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Two Types of Investments

Last week, I wrote an essay about the importance of brand-building for a VC. In it, I reference Fred Destin’s tweet. This post is more or less of a part 2 to the notion of “picking” versus “getting picked”.

As an early-stage investor, and even more so as a scout, where it is my job to qualify leads at the top of the funnel, there are 2 types of investments:

  1. Founders you pick
  2. And founders who pick (you)

The former is in order to build your brand. The latter is a result of the brand you built.

So for some additional context, in the last two days, I just had to ask a few investors who dance around this phenomenon and have a track record for winning outsized returns.

What I learned

In my email conversations with them, here’s what I learned:

On picking:

  • “Picking startups” is thesis-driven. “Getting picked” is value-driven. It’s not mutually exclusive. In fact, in many cases, it’s symbiotic.
  • “Picking” startups, especially at the earlier stages (i.e. pre-seed, seed), often comes down to if you can get conviction faster than anyone else.
  • The earlier the stage an investor invests in, the more likely he/she will focus on “picking” the founders. For instance, angels, pre-seed, and seed investors.
  • If an investor typically leads rounds, they are more likely to be “picking” as well.
  • Markets also matter. If the startups exist in a new market or are attempting to create that market, investors also spend more time “picking”.

On getting picked:

  • In situations where investors “get picked” and founders have leverage, valuations end up skyrocketing with larger rounds and less dilution. In effect, may misalign incentives between founder and investor.
  • For many, it’s a dichotomy they might reflect on when doing fund and deal flow analysis, but not as a pre-meditated approach.
  • For non-lead investors (i.e. angels, rolling funds, etc.), many of whom don’t have a huge brand yet, there is incredible value in empathy and operating experience, which often give you an edge over traditional VCs. Especially since you can’t compete with their check sizes.
  • To “get picked”, build relationships before founders need to raise. Be high-value, actionable, and timely. Hustle like the founders do.
  • Be differentiated. If you have the same thesis/brand/network as every other VC out there, you will just be another number, but never THE number – the signal for a founder among the noise. You don’t have to be unique on every variable (thesis, brand, network, operating experience, etc.), but you have to be stellar and unique in at least one.
  • Help founders with their “firsts” – first hire, first fire, first fundraise, etc. So that you will be the first fund they think of when they raise/need help.

Finding meaning in investments

If I could paraphrase the words of Keith Rabois of Founders Fund in his recent conversation with Jason Calacanis, picking and getting picked analogizes to:

  1. Investment you took a bet on when everyone else turned in the other direction
    • Where “your decision to invest in the company made a meaningful difference in their potential”.
  2. Investment where the company was going to get funded regardless of your investment, but your advice, resources and/or network sped up the escape velocity of that startup in a meaningful way

Keith was early into Airbnb, Palantir, and Wish, when others were doubtful on the product thesis. And it contrasted with his rationale to invest in Max Levchin‘s Affirm. He elaborates on the pod that Max might have gotten larger checks on better terms than he did with Keith. But Max chose Keith for the value Keith could bring to the table.

In closing

As Miami Heat’s Hall of Famer Pat Riley once said, “When you leave it to chance, then all of a sudden you don’t have any more luck.” Investing is all about being intentional. Whether an investor “picks” or “gets picked”, they set themselves for opportunity. In the words of Seneca, “luck is where opportunity meets preparation.” Preparation being the keyword. And for a VC, that includes:

  • A robust network (deal flow + potential hires + potential startup customers/partners + downstream investors),
  • Brand (network + content + knowledge/experience + track record),
  • Resources,
  • And a thesis.

Photo by Mario Mendez on Unsplash

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#unfiltered #37 Why are founders leaving the Bay Area?

In the past year, largely due to the pandemic, it’s been easier than ever to create a business from anywhere in the world. Zoom for calls and meetings. Slack for asynchronous communication. Upwork for gigs. Stripe Atlas for starting a business. Notion for knowledge hubs. As long as you have a stable connection to the internet, geography no longer matters.

Additionally, major US startup hubs (i.e. SF Bay Area, NYC, Seattle, etc.) exhibit a lot of noise, and it becomes harder to discern the the signal among the noise. In the past few years, there’s been an influx of talent from across the world into these hubs. Despite the diversity of backgrounds into this 7 million strong hub, most tech entrepreneurs are stuck in the same modality of thinking. When you’re surrounded by similar personalities who gravitate towards the models that have succeeded already, you’re only going to get more of the same. It’s part of the reason why even seasoned founders with exits under their belt, still go back to startup accelerators, incubators and fellowships. They’re looking for fresh ideas not just on product, but also on business models and culture and more, that fresh blood into the industry brings.

These hubs are bubbles for a reason. I only feel qualified enough to speak on the Bay Area, where I call home now. One of Silicon Valley’s claims to fame is that we’re in a bubble, and we know we’re in a bubble. Because of that, many of the best startup founders know that their initial beachhead – their beta audience – is not here, unless your customers are tech companies, tech meetups, or coffee connoisseurs.

In venture, there have traditionally been three considerations when deciding your geographical playing field:

  1. Move to where your customers are
  2. Move to where your talent is
  3. And, move to where your capital is

And in that priority. Customers > talent > capital. I work in an ecosystem that has long perpetuated talent = capital > customers. One of the best lessons from the pandemic is that the “talent = capital > customers” function isn’t necessarily true, and that it was a product of the noise – the FOMO – that exists in the Bay. Equally so, talent in the Bay, as well as other major tech hubs, are incredibly expensive. While there’s a theme of “talent is on a discount” during COVID, it is still wildly more expensive than other parts of the world. Not only talent, but also real estate, social and professional networks, capital (yes getting money is more expensive), and the market for attention (more on that, here and here). And arguably, the same quality in many other lesser known geographic regions.

While I’m not saying every entrepreneur that has moved their HQ has gone to where their customers are, the remote work lifestyle has set precedent for many companies to rethink what they thought they knew and what they now know. With robust remote tools, like Zoom and Slack, I believe we’ll continue to challenge our understanding of what normal is. And when most companies resume a hybrid model post-COVID, I’m curious as to the emergence of new talent hubs (or maybe the lack thereof) across the world.

*Elaborated off of an answer I wrote on Quora.

Cover photo by Rezaul Karim 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, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

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The Investor I Am Working To Be

I wrote an essay exactly a week ago about welcoming tough founder narratives. In it, the prerequisite to play in VC is to be open-minded – to “stay positive” and to “test negative”. I’m reminded of something Tim Ferriss shared in his recent interview with Jim Collins, “It is not that beauty is hard to find, it’s that it is easy to overlook.”

In a world where it is my job to evaluate people who stretch the margins – to stretch “common sense”, it’s easy to be cynical. On the same token, it’s also easy to be incredibly optimistic. As Blake Robbins of Ludlow Ventures puts it, “the best venture capitalists [are] able to perfectly toe the line of optimist vs. pessimist.”

Since then, partly due to the semi-recent influx of investment talks I’ve seen and been a part of – the holiday mad dash, if you will, I’ve had some time to myself to re-center my purpose in the venture world.

The role of an investor

As someone on the investing side of the table, it is our job to check founders’ blind sides. To consider things they may not be aware to even consider. Drawing parallels between seemingly orthogonal parts of the business that we know because we’ve seen hundreds, if not thousands of businesses. For example, if you’re creating a plug-and-play solution – a product whose main selling point is its ease of use, the more you have to spend on your customer success team, the less effective your product is.

Of course, we merely provide insight and context to a situation, but it is the founders who have the final say.

The brand of an investor

Craig Thomas, an LP, wrote on his Substack last month: “Brand is arguably the only thing that resembles a moat in traditional venture capital.” To summarize Nikhil Basu Trivedi words briefly, brand here is constructed by how strong the synergy between the various forms of acquisition channels (i.e. content, performance marketing/ads, virality/word-of-mouth) and the players in the ecosystem (i.e. founders, investors, LPs, operators, talent, etc.) are. In simpler terms, brand is about who knows and how well they know what you stand for.

Increasingly, in the world of venture, while “picking” the right investments via conviction and a thesis still matters, it’s becoming a world of VCs “getting picked“, as Fred Destin of Stride.VC tweets. This is especially true for the deals that investors expected outsized returns on – effectively, uncapped upside.

Craig provides a great graphic for why brand matters. The blue-dotted line, which he calls the Mendoza Line for VC firms, represents y = x + b. And the best VC firms have b’s where b > 1.

Craig Thomas’ chart plotting the relationship between brand and AUM (assets under management)

He points out that the fallacy here is when firms prematurely scale. Increasing their AUM (assets under management) before establishing and growing their brand. And it’s something I’m not keen on falling for.

Seen in another light, Correlation Ventures did a study that found almost 65% of venture-backed deals fail to return on investment. And only 4% make outsized “magical returns”. Proving that b > 1 is truly easier said than done.

returns on venture backed startups is very low in most cases based on data from Correlation Ventures

There’s a saying in venture: Luck only gets better with success. It’s largely described in the context that it only takes one epic investment to get you on the radar. And I believe building a successful brand is a leading indicator of success. Of course, having a strong brand and having outsized returns are not mutually exclusive either. In a 2015 Medium post, Blake quotes Brett deMarrais of Ludlow Ventures, which I think acutely sums up what it means to be a great investor. “There is no greater compliment, as a VC, than when a founder you passed on — still sends you deal-flow and introductions.”

As you might have guessed, I’m on the brand-building phase. Craig wrote: “Brand is reputation and access.” A great brand leads to better deal flow, which leads strong signals for downstream investors. Which leads to a stronger brand. Analogized, it’s what Reid Hoffman has said all these years: “a good product with great distribution will almost always beat a great product with poor distribution.” As an investor, a VC is their own product.

In closing

To quote Ruben Harris’ first boss in Ruben’s recent interview with Garry Tan, “To become a billionaire, help a billion people.” Through a mutual friend, I first met Ruben, Artur, and Timur back in ’18 around the inception of Career Karma and when they were hosting office hours at their apartment for folks who wanted to break into tech. At the inflection point in my career, I went to one of these to meet the individuals I had only been communicating over emails with. And within 5 minutes, Ruben said: “Here’s who you’ve got to talk to…”. And gave me 2 names I hadn’t even considered reaching out to beforehand. Both ended up being great influences on my growth.

True to their mission, even prior to the founding of Career Karma, they’ve been playing the connective tissue between talent, education and occupation. From their podcast to their company, the triple threat have created an impressive brand and community of givers and hustlers. And I highly recommend checking out their podcast to hear some of their community’s stories. Here’s one of my favorites. Congratulations on your A led by Initialized, Ruben, Artur, and Timur!

Similarly, that’s the investor I’m working to be. While I still have miles more to go in building a brand, I believe I’m taking steps in the right direction.

Photo by Daan Stevens on Unsplash

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2020 Year in Review

I’ve written 102 essays on this blog in the past year, plus some change, spending an average of 1-2 hours per piece and a range from 30 minutes to 2 weeks. An average of 1,200 words per post. While not mutually exclusive, over half of which were on startup topics. One in three described the venture capital landscape. 36 (excluding #0) #unfiltered blog posts, where I share my raw, unfiltered thoughts about anything and everything. 16 on mental health. A surprising 13 on cold emails and its respective ecosystem. And my first public book review. Some didn’t age well, like The Marketplace of Startups. Some will stay evergreen.

25% of my blog posts I started writing at least 48 hours before the publish date. 1 in every 3 (-ish) of the afore-mentioned, I rewrote because I didn’t like the flow. For every 2 essays I wrote, 1 of which I had to wrestle deeply with the thought of imperfection. In effect, half of my essays were a practice to overcome my own mental stigma of “writer’s block.” Yet after over a year of writing, I realize that I’ve become prouder of my writing than when I started.

So, as the year is transitioning into the next, I thought I’d take some time to reflect on my growth 100 (+2) posts after starting this blog. Let’s call them superlatives.

Top 10 most popular

Ranked by total views per post, the 10 posts readers visit the most.

  1. #unfiltered #30 Inspiration and Frustration – The Honest Answers From Some of the Most Resilient People Going through a World of Uncertainty – I asked 31 people I deeply respect to share some of their greatest drivers and darkest moments in life and how they got through them. You can find part 2 here with 10 more thoughts.
  2. My Cold Email “Template” – My friends have asked me for years what I write in my cold emails, and now, what and how I write my cold outreaches are available for your toolkit.
  3. Fantastic Unicorns and Where to Find Them – An essay on the parameters and the mental models investors use to find “unicorn” startup ideas.
  4. When Investor Goodwill Backfires – What It Means to be Founder-Friendly and Founder-Investor Fit – How founders can do investor diligence before signing the term sheet and also how to best manage founder-investor dynamics
  5. #unfiltered #24 How long do you take to prepare for a talk? – A Study about Time Allocation
  6. How to Build Fast and Not Break (As Many) Things – A Startup GTM Playbook
  7. 10 Letters of Thanks to 10 People who Changed my Life – Every holiday season I write thank you letters to the people I deeply respect. It’s one of the best times of the year to reconnect. These are the letters I wrote in 2019. Here are also some I wrote this year for more context.
  8. #unfiltered #18 Naivety vs Curiosity – Asking Questions, How to Preface ‘Dumb’ Questions, Tactics from People Smarter than Me, The Questions during Founder-Investor Pitch
  9. #unfiltered #11 What I Learned About Building Communities through Social Experiments – Touching Jellyfish, Types of Social Experiments, The Thesis, Psychological Safety and Fairness
  10. The Marketplace of Startups – While many of the remarks on this blog post are now obsolete, largely incited by the 2020 Black Swan event – COVID, the two questions at the end of the blog post are the two I still like to ask founders today.

Personal favorites

While not every one of these got the limelight I had hoped, each of these are ones I felt great pride in being able to write on.

Most challenging to write

I had been wrestling with how vulnerable I can allow myself to be in the public space. Writing this post was frightening, but I’m glad I did. It cascaded into deeper conversations with my friends, colleagues and readers, but also inspired more blog posts after this about mental health.

#unfiltered #26 Am I At My Best Right Now?

In closing

I first started this blog with the intention of chronicling my own learnings in the amazing world of venture. While I couldn’t guarantee it would be helpful to every individual reading my humble meandering, I could, at least, guarantee what I write has been or continues to be instructive for me.

Within the first month it had evolved into an FAQ and a means to provide value to as many founders as I can when one day the number of people I want to help exceed my available bandwidth. Wishful thinking at the time, but a cause that inspired me forward. After the first six months, with the introduction of the #unfiltered series, I began to write to think – a way to flush out simple, unrefined ideas to more robust concepts. While I’ll forever be a work in progress, I began to make new dendrite connections that never existed before. In a way, I was and am still chronicling my own journey in hopes that it will continue to guide people beyond my immediate sphere of influence.

Thank you, each and every one of you, for accompanying me on this journey we took yesterday and the one we’ll take tomorrow. And I hope this cognitive passport will continue to serve as your cup o’ Zhou (/joe/) weekly.

Cheers, and I’m excited for the adventure ahead!

Photo by Ray Hennessy on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

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How Do We Welcome the Founder Narratives Behind the Curtains

Being a founder is one of the toughest jobs in the world. Resilience and grit are two (or one) of the indispensable traits of a 5-star entrepreneur. And most, if not all, investors establish grit as the baseline in founder selection, as opposed to the topline in various other careers. While I don’t mean to discount other career paths, all of which I have incredible admiration for, I can only speak in the world of venture where I spend most of my time in.

Yet that same persistence could very much be the same double-edged sword that makes or breaks you. In October, Ryan Caldbeck wrote about his decision to step down as CEO of CircleUp. It was and is one of the most candid pieces I’ve read about the founder journey to date. In it, one section particularly stood out. “Persistence was my superpower. But now I’ve now come to understand that persistence is a double-edged sword, and my decision not to take a break, to not take more off my plate, hurt me, my family and the company. That was the biggest mistake of my career.”

In the founder journey, there exist many moments a founder’s resilience is stress-tested. To get their first customer. To scale to a team of 10. 30. 100. To get their first investor. To raise their first institutional round. But the last thing a founding team needs is for some of their greatest evangelists – their investors – to create counterproductive friction. While it’s presumptuous of me to say that all friction is counterproductive, some friction and additional perspective is necessary to help founders make better, more informed decisions.

In his same essay, Ryan shares a feedback email he wrote to his former board member, as that member’s participation in the company had become “counterproductive”, “vindictive”, and even “destructive”. Unfortunately, these stories happen more often than I would like. It is why many founders believe investors are the gatekeepers to their startup’s success. But we’re not. We don’t have the right to be. On the same token, that’s exactly why it’s so important for founders to deeply consider founder-investor fit.

Michael Freeman found in 2017 that entrepreneurs are 50% more likely to report a mental health condition. Being a founder is lonely. But it doesn’t have to be.

Anton Ego’s words

A few weekends back, my friend and I re-watched my favorite movie. And as the movie faded into music, Anton Ego’s words echoed in my head. While it’s not the first time this quote has appeared in the venture world, it certainly won’t be the last:

“In many ways, the work of a critic is easy. We risk very little, yet enjoy a position over those who offer up their work and their selves to our judgment. We thrive on negative criticism, which is fun to write and to read. But the bitter truth we critics must face is that, in the grand scheme of things, the average piece of junk is probably more meaningful than our criticism designating it so. But there are times when a critic truly risks something, and that is in the discovery and defense of the new. The world is often unkind to new talent, new creations. The new needs friends.

“Last night, I experienced something new, an extra-ordinary meal from a singularly unexpected source. To say that both the meal and its maker have challenged my preconceptions about fine cooking is a gross understatement. They have rocked me to my core. In the past, I have made no secret of my disdain for Chef Gusteau’s famous motto: ‘Anyone can cook.’ But I realize, only now do I truly understand what he meant. Not everyone can become a great artist, but a great artist can come from anywhere. It is difficult to imagine more humble origins than those of the genius now cooking at Gusteau’s, who is, in this critic’s opinion, nothing less than the finest chef in France. I will be returning to Gusteau’s soon, hungry for more.”

For VCs

One of my favorite investors often says, “stay positive, test negative.” While the greatest strength an entrepreneur can have may be grit, the greatest strength an investor can have is optimism.

Optimism in the world. In markets. In startups. But especially people. That even if one venture doesn’t work out, for the people I’ve had the opportunity to stand behind, I know one of their pursuits eventually will. It’s only a matter of time and luck.

That same optimism is a leading indicator for open-mindedness. As people who build our careers at the top of the funnel, it is our obligation to cast our net outside of what is most familiar to us. There will be a number of ideas and belief systems entrepreneurs have that challenge our own. And in many ways they should, as founders are on the frontlines of innovation, they are aiming to be “right on the non-consensus“, to quote Andy Rachleff. When I first got into VC, that same investor who said “stay positive, test negative”, shared another word of advice, “Some of the best ideas seem crazy at first.“

George Bernard Shaw once said something similar as well, “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”

Optimism isn’t only isolated to ideas, but also to the people – the “unreasonable” women and men – behind those ideas and the decisions they make. These innovators aren’t perfect, yet somehow many of us expect them to be. And that dichotomy has created this unfair dynamic that stunts innovation more than we think. I have so much respect for the funds that have set aside capital to invest in founders’ wellbeing, like Felicis Ventures, Freestyle, Crosscut, and more. And I hope many more will follow.

The stories we tell

Over the past few months, I’ve had a number of conversations with founders, friends, and readers about “mental fitness” and “emotional hygiene”. If I could borrow two of my friends’ vernacular. And I’ve learned that we humans are such amazing storytellers.

These powerful narratives has kept the human race alive all these millennia. Before the written word, it was the art of the spoken word, passed down from generation to generation, that held tales of ancestral origins of where to hunt and where to migrate to each season. The same stories have started and ended wars. They have helped us conquer impossible odds. Some narratives today are compelling enough for us to buy a new product or to end a conglomerate.

Yet these exact stories, especially the ones we tell ourselves, can cause stress, anxiety, and depression. The ones that the people we care about and respect tell us can carry even more weight. From role models, parents, managers, friends, mentors, teachers, peers, and more.

In closing

I realized, in conversation, these past few autumn months, more than ever, the power of sharing those stories. To share that we’re not alone and that together, we may learn more than the sum of our individual parts. I understand that it’s no easy task. Even for myself, I debated for the longest time whether to share that I’m not at my best right now. But I’m glad I did. The feedback from the people around me I’ve gotten since brought forth clarity and solace. Similarly, six of my friends, who publicly shared how they get through their toughest times (Pt 1, Pt 2), told me after how grateful they were to have an enormous weight lifted off their shoulders.

Top photo by Nong Vang on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

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#unfiltered #36 Thanksgiving Letters and Holiday Season Thank You’s

Every year, on Thanksgiving, I write a series of emails, letters, and texts to thank the individuals who have helped me become the person I am today – wittingly and unwittingly. Some of whom I may have never met. Some I may never meet again. And a small handful I will meet again on the other side. Nevertheless, the future likelihood our paths crossing does not change the gratitude I have toward each person.

Over time, largely due to the volume of letters I write, this practice has bled into the days between Thanksgiving and Christmas. Last Thanksgiving, I published 10 of the above letters (anonymized) I wrote that year as inspiration for friends, colleagues, and readers who may have been considering or writing their own. This year, I assume, won’t be an exception. And for many others who might need a gentle nudge forward, I share two letters of mine I’ve written this holiday so far to act as a potential anchor for you to start yours.

Dear…

  1. Centaurus – A reminder of self worth
  2. Cassiopeia – A chain reaction

A reminder of self worth

Dear Centaurus,

This year has been incredibly bizarre. On one hand, I’ve had some of my biggest wins in my life so far. On the other, I’ve hit low points I never thought were possible – at least for myself. Actually, especially so for myself. Yet they happened.

While many others might have seen them come and go like the autumn breeze that is blowing against my window sill as I am writing to you, you were there for me in some of my darkest times. I don’t know if it was telepathy or clairvoyance, but earlier this month you sent me one text: “Love you man. Just because.” It came less than 24 hours after a streak of 3 founders independently telling me I was not worth their time. One of which, the call ended 15 minutes into a 30-minute call. That morning I really needed that. And in that moment, I was reminded of another line you sent me last month when I asked you for a favor:

“Beautiful things don’t ask for attention.”

Thank you. I wish you and your family the warmest, the coziest, and the best of holidays. I believe the Danish call it “hyggelig.”

My deepest gratitude,

David

A chain reaction

Dear Cassiopeia,

I still remember the day I selfishly reached out to you. My internal monologue went something along the lines of: “Nah, she’s going to be way too busy to reply. But you know, what if? Nah! Maybe I should send a follow-up in a week.” 7 minutes later, my phone goes bzzzt, bzzzt. Being the phone addict that I am, I had to check and there in my inbox lied an email from you. Overly excited, I replied quickly. And your following reply, or more accurately, your voice message lit my day up like New Years.

I’m 24-years young, but sometimes, like that day, I still act like a 7-years young. At times, my friends and family tell me I should act my age. But in those moments, I admittedly unforgivably don’t.

Since then, you’ve inspired me to write a post about the psychology of curiosity and reach out to professors, like John List, to write posts like this. A chain reaction of ideas, but more importantly, your advice and feedback emboldened me to reach further. In this world that snowballed from your reply to my selfish message, 1+1 = 3.

Thank you. I wish you and your family the warmest, the coziest, and the best of holidays. I believe the Danish call it “hyggelig.”

My deepest gratitude,

David

In closing

We don’t often thank the people who’ve helped us get to where we are today often enough. I know I, for one, don’t. Thankfully, every year, despite everything else that is going on in my life and in the world, I’m reminded to set time aside to show my appreciation. A few minutes per person for me is asking very little for people who have saved me days, weeks, if not years worth of mistakes and folly.

And, the holiday season also happens to be one of the best, if not the best time to reignite old flames and to spark new ones.

Photo by Johannes Plenio 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, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

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#unfiltered #35 How Do You Know When You Click?

Over the weekend, my friend and I had this fascinating conversation about how we found our other friends. I know, metaphysical, nerdy even. But nevertheless, I thoroughly enjoyed it. She posed the question: “Is it just based on how long you’ve known each other? And how often you see each other?” For most of my life, I would have said yes. Classmates that became friends were people I met and could chat with over lunch or after school. The same is true for colleagues. And strangers. Some happened exceedingly fast – within 24 hours. Others have taken over half a year before we “warmed up” to each other.

Unsurprisingly, it gave birth to the question: At what point does an acquaintance become a friend?

The PMF parallel

To be honest, I didn’t have a good answer then, nor do I have one now. Part of the reason I’m sharing this is to open up dialogue and draw inspiration from you, my readers.

Pushing up my glasses, which I’ve got to get a new pair (open to any recommendations), I couldn’t but analogize it to startups finding product-market fit.

How do founders know when they hit product-market fit? The TL;DR version: when you’re too busy to even ponder if you have product-market fit. Or simply, you’ll know it when you have it. For the longer, less nebulous answer, I recommend checking out Lenny Rachitsky’s piece on it, and some of other essays I’ve written on the topic:

Or as Casey Winters, Chief Product Officer at Eventbrite, says:

“Product-market fit isn’t when your customers stop complaining, it’s when they stop leaving.”

Some more examples include, when:

  • You’re focused on upgrading your servers rather than acquiring customers.
  • There’s so much demand, you’re writing “I’m sorry” and “Not yet” emails to your customers who are asking when can they get off the waitlist.
  • Laggards on the adoption curve start using your product and saying wow. In Airbnb’s case, that was Joe Gebbia‘s mom using the product.
  • There are handwritten love letters in your office mailbox.
  • Customers are asking how they can pay (more) for your product.
  • You’re feeling the pull of the market rather than pushing your product in front of people.

Friends

On a similar note, when the entropy of a relationship and the subsequent conversations break into an impetuous nature that eclipses the inciting reason for the relationship, you might have something going. Or in simpler words, you can’t stop the momentum of the relationship. “What about this?” “Let’s do that!” “Ahhh, not enough time!” Of course, as all relationships go, it takes two to tango. Just like product-market fit, when you don’t have it, it’s not obvious what you need to do make it click. But when you do have person-person fit, everything makes sense. And quite obvious, in retrospect.

While the above was my answer on Sunday, I’m not completely sold it’s the end all, be all. And as I continue to find new sparks and rekindle old flames, I’m sure I will learn more about myself and others. A provocative question that may require a more provocative answer.

Top photo by Tyler Nix 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, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

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When Investor Goodwill Backfires – What It Means to be Founder-Friendly and Founder-Investor Fit

A few Fridays ago, I had the fortune of reconnecting with a founder, backed by some of the most recognizable names in the Valley and exited his business last year to a juggernaut in the data space. Now working on his second startup. And he brought something extremely curious to my attention. “Investors shouldn’t be too founder-friendly.”

I’ve talked to hundreds of founders and seen thousands of pitch decks in my short 4 years in venture capital. Yet, that Friday was the first time I’d ever heard that. And it was too bizarre for me not to double-click on. The fact that the sentence also came out of a founder’s mouth and not an investor’s bewildered me even more.

Continue reading “When Investor Goodwill Backfires – What It Means to be Founder-Friendly and Founder-Investor Fit”
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#unfiltered #34 The Impetus to Cup of Zhou

It was a warm autumn 7pm. The golden ball had just found its home beyond the rolling hills of San Francisco. The sky above, dyed violet melting into a soft pink. I was walking up to Liholiho Yacht Club. According to my pal, the best spot in town for Hawaiian food. A 7:30 reservation for our quarterly mentor-mentee dinner.

As I was walking up from SOMA, I was running through the conversation I just had with a founder. He closed the conversation off with: “You should really share this advice publicly.” He was right. ‘Cause in my 3 years in venture capital, I’ve shared that same piece of advice I gave him more than 50 times at that point. I’d been meaning to. I had 11 blog posts written already, just not published. All written in an FAQ format. Yet, the only thing I was still wrestling with was the name of the blog.

It seems trivial in the grander scheme of things. But the perfectionist, inspired by my younger career in art, kept nagging me.

Reality on Ice (ROI). Nah, that wasn’t it. Sounds like a Disney ice show.

Irrogueular. Nah, too eccentric.

David’s blog. Mhmm, talk about uninspired.

Curiosity. Oooh, I like this one, but (1) it’s taken, and (2) doesn’t feel deep enough.

And 80 more where those came from. But none clicked.

Anxious, once again, I began ideating as I bobbed and weaved between the evening crowds. Yet to no avail by the time I reached Liholiho.

Dinner was great as per the usual. My mentor had just joined a new startup, leading a new initiative. We talked work. Life. Athletic endeavors. Romance. And of course, food. It came to no surprise when we two hungry bears needed more to satiate our appetite despite a wonderful meal. After we were “Yelping” places to go to, which we probably flipped through a dozen or two, we gave up.

“David, let’s just grab a cup o’ Joe, and call it a night. Wanna go to-“

“Wait. That’s it!”

“What’s ‘it’?”

“Coffee.”

“That’s what I said.”

“No, no, no… for my blog. The name. My job is to grab coffee with folks. And at the same time, just like caffeine kickstarting all of our days, hopefully my blog can help founders kickstart their startup.”

I ended up scrapping 10 of my 11 blog posts. The only one I kept was my thesis. And I started anew. I spent 3 months ideating a name. 3 years, if you count all the random other WordPress blogs I started. But all it took for me was a moment – a spark. The closest thing I could analogize, at that point, to gut feeling.

Afterword

Oddly enough, this past week, three people independently asked me why this blog is called Cup of Zhou. One pronounced it “cup of zow” (like cow). Another pronounced it “cup of zoo”. The last was over text. I don’t blame them. They’re not the first, and they’re definitely not the last. I respond to them all. They’re all part of my American-born Chinese identity’s memoir. And this blog is just another chapter in my memoir.

Cup of Zhou. /cup uh Joe/

Photo by Demi DeHerrera 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, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

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#unfiltered #33 Inspiration and Frustration Pt. 2 – What Drives Some of the Most Resilient People Forward

A few weeks ago, I published Part 1 of this post on inspiration and frustration. In that time, its reception has been uplifting. Easily my most popular and well-received blog post to date. It also happens to be one of my favorite posts to have published so far. So, I thought I’d continue to ask people about their cocktail of emotions now, the below two questions:

  1. What is the one thing that inspires you so much that it makes everything else in life much easier to bear?
  2. What is stressing/frustrating you so much right now that it seems to invalidate everything else you’re doing?

But, each person can only choose one of the above two questions to answer.

Three of the below candid responses are people I asked from the first cohort, while the other eight are people I thought would add a new degree of freedom on perspective. All of which were drawn more to their inspiration than their frustration.

And as such…

  1. It takes a lot of things to inspire and motivate… rather than one individual thing. – Model, writer, founder
  2. I’m inspired to have a hand in making the world better for everyone through technological progress! – Venture capitalist
  3. I’ve made friends with a girl from my neighborhood grocery store and a stranger opened a door wide for me so I could run towards the train and not miss it. – Founding partner/CEO, investor, community manager
  4. When you start to understand that life is bigger than just you and me, there’s a shift in perspective that brings meaning and purpose to our lives. – Zynara Ng, public speaking coach, video producer, TED speaker
  5. We have the means to weather our current circumstances. – Business professor, consultant
  6. We have struggled to find an extremely valuable and painful problem to start with. Nevertheless, someone will figure it out. Why not me? – Startup founder
  7. We just got a new addition to our family. […] I look forward to future conversations about life and deep topics with him, just like this one! – Startup founder, podcast host
  8. We just tend to judge ourselves more harshly because we have our entire past and lived traumas that we judge ourselves by. – Senior policy aide
  9. Their thank you letters, pictures, and stories of how Vinder has changed or saved their business/life solidifies to me that I’m on the right path. – Sam Lillie, startup founder, hiker
  10. Since this goal is so long term and grand, it’s easy to realize that small things don’t matter. – Sohum Thakkar, engineer
  11. In a world that falls short of showing us unconditional love, I can live my life in such a way that I can be that source of acceptance that others need. – Engineer, writer
Continue reading “#unfiltered #33 Inspiration and Frustration Pt. 2 – What Drives Some of the Most Resilient People Forward”
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