Posts

Posted on

Investing in Mentorship

In theory, there’s nothing wrong with seeking mentorship to gain experience or offering mentorship to give experience. In fact, advice is still something I seek, as I’m still on the green side in the larger landscape. In reality, every person only has 24 hours in a day and limited bandwidth, which inhibit the quantity and quality of mentorship even if the mentor wants to. Providing mentorship, after all, requires mentors to accept the opportunity cost to do something else they could be doing, and prioritize the learning exchange. I characterize mentorship into two categories: passive and active. Passive mentorship is where one purely obtains advice from a mentor, whereas active mentorship is where advice is coupled with hands-on learning experience.

Mentorship is often seen as a huge time commitment, which is why when asked to provide mentorship, many potential mentors, who have yet to commit a large chunk of their schedule to advisorship, turn it down, as soon as they get the request. Having led three mentorship programs across two organizations, as well as hosting founder brunches and brunches with strangers for peer mentorship, here’s why most prospecting mentees are turned down: ensuring value and capping the mentor’s own downside.

Ensuring Value

When mentors are approached, the two most frequent asks are: “Can you be my mentor?” and “What can I help you with?“

The former, “Can you be my mentor?“, often scares many mentors away. Just the word ‘mentor’ or ‘mentorship’ incites the connotation that the mentee is setting a high bar of attention expectation, which in undefined with no clear asymptote or time horizon, in sight. Something I learned over the years, unless I am the one hosting a mentorship program, is that the best mentor-mentee relationships, never mention the word ‘mentorship’, at least not in the first few exchanges. The question itself is nebulous in nature. The nebulosity leaves the mentor needing to expend their creativity to guess what mentees would like to learn. A better approach would be to have a targeted question detailing exactly what you want to learn, with evidence of putting in work to resolve the question beforehand.

Here’s a format I personally use when reaching out for advice, or for passive mentorship:

“I’ve been obsessed about X recently, and have tried out Y and Z, to produce Y’ and Z’ results (where I expected Y* and Z*). As someone I deeply respect in X industry and whose insights I have used in trying out Y and Z, what might I be misunderstanding or should have done differently? If I caught you at a bad time of the year, is there someone or some literature you can point me to, to help me achieve the desired result?”

The latter question, “What can I help with?“, unfortunately, is evidence that the prospecting mentee has not done their diligence. Take for example, helping a VC. There are really only five ways to help:

  • Deal flow – amazing startups that fit the partner/fund’s investment thesis
  • Sales/BD intros – firms that are buying, partnering, or co-investing into the fund’s portfolio
  • Portfolio support – helping the fund’s existing portfolio startups with their various impending dilemmas
  • Follow-ons – downstream investors for the fund’s portfolio
  • LP (limited partner) intros – high net-worth individuals or groups who may fund a VC’s next fund

In knowing one’s specific skill set and network, ideally, a prospecting mentee can help where his/her strengths lie. This is also true on a broader scale, when offering help to friends, acquaintances, and just people who need help, knowing what kind of help they need and when they need it means the world to those in need. After all, a friend in need is a friend indeed.

Capping the Downside

Most mentors, either explicitly or implicitly, want to ensure the experience is valuable and productive to the mentee, leaving the upside to be essentially limitless – for both the mentor and mentee. Having a set of clear measurable goals, one, defines the time horizon, and ,two, helps the mentor understand what is valuable to the mentee. A good reference point are how companies structure KPIs, or key performance indicators. At the same time, clear, measurable goals helps the mentor cap their maximum downside, so the relationship won’t end up becoming a slippery slope. Consider what the mentor has to risk to help the mentee: time, attention, money, reputation, opportunity cost, “knowledge IP”, and so on.

Per the format I use as I mentioned before, it caps the maximum time investment a passive mentor needs to provide to the length of time it takes to answer one question. Or if they’re short on time, I have recognized that they’re busy, and have given them an easier ‘out’ to the question.

In closing

This piece isn’t meant to disincentivize people from seeking help and mentorship, but rather to provide another perspective to those of us, including my younger self, who have yet to figure out their own approach to mentorship or are looking to explore other methods or just to peer into my mental calculus. Mentorship, at the end of the day is an investment – an attention investment. As with all investments, the goal is to lose little, win big – or how we like to say in VC, “de-risk the investment.” The upside, or if I’m continuing on this VC analogy, the return on investment, or ROI, knows no bounds. Even for the mentor, who at first glance, may seem to be losing more than winning, gains the satisfaction and pride of paying it forward, a new friend, and leadership skills, even before what the future may realize.

After all, some of the greatest figures in history and in our world today grew from mentorship: Socrates to Plato, Ralph Waldo Emerson to Henry David Thoreau, Ed Roberts to Bill Gates, Maya Angelou to Oprah Winfrey, Sire Freddie Laker to Richard Branson, Bill Campbell to Steve Jobs, Steve Jobs to Mark Zuckerberg, and the list goes on and on. As many studies have shown, and of course, with a few caveats, happiness can be achieved by spending money on others. In this case, that money is time and attention.

Posted on

The Secret Sauce

Photo by Aarón Blanco Tejedor on Unsplash

I was chatting with a founder yesterday about why she was getting so many “maybe’s”, a few “no’s”, but no “yes’s”, where a “yes” needs to come along with a term sheet, or else it’s as good as a “maybe.” Her product was hitting most of the check boxes for a startup ripe for the seed round, but she just wasn’t getting any traction from investors. There were a few KPIs she was missing here and there, but most startups don’t fit in the cookie cutter rubric anyway. So why?

It was and is the secret sauce. Others might call it the X-factor. It’s what uniquely sets you, as a founder, and your team and product apart from the rest of the competition. Like I mentioned in my thesis, what did you catch that makes money, which everyone else underestimating or missing entirely? It could be an insight; it could be a business model; it could be a specific money-generating collective customer insight. And how will this secret sauce continue to help you gain traction, at the minimum, for next few years. Moreover, at an early stage, pre-product-market fit (pre-PMF), it really only has to be one thing. It doesn’t have to be a list of the five ‘unfair advantages,’ like they teach in B-school. It’s not the chart with you having all the check boxes checked and everyone else having less checks than you do. It’s more often than not, not the up and to the right graph that you have in your slide deck. Because let’s be honest, every startup’s graph is up and to the right. Left side – antiquated. Right side – revolutionary. Bottom side – slow. Top side – fast. Or some cousin of that. Not that any of these advantages, charts and graphs are wrong, but what they represent most likely isn’t as unique as a founder might think. VCs see thousands of pitches in their inbox, pitches at events, and pitches in person. What you think is unique may be the 50th time a VC sees the exact same value proposition. As one of my 6th grade teachers once put it into perspective for me, “Think of a hundred really, really creative ideas. Throw them all away because all of them are unoriginal. Now think of your next hundred, and you are finally entering where no one has tread before.”

Just one thing. One thing I, as a scout, or another as partner, can bring to a partner meeting and say: This one thing is why we should invest. The more intuitive, yet exclusive to you, the better. Investors only have so much bandwidth to entertain ideas. There is a huge sum of okay ideas. Many good ideas. A few crazy ideas. And an even smaller handful of crazy good ideas. And the secret sauce is to prove to anyone exactly why you are one of the crazy good ones.

Now the secret sauce gets more nuanced here. You and your startup not only need that secret sauce, but you need to make sure the investor that you’re talking to is the “best dollar on your cap table,” as Roy Bahat of Bloomberg Beta (yes, the link redirects to a Github link, and they might be the only investors out there that does that) puts it. Why is it the perfect fit for the investor you’re chatting with (or going to chat with)? And why is that investor, and no one else, uniquely suited to help your business flourish at this stage? For example, I can cook up the meanest mushroom dish ever, slather it with my widely-accepted secret sauce (which has white pepper in it), and give it to my brother. No matter how good it actually is, he will without a doubt throw it in the trash or flush it down the toilet. Because he’s just not into mushrooms. The same can be said with investors. If they can’t or don’t know how to appreciate, savor and help you build on that delicious mushroom recipe, you’d just be wasting time barking on the wrong tree.

All in all, the secret sauce is just when your unique recipe for success meets someone with the means and experience to love it.

Posted on

The Myth of the 30-Second Elevator Pitch

I’m not the biggest fan of the 30-second elevator pitch. Although I do believe it has its merits in the art of being concise – to be able to take a complex subject, be it a person or a project, and succinctly describe it for your respective audience, I trust the art of storytelling more.

The elevator pitch is designed to be the appetizer before the entrée, but what I find more valuable is the entrée itself, which, unless you’re at a 20-course Michelin-starred meal, aren’t short. I have rarely seen a deal close on an elevator pitch, much like I haven’t seen or heard of two people become best friends on a “Tell me about yourself.” Elevator pitches, like teaser trailers, are designed to have certain words or phrases click with the one(s) you’re pitching to, and, at some point, becomes too “templated” to connect on an emotional, more-human level. Earlier this month, I recall Robert McKee, one of the most respected screenwriting lecturers out there and a FullBright Scholar, writing about the dichotomy between film and TV in his newsletter, which is analogous to the differential between pitches and an in-depth coffee chat:

“Long-form writers have the power to reveal character complexity and depths of humanity no medium has ever delivered in history.”

Similarly, in my experience, through having a conversation about one’s inflection points in life, I can better understand someone’s depth of character and scars. For example, I love to ask founders: “How did this idea come to be?” Like I alluded to in my piece about my thesis, founders who are obsessed about the idea have a personal vendetta against the problem. They use “I’s” and “we’s”, whereas others who haven’t seen the blood, sweat and tears firsthand would often reference the numbers and speak in large, more abstract scopes. Outside of founders, especially those in fundraising mode, who have practiced knowingly or unwittingly the same responses over and over from meeting with investors, people, who have been in the trenches, often have a less well-rehearsed response to such questions – more scrappy, but much more detailed.

Just the other day, I read a brilliant response to a Quora question on “As a VC, how do you know an entrepreneur has ‘grit’?” that summarizes a quick calculus that differentiates the entrepreneurs from the “wantrapreneurs.” The answer in two words: specificity and compassion – two things which, unfortunately, most elevator pitches don’t cover.

Posted on

My Favorite Quirky Vacation Response

As with most people, when I first learned the how-to’s of communication – be it a resume, cover letter, cold email, college application, or coffee chat, I was taught the tried-and-true rubrics that my predecessors used with reasonable success. I’ve never liked these cut-and-dry templates, but by societal norms, I deemed them necessary. But they not only lack personality, but often times, relevance to whom they’re addressing, on a human level. Of course since then, I changed my whole suite of online, as well as in-person, communication, but I know there are still many means I may have overlooked or taken for granted. In the past two years, I’ve made it my mission to notice and change what isn’t me, and along that path, I stumbled across my old email vacation response.

This post was actually inspired, over dinner, by my friend as she’s gearing up for the holiday season. On the flip side, Brad Feld, a brilliant VC, through his blog post on Feld Thoughts and Nick Kokonas, one of the creative geniuses behind the Alinea Group, in an episode of the Tim Ferriss Show, inspired my current email vacation response that I started using about a year back:

I’m currently out building my first wand, but I can’t seem to find the elusive phoenix for its feathers.

I know I’m supposed to say I won’t be able to respond until I get back on
[date], but the truth is I’ll be lying out of my ass, pardon my French. In always having my phone with me, I will more likely than not see a notification blip pop up on my phone lock screen. And I know that from time to time, I will need to interrupt my vacation to answer something urgent.

That said, I promised myself I’d unplug and enjoy my vacation as best as I can. So, I’m going to run an experiment. I’m going to let you decide:

– If your matter is really urgent, resend the email with your subject line preceded by [URGENT] and I’ll try to respond nimbly.
– Otherwise, I’ll respond when I return to the beautiful SF.

Cheerios and orange juice,

David

As a final commentary, I highly recommend following both Brad and Nick’s work, regardless if you’re in the VC or culinary fields, or not. I’ve been a big fan of both for years, and their insights, outside of email structures, have definitely helped me become the person I am today. As a cherry on top, I find Nick’s Twitter and Medium profile descriptions hilarious.

Posted on

Why I jumped into VC

I’ve always had a life goal of meeting, learning, and helping the craziest, most creative, and most inspiring people in the world (and maybe one day, outside of it). So, half a decade ago, I made that dream-like goal my mission. Every week I reached out to one new person I was insanely excited about, which sounded great in theory, but scared the hell out of my introverted self. I would find the person of the week (POTW, as I would abbreviate it in my journal) from anything that would spark my interest: articles, podcasts, books, friends (and our online and offline conversations), memes, or YouTube videos. I then forced myself to find every way possible, and over time, figure out the best way possible, to meet these brilliant folks. It was a trial-and-error game of email, call, warm intro, Instagram or LinkedIn DMs, hand-written letters, and even attempting to show up at their office and ask for a meeting unannounced. Most were in vain, but those that I did succeed in, always had me jumping with joy, which was quickly followed by nervous adrenaline, as if I had overloaded on caffeine.

But that’s what made every single week fun. Every week I had something to look forward to – a mission that I would jump out of the bed every morning to accomplish.

That’s exactly why I didn’t give myself time to blink when I got the chance to jump into venture capital. Venture capitalists have a great track record of finding and investing in brilliant and passionate dreamers. And when I had yet to find my own systematic calculus for finding fascinating humans of the world, the mysterious land of venture capital would help me gain insight and a means to create my own. At the same time, I just couldn’t ignore my former professor’s description of the VC industry:

“A career where you get to see the future from one person’s perspective. And if you piece enough of them together, you’ll be able to help build the future you want you and your children to live in.”

Though I’m still only a meager three years in, and many miles short of having children, I’ve learned VC is a much more complex beast than I initially thought, but it doesn’t change my mission: to meet, learn, and help the craziest, most creative, and most inspiring people in this world. As someone who’s on the more junior side of life, there has been no better industry for me to learn, in breadth and in depth:

  1. How to start and grow a business,
  2. The frontiers of technology,
  3. And the fundamentals of human relationships.
Posted on

My Thesis (2019)

I jumped into the fascinating world of venture capital about three years ago. It’s not like I planned it out or had a life-long dream of being in VC. Maybe it was a result of too many bedtime stories from my dad or maybe it was my admiration of Remy from Pixar’s Ratatouille. Either way, I just knew I was enamored innovators and their stories.

Three years in, I don’t claim to know everything, or even anything. After all, a brilliant veteran investor once told me:

“You won’t know if you’re good at it until you’re ten years in.”

And it just so happens that ten years is the average lifetime of a fund. As of now, I’ve accrued quite a bit of unrealized IRR – less so monetarily, but more so in terms of pattern recognition. In this cycle (as I believe, rather than psychology’s four linear stages of competence) of incompetence and competence, I know what I don’t know – my conscious incompetence. But here is what I do know – my (hypo)thesis after reading thousands of pitch decks, meeting 700+ founders and learning from 100+ investors. Granted, a mix of pre-seed, seed, and Series A folks.

Why this?

The first leg of my thesis happens to be the most explicit, and often times, the easiest for founders to answer. Why are you pursuing this problem? What makes your solution appealing to people currently facing this dilemma? And, how are you different from your direct and indirect competitors?

‘Why this?’ is, simultaneously, a question about product and market. How does this product fit in the larger picture of the market? Is the market well-defined, growing, or nascent? How saturated is the market? What is everyone else missing entirely or underestimating?

Why now?

What market forces, technological advancements, and/or social dynamics have made this problem ripe for the taking? Timing is crucial for startups. Too early, the stage has yet to be set. Had Uber or Lyft been founded prior to the smartphone, it would have folded in the blink of an eye against the looming giant of taxis. Same if coding bootcamps came before demand exceeded supply of software engineer roles in technology. Too late, and you’re feeding on scraps, if at all.

Often times, there’s more than one team that realizes the intersection of social, technological, political, and economic trends at the same time. But each might have a unique perspective on why the intersection came to be. The question I ask myself when looking at each potential investment is: What did you catch that makes money, which everyone else underestimating or missing entirely? Of course, it does make it easier when the founder(s) help spell that out for me.

Why you?

Early-stage investing is mostly about the founders, especially when there’s so little numeric evidence the earlier the stage is. Their obsession (similar, but not the same as passion), their grit, their domain expertise, their chemistry, and their ambition.

Obsession. Passion is what keeps you going during the day and when you have free time. It’s what you love. For example, there are many things in this world that I love: swimming, art, travelling, and eating, among many others, but I would never throw away my life to pursue these. After meeting with hundreds of founders, I learned it’s easy to mistake eagerness for passion, especially during the first 30-minute coffee chat. Obsession, on the other hand, is what keeps you going during the night, while burning the midnight oil. It’s what you hate. It’s a personal vendetta, which is catalyzed by a problem that you face first-hand, rather than through market diligence. As one of my good founder buddies, Mike, prompts it:

“How you sleeping?”

On the same token, obsession is contagious and inspiring. It is a key quality I look for, which can reasonably help predict how proficient an entrepreneur is and will be in hiring early team members, as well as onboarding future stakeholders.

Grit is a function of obsession. The more obsessed you are, the easier it is to weather through obstacles during the founding journey. It’s a trait I learned to recognize as a former competitive swimmer. The more obsessed I became with a achieving a certain time, the easier it was for me to overlook the short-term pain for the long-term gain. I could put in 40-hour swim weeks and still be as eager and excited coming out of them. Similarly, I’ve seen obsessed founders be able to pull off cup ramen meals, moving from comfortable houses to stuffy 2-room apartments, and taking rejection after rejection from investors, friends, and family. With limited resources, how much cognitive flexibility does the founding team have? I’m not saying that founders need to live in a garage and have cold pizza to be successful, but I do want to see founders’ ability to be scrappy and resourceful, like Brian Chesky and his team at Airbnb went to each of host’s house to take high-quality pictures for the site or when Michelin created the Michelin Guide for restaurants to help sell their tires.

Domain expertise. One of my favorite questions to ask founders is: “What is each of your competitors doing right?” It’s easy to get bogged down in the thought process of “I’m right, you’re wrong” and many founders that I’ve seen do end up living in a bubble of how “unique” (whether true or not) they are. What separates a good entrepreneur from a great entrepreneur is the ability is to ability to adapt and be open-minded about the changing landscape, which includes getting to know your market, and subsequently, competitors, like the back of your hand. Domain expertise isn’t just understanding the market, the product and the team, but also having accumulated deep, unique insights into all the above and being able to defend each insight. It is one of the few traits that I look for that cannot be static and should grow over time.

Chemistry. Rather than asking how long co-founders have known or worked with each other, I found it more insightful to ask how co-founders would resolve problems between themselves and their first impressions of each other. Both provided me with context on whether pressure and friction can create gems or mashed potatoes.

Ambition. When I first entered the world of venture capital, I thought ambition was a given. I mean, who would want to create a startup if they weren’t ambitious? Over time, I learned there were varying degrees of ambition. Some envisioned transforming an industry, some wanted to be acquired, and some just wanted to be their own boss. None are better or worse than the others, but not all are suited for VC financing. VCs bet big to win big. I’ve watched VCs turn down many great ventures, just because they couldn’t justify their potential ROI to their team, fund, and/or limited partners (LPs for short – the folks who invest in VC funds). Why? VCs take on big, but calculated risks. Because of that philosophy, they expect many misses, but for each investment, they’re hoping that that venture makes back a majority of their fund, if not more. Of course, there are a few other factors that determine VCs return on any investment, but at the very early stages, it’s the first check mark entrepreneurs have to check. You can only catch as much fish as how wide the net you cast.

Conclusion

The uncomfortable truth, especially in the San Francisco Bay Area, where people from around the world come to build a dream, is that not all ventures are meant for the venture capital model. VCs ask founders to tackle aggressive schedules and metrics, whether it’s the Rule of 40 for SaaS startups, or the minimum Month-over-Month growth of 30%, as I was first taught. There are many profitable startups and brilliant builders out there that are excluded from the VC model.

My friends and colleagues call it my NTY thesis – the millennial abbreviation for “No thank you”. When I first started scouting, it was all about finding the best ones out there. It was saying “yes” to each opportunity to each conversation – quantity. But when I reached critical mass, had started developing an investment thesis, in conjunction with learning how other theses came to be, it wasn’t about quantity anymore; it was about quality. It wasn’t about finding; it was about eliminating. The hardest part for me was turning my eager “yes’s” to reluctant, but necessary “no’s.” A good mentor of mine once said:

“If you can’t say no, don’t invest.”

Although I have yet to invest in these startups, the calculus is the same. I really boil it into one final question: Am I willing to risk my political or social capital with my connections for your venture? Is there something about the founder and/or startup I can nerd out about? It could be an extraordinary track record for getting shit done. It could be brilliant traction. It could be a unique insight. What really tips the scale is the secret sauce.

Proudly powered by WordPress