Why Questions are More Important than Answers

A Hypothesis

One common mis-perception of VCs is that our life is fundamentally about finding answers. This is wrong; our job is/should be about finding the right questions. Einstein once said:

“If I had an hour to solve a problem and my life depended on the answer, I would spend the first 55 minutes figuring out the proper questions to ask. For if I knew the proper questions, I could solve the problem in less than 5 minutes.”

People watch Shark Tank and they see a Socratic Q&A where the panel of investors pushes hard against entrepreneurs for answers but the answers themselves are pretty limited things. They are concrete, fixed in a time and a place and easy to manipulate. Answers mark the end of a line of inquiry and are a roadblock to imagination. I’ve seen enough deals that any answer an entrepreneur gives in a pitch will be one that I’ve heard before. Rather than focusing on answers, I think there is a great deal to be gained by focusing on questions. Not on the questions vcs ask the entrepreneurs but on the questions they ask themselves. More than anything, the questions we ask ourselves are windows unto our soul. They shine a light on the things we think about as well as how we think about them. The value of this information to a seed stage investor cannot be overstated. If an investor knew the questions an entrepreneur asks themselves and could tap into the inner dialogue of the entrepreneur, the investor could gain months worth of insight in short order. It is the Pareto principle applied to diligence. It is no accident Google is one of the top three most valuable companies in the world. Google has direct access to the question stream of billions of people.

An Experiment

To test out the thesis that a question stream provides valuable insight I recently took two weeks in the middle of January and decided to try and log every substantive question that occurred to me. The following list of questions is what I produced.

1. Is fitness epigenetic?

2. Is ginger an appetite suppressant?

3. What is the most socially damaging way to legally spend $1B?

4. What is the historical horse population in the U.S.?

5. How do underwater submarines refill air tanks? Electrolysis?

6. What happened to my Erik Kent and Cartograph fall wine allocations?

7. How is X company (we passed on) doing?

8. How many pedestrians are killed on the Vegas Strip each year?

9. Would Bernie Sanders be the first Jewish president?

10. What are some home remedies for a kids earache?

11. What are the colors for each rank of the Court of Master Sommeliers?

12. Who owns Rn74

13. What is a two-piece Ah So called? Why is it designed that way?

14. What is the result when you divide by zero? Theories/writing?

15. What is the definition of “Hot Take”

16. What is orca ice tipping?

17. What are the odds of receiving 5 aces in pai gow?

18. What accidents have there been with nuclear submarines?

19. What exactly is a tail strike and how common are they?

20. When does “Who is Mr. Robot” return to TV?

21. What is the best order in which to read the Star Wars books?

22. If Americans were a healthy weight on average how much more efficient would cars be? How much fuel/co2 would be saved?

23. What is the inventory turnover rate at junkyards?

24. What is the cost of traffic accidents to healthcare in the U.S.?

25. How frequently are people born with extra fingers?

26. What is the average cost of acne treatment?

27. What interest rate will the IRS currently accept on convertible notes?

28. What is a pepino melon and how do I eat it?

29. What is the tree of death?

30. What is the average ocean depth?

31. What is the story behind the robot the Russians sent to the moon?

32. Is there a term for googling yourself?

33. How many swing voters are there in the US?

34. How many swing voters are there specifically in the states that can go either red or blue?

35. How much would it cost to make Social Security Solvent for the foreseeable future?

36. How big is the U.S. budget for infrastructure?

37. How big is NASA’s budget? The NSF’s budget?

38. What is the T4M model Jason Lemkin is always talking about?

39. What is the slang word for tweet “twete” used for?

40. What are toreador pants?

41. What is the image on the cover of the “Dirty Minds” record? Is it a trick image?

42. Who were the investors in Booster Fuels?

43. What is the etymology of the word “sport”?

44. Was delayed gratification / the ability to play the long game one of the seven habits of highly successful people?

45. How do I find bibliogram data?

46. What is a threnody?

47. When do rattlesnakes hibernate? Wake up from hibernation?

48. What is DOMS?

49. How many acres of grapes are planted in the U.S. and the rest of the world?

50. What is Vattels’ definition of a natural born citizen?

51. Why do I like spicy foods, what is the mechanism?

If you read through this list you get a fantastic snapshot of the way I think and what I was thinking about over these two weeks. The themes you can probably tease out are wine, a trip to Las Vegas, my daughter’s ear ache, a few questions raised by books I was reading, the election, a diet and exercise regime, an article I was researching as well as some more eclectic random inquiries. The question stream might not be enough for you to know who I “really” am but I guarantee, it is a better indicator than any regular 1-hour conversation.

Real Life Application

Practically speaking turning the question stream, which functions well as a tool for retrospection, into something that works for inspection is not straightforward. Most people do not keep question logs and very few would be willing to share their search histories (even if edited to be sfw). Question logs aren’t necessary however, what is necessary is finding a way to supercharge your insight into another person. There are a couple tactics that can be derived from this insight and from the tried and true venture capital practices.

Focus on the Entrepreneur not the Business: In an initial meeting or phone conversation between the seed investor and the entrepreneur the business substance should be the focus. After all, both the entrepreneur and the investor need to know if the company even fits into the investor’s focus. However, once the basics are out of the way and both parties have some interest in investing time into deciding whether to pursue a relationship, the focus should be on who the entrepreneur is as a person. This second or third meeting, whatever it is, should be about how the entrepreneur thinks about what they think. Basically this conversation should cover exactly what an HR manager would not want you to cover. Talk about politics, religion, family, the singularity, the implications of gravitational waves, what the world will be like if life spans are measured in centuries, the last 5 books each person has read, the desirability of a guaranteed minimum income and anything else the entrepreneur thinks about when they aren’t building their product.

Embedded VC: Seed stage VCs can take a lesson from wartime journalists. Once both parties have decided that an investment is theoretically a fit, the investor and entrepreneur should find a way to work together for a period of weeks or months. There is no better way to gain insight into a person than by working side by side with them. See how the founder responds to adversity, observe their management style and watch a sales process. Without getting access to someone’s internal question stream there is no better way to learn about how they think. This process has major advantages for the entrepreneur as well. The founder gets to learn what it is like to work with the VC. Equally important for the founder is that the investor will know so much more about their business and team that they may actually be able to deliver the tangible value all VCs hope to deliver. The relationship building that goes on in this process shouldn’t hurt the founder’s chances of a follow-on investment either.

These tactics are exceptionally time consuming. They are not easy or comfortable and they are not for everyone but they are 100% worth the investment. If investors and entrepreneurs invest this much effort in getting to know one another up front, the worst thing that happens is each walks away with a close relationship that may develop into something more in the future. On the flip side when magic happens and these tactics lead to an investment the chances of success are substantially higher and the working relationship between the investor and the entrepreneur will be worlds better.