VC Learnings
I’ll be keeping this list up-to-date with my VC learnings.
Any questions— reach out to me on Twitter.
This list contains some of the best advice I’ve heard and read on decision making, exits, people, ops, founder characteristics, boards, etc.
Decision Making
The best ideas are the ones which make the least sense
Make a choice
Make an explicit choice. On fund size, on junior people, on follow on investments etc. If you don’t you’ll drift with the popular thought.
Say no in 60 seconds. Everyone should strive to say no to potential investments in 60 seconds. This maximises your chances of being available/being able to act upon something serendipitous but also forces you to really define at your core what you believe in.
Not Caring
There are two drivers of enduring investment performance:
- Doing something others don’t.
- Doing something others do but during a time they don’t want to.
A few things that help you get there:
- Not caring about looking dumb when you’re confident others are being dumber.
- Not caring about having an imperfect portfolio.
- Not caring about the reputational hit that comes from changing your mind.
- Not caring about not having no explanation for the majority of events.
Risk
For most investors, loss is the bad outcome they’re concerned with. But, the truth is, if it’s the probability of bad outcomes, there are really at least two risks that we should think about.
One is the probability of loss and the other is the probability of gains that you miss out on.
Think differently
To be an out-performer, you have to think differently from the crowd. But most of the time, the crowd is about as close to being right as you can get. Ergo, the problem.
So, to be an above average investor, number one you have to think differently from the crowd.
But number two, you have to be right.
So, second-level thinking is thinking which is different and better.
Paid Pilots / MRR
- Don’t treat Paid Pilots as MRR.
How to Think about Moats
Lots of VC Resources
Exits / Valuations
Reason to sell
- A reason to sell as a founder is not that you’re exhausted, but because you’re out of ideas.
ARR multiples
- $0.5M ARR is the point from which ARR multiples make more sense
Valuations
- T2D3 and why that’s the recommended growth path
- 2019 SaaS valuations (June 2019)
- Cross-industry valuations — Crunchbase (Aug 2018)
People and Ops
Quarterly Offsite
For the Portfolio review write all the companies on cards, shuffle and then go through them one by one.
One person who isn’t the lead gives an update on the company. The lead investor gets to speak last and answer any questions.
The process reveals whether the lead investor has been good at sharing the information flow with the whole team.
Sabbaticals
Force everyone to take a one-month sabbatical with no email/contact every year. Prove the redundancy and that everyone does know everything about the whole portfolio.
+ partner comes back with new ideas about the business after reflecting.
Seating arrangement best practices
Captable.io Scenarios
Building a Career in Venture << excellent blogpost by Sam Wong
Founder Characteristics
These personality traits of determination and communication and the ability to articulate a vision for the world and explain how you’re going to get that done
— I used to think that that was so hard to assess in 10 minutes, it was maybe impossible to try, and YC interviews used to be like an hour. I now think that most of the time, we could get it right in five minutes.
- Competitiveness — sometimes it’s a hidden chip on their shoulder
- Learn it all’s — obsessed with their customers
- Network — for the service to the customers
- Long term — plan unnaturally long into the future
- Experience is generally overrated
- Adversity in the past is important (growing up, prove people wrong etc)
Board
Board Meeting Basics + System (my write-up) + medium here
“Continuous Boards”
How to Manage Your Board
How to run effective board meetings
How to choose Board Members — Aconex Story
Board Meeting Deck — Templates
How to be a great board member
BEFORE Meeting
- Read the materials in advance
- Speak with the CEO before the board meeting
- Read the tea leaves on CEO / Founder psychology
- Have calls or emails with other board members before the board meeting
- Be thoughtful about time management before the meeting starts
DURING Meeting
- Put your electronics away and be present
- Understand the role of listener, enquirer & sparring partner
- Avoid micro-management of non-essential items
- Push for others to speak
- Don’t audition for smartest person in the room
OUTSIDE Meeting
- Understand that most of the value comes outside of the boardroom
- Build strong relationships with board members, stakeholders and key investors
- Help the executive team to prioritize and execute
- Get to know the broader management team
- Know when to be proactive
>> lots and lots of Investment reading — full library here.
Navigation on mobile is harder
— here are the other pages you might want to read:
