Tag: entrepreneur

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A Jerk’s Guide to Being Kind

dog, bully, fight

First off, my lizard brain that optimizes for immediate gratification thought “A Jerk’s Guide to Being Kind” would be a fun title. Clickbait-y (kinda). Great for SEO. So I used that as my prompt for this public journal entry. 🙂

So, if you didn’t come for a public apology and how I say no, I’ll see you in next week’s blogpost.

Secondly, I was reading Chris Neumann’s blogpost this week, aptly named “The Beginner VC’s Guide to Not Being a Jerk.” And realized, holy frick, I’m a jerk. In it, he describes five things that VCs do that come off as jerkish.

  1. Don’t Use Possessive Adjectives
  2. Don’t Multitask When a Founder is Pitching
  3. Don’t Badmouth Founders
  4. Don’t Mansplain
  5. Don’t Ghost Founders

And of the five above, I know I’m an offender of three of the above. Using possessive adjectives. Multitasking. Ghosting. Probably in that order from most frequent to least frequent. (Sorry, Chris. Sorry to founders I’ve done this to.) The first two I don’t do intentionally, nor do I do the either of them often.

Not sure if it makes too much of a difference, but rather than say “my company” or “our companies,” I do say “our portfolio companies.” Just with one extra word in there. Occasionally, will let it slip when I’m trying to shorten the sentence I’m saying.

I know I’m more prone to multi-task when I’m not the only investor in the room, and definitely when I’m not the primary investor. Again, don’t do it often, but it happens. And I never do so when I’m the only other person in that conversation. 99% of the time I do let the founders and GPs I talk to know that I’m just taking notes of our conversation. Personally don’t use the AI notetakers, but that’s a discussion for another day.

And ghosting. My goal is to get to inbox zero every day. And I really do my best not to ghost. But three things will always happen:

  1. Some email or text always ends up slipping through my inbox. Either it goes in spam, or during certain days, I’m bombarded with hundreds of emails and it slips through the cracks. And I do give every founder and GP who pitch me the right to re-surface past emails if it does slip through.
  2. If the email or message seems like it came out of an automation or mail merge AND I’m not interested, I do let it drop. I read EVERY email for sure. But if that email looks like the same one that you send to every investor, those have been going straight into the archives more and more. That also means that some emails just read like it’s an automated email even if it doesn’t, and it slips through.
  3. There’s a shortlist of people who have abused my old personal policy of responding to every email I get. And so for those people, I’m not sorry if I do ghost you. That said, it’s a pretty short list of people (probably 30-40 people as of now).

And lastly, well, I’ve made founders pitching me cry. Not something to brag about. But in sharing what I thought was honest feedback, I made tears flow.

So, in summary, I’m probably a jerk.

In my mind, a jerk is someone who prioritizes their own beliefs and priorities to the point that they either intentionally ignore or severely de-prioritize others’. Although I try my best not to ignore what other might want or need, but I do often prioritize my own. So to add on to all the above, I’m sharing some situations where my jerkiness comes out and what I say in those moments.

When having tough conversations

I actually learned this while listening to Lenny’s podcast with Matt Mochary. When I need to let someone go. When I need to call a friend out on their bad behavior. Or when my partner and I get into a fight. “Preface hard conversations with: This is going to be a difficult conversation. Are you ready?”

In addition, I also preface with how long I think the discussion will take. “May I have thirty minutes of your undivided attention?” And what the topic will be on. No point in blindsiding the other person.

It helps set the stage. And if the other person needs more time, they have the option to back out. Moreover, all tough conversations are 1:1 conversations. At least for me, even if it relates to many, I start notifying them all on a 1:1 basis.

When trying to leave a conversation at an event

This one also isn’t original. I learnt from a friend of mine who is far more eloquent than I am. Not all conversations at events are created equal. And sometimes, at an event, especially a networking event, my goal is to say hi to the event host or to talk to someone else on the floor. And in between, I may find myself in another serendipitous. Case in point, yesterday, I ended up meeting a founder who sold his last company for $500M exit to a large Fortune 50 company in the parking lot and who was figuring out his next thing. Serendipitous. And super fun, but I was going to be royally late for another event if I stayed chatting in the parking lot.

So, when I need to leave a conversation, instead of excusing myself to go to the bathroom or get more food, I’ve learned to say, “I’d love to ask you one last thing that I’d beat myself up tonight if I didn’t ask before I need to go say hi to XXX.”

One, it timeboxes the next few minutes of the conversation. Two, I’m still interested in the individual and I want them to get the last word before I head out.

For 1:1 conversations

I usually let people know at the very beginning of the conversation that I have a “hard stop” at a specific time. Which 90% of the time is true. Usually another meeting. Or I have just way too much work on my plate that I need to get to.

When turning down a meeting (for now)

I wish I had more time in a day to talk to awesome people. I also wish I had more energy in a day to talk to awesome people. But unfortunately, I only have 24 hours in a day. And well, I’m an introvert. As in, I enjoy writing this blogpost you’re reading right now since 5AM in the morning than telling someone in a live conversation what I will end up writing here.

As such, if I’m interested in meeting at some point, I usually say something to the tune of: “I would love to meet, but if I do so within the next XXX weeks / months, I would have failed in my promise to the people I care about. So if you’ll allow me to be a good friend / family member / supporter of my existing projects and investments, could we revisit this in YYY weeks / months?”

Other times to save everyone’s time, since I won’t find my interest levels gravitating towards said topic, I let people know it just isn’t of interest to me in the foreseeable future, and that their luck may be better elsewhere.

When turning down an investment opportunity

This is actually something that was inspired by one of Jason Calacanis’ podcast episodes. And while there are many things I may not agree with him on, I really like the phrasing he uses to turn down founders who push back against his investment decision. And I’ve added some lines that best fit the way I talk. Which I also included this in my 99 series for investors.

“I always have to accept the possibility that I’m making a mistake. The venture business keeps me humble, but these are the benchmarks that the team and I all believe in.”

In closing

Sometimes I think it’s inevitable to appear as a jerk to some people out there. While one can try to reduce the splash damage, the truth is sometimes what you have to say may not be what the other person wants to hear or see. But as long as you hold yourself to a high degree of integrity and do so in as kind of a way as you can, I think that’s all that really matters.

Often times, I do believe it’s more important to be kind than nice. I hope the above helps.

Photo by David Taffet on Unsplash

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

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.

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Qualitative Signals to Look for in Emerging GPs | Jaclyn Freeman Hester | Superclusters | S2E9

Jaclyn Freeman Hester is a Partner at Foundry. She joined in 2016 with a passion for supporting the next generation of entrepreneurs and investors. Jaclyn leads direct investments in early-stage companies, often collaborating with Foundry’s partner funds. She loves working closely with founders to solve hard problems and think about the human elements of business. She invests across B2B and consumer companies that exhibit strong end-user empathy and use technology to empower individuals, unlock potential, and improve experiences.

Jaclyn helped launch Foundry’s partner fund strategy, building the portfolio to nearly 50 managers. Bringing her unique GP + LP perspective, Jaclyn has become a go-to sounding board for emerging VCs.

Jaclyn first fell in love with entrepreneurship while earning her JD/MBA at CU Boulder (Go Buffs!). There, she served as Executive Director of Startup Colorado, where she got to know Foundry and the incredible Boulder/Denver startup community the firm helped catalyze. In her brief stint as a practicing attorney, Jaclyn advised clients in M&A transactions and early-stage financings. She also witnessed the founder journey first-hand, working closely with her husband and his family as they built a B2B SaaS company, FareHarbor (acquired by BKNG).

Jaclyn loves the Boulder lifestyle, but her heart will always be on the East Coast, having grown up a New England “beach kid.” She is the proud mother of three humans and three dogs and is a blue-groomer-on-a-sunny-day skier and 9-hole golfer. In her glimpses of free time, you can find Jaclyn enjoying live music, especially at Red Rocks and in Telluride, two of the most magical places in the world.

You can find Jaclyn on her socials here:
Twitter: https://twitter.com/jfreester
LinkedIn: https://www.linkedin.com/in/jaclyn-freeman-hester-70621126/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[03:24] The significance of Kara Nortman in Jaclyn’s life
[13:59] Lesson on recognizing effort from Dan Scheinman, Board Member at Zoom
[18:27] The question to disarm GPs learned from Jonathon Triest at Ludlow Ventures
[23:37] The differences between being a board member and an LPAC member
[32:04] Turnover within institutional LPs
[33:58] The telltale signs of team risk in a partnership
[41:25] How to answer “How do you fire your partner?”
[44:05] Foundry’s portfolio construction
[53:22] What makes Lan Xuezhao at Basis Set so special?
[59:59] What does Shark Tank get right about venture?
[1:03:37] Jaclyn’s Gorilla Glue story
[1:05:51] What keeps Jaclyn humble today?
[1:12:11] What will Jaclyn do after Foundry’s last fund?
[1:16:28] Jaclyn’s closing thought for LPs
[1:18:10] Thank you to Alchemist Accelerator for sponsoring!
[1:20:46] If you enjoyed this episode, a like, a comment, a share will go a long way!

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“By the time track record is established, it’s almost too late.” – Jaclyn Freeman Hester

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
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#unfiltered #87 Shower Thoughts on Great Founders and Great Investors

expo, markers, whiteboard

I’ve been doing some thinking as of late in and out of the shower. In conversations. In reexamining my own investment thesis. And changing it as a function of scar tissue and tears of joy. As such, sharing a few shower thoughts below that for the below, might be better described as a tweet than in a long-form blogpost.

About founders

  1. 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.
  2. 20 years of experience is more impressive than 20 one-year experiences for deeply technical problems.
  3. 20 one-year experiences is more impressive than 20 years of experience for cultural (consumer) problems.
  4. Great founders don’t delegate understanding. Senior execs aren’t hired until founders themselves prove out the playbook.
  5. In the age of AI, new information is more valuable than remixes of old. Standing out is more important than fitting in. The latter of which will be replaced with by AI given the wealth of data out there. (Ironically, this line is inspired by old conversations plus Sriram Krishnan’s blogpost)
  6. Revenue matters more than traffic for consumer products since AI bots can now mimic simple digital human behavior.
  7. Silicon Valley / SF Bay Area is strong because of the high quality of eavesdropping. There are so many ideas being thrown around in coffee shops. It’s quite easy to stumble across a world-class lesson without paying $2000 for a conference ticket. Things sure have changed since ’08.

About investors

  1. 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.”
  2. 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.
  3. “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. Hell, a lot of being a founder is like that.
  4. 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.

Photo by Mark Rabe on Unsplash

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

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

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.

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An LP’s Guide to the European VC Ecosystem | Ertan Can | Superclusters | S2E8

Ertan Can is the Founder of Multiple Capital, a fund of funds focused on investing in micro VC funds in Europe and has been a limited partner in top funds you’ve heard of including Entrepreneur First and Angular Ventures, just to name a few. He’s done his tour of duty in the asset management world at JP Morgan to covering investor relations topics at Thomson Reuters to investing in startups at a family office. Ertan is also a founding member of 2hearts, a community dedicated to building tomorrow’s tech society with cultural diversity.

He is also a proud MBA graduate from the ESCP Business School and a long time student of finance and law catalyzed by his time at Frankfurt and London.

You can find Ertan on his socials here:
Twitter: https://twitter.com/rtancan
LinkedIn: https://www.linkedin.com/in/ertancan/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[02:21] Ertan’s childhood
[05:36] Why Luxembourg?
[15:03] Which countries do European GPs set up their funds?
[19:46] How did Ertan switch the family office strategy from direct to fund investing?
[24:42] How has Ertan’s underwriting process evolved over time?
[28:04] Do similar pitch deck formats make it easier or harder to make investment decisions?
[30:34] Referrals and warm intros ranked by source
[36:10] Geographies that Multiple Capital invests in
[37:44] Red flags for Multiple Capital
[43:48] How do solo GPs build sounding boards to check their blindside?
[49:04] The (un)predictability of outlier investments
[1:00:41] How does Ertan think about bringing on Venture Partners in a fund of funds?
[1:08:25] The decision-making framework behind an “angel” LP investment and a FoF check
[1:12:01] Where Ertan shares his unfiltered thoughts
[1:20:14] Ertan’s experience around giving GPs feedback
[1:27:05] Cockroaches and superheroes
[1:34:08] Thank you to Alchemist Accelerator for sponsoring!
[1:36:44] If you enjoyed this episode, it would mean the world to us if you gave us a like, comment, or share!

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“Our work is to increase the probability of having some of the outliers as early as possible in as small as possible funds because like a fund, that will lead to a power law in our portfolio.” – Ertan Can

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
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How to Get Six Top Quartile Fund of Funds in a Row | Aram Verdiyan | Superclusters | S2E7

aram verdiyan, accolade partners

Aram Verdiyan is a Partner at Accolade. Previously, he worked on the investment team at Andreessen Horowitz. Before that, Aram worked in BD, sales and marketing at Aviatrix, a cloud native enterprise software company. Aram worked at Accolade from 2012 to 2015 as a Senior Investment Associate and at Deloitte Consulting LLP. He holds an M.B.A from the Stanford Graduate School of Business (GSB) and a B.S. from the George Washington University.

You can find Aram on his socials here:
Twitter: https://twitter.com/aramverdi
LinkedIn: https://www.linkedin.com/in/aram-verdiyan-8099186/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[02:36] How did Pejman Nozad influence the way Aram thinks about people
[04:06] Aram’s ‘distance traveled’
[05:45] What did imposter syndrome look like in Aram’s life?
[06:36] How Aram cold emailed his way into Accolade Partners
[09:03] The first case study Aram did at Accolade
[10:10] When track record is NOT just TVPI, DPI, or IRR
[15:05] The case for concentrated fund of funds’ portfolio construction
[22:42] Telltale signs of “great” deal flow
[26:32] When does due diligence start for prospective funds for Accolade?
[27:50] Primary sources of data for Accolade
[29:00] The variables that impact fund of funds’ team size
[30:24] How many fund investments should each individual FoF partner have?
[35:13] The case for consistent check sizes
[36:20] The common mistake GPs make when it comes to LP concentration limits
[41:27] How Accolade started investing in blockchain funds
[44:52] Blockchain engineering talent as a function of bear markets
[47:15] Time horizons for blockchain funds
[50:38] Luck vs skill
[53:41] Aram’s early fundraising days at Accolade
[57:38] Thank you to Alchemist Accelerator for sponsoring!
[1:00:14] If you enjoyed the episode, drop us a like, comment or share!

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“[When] you’re generally looking at four to five hundred distinct companies, 10% of those companies generally drive most of the returns. You want to make sure that the company that drives the returns you are invested in with the manager where you size it appropriately relative to your overall fund of funds. So when we double click on our funds, the top 10 portfolio companies – not the funds, but portfolio companies, return sometimes multiples of our fund of funds.” – Aram Verdiyan

“We don’t have varying levels of conviction.” – Aram Verdiyan

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
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Exit Windows Matter More Than Entry Windows | Jaap Vriesendorp | Superclusters | S2E6

Jaap Vriesendorp is one of the managing partners of Marktlink Capital, an investment manager from the Netherlands investing over $1b into private equity and venture capital funds. Marktlink Capital’s LPs are almost exclusively Dutch (tech) entrepreneurs from companies such as Booking.com, Adyen and Hellofresh. At Marktlink Capital Jaap focusses on selecting venture and growth funds across Europe and the US. Before Marktlink Capital, he spent the majority of his time at McKinsey where he was one of the leaders of McKinsey’s practice for Venture Capital, Unicorns & Startups in Europe. Besides work, Jaap enjoys sports, mountains, technology, comic books, music and art.

He holds an MBA from INSEAD and is a guest lecturer at the Rotterdam School of Management (Erasmus University). He occasionally shares his views on private market investing on Medium.

You can find Jaap on his socials here:
LinkedIn: https://www.linkedin.com/in/jaap-vriesendorp/
Medium: https://medium.com/@jjjvriesendorp

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[03:04] The significance of Mount Pinatubo in Jaap’s life
[06:23] One Shell Jackets
[08:45] The entrepreneurial gene in the Vriesendorp family that dates back to Jaap’s grandfather
[14:32] The 1-year time constraint of starting Welt Ventures
[17:43] What did the transition to becoming an investor look like for Jaap
[20:28] The 3 traits that define a community
[24:03] How often does Jaap host events?
[25:30] How does Marktlink Capital have 1000 LPs?
[27:15] What was Marktlink’s pitch to their LPs?
[28:32] What is the typical individual LP’s allocation model to VC/PE?
[29:41] Why is VC/PE uncorrelated to the public markets?
[35:10] The 3 facts that define Welt Ventures’ portfolio construction model
[38:28] Exit windows matter more than entry windows
[42:15] Diversification in PE = Concentration in VC
[47:42] 3 types of emerging GPs that deliver alpha
[49:35] Which European fund has a really unique thesis?
[51:44] Which school did Jaap apply to but not get in?
[53:55] Thank you to Alchemist Accelerator for sponsoring!
[56:31] If anything resonated with you in today’s episode, we’d be honored to earn a like, comment, or share!

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“We set out to achieve three things with the community:

  1. We wanted people to have fun with each other. And when entrepreneurs meet entrepreneurs, good stuff happens even if you don’t bring any content.
  2. We wanted to bring the absolute best type of propositions. So in terms of sales, it means sales almost without being sales where you offer something that people really want.
  3. Organized knowledge in a way that nobody does.” – Jaap Vriesendorp

“85% of returns flow to 5% of the funds, and that those 5% of the funds are very sticky. So we call that the ‘Champions League Effect.’” – Jaap Vriesendorp

“The truth of the matter, when we look at the data, is that entry points matter much less than the exit points. Because venture is about outliers and outliers are created through IPOs, the exit window matters a lot. And to create a big enough exit window to let every vintage that we create in the fund of funds world to be a good vintage, we invest [in] pre-seed and seed funds – that invest in companies that need to go to the stock market maybe in 7-8 years. Then Series A and Series B equal ‘early stage.’ And everything later than that, we call ‘growth.’” – Jaap Vriesendorp

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
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The Phantom Testimonial Corollary

thumbs up, scenery, testimonial

I’ve always admired the way Mike Maples has thought about backcasting. In summary, he proposes that true innovators are visitors from the future. Or as he puts it: “Breakthrough builders are visitors from the future, telling us what’s coming.” Such that they “pull the present from the current reality to the future of their design.” In other words, start from the future, then work your way backwards to figure out what you need to do today to get there.

And I find it equally as empowering to do the same exercise as an emerging manager. Hell, for any aspiring institutional investor. Be it from an angel to a GP. Or an individual LP to a fund of funds.

Start from your ideal fund model. Your ideal LP base. Your ideal pitch deck. Then work backwards to figure out what you need to do today. For the purpose of this blogpost, I’ll focus on reference checks.

For everyone in the investing world, especially in the early-stage private markets, we all know that reference checks is a key component of making investment decisions. Yet too often, founders and emerging managers alike think about them retroactively. Post-mortem. Testimonials that are often not indicative of one’s strengths. And especially not indicative of how a GP won that investment, as well as how they can win such investments in the future.

An exercise I often recommend investors do is write your ideal reference you would like to get from a founder. Be as specific as you can. What would your portfolio founders say about you? How have you helped them in a way that no one else can? What do founders who you didn’t fund say about you?

Another way to think about it is if you were to own a word — something that would live rent free in people’s minds — what would you own? Hustle Fund owns “hilariously early.” Spacecadet Ventures owns “the marketing VC” and they live up to it. Cowboy’s Aileen Lee created the idea of “unicorns.” “Software is eating the world” is attributed to Marc Andreessen.

On the flip side of the token, what are testimonials that should never be written about you?

Hell, at this point, if you’re an aspiring institutional investor, and have yet to spell things out, create the whole deck. Fill in the numbers and the facts later, but for now, make up your ideal deck. When leading indicators become lagging, then update it and fill it in.

Then be that kind of investor for every founder you help. As Warren Buffett once said, “You should write your obituary and then try and figure out how to live up to it.”

Photo by Nghia Le on Unsplash

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

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.

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When Helpful is an Action Verb | Aakar Vachhani | Superclusters | S2E5

Aakar Vachhani is a Managing Partner and a member of Fairview’s investment committee. He is involved in research, due diligence, investment monitoring, and business development for Fairview’s venture capital and private equity partnership and direct co-investment portfolios.

Prior to joining Fairview, Aakar was with Cambridge Associates, a leading investment advisor to foundations, endowments and corporate and government entities. He was responsible for analyzing private equity and venture capital investments in support of the firm’s clients and consultants. In addition, he led research and data analytics projects on the firm’s private equity and venture capital database. Aakar also spent time with MK Capital, a multi-stage venture capital firm with a sector focus on software and cloud services.

Aakar Vachhani holds a B.S. in Economics-Finance from Bentley University and an MBA in Finance and Entrepreneurship & Innovation from the Kellogg School of Management. He is a member of the Board of Directors of San Francisco Achievers and the New Breath Foundation. On top of that, Aakar established and leads Fairview’s San Francisco office.

You can find Aakar on his socials here:
Twitter: https://twitter.com/aakar15
LinkedIn: https://www.linkedin.com/in/aakarvachhani/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[04:29] Growing up in a household of 10
[09:36] Aakar’s leadership style when he was a child
[12:12] Why Aakar turned down a job in insurance back at home
[17:25] The third time Aakar applied to Cambridge Associates
[21:56] How Fairview aligns incentives with each investment they make
[26:15] How Fairview helps their GPs
[28:58] How Fairview gives pitch feedback to GPs
[32:54] Reasons Fairview passes on a GP
[34:58] How does Aakar define what a “new manager” looks like?
[37:55] How did Aakar build out Fairview’s SF Bay Area practice?
[44:26] Fairview’s onboarding process for new hires
[47:21] Why Fairview’s investment decisions need to be unanimous
[52:17] The balancing act between a narrow thesis and a big market
[56:09] Why Fairview invested in Eniac Ventures
[57:56] What does a helpful LPAC member look like?
[59:30] Typical questions GPs bring to their LPAC
[1:01:13] How do the best GPs communicate strategy drift to their LPs?
[1:03:01] Why LPs dislike strategy drift
[1:06:28] What new technologies does Aakar think LPs should pay attention to?
[1:08:30] Aakar’s core memories
[1:11:45] Thank you to Alchemist Accelerator for sponsoring!
[1:14:22] If you enjoyed the episode, it would mean a lot if you could like, comment, share, or subscribe!

SELECT LINKS FROM THIS EPISODE:

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
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How a Pension Fund thinks about Venture Capital | Peter Teneriello | Superclusters | S2E4

Peter Teneriello has been a career-long investor in the private markets. He has experience as an allocator across a range of institutional types, from wealth management firms to pensions and endowments, and helped launch the venture capital program for the Texas Municipal Retirement System. Other past experiences of his have included leading finance/operations for a venture-backed startup, in addition to vetting investments for a family office and working with their portfolio companies. Over the years he has also written about his investing experience on Medium and Substack.

He is a graduate of the University of Notre Dame as well as the Kauffman Fellows Program, an executive education program focused on venture capital and innovation leadership. He wears many hats.

You can find Peter on his socials here:
Twitter: https://twitter.com/_PeterT_
LinkedIn: https://www.linkedin.com/in/peterteneriello/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[03:57] The origin of Peter’s nickname
[05:16] How was boxing formative to who Peter is today?
[07:25] The art of the first conversation with a GP
[11:46] How did TMRS deploy $1B into VC and PE annually?
[19:45] Looking at the underlying portfolio of companies
[24:06] How overlap in venture portfolios affect re-up decisions
[26:55] Marks from an LP perspective
[30:52] Qualitative vs quantitative information
[34:45] Signal vs noise in the private markets
[40:46] When Peter shaved his head in front of an entire lecture hall
[45:09] The most recent update to the Peter OS
[51:17] Thank you to Alchemist Accelerator for sponsoring!
[53:53] If you enjoyed the episode, consider dropping a like, comment or share as it really helps me create content that is interesting to you

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“Don’t overweight the quantitative over the qualitative.” – Peter Teneriello

“It’s not to be in the consensus out of a misguided sense of self-preservation; it’s approaching your life’s work with creativity and conviction and treating it like the art that it is.” – Peter Teneriello

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters

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The Complexity of the Simple Question (DGQ 20)

Last week, Youngrok and I finally launched our episode together on Superclusters. In the midst of it all, we wrestle with the balance between the complexity and simplicity of questions to get our desired answer. Of course, we made many an allusion to the DGQ series. One of which, you’ll find below.

In many ways, I started the DGQ series as a promise to myself to uncover the questions that yield the most fascinating answers. Questions that unearth answers “hidden in plain sight”. Those that help us read between the lines.

Superclusters, in many ways, is my conduit to not only interview some of my favorite people in the LP landscape, but also the opportunity to ask the perfect question to each guest. Which you’ll see in some of the below examples.

  1. Asking Abe Finkelstein about being a Pitfall Explorer and how it relates to patience (1:04:56 in S2E1)
  2. What Ben Choi’s childhood was like (2:44 in S1E6) and how proposing to his wife affects how he thinks about pitching (1:05:47 in S1E6)
  3. How selling baseball cards as a kid helped Samir Kaji get better at sales (45:05 in S1E8)

In doing so, I sometimes lose myself in the nuance. And in those times, which happen more often than I’d like to admit, the questions that yield the best answers are the simplest ones. No added flare. No research-flexing moments. Where I don’t lead the witness. And I just ask the question. In its simplest form.

For the purpose of this essay, to make this more concrete, let’s focus on a question LPs often ask GPs.

“Tell me about this investment you made.“

In my mind, ridiculously simple question. Younger me would call that a lazy question. In all fairness, it would be if one was not intentionally aware about the kind of answer they were looking to hear OR not hear.

The laziness comes from regressing to the template, the model, the ‘what.’ But not the ‘why’ the question is being asked, and ‘how’ it should be interpreted. For those who struggle to understand the first principles of actions and questions, I’d highly recommend reading Simon Sinek’s Start with Why, but I digress.

Circling back, every GP talks about their portfolio founders differently. If two independent thinkers have both invested Company A, they might have different answers. Won’t always be true, but if you look at two portfolios that are relatively correlated in their underlying assets AND they arrive at those answers in the same way, one does wonder if it’s worth diversifying to other managers with different theses and/or approaches.

But that’s exactly what makes this simple question (but if you want to debate semantics, statement) special. When all else is equal, VCs are left to their own devices unbounded from artificial parameters.

Then take that answer and compare and contrast it to how other GPs you know well or have invested in already. How do they answer the same question for the exact same investment? How much are those answers correlated?

It matters less that the facts are the same. Albeit, useful to know how each investor does their own homework pre- and post-investment. But more so, it’s a question on thoughtfulness. How well does each investor really know their investments? How does it compare to the answer of a GP I admire for their thoughtfulness and intentionality?

(Part of the big reason I don’t like investing in syndicates because most outsource their decision-making to larger logos in VCs. On top of that, most syndicate memos are rather paltry when it comes to information.)

The question itself is also a test of observation and self-awareness. How well do you really know the founder? Were you intentional with how you built that relationship with the founder? How does it compare to the founder’s own self-reflection? It’s also the same reason I love Doug Leone’s question, which highlights how aware one is of the people around them. What three adjectives would you use to describe your sibling?

Warren Buffett once described Charlie Munger as “the best thirty-second mind in the world. He goes from A to Z in one go. He sees the essence of everything even before you finish the sentence.” Moreover in his 2023 Berkshire annual letter, he wrote one of the most thoughtful homages ever written.

An excerpt from Berkshire’s 2023 annual letter

As early-stage investors, as belief checks, as people who bet on the nonobvious before it becomes obvious, we invest in extraordinary companies. I really like the way Chris Paik describes what we do. “Invest in companies that can’t be described in a single sentence.”

And just like there are certain companies that can’t be described in a single sentence — not the Uber for X, or the Google for Y — their founders who are even more complex than a business idea cannot be described by a single sentence either. Many GPs I come across often reduce a founder’s brilliance to the logos on their resume or the diplomas hanging on their walls. But if we bet right, the founders are a lot more than just that.

Of course, the same applies to LPs who describe the GPs they invest in.

In hopes this would be helpful to you, personally some areas I find fascinating in founders and emerging GPs and, hell just in, people in general include:

  • Their selfish motivations (the less glamorous ones) — Why do this when they can be literally doing anything else? Many of which can help them get rich faster.
  • What part of their past are they running towards and what are they running away from?
  • All the product pivots (thesis pivots) to date and why. I love inflection points.
  • If they were to do a TED talk on a subject that’s not what they’re currently building, what would it be?
  • Who do they admire? Who are their mentor figures?
  • What kind of content do they consume? How do they think about their information diet?
  • What promises have they made to themselves? No matter how small or big. Which have they kept? Which have they not?
  • How do they think about mentoring/training/upskilling the next generation of talent at their company/firm?

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.

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.

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