In the venture world, there’s this concept of the anti-portfolio. A portfolio for incredible startups you had the chance to invest in, but chose to pass on. Usually the startups that qualify to be in this anti-portfolio have already reached mainstream – either having gone public and/or have reached unicorn status. For anti-portfolio references, I highly recommend checking out Bessemer‘s or tuning into Samir Kaji’s Venture Unlocked podcast, where he asks each guest about their anti-portfolio.
But having chatted with a number of incredible investors, what’s more important than names on an excel sheet is the lesson or lessons we take away from passing on the greats. Those lessons are the very answer to one of the most insightful questions an LP (limited partner) can ask. “How does your anti-portfolio advise your current investment thesis?”
In a similar way, life is a mixed bag of engineered serendipity and endured scar tissue. Our past mistakes inform our future decisions. You learn how to handle kitchen cutlery after cutting yourself a few times. You learn to walk after stumbling. And you learn to communicate after making a fool of yourself. We are a product of the scar tissue we’ve accumulated.
I’m in my first inning in the venture world, and admittedly, way too early to have any true hall-of-famers in my anti-portfolio. So rather than looking into the past from the present, I thought I’d look into the “past” from the future. A “past” that has yet to come, but will be defining of my future. Something Mike Maples Jr calls backcasting. Starting from the future and making my way back to today, along the way, figuring out what I need to do to get to that future. If you’ve been following this blog for a while, you know I’m a big fan of his mental model. “The future doesn’t happen to us; it happens because of us. […] Breakthrough builders are visitors from the future, telling us what’s coming.”
Rather than what startups are in my anti-portfolio, what startups would I love to have in my anti-portfolio?
On a similar note, for non-investors: Ten years from now, what are mistakes you’d want to have made that you tell yourself that it was a decade well-spent?
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.
Subscribe to more of my shenaniganery. Warning: Not all of it will be worth the subscription. But hey, it’s free. But even if you don’t, you can always come back at your own pace.
Not too long ago, I quoted Phil Libin, founder of All Turtles and mmhmm (which has been my favorite virtual camera in and most likely post-pandemic), who said: “I think the most important job of a CEO is to isolate the rest of the company from fluctuations of the hype cycle because the hype cycle will destroy a company. It’ll shake it apart. In tech the hype cycles tend to be pretty intense.”
Hype is the difference in expectation and reality. Or more specifically, the disproportionate surplus of expectation. A month ago, Sarah Tavel at Benchmarkwrote: “Hype — the moment, either organic or manufactured, when the perception of a startup’s significance expands ahead of the startup’s lived reality — is an inevitability. And yet, it’s hard not to view hype with a mix of both awe and fear. Hype applied at the right moment can make a startup, while the wrong moment can doom it.”
Right now, we are in a hype market. And hype has taken the venture market by storm.
We’ve all been seeing this massive and increasing velocity and magnitude of capital deployment over the last few months. Startups are getting valued more and more. In the past, the pre-money valuations I was seeing ranged from 2-on-8 to 3-on-9. Or in not so esoteric VC jargon, $2M rounds on $8M pre-money valuations ($10M post-money) to $3M rounds on $9M pre-money valuations ($12M post-money). These days, I’ve been seeing 5-on-20 or 6-on-30. Some of which are still pre-traction, or even pre-product.
Founders love it. They’re getting capital on a discount. They’re getting greater sums of money for the same dilution. Investors who invested early love it. Their paper returns are going through the roof. When looking at IRR or TVPI (total value to paid-in capital – net measurement on realized and unrealized value), higher valuations in their portfolio companies are giving investors jet fuel to raise future funds. And greater exit values on acquisition or IPO mean great paydays for early investors. Elizabeth Yin of Hustle Fundsays “this incentivizes investors to throw cash at hyped up companies, instead of less buzzy startups that may be better run.”
Sarah further elaborated, “In the reality distortion field of hype, consumers lean in and invest in a platform with their time and engagement ahead of when they otherwise might have. They pursue status-seeking-work, not because they necessarily get the reward for it relative to other uses of their time, but because they expect to be rewarded for it in the future, either because of the typical rich-get-richer effect of networks, or just in the status of being an early adopter in something that ends up being big.” The same is true for investors investing in hyped startups. It’s status-seeking work.
Frankly, if you’re a founder, this is a good time to be fundraising.
Why?
Capital is increasingly digital.
There is more than one vehicle of early stage capital.
There are only two types of capital: Tactical capital and distribution capital.
1. Capital is increasingly digital.
Of the many things COVID did, the pandemic accelerated the timeline of the venture market. Pre-pandemic, when founders started fundraising, they’d book a week-long trip to the Bay Area to talk to investors sitting on Sand Hill Road. Most meetings that week would be intro meetings and coffee chats with a diverse cast of investors. Founders would then fly back to their home base and wait to hear back. And if they did, they would fly in once again. This process would inevitably repeat over and over, as the funnel grew tighter and tighter. And hopefully, at the end of a six-to-twelve month fundraise, they’d have one, maybe a few term sheets to choose from.
Over the past 18 months, every single investor took founder meetings over Zoom. And it caused many investors to realize that they can get deals done without ever having to meet founders in-person. Of course, the pandemic forced an overcorrection in investor habits. And now that we’re coming out of isolation, the future looks like: every intro meeting will now be over Zoom, but as founders get into the DD (due diligence) phases or in-depth conversations, then they’ll fly out to meet who they will marry.
It saves founders so much time, so they can focus on actually building and delivering their product to their customers. And,
VCs can meet many more founders than they previously thought possible.
This has enabled investors to invest across multiple geographies and build communities that breathe outside of their central hub or THE central hub – formerly the SF Bay Area. Rather, we’re seeing the growth of startup communities around the nation and around the world.
2. There is more than one vehicle for early stage capital.
While meetings have gone virtual, the past year has led to a proliferation of financing options in the market as well. Capital as jet fuel for your company is everywhere. Founders now have unprecedented optionality to fundraise on their terms. And that’s great!
Solo capitalists
Individual GPs who raise larger funds than angels and super angels, so that they can lead and price rounds. The best part is they make faster decisions that funds with multiple partners, which may require partner buy-in for investments.
Rolling funds
With their 506c general solicitation designation, emerging fund managers raise venture funds faster than ever and can start deploying capital sooner than traditional 506b funds.
Micro- and nano-VCs
Smaller venture funds with sub-ten million in fund size deploying strategic checks and often leverage deep GP expertise. No ownership targets, and can fill rounds fast after getting a lead investor.
Equity crowdfunding
Platforms, like Republic and SeedInvest, provide community-fueled capital to startups. Let your biggest fans and customers invest in the platform they want to see more of in the future. With recent regulations, you can also raise up to $5 million via non-accredited and accredited investors on these platforms.
Accelerators/incubators
Short three-month long programs, like Y Combinator, 500 Startups, and Techstars, that write small, fast checks (~$100K) to help you reach milestones. Little diligence and one to two interviews after the application. Often paired with an amazing investor and/or advisor network, workshops, powerful communities, and some, even opportunity funds to invest in your next round.
Syndicates/SPVs
Created for the purpose of making one investment into a company a syndicate lead loves, syndicates are another ad hoc way of raising capital from accredited investor fans, leveraging the brand of syndicate leads and deploying through SPVs. Or special purpose vehicles. I know… people in venture are really creative with their naming conventions. In turn, this increases discoverability and market awareness for your product.
SPACs and privates are going public again
Companies going public mean early employees have turned into overnight millionaires. In other words, accredited investors who are looking to grow their net worth further by investing in different asset classes. Because of the hype, investing in venture-scale businesses tend to be extremely lucrative. These investors also happen to have deep vertical expertise, high-value networks, as well as hiring networks to help startups grow faster. More investors, more early stage capital.
Growth and private equity are going upstream
Big players who usually sat downstream are moving earlier and earlier, raising or investing in venture funds and acceleration programs to capture venture returns. And as a function of such, LPs have increased percent distributions into the venture asset classes, just under different names.
Pipe
Pipe‘s existed before the pandemic, but founders have turned their eye towards different financing options, like Pipe. They turn your recurring revenue into upfront capital. Say a customer has an annual contract locked in with you, but is billed monthly. With Pipe, you can get all that promised revenue now to finance your startup’s growth, instead of having only bits and pieces of cash as your customers pay you monthly. Non-dilutive capital and low risk.
3. There are only two types of capital: Tactical capital and distribution capital.
There’s an increasingly barbell distribution in the market. Scott Kupor once toldMark Suster that: “The industry’s gonna bifurcate. You’re going to end up with the mega VCs. Let’s call them the Goldman Sachs of venture capital. Or the Blackrock of venture capital. And on the other end, you’re going to end up with niche. Little, small people who own some neighborhood whether it’s video, or payments, or physical security, cybersecurity, physical products, whatever. And people in the middle are going to get caught.”
Those “little, small” players have deep product and go-to-market expertise and networks. Their checks may be small. But for an early stage company still trying to figure out product-market fit, the resources, advice, and connections are invaluable to a startup’s growth. They’re often in the weeds with you. They check your blind side. And they genuinely empathize with the problems and frustrations you experience, having gone through them not too long ago themselves. Admittedly, many happen to be former or active operators and/or entrepreneurs.
On the flip side, you have the a16z’s and Sequoias on their 15th or 20th fund. Tried and true. Brilliant track record with funds consistently north of 25% IRR. Internal rate of return, or how fast their cash is appreciating annually. LPs love them because they know these funds are going to make them money. And as any investor knows, double down on your winners. More money for the same multiples means bigger returns.
The same is true for historical players, like Tiger, Coatue, and Insight, who wire you cash to scale. They assume far less risk. Which admittedly means a smaller multiple. And to compensate for a lower multiple, they invest large injections of capital. By the time you hit scale, you already know what strategies work. All you need is just more money in your winning strategies.
You find product-market fit with tactical capital. You find scale with distribution capital.
Product-market fit is the process of finding hype. When you stop pushing and start finding the pull in the market. Scale is the process of manufacturing hype.
The bear case
But there are downsides to hype. Last month, Nikhil, founding partner at Footwork, put it better than I ever could.
If I could add an 8th point to Nikhil’s analysis, it’d be that investors in today’s market are incentivized to “pump and dump” their investments. Early stage investors spike up the valuations, which leads to downstream investors like Tiger Global, Coatue, Insight, and Softbank doubling down on valuation bets. Once there’s a secondary market for private shares, early stage investors then liquidate their equity to growth investors who are seeking ownership targets, or just to get a slice of the pie. This creates an ecosystem of misaligned incentives, where early stage investors are no longer in it for the long run with founders. Great fund strategy that’ll make LPs happy campers, but it leaves founders with uncommitted, temporary partners.
Sundeep Peechu of Felicis Ventures has an amazing thread on how getting the right founder-investor fit right is a huge value add. And getting founder-investor fit takes time, and sometimes a trial by fire as well. After all, it’s a long-term marriage, rather than a one-night stand. Those who don’t spend enough time “dating” before “marriage” may find a rocky road ahead when things go south.
By my count, ~30% of Felicis companies that have done well had trouble raising Series As in some fashion.
As an example, Matterport which went public last week had little appetite at the A. Non-recurring revenue, hardware business and selling to real estate was a triple whammy.
On a 9th point, underrepresented and underestimated founders are often swept under the rug. In a hype market, VCs are forced to make faster decisions, partly due to FOMO. With faster decisions, investors do less diligence before investing. Which to the earlier point of misaligned incentives, has amplified the already-existing notion of buyer’s remorse.
When VCs go back to habits of pattern recognition, they optimize for founder/startup traits they are already familiar with. And often times, their investment track record don’t include underrepresented populations. To play devil’s advocate, the good news is that there is also a simultaneous, but comparatively slow proliferation of diverse fund managers, who are more likely to take a deeper look at the problems that underestimated founders are tackling.
What kind of curve are we on?
When many others seem to think that this hype market will end soon, last week, I heard a very interesting take on the current venture market in a chat with Frank Wang, investor at Dell Technologies Capital. “VCs have been mispricing companies. We anchor ourselves on historical valuations. But these anchors could be wrong.
“We’re at the beginning of the hype and I don’t see it slowing down. VC has been so stagnant, and there hasn’t been any innovation in venture in a long time. Growth hasn’t slowed. And Tiger [Global] and Insight [Partners] is doing venture right. Hypothetically speaking, if you invest in everything, the IRR should be zero. They are returning 20% IRR because they seem to have found that VC rounds are mispriced. So, there can be an arbitrage.
“There will be a 20% market correction in the future, but we don’t know if that’s going to happen after 100% growth, or correct then grow again. The current hype is just another set of growing pains.”
Part of me is scared for the market correction. When many founders will be forced to raise flat or down rounds. The fact is we haven’t had a serious market correction since 2009. It’s going to happen. It’s not a question of “if” but rather “when” and “how much”, as Frank acutely points out.
Investors who deploy capital fast win on growing markets – on bull markets. Or investors who deploy across several years, or what the afore-mentioned Mark Suster defines as having “time diversity“, who win on correcting markets – bear markets. Think of the former as putting all your eggs in one basket. And if it’s the winning basket, you’re seen as an oracle. If not, well, you disappear into obscurity. Think of the latter as diversifying your risk appetite – a hedging strategy. More specifically, (1) being able to dollar-cost average, and (2) having exposure to multiple emerging trends and platforms. You’re not gonna lose massive amounts of capital even in a bear market, but you also will be losing out on the outsized returns on a bull market.
Only time will tell how seriously the market will correct and when. As well as who the “oracles” are.
In closing
At the end of the day, there are really smart capital allocators arguing for both sides of the hype market. Like with all progress, the windshield is often cloudier and more muddled than the rearview mirror. As Tim Urban once wrote, “You have to remember something about what it’s like to stand on a time graph: you can’t see what’s to your right.“
And as founders are going to some great term sheets from amazing investors, I love the way Ashmeet Sidana of Engineering Capitalframes it earlier this year. “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.”
Whether you, the founder, can live up to the hype or not depends on your ability to find distribution before your competitors do and before your incumbents find innovation. Unfortunately, great investors might help you get there with capital, but having them on your cap table doesn’t guarantee success.
Nevertheless, the interpretation of hype is always an interesting one. There will continue to be debates if a market, product, or trend is overhyped or underhyped. The former assumes that we are on track for a near-term logarithmic curve. The latter assumes an immediate future looking like an exponential curve. The interpretation is, in many ways, a Rorschach test of our perception of the future.
Over the course of human civilization, rather than an absolutely smooth distribution, we live something closer to what Tim Urban describes as:
If the regression line is the mean, then we’d see the ebbs and flows of hype looking something like a sinusoidal function. As Mark Twain once said, “History doesn’t repeat itself, but it often rhymes.”
It won’t be a smooth ride. The world never is. But that’s what makes the now worth living through.
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!
In writing this blog, one of the greatest illusions I seemingly end up creating is that I know a lot. At least that’s what a handful of readers and friends have told me over the years. Truth is I don’t. And more often than not, I am learning and/or refining my thoughts as I am writing.
I’m gonna be honest. The script for this essay was going to be entirely different. In fact, I had exactly six hundred and eleven words written on another introduction to this piece. But in the past few weeks, I hit another seemingly insurmountable roadblock. Catalyzed by a conversation with a mentor who said: “David, you’ve confused movement with progress.” And she was right. The more I thought about it, the clearer it became. Snowballing upon itself until I realized how far I’ve gone when I mistook a compliment for an insult.
The more I read my previous intro, the more it sounded like total BS. Something someone would write never having experienced true self-doubt. I was my own harshest critic.
The irony of it all was that as I was interviewing other incredible individuals for the purpose of this blogpost, I felt I needed their advice below more than anyone else. In a way, I’m glad that some friends needed more time to collect and share their thoughts. In sum, this piece took me two months to put together. And every day, every minute, and every second was worth it.
As I’m writing this piece, I’m somehow reminded of a line Elizabeth Gilbert, author of Eat Pray Love, said in a 2016 interview with On Being, “Creative living is choosing the path of curiosity over the path of fear.”
The process
In concepting this essay, I spent more time than I’d like to admit beating myself up to get to the “right” phrasing of the question. And each time I thought I got closer to the “right” question, a day later, I would find myself second-guessing if people might even bother responding to a “lazy” question. A low-hanging fruit, so to speak. And the fallacy with a low-hanging fruit is that they’ve most likely been asked the same by others. Probably to the point of fatigue, paired with an eye roll. But the thing is… with the topic of self-doubt, it’s not a topic most people are comfortable sharing, much less in public. And equally so, are rarely asked a question on this topic. The flip side of the coin is that they too are less likely to answer such a question. In the end, I settled with a question I came up with two weeks prior.
Speaking on self-doubt, 25% of the people I reached out to in my existing network didn’t have time to respond. Another 20% refused within 24 hours. And another 20% agreed initially, but ended up refusing some time after the initial exchange.
In reaching out, I used a similar framework as I shared in my cold email template.
TL;DR: I’m writing a blogpost on self-doubt, and you were one of the first people I thought of in having been candid enough to share your life journey. What are some of the personal narratives, questions, or comments you find yourself regressing to when you’re filled with self-doubt?
The longer version: Recently, after sharing my own internal conflict (here and here), I had a number of friends and readers reach out to share their own struggles. With almost half of them mentioning at one point in time that “I wish I were like [insert role model’s name] because s/he seems to have it all down.”
But people, like you, are just as human and as real as the next person over. So, in my effort to use my humble platform to humanize the world around us, I thought you’d be one of the best to answer this question!
What are some of the personal narratives, questions, or comments you find yourself regressing to when you’re filled with self-doubt?
Because I also plan to share your answer in the form of a blog post, similar to a study I did last year, where I asked [names redacted] and some other great folks! By default, I will abstract your name from what you share. In this case, I will cite you as “[title]”. That said, if you’re open to me using your real name or would like a different “title”, please do let me know. If you’re curious as to why my default is not to include your name, this is why.
And I know your candor will help many more, like me, who are going, have gone, and will go through difficult times. So, thank you. I have nothing short of my deepest gratitude for not only your candor, your time, but also your willingness to share your thoughts with the amazing people in this world.
Warmest, David
My only ask
My only ask is that you stay open-minded as you read the below memoirs. For context, this has been the blogpost that I’ve gotten the greatest percentage and number of “No’s” from. In the forms of:
“This is not something I’m ready to share at this point in my life.”
“I’ve been too busy. Sorry.”
“I’m sorry. I don’t think I’ll have time to get to this.”
“I don’t think now is a good time for me to be involved unfortunately.”
It isn’t easy to share what each of my amazing friends have shared below. Some of which stories may never see the light of day without their courage. And I hope you let their authentic voice shine as much as, if not with more respect that you have given me all this time. On behalf of everyone here, thank you. Thank you for giving all of us the platform to share our most vulnerable selves.
Unless otherwise specified with their first and last name, the below names, listed in alphabetical order, are pseudonyms to respect the courage it took each and every one of them to share what they did: Andrei, Annie, Elijah, Harry, Liam, Lucas, Mateo, Mya, Stephanie, Zack
The question
What are some of the personal narratives, questions, or comments you find yourself regressing to when you’re filled with self-doubt?
“I have a rather conversational style of writing. I suspect it’s the product of some natural proclivities and the sheer joy that comes from clacking a keyboard.
“We live in a world where every action has the potential to be a performance. Performances, by their very nature, are meant to be judged—are they memorable? Funny? Heart-wrenching? All of us, whether we like it or not, are constantly on stage and constantly judged. Personally, I get stage fright, and don’t recall being consulted before I signed up for this part.
“My own vintage of self-doubt stems from being judged poorly by someone I need something from. I’m in a position of vulnerability, they’re in a position of power. An old turn of phrase from the Bible, later memorialized forever in A Knight’s Tale, captures what my psyche so desperately tries to avoid: “You have been weighed, you have been measured, and you have been found wanting.” The external “they think I’m lacking” becomes the internal “I’m not good enough,” and by then I’m well stuck in the swamp of self-doubt.
“For me it’s the idea of being rejected, rather than rejection itself, that causes self-doubt to metastasize. As the CEO of a venture-backed startup, this is not ideal.
“Two months back I had a bad panic attack. Wave after wave of self-doubt assailed me for hours after the attack subsided. Just yesterday, I had the minor upwellings of another one. Both were caused by pitches I knew I bombed (ironically, both investors ended up investing). In a perfect world, one in which I am preternaturally confident, the opinion of others shouldn’t stir feelings of self-doubt. In the real world, I care very much what others think of me.
“It’s easy to build stories in our mind to validate self-doubt, especially in the early days of a company when you don’t have a ton of evidence to beat back the self-doubt. I’m still not sure what the evolutionary advantage is to this pattern, to play devil’s advocate against ourselves, but it’s real nonetheless. We all do it. And the cleverer the mind, the more insidious the arguments.
“When this happens, my mind runs to something my dad used to say: ‘What you think about me is none of my business.‘ If I ever get a tattoo, it will be these 10 words. There’s something comforting, almost even glib, that enables me to turn the corner more quickly than I normally would. It’s a well-trodden path that leads me back to positivity, outcome independence, and abundance mentality.
“Self-doubt is inevitable. So rather than trying to avoid it, focus on leaving it behind.”
Of course, I couldn’t help but include Taylor’s afterword as well.
“Unintentionally mirrored after one of my favorite writers, John Gierach. John muses on life’s richest veins and uses fly fishing as his vessel.”
A blessing in disguise
“Self-doubt may feel painful at first sight… but in essence it’s a real blessing… because it helps balance one’s ego + falling for believing in their own shit! If you are trying to learn new things and explore uncharted territories… it’s inevitable to have self doubt. It’s almost like having a sense of danger when you are venturing in extreme sports let’s say.”
– Andrei, Managing Director at a VC Firm with 10+ Funds
Lily pads
“When I start feeling self-doubt, my mind immediately regresses to ‘lily pads’ or landing places of past memories where I feel like I could have done something better. I start to overthink everything I wish I could have done differently in past roles or interactions, and get paralyzed with fear that I will have the same regrets in the future based on the next choices I make and actions I take.
“Here’s a few questions I regress to:
How did I trick someone into believing I was the right person for this job?
Will I ever be able to match the level of success I had with a previous project or was that the ultimate cap of my success?
Do other people perceive a mistake I made in the past with the same level of intensity? Are they as fixated on it or was it something that barely registered for them?
“The things that have helped:
I think through the advice I would give a friend, and then I try to be as gentle with myself (which is a hard thing to do).
I remember that the best wins in life come from taking risks, and assure myself that if I don’t feel some doubt, then I am not pushing myself to grow.
I keep a folder of compliments and nice feedback I have received, and I go back and read through a few threads to remind myself I have been able to get through things successfully in the past.”
– Annie, Head of PR
I followed up with Annie after, if she could shed some more color on what advice she gives to herself, as well as an example of a compliment she finds herself revisiting when she finds herself wrestling with self-doubt. And here’s what she shared:
On self-advice,
“Look at your success over weeks or months, rather than by the hour. A single day may not feel like you’ve achieved everything you set out to do or landed a milestone, but if you can Zoom out, you are doing it right.”
On compliments,
“In response to a tough email I once sent, an executive privately emailed me to compliment my professionalism and how I had organized my thoughts. That compliment resonated because I had put hours of thought into that response even though it was only a few paragraphs long, and it meant a lot to me to have someone validate my thought process and my output. When I am doubting myself and worried my instincts are off, I go back to that email. I also try to put it into action and go out of my way to compliment people now in similar situations, because I know how much of a difference a one-line compliment can make.”
An old friend
“Self-doubt (SD) is especially bad when I’m starting a new project. My first company was deeply personal and mission-driven but required a lot of upfront capital (like most of my savings). I was always pretty good at hyping myself up to start the project but then the flashbacks would come. I begin to think of my mom and the 14hr shifts she’s worked since 2002. I had been working towards affording her an early retirement at the time and SD reminded me that it could all go away in a second.
“One wrong move and I would revert our family back to poverty.
“It would be on me.
“These thoughts left me sleepless, and also [made me] lose excitement in other parts of my life too. It sucked but having gone through it, I now consider SD a friend. Not a friend I’d want to hang out with all the time but an old friend with good intention and zero sugar coat.
“I can be a reckless person at times and can trust SD to be there to remind me that I have a lot to fucking lose.
“It reminds me to be very careful and to hustle like I have everything to lose.
“Whatever causes SD’s intervention these days, I realize it must be really fucking important to me and worth a second thought.”
– Mya, Forbes 30 Under 30 Founder
When you lose
“Say I lose my biggest client and I start to be overwhelmed with self doubt, my go to thoughts / comments / narratives are:
Am I delusional about my abilities? Maybe I’m actually an idiot with an ego? Imposter
What if I had done this, done that. Every little time I wasn’t perfect becomes a possible moment that will come back to ruin me
I’ve always been unlucky and luck seems to be a big part of success, so maybe I’m doomed no matter what
“But then there’s also a deeper narrative:
Maybe I just don’t ACTUALLY want this. I just think I want this. And my soul just isn’t in it and therefore I will fail. I’m not self aware enough
We all die. Nothing matters… especially me and what I’m doing.
A lot of successful people seem miserable. Is this a rat race? Am i setting myself up to fail on what really matters
Overall inability to identify a reason for why I am doing something and why I am the one that can do it”
– Elijah, Venture-backed founder
Self-compassion
“When I think about narratives, I try to go back to the psychology of ‘self talk’–especially when it comes to reducing ‘negative self talk’. Through time, self awareness and an emphasis on reducing self criticism, has helped me to become less doubtful. The question of ‘Why are you doing this?’, if done with self compassion can be a great way to maintain focus and inspire creativity.
“In terms of negative self talk day to day, I try to look at things through the constructive criticism lens, rather than the self critic. The former allows for more creativity. Life can be a challenge, and patience with the process helps me to embrace more self confidence.”
– Zack, General Partner at Venture Firm/Podcast Host
When Zack shared this, I couldn’t help but recall Jack Kornfield‘s line, “If your compassion does not include yourself, it is incomplete.”
What’s next
“Great question.
“I wish I could be of specific help but I do not do ‘self doubt.’
“I have had many many many challenges and course changes in my life, but each one of them created a new path. There are times when I am disappointed that my path doesn’t go in the direction.
“I had originally predicted or hoped for, but I can’t remember ever feeling self doubt. That’s because I always know I will discover the way forward that does work for me in the moment. I tend to focus more on the ‘what to do next’ rather than the ‘why something happened.’ I tend to be very stoic in my assessment and dealings with challenges. I don’t like feeling bad so I tend to create plans pretty quickly to move through whatever challenges I have.
“I do my best to recognize progress and change and do my best to adjust to it as fast as possible in order to minimize discomfort. I also tend not to think of things as either good or bad… just events that happen. The only thing I know I have control of is my response to change. I can’t control much… including the tempo of change. I tend to not look backward as to ‘why’ things happen and focus on ‘what’ I may have done to cause them as well as ‘what’ I am going to do next. In essence, I don’t feel like a victim ever… I own the events and challenges I face and do my best to strategize how to move through them.
“One easy example is this past year. My business model of being an in-person speaker got turned off like a light switch. I then just kept moving and building relationships. I believe the choice we have is to either keep up with the tempo of change in the world or not.
“Another example is happening right now. This past year I began walking a great deal and listening to audible books, taking notes and creating content. It was very enjoyable. I injured my hip a few weeks ago and it has totally disrupted my routine. I am working as quickly as possible to create new routines and healthy habits to continue to live what I believe is my purpose. It sucks that things change, but that is inevitable :)”
– Liam, Former FBI, Author
Personal suffering as a proxy
When talking about mental health, Max Nussenbaum, Program Director @OnDeck Writer Fellowship, always comes to mind. When I pinged him for answers, he gave me the opportunity to quote some of his amazingly candid essays.
“I wrote two pieces on this, one about being a startup founder and the other about being a writer.”
Both of the above pieces I highly recommend. But here are a few of Max’s thoughts that resonated with me the most. Even then, this snapshot will not do the nuance he describes justice:
“Since I didn’t know how to prove to myself that I belonged where I was, I turned to the only method I could come up with: treating my personal suffering as a proxy. The rest of my life becoming less and less put together must have meant that I was throwing more and more of myself into the company, and therefore that no one—least of all me—could question my commitment or whether I was cut out for this. And so I partied too much and foreclosed any real connection with the people I was dating and just generally reveled in everything around me being a bit of a mess.”
“A lot of this was fun, but I was stressed and anxious all the time; there was both a euphoria and a terror in feeling like my life was moving so fast that the whole thing threatened to go off the rails at any moment. I would look around and think to myself, this must be what really living is all about. And whenever I felt like an imposter as a founder, I’d use the corresponding messiness of my personal life as proof that I was giving the company my all.
“Of course, none of this made any logical sense, and none of it made us more successful. A stable relationship almost certainly would have been a support system that helped me be a better founder; at the very least, it’s hard to do good work when you were out till 4 a.m. doing drugs with strangers the night before. But that’s the thing: I wasn’t optimizing for actually making my company successful. I was optimizing for assuaging my own insecurities.”
Doing your best
“In short, I have a simple approach for when self-doubt could come in – in that, as long as you believe you are doing the best you can, getting support from others to help get through the situation, and striving to continually improve, then what is meant to be, will be. If it doesn’t happen, then it wasn’t meant to happen and something that’s better suited for you will come along in due time.
“While it might be short term disappointment, either turn it into a driving force to do better and achieve what you were originally trying to do, but knowing limits, putting in a plan for constant improvement and being satisfied with the achievements as long as you can internally reflect and know you did your best.”
– Mateo, Head of International at a post-Series B startup
Your best days are ahead
“I grew up in a poor, uneducated family, and have for a long time felt like I didn’t quite fit in. To them, my curiosity and intellectual pursuits are deemed futile and a pipe dream. It has also been met with ridicule and mockery. As much as I pretend that it doesn’t affect me, ultimately the people in your family have so much influence on our sense of self worth. It wasn’t until moving out here in 2013, that I felt like I found my family and my tribe. That narrative still bounces around in my head from time to time, but I have worked really hard through therapy and conversations with mentors to eradicate a good majority of it.
“I guess imposter syndrome, is the widely used term for this condition. For folks like us, that may be more deeply rooted and takes more effort to overcome. Am I smart enough to do this? Do I know enough? Am I experienced enough? I’m not educated like my colleagues. I didn’t go to Stanford, Cal, or MIT. What am I doing here?
“There’s only so much one can tell oneself to overcome these deeply rooted self doubts, ‘you got this’ ‘you belong here’.
“I have found that working through it is a journey that involves creating new habits and forming new narratives. Turning the negative self talk into, ‘this is part of the process’ ‘your beginner’s mind is an asset’ ‘I’m not my highly educated colleagues, but my game and perspective is unique’.
“Growing up in South Carolina in my family, so many of the things the could have been cultivated weren’t, and that’s fine. I feel like my best days are ahead of me, and I’ll take that.”
– Harry, Senior Design Leader at a Fortune 100 company
The war between results and doubt
“Whenever I go a month or more without a sale, the doubt starts to creep in. The only thing that pushes the doubt away is a successful sale. I am better at dealing with it now because I have been through so many cycles and ups and downs, but I have never truly figured out how to eliminate the doubt (or better channel/repurpose that negative energy) that creeps in whenever I have a little capacity to do more work.”
– Lucas, Managing Director at an Executive Search Firm
Would she say the same for a man?
As if the world gave me the sign to take this leap of faith to write this blogpost, the first person I reached out to was Stephanie. I happened to catch her right at the moment she had been rejected after an interview for a senior position at a firm.
“I was honest about my career and life. Next time I could speak differently but I know with my resume and the time off I took that I would get the questions I received.
“I just hated the comment she made. She was very complimentary but then used this word that made me wonder, ‘Hmm would she say this about a man with my same career path?’
“The interviewer commented to my friend that I was smart but ‘too whimsical’ for the role they are hiring for. It made me question my whole career path for a second. By the way, I had never been called ‘whimsical’ before… that’s a word used for fairies.
“I try not to overstress myself and that’s why my personality is more chillax, but I take myself very seriously at work.
“Questions I ask myself and messages I give myself when I have doubt:
‘Am I doing the right thing with my life?’
‘What can I do to help others understand why I am taking this direction?’
‘How can I be my number one fan?’
‘Be compassionate with yourself.’
‘Focus on your mental health during this time of self doubt.’
(when someone rejects me)”
– Stephanie, Female co-founder of a hedge fund and advisor to multiple companies
Dreaming and falling
“From my own experience the question of self-doubt sneaks in way too often in almost any entrepreneurial quest. It can happen that you have self-doubt 101 times a day about some totally banal things such as ‘can I name myself a CEO and put it on my LinkedIn profile if I just founded a business’.
“For me personally, those ‘light’ self-doubt questions are categorized more as decisions. Same as with food, just make up your mind on what you want to have for lunch and stick to your decision whether it tastes or it doesn’t taste good. And of course, if it did not taste well enough, make sure that you have learned the lesson for the next time.
“The real heavy self-doubt comes to surface when:
A. You are selling a dream, a vision or an idea, and B. When things are falling apart.
>> A.
“In situation (a), it can often happen when you don’t have enough pieces of tangible evidence, data points, intelligence, etc. to prove your point of view to yourself and others. People will say – your idea sucks, this is impossible, you don’t have the skillset, your team is not good enough, the market does not exit, etc.
“To ‘survive’ these situations and be able to thrive no matter the negative comments and feedback (which often can come from some of the most influential and successful investors and entrepreneurs), I always make sure that before I go out there selling my vision, I truly believe in my idea/dream and that I have done enough homework to personally assure that there is a decent chance for it to come to life. I bulletproof it for myself first before I take that and test it with the world.
“Moving forward with selling the dream, during the conversations I tend to come back to the narratives of others who did something great in the past and proved others wrong.
“As Nelson Mandela would say, ‘It always seems impossible until it’s done.’
“I read so many inspirational stories of successful innovators, scientists, philosophers, artists, sport athletes, and entrepreneurs. And I don’t hesitate to bring those examples up in a conversation to show that someone has done it before even though at the beginning no one recognized their potential or the potential of their idea.
>> B.
“For situation (b) when your project is failing, sometimes it is totally out of your hands (and that is sort of an easier scenario,) but sometimes you do tend to question yourself if you could have done something differently. You start developing self-doubt in your managerial and entrepreneurial competence. Especially when you read so many headlines about the success of other entrepreneurs that raised 100s of millions or exited their companies at some mind-boggling valuations.
“In those moments, I do two things:
I rationalize by going back in the past and rewinding all the small achievements we made along the way. While doing that, I express deep gratitude for every single small step I made. As an example, we never raised from a Tier 1 VC but we met a lot of them and with some, we had multiple rounds of conversations. I am deeply grateful for even hearing back from them, for every moment they took to review my deck and learn more about our project. Success is the path and the process itself, not the final outcome. And that is what I remind myself of, in case the self-doubt comes to surface.
I ask myself if I did put in my perfect effort because that is all I could have done. As Sam Altman said, one needs a great idea, a great product, a great team, and great execution. Even if you have all four of these you may still fail. The outcome is something like idea x product x execution x team x luck, where luck is a random number between zero and ten thousand. Knowing that at the end of the day we are only in control of our thoughts, intentions, and reactions I end up asking myself – am I a satisfied with my input and work and did I do my best and put in the perfect effort? And the answer to that question brings me to a rationale that is beyond self-doubt and is actually the basic building block of self-confidence. This really helps to turn doubt into a strength!”
I know that not every story will resonate. Some may never resonate. Some will grow on you over time. Others will find meaning into your life when you least expect them to. My purpose for starting this blogpost is to freeze these stories and life lessons in amber for when you find yourself needing them the most. Life’s not easy. Neither is it meant to be. But hopefully, you’ll find comfort knowing you are not alone.
At the end of the day, all advice is autobiographical. Or as Kevin Kelly, co-founder of WIRED magazine, once wrote, “Advice like these are not laws. They are like hats. If one doesn’t fit, try another.” What you’ve read above are the advice, stories, autobiographies. Anecdotes that hopefully shed more light into the elements of humanity many of us, including myself, have been scared to talk about.
A good buddy of mine made me watch a movie recently. It couldn’t have been more timely. He told me nothing more than this one line from that movie:
“We are all the unreliable narrators of each other’s stories.”
So I watched it. I won’t tell you the name of the movie or what it’s about, but if you use the above quote in your search query, you’ll find it. And if you’re like me, and so many others, who struggle with identity and your place in the world – either now or in the past, it’ll change the way you see the world and the people around you.
Thank you Taylor, Max, Janko and everyone else who made this piece possible!
#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.
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Earlier this month, I saw quite the thought-provoking tweet from Ashley Brasier.
“I took a cue from General Patton, who thought that the greatest danger was not that the enemy would learn his plans, but that his own troops would not.”
-Trader Joe (aka Joe Coulombe) on the need to sell to everybody – not just to your customers, but also to your employees
Whether it’s a function of confirmation and availability bias or lesser-known leadership secret, I saw similar themes pop up everywhere from Phil Libin of Evernote and General Catalyst fame to Kelly Watkins at Abstract to Colleen McCreary at Credit Karma. And because of that, I thought it was a topic worth double-clicking on.
There’s the age-old saying: Leaders lead. Managers manage. And a CEO is frankly a marriage of both. While there are the canonical examples of Musk and Jobs, a CEO both leads with her/his vision but also manages expectations.
“I think the most important job of a CEO is to isolate the rest of the company from fluctuations of the hype cycle because the hype cycle will destroy a company. It’ll shake it apart. In tech the hype cycles tend to be pretty intense. At mmhmm we are very much in the Venn diagram of two hype cycles. There’s a general hype cycle around video, which is going to be way up and down over the next few years. […]
“There is also a hype cycle around early and mid stage startup investment. It’s super volatile, now more than ever, because of potential changes in the tax laws, interest rates, and inflation. So you’ve got these two very volatile areas, video and startup investment, and we are sitting right in the bull’s eye of that. This means that my most important job is to isolate the team so that we don’t float based on the ups and downs of the current. Make sure we have enough mass and momentum to go through it, meaning we don’t change what we do based on the hype cycle.
“And that takes capital, which is why we have to raise some capital to do this. It also takes understanding of where you’re trying to go and knowing where you’re going is not based on the hype cycle. You have to have a long term conviction about that. You may be wrong. The conviction could turn out to be wrong, but you’re not going to know that based on day to day fluctuations of excitement or month to month. So have a clear direction of where you are going and then make sure the ship has enough momentum so it doesn’t matter what the waves are doing, you’re still going relatively straight.”
Kelly Watkins, CEO of Abstract, also said in an interview: “People might think the job of the CEO is to make a lot of decisions, but I see my job as setting the tone for the company. People look to leaders to gauge their own reactions in a situation. So if I’m running around like a headless chicken or my tone is on a really high frequency, people graft off of that.”
Similarly, I wrote an essay a year and a half ago. On Sun Tzu and how a leader’s job is setting the tone for her/his company. In short, your team follows you and is a direct function of:
How much they trust you, and
How well they understand a leader’s commands (the why, the how, and the what)
As a caveat, one might disagree with the what, and maybe the how, but a strong team believes in the same why.
In another interview, Colleen McCreary of Credit Karma once said: “Founders, in particular, are always looking to move onto the next thing, but people don’t come along the journey that quickly. So you have to slow down to be consistent, stay on message and tell employees how they’re going to define success. Because if you don’t focus on what really matters, people will hang their hat on an IPO or the stock price as being the determinant of success, and it’s just hard to unwind.”
And why does all this matter?
As Ben Horowitz wrote in his book What You Do Is Who You Are, “Culture is a strategic investment in the company doing things the right way when you are not looking.”
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Charles Hudson at Precursor told Monique Woodward of Cake Ventures, when she was first raising, “You’re not just raising for Fund I; you’re raising for the first three funds. And act accordingly.” In other words, build long-term relationships. As someone who lives and breathes in the entrepreneurial ecosystem, it’s about giving first. There are many things I have yet to do, but are on my life’s roadmap. And given my humble, but curious beginnings, two of the greatest gifts I can give right now at this point in my career, are:
Time
Valuable connections
… which led me to be a scout years ago. Or as the folks at Techstars say, give first. On a similar wavelength, one of my mentor figures told me when I first jumped into venture, “Think three careers in advance.” You’re laying the groundwork for your future success. Or, as I have sometimes heard it described, the tailwind of your 10-year overnight success.
I try to be helpful to everyone who takes time out of their day to talk to me – be it outbound or inbound. Of course, over time, it’s been much harder for me to meaningfully add value to every person who comes my way. Though my blog is one way to scale and share my knowledge capital, I’m always looking for new ways. So if anyone has any recommendations, I’m all ears. After all, I’m still in my first inning.
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Fast, Simple, Awesome
In the theme of scaling myself, I recently shared with the fellows in our VC fellowship about my workflow as a scout. And, I thought it’d be just as valuable to you my readers as well.
I find myself living in my inbox for at least 3-4 hours a day, with hundreds of email chains by the end of the week. What I needed most was operational efficiency. And, at the end of the day, efficiency is results divided by your efforts.
E = Result/Effort
First things first, tune your email settings, which I first picked up from Blake Robbins‘ blog:
If you have more than one inbox, enable multiple inboxes.
Enable compact view versus default view.
Enable keyboard shortcuts.
The only ones you really need are: E to archive, V to move an email
Enable auto-advance. So that you move on to the next email automatically after performing an action on the previous.
Then, the best thing is you only need three folders: Action Needed, Read Later, and Pending Response.
For any email that takes longer than a minute or two to reply, it goes in the Action Needed folder, like long-form advice/feedback or being stalled by waiting on a reply for a double-opt in. When my day frees up a bit more, usually later in the day, I revisit this folder to address all the other action items.
Read Later includes the mountain of blogs, newsletters, news outlets I’ve subscribed to, but didn’t have time to start reading until later in the day. Occasionally, it includes a founder’s monthly investor update. For the latter, I usually just scroll straight to the asks and see if I can help or not. If not, I read and move on.
For the emails I send out but expect a response in return, Pending Response is the perfect folder for that. This next part is completely optional. But, under the Nudges category, enable Suggest emails to follow up on. Because of Google’s algorithm, it can occasionally end up adding to the clutter when it surfaces up an email that doesn’t need to be followed up on. But if that’s the case, it goes straight into the archive folder.
And yes, for everything else, that don’t go in the above three folders, goes into Archives.
I used to have a million and one folders for startups, jobs, VCs, events, saved articles/newsletters, and more. Which looks great when you’re organizing material and when the inbox search algorithm wasn’t as great as it is now, but it doesn’t speed up the workflow. In fact, it often slowed me down – as I tried to put items in the appropriate folder before responding to my next email. And sometimes, they fit in multiple folders.
For mobile, the only thing you need to change are the Mail swipe actions. Swipe right to archive. And swipe left to Move to [folder].
You can either do the above, or use Superhuman, which has all the above functions. The faster I can get back to people who need my help, the better. Whether it’s me, or someone smarter than me, I try to point founders in the right direction.
Tracking the data
Separately, on an excel sheet, though I don’t track every startup I talk to, I track deals I refer/intro, with the following columns:
Startup
Founder(s)
Date
Stage
Industry
Deck [link]
Referral Source
Who’d I refer to
Secret Sauce – Differentiator/Reason for referral
Result of referral (Pending, Talking, Rejected, Invested, Will revisit)
Date of action [result of referral]
Check size (if applicable)
Round size (if applicable)
I also color-code so that’s it’s easier on the eyes. With the above, I can track:
Most intros/investments/rejections, by:
Industry
Partner
Stage
Referral source
Response Rate
Average Time:
Between intro and investment, per VC
Between intro and conversation
Average check size (per fiscal year)
Average round rise (per fiscal year)
% breakdown by types of compensation
% referral sources from founders who successfully fundraised (via me)
Founders who didn’t successfully fundraise (via me)
In closing
As one of my favorite VC quotes go: “There is no greater compliment, as a VC, than when a founder you passed on — still sends you deal-flow and introductions.” I’ve had the fortune of working with some amazing founders over the years – a number of them who I was never able to help with the limitations of my own knowledge, but through the people I sent them to. Luckily, I largely attribute to my ability to help founders quickly through the above workflow. Hopefully, it can be as useful to you as it has been for me.
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Though I’ve spent a minute in venture capital, I’ve never raised a fund. So I’m not going to pretend I know everything. Because I don’t. Every single idea here is one I’ve borrowed from someone with more miles on their odometer in this industry.
When does an emerging fund manager turn into an emerged fund manager? I’ve always heard the general rule of thumb is by Fund III. But in all honesty, I took that for granted and never knew why.
“The other [successful trait in fund managers] that we see a lot of is really having a defined strategy, and really sticking to it and executing on it. Straying away from your strategy is one of the best ways to create issues for you down the road. Yes, it might be successful and it might create returns for you today, but it will create difficulties down the road when you’re looking to raise that next fund. Because that’s what you’re selling to me at the end of the day.
“Fund I, basically what you’re selling is a promise. You’re selling a dream. You’re selling the concept around the strategy.
“Fund II, you’re selling the execution on that strategy. Depending at what stage you’re investing at, for the most part, you’re not going to have returns to be pointing to. You’re going to be selling your ability to execute on that strategy.
“Fund III, you’re selling the returns on Fund I.”
Samir then follows up: “Fund III’s are the hardest [to raise] because by then, it’s four, five, six years in and you have to show something. It is return-based.”
Phil Libin, co-founder and CEO of All Turtles, mmhmm, and Evernote, and former Managing Director at General Catalyst, in his recent interview with Tyler Swartz, said: “We don’t need scale to make a good product, in fact, it’s a distraction if you focus on scale prematurely.” In venture, your fund is your product. And like an entrepreneur, an emerging manager shouldn’t worry about scaling the size of their fund in the Fund I and II days. Stay small. Focus on delivering on the strategy and promise you made to your LPs. After all, it’s much easier to return a $10M fund than it is to return a $100M fund. Especially since a 3-5x multiple means you’re just average these days. As Mike Maples Jr. of Floodgate says, “Your fund size is your strategy.”
By the time you get to Fund III, you now have a track record of financial return (or not). And by then, you and the market should have a good idea if you have a longer time horizon in venture or not.
And even if not, many former VCs go back to the operating side of the table, armed with the knowledge, skills, and relationships they gain on the VC side.
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Not too long ago, I published a blogpost walking through my top 9 founder questions that deserve more attention. In it, I detailed:
The questions
My rationale for asking each of them
Surprisingly, it did really well. A few folks reached out to me before that post, which inspired its due subsequence, asking if I had a repository of questions to share. And after, asking me to do more of such calculi.
Just got asked by a friend on how I come up with questions.
1st thought, idk it just happens.
2nd thought, naw, I know I spend too much time swimming in my head.
So here's a thread 🧵. Hope it's useful to someone out there (Or an excuse to say I worked today):
While I’m compiling something of the like on the backend, with no real deadline, as it’ll grow over time, I thought I’d dedicate a series on this blog to new and old questions that come into my purview. Each paired with:
Why I ask it the way I do
In what circumstances do I find myself asking it
And if applicable, how I build up to asking that question
And as bowtie to wrap everything up nicely together, I’m calling it the DGQ series. Or Damn Good Questions. Or it’s counterpart, Dumb and Garbled Questions. I’ll let you decide what each question stands for. But I’m really not the best with naming conventions, so if anyone has a better one, I’m all ears.
As the rocket takes off, I thought I’d begin by sharing the question that inspired me to start this new series.
What would [20+age] year old [name] say about the [name] that sits before me today?
For instance, what would 45-year old David say about the David that sits before me today?
I’ve heard many variations of this question, but the wording of this question in particular is an ode to my buddy, Matt, founder of nomofomo and UCLA’s President of Thought Lounge. After all, many of the best ideas I have in my noggin’ right now are not my own. This question is no exception.
There’s this great line from the song A Million Dreams, which I’m going to spare you my sad excuse for a karaoke singer, that goes like: “I don’t care, I don’t care, so call me crazy. We can live in a world that we design.” As luck would have it, I found it when I read Mike Maples Jr‘s piece from last year on backcasting. Which, if you have a spare 10 minutes, I highly recommend checking out as well. And speaking of quotable lines, he wrote, “The future doesn’t happen to us; it happens because of us. The future is not like the weather. It doesn’t just happen. People make the future. It’s not a destiny or hope; it’s a decision.”
He goes on to say, “Breakthrough builders are visitors from the future, telling us what’s coming. They seem crazy in the present but they are right about the future. Legendary builders, therefore, must stand in the future and pull the present from the current reality to the future of their design.”
Similarly, not only the greatest founders, but I also found that the greatest life athletes live in a similar mantra. It takes real courage to stand where no one is standing and decide that is the direction you want to pursue. You might be right; you might be wrong. But there’s something to be said about the clarity you will have when you live life under the assumption that you’ve already done it.
For example, I suffer from stage fright. But I find great comfort in visualizing myself doing what scares me the most again and again, until I get comfortable standing on stage. Imagining myself giving the same talk in front of one friend, 10 friends, 50 people and even 5,000 people. Each time I level up, I imagine the fear as well as the excitement that comes with it. Embracing both the former and the latter.
In a similar way, the way the future me looks at the naïve me of today helps me find the elusive confidence I need when I’m in doubt. Would future me look at today me and shake his head in disappointment or pride? What would he tell me to do if he sees I’m struggling? And when I myself cannot manifest the courage to take a step forward, my wiser and more resilient self will manifest the destiny I am meant to walk.
As Suleika Jaouad, author of the memoir Between Two Kingdoms, once said, “[The] act of writing a future dream in the present tense has really kind of helped assuage that fear.”
So ask yourself, What would the Future You say about the You that sits before me today?
I imagine even if you don’t find powerful answers, you’ll find powerful questions that will serve as guiding principles in your own life.
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For today’s blogpost I’m going to try something new. It was requested by a reader of this blog, which for anonymity’s sake, I’ll call P. For those who live a busy life, prefer audio over text, or just find my font choice appalling, I thought I’d record myself reading the below text. Think of it like the audiobook version of this essay.
If you love or hate this format, I’d love to hear what you think. Feel free to comment below, or DM me across any of my channels. Any and all feedback welcome with open arms.
Over the years, I’ve used many different versions of the question: What would you do if you knew you would fail? Or, What would you do regardless of the outcome of the endeavor? And as long as the reason for doing so contains any combination of:
Skill acquisition
Invaluable experience
Or relationship/friendship that I value more than the project itself
… it’s a “Yes” for me. The “Yes” becomes an exploration of depth. An optimization strategy for my strengths. My superpowers. It’s something I learned from quite a few of my mentors over the years – both in an official and unofficial capacity.
Subsequently, I’ve had this belief for a long time, which will probably cause some uproar somewhere, that we shouldn’t optimize our life around reducing our weaknesses. But rather, focus our time on maximizing our strengths. That doesn’t mean we shouldn’t ever work to ameliorate our incompetencies. But:
Just enough that we meaningfully reduce our risk of ruin. Any more, there are diminishing returns over time. Forgiving my esoteric economic jargon, we should only work on our weaknesses so that we don’t lose our ability to survive. For example, if you don’t know how to cook, you shouldn’t aim to be the best Michelin-starred chef in the world, but just enough so that you don’t starve to death. Assuming your goal in life isn’t in the culinary world.
Mitigate our weaknesses that are the most adjacent to our core strengths. For instance, in my opinion, one of my greatest relative strengths is my ability to ask questions. I am by no means the best, but compared to the rest of my skills, this is one I find myself shining in a bit more than my peers. Which effectively meant I was always interested in what others were up to and how they thought. A mentor figure told me years ago that it didn’t matter how interested I was in others, no one had a reason to be interested in me. Which meant that one of my greatest and most adjacent weaknesses was to be interesting.
People who have superpowers often carry super-weaknesses. The greater their superpower, usually the greater their weakness. Humans aren’t great multitaskers. We were never designed to be. If you’re saying yes to one thing, you’re saying no to a hundred other things. Are you willing to shoulder that opportunity cost? Sometimes you are, but be very deliberate about it.
Fairly recently, I was presenting to an amazing cast of board members in a board meeting. There was a general consensus around the fact that we lacked focus as an organization, yet we were sitting on a wealth of talent. To which, one of our board members redirected us to Steve Jobs’ infamous speech when we returned to Apple in 1997. One line in particular stood out to me: “Apple is executing wonderfully on many of the wrong things.“
He follows up to say: “The ability of the organization to execute is really high though. I mean, I’ve met some extraordinary people at Apple. There’s a lot of great people at Apple. They’re doing some of the wrong things because the plan has been wrong.”
Taking a step back, as humans, as working professionals, as entrepreneurs in each and every one of our own rights, we often “execute wonderfully on many of the wrong things.” Often times, that’s on our own weaknesses, rather than our strengths.
Living in a simulation
Imagine that we live in a simulation – an MMORPG. Or, massively multiplayer online role-playing game. We start off with a finite number of stat points. The starting number of stat points varies from person to person, depending on your socio-economic class and your given genetic code. You can allocate those stat points however you want.
You can spread them all out evenly, where you’ll never have any true weakness, but neither any true strength. You’ve hedged your risk of ruin. It’s going to be really hard for you to lose, but you can never really win.
On the flip side of the token, you can minmax your build, using gaming terminology. Double down on a stat, to achieve the equivalent of a superpower, compared to your peers. But often times, if you are maximizing on a superpower, you’ve minimized your proficiency in another area. Luckily, as in any game, and as in reality, you can pick up tools and make friendships along the way that will supplement your weaknesses with their strengths.
Of course, as all analogies go, there are exceptions. But as far as I know, there are far fewer exceptions than those that fit into this analogy. And, technically, our ability to level up is infinite. The only upper limit is that, like everyone else, we have 24 hours in a day and a finite number of years to live.
So, where am I going with this?
Super-tools for (super)weaknesses
What do you not want or don’t care to have a superpower in? For the skills and tasks you use everyday, but don’t care to be the best in the world for, leverage software and tools to automate your work, so you only need to spend the minimal amount of time or energy to make sure it doesn’t become a stressor for your day. In the above gaming analogy, you use items to compensate for specific stat deficiencies. The more efficient the “item”/tool, the less energy you need to expend to make up for a super-weakness.
Here are the tools I use to supercharge my day, so I can spend more time enhancing my superpowers and less time mitigating my super-weaknesses.
Descript
Descript makes me feel like a god. As much as I love Adobe Premiere Pro, it had an incredibly high learning curve. But once you got it, they have some of the most robust tools on the market. On Descript, I love how I can edit an audio or video clip just by deleting words in the transcript. And if I mess up, and I do quite a bit, I can always voiceover in the editing process to make myself sound smarter than I actually am. Even better, I can drag and drop music, video and sound effects. If you’re listening to the audio version of this essay, you might have noticed I don’t have any of the afore-mentioned effects. The goal here was just to get you my thoughts as quickly as possible, without trapping myself in audio perfectionism.
If the Adobe Creative Suite is the endgame, Descript is the early game. And it helps you ace it remarkably well.
Notion
Notion is a dark horse (for me). I’ve seen startup data rooms, personal blogs, internal wikis, and even VC investment theses and fund strategies being produced on Notion. It always seemed like a nice-to-have. In all fairness, I didn’t give it the benefit of the doubt it deserved until late last year. Its greatest ability isn’t the ability to create a robust website or the prettiest blog. Its greatest ability is that it gets people to put ideas and thoughts on paper as quickly as possible. The barrier to entry is so low that its greatest competitors are note-taking apps, like Evernote or Google Keep, for early users. Then, you can go from notes to fully functional site in minutes.
And ever since, I’ve been a geek over it. There’s this great thread on Twitter by @empirepowder about all the applications you can build using Notion extremely quickly – from creating a blog from scratch to publishing a course to tracking analytics on your page to the ultimate tweet tracking tool.
For many of us, the hardest part about doing anything is starting. Notion solves that.
Undock
Take scheduling as another example. I know very few people, if at all, who want to be the best scheduler in the world. I know I don’t. But I find myself spending an undeserving amount of time trying to schedule meetings, rather than actually having meetings or being productive. Enter Undock. “The fastest way to find time to meet with anyone.” That’s from their website. And it’s true. When I’m in my Gmail scheduling calls/meetings with founders or investors, I never leave my email tab nor do I ever touch my mouse. No matter how many people are on the email thread, I can find time for a meeting, on average, in two seconds. That’s no joke. I timed myself.
Meetings are about communication, connection and collaboration. But maybe you’re just exhausted from scheduling them. Look, Undock is actually not “just another scheduling app”. We’re a super calendar and we come in peace.
Having and empowering others to have superpowers is literally in their DNA.
Superhuman
I’ve heard many great things about Superhuman, and about a quarter as many bad things about the platform. Superhuman’s claim to fame is being able to get you to inbox zero via one of the most seamless and fastest email experiences ever – through shortcut keys, follow-up reminders, and social media insights just to name a few. Their user interface makes it incredibly easy to respond from one email to the next, even when you’re offline. They have this 100ms rule, where every interaction should be faster than 100ms to make communication feel instantaneous. And they do deliver.
Many of its customers include investors and founders. Busy people who have more unread emails in their inbox than they care to count. Most of the bad reviews I hear from friends and colleagues are that $30/month is just too expensive.
There are many ways to look at the $30 price tag. It’s $12 more than Netflix’s premium plan, and Netflix serves you new content you might not have access to otherwise. Superhuman serves you the same content that would have been yours anyway, just in a new light. On the flip side, $30/month is $1/day. Less than a cup of coffee a day, assuming you buy your coffee every day. But even if you only bought $3 coffee twice a week, $30/month would still be cheaper.
Or in a different lens, Superhuman’s core audience – founders, investors, busy people who have hundreds of emails a week, if not a day – their time is worth at or more than $30/hour. So, if on a 160-work month, Superhuman collectively saves their customers more than an hour of time every month, then it’s worth it to them.
The way I look at it, it’s a bargain. But I don’t use it. Why? It’s not because it’s too expensive. Neither because I don’t have enough emails to go through. But rather, I happened to optimize my email workflow before I even heard of Superhuman. I’ll save that topic for a later blogpost. But if you don’t have a way to get to inbox zero (unless you don’t care. I have a number of friends who have tens of thousands of unread in their inbox. That scares me)… but if you do care about the piling mound of emails, Superhuman’s really got it in the bag.
In closing
And maybe this post might serve helpful in reframing on how you can live your most optimal life. Supercharge your strengths. And find the best tools and mental models you can to protect your downside. It’s okay if you’re not the best at the latter; you don’t have to be.
I mentioned a few of the tools I use, but your mileage may and probably should vary.
While there are tools out there that supercharge your ability to execute and perform, equally so, you’ll find there are amazing people out there that complement your weaknesses. Friends, colleagues, co-founders, life partners. In the words of Steve Jobs, find and meet “extraordinary people.” To do so, as my mentor told me, you’ll have to be interested and interesting.
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I was reading Sammy Abdullah of Blossom Street Ventures‘ Medium post not too long ago about the value of auto-price increases in a context I’ve never really thought about. Quoting one of his portfolio companies’ founders:
“We started including auto-price increases in our renewals at the start of this year and it’s been surprisingly effective. Our starting point is 10% and we get it more often than not; some customers negotiate us down to the 3–5% range.
“The automatic price increases are a beautiful thing because they give us leverage:
we can trade an automatic price increase for an earlier renewal, longer contract period, or upselling to more features; and
when we do waive price increases, the customer walks away satisfied. They feel like they’re winning.”
It’s a great way to win on net retention. But as I’ve written about before, the net retention equation is comprised of the upgrades, downgrades, and churn variables.
Or convert more users into customers, if you’re running a freemium model
Reduce the number of customers downgrading to lower tiers
Reduce churn – customers leaving your platform
Some permutation of the above variables
Leveling up upgrades
Shivani Berry, founder of Ascend’s Leadership Program, once wrote: “Buy-in is the result of showing your team why your idea achieves their goals.” In a similar sense, buy-in is the result of showing your customers why your product achieves their goals. The best thing is that their goals will change over time. As so, your product must contain increasingly more value to your customers as they level up in their lifecycle. As they grow, you have product offerings that grow with their needs.
Take, for example, one of my favorite startups these days, Pulley, a cap table management tool for startups. Don’t worry, this isn’t a sponsored blogpost. Although it’d be nice if it was. I have no chips in the bag; I just like them. They have three tiers of pricing. The lowest for startups with 25 stakeholders. The middle for startups with 40. And the highest is for larger businesses.
Why 25? The average seed-stage startup has about 25 stakeholders. Subsequently, top of mind for them is what SAFEs and convertible notes look like on their cap table and how to structure early equity pools.
As a startup levels up to 40 stakeholders, they’re probably jumping into their first priced round. As such, they’ll need a 409A valuation to appraise their fair market value, as well as finally putting together their first official board.
Every time founders raise another round of funding, the more complicated their cap table becomes. The more they need Pulley’s software. And it so happens, the less price sensitive they become. For Pulley, that means they can charge more as their customers have greater purchasing power.
You also always want an enterprise pricing tier, where pricing is custom. Don’t be afraid to charge more. As I mentioned in a previous essay, when Intercom was only charging IBM $49, an IBM exec once told the Intercom team, “You know, I go on a coffee run for the team that costs a lot more than your product. That’s why we’re wary of investing too much more in you. We just don’t see how you’re going to survive.” If it helps as a reference point, the median ACV (annual contract value) for public SaaS companies is $27,000.
Do note that the more you charge, the longer the sales cycle will be. For ACVs over $20K, expect 4-6 months of a sales cycle. For contracts over $100K, expect 6-9 months. Of course, the contrapositive would be that the lower the price point, the easier and faster it takes to make a decision.
Reducing downgrades and churn
I’ve been in love with Clayton Christensen’s “jobs-to-be-done” (JTBD) framework ever since I learned of it a few years ago. At the end of the day, you’re delivering value. Value in the form of doing a job. As Christensen says, “when we buy a product, we essentially ‘hire’ it to help us do a job. If it does the job well, the next time we’re confronted with the same job, we tend to hire that product again. And if it does a crummy job, we ‘fire’ it and look for an alternative.”
The better it can do the job your customer needs to get done, the more you can optimize for the variables in the net retention equation. Sunita Mohanty, Product Lead at Facebook, shared an amazing JTBD framework they use back at Facebook and Instagram:
When I… (context) But… (barrier) Help me… (goal) So I… (outcome)
Here’s another way to look at it:
What features should we have that would make our product great?
What features should this product have that would make it a no-brainer purchase for our customers?
The “no-brainer” part especially matters. And to be a “no-brainer”, you have to deliver the best-in-class. Your features have to solve a fundamental job that your customer is trying to solve. The difference between a “great product” and a “no-brainer” is the difference between a 5 out of 5-star rating and a 6-star out of a 5-star rating. Effectively, the outcome in Facebook’s JTBD framework exceeds the goal, which makes the barrier irrelevant. As David Rubin, CMO of The New York Times and former Head of Global Brand at Pinterest once said: “Your service shouldn’t lead with ‘saving money’. You must create an offering that is so compelling, it stands by itself in the consumer’s mind.”
In closing
At the end of the day, in the words of Alex Rampell, building a startup is “a race where the startup is trying to get distribution before the incumbent gets innovation.”
You’re in a race against time. You’re trying to reach critical mass and growth before your incumbents realize your space is a money-making machine. And growth comes in two parts: acquisition and retention. While many founders seemed to have over-indexed on acquisition over the last couple of years, the pandemic has reawakened many that retention is often times much more difficult to attain than acquisition. While it may not be true for every type of business, hopefully, the above is another tool in your toolkit.
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They were part of the defining score of years that brought the sport into the limelight. To most, most of the above names carry little gravity, outside of Phelps. But to me, they were the names that had me huddled around the TV. Watching the prelims. The semis. And of course the finals. They were the names that inspired me to be better.
As Ervin said, “We are the oldest of the fastest and the fastest of the oldest. We are men between worlds.”
But as they came back for one last curtain call this Olympic Trials, I couldn’t help but recall their influence on me in some of my most formative years. Whether I need that extra push for the most challenging project in my life to date or that shoulder to lean on when I am at my worst, there’s one race I cannot help but think about.
Just like when a Yahoo! exec told the Reddit co-founders that they were a “rounding error” and the team subsequently decided to frame it on their office wall as motivation, in 2008, the US Olympic 4×100 freestyle relay team faced a similar dilemma. Despite having Phelps on the relay team, they weren’t the crowd favorites. The French were. They – the American team – were the underdogs.
In fact, that 2008, French team boasted some of the fastest sprinters in the history of the sport. Alain Bernard who had just won his gold in the 100 meter freestyle. And Amaury Leveaux who had taken the silver in the 50 meter freestyle. And besides Lezak who tied for bronze in the 100 meter freestyle, none of the others on the US team had medaled for a short-distance freestyle event that Olympics.
Pound for pound, the US relay team had to deliver not only their best, but beat their best. To have a chance at beating the French team. So for motivation, they read Bernard’s comment in the papers over and over. “The Americans? We’re going to smash them. That’s what we came here for.”
Phelps leads the race, giving his team a slight lead over France. Weber-Gale holds that lead for the Americans. Jones, the slowest and the third leg of the team, yet still punching every inch of his worth, gives the lead back to France. And Bernard, the world champion in the 100 free, against Lezak for the US, gets a strong lead for a race and a length he is already the best in the world at. Lezak trails behind by over half a body length at the flip. 50% done of the last leg of the race.
I remember sitting in front of the television screen, screaming and hoping my voice would reach the Water Cube in Beijing. “C’mon… c’mon! C’mon!!” Lezak, at 32, one of the oldest competitors in the pool that year, pulled together what could only be described as sheer willpower. Those last 50 meters… seemed to have been the longest 23 seconds of my life. A breath for every second that passed. A breath for every second Lezak pulled closer to Bernard. And in the last ten seconds, minus the sound of the TV, the room was silent. As some people might say, you could hear the sound of a pin drop. It did. With a margin of eight hundredths of a second.
One of the tightest and most inspiring races in all of history. If you ask me, the greatest. And the race I watch time and time again when I am at my worst.
You have to see it for yourself to really believe the excitement.
#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.
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