Not at all”. Although I’m shy to say we got completely honest answers, the answers in which we did give allowed for them to follow-up and supplement why they felt that way, without us prompting them.

The only ‘unaddressed’ fallacy by this question – point #2 – was resolved by putting other methods in place to measure attention spans during the event, like the number of times people checked their phone per half hour or the number of unique people who were left alone for longer than a minute per half hour (excluding bio breaks).

Feedback

“How can we improve our event?” We received mostly logistical answers. Most of which we had already noticed either during the event or in our own post-mortem.

In rephrasing to, “How can we help you fall in love with our events?”, we helped our attendees focus on 2 things: (1) more creative responses and (2) deep frustrations that ‘singlehandedly’ broke their experience at the event.

And to prioritize the different facets of feedback, we based it off the answers from the questions:

  • “What was your favorite element of the event?”
  • And, “How distraught would you be if we no longer invited you to a future event?”

For the attendees who were excited about elements closely aligned with our mission, we put them higher on the list. There were many attendees who enjoyed our event for the food or the venue, though pertinent to the event’s success, fell short of our ultimate mission. That said, once in a while, there’s gold in the feedback from the latter cohort.

On the flip side, it may seem intuitive to prioritize the feedback of those who were “Very distraught” or “Not at all”. But they exist on two extremes of the spectrum. One, stalwart champions of our events. The other, emotionally detached from the success of our events. In my opinion, neither cohort see our product truly for both its pros and cons, but rather over-index on either the pros or the cons, respectively. On a slight tangent, this is very similar to how I prioritize which restaurants to go to or which books to read. So, we find ourselves prioritizing the feedback of the group that lie on the tipping point before they “fall in love” with our events.

Unscalability and Scalability

We did all of our feedback sessions in-person. No Survey Monkey. No Google Forms, Qualtrics, or Typeform. Why?

  1. We could react to nuances in their answers, ask follow-up questions, and dig deeper.
  2. We wanted to make sure our attendees felt that their feedback was valued, inspired by Google’s Project Aristotle.
  3. And, in order to get a 100% response rate.

We got exactly what we expected. After our post-mortem, as well as during the preparation for our next event, I would DM/call/catch up with our previous attendees and tell them which feedback we used and how much we appreciated them helping us grow. For the feedback we didn’t use, I would break down what our rationale was for opting for a different direction, but at the same time, how their feedback helped evolve the discourse around our strategic direction. Though their advice was on the back burner now, I’ll be the first to let them know when we implement some element of it.

The flip side of this is that it looks extremely unscalable. You’re half-right. Our goal isn’t to scale now, as we’re still searching for product-market fit. But as you might notice, there are elements of this strategy that can scale really well.

In closing

Of course, our whole endeavor is on hold during this social distancing time, but the excitement in finding new and better ways to measure my assumptions never ceases. So, in the interim, I’ve personally carried some of these interactions online, in hopes of discovering something about virtual conversations.

Photo by Jennifer Burk on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups!

Proudly powered by WordPress