In an earlier post entitled “On-demand markets that aren’t”, I used the example of Rinse, a laundry and dry cleaning managed marketplace where we’re investors, to highlight how many markets that at the outset appear to be suitable for on-demand service, and as a result of the hype around on-demand services are often named that way, are in fact not on-demand.
In a recent post entitled “On-demand isn’t always in-demand”, Rinse’s co-founder Ajay Prakash explains why this is the case in much more depth than I did. As Ajay points out, businesses succeed by solving the primary pain points of their customers. And “none of the pain points in dry cleaning, laundry, or any other form of clothing care require an on-demand solution.”
In fact, Ajay argues that other verticals which are also often given as examples of on-demand services, like house cleaning, storage, and car washes, also do not require an on-demand solution.
You can read Ajay’s full post here.
Any thing worth doing takes a long time. Some things take decades and some things take years.
What matters is the multi-year or multi-decade trajectory that you’re on, and whether that trajectory is in line with what you want to get out of life.
There’s little you can do to change the course of that trajectory in a single day, let alone a single moment. Yet, despite the fact that trajectories don’t change in a single moment, we get hopeful or frustrated in the moment.
When this happens, it’s useful to remember that the trajectory hasn’t changed. Your mood has.
This doesn’t mean that you should fight the feeling of hopefulness or frustration that you’re experiencing. Just recognize it for the mood that it is.
Doing so refocuses you on the trajectory. And that hasn’t changed.
Last weekend, I wrote about how studying math helps us identify patterns which are an important contributor to successful investing.
As Roger Antonsen, a mathematician at the University of Oslo, puts forth in this TED talk, the study of math also helps us realize that the same pattern can be expressed in different ways. So, depending on the perspective you take, the same pattern can also be understood in different ways.
If this is the case, then to truly understand something, we need to be able to see it from different perspectives. And seeing something from a different perspective that belongs to someone else is empathy. In other words, to truly understand something, we need to be able to empathize.
I couldn’t embed the video in this post, but you can watch it in full at this link.
We communicated with two of our companies on WhatsApp groups this week. It feels different to use WhatsApp, a tool that we usually use for personal communication, in a business setting.
Even more interesting was the use of emoji’s in the groups. It’s difficult to express emotions through text and emoji’s help solve this problem. However, emotions are expected in personal communication and less expected in a business setting. So seeing emoji’s used in a business setting made the experience even more interesting.
This all reminded me of an Andreessen Horowitz podcast on emoji which shares how emoji emerged, the contexts in which they’re used, their advantages and limitations, and how they’re likely to evolve. You can listen to it below.
I recently read eBoys, a book by Randall Stross about the founding Benchmark Capital team’s investments in the run-up to the 2000 internet bubble. These investments include eBay and Webvan.
The book is the result of the Benchmark team giving access to Randall to sit in on their internal meetings and interact with their portfolio companies. This decision was likely taken to market the newly founded fund and while it worked out in some respects, it also backfired in others. There are several instances in the book that the Benchmark partners would have likely preferred to leave out.
But setting that aside, the book provides valuable insights into the chaotic world of startups, the uncertainty which governs venture investments, and lessons from the run-up to the 2000 internet bubble.
If you want to read the book, you can buy it here.
The most important determinant of an investor’s success is their investment decisions.
And making good investment decisions requires really understanding what a founder is thinking, their values, and their likely actions following an investment.
And in order to really understand a founder, you have to really listen to them.
This goes well beyond just listening to them talk about their background and their plans for the company.
For example, it requires analyzing the structure in which they think to determine the extent to which they leverage facts and assumptions to justify their decisions. It also requires monitoring their body language to gain insights into their true feelings about specific issues. Finally, it requires observing their interactions with others to determine whether they’d be a leader who earns the respect of their followers. These are just some examples.
There’s no single recipe to really understand a founder. It’s one of those things where you need to continually ask probing questions, to the founder and to yourself, and to dig deeper in a specific direction when an answer tells you to do so.
And this requires really listening.
I was recently speaking with one of our entrepreneurs who shared that he feels like he’s in way over his head in managing his company. Basically, he communicated that he felt overwhelmed by all that the company needs to and not sufficiently qualified to get the company to do it.
There’s a common way to describe how he’s feeling. It’s called impostor syndrome. Wikipedia describes impostor syndrome as when “high-achieving individuals [are] marked by an inability to internalize their accomplishments and [live with] a persistent fear of being exposed as a “fraud”.
The underlying feeling responsible for impostor syndrome is that of doubt regarding one’s abilities. And, like many feelings, it’s a double edged sword. If you experience too much of it, it can cripple you by preventing you from taking on challenges because you don’t believe in your ability to overcome these challenges. But not feeling any doubt about your abilities isn’t the solution. If you don’t doubt yourself every now and then, you’re unlikely to put in the hard work necessary to accomplish what you want to do. A healthy dose of insecurity is a great motivating factor.
So the problem isn’t whether you feel like an impostor every now and then. That’s outside of your control. The problem, if any, arises based on your interpretation of the feeling and the actions you take as a result. And those are within your control.
Specifically, do you use the inevitable moments of self doubt that you experience as excuses to back down from challenges or as fuel to work harder?
Hiring can be very difficult for a startup. You’re competing for talent with established companies that have a stronger brand name and the resources to offer better financial terms than you. You can compensate for offering a lower base salary with an attractive equity package but whether that equity package will eventually amount to something is a question mark. The truth is that most startups fail.
You may be the rare exception to this. You may have achieved product market fit and may be experiencing breakout growth with a group of all star investors that make hiring easy for you. You may be the next Facebook (back in 2006) or Uber (back in 2011). If this is the case, you’ll have a good shot at hiring the exact candidates you want.
For most startups, this isn’t the case. You need to compromise on hiring the best person for the role because you don’t have the brand name and financial resources to do so. In these cases, I recommend hiring for the next year.
This means that you should hire people who will be able to properly fill their roles based on where you believe the company will be next year. Ideally you’d like to hire for 3-5 years out, but as discussed earlier, you’re unlikely to have this luxury. And hiring for right now is too shortsighted. If you don’t think that the hire is good enough to meet the demands which the role will require of them next year, this will be a costly hire. The up-front costs of hiring, integration, training, and eventual replacement are unlikely to justify the less than year long contribution that they make to the business.
If someone says they don’t believe in what you’re doing, what do you do? Do you spend your time trying to convince that person to believe, or do you try to find other people with a similar value proposition who already believe?
If you think that the person who said “no” has a stronger value proposition than the alternatives, you should probably try a few more times. That’s persistence and it’s a valuable trait.
However, if their value proposition isn’t that different, or if it is but you’re unable to change their mind after a few more tries, you’ll get a much higher return on your time by spending it trying to find people who already believe.
In other words, finding someone who already believes is easier than trying to change the mind of someone who doesn’t believe.
This is true not only for entrepreneurship but for many other walks of life.
Pattern recognition is essential to successful investing. Identifying which data points carry signal, which are noise, and assigning weights based on the predictive powers of those that carry signal while building a diversified portfolio that allows for the overall portfolio to succeed even if individual investments fail due to the incompleteness and incorrect assessments in your data set sit at the heart of investing.
And math is arguably the best subject to study if you want to develop your pattern recognition skills. Math is all about identifying patterns that link inputs to outputs. A mathematical equation is simply a pattern expressed in written form.
I think that a big part of why I enjoy investing is because of the underlying math and pattern recognition skills it involves.