Totality Matters: A Venture Capitalist’s Lessons from the Eclipse
Although I had been interning at Origin Ventures since last February, I started as a full-time Senior Associate only a few weeks ago. This past Monday, I took advantage of Origin’s work remote policy and drove to northern Missouri to experience the totality of the Eclipse of the Century. Besides being an incredible spectacle and one of the most remarkable and awe inspiring moments of my life, there are a few metaphors that are relevant to venture capitalists and entrepreneurs. I wanted to kick off my tenure at Origin by sharing those here.
Forecasts are always wrong
My wife, friends, and I delayed making the decision to travel to Missouri until the last minute so we could see the weather forecast. As of Sunday, the weather was iffy: cloudy with a chance of thunderstorms throughout northern Missouri and southern Illinois.
In my former life as an energy trader, I used enormous amounts of data and rigorous analytics to try and forecast the future price of electricity. Similarly, as venture capitalists, uncertainty is the only thing we know for sure. A forecasted set of financials will assuredly not be right, and our current view of where a market is heading isn’t perfect. Still, we have to make the best of this uncertainty, and our goal is to minimize that uncertainty and the associated risk. Origin does that through intense due diligence, and have started to build a data software called DOVe (Data Origin Ventures — original, I know) to analyze startup data.
For the entrepreneur, uncertainty is even more real and palpable. Each decision about the trajectory of the product or business can feel overwhelming. Fortunately, today there is more data than ever that can help guide a company — about workplaces, customers, property rights, market trends, marketing, and so on. The more an entrepreneur knows and can minimize uncertainty, the better prepared he or she is.
So how’d we deal with the weather uncertainty? We looked at a dozen different weather sites, and finally hedged our bets by going to a vineyard in the area with the most promising forecast. Worst case scenario, a few hour break in the afternoon with a glass of wine wouldn’t be so bad.
99% vs. 100%
I debated staying in Chicago because the 87% sun coverage visible from the city seemed pretty good, right? Wrong. Witnessing the serenity, the horizon, and the beauty of the blocked out sun during the totality didn’t compare to the moments right before or right after. Even the smallest sliver of the sun at 99% was completely different than the two minutes of totality.
Like the lucky 3.8% of the nation’s population who live within the path of totality, only a small portion of startups will be attractive to venture capitalists. I am not looking for 87% or even 99%. I am looking for that select group of companies that has a chance at being truly special. That group is small and carries its own (often greater) risk, but I’d rather risk getting to totality and failing than not having the opportunity to see it at all. Same goes for the risk-return tradeoff we look for in an early-stage investment.
Which brings me to my next point.
Getting to 100% takes hard work
Thanks to family obligations, we couldn’t start the 5 hour drive to St. Louis until Sunday evening. Then, I had to take phone calls from the car and do work out of a cafe on the side of the highway. The return drive was horrendous, taking us nearly 8 hours because of traffic and construction. All in all, it was a ton of effort and aggravation for an admittedly short spectacle.
But it was worth it. The best things in life aren’t necessarily easy, and almost everything worth obtaining takes hard work and dedication. This is true for eclipses, love, family, and… entrepreneurship.
Being an entrepreneur is harder, more time consuming, and more of an emotional rollercoaster than any desk job could ever be. But the success can be even sweeter and the reward even more gratifying. At Origin, we provide our resources and experiences to help ease this burden, but at the end of the day, the entrepreneur is the one driving the ship.
You can’t succeed alone
Perhaps a more important question than “was it worth it”, is: “did I go on this journey alone?” Absolutely not. Driving 12 hours in a 24 hour period while trying to do a full day of work and take 2 hours to see the eclipse isn’t feasible without a little help. The four of us took turns driving, napping, working, entertaining the driver, and using our phones as hotspots. Together, we accomplished more and did so in an easier manner than we ever could have alone.
This, too, applies to entrepreneurship. There are some entrepreneurs who think they can build a startup by themselves. Some can. Most can’t. At Origin, we strongly prefer to invest in multiple-founder teams. It’s easier to get to the top of the mountain with multiple backs to shoulder the load.
Failure is part of success
There was a real chance that I drove 14 hours, took time off work, imposed on my St. Louis friends, and stressed about cloud cover for nothing. It was uncertain if the sun would be visible from anywhere in eastern Missouri. After weighing the risks, I still decided to make the trek. And if clouds had covered the sun, despite my research, I would have been disappointed and the trip would have been a failure.
Failure looms in venture capital, as well. Not every deal returns 10x; not every investment looks prescient in retrospect. While we meticulously model and dig deep for due diligence, there are some factors that we can’t know, so failure is always a possibility. When a deal doesn’t work out, we cut our losses, learn whatever lessons can be gleaned from the experience, and move on. That’s part of VC, entrepreneurship, eclipse-chasing, and life.
These are all truths that I have taken to heart over the last 18 months of working at Origin. Venture capitalists sometimes get a bad reputation because they lose sight of some of the above lessons when dealing with entrepreneurs. The four partners at Origin have taught me to be empathetic and respect each startup and founder. Most companies won’t be in that sliver that we consider investable, but they still deserve respect, and, when appropriate, guidance.
For those startups that do fit in “the totality,” I look forward to working together and helping build successful and sustainable businesses. If you have a startup you think is in that special band, email me at email@example.com, or tweet me @sbstern.