Tag: penn and teller

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Paying Attention Vs Paying Proper Attention

magnifying glass, pay attention

Earlier this week, I was listening to a fascinatingly thoughtful conversation between Tim Ferriss and Kindred’s Steve Jang, where Tim said one line that stood out in particular: “I’ve been paying a lot of attention, but I’ll be honest, I don’t know how to pay proper attention.”

And well, it got me thinking. About the difference between knowing what to look at and knowing how to look at it.

One of my favorite TED talks is by Will Guidara (quite honestly I think it deserves more views on YouTube than it has). Will is probably best known for co-founding one of New York’s hottest fine dining restaurants, Eleven Madison Park, and for writing the book, Unreasonable Hospitality. And in it, he talks about how just listening to the conversations that are happening at the tables and delivering these small, unexpected pockets of joy can create experiences that transcend money and time.

In the afore-mentioned talk, he talks about how there are four diners at Eleven Madison Park. That they went to all the top restaurants in NYC. Le Bernardin. Per se. And so on. And Eleven Madison Park was the last on their to-do list. But the only regret they had was that they never got to try a New York hot dog. Of course, upon hearing that, Will storms out the door to buy a $2 dog, brings it back to the kitchen and convinces the chef to serve it over the aged duck that took years to perfect. And when he finally delivered the next course on the menu as the hot dog he just bought, the four guests went bonkers. That despite on the multiple courses and the brilliant food, that their favorite dish was the NYC hot dog.

That it was because Will paid proper attention to his guests that he was able to deliver a truly unforgettable experience.

The truth is how to pay proper attention to anything that deserves our attention is the million-dollar question.

Paying proper attention

There’s the famous selective attention test, where viewers are asked to count the number of times the ball is being passed between the players, only to fail to realize that there is gorilla that walks across the screen. We’re told to pay attention to the ball passes, but only by paying proper attention to the purpose of why the test is being administered, do we catch what is hiding in plain sight.

Similarly, Raymond Joseph Teller (or better known for being half of the dynamic magic duo Penn & Teller) did a fascinating talk a decade and a half ago about the illusion of expectation. That magic in all of its novel facets feeds off of the expectations of its onlookers. When one tries to pay attention to the coins that are “magically” jumping from one hand to the next, you might fail to catch the sleight of hand in between. But only after he reveals his secrets is the simple magic act all the more impressive. In other words, in the second half, he teaches you how to pay proper attention.

If you have eight minutes in your day, would highly recommend watching the below video.

I can’t speak for every topic, industry, relationship, and so on out there, but at least for the cottage industry of venture capital, why I choose to write an angel or an LP check is similar. I don’t really look for what will change. ‘Cause damn, it’s so hard to predict what will change and how things will change. If I knew, and if one day, I know, please invest in my public markets fund, which will be the best performing fund of all time. But I don’t. We, as pundits sitting around the table, might draw predictions. But even the smartest of us (not sure why I say us, ’cause not sure if I can put myself in that category yet) would be lying if we knew what would happen in foresight.

Instead, I look at what doesn’t change.

What doesn’t change?

The great Charlie Munger passed away last week at the age of 99. And without question, a great loss to the world we live in today. Just half a year prior, he and Warren Buffett were hosting their 2023 annual meeting. And just two weeks prior, he was still doing CNBC interviews. And one of my favorite lines from that May annual meeting was:

“Well, it’s so simple to spend less than you earn, and invest shrewdly, and avoid toxic people and toxic activities, and try and keep learning all your life, et cetera, et cetera, and do a lot of deferred gratification because you prefer life that way. And if you do all those things, you are almost certain to succeed. If you don’t, you’re going to need a lot of luck. And you don’t want to need a lot of luck. You want to go into a game where you’re very likely to win without having any unusual luck.”

In reducing the requirement to need luck, one of the most effective ways to find what is constant in life. That despite changing times and technologies, these stay true. Or as Morgan Housel and Naval Ravikant put it, If you lived your life 1000 times, what would be true in 999 of them? In investing jargon, pattern recognition. Across my investments and more, where have I seen outperformance? What characteristics do they all share? What about human nature won’t change?

In fairness, pattern recognition gets a bad rap. And for a lot of investors, that’s because they choose to only invest in their comfort zone, and what they know best. Their former colleagues. Their Stanford GSB classmates. People who look like them, think like them, act like them. But recognizing thematic threads stretch across all facets of our life. We learn that not brushing our teeth well can lead to cavities. We learn that after stubbing our toe on the kitchen counter numerous times, we take a wider turn before turning into the kitchen. And we learn that eating piping hot foods kills your tastebuds for the next few days.

The venture corollary

In venture, we’re always taught to look at the team, product, and market. And that all are important. But if you tell a new grad or an ex-founder or an emerging angel to do just that. To them, that means nothing. They wouldn’t know how to judge. They have no benchmarks, nor do they know what’s right versus wrong. Now I don’t want to sound like a broken record, but I do believe previous blogposts like this and this are quite comprehensive for how I pay proper attention as an investor.

Emerging LPs are not immune to the lack of perspective as well. My hope and my goal is for how to be just as important if not more than the what. And for the why to be just as or more important than the how. It’s because of that, I write essays like this and this. And of course, it’s why I started Superclusters because I, too, am looking for how to pay proper attention to the next generation of venture investors. (Stay tuned for the coming Monday for episode four where we unpack the bull and bear case of early distributions in a fund!)

Photo by Shane Aldendorff 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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Why Investors Talk about Grit

exercise, grit, persistence

“Magic is just spending more time on a trick that anyone would ever expect to be worth it.” — Penn & Teller

Five years ago, back in 2018, I would have never guessed. But I fell in love with the soles of another person’s feet. And I knew this was going to be one of the most tenacious people I’d ever meet.

I was introduced to “Ben” by a dear friend with one line, “No one can outhustle him.” “Ben” grew up with an insatiable appetite to learn, in a village located on the outskirts of Cairo. He would spend many days and nights in conversation with village experts and the village library, until one day he noticed he learned all he could have.

It just so happens that there’s a two-hour bus to Cairo that comes once a week. And that was how he found the libraries in Cairo, where he realized his interest in AI. But due to the bus’ odd schedules, instead of riding it, Ben chose to instead walk ten hours to Cairo every week. He’d then download, read, and print (to bring back to his village) as many Stanford PhD research papers on AI as possible. Sleep overnight at the bus stop. Then the next day, walk ten hours back to his village, where he’d continue with his reading for the week with all the loose leaf papers he had.

Needless to say, he had the feet to show for it.

I shared that story with a friend two days ago at the perennially-packed Superhot. We were chatting about the traits we look for in founders we back and the questions we ask to get there. The latter of which I’ve written about before. And at the early stages, the chief thing we look for is grit. There’s a tweet I stumbled on this week summarizes that rather nicely:

The problem is it’s so hard to see if a founder has the qualities of a “white belt who never quit” in just one meeting, even a few meetings. So, instead of sharing what questions we ask founders — most of which I know are designed to be reveal tells of grit, and are at least to my friend and his team, proprietary to some degree — I’ll share why grit matters, not just as a founder trait, but as a variable in the fundraising process, and a story that I hope will inspire you.

Candy versus the meal

One of the frameworks I love thinking about is the difference between how people think and what people talk about. This is by no means original. I actually stumbled across this when watching Malcolm Gladwell on Masterclass. For instance, when people watched the most recent Avatar movie, they didn’t say “Here’s the plot of the movie.” They talk about their favorite scenes or how great the performance capture was for underwater sequences. Neither is all-encompassing of the movie, but it gets people excited. That’s what word of mouth is.

Malcolm Gladwell calls it the meal and the candy, respectively. The meal is how people think — what people take home. They sit down with it and take time to process. The candy is what people talk about. The parts of the narrative that are easiest to share and remember.

From a go-to-market presentation I did earlier this year

Candy without the meal is clickbait. A meal without the candy means no one will talk about the good work you do. So you need both.

Similarly, in the world of venture, when I, like most other investors get excited about a deal, assuming it’s a good one, don’t talk about the whole pitch deck. Neither do I get super excited about sharing the one-liner unless it’s actually something unique. Like when a bike-sharing company pitched their one-liner as “We make walking fun.”

What I talk about is what’s cool and what stands out. That’s the investor’s word of mouth. And that’s how you fill a round. Or get people excited to help you find investors who will. Things I shared before include:

  • “That startup that hit 130% net retention.”
  • “Customers literally write love letters to the founders.”
  • “That founder cold emailed a Disney exec for 300 days straight to inevitably close their first enterprise deal.”
  • “This founder started a podcast as a growth engine to 1/ secure his first 10 customers, 2/ bring on one of the best advisory board I’ve seen to date.”

As you might notice, it’s almost impossible to guess what each company does above with just what I shared. And it sure as hell doesn’t get investors to conviction with just that. But they’re powerful enough for investors to take a second look at and talk about. Among the above, the absolute favorite thing investors love to talk about with each other is a founder’s ability to hustle. And subsequently, their Herculean efforts that demonstrate grit.

Years later, my friend on Wednesday was still talking about a founder he backed who waited in the cold outside an exec’s office until he got a meeting. Then found unique ways to turn 20 minutes into 30 minutes into hours into their first enterprise client.

The thing is it’s rare to see this. Most people promise that they will, but the best founders have demonstrated this grit time and time again before, against seemingly impossible odds. And they’re only “impossible” if you’ve set lofty goals in the past and you did nothing short of your best to try and achieve it. I’ll give another example. One that I knew if he was to start another business, you knew he was going to make it happen.

Spoiler alert: He did.

From losing everything to acquisition

I first met Anthony at 1517 Fund’s quincentennial “anniversary” summit back in 2017, designed to bring together the world’s most divergent thinkers.

The first thing you notice about Anthony is that he had a small frame. A demeanor that belied his life experiences and the courage it took for him to share them. Yet, he has a way to command the attention of his audience.

He started his business back in freshman year of college delivering food to his fellow classmates at USC. It started off as a side hustle to earn some spare change. Something he didn’t expect would become something greater, until one day Mark Cuban came to USC to give a talk.

As the fireside chat ended sooner than expected, Mark polled the audience, “What if we did a live Shark Tank?” Anthony explained that while unsure if it’ll work, but not wanting to let a once-in-a-lifetime opportunity go, he decided to pitch this idea he’d been working on — which at that point, was not even an app, but just a series of text messages between friends who ordered food and friends who were willing to deliver them.

To his surprise, Mark loved it. Soon that snowballed into Anthony dropping out of school to focus on the business full-time. They got into 500, and he became a Thiel fellow. But one spring later, amidst the hype of a party in Vegas, he miscalculated a dive into the pool. Fractured his spine. And became paralyzed from the neck down.

In the ensuing months, his top priority was not to grow what became EnvoyNow, but to breathe, to drink water — to survive. His co-founders had promised him they would look after the business and that he should focus on recovery. So he did. Months passed. And while Anthony still sat in the occasional company meeting, he was focused on mobility and feeding himself.

A few more months passed by, and one day, his co-founders decided to visit him while he was still focused on recovering. And they broke the news. The business was stalling. Investors had lost faith. Moreover, both his co-founders had already lined up new opportunities and wanted to close the business down.

As I sat listening, I couldn’t help but wonder what I’d do in that situation. Anthony instead decided to go back full-time to the business and win back his remaining team and investors. He said, “I went back to our investors. I shared where we were at, which wasn’t good. And asked them to believe in me once more. They did once before, and as long as I showed I was still passionate about the business, I was banking on the hope that some will still continue to support us.” Luckily, a small handful did.

With renewed drive and determination, and a tough situation to get out of, within the year, they expanded to 16 schools and employed 1500 students around the nation. The rest is history. They sold to JoyRun. And Anthony went on to found more companies, including his current one, Vinovest, which he started 2019 and raised an A in 2021.

If you’re curious about the additional details to the story, there’s also a great 2017 Fortune piece cataloging his journey. I love the line Blake Masters, President of the Thiel Foundation, shared in that piece, “Good luck finding something that will hold [Anthony] back.”

In closing

There’s a fun little thought exercise a couple investors I know used to do (maybe still do). They first posed the question to me when I first jumped into venture, which is:

If you had two young founders… One went to MIT, graduated with a 4.0 GPA in computer science, and was summa cum laude. The other is a high school graduate, and instead of paying over $200,000 over 4 years, took every single MIT computer science course on Coursera in one year. All else held equal, who would you invest in?

Naturally, the answer biases towards the latter. Yet, in the past few years, or at least since I’ve been in the world of VC, there’s been a bunch of logo shopping and chasing the idea of “signal.” While no one says is explicitly, logos have become more important than the hustle.

Today, we’re in a tough market. One where we haven’t seen the light at the end of the tunnel. Hell, we don’t even know when we’re at the trough yet. Or at least, the lagging indicator that we are is a massive slowdown or lack of layoffs. Yet, we recently saw Google, as well as Microsoft and Amazon, go through cuts.

And so, it no longer matters who you’re backed by or where you’ve come from. As Engineering Capital’s Ashmeet Sidana said, “A company’s success makes a VC’s reputation; a VC’s success does not make a company’s reputation. In other words to take a concrete example, Google is a great company. Google is not a great company because Sequoia invested in them. Sequoia is a great venture firm because they invested in Google.”

What matters is that you can make it out the other side. What matters is that you’re inventive and creative, that you can tighten your belt and put the pedal to the metal, and do what looks in retrospect as superhuman.

And that requires perseverance and the ability to learn. That requires spending more time on something than anyone would ever expect to be worth it. As you do so, you embark on what VCs call — insight development.

Photo by Karsten Winegeart 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!

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.

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The Eight Rules of Great Pitches

Over the week, I was revisiting some of the Instagram posts that I had saved over the years, and I re-discovered one of my favorites by Christoph Niemann sharing his kudos to the late Kurt Vonnegut.

Most of all, Vonnegut’s advice on writing applies just as much to other forms of storytelling. And if you know me, I was immediately reminded of pitching.

  1. Never waste someone else’s time.
  2. Give the listener someone to root for.
  3. Every character should want something, even if it’s a glass of water.
  4. Every sentence must do one of two things — reveal character or advance the action.
  5. Start as close to the end as possible.
  6. Be a sadist. Show awful things that happened to the characters.
  7. Write to please just one person. Don’t get pneumonia.
  8. Give your readers as much information as possible as soon as possible.

Never waste someone else’s time.

Teach your investor something they didn’t know before.

A lot of investors claim to be experts, and even more are seen as experts. Too often, founders blindly listen to what their investors tell them to do. As Hunter Walk of Homebrew once said, “Never follow your investor’s advice and you might fail. Always follow your investor’s advice and you’ll definitely fail.”

YouTuber Derek Muller just came out with a great video on the ideal variables that manifest expertise. Two of such variables are:

  1. Valid environments – environments that are predictable and have minimal attribution to luck
  2. Quick feedback loops

The problem with venture is that our feedback loops are incredibly long and drawn out. Oftentimes, it takes 7+ years to fully realize any kind of financial outcome, although there are many red herrings of outcomes in between, like new funding, brand-name investors, users (rather than customers, or people who actually pay for your product), mass hirings, and so on. Because our feedback loops are slow and luck plays a huge role in success, it’s hard to differentiate true experts in the field. All that to say, every investor is learning to be better, to have more data, to make better judgments than the next.

And if you can show that you know something worth our time again and again, it’ll be worth paying our tuition money to you.

That said, I don’t want to discount how some investors can be really helpful in particular areas that have valid environments and fast feedback loops. For instance, code, A/B testing distribution strategies, ability to help you raise your next round within a certain timeframe, or get you into Y Combinator. The determinant of success in the afore-mentioned has clear KPIs versus their own financial success in the fund.

Give the listener someone to root for.

Aka you. Why you?

Mike Maples Jr. once said, “We realize, oh no, this team doesn’t have the stuff to bend the arc of the present to that different future. Because I like to say, it’s not enough. […] I’d say that’s the first mistake we’ve made is we were right about the insight, but we were wrong about the team.”

“I’d say the reverse mistake we’ve made is the team just seems awesome, and we just can’t look past the fact that they didn’t articulate good inflections, and they can’t articulate a radically different future. They end up executing to a local maximum, and we have an okay, but not great outcome.”

There’s a category of founders that are going to win no matter if an investor chooses to invest or not. Most typically like riding this train. They have to do little to no work to be recognized as a great investor.

Then, there’s the cohort of founders that may or may not win on their current idea, but their investors really, really, really want these founders to win. These founders are the underdogs. They’re also the ones with often the craziest of ideas. Even more so, they’re the ones that if they win, these founders will redefine the world we live in today.

As a founder, you have two jobs when fundraising:

  1. You need to find the partners who really, really want you to win. As the great Tom Landry says, “A coach is someone who tells you what you don’t want to hear, who has you see what you don’t want to see, so you can be who you have always known you could be.”
  2. You need to give these partners the ‘why.’

And I promise you that ‘why’ is not because of straight facts, but because of a story. Why should people help you get what you deeply want?

Every character should want something, even if it’s a glass of water.

Speaking of what you deeply want, almost every founder I chat with pitches me their raison d’etre. A selfless reason to cure the world of cancer. Metaphorically speaking, of course. That’s cool. You can tell that to the press. It’ll make great PR.

Rather I care about the exact opposite. What is your selfish motivation? This is a question I personally like asking founders. Your selfless motivation keeps you going during the day, during peace-time, when things are going just right. Your selfish motivation keeps you up at night, when s**t gets tough. When no one else believes in you except for yourself.

I want to know that you want that so badly, that you’re able to go the distance. And if that same thing is something that your investor can relate to, then you have a match made in heaven.

Every sentence must do one of two things — reveal character or advance the action.

Let me revise the above. Every slide must do one of two things — reveal character or advance the action. Anything else is superfluous. That means, outside of your core slides — problem, solution, action plan/financial projections, rising conflict (aka competition, blockers and risks), and your team slide, everything else is superfluous. Or at least, save it for your data room.

I’m sure some investors would debate me on this, but every investor has a slightly different framework. The above is my own perspective. That said, every slide should give an investor 10% more conviction towards investing in your business — capping out at 70%. ‘Cause after 70, any additional information (in the first meeting) has diminishing returns.

Start as close to the end as possible.

No investor cares about which hospital you were born in, but they do care about when the fire first started. And they care about your inflection points, even if that’s still ahead of you.

Be a sadist. Show awful things that happened to the characters.

Grit is one of the hardest founder traits to measure over a 30-minute meeting. Even after prolonged and deliberate interaction, most of the time it’s still hard to grasp this amorphous quality. But if you ask most investors what is the number one trait of a great founder, it’s either grit or passion. The latter of which often serves as a proxy to grit.

If you’re regular here, you know one of my favorite quotes of late is Penn and Teller’s. “Magic is just spending more time on a trick than anyone would ever expect to be worth it.“

Past performance is not a predictor of future progress. But it really does help. A lot. In a startup’s lifespan to becoming a leading business, there are 10-15 trials by fire. And for each one of those, the founders are required to pull off nothing short of a miracle. In fact, this next year will be exactly one of those tribulations for 99.9% of companies.

So, show moments in your life where you were able to pull off a miracle. And a miracle, by definition, is when the odds are heavily stacked against you.

Show excellence. Walk your listeners — your investors — through the journey of how you tasted glory. How you were able to achieve the seemingly impossible. Personally, this is why I love backing professional athletes, veterans, and chefs. Three fields (of, I’m sure, many more) that you really need to eat s**t to be one of the greats.

Write to please just one person. Don’t get pneumonia.

Every pitch should be tailored. Why would this investor be the best dollar for your cap table?

No investor (even if it’s true) wants to be just another investor. They want to be THE investor. Make them feel special. When you propose to your partner for marriage, you tell them why they’re the one for you, not why you’re the one for them. You get down on one knee and tell them why they are amazing. Not the other way around.

Give your readers as much information as possible as soon as possible.

The one-liner matters. It is the first point of interaction with your startup, and oftentimes, may be the last. Don’t shroud it in mystery and jargon. If you’re ever stuck here, remember Brandon Sanderson‘s First Law of Magic:

“Your ability to solve problems with magic in a satisfying way is directly proportional to how well the reader understands said magic.“

Equally so, the subject line of a cold outreach email serves the same purpose. This is especially true, when you’re reaching out to someone who you can reasonably assume has hundreds of emails in their inbox per week. For reference, and for the most part I’m a nobody compared to the partners at a16z of Lightspeed or Benchmark, and I get about 50 cold inbounds per week.

So, in my opinion, your subject line should have no buzzwords (well, because everyone’s using them). Think of it this way. Say you’re an author selling your new self-help book. And say your greatest distribution channel are likely bookstores in airports. If everyone in the self-help section has an orange cover with bold blue words, you want to be the one black and white cover book. And if everyone has black and white sleeves, you bring out the neons.

In the context of email subject lines, instead, you should include numbers. What is the one metric that you are killing it at? Just like what I recommend folks write in their email forwardables. Instead of “Invest in the Leading BNPL Solution in Latam”, use “BNPL startup growing 50% MoM”. Give the exact reason why your investor should be excited to invest in your company. Don’t save it behind eight clicks — Email, Docsend link, and another six clicks to get to the slide of importance.

People can only tell different, not better, unless it’s 10x. Mediocrity is a crowded market, so don’t waste your time there. Taking a quote out of Pat Riley‘s book, “You don’t wanna be the best at what you do; you wanna be the only one who does what you do.”

In closing

Storytelling is an emotional discovery. The facts don’t change, but a great pitch or story weaves seemingly disparate facts into a compelling narrative. One that inspires action and draws curiosity. In a saturated world of attention, you are fighting for minutes if not seconds of someone’s time. Make it valuable.

Photo by Daniel Schludi 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!

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.

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Be Interesting And Interested

copy, reflection, imitation

There’s this distinct memory I have from when I was 11. It was the second to last day of sixth grade – somewhere in the middle in the sweltering ’08 June heat. Despite efforts to hold them back, it was the first time in a long, long time that I cried in public. On a day when everyone was obsessed with signing yearbooks and bragging about summer vacation plans, my core teacher, Mr. S called one of my classmates and I up to his desk.

As soon as I realized his usual smiling demeanor was nowhere to be found, I knew something was very wrong. It turned out that my classmate had submitted the exact same final project as I did – one that I had painstakingly created over two months to be what I believed to be the most ingenious final project my sixth grade teacher would have ever seen. I don’t remember who that classmate was. Hell, I don’t even remember if they were boy or girl.

Between salty tears and choked hiccups, “She… she cop-… copied me,” I stuttered to Mr. S.

All I remembered was that the next few minutes flew by in a watery blur trapped above the floodgates beneath my eyes. I failed to hear a single word he said. I just stood standing facing the beige walls behind Mr. S’s desk. He pulled my classmate to the side to a conversation I was not privy to.

As time went on, my eyes drifted further up, hoping gravity would be kind to my waterworks today, until I was staring right where the west wall and ceiling met. And right on that horizon, I saw the words he hung against that beige wall since the beginning of the school year. A meme. Borderline, a dad joke.

Opportunity is now here.

But the ‘w’ and ‘h’ were so close together, when I first walked into Mr. S’s classroom, I thought it read: Opportunity is nowhere. When I asked, he once told me, “You know there’s a fine line between opportunity and lack thereof.” In a chuckle befitting of a dad, he continued, “The only difference is that you have to give yourself some space.”

And for the briefest moment, I remembering smiling just a little then.

After chatting with my classmate for a few minutes, they solemnly walked back to their seat and sat down. He beckoned me over, and waited a few seconds so that my sniffles wouldn’t drown out his soft, but firm voice.

“David, you should be proud [she] copied you. That means you have something worth copying.”

To this day, that line stays in my head rent-free.

Interest is a two-way street.

Eight years later, after crafting the perfect cold outreach email to someone I really respected, I received the most meaningful rejection email to date from her. Just four words. “Be interesting and interested.”

In fairness, it took me a few weeks before those words clicked, which I wrote about here. I was definitely interested in her background, but I hadn’t given her any reason to be interested in me. I wasn’t interesting. Or at least, I hadn’t painted myself to be an interesting person.

Interest comes in many forms. The ability to be useful. Being a host of exciting or inspiring stories. Strategic value. Bragging rights. Simply put, you need to have something that people want. They either want something from you, or they want to be like you. In Mr. S’s words, “something worth copying.”

Of course, maybe there’s a world where you don’t want people to know. For instance, Max Levchin once shared in Founders at Work. “If you patent [software], you make it public. Even if you don’t know someone’s infringing, they will still be getting the benefit. Instead, we just chose to keep it a trade secret and not show it to anyone.”

Or you might make your VCs sign NDAs. Which most of us aren’t a fan of.

In closing

If there’s anything you take away from this essay, it’s that:

  1. I used to be crybaby, and
  2. Have something worth people’s time and interest.

It doesn’t matter if you’re copied. Hell, it’s good that you’re being copied, or that there are similar ideas in the market.

I came across a thread by Greg Isenberg that echoed the same notion.

At the end of the day, it’s not about the idea; it’s about execution. No one can beat you at being you. Do things that excite you. Do things that, if you were someone else, you would want to hang out with you.

Don’t ever have someone you meet with feel like they’ve wasted their time. Rather, make them feel like they got time back from meeting with you. That’s when you feel the magnetic pull of the people around you. And that’s when the people you want to meet and learn from will want to learn from you.

I’m once again reminded of two quotes. One of my recent favorites.

“Magic is just spending more time on a trick than anyone would ever expect to be worth it.” – Penn & Teller

The other from my favorite movie.

“Not everyone can become a great artist, but a great artist can come from anywhere.”

Stay magical, my friends.

Photo by Andre Mouton on Unsplash

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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.

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How to Get Investors to Just Ask One Question: “How Can I Invest?”

After recently tuning into an incredible founder’s most recent investor update, I stumbled across a shoutout once again to Silicon Valley storytelling legend Siqi Chen. It wasn’t the first and surely won’t be the last time I find such kudos from a mutual friend. I’ve been a huge fan since his 2019 presentation on presentations, and there’ve been multiple times his name has surfaced in a conversation with friends. I’ve also publicly written about just how amazing he is. That day, I felt the cosmos telling me today was the day. Something just felt right. A swig of that Felix Felicis, if you know what I mean. In hindsight, I guess I could have asked for a warm intro. But my enthusiasm just couldn’t wait.

My question was simple:

“What do you think sets a top 0.1% story from a top 5%er? What sets a timeless story apart from a box office hit?”

“Hm, it’s a good question. Maybe two things: ‘proof of work’. In other words, founder-market fit. Authenticity can be faked so ‘proof of work’, in terms of background, experience, expertise for your authenticity, is valuable. The second thing is just sheer effort, finesse, and practice.”

He ended his answer with a quote you might find quite familiar from his storytelling presentation:

“Magic is just spending more time on a trick that anyone would ever expect to be worth it.” – Penn & Teller

And naturally, I had to follow up. “What are the top 1-2 questions you ask yourself to help you stress test if you’re telling epic stories? Or if it’s more applicable, questions you ask others to see if your story resonated with them?”

To which, he left me with a rather curious statement:

“The stress test for me is when, after the story, there are no questions other than ‘How can I invest?’ This is probably the biggest hack I have for a pitch, which is that contrary to popular belief that questions are an expression of interest, all questions are bad.”

I paused. All. Questions. Are. Bad. To a person who makes a living out of asking questions, you can damn well be sure that whatever I was thinking, whatever I was doing, whatever I was going to say disappeared in a moment’s grace, like a midsummer night’s dream. He already had my attention, but now, he had my curiosity.

He goes on: “The correct way to look at questions is that they are akin to a compiler error in your pitch: It is the tell tale sign of objections politely withheld until you were done talking. It should be your goal to adjust your pitch such that those questions never come up in the first place.”

Needless to say, as all contrarian sayings went, I found Siqi’s words quite provocative. I hadn’t yet come to terms with his permutation of punctuated words strung into sentences. His words, while in plain English, arrived at my ears in a manner that was quite foreign. But the more he elaborated, the more sense it made.

“You know how when a salesperson is trying to sell you something, whether it’s a SaaS product or a set of steak knives, and you don’t want to buy it, but you’re listening politely?” explains Siqi. “You already have an objection and you have already decided to not buy it. And that objection you’re just holding in your head until they’re done talking.

“The first question you ask after they’re done talking is basically that objection. Once you’ve thought about that objection as the listener, you’re no longer paying attention. That objection is all you’re thinking about.

“Here’s a concrete example. Let’s say the first question you think of is ‘it’s a competitive space, how do you think about competition?’

“That means they were thinking about competition for some unknown period of time while you were pitching, probably from the minute you started. And they already decided to not buy.”

His next few words are worth underscoring. If words carried weight, shine, and could be worn on your fourth finger after an elaborate ceremony, this was it. “The way you debug it is by preventing that question in the first place, for example, by inserting a slide at the beginning explaining: ‘This is a really competitive space, but here’s why we’re doing what we’re doing’. Then you defuse the question and it doesn’t come up in the first place.

“A good pitch removes those objects in your head so that you end up buying. One way to improve your pitch is to systematically remove questions until you’re left with just one: ‘How can I invest?’”

In the deck he shared back in 2019, on slide 19, he has another two lines that are equally as powerful and read: “We unconsciously try as hard as we can to fit new facts into existing opinions. Based on existing opinions we make decisions that make us feel good, or the least bad.”

Unfortunately, Siqi’s right.

How often have you brought up a new fact that contradicts with what your mom/dad/grandma/grandpa believes and they respond with “Don’t believe everything you read online?” And then, read a “fact” from an unconfirmed source that affirms their beliefs and they respond with “I told you so?”

Investors, like any other human, are no different. Questions, therefore, are implicit personal opinions reworded explicitly, with the expectation that the facts you bring up fit in their existing mental models. And if the facts don’t match up, “You’re too early for us”. Or as they tell themselves, “The founders have not given us the facts we look for to fit in the frameworks we have.”

Then again, as founders, you may not be looking to fall into a pre-ordained mold. In fact, the most world-shattering businesses never fit into the mold. So neither should you. Steve Jobs famously said:

“Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.”

So, if you only have facts, stick with the facts that reaffirm an investor’s opinion of a great startup. Admittedly, that can only be true for the top 0.1% of businesses out there. The vast majority of startups don’t have numbers that fit such a high benchmark honed from years of pattern recognition. A benchmark investors have high conviction in. Certainty, one might say. The great writer Charlie Kaufman once said, “Because when you’re certain, you stop being curious. And here’s the one thing I know about the thing you’re certain about. You’re wrong.”

The best thing about this business – about being an investor – is that it keeps people humble. A fact, unfortunately, many investors forget. So stay curious. And tell us a story so compelling we can imagine no other.

Or as Siqi puts it, “The goal of a great presentation is to create emotions that persuade people to take action.” The founders don’t just share their passion. Their passion is contagious. It spreads like a virus. And whoever is infected shares it with the people around them, which if your story is compelling enough, those people share it with their friends. In a vast game of telephone, the more relatable and inspiring your story is, the longer the game of telephone. Facts become stories. Stories become tales. Tales become legends.

The best stories don’t just share facts. They inspire. They weave facts together in a way so compelling that there are no more questions. The world is filled with limitless amounts of data – most of which are seemingly disparate and meaningless. The best storytellers give the chaos of data meaning. They give data purpose.

In reality, you’re not going to get the pitch down in v1. Practice it, especially with people who have a critical eye with words. They don’t have to be investors. Probably not just with your co-founders and team members because they’re biased. They’ll make lapses in judgment because they already understand the problem space well enough. So well, they won’t have realized you skipped steps in your logic. Practice it with writers, lawyers, speechwriters, marketers, influencers, that Redditor that deconstructs every single presidential speech, and video editors, especially those who edit meme videos. Then when you pitch it to investors, the goal is that they don’t withhold objections because they simply don’t have any.

I can’t help but recall a great line by Robert McKee, “At story climax, you must deliver a scene beyond which the audience can imagine no other.” Equally so, by the end of your pitch, you must deliver a solution beyond which the audience can imagine no other.

Photo by Aaron Burden 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!

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 or investment advice. Please do your own diligence before investing in startups and consult your own adviser before making any investments.

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