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Drawing Inspiration

drawing inspiration, ideas, eclipse, writer's block

On Tuesday, I had the great honor to jump on a call with someone who is both a brilliant composer and an acclaimed orchestral conductor. Though he was classically trained, he found fame in the world of video games. And I couldn’t help but ask where he draws his inspiration when composing musicality to pair with various mediums of entertainment, even outside of games. He answered simply:

“Everywhere.”

He followed up that to help him frame his ideas around the subject of his piece: “I watch a little bit, not too much to have the show or game dominate in his mind, but enough to start off.” Just a small spark to start the fire. What he said echoed in mind, reminding me of a conversation I had with another friend – entrepreneur, author, and podcaster – prior to self-quarantining ourselves. He told me: “There’s no such thing as writer’s block. It’s that desire for perfection that holds us back from putting our pen on paper. But once we let go of trying to be perfect, we can find inspiration from everything around us.”

In all honesty, when he first told me this, I thought he was being quite presumptive. Especially it was at a point in time I was struggling to find content to put out weekly. But he was right. And, as you may have guessed, that became the kindling for the #unfiltered series.

Similarly, a few weeks back, a college buddy asked me where I find my inspiration for pieces on this blog. Though I am echelons shy of the musical talent I spoke with two days ago, I offered him the path I took to get me here:

  • Practice ideating daily.
  • Talk to people.
  • Meditate and/or write in a gratitude journal.
  • Write an audience of one.

Practice ideating daily.

My brain, like your brain, is a muscle. The more I practice using it, the better it gets. The same is true for ideas. The more ideas I write, the better I’ll get. It can be one sentence. Or, it can be 5 pages. But make sure to dedicate at least a full page to each day, even if 95% of it may be blank. The point is to deliberately do so every day, with no cheat days. Personally, I spent the first 2 weeks, writing one sentence entries.

So, I invested in an idea journal. In fact, probably my best investment I made in the past 3 years. And, I didn’t bother buying a cheap one. It was a Moleskine art sketchbook. At the time, a $17 purchase plus tax. And for a broke college student, that was a sizable amount – two good meals worth. A good alternative and the one I use now is a Leuchtturm1917 sketchbook. Why? Because it forced me to use it. I realized for me, the better the notebook is, the more I’m inclined to not let it go to waste.

Although I wish this was my original idea, my professor at Cal taught me this simple, but effective strategy.

Talk to people.

When I found myself unable to grasp at any ideas (that I thought were good), I talked to people. The more obsessive they were about their passion, the better. The more (positive and negative) emotion they channel into their work, the more insight they’ll have. And, frankly, excitement is contagious.

Talk to at least one of them from this cohort a week. Take notes, follow up, and ask more questions. The last part usually more independently, depending on their bandwidth.

Meditate and/or write in a gratitude journal.

Be thankful. It’s a useful frame of mind to be in. Positive thinking helps with more expansive creativity. Negative thoughts and stress, depending on its severity, narrows down the scope of your creativity.

Write for an audience of one.

Many professional writers are taught to find a target audience and write for them. Focus on a specific segment, before broadening, if ever. My mentors taught me to take this one step further. Instead one specific segment, just one person. It’s much better to write for 1 person who I know will always love my content than to write for a hypothetical many who may or may not even like it. For me, it’s myself. When I’m writing here, I’m merely a hobbyist. I don’t have any grand goal of reaching one million subscribers (not that I’m opposed to it). I’m just here to immerse myself in the joy of writing. And if I am lucky to have affected someone else’s life in a meaningful way, that’s my cherry on top.

Photo by Jongsun Lee on Unsplash

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#unfiltered #9 Living to Eat – Supporting the Service Industry, Fine Dining Musings, Restaurant Selection Criteria, Tipping, and the Notebook

living to eat, fine dining

I had originally planned to write this post back in February, but when the coronavirus came crashing in 6th gear, I thought it would have been unwise to urge you, friends and family to venture beyond your doorstep. So this post fell into the depths of despair, hoping to find its way to center stage after we were on the road to recovery and when restaurants reopened.

But yesterday, over a Zoom call, in catching up with a fellow foodie and college buddy, he suggested that I still post this. Not to urge people to eat out. But as a voice to support the many struggling restaurants, caf̩s and bars out there Рmany of which include our personal favorites. Before I dive into this post, I want to explicitly note 2 disclaimers:

Disclaimer 1: As I mentioned above, this post is not written to incentivize you to go eat out now, but rather just illustrate my musings as someone who loves food. And as many other businesses are feeling the brunt of the impact in the status quo, the culinary industry is no exception. Your favorite restaurant yesterday may not exist tomorrow. And you won’t even be able to experiment with any of the below musings if we don’t put a hand out now and support them when they need us most.

Disclaimer 2: I am neither a professional chef/cook nor is my trade being a food critic. So take what I say with a grain of salt, as with anything I write. Below is merely my observations in one of my most expensive hobbies as a foodie.

Given the extravagant length of this post, here’s a TL;DR:

  • Why I don’t resort to Yelp/Google when picking a new dinner destination
    • And a couple of my favorite restaurants in the Bay Area
  • My calculus for tipping – and why there are times I choose to not tip
  • Why a notebook may be your best friend in your culinary adventures
Continue reading “#unfiltered #9 Living to Eat – Supporting the Service Industry, Fine Dining Musings, Restaurant Selection Criteria, Tipping, and the Notebook”
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#unfiltered #8 The Oasis – Fiction, Books I’ve Recommended/Gifted the Most, How I’ve Kept Myself Busy Outside of Work

book, fiction, reading

Lately, I’ve picked up a few fiction books – 2, to be specific – The Three Body Problem by Liu Cixin and Mistborn: The Final Empire by Brandon Sanderson, by recommendation of a friend and founder, respectively. And damn, they’ve rekindled my love for worldly escapes. Prior to high school, I used to be the biggest fanatic of fiction books. Although proportionally smaller, my fictional “library” at home still includes:

  • every single book in the Magic Tree House series by Mary Pope Osborne
  • the entire Redwall series by Brian Jacques,
  • every single one in the LEGO Bionicle series,
  • the Alex Rider series by Anthony Horowitz,
  • Dune by Frank Herbert,
  • The Steel Wave by Jeff Shaara,
  • and much more.

And to further how much I nerded out over fiction, I knew our local librarians by their first name and memorized by library card number by heart (to this day) – all for the sake of fiction. But as I grew older and entered my teens, I was told that I should have outgrown fiction. That it should stay as a remnant – a fond memory – of my “youth”. So, I slowly acquired the taste for non-fiction, biographies/autobiographies, business books and documentaries.

Yet, in some ways, in this serendipitous situation, when now I have more free time, and by fervent inspiration from the two aforementioned angels, I found sanctuary in other worlds. I saw with my imagination and heard with my eyes. For lack of better words, it was magical.

From non-fiction, I’ve been able to walk alongside the greats who have once or now inhabit the reality on this small blue pearl amidst a sea of unknown. From fiction, I’ve been able to walk alongside the greats who have never lived in this reality, maybe never will, but somewhere out there, they hold the keys to our dreams. Each hold a proud seat in my heart, but the latter has been dormant for over a decade.

Books I’ve Recommended/Gifted the Most

I should preface that I’m not the most voracious reader out there – although that’s been changing over the past 4-5 weeks. But here are my favorites which I’ve recommended/gifted the most:

  • 2018 fav – The Messy Middle by Scott Belsky
    • Short (1-3 pages, on average), but incredibly insightful chapters of product/design/leadership lessons from a founder/investor/product leader, especially during messy times post-honeymoon stage of being an entrepreneur. My favorite pages… 232-234. A set of three questions to create a lovable product.
  • 2019 fav – The Trillion Dollar Coach by Eric Schmidt, Jonathan Rosenberg, and Alan Eagle
    • A dedication to the most well-known least famous person in Silicon Valley. From the book title, you might be able to guess what he did – all of which he took zero compensation for. Having been suggested and subsequently read too many leadership books earlier in my career, when I first suggested this one, I was quite skeptical. I thought it was just another one of those, until I heard the name, Bill Campbell. A name which I’ve heard more than once from various people who attributed their success to him, since 2016. And I’m so glad I didn’t dismiss this one. I only wish I could have gotten to know the amazing person this book is dedicated to.
  • Startup fav – The Hard Thing About Hard Things by Ben Horowitz
    • A book that doesn’t sugarcoat the tough decisions in building a company – a set of decisions illustrating on how he dealt with situations when things just wasn’t going his way. Rather than being prescriptive, it gave me a framework for understanding the various struggles a founder will encounter – most of which I had yet to see when I was recommended to read this book. Quite pertinent in today’s landscape, ironically.
  • Most nostalgic/impactful on personal growth – The Art of War by Sun Tzu
    • I was first given this book when I graduated from elementary school, as the problem child, though not in the traditional sense. I had a knack for blaming others when problems arose, but this book helped me understand people better and where people were coming from. In all honesty, I don’t know why it clicked when I was only 10, but it did. Apart from my childhood bias, though specific to leadership in a military regime, you can draw several parallels between the art of war and business and life.
  • Fiction fav – Salamandastron by Brian Jacques
    • Brian Jacques throughout the entire Redwall series just has such a way to weave suspense and an emotional attachment to the various characters. Admittedly, it was the first fictional book I cried to while reading, so it holds a special place in my heart.

For the sake of not overwhelming you with too much, I’ve only included the ones I’ve statistically recommended/given the most, as well as gotten the most positive reactions from folks I’ve offered these to. If you’re interested in a more exhaustive list, feel free to DM me – either through this blog or social media.

Keeping Body and Mind Busy

For many of my other friends and colleagues, they have found similar solace in books. Many in the kitchen. Some with instruments and a camera. A handful with a mic and Twitch or Anchor.

Because I have saved 2-3 hours of travel time every day now, I’ve been:

  • Doodling at least thrice a week in my Leuchtturm notebook, specifically their medium sketchbook (180g/sqm, so on the thicker end of pages);
  • Jumping on game sessions with friends over the weekends, like on Skribbl.io or recently, Songversations (Discord is definitely my favorite medium of social interaction, especially with all the bots they have. My favorite of which is the Groovy music bot where I can tune into music alongside my friends);
  • Reaching out to 1 new person I’m insanely curious about every week;
  • Idea-journaling every day;
  • Trying new recipes and methods in the kitchen;
  • Trying new home workout routines;
  • Reading fiction and non-fiction;
  • Writing for this blog 😀 ;
  • And, a new social experiment between friends, family, and colleagues, in hopes of making this world feel a little smaller, just a little closer, and a whole lot more interesting.

So, if you have the time and privilege to, explore new/’new’ genres and mediums of storytelling, creativity, and activity. Some may very well surprise you!

Photo by Ksenia Makagonova 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!

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#unfiltered #7 Words are Food – Having Empathy, Job Resources Now, Letting Staff Go, and Perspective Shifts

words are food, empathy

I jumped on a call with my good buddy, incredible founder and one of the most magnanimous people that I know, Mike, not too long ago. And no, he did not pay me to say that. As always, we nerded about everything on the face of this planet, but one thing in particular stood out to me. And inevitably manifested into the foundation of this #unfiltered post. He said, just 3 words:

“Words are food.”

The more we delved into this rabbit hole, the more robust the metaphor began. But for the sake of not running your ear off, I’ll cover just one facet of our parallel.

Compliments are sweets. They’re great in moderation, but too many give you cavities. They wrap up a great meal, but you cannot live your life only indulging in compliments. On the other hand, constructive criticism are your vegetables. They may not taste the best, but they’re healthy for you. And a healthy diet should consist of mostly fruits and veggies. Yes, brussel sprouts and eggplants too. Of course, it’s important to note that blatant criticism, like “You suck” or “You’re dumb” is garbage. They neither taste good nor are they healthy for you. You can smell it from miles away. So just steer clear.

After all, you are what you eat. 😀

Empathy in Words

In the past 4 months, we are all going through a transitory stage in our lives – some more drastic than others. Some of us have experienced the deaths of loved ones. Some, a test of relationship integrity. Others, career shifts and a change in household income. For those of you who have been affected by the job market, my friend passed me this resource which I hope you’ll find use in honing your job search. Anecdotally, it seems pretty accurate.

And almost everyone, a dietary change and restriction, due to the market’s supply and demand. And it’s more important a time than any (not that you shouldn’t when the curve flattens and the markets recover), be empathetic.

Be kind – with your actions and your words. In these times, it’s so easy to be caught up in what’s not going right in your life, but you’re not alone. You never are.

Empathy in Business Now

Although this applies to so many different aspects of our lives, I’ve found its pertinence on the business front recently. When the focus of businesses now is on cash preservation rather than growth, which I’ve alluded to in previous posts (1. cash in private markets, 2. heeding advice , 3. brand as a moat), aggressive decisions can be tough. As the saying goes, measure twice, cut once.

Here are some examples of said (preemptive) decisions I’ve seen from founders so far:

  • Reallocating 30% of the company budget to the core business from expansion and venture bets (70-20-10 rule of thumb to 100-0-0)
  • 50% cut to CEO salary, 10% cut to management, 5% from everyone else, to try to minimize layoffs
  • 100% cut to founder(s)’ salary, 35% cut to management, everyone else keeps theirs the same, while offering healthcare benefits for temporary workers/contractors

The conclusion for some founders may reach the point of laying off people who followed you believing in your dream. You can check out Mark Suster‘s, Managing Partner at Upfront Ventures, rubric for questions you need to consider in empathetic moments of business decisiveness.

Empathy won’t change decisions. The tough, but true remarks are your vegetables. People will still have to eat them, but be understanding of where the people eating the food you cooked up are coming from. Rather than boil your brussel sprouts, offer crispy ones with a soy glaze, a little heat, and a layer of bonito flakes.

Perspectives Forward

Recently, I had the fortune of connecting with a founder whose parents were refugee who found sanctuary in the states. She put things wonderfully into perspective, when comparing the current situation to the one she was familiar with as a child.

“There are 2 camps of refugees: (1) those who want things to go back to the way they were before, and (2) those who move forward knowing that life will never return to the ‘normal’ they once knew.

“And those who progress forward are those who believe in the latter.”

When the dust settles after all of this, life won’t ever be the same as it was 4 months ago. The hospitality, transportation, travel, and service industries, just to name a few, will irrevocably change. You friends and family may have lost dear ones.

Alas, I’m an optimist. And I know that we’re going to come out stronger than we were when we went in. We’re going to have to get used to a new diet. I dare say, even a new vernacular.

#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!

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Cold Emails – Addressing Elephants and Rock Hyraxes

cold email, elephant

Amidst this unpredictable pandemic, where people are sheltering in place and social distancing themselves. We’ve reached a new inflection point in the curve of virtualizing our worlds. And it just so happens that this is one of the best times to reach out via cold email.

I want to preface by saying this practice has largely worked for me when I reach out. But is neither representative of the population nor guarantees a reply.

The Lesser-known Rock Hyrax in the Room

When reaching out via cold email, the first thing I do is to address the elephant in the room. Outside of the “why are you reaching out to me” question that everyone has, the second most pertinent question, consciously or subconsciously, often is “how long will this take?” – the rock hyrax in the room.

Fun fact: Apparently, the rock hyrax is the elephant’s closest cousin. Frankly, I didn’t know that until I began writing this piece.

Most people who’ve spent some time honing their skills for cold emailing can answer the first question rather well. But, many miss the second.

Close cousins include:

  1. What does the time commitment look like to respond to the email? To address the ask meaningfully? What is my opportunity cost?
  2. How long will this relationship like?
  3. Can I get along with this person?
  4. Will this be an extension of work?

The most important frame of mind is to be honest. If it’s a sales call, it’s a sales call, not “expanding my network.” If you think it’s going to take half an hour to chat, say it. Don’t be nebulous. Set expectations and be forthcoming and candid from the get-go.

“So… why are you reaching out to me?”

And, I’ll leave no stone unturned. If you know the receiving end is busy, also address why they are the best candidate to answer your ask. Be specific. Whether you’re trying to close the first few clients in your pipeline or reaching out to learn, consider the answers to these questions:

  1. How did you find them?
  2. What about them makes you insatiably curious to reach out?
  3. Why they’re the best fit? What’s in it for them? What’s in it for you? (Note I ask “What’s in it for them” before I ask “What’s in it for you”)
  4. Have you spent time doing diligence? On the person? Industry? Topic?
  5. (Optional) Are there inflection points in their life/career/public presence that are unrelated to your ask, but you find oddly fascinating? Pick 1-2.
    1. Note: You should be approaching this question from a point of admiration, fascination, and/or genuine curiosity. If you have any malicious intent, don’t bother.

It just so happens that the same holds for rekindling old flames. Although it’s, by no means, a replacement for social interaction, hopefully it’ll keep the pan hot, when you do sautée after we start mingling at dinner parties again.

Photo by Geran de Klerk on Unsplash

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Mega vs Micro Funds – Where is the money going in the private markets?

markets, mega vs microfunds
Photo by William Felker on Unsplash

One of my buddies and his team recently successfully raised their Fund I, luckily before this recent downturn. Moreover, their fund is geared towards investments into frontier tech. And the Curious George in me couldn’t help but ask about his findings and learnings. In the scope of mega versus micro-funds, our conversation also spiraled into:

  • the current state of private markets,
  • VC-LP dynamics,
  • and, operators-turned VCs.

Here’s a snapshot of our conversation, which could act as a cognitive passport for newly-minted and aspiring VCs. For the purpose of this blog, I’ll call him Noah.

The Snapshot

David: How do you think the private markets will change in this pandemic?

Noah: In a way starting a fund is a lot like starting a company. It’s definitely a humbling process to be on the ‘other side’ of the table and feel what it’s like to be an ‘entrepreneur’ and fundraise.

Yeah the impact on the private market side is something i’m trying to figure out yet. I think it’s still a little early to denote the true extent of the impact. But nonetheless, in the short term, funding activity is bound to go down, people are speculating the duration of this event and waiting for prices to come down. We’re lucky to have closed some money before this happened but it’ll be extremely tricky for the next wave of new fund managers to raise their funds.

It’ll be an especially rough time for founders especially if it goes on for long enough, most VCs will probably try to cut losses by dedicating their attention to portfolios that have the highest chance of survival. This crisis is also different in the sense that it’s a virus which prevents people from regrouping quickly if it carries on.

David: And it’s partly due to a recent function of LPs under-allocating towards the VC asset class as a whole, with longer fund cycles (10 years [6-7 years now] + 2-year extensions). Before all this, the market had been performing rather well in the past few years (a solid 17-18% return YoY on the public markets, or these self-imposed liquidity events, versus venture where only the top quartile of VCs make better than market return). I believe the 2018 number for the top quartile annual IRR was 24.98%, which is, what, 3x in 5 years, but even then, its not enough to convince many LPs.

Although you have the rise in a new sort of private investor in both the secondary markets, as well as VC-LP functions, where firms LPs either invest directly, or VCs are now investing in other micro-funds, like Sapphire. With VCs writing more discovery checks, and so many recent exits in tech, syndicates, via SPVs (special purpose vehicles), has helped them develop relationships with founders early on and relatively no strings attached.

Noah: I think one metric that really stands out that everyone is thinking about is in terms of liquidity. Not only are companies staying private for longer, more and more new alternative asset classes are rising. Interestingly enough, a lot of the endowments or larger institutions we’ve talked to are over allocated in venture. For example, Duke has nearly 1/3 of their money allocated to VCs. One obvious way that VCs are tackling this is in the secondaries market, selling off equity earlier and earlier, so lower potential return profile but LPs generally love early indications of a good DPI.

And yep, microfunds is definitely a big trend as well. It’s simply not sustainable for half a bill/billion dollar early stage funds to exist. Some of the returns of these mega funds have been made public and they’re not looking too great, even if it’s still early for them. On the flip side, smaller funds are a lot easier to return and generally where the best performing vehicles can be found. Moreover, the traditional endowments and institutions have locked in to the Sequoias and Andreessens already, so new FoFs (fund of funds) and relatively newer endowments are always looking for who are the next best alternatives. It just so happened that we’re also seeing a wave of ex-operators coming into the world of VCs and starting new funds. They might not have the acumen to build a long-standing mega fund yet, but their technical expertise makes them a good candidate for more verticalized funds.

David: I totally agree with your sentiment that operators should go do specialized funds, that could be vertically aligned, or could be functionally aligned (i.e. marketing, growth, dev, design, etc.). I’ve had this long standing belief, and let me know what you think. If you’re a great VC, run a mega fund. But if you’re a good-to-okay VC, run a micro fund or an alternative funding vehicle.

As someone who’s good-to-okay, it’s more important to (1) hedge your bets, aka diversify your portfolio, and (2) collect data. Most newly-minted VCs don’t have the experience, like you said, on the other side of the table. Just because you’ve been a good student doesn’t mean you’ll be a good teacher. As someone starting off or just don’t have a stable track record for doing well (aka one shot wonders or the lagging 75% if not more, of the industry), you gotta collect data, to do better cohort/portfolio/deal flow analysis.

Whereas if you’re a great VC, you need the capital to commit to the best investments of your portfolio. So megafunds, plus growth funds, make sense. Although, admittedly great VCs are far and few between.

Noah: My two cents is that the trend of larger and larger fund sizes is ultimately the result of VCs becoming too competitive. It’s no longer enough that VCs have a platform team to help support portfolio companies because more and more other VCs are amassing large support teams too. Therefore as you mentioned, the true way for them to stand out is to have a multi-billion dollar fund that spans across multiple stages. So unlike an early stage fund that can only guarantee committing maybe up to, let’s say, $10MM in capital during their seed and series A, these new beasts can support you in the growth rounds as well, all the way to IPO, and more and more VCs are doing so.

The problem is that this is a recent trend that happened within the past decade, and it’s still quite early to judge the capabilities of some of these new mega funds and whether they’re qualified to manage such a large fund. Nonetheless, you do still see that some of the best funds out there are very disciplined in keeping a consistent fund size (e.g. USV, Benchmark, First round, etc.) simply because it’s so much harder to return a billion dollar fund versus a $250MM vehicle. Microfunds is another interesting trend. On one hand a lot of these newly-minted VCs simply don’t have the capability to raise a >$100MM+ fund in the first place. But there are also cases where the GPs are more than capable but still choose to keep it at a <$100MM vehicle. I’m guessing a lot has to do with the competitive environment we’re in nowadays. When you don’t have as high ownership targets because of your smaller fund, you’re more flexible with minority stakes and can thus co-invest and get into better deals.

What does this mean for founders?

In these trying times, the public discourse around venture financing has been that there’s still quite a bit of capital that has yet to be deployed and that investors are still looking to invest. Yet it is neither entirely true nor entirely false. There are still financings going on today. Admittedly, most of these started their conversations 2-3 months ago.

The goal is cash preservation over growth for many verticals and companies, and it’s no less true for private companies. In that theme, most investors’ first foremost focus is the wellbeing of their portfolio. And because of that priority, many investors are slowing their investing schedule for now. This is especially true for megafunds, where, as ‘Noah’ mentioned, requires much more to return the fund, much less make a profit.

On the flip side, I’ve seen smaller funds and angel syndicates still actively deploying in this climate. I’ve also heard concerns where this pandemic and downturn is going to affect their fundraising schedule for Fund II and Fund III, so they’re pressured with making bets now from their LPs.

Anecdotally, it shouldn’t be harder to raise funding now than before. Some of the greatest companies came out of the past few downturns (2000 and ’08). A caveat would be if you overvalued in a previous round and are still looking to maintain the valuation trajectory (up round over down round).

So keep hacking! Measure well! And stay safe!

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Self-Assessment (VC Scout) circa April 2020

vc scout reflection
Photo by Marc-Olivier Jodoin on Unsplash

This year in my resolution, I aim to be more vulnerable by “opening up about the potholes ahead, not just the ones in the rearview mirror”, to quote Jeff Wald. So I’m going to take a step closer to doing so.

Yesterday, my buddy asked me a question that didn’t sit well with me. Not because he was rude, nor because he meant to offend me. In fact, for all intensive purposes, it was entirely innocuous. But it was a question that got me to really question my beliefs and do an impromptu performance review of myself. He asked:

“Out of all the startups you’ve met with and had the chance to source, how many do you regret passing on? Which one or two stands out to you the most?”

I paused for a second. But when words arose to my mouth, my reply was simple. “I don’t think I have any regrets.” As soon as I said that, I immediately felt this gnawing feeling that something was wrong. I’ve always chosen to live life without regrets. And though this may seem to run parallel to my mantra, I knew deep down it wasn’t meant to be.

Luckily, I have had more time to introspect than otherwise during this pandemic. There are 3 possibilities as to why I have no regrets:

  1. It’s too early to tell which ones will be home runs.
  2. I’m not being selective enough, aka I have a flawed investment thesis.
  3. I don’t have the kind of quality deal flow I would like.

While optimistically, I hope it’s the first possibility. After all, it’s only been 3 years since I embarked on this journey. And there probably is a small proportion of startups that will go on to prove me wrong. Realistically, it’s a permutation of the latter two.

Currently, I pick about 40-50% of my inbound (referrals/intros, cold pitch emails/messages, various networking apps) and 100% of my outbound (assuming they get back to me) to have a conversation with. Of those, I usually find 1 out of every 10-15 that I continue the conversation with from an investment standpoint. And out that pool of founders, I usually end up referring 50% of them. Meanwhile, I still try to be helpful in some capacity to everyone else, but only spend about 20% of my time to do so. From a high level, I couldn’t see anything wrong with this funnel. At least, not until my buddy asked me that question.

Sourcing is one of those things that’s easy to pick up, but difficult to master. And now, I feel, not just conceptualize, how steep this learning curve is. There’s a saying in the industry that “luck only gets better with success.” But I have yet to pay the admission fee for my luck to start compounding. So there’s 3 things I have to do:

  1. Reevaluate my current deal flow by analyzing inbound sources and the empirical quality from each (# of startup I’ve introed/total # of startups received from X source).
  2. Hit up the investors I know to help me create a more robust thesis.
  3. Double down on helping my existing deal flow reach their aggressive milestones, until hopefully, the first can hit the ground running.

On the brighter side, it’s great that I’m iterating on this now before I become a checkwriter.

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#unfiltered #6 The Quantum State of Advice РThe Marriage of the Schr̦dinger Equation and Cold Emails

quantum, schrodinger's cat, advice
Photo by Danilo Raphael Reyes on Unsplash

“The rearview mirror is always clearer than the windshield.”

– Warren Buffett

Although Mr. Buffett said that in relation to business, I find it equally true everywhere else. Just like the rearview mirror and the windshield, I want to denote the dichotomy between feedback and advice.

  • Feedback – given post-mortem, after-the-fact, help after peering into the rearview mirror
  • Advice – given “pre-mortem” or in an ad-hoc sense, help offered proactively, looking through the windshield.

As this title suggests, for this post, I’ll just be focusing on advice. And well, that may be as profound as this post will get, the rest is just a trip down my nerdy shower thoughts after watching this video about parallel worlds my equally nerdy friend sent me.

You have been warned…

The world right now

Well, you see, I work in an industry that thrives off of giving advice. Especially in these trying times when businesses are not only trying not to lay off their staff, many are working around how to stay afloat. My friends in culinary projected a 50% decline in occupancy rate, but at this point, have shifted entirely to to-go options and lowered their own salaries anywhere from 35% to 100%. My pals in D2C (direct-to-consumer), transportation, or travel have been punched in the gut. And, my entrepreneurial buddies are doubling down on cash preservation, rather than growth. The rule of thumb we’re telling founders to have at least as much runway to weather the next 18 months. So if that requires pushing up your fundraising schedule, then time to re-prioritize.

The nerd comes out

But after decades worth of receiving advice and years worth of giving advice, I learned something that seems like a no-brainer now. You see, the thing is advice is both right and wrong simultaneously. You can say it’s in a superposition of being right and wrong… at least until that advice is observed by its subsequent application and result.

Let’s take it a step further. Can we predict the probabilistic effect of advice on a given situation? Sure. So, let’s take a look at the Schrödinger equation.

Image result for schrodinger equation

There’s a few elements that stand out. |Ψ(t)> denotes a time-dependent function. And, H(t) denotes the sum of the kinetic and potential energies for all the particles in the system. In relevance with advice, the timeliness ( |Ψ(t)> ) of the advice matters – in relation to both where you are now and where you’re heading. The eigenvector of you. At the same time, it’s important to factor in your velocity now and everyone and everything else’s involved in the situation.

You might be wondering how come I didn’t analogize to the classical mechanics version of this equation: F=ma. Excellent observation! The reason is that the classical mechanics version doesn’t account for wave-like probabilistic outcomes. And advice and its relative observation by application doesn’t have a guaranteed outcome. Rather, it plays a hand in either increasing or decreasing the outcome of an event.

Here’s an example

One of the first lessons I learned, if not the very first piece of advice I got, when learning about ‘Cold Emails 101’ was:

“Limit your email to 3-5 sentences.”

Makes sense. I didn’t want to bombard the person I was reaching out to. I want to make it easy for them to read and reply to. But over the years, I learned that the real answer to email length is ‘It depends’. If you’re reaching out to someone who:

  • already has a lot of clutter in his/her inbox,
  • has expressed disdain or annoyance in reading emails,
  • doesn’t check his/her inbox often,
  • has a succinct personality (person-of-few-words),
  • or anything else that suggests they’re not going to bother with a long email,

… then send the 3-5 sentences. But if that person:

  • wants to see that you’ve spent your time doing your diligence (not a generic spray-and-pray email),
  • has a more extreme sense of self-worth,
  • is curious/open to flushed-out new ideas/perspectives,
  • enjoys a tale,
  • is a comedian,
  • or anything to suggest that a longer email may stand out to them,

… then craft a longer message. I was able to get in touch with some of the people I really admire by crafting lengthier emails. That said, there’s always a bit more nuance in all of this. Here’s a piece I wrote last year that may provide some context. And this is only probabilistically higher, holding all other variables constant.

Even so, there’s always more than two options. DM them on their most active social media platform. Get an intro. Send them meaningful content. Send a hand-written note by messenger hawk. Visit them in person, without unwanted trespassing. Go viral by making a lollipop with their face on it. Buy an extrasolar star and name it after them. The list is endless.

In sum, the advice of limiting the verbage of your emails is right and wrong at the same time. It merely depends on where the person you’re reaching out to is at and where they might be headed, as well as your own goals in life. And of course, as with any advice, limiting your sentences may boost or detract from the likelihood of a reply.

The disclaimer

As is the nature of an analogy, it breaks down when you get more granular. I should mention that I’m no astrophysicist (dealing with the macro) nor am I a quantum physicist (the micro). And I’m sure if any relevant occupation were to look into my analogy, there’d be tons of holes. I am merely a peripheral enthusiast.

quantum advice
My scribbles on paper which turned into this post.

#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.

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Brand as a Moat

startup brand, moat, defense, defensibility
Photo by Keith Johnston on Unsplash

What is the underlying notion that makes this product work?

It’s the question that almost every investor, especially early-stage startup investor, tries to answer when they’re entertaining potential investments. Some close cousins include:

  • What social, economic, or political trend is enabling this technology/business to work?
  • Why will people want to continue using this product? Consciously? Subconsciously? How much will they regret not being able to use this product?
  • Why is this idea crazy good, and not just crazy?
  • Is there a predictable road to traction? Product-market fit? $1M ARR? etc.
  • Is this a scalable business?

Needless to say, when I chat with founders, their business’s defensibility often comes up. Every business – small or large – needs to be defensible. Grandma’s cookies are just that good ’cause of that ‘secret’ brown butter element. Or Sally’s lemonade stand sells better than her neighbor’s down the street since she can keep her drinks cool for longer. Just like every good medieval castle has a moat, possibly filled with alligators, every good business has to have that one (or many) unfair advantage, as they call it in B-school. Not that I ever went, but I’ve heard from friends and professors who have. And this is even more true if you want to build a scalable business.

Those who have gone generally claim that their moat is their experience at X Fortune 500 company. Those who have a technical background often claim that their moat is their IP – patents owned and pending. Neither are wrong. And frankly, there are a multitude of factors that come into play when arguing for a business’s defensibility. And most of the times, it’s a permutation of the above and more. But the purpose of this post is to focus on an often discounted notion of brand as a moat. Both the company brand and the personal brand.

Disclaimer:

I should mention that before you even consider your business’s defensibility, and subsequently, brand, first, make a damn good product. I’ve seen too many founders take that leap of faith before they even have a product. They pitch the dream of them making a better world – the company vision – before they even figure out the first steps they need to take to get there.

The only ‘exception’ to this rule, at least from a fundraising and pre-PMF perspective, is if you have an amazingly robust personal brand. Though that may help with early traction, it won’t be enough to sustain a scalable business in the long run.

The startup brand

Your startup’s brand is a collective composed of the:

  • Company mission,
  • Company vision,
  • Internal culture,
  • And, the openness and responsiveness of the team.

The vision is that ultimate dream. The mission is what you’ll do now to get to that dream. Back in college, someone I really respect put it to me like this:

“The vision is the Sun. The mission is that ladder up. You can’t get to the Sun without building a ladder. If you only stare at it, you’ll eventually blind yourself. And if you just build a ladder, or else you might up on Mars instead, poorly equipped to survive there.”

Culture is something that you can set at the beginning, but know it’ll be an evolving beast with every new hire and every new incident. What you let happen defines the new culture. Although I share my thoughts in a post earlier this year, Ben Horowitz puts it into a much better perspective in his book, What You Do is Who You Are: How to Create your Business Culture. Quite a story-filled read, especially when you’re looking for something to do at home now.

And, the above three culminates into how your team acts.

  • Do your current customers/users feel like their concerns are either addressed or at least, valued?
  • Do they feel they are a valued member of your community?
  • What is your customer satisfaction rate? NPS score?
  • How do you prioritize and act on customer feedback?
  • Are your users engaged? How do you reengage them, if they become inactive?
  • For apps, what are they saying on the App Store/Play Store?
  • And, how are new customers hearing about your product? What do they hear? What are their explicit and implicit assumptions when using your product?

Why it Matters

Together the 4 elements answer the fundamental questions:

  1. Why would a potentially great customer want to use your product?
  2. Why would a potentially great hire want to join your company?

In the past few months, many VCs have been shifting their investment focus from consumer and towards enterprise/SaaS. There’s the argument that consumers are (1) more expensive to acquire (increasing CAC; the average number of apps a person downloads a day is zero), and (2) harder to retain. (For a more in-depth explanation, I would recommend you to check out the “Consumer App Conundrum” section here.) Aka, it’s more competitive than ever in the consumer markets. When we get closer to perfect competition over a saturated market seeking attention, having a great product just isn’t enough anymore. When some of the most active and vocal consumers happen to be people on the younger spectrum (millennials and Gen Zs), to fight for their attention, you need a brand that resonates with them on causes they care about – whether it’s diversity or climate change or another social cause.

We see this notion affecting two other verticals: the public sector and enterprise.

  • The privatization of X (let X be education, healthcare, transportation, etc. for all that were empirically public sector functions)
  • The consumerization of enterprise

For the purpose of this piece, let’s look at the consumerization of enterprise. What does that mean? Before enterprise sales worked from a top-down approach. A founder of an enterprise/SaaS startup pitches to a senior executive at a Fortune 500 (or similar) company. And the executive makes the call and the budget allocation towards their team’s usage of said product.

Now, many startups/companies, like Slack, Trello, Lever, and Soapbox, are taking the bottom-up approach, garnering brand loyalty among the people who will be/are using the product itself. And I predict that’ll be so in the near future for Superhuman, the fastest email client, and Woven, my favorite calendar app, as well. After all, progress happens at the most junior level. If you take it in relation to a tech startup of 200 in its growth phase, the founders or executives can make a plan and set deadlines. But if your most junior developer isn’t working on it, the whole business halts to a stop. All this makes me quite bullish on products in the low-code/no-code space, as well as in towards the future of work.

Moreover, this has led enterprise products to be heavily personalized, constantly updating, and has paved the way to multi-modal business models (i.e. subscription and pay-per-use). All this maximizes user satisfaction, which in turn affects their productivity, and transitively, the business flow.

Although the job market looks wildly different now than it did 3 months ago, when I assume the average founder is looking for cash preservation over growth, you still should be cognizant about the latter going forward.

Your Personal Brand

Your personal brand as a founder, or just as a professional, really matters. If you are a founder or thinking about becoming one, start building a public voice. Get people excited about you and what you’re all about.

Why?

Personal brands are extremely scalable and have built-in virality. You put one post out. Some percent of your followers engage with your content by liking or commenting. Then either by social media’s algorithms or by their innate excitement, they’ll share your content with their friends. Subsequently, new folks discover you and your content. And this becomes a virtuous loop, or network effects, as we call it, that helps get you scalable traction. This is why celebrities, like Dr. Dre and Maisie Williams, and their ventures garner quite a bit of traction among consumers and among investors. This is also why influencer marketing has been so bullish over the past few years.

At some point in your company’s lifespan, your personal brand will become the company brand. And that’ll become either shining beacon or the downfall of your company. More than just the followers you have on social media and in public, you are judged by everyone constantly on your aptitude and behaviors. How open, conscientious, agreeable, extroverted, and neurotic are you? (Yes, I took the 5 traits from the Big 5/OCEAN test.) Each and more have an impact on your personal brand. If we look at the culture behind Facebook, we see how large of an imprint Zuckerberg has on it. For Apple, Jobs.

In closing

The best thing about brands as a moat is that it’s effectively free! But both take years of work in building. As someone on the investing side, I love stellar brands. And it’s one of the elements of a business I weigh heavily on for its potentiality in network effects, summarized in the “Why you?” component of my NTY investment thesis (why Now, why This, why You).

Hmmmm, now thinking about it, personal brand may be the biggest reason I’ve been changing my handwashing habits in the past week… after watching Gordon Ramsay, Alton Brown, and Conan O’Brien‘s tutorials on it.

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#unfiltered #5 The Insider “Silicon Valley” TV Show – The Show, plus Thoughts on Eccentric Cold Emails and Crazy Startup Pitches

Tech satire.

I gotta say I love it! Memes. GIFS. YouTube vids. TikTok clips. The whole nine yards.

As a testament to how much I love satirical memes and GIFs, six years ago, when I was testing out “best” cold email methods, as a semi-random A/B test, I emailed half of the folks I reached out to, leading or ending with either a meme or GIF. The list ranged from authors to musicians to researchers to Fortune 500 executives to founders to professional stone skippers. And the results weren’t half bad. Out of 150 odd emails, about a 70% response rate. Half of which resulted in a follow-up exchange by email, call, or in-person. The other half were gracious enough to say time was not on their side.

So when I learned, from the most recent episode of Angel podcast, about David Cowan’s version, I just had to check it out. And I wish I had only discovered it sooner. Made by Director Martin Sweeney, and co-visionaries, Michael Fertik of Reputation.com and David Cowan of Bessemer Venture Partners, bubbleproof is tech hilarity… made by the folks who have tech day jobs. Though I still haven’t watched the 6 seasons and 53 episodes of the Silicon Valley TV series yet. Sorry, friends who keep recommending it.

I just finished episode 5, where they share a snapshot of comedic ideas and pitches – from lipid fuel technology to an Airbnb marketplace for prisoners. And not gonna lie, I had a good chuckle. But when the episode wrapped up and I finally had a chance to think in retrospect, those ideas could have been real pitches in some world out there. When I first started in venture, I met with my share of cancer cures predicated off of a happiness matrix and feces fuel and African gold brokers. In case you’re wondering, yes, I did get pitched those. The last one admittedly should have come through my spam folder.

In these next few weeks, while you’re WFH (work from home), if you’re curious about tech from the ironic perspective of those who live and breathe it every day, check the series out. Only 10 episodes. 7-15 minutes per. (And while you do that, maybe I’ll finally get around to watching Silicon Valley. But no promises.)

As a footnote, Bessemer also has a track record for being forthcoming and intellectually honest. I would highly recommend checking out their anti portfolio, that lists and explains not their biggest wins or losses, but their biggest ‘shoulda-coulda-woulda’s’.

#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!

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