It’s a great talk. And I highly recommend you check it out even if you don’t work in the creative industries.
We’ve seen writer strikes in Hollywood as well as a proliferation of AI use cases in creative industries. James Cameron joined the board of Stability AI. The Russo brothers behind Marvel’s superhero sequel prowess have created their own AI studio. Pouya Shahbazian as well, using AI over the next four years to create 30 AI-generated films. The list goes on. As such, the question of “Is AI art?” is an interesting one to answer. And admittedly, harkens to a series of conversations I’ve had with allocators on leveraging AI in investing practices.
From the VC/GP side, there are folks like Yohei, Sarah, and Ben and Matt, just to name a few who’ve all been building and incorporating AI recently into their workflows and deal flow pipelines. Yes, I know I’m missing a lot more names. But you get the point. From the LP side, progress is still slower, but many younger LPs are quickly adopting AI as well. The conversations I’ve had come from senior allocators on whether it makes sense to use AI. And if so, how much?
Which begs the question: If AI can do your job, do you still have a job?
I was at a dinner last year where the CIO of a large endowment shared that the reason she knows what to look for in managers today, how to underwrite funds, and how to build a venture portfolio was due to the fact she made a plethora of mistakes on her way up the allocator ladder. Small mistakes, like mixing up a decimal on the spreadsheet which led to a venture fund needing a $10B outcome instead of a $1B outcome. Or like Jamie Rhode once said on Superclusters, that she failed to check before she made a commitment to a fund if the fund actually had the commitments that the GP advertised, leading to her check being a larger proportion of the final fund size than she anticipated.
A lot of senior leaders in the LP space seem to be quite skeptical of what AI can do for investment decisions in its current state, yet junior team members seem to widely adopt it to write memos, to inform investment decisions, to create portfolio construction models, and so on. And so far, there’s been a general consensus that AI, at least with respect to investment decision-making, has yet to reach its desired state. In one comment at the same dinner, a senior allocator remarked that one of her direct reports submitted a fund construction model that was built via AI and suggested that in order to return the fund, they needed almost a quarter of the companies to become unicorns. And when questioned, the junior allocator saw nothing wrong with the model. Only to further defend their choice. Or as Brandon Sanderson says in the talk, the problem with AI “is because they steal the opportunity for growth from us.”
“The process of creating art makes art of you. My friends, let me repeat that. The book, the painting, the film script is not the only art. It’s important, but in a way, it’s a receipt. It’s a diploma. The book you write, the painting you create, the music you compose is important and artistic, but it’s also a mark of proof you’ve done the work to learn because in the end of it all, you are the art. The most important change made by an artistic endeavor is the change it makes in you. The most important emotions are the ones you feel when writing that story and holding the completed work.
“I don’t care if the AI can create something that is better than what we can create because it cannot be changed by that creation. Writing a prompt for an LLM, even refining what it spits out, will not make an artist of you because if you haven’t done the hard part—if you haven’t watched a book spiral completely out of control, if you haven’t written something you thought was wonderful and then had readers get completely lost because your narrative chops aren’t strong enough, if you haven’t beat your head against the wall of dead ends on a story day after day until you break it down and find the unexpected path—you’re not going to have the skill to refine that prompt. The machine will have done the hard part for you and it doesn’t care.”
Growth comes from making mistakes. It comes from the struggle. The “distance travelled,” to borrow a term Aram Verdiyan used before. This is why investors often prefer partnerships and co-founderships. It’s why many firms have “red teams.”
There is probably a day when AI can do our job. But for now, the art of investing is in the friction it takes to make a decision. The character-building moments. The moments where you question your own priors. So if AI enables you to have more nuanced dialogues with yourself, if it challenges the way you think in ways you hadn’t considered before so that you look for evidence that either proves or disproves the null hypothesis, then there will still be room for the use of AI in investing. Otherwise, if you’re regurgitating scripts based on singular uninspired prompts, then you likely won’t have a job for long.
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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
Having been to a number of talks and panels, my biggest frustration with these occasions is when a moderator asks a VC: “So what do you invest in?”
And the VC would respond, “Good people, good markets.” Or “Ambitious founders tackling ambitious problems.” Or some cousin of it. Well, of course. I’m not saying they’re wrong, but no venture capitalist ever says, “I want to invest in bad people building in bad markets.” It’s the kind of advice and “insight” that’s equivalent to a large company saying their company culture is a “family.” Not wrong, but tells me nothing about what you actually want. The same is true for most advice for investors. And well, advice in the investing world is given quite liberally, without liability and responsibility most of the time.
So I made it a mission to collect pieces of advice that were actually tactical or differentiated. Advice that would make you turn your heads and actually pay attention. And under the right circumstances, actually useful. It’s why I wrote this blogpost’s predecessors:
This is the third one in this 99 series for investors. And, if by chance, you’re a founder reading this, to understand the mentality of a differentiated investor, you might also like the 99 series for founders. But I digress.
In no particular order other than the chronological order I found them, below is the third set of 99 pieces of advice for investors:
1/ “Any company that is pure execution risk without any market risk is not a suitable venture investment.” — Chris Paik
2/ “[In the private markets,] I don’t think we’ve seen a 70% write down yet or 70% of these [private companies] worth less than the cash [they’ve spent to date].” Take public market comparables. To see how much public companies are worth as a function of the money they’ve spent to date, look at the “Cumulative Retained Earnings” (which tells you how much money they’ve burnt over their lifetime) compared to the “Enterprise Value” (or market cap minus the cash they have today). If their enterprise value is less than their cumulative retained earnings, that means they’re worth less than the money they’ve spent to date. — David Friedberg (timestamped 4/21/2023, when he said there are 70% of public companies that are worth less than the cash they’ve spent to date, but we haven’t seen a 70% haircut to private market valuations)
3/ The first best use of any consumer product is crime. — Pre-seed VC
4/ When looking for outliers, “Invest in companies that can’t be described in a single sentence.” — Chris Paik
5/ “Venture investing process as a two-stage process – the first where you ensure you avoid false negatives – that is, you ensure that there are no errors of omission, where you unwittingly pass on meeting a potential winner. The second stage is where you avoid a false positive or errors of commission, that is, picking the wrong company.” — Sajith Pai quoting Karthik Reddy
“How are you using AI? Is it a third-party? Let’s see those terms, contracts, etc.
How are you using customer data? Prior agreements? Prior policies in place? Subsequent policies in place? You could lose the data, the models, and the algorithms. If found in violation by the FTC. States privacy laws like Texas, California, and Virginia also should be looked at.”
7/ “When it’s cooler to be in a startup than in a band, we’re at the top of the market.” — A fund of funds General Partner
8/ “Buy when there is blood in the streets, and sell when there are trumpets in the air.” — A Warren Buffett attribution
9/ Does this founder have 20 years of experience of 20 one-year experiences? Depth vs breadth. Which does the industry/problem they’re building for require?
10/ While there is no one “right” way to run a partnership meeting, beware of conviction-led deals (as opposed to consensus-driven), since partners are incentivized to go into sales mode to convince the rest of the partnership and may make it harder for them to see the flaws in the deal.
11/ In early stage venture, debates on price is a lagging indicator of conviction, or more so, lack thereof.
Price also matters a lot more for big funds than small funds.
Price also matters more for Series B+ funds.
Will caveat that there’s an ocean of difference between $10M and $25M valuation. But it’s semantics between $10M and $12M valuation. How big your slice of the pie is doesn’t matter if the pie doesn’t grow.
Not saying that it’s correlated, but it does remind me of a Kissinger quote: “The reason that university politics is so vicious is because stakes are so small.”
12/ “Judge me on how good my good ideas are, not how bad my bad ideas are.” — Ben Affleck when writing Good Will Hunting. A lot of being a VC is like that.
13/ We like to cite the power law a lot. Where 20% of our investments account for 80% of our returns. But if we were to apply that line of thinking two more times. Aka 4% (20 x 20%) of our investments account for 64% of our returns. Then 0.8% account for 51.2% of our returns. If you really think about it, if you invest in 100 companies, we see in a lot of great portfolios where a single investment return more than 50% of the historical returns.
14/ “Early-stage investing is NOT about mitigating the possibility of failure It’s about discounting the probability of an outsized outcome – what is the size and likelihood of a HUGE win Investing in “safe” companies due to fear of failure is the surest way to a mediocre returns.” — Rick Zullo
15/ “[David Marquardt] said, ‘You know what? You’re a well-trained institutional investor. And your decision was precisely right and exactly wrong.’ And sometimes that happens. In this business, sometimes good decisions have bad outcomes and bad decisions have good outcomes.” — Chris Douvos
16/ When calling a reference and asking about someone’s weakness, “If you were to hire someone under that person, what would be the top traits you’d look for?”
17/ Give founders a blank P&L statement. Tell them that is not their P&L statement; it is their customer’s. And ask them where do they/their product sit on their customer’s P&L statement. Those who are aware of who they are and who they need to sell to do better than those who don’t.
18/ No one has a crystal ball. Well, the pessimists do. They’re right 90% of the time.
19/ “I want the guy who understands his limitations instead of the guy who doesn’t. On the other hand, I’ve learned something terribly important in life. I learned that from Howard Owens. And you know what he used to say? Never underestimate the man who overestimates himself.” — Charlie Munger
20/ “Instead of saying, ‘This risk exists,’ we reframe the risk and ask, ‘What do I have to believe for this to work?’ Doing this transforms risk from a source of fear and unknown into a set of clear assumptions to be systematically tested and de-risked.” For example, “We have to believe we can scale the hardware to XYZ performance metric by ABC date. What are the key engineering constraints bottlenecking that?” — Mike Annunziata
21/ Questions to ask investee (on-list and off-list) references by Graham Duncan:
How would you describe Jane to someone who doesn’t know her?
What’s your sample size of people in the role in which you knew Jane?
Who was the best person at this role that you’ve ever seen?
If we call that person a “100”, the gold standard, where’s Jane right now on a 1-100?
Does she remind you of anyone else you know?
If Jane’s number comes up on your caller ID, what does your brain anticipate she’s going to be calling about? What’s the feeling?
Three attributes I like to keep in mind are someone’s hunger, their humility, and how smart they are about people. If you were to force rank those for Jane from what she exhibits the most to least, how would you rank them?
What motivates Jane at this stage of her life?
If you were coaching Jane, how would you help her take her game up?
If you were going to hire someone to complement Jane doing the same activity (NOT a different role), what would they be good at to offset Jane’s strengths and weaknesses?
How strong is your endorsement of Jane on a 1-10? (If they answer 7, say actually sorry 7s are not allowed, 6 or 8? If the answer is an 8, “What is in that two points?”)
22/ “Neutral references are worse than negative references.” — Kelli Fontaine
23/ “If someone brags about their success or happiness, assume it’s half what they claim. If someone downplays their success or happiness, assume it’s double what they claim.” — George Mack
24/ “Historians now recognize the Roman Empire fell in 476 – but it wasn’t acknowledged by Roman society until many generations later. If you wait for the media to inform you, you’ll either be wrong or too late.” — George Mack
25/ “Joe Rogan and Warren Buffett are both entrepreneurs. But if you switched them, both businesses would fail. Rule of thumb: If a word is so broad that you can’t switch 2 things it describes, it needs unbundling.” — George Mack
26/ Are the founders at the same stage on the Maslow’s Hierarchy of Needs? If not, how have they come to terms with different motivations outside of the scope of the venture itself?
27/ $100K contracts take about 70 days to close. So a founder becomes interesting if they figure out how to close faster. — Gong State of Revenue Growth 2025 report
28/ Beware of “annual curiosity revenue.” “AI companies with quick early ARR growth can lead to false positives as many are seeing massive churn rates.” — Samir Kaji
29/ Data suggests that “never following on” beats “always following on” 63% of the time. “Outperformance for the typical portfolio is 12% better when you don’t follow on (3.52X vs 3.14X).” — Abe Othman
30/ “A successful reserve strategy depends both the chance of picking winners and the step up value at the next round. The stock price multiple * the probably of receiving funding = 1.” If the product of your variables is more than one, you should focus primarily on increasing your check size and ownership at entry. And as such, fewer to no reserves. If you’re below one, you’re better off with more reserves. — Clint Korver
31/ Be aware of “seed-strapping” among AI startups. Your SAFEs may never convert. “Watch for any revisions to *YC’s* SAFE or *YC’s* side letter (note: YC has a secret SAFE and side letter documentation not available on on their website, so careful with conclusions).” — Chris Harvey
32/ In underwriting AI companies in 2025, ARR and run rate are no longer signal. Instead, look at sales efficiency (how long it takes you to implement your product; if you charge more or double the price, will customers still buy your product?), the cost to acquire that revenue, and net dollar retention (gross churn, land and expand). — Nina Achadjian
33/ “The ‘raise very little’ strategy only works if you’re in a market that most people believe (incorrectly) is tiny or unimportant. If other people are paying attention, you have to beat the next guy.” — Parker Conrad
34/ Instead of asking founders/references what are their weaknesses, ask for 2-3 positive words that describe them and 2-3 positive words that DO NOT describe them.
35/ “You want to be pre-narrative. You want to position your capital in an area where the supply of capital increases over time and where those assets will be traded at a premium.” — Albert Azout
36/ “For Hard Tech companies, the only metric that matters before Series B is the ‘Speed of Hiring Impressive People’, aka the ‘SHIP’ rate.” — Mike Annunziata
37/ Beware of co-CEOs and founders who used to be VCs where their past firm isn’t investing. — Sriram Krishnan
38/ “If you don’t pay great people internally, then you’re a price taker.” — Ashby Monk
39/ “Buying junk at a discount is still junk.” — Abe Finkelstein
40/ “What do you do when you don’t know anything, you haven’t met anybody, you have no context, the human brain starts inventing rationale.” — Narayan Chowdhury
41/ “The bigger you get, the more established you get, the more underwriting emphasis goes into how this team operates as a structure rather than is there a star?” — Matt Curtolo
42/ “Price reflects the inefficiencies of the market.” — Albert Azout
43/ “You want to be pre-narrative. You want to position your capital in an area where the supply of capital increases over time and where those assets will be traded at a premium.” — Albert Azout
44/ “We don’t want a slow no. A slow no is bad for everybody.” — Sean Warrington
45/ “Today’s world is unpredictable, and this is as stable as it will ever be again.” — Seth Godin
46/ “Alfred is the worst e-commerce investor at Sequoia as he knows too much & I am the best biotech investor at Sequoia as I know nothing about biology.” — Roelof Botha, quoted by Finn Murphy
47/ “Since the job is not about simple pattern-matching but about finding true outliers, seniority and experience don’t guarantee success.” — Ian Park
48/ As your fund size grows, do be wary of investing in competing portfolio companies. While it’s always been a tradition in venture to not to, times may be changing. Be sure to be transparent and know how to separate church and state. “This is an issue where the business model for funds is at odds with what most founders want.” Ways you can do so. By Charles Hudson.
“Use a seed fund or scout strategy to meet as many promising, early-stage companies as you can.
“Focus on investing in Series A and Series B (instead of seed) rounds and pay up to get into the winners when it’s clear which companies are working.
“Buy secondary positions in the companies that matter but that you missed.
“Invest in competitors but have different investors take board seats and create firewalls to limit information spillover.”
49/ “I deeply subscribe to, ‘There’s always another train leaving the station.’” — Wendy Li
50/ “Alpha’s three things: information asymmetry, access, and, actually, taxes.” — Vijen Patel
51/ The worst mistake you can make as an early-stage investor is to believe you’re the smartest person in the room.
Fundraising from LPs
52/ “If you’re at 75-80% committed and then you say there’s a single close, that will drive urgency. If you’re at 10 to 30 to 40% committed, and you say there’s a single close, you have no catalyzing power. There’s just so much dirt to hoe. When I went out, when people would ask, ‘When are you closing?’ I would say, ‘We will close on this particular date and ideally it will be a single close. And here is where I am. I’ve closed X% of the pipeline and the total value of the pipe of interested investors was this amount of money.’ The goal was to show with a relatively small conversion rate, I could get to a single close.” — Tomasz Tunguz
53/ What to prepare for the due diligence questionnaire (DDQ) with institutional LPs. — Chris Harvey
54/ What Minal Hasan includes in the fund diligence room (specifically for Fund IIs)
Primary materials
Due Diligence Questionnaire
Pitch Deck
Appendix to Pitch Deck
Detailed Investment Thesis & Strategy
Term Sheet
LPA
Subscription Agreement
Legal
Incorporation Documents for LP, GP, and MC
Entity Org Chart
Team
Team Bios
Prior Partner Investment Performance
Hiring Plan
List of Advisors
List of References
List of Co-investors
List of Service Providers
Portfolio
One-pager on each company
Deal Pipeline
Governance
Board/Board Observer Seats
Policies
Sample Investment Memos
Sample Quarterly Report
Sample Capital Account Statement
Sample Capital Call Notice
Sample Distribution Notice
Financial Docs
Budget
IRR Spreadsheet
IRR Benchmarking
IRR Letter certified by accountant
Marketing
Press mentions
Authored thought leadership
55/ When fundraising, don’t share which other LPs you’re talking to. Even if LPs ask who you’re talking to. Unless money is in the bank, nothing counts. Tell the other LPs that you have non-disclosures with all your other LPs, but that you have a lot of interest. If you share the marquee names, the other LPs’ will base their decision on the closing of those LPs. If they commit, great. If not, it will materially impact how the new LPs view your fund.
56/ When working with overseas LPs, you should ask for their citizenship, where their capital is domiciled at, and who is the ultimate beneficial owner if not the person you are pitching? This would help you navigate CFIUS rules and knowing who you’re actually bringing on board.
57/ You should ask prospective overseas LPs what their citizenship is and who the ultimate beneficial owner (UBO) is, if not the person you are talking to, as you are doing diligence on your prospective LPs.
58/ “Going to see accounts before budgets are set helps get your brand and your story in the mind of the budget setter. In the case of the US, budgets are set in January and July, depending on the fiscal year. In the case of Japan, budgets are set at the end of March, early April. To get into the budget for Tokyo, you gotta be working with the client in the fall to get them ready to do it for the next fiscal year. [For] Korea, the budgets are set in January, but they don’t really get executed on till the first of April. So there’s time in there where you can work on those things. The same thing is true with Europe. A lot of budgets are mid-year. So you develop some understanding of patterns. You need to give yourself, for better or worse if you’re raising money, two to three years of relationship-building with clients.” — David York
59/ “Getting an LP is like pulling a weight with a string of thread. If you pull too hard, the string snaps. If you don’t pull hard enough, you don’t pull the weight at all. It’s this very careful balancing act of moving people along in a process.” — Dan Stolar
60/ “Things that break the rules have a bigger threshold to overcome to grab the reader’s attention, but once they do, they tend to have a stronger, and more dedicated following. Blandness tends to get fewer dedicated followers.” — Brandon Sanderson on creative writing, but applies just as well to pitches
61/ In all great stories, the protagonist (in the case of a pitch, you) is proactive, capable, and relatable. Your pitch needs to show all three, but at the minimum two out of the three. — Brandon Sanderson
62/ “Data rooms are where fund-raising processes go to die.” Prioritize in-person and live conversations. When your investor asks you for documents, ask for 15 minutes on their calendar so you can “best prepare” the information they want. If they aren’t willing to give you that 15 minutes, you’ve lost the deal already. — Mark Suster
63/ “Funds can start with a private offering, then move to 506(c) after the prior offering is completed without a waiting period—new Rule 152(b) allows for a quick switch, you just can’t do them at the same time or start with Rule 506(c) then move to 506(b).” — Chris Harvey
64/ “Set your own agenda or someone else will.” — Melinda Gates
65/ To address key person risk if the GP, or one of the GPs, has a debilitating health condition within the fund term, include the below in the LPA, by Shahrukh Khan: Each Key Person shall, as a condition to their designation, represent and covenant to the Partners [inclusive of the GP and LPs] that, to the best of their knowledge, they are not currently experiencing any medical condition reasonably expected to materially impair their ability to perform their duties over the Term [usually 10-12 years] of the Fund. If, during the Investment Period [when the fund is actively making investments], a Key Person is diagnosed with or undergoes treatment for a condition that materially impacts their ability to fulfill their responsibilities, the General Partner shall promptly disclose to the Limited Partners that a Health-Related Key Person Event [we could define this broadly] has occurred. The specifics of the health condition need not be disclosed [maybe except to the LPAC if there is one?]. Upon such notification, the Investment Period will be suspended and cannot continue without the express approval of the Limited Partners. [I feel like this could mean that no new investments can be made until LPs review and vote on whether to proceed with the fund’s activities in light of the health-related situation.]
66/ When asking LPs what they invest in, sometimes what they don’t invest in is more helpful than what they say they invest in. Most LPs are trained to be generalists — by sector, by stage, by asset class — so asking what they do invest in often nets an answer like “We invest in everything” or “We only invest in the best,” which are often less helpful tells when you’re trying to figure out if you’re a good fit for them or not.
67/ If you have a 3(c)(1) fund, “if an investor owns >10% of your fund, the SEC’s look-through rule requires you to count ALL underlying beneficial owners toward your 100-investor limit.” The workaround is you create a side letter for large LPs that includes this statement: “The Investor’s Capital Commitment shall equal the lesser of [check size] or 10% of total fund commitments.” — Chris Harvey
68/ At your AGM, talk about categories of VCs you admire. For instance, “inception funds” or “superscale funds.” And the logos you admire in each category. Then show the funds that actually follow after your capital. This builds rapport with your LPs and that you’re not just shooting from the hip, where it “just so happens” that some random awesome fund follows your capital. Inspired by Gil Dibner.
69/ “If an LP isn’t following up with an ask for the data room, refs and lays out a path to a potential next meeting, then it’s a pass. Hint — don’t offer the dataroom. I always say yes.” — Endowment Eddie
70/ “[LPs] are underwriting your ability to create signal under uncertainty. If your fund slide can’t do that, your deck is already leaking trust.” — Thorsten Claus
71/ “I’m not here to tell you about Jesus. You already know about Jesus. He either lives in your heart or he doesn’t.” — Don Draper in Mad Men
72/ On GPs answering questions on operational excellence… “The best answer I could ask from a GP is for them to be super honest and say, ‘These are the people I’ve leaned on to help me understand what best practices look like.’” — Nicky Sugarman
73/ When reporting numbers, it’s helpful to have more than one TVPI number. One number should represent last round valuation prices. Another should be the number you believe is authentic to you, which likely includes some companies that have been proactively written down and revenue multiples that reflect where the company is currently at. Nevertheless, always explain your rationale as to why.
74/ When you’re fundraising from institutions, expect “27 months from first meeting to wire, 4.7% of prospects commit,” and “annual costs [of] $2.1M+ in infrastructure.” — Pavel Prata
75/ “Speed to fundraise does not always equate to a strong investor.” — Lisa Cawley
Fund strategy / portfolio construction / exiting
76/ If you have a follow-on strategy or a reserve strategy, track your “follow-on MOIC.” Return hurdles are 10x MOIC for initial capital. And 4-5x MOIC for follow-on capital. The more you invest in follow on, the less TVPI you’ll have. “If you’re going from pre-seed to seed, you’re tracking to a 5x MOIC. If you’re going from a seed to Series A, that goes down to 3x.” — Anubhav Srivastava (timestamped Apr 7, 2023)
77/ The reasons Fund I’s and II’s outperform are likely:
Chips on shoulders mean they hustle more to find the best deals. They have to search where big funds aren’t or come in sooner than big funds do.
Small fund size is easier to return than a larger fund size.
Rarely do they have ownership targets (nor do they need significant ownership to return the fund). Meaning they’re collaborative and friendly on the cap table, aka with most other investors, especially big lead investors.
Price matters less. Big funds really have to play the price game a little bit more since (1) likely to be investing in multiple stages with reserves, and price matters more past the Series A than before, and (2) they’re constrained by check size, ownership targets, and therefore price in order to still have a fund returner.
78/ “Strategy is choosing what not to do.” — Peter Rahal
79/ “We expect GPs to have 1% ownership for every $10M in fund size.” — Large multi-billion family office
80/ “Exiting a position in a company to return DPI to LPs is not a reflection of your stance on the company, but your stance on the market.” — Asher Siddiqui
Fund structure
81/ If you have more than $10M and are not a solo GP, consider separating your GP and management company entities. While there are about $5000-10,000 in costs per year, separating fund structures allows for more optimal tax planning, better liability protection, continuity across GP entities with future funds, and flexibility to adopt W2 employment for future employees which is hard to do under a partnership structure. — Chris Harvey
82/ If you’re a GP at a large fund making >$1-2M in annual fees, consider two metrics: (a) AUM times management fee divided by number of GPs, and (b) NPV of potential future carry on that AUM divided by number of GPs. You never want (a) to be greater than (b).
Portfolio Support
83/ “Just because I have a front row seat at a championships [basketball game] doesn’t mean I can coach an NBA team.” — Brian Chesky
84/ “The thing about working with self-motivated people and driven people, on their worst day, they are pushing themselves very hard and your job is to reduce the stress in that conversation.” — Nakul Mandan
85/ “The median value-add is about zero. The mean is less than zero. Most things work because they just work (right set of users wanted something at the right time) and the executive team builds the right culture to hire a great team to operate in that market, not because of what a VC does. Value-added service is ‘product as marketing’ for 90% of investors who pitch it.” — Kanyi Maqubela
86/ Get access to as many different offices of your portfolio company’s potential customers as possible. Even better if you know them so well, they give you their office keys. — John Gleeson
87/ “I find most meetings are best scheduled for 15-20 minutes, or 2 hours. The default of 1 hour is usually wrong, and leads to a lot of wasted time.” — Sam Altman
89/ If you don’t know what to ask your LPAC, ask about extensions on fund length (i.e. past 10+2 years), exceeding limits on company concentration and recycling, investing in startups across funds, and early DPI. — Hunter Walk
90/ At the annual summit… “When you speak on market/themes, I don’t want to hear from the managing partners. Bring out your young guns and the members of the team who are your ground game/first line.” — Endowment Eddie
“First extension: 63% of funds surveyed allow GPs to authorize the first extension at its sole discretion, typically for one year.
Second extension: 42% of funds surveyed require approval from the LPAC to authorize the second extension.
Third extension: 41% of funds surveyed require consent from the fund investors to authorize the third extension. Note that further extensions can always be approved by an amendment to the fund documents, but this would require consent from at least 50% and usually 75% of investors by commitment or interest.”
92/ “Too many calls I get on, it’s a re-hash of what the strategy is. Assume if I’m taking the call, I actually spent five minutes reminding myself of who you are and what you do.” — Chris Douvos
93/ “One thing I hate is when I meet with someone, they tell me about A, B, and C. And then the next time I meet with them, it’s companies D, E, and F. ‘What happened to A, B, and C?’ So I’ve told people, ‘Hey, we’re having serious conversations. Help me understand the arc.’ As LPs, we get snapshots in time, but what I want is enough snapshots of the whole scene to create a movie of you, like one of those picture books that you can flip. I want to see the evolution. I want to know about the hypotheses that didn’t work.” — Chris Douvos
94/ “Every letter seems to say portfolios have ‘limited exposure to tariffs.’ The reality is we’re seeing potentially the breakdown of the entire post-war Bretton Woods system. And that’s going to have radical impacts on everything across the entire economy. So to say ‘we have limited exposure to tariffs’ is one thing, but what they really are saying is ‘we don’t understand the exposure we have to the broader economy as a whole.’” — Chris Douvos
95/ “Bad performance is explainable, but operational failures erode trust and your LPs aren’t going to re-up.” — Liz Ferry
Building a team
96/ “You can’t exceed one associate per partner and expect those associates to have real influence.” — Mike Dauber
97/ “Scaling is not synonymous with increasing fund size. To me, scaling means you’re increasing in sophistication. You’re increasing in focus. And that’s really a sign of maturity and fund size is a byproduct of that.” — Lisa Cawley
Compensation
98/ In a 2024 survey, in regards to junior team members’ compensation, “AUM matters less than you think.” There’s only a 17% pay bump on base pay for associates between $1.5B funds and $156M funds. In addition, levers that can boost a GP’s take-home pay include GP staking and cashless contributions. — Chris Harvey, with reference to Deedy Das and Venture5 Media
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!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
A while back, my friend Augustine, CEO and founder of Digify, asked me to write something for his company, Digify’s blog, about how I think about maintaining relationships between fundraising cycles when I was still an investor relations professional. As such, I wrote a mini two-part series on the frameworks and tactics I use to maintain LP relationships. Been given the liberty to cross-post on this humble blog of mine, in hopes that it helps any emerging managers or IR professionals here.
Voila, the first of two!
Author’s note [aka me]: My promise to you is that we’ll share advice you’ve likely never heard before. By the time you get to the end of this article, if you’re intimidated, then we’ll have done our job. Because that’s just how much it takes to fight in the same arena as people I’ve personally admired over the years and work to emulate and iterate daily. That said, this won’t be comprehensive, but a compilation of N of 1 practices that hopefully serve as tools in your toolkit. As such, we will be separating this piece into Part 1 and 2. The first of which is about overarching frameworks that govern how I think about managing relationships. The second of which focuses on tactical elements governed by the initial frameworks brought up.
One of the best pieces of advice I got when I started as an investor relations professional was that you never want your first conversation with an allocator to be an ask. To be fair, this piece of advice extends to all areas of life. You never want your long-anticipated catch up with a childhood friend to be about asking for a job. You never want the first interaction with an event sponsor to be one where they force you to subscribe to their product. Similarly, you never want your first meeting with an LP to be one where you ask for money.
And in my years of being both an allocator and the Head of IR (as well as in co-building a community of IR professionals), this extends across regions, across asset classes, and across archetypes of LPs.
So, this begs the question, how do you build and, more importantly, retain rapport with LPs outside of fundraising cycles? The foundation of any successful LP relationship lies in consistent engagement beyond capital asks.
To set the context and before we get into the tactics (i.e. what structured variables to track in your CRM, how often to engage LPs, AGM best practices, etc.), let’s start with two frameworks:
Three hats on the ball
Scientists, celebrities, and magicians
“Three hats on the ball”
This is something I learned from Rick Zullo, founding partner of Equal Ventures. The saying itself takes its origin from American football. (Yes, I get it; I’m an Americano). And I also realize that football means something completely different for everyone based outside of our stars and stripes. The sport I’m talking about is the one where big muscular dudes run at each other at full force, fighting over a ball shaped like an olive pit. And in this sport, the one thing you learn is that the play isn’t dead unless you have at least three people over the person running the ball. One isn’t enough. Two leaves things to chance. Three is the gamechanger.
The same is true when building relationships with LPs. You should always know at least three people at the institutions that are backing you. You never know when your primary champion will retire, switch roles, go on maternity leave, leave on sabbatical, or get stung by a bee and go into anaphylactic shock. Yes, all the above have happened to people I know. Plus, having more people rooting for you is always good.
Institutions often have high employee turnover rates. CIOs and Heads of Investment cycle through every 7-8 years, if not less. And even if the headcount doesn’t change, LPs, by definition, are generalists. They need to play in multiple asset classes. And venture is the smallest of the small asset classes. It often gets the least attention.
So, having multiple champions root for you and remind each other of something forgotten outside of the deal room helps immensely. Your brand is what people say about you when you’re not in the room. Remind people why they love you. And remind as many as possible, as often as possible. This multi-touch approach is essential for nurturing a robust LP relationship strategy.
Scientists, celebrities, and magicians
My buddy Ian Park told me this when I first became an IR professional. “In IR, there are product specialists and there are relationship managers. Figure out which you’re better at and lean into it.” Since then, he’s luckily also put it into writing. In essence, as an IR professional, you’re either really good at building and maintaining relationships or can teach people about the firm, the craft, the thesis, the portfolio, and the decisions behind them.
To caveat ‘relationship managers,’ I believe there are two kinds: sales and customer success. Sales is really capital formation. How do you build (as opposed to maintain) relationships? How do you win strangers over? This is a topic for another day. For now, we’ll focus on ‘customer success’ later in this piece.
There’s also this equation that I hear a number of Heads of IR and Chief Development Officers use.
track record X differentiation / complexity
I don’t know the origin, but I first heard it from my friends at General Catalyst, so I’ll give them the kudos here.
Everyone at the firm should play a key role influencing at least one of these variables. The operations and portfolio support team should focus on differentiation. The investment partners focus on the track record. Us IR folks focus on complexity. And yes, everyone does help everyone else with their variables as well.
That said, to transpose Ian’s framework to this function, the relationship managers primarily focus on reducing the size of the denominator. Help LPs understand what could be complex about your firm through regular catchups—these touchpoints are crucial for maintaining a strong LP relationship:
Why are you increasing the fund size?
Why are you diversifying the thesis?
How do you address key person risk?
Why are you expanding to new asset classes?
Are you on an American or European waterfall distribution structure?
Why are you missing an independent management company?
Who will be the GP if the current one gets hit by a bus?
The product specialists split time between the numerator and the denominator. They spend intimate time in the partnership meetings, and might potentially be involved in the investment committee. Oftentimes, I see product specialists either actively building their own angel track record and/or working their way to become full-time investment partners.
One of my favorite laws of magic by one of my favorite authors, Brandon Sanderson, is his first law: “An author’s ability to solve conflict with magic is directly proportional to how well the reader understands said magic.”
In turn, an IR professional’s ability to get an LP to re-up is directly proportional to how well the LP understands said magic at the firm.
My friend and former Broadway playwright, Michael Roderick, once said, the modern professional specializes in three ways:
The scientist is wired for process. The subject-matter expert. They thrive on the details, the small nuances most others would overlook. They will discover things that revolutionize how the industry works. The passionately curious.
The celebrity. They thrive on building and maintaining relationships. And their superpower is that they can make others feel like celebrities.
The magician thrives on novelty. Looking at old things in new ways – new perspectives. The translator. They’re great at making things click. Turning arcane, esoteric knowledge into something your grandma gets.
The product specialists are the scientists. The relationship managers are the celebrities. But every IR professional, especially as you grow, needs to be a magician.
Going back to the fact that most LPs are generalists, and that most venture firms look extremely similar to each other, you need to be able to describe the magic and your firm’s ‘rules’ for said magic to your grandma.
For the next half, I’ll share some individual tactics I’ve worked into my rotation. Most are not original in nature, but borrowed, inspired, and co-created with fellow IR professionals.
This post was first shared on Digify’s blog, which you can find here.
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Any views expressed on this blog are mine and mine alone. They are not a representation of values held by On Deck, DECODE, or any other entity I am or have been associated with. They are for informational and entertainment purposes only. None of this is legal, investment, business, or tax advice. Please do your own diligence before investing in startups and consult your own adviser before making any investments.
As a kid, I wrote poetry because it was easier to express myself in short form than long form. I also used to start writing fictional books, but stop after chapter one because I didn’t know how the story would develop. I was also the kid who would find five different ways to say the same thing in grade school, just so that my essay would hit the page limit. Yet still, my lowest grades among any subject was still English, particularly writing.
David Ogilvy, the namesake for the legendary advertising firm, Ogilvy & Mather, now just Ogilvy, once said: “Woolly minded people write woolly memos, woolly letters and woolly speeches.” The truth is I was, probably still am, a “wooly minded person.” But I try to be better.
That was the genesis of this blog. I didn’t have grand hopes of becoming famous. Or that I was going to make a career out of this. Still so, as it is still the reason why I haven’t said yes to any sponsors to this blog.
I write to think. I write whatever comes to mind. Simply, I write what I want. In fact, when the fact I have this blog comes up in conversation, I still actively tell me to unsubscribe. This isn’t an LP blog. Nor a VC blog. Nor a startup blog. It’s just my train of consciousness. Something I commit to every week. So, I’m extraordinarily honored to have a few thousand of you read this on a regular basis.
Thank you.
I don’t say that enough on this blog. But to all of you reading, I am deeply grateful you’re on this journey with me.
But… over the years, people have said I’m not as bad as I say I am at writing. Which might be true. We are all, after all, our own harshest critics. While I’m nowhere near the level of David Ogilvy or Brandon Sanderson or Maria Popova or Neil Gaiman or Susan Cain, in case it might be helpful, here are the gentle reminders I give myself when it comes to writing:
Write as I talk. Incomplete sentences. One word sentences. Short, easy words occasionally sprinkled in with a $10 word I like. Tenacious. Idiosyncratic. Judicious. And yes, I’m conscious that I use ‘bandwidth’ instead of ‘time.’
Write only when I’m inspired to. I don’t have a strict regimen of writing. I’ve met authors who have four-hour morning writing routines. I don’t. This is not my full-time job. But I enjoy writing. And I’m not publishing daily. I’ve committed to weekly. That affords me an immense amount of latitude for ‘productive time to be bored.’ I’m more often inspired by ‘touching grass’ as the kids call it than I am staring at my monitor or journal.
In case I’m on a deadline and I’ve been uninspired up till the deadline, I have a very specific doc I reference. The metaphorical ‘break glass in case of emergency.’ It’s called the Emotion Catalogue. In it, I’ve tracked every single time I’ve consumed a piece of information that led to a specific emotional reaction. Happiness/joy. Sadness. Regret. Guilt. Jealousy. Anger. Inspiration. Fear. Creativity. Not sure if the last one is an emotion, but to me, it is. And if I’m supposed to write about a certain emotion, I need to feel that emotion. So I go to that catalogue, pick one or two of the inspirations within a section. And I consume it. Read it. Watch it. Listen to it.
Use productive time to edit. Use inspired time to write. For me, that’s usually (not always) writing in the evening. And editing in the morning.
I ‘idea-journal’ every day. If I can’t think of a new idea to write on, the journaling prompt I have to answer, “What is the most important question I should be asking myself today?” or “What did I really not want to do today? Why?”
Write for one person. You. Or for me, the person I was yesterday. I am always guaranteed one happy reader. But also, if it’s helpful for me, there’s a good chance I’m not alone. And it’s helpful for someone else out there as well.
Rewrite things often. The first idea is usually not the best, nor is it the most refined. Even if it’s five years from now.
Be comfortable with dropping ideas. Sometimes I’m motivated to write something, but I lose motivation halfway through. Instead of making it homework for myself, it’s easier to mentally drop it. This is different from ideas I’m still motivated to write about, but can’t find the right concepts or words to put it into play. Those I mull over for a while. Sometimes, years.
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!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
This is my third iteration of the 99 series for founders. You can find the first two here and here. The premise for this series was simple. The best, most insightful, unsuspecting lessons are hidden in the deepest, darkest corners of the internet. Hell, many more are hidden in rooms behind closed doors. The goal of this 99 series is to unveil those. Advice you’ve likely never thought about, and most likely have never heard of.
While you don’t need to read all the below at once, it’s helpful to keep the below at your fingertips for when you do need them. As always, unless the advice is not cited, all advice has been backlinked to its source, in case you want the longer, sometimes more nuanced version.
To make it easier for you, I’ve also pooled the advice in categories, depending on your needs:
P.S. Have I started the next one in the 99 series for founders? Yes, I have. Stay tuned!
Fundraising
1/ “Once you take venture capital, the venture capitalist’s business model is your business model. You’ve got to get liquid at a number that makes sense for them. High valuations are good because you take less dilution. Et Cetera. But the reality is that when you have a high valuation, that starts to eliminate your options. ” — Chris Douvos
2/ The employee option pool is easier to negotiate than asking an investor to take less ownership. The pool at the time of term sheet comes out of founder/team’s equity. If the pool becomes completely allocated post-investment, you need to go back to the board and ask for a larger pool, and everyone (you and VCs) gets diluted then.
3/ Beware of the “senior pari-passu,” which means that that investor gets paid paid back before everyone else on the preference stack AND they get equal footing with all the other investors. The thing to watch out for isn’t necessarily for the mechanics of the term itself, but the fact that if you let one investor have that in this round, every subsequent round, investors then will ask for that as well.
4/ Repeat founders often ask for co-sale right immunity (usually 15%) when putting together term sheets. Co-sale rights are usually provisions investors add in to prevent you, the founder, from liquidating before a liquidity event. The rights dictate the when you want to sell your equity, the investor has first dibs to buy your equity AND if not, they can also sell their equity alongside you. Because there are additional provisions, most buyers may not want to put in all the work to diligence just to have an existing investor buy your equity. And also, if your existing investors are also selling, it sends a negative signal to potential buyers.
5/ If any corporates own more than 19.5% of a company, they have to write you off as a subsidiary of the corporate and report your losses as their losses. So they’re less valuation sensitive and care less for ownership.
6/ You’re likely not the only one in market with your solution. If a competitor raises a massive round, that’s market validation. And not a reason to change your pitch. You should only change your pitch if your customers are opting for your competitor, but not if VCs are talking about your competitor. If VCs ask about your well-funded competitor, say “My customers don’t bring this up with me. But rather they bring up incumbents and this is why we’re tackling this space in full force.”
7/ “Once you have $500k+ raised, spend 2/3 of your time on funds, 1/3 on small checks.” — Ash Rust
8/ Beware of SAFE overhangs. You probably don’t want to raise more than 25% on SAFEs in comparison to the next priced round. — Martin Tobias
9/ Don’t say “The market is so large, there are room for many winners.” To a VC, that’s code for “This founder is getting their ass handed to them by competition.” — Harry Stebbings
10/ If a large number of your employee base do not have the experience of being in a startup, “make a choice about how/when/if to be transparent about the things that are happening (good and bad) and the level of startup experience within the group will be a critical factor in whether the decision to be transparent turns out to be a good one.” — Javier Soltero
11/ To fundraise, even if your last X number of months sucked, you need to show just three months of great growth prior to the fundraise. — Jason Lemkin
12/ Rough benchmarks for enterprise revenue growth for things to be interesting to VCs (— Jason Lemkin):
Before $1M ARR, growing 10%-15% a month
Around $1M ARR, growing 8%-10% a month or so
Around $10M ARR, ideally doubling
13/ “An investor is an employee you can’t fire.” — Vinod Khosla
14/ “Things that break the rules have a bigger threshold to overcome to grab the reader’s attention, but once they do, they tend to have a stronger, and more dedicated following. Blandness tends to get fewer dedicated followers.” — Brandon Sanderson on creative writing, but applies just as well to pitches
15/ “Great worldbuilding with bad characters and a bad plot is an encyclopedia. Great characters and a great plot with bad worldbuilding is still often an excellent book. […] The fact that time turners break the entire universe of Harry Potter wide open does not prevent that from being the strongest book in the entire series.” — Brandon Sanderson on story plots, but also applies to markets and founding teams. Replace worldbuilding with market. Replace characters with team, and plot with product-market fit or founder-market fit.
16/ In all great stories, the protagonist (in the case of a pitch, you) is proactive, capable, and relatable. Your pitch needs to show all three, but at the minimum two out of the three. — Brandon Sanderson
17/ “Data rooms are where fund-raising processes go to die.” Prioritize in-person and live conversations. When your investor asks you for documents, ask for 15 minutes on their calendar so you can “best prepare” the information they want. If they aren’t willing to give you that 15 minutes, you’ve lost the deal already. — Mark Suster
18/ “Second conversation with a serious investor is usually around what are you trying to prove and who are you trying to prove that to.” — Fund III GP
19/ “Set your own agenda or someone else will.” — Melinda Gates
20/ “The ‘raise very little’ strategy only works if you’re in a market that most people believe (incorrectly) is tiny or unimportant. If other people are paying attention, you have to beat the next guy.” — Parker Conrad
21/ Beware of stacking SAFEs. And be sure to model out that you as the founder(s), won’t dip below 50% ownership before the Series A. This is a more common problem than most founders think. Inspired by Itamar Novick.
22/ “Before you send a single email or take your first call, you should have a fully-researched pipeline CRM with a minimum number of qualified target investors.” — Chris Neumann
Pre-Seed: 100 – 150 qualified target investors (a mix of angel investors and VCs)
Series A: 60 – 80 qualified target investors (all VCs)
Series B: 40 – 60 qualified target investors (all VCs)
Governance
23/ Find your independent board member before shit hits the fan (usually when your investor representation and you the founders disagree). Because by the time you find an independent board member when things go south, your investor will recommend someone who’ll most likely take their side. Board members recommended by VCs usually have long standing relationships with investors and are likely to sit or have sat on other boards with that investor previously. And because they have a longer standing relationship with that VC, they will likely side with the VC when there’s a disagreement.
24/ “Board members can’t make companies but they can destroy companies.” — Brian Chesky
25/ Ask your prospective investors how long they plan to be at their firm. The worst thing that can happen is you bring on a board member and they switch firms after a year, then you’re left with a someone you didn’t pick. It’s probably also a good idea to let the investor have their board seat, contingent on them working at that firm. — Joseph Floyd
26/ Consider incorporating the company in Nevada or Texas, as Delaware courts are becoming more judiciously activist. Especially consider this if you are either politically exposed or you want more leeway and protection as a founder. — Elad Gil
27/ “When you build with other people’s money, you don’t just owe them outcomes—you owe them truth. And selling your cash to a zombie isn’t a strategy. It’s a story you tell yourself to avoid facing the music.” — Lloyed Lobo
Hiring/Team/Culture
28/ “If you raise a lot of money, do a hiring freeze and don’t hire anybody for 90 days. Money’s not going to solve your problems. You are going to solve them.” — Ryan Petersen
29/ “If you had to hire everyone based only on you knowing how good they are at a certain video game, what video game would you pick?” — Patrick O’Shaughnessy. People’s choices can be quite revealing. You can likely ask the same question for any activity/sport/topic of choice.
30/ “I hate surprises. Can you tell me something that might go wrong now so that I’m not surprised when it happens?” — Simon Sinek. A great question on how to ask weaknesses without candidates giving you a non-answer.
31/ Beware of candidates who can’t stick to a job for at least 18 months. — Jason Lemkin.
32/ Beware of candidates who love what’s on their resume. You want to be sure you’d hire them even if they didn’t have those logos/titles. — Jason Lemkin.
33/ Beware of candidates who don’t have good reasons to leave their last job. Or any job for that matter. Also watch out for candidates that leave because of salary. — Jason Lemkin.
34/ As soon as you raise capital, you should move out of a coworking space. Because as long as you are there, you cannot shape your company’s culture when the culture of the rest of the coworking space is more prevalent. — A VC who was the first institutional check into 5+ unicorns
35/ “First time founders brag about how many employees they have. Second time founders brag about how few employees they have.” — Dan Siroker.
36/ 20 years of experience is more impressive than 20 one-year experiences for deeply technical problems.
37/ 20 one-year experiences is more impressive than 20 years of experience for cultural (consumer) problems.
38/ Great founders don’t delegate understanding. Senior execs aren’t hired until founders themselves prove out the playbook.
39/ Inspired by Marc Randolph. Set boundaries around your work. Ask yourself, do you want to be starting your 7th startup and their 7th wife/husband? If not, be uncompromising with boundaries around work and life. Usually, I see most founders not have that versus most tech employees, who set boundaries almost in the opposite direction.
40/ “My two rules of thumb for CEOs (and all leaders) are:
‘if you feel like a broken record, you’re probably doing something right’ and
‘always craft your comms for the person who just started this week.'” — Molly Graham
41/ At Starbucks, no matter what seniority you are, every employee has lowercase titles. And it isn’t a typo.
42/ If you don’t know how to hire a 10/10 CTO looks like, find a world-class CTO then have them help you interview CTO candidates. It’s important to nail this right in the beginning no matter how long that takes. — Jason Lemkin
43/ “People duck as a natural reflex when something is hurled at them. Similarly, the excellence reflex is a natural reaction to fix something that isn’t right, or to improve something that could be better. The excellence reflex is rooted in instinct and upbringing, and then constantly honed through awareness, caring, and practice. The overarching concern to do the right thing well is something we can’t train for. Either it’s there or it isn’t. So we need to train how to hire for it.” — Danny Meyer
44/ Prioritize references over interviewing when hiring. “Executives have more experience bullshitting you than you have experience detecting their bullshit. So it’s like an asymmetric game where you’re a white belt fighting a black belt and they’re just going to punch you in the face repeatedly.” — Brian Chesky
45/ At the end of a candidate interview process, try to convince them out of joining the company. If you only paint them the rosy picture of joining, even if they join, they’ll joined disillusioned and with expectations that this job will be a country club, which it shouldn’t be.
46/ One of the best job ads out there by Ernest Shackleton, a 19th/20th century Antarctic explorer: “Men wanted for hazardous journey, small wages, bitter cold, long months of complete darkness, constant danger, safe return doubtful, honor and recognition in case of success.”
47/ “The health of an organization is the relationship between engineering and marketing. Or in enterprise, the relationship between engineering and sales.” — Brian Chesky
48/ “Great leadership is presence, not absence.” — Brian Chesky
49/ “I want the guy who understands his limitations instead of the guy who doesn’t. On the other hand, I’ve learned something terribly important in life. I learned that from Howard Owens. And you know what he used to say? Never underestimate the man who overestimates himself.” — Charlie Munger
50/ “If you pay great people internally, you can push back on the external fees. If you don’t pay great people internally, then you’re a price taker.” — Ashby Monk
51/ “Expect 60% of your VPs to work out — and that’s if you do it right.” — Dev Ittycheria
52/ Be generous with startup equity for your first 10 employees, “as much as leaving 30% of the pool to non-founders.” Be willing to give your early engineers 3-5% of equity, as opposed to only 50-100 basis points. — Vinod Khosla
53/ “A company becomes the people it hires. […] Experience has shown me that successful startups seldom follow their original plans. The early team not only determines how the usual risks are handled but also evolves the plans to better utilize their opportunities and to address and redefine their risks continuously.” — Vinod Khosla
54/ “I often tell pensions you should pay people at the 49th percentile. So, just a bit less than average. So that the people going and working there also share the mission. They love the mission ‘cause that actually is, in my experience, the magic of the culture in these organizations that you don’t want to lose.” — Ashby Monk
55/ “Innovation everywhere, but especially in the land of pensions, endowments, and foundations, is a function of courage and crisis.” — Ashby Monk
56/ “You stay obstinate about your vision; you stay really flexible about your tactics. […] Nobody ever got to Mount Everest by charting a straight path to the peak.” — Vinod Khosla
What criteria would you use to hire someone to do this job if you were in my seat?
How would your spouse or sibling describe you with ten adjectives?
I think we’re aligned in wanting this to be a good fit, you don’t want us to counsel you out in six months and neither do we. Let’s take the perspective of ourselves in six months and it didn’t work. What’s your best guess of what was going on that made it not work?
What are the names of your last five managers, and how would they each rate your overall performance on a 1-100?
What are you most torn about right now in your professional life?
How did you prepare for this interview?
How do you feel this interview is going?
58/ Empower your entire team to be owners in the success of your company. “Take ownership and don’t give your project a chance to fail. Dumping your bottleneck on someone and then just walking away until it’s done is lazy and it gives room for error and I want you to have a mindset that God himself couldn’t stop you from making this video on time. Check. In. Daily. Leave. No. Room. For. Error.” — Jimmy Donaldson “Mr. Beast”
59/ “CEOs are pinch hitters. We should be working on the things that nobody else can or nobody else is.” — Jensen Huang
60/ It’s only after you’ve seen excellence first hand do you no longer need to outsource the recognition of excellence to others (brands, titles, other references).
61/ “When you’re speaking with backchannel references, you know that some of these are also mentors to the candidate, and accordingly will have influence. They’ll likely call the candidate right after your call anyway to tell them how you’re thinking about them. So ask the pointed questions you need to, but then take 10 mins at the end to also tell this person what you’re building, why it could be a special company, the momentum you have in the market and why you’re particularly excited about the candidate for this role. Get the reference excited about this opportunity for the candidate.” — Nakul Mandan
62/ “Every meeting with a great candidate is a buy-and-sell meeting, and you want to build their excitement about you to its peak right before you make the offer. Making the offer too early—before they’re fully sold—can be just as bad as losing momentum by moving too slow on someone you know you want.” — Samantha Price
63/ On co-founders being in the same boat with no Plan B… “We actually wrote this in the shareholder’s agreement and it lived there all the way until the IPO. If one of us took another job or a side hustle or took any income from any other source, we should have to give up our shares. We wanted to be fully committed. If we’re going to fail, we’re not going to fail for lack of effort.” — Olivier Bernhard
64/ “You have made a mis-hire if your Customer Success leader doesn’t understand the pains, needs, and desires of your customers as well as you do within 90 days.” — John Gleeson
65/ Ask a candidate to explain a technical challenge and to talk through how they’d approach it. Then ask them to think through how they’d do it again – but in half the time.” — Keller Rinaudo Cliffton / Sarah Guo
66/ “Your org chart either accelerates or impedes your velocity. Conway’s Law inevitably shapes output—teams structured for pace will produce systems designed for pace.” — Sarah Guo
67/ “Just look at ARR per Employee. It’s the canary in the unicorn coal mine.” — Lloyed Lobo
68/ While your co-founders should excel in areas you lack and love growing further on that wavelength, they must also at some point in their career want to grow in the area you excel in. Otherwise, they’ll never truly appreciate the work you do. And unspoken expectations lead to quiet resentments.
69/ “I find most meetings are best scheduled for 15-20 minutes, or 2 hours. The default of 1 hour is usually wrong, and leads to a lot of wasted time.” — Sam Altman
70/ “Strategy is choosing what not to do.” — Peter Rahal
71/ When hiring talent, ask yourself: Are this candidate’s best days ahead of her or behind her?
Product/Customers
72/ The best way to slow a project down is to add more people to it.
73/ “Never delegate understanding.” — Charles and Ray Eames
74/ There’s this great line in a book I was recently gifted by a founder. “There is only one boss — the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else.”
75/ A community or 1000 true fans built without big brands and logos is far more impressive than a community built by leveraging someone else’s brands.
76/ If your value prop is unique, you should be a price setter not a price taker, meaning your gross margins should be really good. A compelling value prop is a comment on high operating margins. You shouldn’t need to spend a lot on sales and marketing. So the metrics to highlight would be good new ARR/S&M, LTV:CAC ratios, payback periods, or percent of organic to paid growth. — Pat Grady
77/ “If we don’t create the thing that kills Facebook, someone else will.” — Mark Zuckerberg, via a red book titled Facebook Was Not Originally Created to Be a Company, given to every employee pre-IPO
78/ The best sales people are often those who communicate the most with the engineers and product team. They tend to understand the product the best. Rule of thumb should be 80% inside, 20% outside. — Former founder with a 9-figure exit
79/ “Concentration of force is the first principal strategy. Spreading yourself too thin means not concentrating resources on the sales you could win because you are spreading time on lower quality prospects. Doing 90% of what it takes to win doesn’t result in 90% of the revenue, it results in zero. You must pick the battles you can win and win the battles you pick.” — Rick Page
80/ “One of our clients said this about a large defense contractor with multiple subsidiaries: ‘having business at one business unit not only doesn’t help me at the next one, it actually hurt me. They hate each other so much that if one business unit is for me, the other ones are against me. But they are all united in one value: they hate corporate. So the potential for working my way to the corporate offices and coming down as their worldwide standard is impossible in an account like this.” — Rick Page
81/ “Pain doesn’t come from the business problem, it comes from the political embarrassment of the business problem. If the pain or lost opportunity is not visible, then it’s not embarrassing and it will not drive business buying activity to a close.” — Rick Page
82/ “Mr. Prospect, we’ve announced a 6% price increase. We’d hate to see you buy the same proposal later at a higher price, so we really need to get this business in by the end of the quarter to secure this price. — Not only is this technique predictable, but after months of building value for your solution, you have now commoditized yourself. You have turned it from value to price on order to close business at the end of the quarter. Once you have offered a discount, you have announced what kind of vendor you are and the only question now is the price. Let the games begin.” — Rick Page
83/ “You must refocus off the imagined political benefit of a lower price, and on the longer term benefits of the overall project. ‘Mr. Prospect, how are you measured and what you will be remembered for three years from now won’t be the price, it will be the success of the project. If this goes well, the cost will be a detail. If the project goes poorly, no one will say ‘well at least we got a bargain.”” — Rick Page
84/ “Try not to take no from a person who can’t say yes.” — Rick Page
85/ Stacking the bricks, a Steve Jobs’ concept. If you have a pile of bricks and lay them on the ground, then no one will notice the ground. If you stack them up vertically, you create a tower; and everyone will notice the tower. Consider this when you have product features, launches and fixes.
86/ As of Q4 2024, it takes about 70 days to close a $100K contract for enterprise customers. Use that as your benchmark. If you’re faster, brag about it. If you’re slower than that, figure out how to close faster. — Gong State of Revenue Growth 2025 report
87/ Beware of “annual curiosity revenue.” “AI companies with quick early ARR growth can lead to false positives as many are seeing massive churn rates.” — Samir Kaji
88/ Your job is to get to innovation retention before your incumbents get to innovation.
89/ If you didn’t help create the proposal with your customer, you’ve already lost.
90/ People don’t change when they’ve made a mistake. People change when there’s a public embarrassment of them making a mistake.
91/ Know your customers intimately. Go visit your customers as often as you can. In fact, get as many passes / office keys to their offices as possible, and spend time with them.
92/ “Every other week, we have a customer join for the first 30 minutes of our management team meeting: they share their candid feedback, and ~40 leaders from across Stripe listen. Even though we already have a lot of customer feedback mechanisms, it somehow always spurs new thoughts and investigations.” — Patrick Collison
93/ “I see a lot of b2b startups moving to multiyear pricing from monthly or annual. I think this is usually a bad idea. It hides customer delight issues. It lengthens sales cycles. Overall, it just reduces the signal startups need.” — Brian Halligan
94/ Customers will still highly rate your customer service even if they didn’t get what they wanted if you show you care. That you care for their plight, and you really try to help them get what they want. — Simon Sinek
Competition
95/ “When you get outreach from multiple VC associates out of nowhere, your competitor is out raising and they’re just doing their homework.” — Siqi Chen
Legal
96/ “If you’re selling the business, tell as few people as possible and do everything you can to make sure past employees or former business associates do not find out.” Beware of moths who can start lawsuits. — Sammy Abdullah
97/ When you’re working with boutique investment banks, to protect yourself in case the banker sues when you choose to go with a different buyer… “Make sure the banker contract says they only get paid on intros they make directly and have a 6 month tail. Terminate any banker agreement as soon as they’re no longer working and the process is over; do not let these agreements linger.” — Sammy Abdullah
Expenses
98/ “Never buy a SaaS product owned by private equity unless you have to. Main exception: if founder is still CEO. Why: Impossible to cancel, Price increases out of the blue, Lose any real customer success, Innovation slows down or even ends, Support usually terrible” — Jason Lemkin
Secondaries
99/ If you’re planning to sell founder secondaries, beware of signaling risk. Sometimes, you do have a major life event that needs capital (i.e. buying a home, having a baby, hospital bills, etc.). If you are to sell, don’t sell until the Series B. “And even then I’d suggest titrating up… 2% at A, 5% at B, 10% at >=C.” — Hari Raghavan
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!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
One of my favorite equations that I’ve come across over the last few years is:
(track record) X (differentiation) / (complexity) = fund size
I’ve heard from friends in two organizations independently (Cendana Capital and General Catalyst), but I don’t know who the attribution traces back to. Just something about the simplicity of it. That said, ironically, for the purpose of this blogpost, I want to expand on the complexity portion of the equation. Arguably, for many LPs, the hardest part of venture capital as an asset class, much less emerging managers, to underwrite. Much of which is inspired by Brandon Sanderson’s latest series of creative writing lectures.
Separately, if you’re curious about the process I use to underwrite risks, here‘s the closest thing I have to a playbook.
A flaw is something a GP needs to overcome within the next 3-5 years to become more established, or “obvious” to an LP. These are often skillsets and/or traits that are desirable in a fund manager. For instance, they’re not a team player, bad at marketing, struggle to maintain relationships with others, inexperienced on exit strategies, have a limited network, or struggle to win >5% allocation on the cap table at the early stage.
Restrictions, on the other hand, are self-imposed. Something a GP needs to overcome but chooses not to. These are often elements of a fund manager LPs have to get to conviction on to independent of the quality of the GP. For example, the GP plans to forever stay a solo GP even with $300M+ AUM. Or the thesis is too niche. Or they only bet on certain demographics. Hell, they may not work on weekends. Or invest in a heavily diversified portfolio.
Limitations are imposed by others or by the macro environment, often against their own will. GPs don’t have to fix this, but must overcome the stigma. Often via returns. Limitations are not limited to, but include the GPs are too young or too old. They went to the “wrong” schools. There are no fancy logos on their resume. They’re co-GPs with their life partner or sibling or parent. As a founder, they never exited their company for at least 9-figures. Or they were never a founder in the first place.
To break down differentiation:
f(differentiation) = motivation + value + platform
Easy to remember too, f(differentiation) = MVP. In many ways, as you scale your firm and become more established, differentiation, while still important, matters less. More important when you’re the pirate than the navy.
Motivation is what many LPs call, GP-thesis fit. To expand on that…
Why are you starting this fund?
Why continue? Are you in it to win it? Are you in it for the long run?
What about your past makes this thesis painfully obvious for you? What past key decisions influence you today?
What makes your thesis special?
How much of the fund is you? And how much of it is an extension of you or originates with you but expands?
What do you want to have written on your epitaph?
What do you not want me or other people to know about you? How does that inform the decisions you make?
What failure will you never repeat?
In references, does this current chapter obvious to your previous employers?
And simply, does your vision for the world get me really excited? Do I come out of our conversations with more energy than what I went in with?
As you can probably guess, I spend a lot of time here. Sometimes you can find the answers in conversations with the GPs. Other times, via references or market research.
Value is the value-add and the support you bring to your portfolio companies. Why do people seek your help? Is your value proactive or reactive? Why do co-investors, LPs, and founders keep you in their orbit?
Platform is how your value scales over time and across multiple funds, companies, LPs, and people in the network. This piece matters more if you plan to build an institutional firm. Less so if you plan to stay boutique. What does your investment process look like? How do people keep you top of mind?
Of course, track record, to many of you reading this, is probably most obvious. Easiest to assess. While past performance isn’t an indicator of future results, one thing worth noting is something my friend Asheronce told me, “TVPI hides good portfolio construction. When I do portfolio diligence, I don’t just look at the multiples, but I look at how well the portfolio companies are doing. I take the top performer and bottom performer out and look at how performance stacks up in the middle. How have they constructed their portfolio? Do the GPs know how to invest in good businesses?” Is the manager a one-hit wonder, or is there more substance behind the veil?
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!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
Folks with frequent flyer miles here know that I’m a big fan of Brandon Sanderson’s lessons on creative writing. So, when Brandon Sanderson shared his new course on YouTube, I had to check it out. And I’m glad I did. In it, there’s a story on a Hollywood pilot for a new sitcom.
A team in Hollywood would bring people in, and subsequently tell them that team would ask the test audience what they thought of the pilot episode after they watched it. People would then watch it. After, they would ask, “There was a commercial at break number one. What brand was this commercial for?” Why? They didn’t want people focusing on the commercials, but wanted to understand the efficacy of the commercial. According to Brandon, they used the same sitcom pilot for years, which they used as the constant to test the commercial itself.
As such, Brandon’s advice to writers was that you shouldn’t ask too many leading questions when asking for feedback. Otherwise you’d predispose your audience to the intentions of your script.
Interestingly enough, I wrote a piece last week on how I do references. In it, I also share some of the questions I use during diligence and reference calls. While the questions aren’t intended to deceive, they’re designed to get to the truth. For instance, instead of asking for a person’s weakness, you ask “If you were to hire someone under this person, what qualities would you look for?” If I were to ask a stranger about their friend’s weakness, 9 times out of 10, I’ll get a response that’s a strength in disguise. A stranger has no incentive to tell me negative things about someone they have known for a while.
But at the same time, my job as an investor, though only a minority investor, is to help their friend grow. And I can’t help them grow if I don’t know what are areas they need to grow in.
As such, the focus isn’t on weaknesses. But shifting the framing to areas where I can complement them. Areas that if they worked on them in the next two years will make them a more robust leader.
There’s also another exercise I’ve really enjoyed working on with founders and emerging managers. I’d host a dinner where most people don’t know each other and what the other people are building. I don’t give them time to introduce themselves, but I ask every single person to bring their deck. During the dinner, they’re required to give their deck to someone else at the table. Each person then has a max of two minutes to look at someone’s deck, with no other context. After two minutes, decks are put away. And each person is required to pitch the startup or the fund as if they were the founder.
It’s a self-awareness exercise. Too often, when we’re looking at our own pitch day in, day out, we tend to lose perspective. We tend to miss things that are obvious to others. Through the above exercise, each person is able to notice what someone with limited time and attention took away from their pitch and what the delta is between what the founder wanted to convey and what the other person ended up conveying.
#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!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
I came across a quote recently, which I believe originates from Qi Lu, former COO of Baidu, and the one who created Bing, Microsoft’s search engine. “Luck is like a bus. If you miss one, there’s always the next one. But if you’re not prepared, you won’t be able to jump on.”
And your bus fare comes by way of preparation. The 10-year overnight success.
Or as the classic Seneca line goes, “Luck is when preparation meets opportunity.” Or as Louis Pasteur also said, “Chance favors the prepared mind.” And by having a prepared mind at the bus stop, you’ve increased the surface area for luck to stick.
Of course, I could fill an entire blogpost with just quotes on what luck means. But I won’t.
Year 27 on this planet was simply a year to try new things. An exploration of the human mind. An exploration of what are the boundaries of the LP landscape. And what’s worth pushing on, and what’s not. The output of which culminated in events, new ways to operate, building trust circles, the podcast, more content on the blog, and of course, a lot more conversations with influencers in and away from the limelight.
The inputs of which came from my last year’s resolution.
A reflection
Last year, the goal was to find myself in the flow state at least twice a week. Truth was, at that point in time, I had yet to figure out how to truly measure it. And it wasn’t until October 15th last year when I started measuring the early semblances of it outside of just allotting time to be in the flow state. For me, it came down to a simple question. Was today worth it?
In other words, was today well spent? Defined by either:
Learning a new skill or framework
Creating a core memory
Or by realizing something I never realized before, a new way of looking at the world around me.
Each of which, at least for me, largely become possible when I am in an egoless state working or thinking about something proactively than reactively.
As of writing this blogpost, I’m 16 weeks in. And I have 18 days well spent. On average, between one and two days per week. Leaning more on one though.
Though I might be able to allot time on a weekly basis on my calendar for “flow state,” I’m not always in the mood for it. That in itself was dependent on circumstance, timing, stress, and the disciplined pursuit of inspiration. The last of which was a luxury I couldn’t always afford. Sometimes when there are more pressing matters, I can’t help but find my mind wandering and stressing over more urgent matters than focusing on doing something new.
As such, to help me do so, I focused on things I could control daily: Was I consuming a healthy and diverse diet of information? Which I measured through reading, listening to podcasts and content, and conversations with different kinds of people.
I also look back at my journal entries for the past year, and anecdotally, more than 60-70% of them are about topics and tasks I had to do, pre-assigned (often self-assigned due to constraints). And a lot of them focus on the 10%, maybe 20%, marginal improvement and refinement of what’s been done already, rather than the 10X thinking I find more common in journal entries in the years before. The difference between reactive journaling and proactive journaling. The product of consuming too much (work, podcast, and otherwise) of the same genre of information. Simply, I didn’t cover all my macros.
So, this year…
So this year’s goal is no different than the last. To explore. To find myself in creative pursuits and in the flow state. And to take risks.
While I remember the lyrics, I often forget Sanderson’s Second Law. “Flaws/limitations are more interesting than powers.” Constraints are the breeding grounds of inspiration.
Not sure how much of this is lore, but I remember reading once that Bill Gates loves hiring lazy procrastinators. As his words once rung, “I choose a lazy person to do a hard job. Because a lazy person will find an easy way to do it.” For Gates, the constraint of time and energy on a responsible individual is the forcing function for brilliance.
While it’d be ridiculous to give myself a pat on the back for “brilliance,” there is immense value in time constraints, as well as intentionally handicapping myself to produce results. To not let perfect be the enemy of good.
As such, I’m going to impose limitations on myself as a forcing function of iteration, and hopefully by product of doing so, I live more days that are worth it. For now, the count is 19 since Oct 15, 2023 (when I started counting).
How I will measure success, with a North Star of at least 2 per week
Publish the intuition vs discipline blogpost (final draft done by end of February)
Host an escape room where all the clues to escape are based on each guest’s individual stories (March)
Build a repeatable framework for backing GPs as an individual LP (by the end of February)
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!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
As those close to me know, over the past few weeks, I’ve been knee-deep in some new projects. Projects I haven’t been this excited to produce in a long while. One of which is around experiences.
At the same time, as friends and long-time readers of this humble blog know, I am no stranger to the world of socialexperimentsandexperiences. I still don’t have a great catch-all term for it. They’re not just another set of “events.” Events just remind me of the same conference, fireside chat, or happy hour playbook. But I try to take my events a step further. So, naturally, given my fascination around building experiences, I walk hand-in-hand with both psychological research and game design. The former of which I share a bit more in previous blogposts than the latter.
So, I’m going to dedicate this essay to three of the lessons I picked up in the latter.
Create experiences that optimize for people who know no one else there.
Don’t confuse complexity with depth.
A great event is great not due to the event itself, but because of the story one gets to tell again and again.
1. Create experiences that optimize for people who know no one else there.
I had always had this somewhere in the back of my head. To design experiences where no one was ever left out. But when I caught up with a friend recently in New York, he codified it into what it is today. As someone who runs a design studio that builds immersive experiences in New York, he spends most of his time building experiences for strangers. And while friends may visit his exhibits together, the vast majority of his attendees do not know anyone else.
Take, for example, happy hours. Most happy hours aren’t designed for the person who knows no one. Usually the event itself is fairly laissez-faire. Most of which, the hosts don’t actively try to connect attendees. And so if you show up at a happy hour and the host is too busy to intro you to anyone, unless you’re an outgoing person, you’re likely standing near the edges, hoping to jump into a conversation if any group will let you. This often leads to events where people leave early and form cliques. It also optimizes for early birds, rather than the fashionably late.
Tactically, it’s creating excuses for people to jump in conversation. While not a problem for outgoing individuals, I need to empower everyone, including shy introverts, with tools to start conversations, where I and/or the experience shoulder the initial responsibility and blame to start conversations. That could be with customized fortune cookies where one is supposed to read their fortune to someone else. Or empowering people with a mission or an ask greater than themselves. For instance, to over-simplify it a bit, “I’m trying to put together a small group of everyone who’s wearing glasses tonight. Do you mind helping me find out all the names of the guests who are wearing glasses?” Or “I’m trying to resolve a debate with my co-host. Pineapples or no pineapples on pizza. I’m all for pineapples, but she isn’t. Can you help me find more allies?”
2. Don’t confuse complexity with depth.
This is unfortunately a fallacy I often find myself spiraling down the longer I’m given to ponder. And I lose myself in intellectual complexity.
Many years ago when a couple friend and I first decided to host an escape room in a mansion over three days and two nights, the greatest question we had was: How do we create an immersive experience over multiple days? And retain that level of immersion throughout? I thought, hell, what if we created a brand new language for the event. One that all guests would have to learn and practice throughout the event. We’d ease them in slowly, but the biggest puzzle could only be solved through adequate mastery in this new language. This easily gave me the greatest injection of dopamine when planning for the event. And I went deep, talking with linguistic professors, studying how Tolkien created Quenya, and how Cameron and Paul Frommer created the Na’vi language.
It was truly interesting to me and to many of my friends. But unfortunately, through user testing, to most others, while interesting to hear its backstory, was not fun to practice. I had ended up developing it to a level to where it departed from its English roots to resembling language of Scandinavian origin. Because of its complexity and how there were more guests who were English speakers than speakers of this new language, immersion broke almost instantaneously.
The great Mark Rosewateronce definedinteresting as intellectual stimulation and fun as emotional stimulation. While they’re not mutually exclusive, it’s important to not confuse the two.
There’s a great Maya Angelou line that I, like many others, like to reference. “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” And it is no less true for gamified designs. Emotional satisfaction often runs deeper and longer than intellectual satisfaction. The former has a greater chance of becoming a “core memory,” to borrow from the brilliant minds behind Pixar’s Inside Out, than the latter.
I was lucky to learn this lesson from one of the greatest designers of card games alive today. It was on a call earlier this year, where I was telling him about all the awesome bells and whistles I was planning on implementing for an upcoming experience. And I asked what he thought. To which, he responded: “Kill all complexity. Complexity is not a substitute for depth. Rely on your audience for depth. The more borders, the harder it is enjoy. Too few, it’s chaotic. Find the absolute minimum number of borders.”
The goal of creating systems is to create opportunities for serendipity. To create opportunities where people can dive deep. Not to force people to take the plunge when they may not be ready.
His advice just happens to rhyme with a quote I’ve always kept somewhere in the back of my mind, but now sits on the wall above my PC.
“Your ability to solve problems with magic in a satisfying way is directly proportional to how well the reader understands said magic.” — Sanderson’s First Law of Magic
3. A great event is great not due to the event itself, but because of the story one gets to tell again and again.
Under the ambiance of MarieBelle, which I still so fondly remember the moment my friend told me this, she said, “A great event is great not due to the event itself, but because of the story one gets to tell again and again.” It’s the truest definition of surprising and delighting. She was someone who used to work on the Dreamweavers team at Eleven Madison Park when Will Guidara was still there. As such the above lesson was a page out of Will Guidara‘s book Unreasonable Hospitality, whose best known for how intentionally he took front of the house hospitality at 11 Madison Park, one of the greatest restaurants in the world. 4 stars on New York Times, and 3 Michelin stars. He also happened to be the person who conceived the Dreamweavers team there. Just to give you an idea of how seriously they take their roles…
First off, the core of the event itself — the meat, the protein — has to be great. If it’s a tofu burger, it better be a damn well-marinated fat slice of egg tofu, double-fried to perfection. To Malcolm Gladwell, that’s the meal.
And only once you have it all, what’s the cherry on top? What’s the candy? Why would people want to talk about it? For events, that’s:
Delivering surprises — gifts and/or experiences they do not expect
Transferrable pieces of knowledge — insights, frameworks, or trivia knowledge that are useful even after the event
Meeting great people WITH great stories — “Did you know that [so-and-so] did X?” And for this to happen not just opportunistically but at scale, finding ways to help people share stories of vulnerability or of adventures that have yet to grace any public media is key. The easiest way is through questions. The slightly harder way is through a set of triggers where it makes sharing such a story natural.
In closing
I am, as always, a work-in-progress. And with the events I’ll continue to host this year, I’m going to learn more. And in time, be able to share more of my lessons, trials, and tribulations in this journey. In hopes, this will aid or inspire you on your path.
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!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
Whenever I host fireside chats, I always ask three questions before the talk begins, usually a week in advance.
What would make this interview the most memorable one you’ve been a guest for even two years from now?
Are there any topics you don’t want to talk about? Or are sick of talking about?
Are there any questions you have yet to be asked, but wish someone were to ask you?
On top of the above three questions , occasionally, I ask a fourth. Do you have a home run story that has gotten you a standing ovation in the past — privately or publicly?
The goal is simple. Despite hours of research and asking mutuals, sometimes I still can’t find anything that’s humanizing about my guest. And I know for a fact that all humans are imperfect. And that imperfection makes each person relatable. Just like when Neil Gaiman met Neil Armstrong. But recently, I’ve fallen in love with a new way to phrase the fourth question.
What is a story that you’ve told or have yet to tell where you either fight to hold back tears or fight to hold back giggles?
On my flight to New York recently, I watched a movie starring one of my favorite actors in the world, Tom Hanks, which inspired this question. And, subsequently this blogpost. A Man Called Otto. Inspired by Fredrick Backman’s A Man Called Ove. And I’m not ashamed to say, I cried during that movie. While Rotten Tomatoes may not give it the score I think it deserves, it was well-written and well-produced. Through it, I realized that powerful stories are powerful not because of how awesome the protagonist is. But by how relatable their weaknesses are. Their limitations. I’ll give an example… to avoid spoiling the afore-mentioned movie.
Spiderman isn’t awesome because he has mutant powers. He’s awesome because he’s prone to all the emotions and struggles, be it love, bullies at school, a horrible boss, and how he acts out against all of that. Spiderman’s much more relatable than a super billionaire who owns all the gadgets in the world or an alien from another planet. He’s just a kid from Brooklyn. Or Queens, depending on which Spiderman suits your fancy. And as Brandon Sandersononce said, limitations are more interesting than powers. Limitations make us human. And characters who exhibit humanness and still somehow overcome impossible odds are stories that are passed from generation to generation.
That said, storytelling, outside the realm of superpowers, is equally as true. In a world where appearance and social capital goes a long way, trying to be perfect, to look perfect, and to act perfect is a fallacy in the modern era. While we know we’re not perfect, as a society, we continue to strive for perfection.
After watching a lot of movies, and in my free time, watching acting lessons (FYI, would fail as an actor, but still find the craft fascinating.), I’ve learned we don’t cry when watching movies because the characters cry easily. We cry because the character is trying to hold back their tears. And we don’t laugh during a show or a movie because the comedian laughs easily. We laugh even more because they’re trying to hold back their own laughter. The narrators and characters we see are a reflection of who we truly are.
In many ways, if someone cries easily, it relieves the audience of the ability, some artists may call it responsibility, to cry. Someone, the actor or actress or character has diffused the tension already. But if they fight to hold back their tears, holding back the floodgates, we as the audience are more likely to cry in their stead.
Now I say all of this because I find most fireside chats and interviews unrelatable. Now it’s a product of many things. And I genuinely believe a plethora of individuals do have something powerful and insightful to share, but the stage needs to be ready for them. It’s rare for guests to drop some head-turning advice in the first 10 minutes. Which means… it’s up to both the host and the guest to hold the audience’s attention long enough, as well as create enough opportunities for the guest to shine. The above question, in my opinion, does both.
So all in all, going forward, rather than asking for a home run story, I will ask for stories where people are just people. And for stories that mean a tremendous amount to the people telling them. That they have no choice but to let even a little bit of themselves out emotionally.
The DGQ series is a series dedicated to my process of question discovery and execution. When curiosity is the why, DGQ is the how. It’s an inside scoop of what goes on in my noggin’. My hope is that it offers some illumination to you, my readers, so you can tackle the world and build relationships with my best tools at your disposal. It also happens to stand for damn good questions, or dumb and garbled questions. I’ll let you decide which it falls under.
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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
