Tag: questions

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Part-time vs. Full-time Founders

Over the weekend, my friend and I were chatting about the next steps in her career. After spending quite some time ironing out a startup idea she wants to pursue, she was at a crossroads. Should she leave her 9-to-5 and pursue this idea full-time, or should she continue to test out her idea and keep her full-time job?

Due to my involvement with the 1517 Fund and since some of my good friends happen to be college dropouts, I spend quite a bit of time with folks who have or are thinking about pursuing their startup business after dropping out. This is no less true with 9-to-5ers. And some who are still the sole breadwinner of their family. Don’t get me wrong. I love the attention, social passion, literature and discourse around entrepreneurship. But I think many people are jumping the gun.

Ten years back, admittedly off of the 2008 crisis, the conversations were entirely different. When I ask my younger cousins or my friends’ younger siblings, “what do you want to be when you grow up?” They say things like “run my own business”, “be a YouTuber”, and most surprisingly, “be a freelancer”. From 12-yr olds, it’s impressive that freelancing is already part of their vocabulary. It’s an astounding heuristic for how far the gig economy has come.

Moreover, media has also built this narrative championing the college dropout. Steve Jobs and Apple. Bill Gates and Microsoft. And, Mark Zuckerberg and Facebook. There’s nothing wrong in leaving your former occupation or education to start something new. But not before you have a solid proof of concept, or at least external validation beyond your friends, family and co-workers. After all, Mark Zuckerberg left Harvard not to start Facebook, but because Facebook was already taking off.

Honing the Idea

The inherent nature of entrepreneurship is risk. As an entrepreneur (and as an investor), the goal should always be to de-risk your venture – to make calculated bets. To cap your downside.

Marc Benioff started his idea of a platform-as-a-service in March 1999. Before Marc Benioff took his idea of SaaS full-time, he spent time at Oracle with his mentor, Larry Ellison, honing this thesis and business idea. When he was finally ready 4 months later, he left on good terms. Those terms were put to the test, when in Salesforce’s early days, VCs were shy to put in their dollar on the cap table. But, his relationship he had built with Larry ended up giving him the runway he needed to build his team and product.

Something that’s, unfortunately, rarely talked about in Silicon Valley and the world of startups is patience. We’ve gotten used to hearing “move fast and break things”. Many founders are taught to give themselves a 10-20% margin of error. What started off as a valuable heuristic grew into an increase in quantity of experiments, but decrease in quality of experiments. Founders were throwing a barrage of punches, where many carried no weight behind them. No time spent contemplating why the punch didn’t hit its mark. And subsequently, founders building on the frontlines of revolution fight to be the first to market, but not first to product-market fit. Founders fight hell or high water to launch their MVP, but not an MLP, as Jiaona Zhang of WeWork puts it.

In the words of the one who pioneered the idea of platform-as-a-service,

The more transformative your idea is, the more patience you’ll need to make it happen.”

– Marc Benioff

As one who sits on the other side of the table, our job is to help founders ask more precise questions – and often, the tough questions. We act more as godmothers and godfathers of you and your babies, but we can’t do the job for you.

The “Tough” Questions

To early founders, aspiring founders, and my friends at the crossroads, here is my playbook:

  • What partnerships can/will make it easier for you to go-to-market? To product-market fit? To scalability?
  • What questions can you ask to better test product feasibility?
  • How can you partner with people to ask (and test) better questions?
  • What is your calculus that’ll help you systematically test your assumptions?
  • Do you have enough cash flow to sustain you (and your dependents) for the next 2 years to test these assumptions?

Simultaneously, it’s also to important to consider the flip side:

  • What partnerships (or lack thereof) make your bets more risky?
  • How can you limit them? Eliminate them?

And in sum, these questions will help you map out:

At this point in your career, does part-time or full-time help you better optimize yourself for reaching my next milestone?

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What Does Personal Progress Look Like?

In the past two weeks, through conversations on my birthday resolution and what my success metrics are, my friends inspired me to write this post . That’s when you know I’m in Silicon Valley! Or startup Disneyland.

So, how do I measure my progress? This is by no means proprietary or original. In an annual email exchange, my mentor had me ask myself one question:

How ashamed do I feel about myself one year prior?

Although not comprehensive, I find it to be a great litmus test for evaluating personal development. If I don’t scoff at my former self for being dumb, I’ll know I haven’t progressed. At the same time, I put myself in the shoes of my future self, abstracting myself from my status quo, and ask two questions:

  1. What aspects of my past self am I embarrassed to see?
  2. What strengths of my past self would I find extremely unimpressive to show off?

This acts as an ego check and helps me look at myself more objectively.

I started this practice two years ago where I keep a checklist (on Google Keep) of wins I keep track of throughout the year. It included any magnitude of achievement, like:

  • A successful deal close;
  • Joining as a guest on a podcast;
  • An art piece I’m proud of drawing;
  • Cooking a meal that pleased my parents;
  • And, sleeping 8 hours a night.

Then one week prior to my birthday, Google Calendar reminds me to go through that checklist and review what I still feel proud of and what I find to be ‘normal’. I check all the ones I no longer gain contentment from. All that’s left are “My Proudest Moments at Age XX”. Then my goal for the following year is to make those moments feel ‘normal’. I’ll get to this step eventually. But I plan to review the annual lists every 5 years to see if I still feel the same.

In a way, this blog is also designed for me to reflect on earlier iterations of myself through my writing. As much as this one question has enlightened me, I hope it may act as your heuristic for your growth.

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Obsession is Human Error at its Finest

Photo by Ferenc Horvath on Unsplash

When I first entered venture, I asked a number of VCs:

How do you tell the difference between a good startup and a great startup?

The answer I received from multiple investors was: intuition, which, admittedly, confounded me to no ends. Maybe it is true, that it is intuition, especially after seeing such a large sample size of startups over their careers – that in a heartbeat, they can reasonably tell the difference between a good and a great one. But I didn’t have that sample size. In fact I had a very small, and very biased sample to extrapolate from. The best investors out there were, quite frankly, unconsciously competent, but I was very aware that I was and am consciously incompetent, seeking competency.

So I figured, with enough data points in my sample, as econometrics has taught me through the law of large numbers, eventually I’ll have a sample that’s more or less representative of the population. So, for the past three years, I met with 10-15 tech entrepreneurs every week – self-proclaimed, venture-backed, and anyone in between – in an effort to figure out what intuition as an investor meant. What I found, pre-product-market fit and even pre-unit economics, is that it all stems from what many VCs and angel investors call ‘passion’, or rather what I like to call: obsession.

Why obsession? While I do briefly explain it in my investment thesis, it is a proxy for grit and domain expertise of a founder or founding team, which is strongly correlated with the growth potential of a venture. Obsession keeps you up at night; passion keeps you active during the day. Obsession is a lifestyle; passion is a hobby. Through chatting and tracking various founders and startups at various points in their founding journey – from idea to scale to exit, here are the three telltale signs I found of obsession:

  • Honesty,
  • Details,
  • And a personal vendetta.

Honesty

What do you know? What don’t you know?

The founder(s) are radically honest. They’re readily willing to admit what they know and what they don’t, as well as how they plan to figure out what they don’t. The more obsessed you are, the more you realize there are more questions than answers. What kind of questions do the founders ask themselves? How are they prioritizing and allocating their time?

Entrepreneurship has never been a solo sport, and every founding team could always use as much help as they can get. The only way investors, advisors, and a company board can help is if they know what part needs help. Unfortunately, in the Bay Area, there’s a heavy aura of “fake it till you make it” that’s not only true for founders and investors, myself included at one point in time, but professionals across the board, like a duck swimming across a lake, furiously paddling beneath the surface of the water, but appearing calm and collected above. This facade led to stress, anxiety, and eventually a cycle of depression for many brilliant folks out there, which has only recently gained some awareness in the public eye. Mental health, especially founders’ mental health, is one of the areas I’m tracking pretty closely, in diligence, scouting, and when hosting peer mentorship circles. I don’t require founders to know everything about starting a business or tackling a market risk, nor do I expect them to know everything. All I require is the conviction to solve the seemingly unsolvable, and the honesty to admit it and work together to solve it.

Details

What are your customers telling you?

Just as important as the questions founders ask themselves are the answers they’ve found so far. What have they tested? What are they testing? What will they do if they get X result? Y result? And the customers feel it all. What is resonating with their customers – explicitly and implicitly? What isn’t? And how granular can the founders go?

Each action taken is purposeful and holds some kind of predicted value. These founders are obsessed with details – even the ones that aren’t sexy or won’t wow at face value, yet crucial to the survival and growth of their business. For example, Rahul Vohra, CEO of Superhuman, the world’s fastest email client, takes his feedback surveys extremely seriously. While he goes more in depth in this brilliant podcast episode on 20-Minute VC, he’s able to dissect four questions to be able to assess product-market fit and strategic offerings of features to his product. From a simple question, “How would you feel if you could no longer use Superhuman?”, if 40% or more say ‘Very Disappointed” (out of three options: Very Disappointed, Somewhat Disappointed, and Not Disappointed), then he would have achieved initial product-market fit. Whereas most companies track lagging indicators of interest, like NPS scores, where customers would have made their decision by the time they take the survey, Rahul is obsessed with leading indicators, before customers make their “decision”.

Personal Vendetta

What was your “Eureka!” moment?

Building a business starts with the self, and ends with others. Is it their personal problem? Are they taking revenge on the scar tissue they’ve grown from being bogged down by this problem? Or maybe it’s a problem that means a great deal to someone who means a great deal to them?

I’m always incredibly curious as to why someone would want to be an entrepreneur. It seems to go against the very psychological grain of being a human. Founders are risking the food on the dinner table, sleep, a social life, money, years worth of opportunity costs, sanity, and much much more. Effectively, they’re taking Maslow’s Hierarchy of Needs and flipping it on its head. So I’m always dying to know what compels them to push forward. As one of my mentors back in college once asked me: “What is your selfish motivation?”

Behind all of the fancy-shmancy market maps and industry/trend analysis, where markets start with B as in billion (and one day, we’ll see more markets that start with T as in trillion), or, in 2017, it was crypto-this or blockchain-that, what drives these founders? Don’t get me wrong. All the afore-mentioned analysis is on the forefront of my mind when I look into a startup. What underlying infrastructure or social trend makes this product/service inevitable? How antiquated and/or fragmented is the knowledge or resource acquisition process in this targeted industry? But the truth is, more often than not, I see multiple ventures tackling the same space with almost the same solution. So who’s the winner? In my opinion, the one who’s more obsessed. From the lens of essentialism, instead of “How much do you value this opportunity?”, I’m more interested in “How much would you sacrifice to obtain this opportunity?” Though I’m not looking for a blood ritual, nor do I want to ever get involved in one, I’m looking for founders’ willingness to pursue this full-time over part-time and their resourcefulness (on a limited budget) to get shit done, like when Brian and the team at Airbnb took to photographing their first few living spaces or packing each box of Obama O’s themselves.

And you know you have a winning story to my initial “Eureka!” question when you have the full, undivided attention longer than the first minute of people who are notorious for having low attention spans. A story about a personal vendetta is compelling, inspiring, and most importantly, contagious. And I’ll know this when my eyes start sparkling just like the founders. I may not drop everything in my life and tackle this new dilemma full-time, but I’d be damned if I don’t make sure that founder’s dream becomes a reality.

Final Thoughts

At the end of the day, obsession is inefficient – a human element artificial intelligence has yet to be able to replicate. It’s scrappy. It’s doubling down on things that may not succeed. As the saying goes, you’re wrong until you’re right. But damn, it is magnetic. After all, obsession is human error, at its finest.

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