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I share what I learn each day about entrepreneurship—from a biography or my own experience. Always a 2-min read or less.
Personal Growth
I chatted with a founder recently about personal growth and about great founders constantly leveling up as their company grows. He asked a good question: how do I recognize personal growth opportunities?
It’s simple for me—I’ve got one when I’m faced with an important task or challenge that I really don’t want to do. I’ve generally got a list of various things that I need to get done. The one that makes me cringe or that I dread doing is the one that’s likely to lead to personal growth. It’s not 100%, but it happens more often than not when I get that feeling.
I’ve learned to lean into the things I dread with the hope that I’ll grow from them.
Decade-long Commitment a Turnoff?
It’s often seven or more years before a start-up has a material liquidity event such as an IPO or acquisition. Founders should be comfortable with a journey of that length if they want to pursue entrepreneurship.
I recently had a chat with a venture investor who considered starting his own venture capital firm. One of the main reasons he hasn’t is the realization that it will commit him long-term. It will likely take twelve to twenty-four months to raise the fund. Funds usually have a ten-year life cycle, so once he begins investing that capital into start-ups, he’s committed to managing the fund for a minimum of ten years. That’s an eleven-year-plus commitment he’s not willing to make. Instead of writing larger checks from a VC fund, he plans to write small angel checks. He’s putting more of his own capital at risk, but he wants to preserve flexibility over the next decade.
This investor has deep domain experience and a strong network in a particular sector. Any early-stage founder he works with will get a tremendous amount of help and is more likely to achieve product–market fit.
Listening to this got me thinking. I wonder how many seed-stage venture investors (current or aspiring) who could help companies find product-market fit avoid starting a venture capital fund because of the decade-long commitment.
CalPERS Commits $1B to Emerging Managers
The California Public Employees’ Retirement System (CalPERS) recently announced a $1 billion commitment to back emerging private equity managers. The goal is to foster more innovation and entrepreneurship in the investment industry by backing the next generation of managers. CalPERS, with around $440 billion of assets as of June 2022, is a juggernaut in the investment industry and can drive change.
The announcement references private equity, but this is a big deal for the venture capital industry. Venture capital is a subset of private equity and should receive some of these dollars.
Many studies have shown that emerging managers generate alpha, and the CIO of CalPERS recognizes this. This quote from her stood out to me:
It’s not about a diversity play. . . . It’s about generating alpha in a more thoughtful way, and leveraging partners we will work hand in glove with.
Can’t wait to see the impact that CalPERS’s commitment has on early-stage venture capital.
Will Tech Layoffs Lead to Wider Distribution of VC Investors?
The rise of remote work led to many people and companies leaving high-cost coastal cities. This redistribution of talent has changed how early-stage venture capital is deployed. Before, investors would invest only in entrepreneurs whom they could meet in person. Many investors preferred to not travel, so founders migrated to cities with a high concentration of venture capital investors. But the pandemic and the redistribution of talented entrepreneurs changed this. Investors now regularly invest in founders whom they’ve met only over Zoom.
I’ve been thinking about the tech layoffs by large companies like Amazon and Google and what they’ll do to the distribution of talent. I suspect that a material number of people laid off by these companies will rethink living in their high-cost cities, especially if their job was the main thing keeping them there.
I could be wrong, but if this does play out, I’m curious about how venture capital will adjust. If a lot of talented founders no longer want to reside in the Bay Area, for example, how will these firms adjust? Will they continue to stay heavily concentrated in places like the Bay Area and do even more investing over Zoom? Or will they rethink where their firms or their firms’ investors live?
Weekly Reflection: Week One Hundred Forty-Seven
This is my one-hundred-forty-seventh weekly reflection. Here are my takeaways from this week:
- Tech Layoffs – This week Google announced a 12,000 headcount reduction. Earlier this week Microsoft announced a 10,000 headcount reduction. The layoffs are terrible for those impacted. I believe we’ll see a material uptick in entrepreneurship and more of these people migrating to lower-cost cities like Atlanta.
- Focus on Simple Ideas – I’ve been thinking about this all week. Outsized success is the result of intensity applied to simple ideas.
- History Lesson – I had a long conversation with an elder about historical events I wasn’t familiar with that shaped the world in ways I wasn’t aware of. I’ve been thinking about this conversation and learning more about the events he shared with me. I want to start digging into history more to better understand the events that led to today’s society.
Week one hundred forty-seven was a steady week. Looking forward to next week!
Closing Windows of Opportunity: Milestone Events
When I finished college, I crowdsourced my transition to corporate America. I asked for advice on a blog and got a lot of great feedback. Recently, I reviewed it. This one stuck out to me:
Never turn down a weekend with friends. Use some of that new hard-earned cash to continue building your friendships from college and maybe rebuild those ones that died while you were away studying.
As a founder I sometimes followed this advice, but I ended up saying no to many social events because I was too busy building a company. I regret saying no to some of those milestone events because they ended up being once-in-a-lifetime opportunities with friends—memories I wasn’t a part of.
I now approach this differently. When close friends or family invite me to something that’s a milestone, I try my hardest to attend and be totally present. The work will always be there, but opportunities to spend time with friends or family at milestone events are closing windows of opportunity that I want to take advantage of before they’re gone.
More Layoffs = More Potential Founders
Earlier this month, I shared my predictions about tech layoffs changing the risk/reward dynamic in favor of entrepreneurship. Today, Microsoft announced that it’s reducing headcount by 10,000 people through Q3 2023. This is on top of other sizeable layoffs announced in the last few months by Amazon, Salesforce, and Facebook.
As more tech workers capable of building products are laid off, the risk/reward calculation tilts more in favor of entrepreneurship for some of them. This could be the year that many of these people bet on themselves.
Know Your Competition
“Start-ups die of suicide, not murder.” It’s a common saying. It means that most start-ups fail because of self-inflicted wounds like bad decisions, not competition. This is true, but even so, it’s critical for early-stage founders to know the competition when pitching investors.
Investors backing founders at the spearhead of company formation want to back someone who understands a problem and the market for it better than anyone else. They expect the founder to have identified something others don’t see that will allow them to succeed. Part of this process should include understanding existing solutions and why they don’t adequately serve the market. That doesn’t mean you aim to mirror what your competitors have done. It does mean you know how your solution will create more value than competitors’.
If you’re an early-stage founder and you don’t know your competition or can’t speak to how your solution is superior, you’ve diminished your chances of getting capital from investors.
Happy MLK Day!
I wanted to take today to celebrate the late Dr. Martin Luther King Jr. His contributions to society were foundational in moving our country closer to equality for all.
Hope everyone had a great MLK Day!
How I Encourage Serendipity
A few months back, I shared Reid Hoffman’s belief in keeping his expectations of meetings low to allow for serendipity. That really stuck with me, and I’ve embraced it, which has indeed led to some serendipity. Since then, I’ve been thinking about how to lean into encouraging more serendipity.
I’ve started to think about how to make room for serendipity through my normal nonwork interactions. I’ve landed on something that’s worked. When I’m doing normal everyday things, I now try to go to new or unfamiliar places to get exposure to new establishments, neighborhoods, and people. A simple example is dinner. Most people have their go-to restaurants and neighborhoods. These places are where they’re comfortable and what they know. Instead of sticking to your favorites, find new places (preferably with good reviews) in an area you don’t frequent. While you’re there, try to understand the people and the area.
I recently had dinner in a part of town I don’t usually go to. The place has good reviews, so I was excited to try it. Instead of grabbing a table, my companion and I chose to sit at the bar. Because we did, we had amazing conversations. The bartender gave us a history of the restaurant and its ownership. And we met another couple at the bar who build custom homes. They gave us a boots-on-the-ground perspective of the Atlanta housing market and shared some information we otherwise wouldn’t be aware of. We all agreed to keep in touch.
Serendipity, by definition, happens by chance, but you can be intentional about increasing the probability of it through your decisions about everyday activities.