I was recently asked what my current thinking is in finding great startups in a socially distanced environment by someone new to the venture industry.
It’s a topic that I’ve been doing some thinking about. In a nutshell, different entry points (angel, seed, venture, growth, re IPO etc) stages implies different strategies, which further implies different deal sourcing strategies.
In general, I think this is not unlike any marketing / GTM strategies, hence similar mental model applies:
– Pull: Increase surface area via presence and content.
– Push: Proactive outreach, either by forming new connections with interesting people or spending quality time in a subject matter.
Brand equity is built via doing the above consistently over time, with a differentiated point of view. Interestingly, doing the above consistently over time will help you form and refine your point of view as well.
As we move forward collectively to a post COVID world, I suspect a lot of the habits formed during this period will become muscle reflexes, and perhaps to a large degree we will collectively develop new social norms and etiquettes to forming new connections and deepening existing relationships. This is also why I think Clubhouse is such an interesting product which perfectly captures and reflects the zeitgeist of the moment. I’ve been spending increasingly more time on the platform (see surface area above) and am generally enjoying the conversations and learning from the dialogues.
Previous iteration here (2017) and here (2015).
- Always prioritise your family and important relationships over everything else.
- Never underestimate your ability to augment your immediate reality. If you want something, go get it. If you want something to happen, make it happen.
- Never take yourself too seriously.
- Be kind, which is different from being nice.
- Be patient.
- Take chances on your career, and never be too comfortable.
- Leave room for uncertainty and surprises. This takes some conscious effort, for uncertainty and surprises lie beyond your comfort zone. Hence, get out of your comfort zone often.
- Earn your reputation through hard work, there are no shortcuts, and then protect your reputation at all costs. Your reputation will be the greatest currency you have in your career.
- Always strive to be effective and get things done. You don’t have to be the smartest guy in the room. It doesn’t matter.
- Make an effort to cultivate your friendships. Go out, stay up. Learn how to have fun.
- Go out of your way to meet and be around smart, interesting and ambitious people. I once heard that you are the average of the 5 people you spend the most time with. Not sure how true that is, but I do believe in the importance of keeping good company.
- Be generous with your time and money. Most of the people that I came to admire and respect were always generous with their time and money. Incidentally these are the same people whom are pretty successful in their respective fields. Causation? Maybe. Correlation? Definitely.
- However, be prudent with your attention. A lot of things in life aren’t worth paying attention to.
- Your happiness is your own responsibility.
- True love is patient.
- True love also takes effort. In fact, any genuine, enriching, long-lasting relationship takes effort. Make time.
- Even the deepest wounds will heal. The deepest wounds will also, turn out to be the greatest teachers in life.
- Marry someone who inspires you to be a better version of yourself. Similiarly, marry someone who has the desire to grow with you, too. In a good marriage, the whole is greater than the sum of its parts.
- Having money is nice, but don’t stress over it too much.
- Keep your personal burn rate low, but remember to eat and live well too.
- Time is more important than money.
- When in doubt, always choose substance over style.
- Buy experiences, not things. Buy utility and value, not fashion.
- Make good effort to stay healthy, in body and mind.
- Be confident, but not proud. Never let pride get in the way of learning.
- Choose long-term gains over short-term gratification.
- Pay attention. Most people sleepwalk through their lives. Don’t be most people. Be aware. An unexamined life is not worth living.
- Read. Read fiction to appreciate the beauty of language. Read non-fiction to learn how the world works. Read good essays. Again, be prudent with your attention.
- Take time off to wander and think.
- Nurture your curiosity. Wisdom comes with experience so be patient.
There are a lot of debate and discourse today, as a reaction to the state of the work today brought on by the COVID-19 pandemic. The global society as a whole has been under tremendous stress today; fault lines which had been simmering underneath the veil of a 10 year market bull run now appear more obvious than ever.
To that, a lot of experts had offered varying opinions. I enjoy learning and listening to perspectives across a diverse spectrum (V? L? U? W?) but it’s clear to me that we are living in a time where no one truly knows how the world would look like in the near future.
Which is why I find Satya Nadella’s perspective in New York Times resonating:
Mr. Nadella sees the world going through three phases during the pandemic. The first is simply responding to the immediate impact through office closures, cost cuts and the like. Then comes recovery, which is already underway in many places, and will be more like a “dial” than a “switch.” He said, “There will be lots of movement of the dial, back and forth.”
In the “reimagining” phase, innovations born of necessity during the previous two phases will emerge, like remote control of manufacturing processes, A.I. bots helping diagnose patients and more effective distance-learning technologies.
It’s a simple and obvious framework, but inherently powerful in that it is optimistic and forward looking.
This is why I believe in the spirit of entrepreneurship. We don’t have to know how the future will pan out exactly, but we do know that if we work hard and have some good luck along the way, we will be able to reimagine and build a better tomorrow for ourselves, our communities and the world at large. The world needs more entrepreneurs and innovators, now more so than ever.
This interesting bit of venture history appeared in a recent Pro Rata newsletter:
Fourteen years ago, venture capital firm Kleiner Perkins raised $200 million for a fund dedicated to “worldwide pandemic preparedness and global health, with a focus on surveillance and detection, diagnostics, vaccines and drugs.
Why it matters: Several companies from that portfolio are now part of the fight against COVID-19, and the fund’s partners played a part in creating a government agency called BARDA that’s been helping to fund coronavirus test and vaccine development efforts.
In venture, we often ask ourselves the three why’s when we are assessing investment opportunities – why this problem statement / market opportunity, why you, and why now.
For me, it’s relatively easy to discern the validity of a problem statement or market opportunity, and the relative quality of the founding team (why you). The trickiest is the question around timing (why now).
Market timing is tough to get right; too early, you risk spending too much time and money waiting for the market to catch up. Too late, competitors drives away profits and establish barriers to entry. The magic seems to be slightly early, by not being the first mover but early enough to define the category and own the market. Think Google & Facebook. In the case of Kleiner Perkins, this speaks to the difficulty of timing in the financing of innovation. They were clearly right, though a little early.
In any case, I’m glad that the seeds of a potential solution to today’s COVID-19 problems were planted 14 years ago, and i am curious what would the seeds i plant today grow into, in the years to come.
I’ve been asked many times through the years what the ideal founding team size is. Arbitrarily, the common answer seems to be 2-3 people.
After being an angel investor as well as a venture investor for the past 5 years, I’ve come to realise that the real question should be, what is the ideal team size for a founding team to enable the fastest decision making of the highest quality. After all, the reason startups win against incumbents is to that startups tend to get to distribution faster than big co incumbents get to innovation.
I do find it dogmatic and arbitrary when investors tell me that they never invest in single founder companies just because (albeit you can argue the key man risk becomes significant), or when they say they don’t invest in teams with more than x cofounders. Going back to first principles, why does that matter when the founder(s) had demonstrated a history and track record of making high quality decisions and executing? Alibaba for one famously had 18 cofounders!
I am pretty proud at SeedPlus I’ve invested in single founder companies (Nicki At CardUp) and companies with 5 cofounders (Rukita from Jakarta, Indonesia) and I’m glad to say both companies are executing pretty well at least from a team perspective.
So, Founders – when you are thinking of building out your founding team, think instead of who should you be partnering with to enable the best decision making ability, with speed, over time, because that is a huge competitive advantage if you get that right.
Went for a good run today and managed to finished an excellent interview with John Maxwell by Shane Parrish on The Knowledge Project. (Link to podcast here.)
John is a leadership expert; he developed the 5 levels of leadership framework and is a best selling author. You should check out his work here.
There are many gems in the conversation which warrants a listen to the entire episode. One of the gems though which really spoke to me, especially against the backdrop of the current crisis which threw a lot of plans into disarray, was his comment on being growth oriented and not goal oriented.
Most driven individuals have the tendency to plan and set goals against a timeline, within a certain margin of error. The interesting thing about the current crisis is that the world changed so drastically in such a short time that I’ll bet for most of you out there, your goals are not entirely relevant anymore. For me, this is true and truly frustrating.
Growth on the other hand is enduring; having a growth mindset implies a certain level of pliability and adaptability. To that, I was reminded of the quote that was attributed to Darwin (probably a mis-attribute but makes sense nonetheless): “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”
It’s a good reminder to go back to basics. For me, that means going back to the why’s of my career thus far and my continued passion in technology, entrepreneurship and venture.
In venture, it’s not often coming across a team with a high degree of raw talent and passion, solving some of the most ambitious problems in Southeast Asia. I’ve been incredibly grateful to be able to join Harshet and Tommy on the ride since leading SeedPlus’s investment into Qoala last year when it was just the two of them.
Here’s a good profile of Qoala from Tech in Asia which tells the story thus far: https://www.techinasia.com/microinsurance-coming-masses-indonesia
While it’s often exciting to talk about the market and opportunity size (Insurance x technology x emerging Southeast Asia), it’s the human stories that stays with me:
“We once had a case where 17 kids had a delayed flight from Jakarta to Manado. They were stranded at the airport and tried to make a claim for their flight delay,” shares Harshet Lunani, Qoala’s co-founder and CEO. “As the process was automated, all they had to do was snap a picture of the documents to make the claim, and we could pay them immediately.”
Lunani adds: “We later found out that they used the money to have a meal at KFC, and that made my day because I can relate and imagine not setting aside money for a meal due to a tight flight schedule.”
(I can relate to the bit about KFC 🙂)
Moments like these where technology creates an impact with such immediacy is truly inspiring. The truth is, moments like these shouldn’t be rare; moments like these should be experienced by every day consumers across Southeast Asia. I am glad and energised that the Qoala team is en route to making that happen, partnering with some of the most successful investors in the region including Sequoia Capital, Golden Gate Ventures, MassMutual Ventures, MDI Ventures and so on.
To more inspiring moments!
This is my first Fathers Day being a Dad. It’s been an amazing journey. I learned a lot, about the people around me, and about myself too. The experience has taught me so much, and I am better for it.
One of the key lessons though, I think, is the parallels between parenting and stewardship. Perhaps it’s best captured by the following poem by Khalil Gibran:
Your children are not your children.
They are the sons and daughters of Life’s longing for itself.
They come through you but not from you,
And though they are with you, yet they belong not to you.
You may give them your love but not your thoughts,
For they have their own thoughts.
You may house their bodies but not their souls,
For their souls dwell in the house of tomorrow,
Which you cannot visit, not even in your dreams.
Thanks for coming into the world and joining me in this journey called life, son. I can’t wait to explore life and the world with you.
After 3 years in venture I’ve come to appreciate the differences between operating and investing better, and the nuances between the different stages of investing in private, high growth, technology companies. There are many observations and lessons learned for sure that I might share in future posts, though here’re some points very well articulated by Ilya Fushman, who recently joined famed VC firm KPCB.
IF: Certainly, there were some great logos in the growth-stage fund. But I think returns from [earlier-stage] venture were pretty great as well.
I think where we came down as we were thinking about strategy was this notion of how do you compete. There’s a lot more capital at the seed stage; there’s a lot more capital in growth stage. When we think about ecosystem and landscape of venture, when you look where we’re focused predominately today — which is Series A — the type of work we do and the kind of skills required is mentally quite different from late-stage investing. There’s basically no data. We’re helping founders hire their first sales leader and figure out their product strategy and helping them navigate partnerships. And when you look at the late-stage growth side, a lot of it is financial engineering, and you have to be really good at it, because you have to price things really well. For us, if we’re off 20 to 30 percent on price, it’s probably okay as long as we pick the right company.
I believe this pretty aptly describes the work that we do at SeedPlus. We were there when founders are looking at the go-to-market strategy for the first commercial launch of their products; we were there to help navigate complex partnership conversations and financing strategies; we were also there when founders needed the nitty gritty & the mundane – helping hire the right corporate secretary firm, modelling cap tables in Excel, recommending co-working spaces etc. Of course all the above doesn’t preclude a successful outcome (both in the investment sense and in building a successful company), but in general we feel pretty good about our ability to roll up our sleeves and help and being part of the company building process.
In other words our aspiration is to be Company Builders rather than Company Financiers. Hopefully the perceived value is mutual between the SeedPlus team and our portfolio founders. :)
Read the rest of the interview here: https://techcrunch.com/2019/02/14/kleiners-mamoon-hamid-thinks-we-could-be-in-a-15-year-long-bull-market-and-other-insights-from-the-firm/