Tag Archives: Investors

Time and Money As a Function of People

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People: The Uncertainty Factor

Last week, Fred Wilson wrote a post about time and money, and how to value each of them against one another within the context of investing. In it, he broke down a series of considerations which each impact the time-money balance. Rereading through it again, though, it occurs to me that a lot of Fred’s considerations also point to another, perhaps more subtle factor: people.

The people factor weighs heavily on the time-money dynamic, and arguably has the potential to significantly alter one’s perceived outcome. Inasmuch as the time-money assessment is predicated on the concept of effort—that is, how much effort one must put in to a venture in order to effectively procure a sufficient return for one’s investment (both time and money herein)—that effort is nonetheless dictated (or at least impacted) by the people around whom it centers.

Much of Fred’s argument—broken down amongst four examples—revolves around the notion of uncertainty as it applies to people. Uncertainty in this case (or these cases) stems from the fact that people are inherently different, and what holds true for one may not necessarily hold true across the board.

This is why so many investors articulate “the founder/team” as one of the most important factors—if not the most important factor—in their decision to invest. As Hunter Walk notes in his response piece to Fred’s post: “…we don’t invest in people we don’t want to spend time with, even if it could be a profitable investment.” Herein, the investors clearly value their time simply as a function of the personal connection they feel with the founder(s).

The Value of Evaluating Relationships

Yet as Fred notes, the reverse is true too: founders are just as much playing a “game of people” as investors are—the return on an investor’s value to a founder most times goes far beyond the money. The investor is similarly in the position of proving to the founder(s) that s/he is able to balance his or her portfolio while still delivering the necessary value to the startup company.

Evaluating people and relationships helps to assuage the challenges on both sides of this equation. When people learn to know what they’re looking for in a partner (be it a founder in an investor or vice versa)—and to articulate that to themselves, their team, and prospective collaborators—they are able to dramatically increase the value factor in the overall equation. This directly affects the time-money portion of the equation. An investor’s time is better utilized because the founder(s) can communicate their needs and vision, and thus deploy the investor’s money in a more focused manner (all while keeping open lines of communication as to how and why certain strategies might have been taken). The dollar value of the investor’s money thus increases, which increases (again) the value of their time input.

All of these factors work similarly axiomatically for founders looking to extract the most value from their potential investors.

Who You “Click” With

The evaluation of people—being able to discern who you “click” with and the type of personality which best fits your portfolio (or startup) strategy—is key in evaluating one’s time commitment to a project. The time-factor, which Fred articulates should be priced into early-stage investing math, can in fact be thought of as the people-factor. In the early stages especially, the clear dollar value of a company may not be readily apparent and some other—perhaps less tangible—metric may be necessary to consult. This is the people-assessment—this is the scenario in which investors are rife to say, “there was just some ‘It’ factor about her resilience” or “her charisma just sold me on the idea.”

This is not a shot-in-the-dark decision; it’s often a carefully calculated decision that is based less on spreadsheet numbers and more on personality—the potential we’re all theoretically (hopefully) capable of. This is a honed skill—gut feelings about people are as real as any metric and have the potential to return value on time and money investment as much as anything else in the decision process.

Time and money are very concrete things, but like so much else in life, their value can be drastically affected when they are thought of as a function of people.

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Find me on Twitter @adammarx13 and let’s talk music, tech, and business!

The New Founder-Seed Reality: Cash, Vision, and Structure

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One of the pieces which made the rounds last weekend was Fred Wilson’s assessment of early stage startup funding. More precisely, the decline in seed funding over the last few quarters, down from the peak in 2015. This was followed by a post from Jason Calacanis, which expanded on Fred’s initial thesis and took a deep dive into how he applies those dynamics to his own angel investing strategies. I’m not going to rehash these posts. However, I will muse for a little bit on what I was picking up reading between some of the lines. 

Over the last few years, and in the last year especially, I’ve begun to think deeply on how augmenting one’s approach to networking and pitching can open up doors which otherwise remain shut. In this case, the doors in question are those into an investor’s or angel’s office. Part of what has been so difficult for founders in the recent climate is that with all the money that’s been sloshing around, it’s been all that much harder to differentiate oneself. So while the seed slowdown might fill some with dismay, it’s an opportunity.

As Fred and Jason point out that this is an opportunity for new investors to get into the game and fill the gap left by investors moving further up the river, I’m going to argue that a similar opportunity exists for founders, if not as clearly exhibited. In an industry where everyone knows everyone, sometimes standing out can be much harder when there are certain expectations (prerequisites?) flying around.

Let’s be honest; people pattern-match because it’s human nature. But this nature can create blind spots—these blind spots in turn create new opportunities. Nothing exists in a vacuum, and I think the things which Fred and Jason are pointing out here—expectations of and desire for revenue, cash efficiency, a maturing business structure—run in tandem with the opening of a door to be able to now differentiate yourself in ways which previously seemed more difficult. As Hunter Walk notes, you do this by being CRAZY. Part of it is having CRAZY numbers; if you don’t have these (yet), you better have CRAZY vision.

Vision is ultimately what makes any company; without vision, you have no mission, and you have no real reason to execute. People don’t execute like hell on something they’re ambivalent about—they execute like hell on visions they see clearly and problems they’re obsessed with solving. I think the posts from Fred, Jason, and Hunter work so well in tandem because they begin to identify potential parameters for what the new seed environment might look like:

  1. Vision
  2. Cash efficiency
  3. Maturing business structure

Without each previous component, the following ones would be lacking. The new environment we see developing before us will be leaner, grittier, and ultimately more hostile towards companies which can’t lock down cash efficiency and a structure which matures with their growth.

But my gut tells me that the kind of founders which angels and seed investors are really looking for—the hungry ones who have great, obsessive visions—are exactly the founders who thrive in this type of environment. It’s precisely in these types of gritty, lean environments that the CRAZIEST visions tend to germinate. I think this new landscape will be interesting to watch for those truly CRAZY visions and how the new crop of founders differentiate themselves to communicate them.  

Music for this piece:

  • Savage Garden – Savage Garden
  • Master of Puppets – Metallica
  • Head for the Door – The Exies

How to Get That Coffee Meeting You Can’t Get

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An entry in the Minimum Viable Network series.

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Reflecting on “Creating Value” and Reaching Out to Others

A couple weeks ago, I had the wonderful opportunity to speak with Poornima Vijayashanker of Femgineer. We spoke about startup failure, resilience, new opportunities, and networking. During the course of our conversation, we discussed the notion of reaching out to others—particularly the idea of reaching out to influential people in one’s network “without a reason.” It occurred to me recently that there is a massive difference between reaching out to someone in a tactless way and building a bridge with someone to facilitate dialogue and potential partnership in the future. Let me explain.

Poornima and I both expressed to be fans of the mantra “create value for others before asking for it for yourself”—a notion that I was opened up to and drawn to through following Chris Sacca and others. Part of what the mantra espouses is the belief that doing things for other people leads to people wanting to do good things for you in return. It underscores the idea of good karma and proving one’s worth rather than just saying it. Sometimes, actions do truly speak louder than words.

But it also presented a challenge the more I thought about it. In my mind, part of creating value for others is recognizing the importance of their time, and treating it, as Mark Cuban would say, as their most precious resource. That understood, what if you want to get to know someone simply for the opportunity to get to know them? What if you don’t (yet) have a company or idea you want to pitch, or a fund round you want them to lead, or even an intro you want them to make for you? What if it really is as simple as identifying someone whose personality has an impact on you and wanting to cultivate a relationship with that person?

In short, how do you build your Minimum Viable Network without alienating the very people you hope to forge connections with?

“Don’t Ask to Pick My Brain Over a Coffee Meeting”

Investors (and others) always say “don’t ask me if we can meet for coffee so you can pick my brain.” I’ve heard it numerous times from influential investors whom I respect. However, it didn’t match up with the private interactions I’ve had with a few influential investors myself (who shall remain unnamed to protect their inboxes). So, how do I have multiple standing offers to meet with some important people just to grab a coffee and chat—talk music—talk politics—talk relationships?

I put in time to get to know them beforehand. Before any coffee meeting was ever discussed.

I believe that when influential people say, “don’t ask me to meet for coffee or to pick my brain,” they’re not really saying “I’ll never have coffee with you.” (Though, as with all generalizations, there are always exceptions).

What they’re really saying is, “I won’t meet with you if I don’t know you.”

You Build a Minimum Viable Network Through People Knowing You

So what does “knowing me” mean?

Sometimes it means that someone in their network has recommended and vouched for you.

Other times, though, it means that they know we might share similar musical taste, a similar sense of humor, similar worldviews, and/or similar values. They’re articulating a desire to meet with people who’ve put in the time and effort to cultivate a relationship prior to the coffee meeting; time speaking on Twitter, helpful feedback on projects, and certainly time cultivating a good reputation amongst the other people in their network.

This is how you get that coffee meeting that it appears no one ever gets. Be real, be engaging. If you share a similar musical or movie taste with someone you want a relationship with, let them knows. Post funny gifs, make references, lurk in conversations and make great observations—show that you have things in common on a human level outside the work paradigm.

This is how great networkers build great relationships.

Then, when you do have a specific idea you want to pursue, fund, or are seeking feedback on, reaching out to these people will be so much easier because a rapport has already been established. Not every good relationship needs to begin with a double-opt-in intro (though this is certainly one of the best techniques). It is possible to build great relationships on the backs of numerous coffee meetings where you just shoot the breeze with a sought after investor—but these will take much more time and care.

Be prepared to be patient, and always reciprocate good karma with good karma. Be humble in valuing someone else’s time, and it will speak louder than any idea you try to pitch in the moment.   

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Find me on Twitter @adammarx13 and let’s talk music, tech, and business.

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Karma, Passion and Identity: A Response to Chris Sacca’s Bleeding Aqua

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Chris Sacca‘s post “I Bleed Aqua.” yesterday is the must-read (or rather, reread) for me today. It’s poignant and candid, enabling it to speak on a deeper level than perhaps would be possible, had it been more reserved. It touches on business terms, but it’s really not about business at all. It’s about relationships and identity.

Sacca illustrates his relationship with the service in an intriguing way, preferring to start the post with a declaration of his passion for it, rather than examining it as a wise business investment. Though he touches on this candidly in the following paragraphs, they fade somewhat when compared to the arguably deeply personal thoughts he shares.

For him, it seems to be so much about the relationships and personal experiences it’s allowed him to have—how it’s allowed him to share milestones in his life with friends (and complete strangers), and to glean from that a certain conversation with the world. As he bluntly notes, “Twitter went from just being an investment to a huge part of my identity.”

And like with so many things, I make the music analogy in my head. If Twitter was the indie band trying to gain any sort of traction in its early days, then Sacca was the truly passionate fan who brought people to their shows and proudly wore their T-shirts. He was (and is) the fan who identified something so magnetic that by his own words, they became a part of him—a part of his identity.

For anyone who missed Sacca’s Periscope talk with Peter Pham on Wednesday, a huge topic that they covered (well, huge in my opinion) was the concept of good karma and relationship building. When discussing the process by which he builds and cultivates his relationships (personal as well as professional), Pham stated that one should do things for others without asking for anything upfront: “create value before asking for value.” Pham and Sacca seemed to agree that the dynamic of good karma was something they both subscribed to. Pham went on to discuss how it’s through this dynamic of good faith and positive relationships that he’s built his (former and current) companies.

Sacca’s subsequent post on how he thinks about his relationship with Twitter is telling of this sort of relationship dynamic. In many ways, it illustrates the notion that I discussed in my post on being excellent; letting your passion inform your professional decisions as much as good business strategy. As I examined with Product Hunt, letting concepts of community and positive relationships inform one’s business tactics is a winning strategy. Even as he discusses the concept of being critical of some of Twitter’s moves towards the end of the post, he does so in a way that reaffirms his love of the service, and excitement at what it is and can be.

Perhaps the strongest sentence is also the simplest. Just three words: “I bleed aqua.” That’s how Sacca caps his post—a blunt, positive statement. And that’s exactly how the post as a whole comes off: blunt, positive, reaffirmed, excited.