Last week, I bumped into a buddy who runs a fairly large venture-backed company. I asked him how things were going. Rather than getting the common response, “everything is great,” he explained that he had spent the last few quarters developing a new product only to discover the customer response has been lukewarm. He said this experience stung because countless hours and hundreds of thousands of dollars were spent building the product. He had also used up significant political capital with his Board. He asked me what I thought. I simply replied, “Don’t let the sunk costs get in the way of deciding what’s best for the business.”
A sunk cost is a cost that has already been incurred and cannot be recovered. We all experience sunk costs in our personal and professional lives. They can include money spent, time, effort and energy. Sunk costs play a big role in startups and investing. Startups and investors are faced with a barrage of sunk costs on a regular basis:
Spending huge sums of money to develop a product only to discover there isn’t a market for it
Hiring a key executive only to discover he or she isn’t a fit
Making a big promotion only to realize the employee isn’t set up for success
Naming your company and buying a domain only to find another company has the trademark
Launching a large advertising campaign that doesn’t produce results
Hiring expensive recruiters or consultants that don’t deliver
Investing in a company that doesn’t perform relative to expectations
A lesson I learned in school and throughout my career: valuing and harping on sunk costs often leads to poor decisions. It is human nature to try to salvage an investment of time, money, energy and effort. Avoid the trap. They are counterproductive when making forward-looking decisions. They are often an illusion. Don’t let them get in the way. Treat the money, time, energy and effort as gone forever. I realize moving on can be painful and feel barbaric but it can also be liberating.
Whenever sunk costs are influencing decisions, I always recommend coming back to this question: ‘what’s best for the company going forward?’
As an investor, this often presents a dilemma. Investment theory suggests that any incremental dollar invested in a company should be evaluated separately from the initial check. I typically subscribe to this principle. It is sound and responsible. But what happens if a company is in a tight spot and needs additional investment to get to that next critical milestone or achieve an outcome? Is declining an investment in this situation truly in the best interest of the firm? I would argue that most often it’s not.
Venture, especially seed investing, is a human-driven and long-term business. My reputation is all I really have. If I don’t step up in times of need, I’ll eventually develop a bad reputation and founders won’t want to work with me. Being a supporter in tough times is not only the right thing to do from a human and karmic perspective but I also believe it will result in better returns over the long run.
Dealing with sunk costs isn’t so black and white after all. There are grey areas that ultimately challenge our values. If you just focus on what’s best for the company in the long-term you can’t go wrong.
Yesterday, I was thinking back to my experience in high school. While I had some amazing teachers and treasure many of the lessons that I learned, I wish I had been taught more fundamental ‘life skills’ during my adolescence. That reflection prompted me to write the following tweet:
Less than twenty-four hours later, the tweet has been shared and liked thousands of times. It turns out the idea of teaching “life skills” in schools struck a nerve and catalyzed a thought-provoking discussion about what’s missing from the ‘traditional education.’ Hundreds of people from around the globe shared their perspectives on what should and shouldn’t be included in an education.
By late last night, it was evident that the community had begun to crowdsource a quasi-curriculum for a ‘Global Life School.’ Per Rusty Meadow’s suggestion earlier in the day, I recorded many of the suggestions and consolidated them into an organized list.
Before I go any further, I want to make a few things clear. I don’t pretend to be an expert on writing curricula. Nor am I an expert on the inner workings of our vastly complex and antiquated education system. Nor do I feel our teachers are failing the kids. Our teachers work their asses off, are stretched to the max and are grossly under compensated. They’re doing the best they can given the circumstances. And some do teach these life skills. Additionally, schools are not incentivized to stray far from the core curriculum because test scores matter and dictate funding. Upon reflection, it’s unrealistic and perhaps wishful thinking to expect traditional schools to teach a full menu of ‘life skills’ for a variety of very practical and philosophical reasons.
Here’s what I do know. People need and actually want to learn and / or revisit this material and these skills. It doesn’t take a rocket scientist to figure this out. And we can’t let the responsibility solely fall on our parents, relatives and other members of the community. It’s not fair. First, not everyone has a support team. Secondly, not every support team is well-equipped with the range of skills required to succeed in life. It takes a village. The response on Twitter is clear evidence there is a huge gap and opportunity. I realize there are a number of companies, like MissionU and The School of Life, that are stepping up to fill parts of this void. I am hopeful these solutions and others like them are a precursor to new institutions that will teach life skills to a range of audiences using varied approaches.
Before I leave you with the crowdsourced curriculum that evolved over the last 24 hours, I’d like to share my philosophy on education. Institutions and teachers are critical and we need them to thrive as a society, but the pursuit of knowledge, values, and experiences should be a personal life-long endeavor. Just because you’ve finished a class, graduated with a degree, settled on a career or are a certain age, it shouldn’t mean you are finished learning. We are living in incredible times. Information and access are nearly free and ubiquitous. Billions of people are now able to access the internet from their pockets. Most people with an ounce of curiosity, passion, persistence and a healthy dose of skepticism can really learn anything they want. Truly amazing.
I’ll end with two asks: first, please review the curriculum and let me know if any topics or sections should be added, deleted, combined or modified. Finally, if any of the topics pique your interest, I encourage to go deeper and follow your curiosity. Rather than waiting for traditional schools to develop some of this content or new ‘life schools’ to emerge, you can get started on your own with a little nudge and guidance. Everyone, regardless of age, can be a learner and a teacher. Embrace that.
Global Life School
Personal finance
Basic budgeting
Taxes
Mortgages and leases
Basic banking skills (saving, writing checks)
How credit works (loans, credit cards, mortgages)
How to buy a car
Compute net present value of college (based on cost and potential future earnings)
Basic contracts (e.g. car lease, rental agreement)
Insurance (renters, life, auto)
Investing
Student loans
Health
Basic nutrition
Mindfulness (for mental health)
Basic first aid
CPR
Contraception
Sex education
Fundamentals of exercise
Quant self
Stress management
Key Economic Ideas
Opportunity cost
Sunk cost
Diminishing returns
Compounding
Game theory
Self-sufficiency
Relationships
Conflict resolution
Networking (online and offline)
Providing feedback
Respectful candor
Relationship acuity and qualifying
Listening
Maintain relationships without proximity
Basic social skills (e.g. put phone away for 5 seconds)
Business fundamentals
Basic business concepts (revenue, expenses, assets, etc.)
Several months ago while I was on my Vipassana meditation retreat, I was captivated by the idea that change is a constant. By unplugging for ten days and increasing my sense of awareness, it became very apparent that objects around us and within us, even at the tiniest levels, are always in a state of flux. Despite the fleeting nature of everything, we as humans tend to cling to objects, people, places, memories, emotional states, etc.. We crave permanence even though impermanence stares us in the face. When I returned home, I became obsessed with this question: if everything is constantly changing then why is it so hard for most people to change old habits and develop new habits?
It turns out my question has a number of answers. For starters, certain behaviors become so deeply wired into our brains that we perform them automatically or when triggered. This allows us to perform certain activities without having to think about them. This dynamic allows the brain to focus on more important activities such as those related to survival. Additionally, most people try to change old habits and create new habits but don’t really know how to or give up too soon. There’s not only a lot of misinformation floating around but many people, myself included, try to make huge changes before taking small steps. The evidence is clear: more than 100 million Americans set New Year’s resolutions but less than 8% are successful in their pursuit.
Over the last three years, I’ve become deeply passionate about behavior change and personal growth. During this time, I’ve developed a daily meditation practice, built a highly satisfying sober life, lost nearly twenty pounds, cycled more than 3,000 miles, read more than a hundred books, and created countless other tiny habits. All of these changes didn’t happen overnight. Each behavior began with a small step that eventually grew into a larger habit with plenty of time, practice, and patience. Perhaps most importantly, I relied upon a support network of family, friends, and mentors who held me accountable, provided tough love, shared advice and encouraged me to stay the path. I couldn’t have made these stride alone. I realized change isn’t easy, but it’s certainly possible with the right tools, a bit of patience, a dose of persistence and peer support.
With that being said, I’m excited to finally take the wraps off my latest side project: One Change Club. We are building a community in NYC that helps our members build good habits, one at a time. We believe that everyone has an unlimited capacity to grow, but it’s difficult to develop new habits alone and without tools. One Change Club was created with a simple idea: build a community of dedicated individuals who are committed to creating new habits and supporting each other. We started One Change Club because we wanted something like it in NYC but it didn’t exist. We took the initiative to build it ourselves and share it with you.
One Change Club has three components: a workshop, community, and tools. Our workshop is the initiation into the One Change Club. During the workshop, you will receive a crash course on increasing self-awareness, understanding behavior change, mapping your habits, understanding new habit formation and implementing a plan to achieve your goal. Once you complete the workshop, you will interact with the community on three levels: in the workshop, in our online community and in one-on-one chats with other members. Upon completing the workshop, you will gain access to a variety of tools to help on you on y our journey including a habit tracker, a community app, a daily email, a variety of worksheets and journaling exercises.
Our first three workshops are planned for December 2017 and January 2018. Right now, they’re limited to NYC, but we hope to host workshops in other cities later this year. Space is limited because we’re keeping the first three cohorts small. We plan to give our inaugural members the attention they deserve so they can succeed. We also want to learn what works and what doesn’t before greatly expanding cohorts. I promise we will iterate and improve each cohort based on feedback from members and our learnings. I also promise to learn from and grow with each member. In all honesty, this is a bit of an experiment and I can’t make any guarantees, but the early feedback from prospective members has been super positive. I am truly excited and honored to share the experience with you.
If you’re based in NYC, you can apply to the One Change Club here. Don’t hesitate to reach out if you have any questions, comments, feedback or initial impressions. I hope to see you there.
I’ll leave you with our manifesto:
We believe you have an unlimited capacity to grow. You can become who you want to be. You can change whatever you want to. You are potential. You are progress. You have everything you need inside of you. Heart. Smarts. Guts. Passion. Will. Strength. The road won’t be a cakewalk. You’ll struggle. You’ll stumble. You’ll fall. That’s ok. Everyone does. Failure is part of the journey. You have the freedom to choose how to respond. You can give up or pick yourself up. Have faith. Wipe the mud off your face. Take a deep breath. Look in the mirror. Focus on yourself. Don’t point fingers. Start over. Take the first step. Make it a small step. And the second. Focus on just one more rather than the mountaintop. The goal is progress, not perfection. One step at a time. One day at a time. That is all we ask of you. Nothing more. Be patient. Be persistent. You can do it. You are doing it. You will reach your destination. We believe.
I recently read an excellent essay by Andrew Kortina titled, “They Say the #1 Killer of Old People is Retirement.” In this piece, he discusses the importance of finding purpose and meaning deep into life. Andrew outlines a confluence of factors that are causing mental and financial hardships for baby boomers. Many are struggling emotionally and financially for a variety of reasons including lack of savings, meaningful work and intellectual stimulation. He proposed several interesting solutions based on this simple idea: “I think we can help people continue to feel productive and valued by instilling them with some sense of greater purpose after retirement.” Kortina’s post conjured thoughts and feelings about my father who recently turned seventy-five.
Several years ago, dad was in a tough spot mentally. He had aged out of the workforce and just experienced his second divorce. Additionally, he was living alone for the first time in nearly thirty years. While he had some savings and a predictable income stream from Social Security and an annuity he purchased, this cushion likely wouldn’t be enough if god-forbid there was an emergency or if he is lucky to live beyond his mid-eighties. During this period, my dad would run errands, go to the gym, watch sports and hang around the house on most days. That was his routine. My siblings and I could tell he was depressed, lonely, hopeless and stuck in a vicious cycle.
My dad’s situation isn’t unique. There are more than 70.4 million baby boomers in America according to the U.S. Census Bureau. Workforce participation among boomers is on the decline. Nearly half of boomers haven’t saved for retirement and sixty percent are relying heavily upon Social Security to be their safety net (link). Furthermore, one in seven boomers is treated for depression, which is a higher rate among other generations of American adults (link). Finally, divorce among Boomers is increasing. The number of divorces among that age demo has doubled since the 1990s (link). When looking at the various data points, it turns out that my father isn’t an outlier.
One day last year, I was having a heart-to-heart with my father. We were trying to brainstorm hobbies, odd jobs, volunteer opportunities and local organizations where he could spend his time and perhaps earn a few bucks. I suggested joining the local senior center. That idea didn’t resonate because he still felt young and couldn’t identify with being a senior. We talked about him becoming an usher at Fenway Park since he loves the Red Sox. That likely couldn’t work given the night games and the forty-five minute commute to and from Boston. He suggested working at a friend’s restaurant as a host but they’re only open for dinner. My brothers and sisters also got involved and suggested a bunch of ideas but none seemed to stick.
I felt like we were at a dead end until one afternoon when I was talking with my father about his situation. For some reason in that moment, Viktor Frankl and his seminal book, ‘Man’s Search for Meaning,’ suddenly came to mind. The book chronicles Frankl’s experiences in the Auschwitz concentration camp during World War II, and describes his psychotherapeutic method, Logotherapy, which is founded on the belief that human nature is motivated by the search for a life purpose. Fulfillment achieved through pursuit of meaning in one’s life. Frankl famously wrote, “Everything can be taken from a man but one thing: the last of the human freedoms — to choose one’s attitude in any given set of circumstances, to choose one’s own way.” In that moment, I said to my dad, “You need to find something that will give you purpose and meaning in life.”
Several weeks later, I got a call from him and he sounded upbeat. He proudly announced that he was going to apply to be a substitute teacher in the local area. While my dad was a sales executive for most of his career, he has always had a passion for teaching, coaching and helping youth. I could tell he was excited about this potential opportunity and this could be the solution he and my family had been looking for. He approached the application and interview process as if he was going for a full-time job with a Fortune 500 company. He prepared for hours, gathered strong references and followed up after each of his interviews. He left no stone unturned. It wasn’t very long until he had a job as a substitute teacher in multiple school systems.
Today, my father is a full-time substitute teacher at Salem High School. He loves going to school every day and interacting with the students and the faculty. They challenge him (in a positive way) and help him remain young at heart. No job at the school is above him. He’d mop the floor if they asked him to. He’s contributing in his own way. He’s healthier physically and sharper mentally. He believes he’s making a difference. At age seventy-five, he has managed to find his calling in life. Isn’t that amazing? Most importantly, my dad has finally found meaning and purpose in life. I honestly haven’t seen him this happy and fulfilled in the last twenty years. Every few weeks, my dad will thank me for encouraging him to seek meaning and purpose. The nudge, while simple, was all he needed.
So why did I tell my dad’s story? I feel it’s our generation’s responsibility to help our parents and elders find meaning and purpose should they need a compass. They paved the way for us and now we’re standing on their shoulders. There’s so much we can learn from them. There’s a good chance that we’ll want the same support and guidance from future generations. Helping boomers find a new north star might be one of the biggest untapped opportunities that not enough smart people are focused on. Sure, there might be economic upside in cracking this nut, but I feel there are far larger benefits: less-depression, more quality time with loved ones, better relationships, more independence, healthier bodies and minds, and hopefully longer lives. That seems like a no-brainer to me.
My First Think Week: Going Off The Grid for Exploration and Reflection
Sundown on one of my many nature walks
Earlier this month, my good buddy, Mike Karnjanaprakorn, Founder / CEO of Skillshare, stopped by our place in the Catskills for a few hours. He was just coming off his seventh ‘Think Week.’ Over lunch, Mike explained the inspiration behind this annual ritual and outlined the basic structure he has used over the years. He even wrote a useful blog post about his experience a few days later.
Mike initially got this idea from Bill Gates, who takes these weeks several times a year to find inspiration and go deep into a few areas of interest. Bill would also read a variety of essays and briefs written and submitted by Microsoft employees and researchers. In fact, Bill dedicated one of his Think Weeks in the 90s to understand the coming wave known as the internet (see his memo, “The Internet Tidal Wave”). Several other friends have recently taken a Think Week. This includes Dan Teran from Managed by Q who swore by his experience diving deeply into the future of work.
After talking with Mike and Dan, I decided to plan my own Think Week since I’m in a career transition and likely won’t have much downtime once I decide to go full force into my next endeavor. My first order of business was to block out five days on the calendar. Rather than flying by the seat of my pants once the Think Week kicked off, I dedicated a half a day to develop a list of simple rules, set goals, clean out my Pocket, and select dozens of essays and articles. I reasoned that having structure in place would help me focus and get the most out of my experience.
Putting some simple rules in place was helpful to ensure I created a conducive environment for learning and reflection. Here are the rules that I observed throughout the week. Stick to your themes or areas of interest. Build a firehose of content that aligns with those themes and your overarching goals. Rise by 6:30am and lights out by 11pm. Meditate first thing in the morning. Exercise daily before lunch. Take a walk in the late afternoon. Remove all distracting apps from your devices. Limit Wifi and web browsing. Schedule no meetings. Check email once per day for no more than fifteen minutes. Limit phone calls to no more than two per day. These rules were essential boundaries for keeping my ADHD in check. I recommend you create you own simple rules if you embark on your own version of a Think Week.
Once I had these simple rules in place, I then developed a list of outcomes I was hoping to achieve during the Think Week. The first goal was to develop three personal and three professional goals for the next twelve to fifteen months. The second goal was to determine one focus area for the next twelve to fifteen months so I know exactly how to spend my time. The third goal was to satisfy my intellectual curiosity. The fourth goal was to journal and find inspiration for future blog posts. The fifth and final goal was to take notes on the readings so my learnings were captured.
Finally, I selected a range of subjects that have been top of mind for me lately. I purposefully didn’t choose just one topic because I badly wanted to satisfy my intellectual curiosity and there wasn’t one topic that I felt passionate about. I ultimately decided to spend my time diving into a dozen or so various topics. These included crypto, china, decentralization, philosophy, augmented reality, artificial intelligence, energy, venture capital, investing (broadly speaking), global health, equality and cities.
The week was more challenging than I anticipated. Being up in the woods without any human interaction was probably the hardest part. By the end of each day, I was exhausted mentally from hours of reading and writing. By the end of the week, my brain was fried, I found it difficult to concentrate and I was craving human interaction. On the last day, I slept until 7:30am, relaxed, went for a long bike ride, and reflected on the big questions that were still weighing on me. While I was able accomplish most of my objectives, I wasn’t able to cover as much ground as I thought I would. I still have dozens of unread essays and articles saved in my Pocket. Also, I was reminded that I’m badly addicted to my phone and it’s the biggest productivity killer in my life. While the full experience was enjoyable, it wasn’t as relaxing and easy as I thought it would be.
Despite the challenges, my first Think Week was definitely positive, rewarding and successful. I’m glad that embarked on this journey and invested the time. I now have clarity on how I should spend my time, what I need to say no to, which areas I’d like to further investigate, the changes I’d like to make, and, most importantly, where I’m heading in the next phase of my career. I’ve found that taking a pause and slowing down is necessary for personal and professional growth. The evidence is clear: I’m returning to the city rested and feeling positive about the road ahead. I still have some anxiety about the future but that’s natural. I’m prepared mentally and ready to embrace the uncertainty and risk that lies ahead.
In closing, I highly recommend setting aside some time for a Think Week if you’re looking to go deep in a particular area, facing a big decision and / or experiencing a life transition. Keep in mind it doesn’t need to be a week to reap the rewards. If you’re unable to take a break from work or get away for five to seven days, consider taking a ’Think Weekend’ or ‘Think Day.’ You can also do it anywhere — it doesn’t have to be in the woods — as long as you create an optimal environment for learning and reflection. With enough advance planning, you’ll be able to block out the time, create your own simple rules, build an agenda that fits your schedule, and zero in on the big questions that you’re facing. The idea is to get away, unplug, read, write and focus. You’ll be glad you invested the time and energy in yourself.
Finally, friends and family have asked me to publish a list of the content I consumed throughout the week. While this list isn’t comprehensive, it includes a majority of the articles, research reports, podcasts and videos I found most thought provoking or inspiring. Enjoy!
The Third Rail: In Baltimore, Public Investment — And Disivnestment — in Transportation Have Figured Greatly in the Persistence of Racial and Economic Inequality (The Place)
SF Spends a Record $241M on Homeless, Can’t Track Results (SF Chronicle)
Fostering Profits: An Investigative Look into the For Profit Foster Home Industry (Buzzfeed)
Black Lives Matter is Democracy in Action (The NY Times)
The End of Apartheid in South Africa? Not in Economic Terms (The NY Times)
Why Every Indiana Inmate Could Soon Have a Tablet (USA Today)
Last week, I published a blog post titled, ‘Decoding the Qualities of a Great VC.’ The spirit behind the piece was to spark a conversation about what makes a good venture investor and whether that can be predicted. It was generally well received until I saw this Tweet from Nathalie Molina Nino, CEO of BRAVA Investments, an investment platform that cares less about creating the next woman billionaire and instead backs businesses that create wealth for a billion women:
I immediately became defensive because I had good intentions in writing the post and felt I highlighted ‘universal’ attributes of great investors. Without giving it any thought, I quickly replied to Nathalie with the following tweet:
At that point, I became uncomfortable because my ignorance was obvious. Growing up in a predominately white upper middle class town in Massachusetts, I was indirectly taught that privilege was about wealth rather than race, gender, sexual preference, etc.. I incorrectly believed I wasn’t privileged because a) I was raised by an amazing single mother who worked two blue-collar jobs, b) I’ve earned an income since my early teens, c) I financed my college education, d) and I’ve worked hard to be self supporting for nearly two decades. It dawned on me through those various exchanges that I have been eating my own bullshit. What I began to quickly realize is that wealth is just one component of privilege and arguably the weakest one.
Later that night, I was talking with my wife, who happens to be Asian American (and more self-aware of her life’s privileges), about the exchange on Twitter. Eliza immediately called me out for lacking empathy and explained that I was wrong on many levels. She pointed out that I’m oblivious because I don’t even see how my own privilege as a white man in America has contributed to my success. Eliza asked me how many opportunities in life I’ve received because I look and talk like those who made the decisions. I didn’t respond to her because I knew the answer. This was difficult to hear and accept because she was right and there was no logical argument that I could make.
Several days later, Nathalie’s tweet and my conversation with Eliza were still weighing on me. I’ve since learned that the idea of privilege dates back to the early 1900s. Famed American civil rights activist W. E. B. Du Bois wrote that although African Americans were conscious of racial discrimination, white Americans did not think much about the effects of racial discrimination. The concept didn’t really enter the mainstream until 1988 when activist Peggy McIntosh published her seminal article, ‘White Privilege and Male Privilege: A Personal Account of Coming to See Correspondences Through Work in Women’s Studies.’ McIntosh describes her understanding of “white privilege” (unearned advantage based on race) which can be observed systemically and individually, like all unearned privileges in society (e.g. privilege related to class, religion, ethnicity, sexual orientation, age, ability).
One year later she published a shorter version titled, ‘White Privilege: Unpacking the Invisible Knapsack.’ These words in particular struck a chord: “After I realized the extent to which men work from a base of unacknowledged privilege, I understood that much of their oppressiveness was unconscious.” In this particular essay, McIntosh outlines twenty-six privileges which she, as a white person, experienced in the United States. Many of them are powerful examples but this one stood out: “If I want to, I can be pretty sure of finding a publisher for this piece on white privilege.” After reading her piece and starting to educate myself, it was impossible to refute that being born white and male and American (the birth luck trifecta!) provides me certain unearned privileges in life that people of other gender and skin colors simply are not afforded.
After I read these essays, I began to contemplate the privileges I experience on a regular basis. Like Peggy McIntosh, I composed a list of these to shed light on what I take for granted. The list included everything from ‘I don’t often think about the personal safety of myself or my loved ones.’ and ‘I don’t have to think twice when asked a question by the police.’ to ‘I don’t have to worry about finding work that is both fulfilling and financially rewarding.’ While I still have much more to contemplate, this exercise has also put things into perspective.
What I’ve also come to understand is these dynamics run DEEP. Really deep. So deep they’ve been systematically engrained into our way of living over hundreds of years. So deep they’re unconsciously programmed into our brains. So deep they perpetuate capitalism, globalization and power. So deep they transcend race, gender religion and national boundaries. In fact, so deep that I’ll likely never understand them regardless how much empathy I develop, how many conversations I have and books I read. These dynamics are extremely powerful, complex and twisted.
Warren Buffett famously said, “I won the ovarian lottery.” So did I. I don’t want this to make me a bad person and I don’t want to feel ashamed. I also don’t want to discount the thousands of hours of hard work I’ve put in over the years. Like others, I don’t know what to feel sometimes. This is very complicated. What I know is this: I have a good heart, an open mind and a desire to expand my worldview. Thankfully, this experience has been humbling and enlightening. I have no doubt it’ll have a lasting impact on me.
In all honesty, I’m still processing all of this and I don’t truly know what I’m talking about yet. I understand this is an awkward conversation and I’m willing to risk saying things incorrectly so I can learn to say them right. I’m certainly open to feedback and criticism. This certainly doesn’t make me special or a hero. I don’t expect a pat on the back. I’m writing this because I believe I need to speak up about this topic and express how I feel. Raising my daily consciousness about the realities of privilege and acknowledging that it’s not an even playing field is an important first step for me.
Finally, I’d like to apologize to Nathalie, Katherine and others for getting defensive about their tweets rather than initially taking a step back and considering their perspective. I’m grateful that these women and my wife forced me to look in the mirror and think about such an crucial topic that’s often swept aside out of habit, ignorance, fear and/or hatred. Thank you for speaking up and challenging me. We need more of this. Not less. I’ll end with this:
“Our lives begin to end the day we become silent about things that matter.” Dr. Martin Luther King Jr.
Last Friday, I was talking with Parker Thompson of AngelList and creator of Startup L Jackson about a range of topics from investing in pre-seed companies to building a venture firm from scratch. Towards the end of the call, he asked what I thought are the attributes of a successful VC. Rather than answering on the spot because we were essentially out of time, I told him that I’d give the question more thought and I’d email him my thoughts over the weekend.
Later in the day when I had some downtime, I began to consider Parker’s question and asked myself the following related questions: What makes a good VC? What’s important to venture firms, limited partners and founders? Who are the best VCs and what makes them special? After considering those questions, I grabbed my notebook and wrote down the attributes that I felt were essential.
Curiosity — thirst for knowledge and learning.
Expertise — business, engineering and/or product chops developed through experience.
Passion — genuinely excited by new ideas, innovation and entrepreneurship.
Focus — ability to drown out noise and spend time on what matters.
Network — authentically develop and maintain relationships at scale.
Sales — ability to sell and build consensus internally and externally.
Emotional intelligence — empathize and assess motivations, desires, needs and intangibles.
Conviction — ability to maintain excitement in the face of opposition and skepticism.
Rather than sending Parker an email with my thoughts, I decided to share the list on Twitter, cc him on the post and participate in the conversation that unfolded. Several founders and investors chimed in publicly and privately to share their views and expand the list I started. While I don’t necessarily agree with all of the suggestions, the other attributes that were mentioned included:
Quick learner — ability to quickly consume, learn and absorb information about a wide variety of topics.
Friendly — generally pleasant to be around and likable (while I try to respect everyone, I’m not sure this is a prerequisite for being a great investor).
1st principle thinker — someone who can boil complex ideas and phenomena down to their fundamental truths.
Stoic — remain calm under pressure and turbulence.
Humble — modest in behavior, attitude or spirit.
Vision — can see where the world is heading.
This combined list of fourteen attributes is far from comprehensive but I believe it captures many of the important ones. I wonder how the world’s best VCs — investors like Michael Moritz, John Doerr, Marc Andreesen, Shana Fisher, Fred Wilson, Bill Gurley and Chris Sacca — would describe themselves and their most successful peers. I also wonder if their institutions have developed a system to identify the next great generation of investors based on a set of attributes and experiences. Their firms have managed to stay on top for multiple cycles and I don’t think it’s by accident. Given people and networks are at the center of the VC business, perhaps they’ve discovered the hidden answer to the talent equation through identifying, hiring, training and retaining remarkable people.
Several years ago, Jerry Neumann, a respected angel investor in NYC, catalogued the background of every great VC firm’s founders, trying to answer this question. Here is the output from that effort which he titled, VC Genealogy. According to Jerry, the most interesting thing he found is that aside from the expected bankers and lawyers and tech-company execs, there were some journalists in there (Moritz being the most prominent). The qualities of journalists stood out to him because they’re able to track down the right people to interview, ask the right questions, validate the answers they receive and communicate their findings succinctly. Clearly being an effective communicator is critical.
That brings me to the million dollar question: Is it possible to create a platform or system to identify and train the next crop of top venture investors in the world? What would it look like? Perhaps the system is driven by software. Or perhaps it’s a new type of organization in the vein of YC that identifies, trains and networks investors. Maybe it’s a hybrid. I could imagine such a system would score, weigh and rank the candidates based on criteria, attributes and experiences. How would such a program or system grade intangibles or soft skills? Could it identify the power of someone’s network? What are the potential inputs of such a system and what could the output look like? The questions are seemingly endless but it’s a fun thought exercise worth considering.
Maybe this is a pipe dream given there are so few truly great investors and VC is considered to be an apprenticeship business where the learnings take place over many years and throughout cycles. VCs face so many different problems over their careers or even over the course of a portfolio company’s path — that even the best suited have to do a few years of on-the-job learning to be great. Would Fred Wilson be the same investor if he hadn’t experienced the dot com boom and crash at Flatiron Partners? Did Bill Gurley receive years of unique mentorship from the founding partners of Benchmark? What were the key insights Shana Fisher developed while at IAC? Did Michael Moritz discover the ideal founder archetype by writing about Steve Jobs and Lee Iacocca or did he learn from Don Valentine and his predecessors at Sequoia Capital? How did those experiences and interactions shape their investment tastes and philosophies? Given experiences play such an important role in shaping an investor, I’m honestly not sure if it’s even possible to develop a system that delivers alpha by finding and training future investors unless it’s a longer term endeavor.
All that said, experimentation and time will tell us if this is possible. I have a hunch we’ll witness the emergence of a ‘YC for investors’ in the next few years. While venture investors don’t match the speed of innovation as our founder peers, VCs have attempted to create new models and programs over the last few decades. For example, DFJ franchised (brand), 500 franchised (brand), 500 has a VC class (edu), Kauffman Fellows (edu), AngelList syndicates (tech, network), and scouts (network). We’ve seen tech, network, education, and brand as things that people have tried in various combinations to make new VCs. The obvious other options being “hire and train” and “learn on my own dime.” I suspect there’s more to come which is always a good thing.
In closing, I hope any new innovations will be intelligent enough to find the next great VCs based solely on proven attributes and experiences. I also hope these efforts will expand the pool of candidates (think: gender, race, geography). Given the ceiling to break into VC is extraordinarily high — capital, networks, experience, geography — I believe expanding the talent pool would be a good thing for funds and limited partners. That could very well be one of the lasting benefits and contributions these innovations bring to the industry. It’s my hope that in twenty years the list of the great venture capitalists is a diverse set of humans with strong attributes and abilities that have been validated by the giants who helped build the industry.
If you have some thoughts on what makes a great VC and would like to contribute to the discussion, please hop into our thread on Twitter. I’d love to hear from you.
(thanks to Parker Thompson, Jerry Neumann and Leo Polovets for reading an early version of this post)
