The “Forward Intro Email”
I was communicating with Roy Bahat by email. I ended up asking him for an introduction to another person. Roy, who is great, quickly agreed, asking that I send him a “forward intro email”. I reviewed his format and loved it. I’m often asked to make email intros, and I agree with what Roy says in his post. Anyone wanting an email intro should consider using Roy’s format. It will make it easier for your contact to make the intro, which will likely lead to the intro being made faster.
Your Loved Ones Might Not Like Your Becoming a Founder
I recently listened to a founder’s wife share her reaction to learning that her husband wanted to quit his lucrative job and start a company. She was angry, and understandably so. Life had recently dealt them a series of positive and negative jolts, and this would be another jolt, albeit self-inflicted. They discussed the decision ad nauseam. Ultimately, she decided to have faith and support her husband in pursuing his dream. It’s early in the company’s journey, but things have gone well so far, and she’s happy that she supported him.
Becoming a founder isn’t a decision to take lightly. People don’t discuss this as much as they should: starting a company probably will greatly affect the founder’s loved ones. Start-ups don’t have many resources, so the financial impact can be hard for a family to adjust to. Especially if the financial load is now on one person. Just as important is time. Early-stage founders put tons of time into their start-ups, which leaves less time for loved ones.
If you’re thinking about starting a company, be sure to consider and consult your close loved ones as you’re evaluating entrepreneurship. You and your team will be under an inordinate amount of stress to make the company succeed. It will be much harder if you’re under similar stress at home. In a perfect world, you want your loved ones to be your main cheerleaders and supports. They’ll find it hard to live up to that if they haven’t been included in the decision-making process.
Where Will You End Up?
A seasoned executive I respect emailed me a quote this week:
If you don't know where you are going, you’ll end up someplace else.
It’s a simple, powerful, and thought-provoking statement. And I agree with what Yogi said. Having a clear destination (or direction at least) helps me deal with all the uncertainty and noise in the world. It allows me to stay calm in stressful situations and make the right decision. I think about where I want to be and confidently evaluate decisions based on whether they get me closer to or further away from that destination. My decisions might be counter to what others would do in the short term, and I sometimes hear questions or criticisms from people who don’t understand one of my decisions. I’m able to confidently (and respectfully) tune that noise out, because the right decision is obvious to me, given my destination.
Yogi is right. If you don’t have a clear idea of where you want to go, you’ll definitely end up someplace else. So where do you want to go?
Weekly Reflection: Week One Hundred Thirty-Five
Today marks the end of my one-hundred-thirty-fifth week of working from home (mostly). Here are my takeaways from week one hundred thirty-five:
- Sluggishness – I was under the weather this week, which wasn’t ideal. My productivity was noticeably affected. Feeling better now and looking forward to next week.
- Complex concepts – This week was a reminder of how important it is to communicate new or complex concepts using a simple visual image. A picture is worth a thousand words—but it can be hard to come up with the right one.
Week one hundred thirty-five was sluggish and only semi-productive. Looking forward to next week.
New Networks = New Ideas
I shared some views on the importance of networks with someone recently, including how being part of different networks helped me navigate my early founder journey.
One thing I didn’t realize back then was that being part of diverse networks was valuable because it exposed me to new ideas. I learned about all sorts of things I would have never known about. Some of those ideas became transformational for me, altering my trajectory. Exposure to new ideas is something I now seek out, because it helps elevate my awareness about the world and my thinking in general.
If you want exposure to new ideas, consider joining different networks.
A Burn-the-Ships Mentality
I listened to an investor and founder give his thoughts on what it takes to win and how he identifies winners. He described how he evaluated one of his most profitable investments: Uber. When he invested in the company early, he was betting on the founder, Travis Kalanick. Travis was intense and had what this investor calls a “burn-the-ships” mentality.
During wartime, when ships arrived at an enemy’s shore, the generals instructed the troops to burn their own ships once everyone had disembarked. The only way the troops would go home, they were told, was by taking the enemy’s ships. There was no turning back—winning was the only option.
I’d never heard an investor describe a founder in this way before, so it stuck with me. I’m all about backing founders who have a drive to win, but I’m not sure that a “burn-the-ships” mentality is a necessary or even good thing. I don’t know enough about Travis or the early Uber story to talk about them. I do believe, though, that there are ways to motivate your team to win without burning the ships.
Inbound As a Way to Find Great Companies
Last week I chatted with a few investors at Venture Atlanta. With one group, the topic of sourcing came up. I’m always curious to hear how others think about identifying the companies they’ll invest in. I noticed that most of these people had a strategy that focused on driving inbound activity. They had different approaches to accomplishing this, but bottom line, they all involved founders reaching out to investors.
Inbound activity is great for investors, but I think it can also be a double-edged sword for early-stage investors. It’s reactive. Because investors are reacting to founders, the markets they end up investing in are limited by the communications from founders they happened to receive.
Markets matter a lot in venture capital investing. It’s hard to make a big impact on the world or realize outsize returns if you’re in the wrong market (one that’s small or hypercompetitive, for example).
Inbound activity is an important part of an investor’s strategy for finding companies, but it can’t be the strategy if you want to invest in the best founders building in the best markets. You’ll likely have to spend time thinking about what markets you want to be in and then go pursue the founders in those markets.
Last week I attended Venture Atlanta and a variety of other events throughout the week. I hadn’t been to Venture Atlanta in person in over two years, so I wasn’t sure what to expect. The events were all great, and I met some amazing people. One of the things that jumped out at me was the number of people who didn’t know each other. Said differently, last week’s events highlighted how little certain networks interact with each other.
Once I realized how many people didn’t know each other, I made a point of trying to connect people who should know each other or could help each other. Hopefully, those connections will be helpful and allow those folks to expand their networks.
I think there’s a big opportunity in early-stage entrepreneurship to connect more networks that don’t interact—locally and nationally. I’m going to spend more time thinking about how to do it.
Probability of Raising a Series A?
I listened to someone share an interesting way to think about start-up investments. This person is helping a seed-stage investor rethink their evaluation process, which included considering how big the company could be if things went well. Could this be a billion-dollar company that returns the fund, or would it max out at something smaller? They modified their approach to think about near-term probabilities. Specifically, what’s the probability that the company will raise a Series A? The logic behind this change was that most companies wouldn’t exit for more than $1 billion without raising a Series A, so why not focus on evaluating this?
It’s an interesting approach that got me thinking. The likelihood of a company raising capital from a later-stage investor is something that it’s good to be mindful of. Thinking about the probability of this happening could produce useful insights.
In the last two years, many early-stage companies raised at high valuations by historical standards. I remember seeing a seed-stage company raising at a $100-million-dollar valuation. Given these high valuations early in their life cycle, I’m wondering, what are the probabilities of these companies raising clean Series A rounds?
Will Outsiders Shake Up VC?
I had a chat with two friends yesterday about the venture capital (VC) industry. One works in the industry and the other is entering it. We debated the difficulty of breaking in to the industry, the challenge of getting capital if you’re a founder outside the VC network, gender issues, and a few other things.
One of my friends pointed out something that stuck with me. He said VCs that have been successful have accumulated unheard-of amounts of wealth at young ages (relative to historical norms). They’ve achieved this success using a particular playbook. There are certain parts of that playbook that people might not like and that are under fire now. But why change what you’re doing if it’s working so well?
If you look at the history of venture capital, you see that the industry changes when it’s forced to. Said differently, when its economics are threatened, the industry reacts. Masayoshi Son and Chase Coleman are examples of outsiders whose unusual approaches affected industry returns and caused the industry to adapt.
It’s interesting that for all the disruption and innovation VC brings about in other industries, VC itself doesn’t evolve and innovate at a faster pace. The world has changed a lot since March 2020, and I think the VC industry hasn’t innovated enough to keep up with all the changes. I think we’re due to see another wave of changes to the industry caused by outsiders.