Category Archives: Entrepreneurs

Visions require sacrifice and repeated communication

Leaders are often portrayed as people who have a vision. And this is indeed an important part of leadership.

However, more important than having a vision is communicating it so that other people instill it as well. This requires two things.

The first is dedicating the majority of your time towards the communication of your vision. If you don’t display this sacrifice, others will question how much you value your vision, and will therefore be less likely to believe in it.

The second is repeatedly communicating your vision across different channels, whether in person, over video, over audio, or in writing. It takes time for any one person to instill your vision, and it takes a lot of time for a lot of people to do the same.

In other words, the message behind your vision is only part of the equation. The sacrifices you make to repeat the message, get other people onboard, and hopefully get them to repeat the same message to others are what transform your message into a vision.

Reasons to not invest

There are many reasons to not invest in a startup. Among others, these include concerns about the size of the market opportunity, the startup’s ability to capture value from its product, the competitive threat, the business model, and the investment terms.

Among potential reasons to pass, some are not related to the founder. For example, in the list above, this includes concerns about the investment terms.

However, most of the reasons to pass are in fact derivatives of the founder. In the list above, it’s the founder who decides to pursue a small opportunity, builds a startup in a part of the value chain that makes it difficult to capture value, is unlikely to be able to outperform competition, and is unable to build a strong business model.

So when you’re not investing in a startup for one of these reasons, which is most of the time, you’re not investing primarily because of the founder.

Mike Maples

Mike Maples is a co-founder of Floodgate Capital, where he has backed companies like Twitter and Lyft.

This is an excellent interview hosted by Tim Ferriss, featuring Mike Maples. It covers not only investments, but also practical lessons from and advice for life.

It’s a great listen as we close 2017 and approach 2018. I recommend listening to the full 109 minute interview here.

Short term and long term independence

If you think of impact as the number of people you touch multiplied by the impact you have per person, it becomes clear that the easiest way to have more impact is to touch more people. The reason is that, no matter what you do, you can only have so much impact per person because they will be interacting with you, or your good or service, for, at best, a fraction of their day.

Touching more people, in turn, requires working with more people and delegating your work to them. And the more people you work with, the more responsibility you have towards these people. Some people are held accountable by you, and you are held accountable by others. In both cases, a responsibility develops towards these people.

Fulfilling this responsibility requires sacrificing what you might want to do at any moment with what needs to be done at that moment to benefit the organization.

So at one level, you’re sacrificing your independence for impact.

However, it was your conscious decision to pursue the route of having impact in the first place. As a result, at a higher level, you’re simply sacrificing your short term independence in order to be able to pursue your long term independence.

The corollary to this is that seeking short term independence comes at the cost of your long term independence.

In other words, no matter which independence you’re optimizing for, you need to often do things you don’t want to do.

Facts and stories

Some stories are based on a comprehensive review of all available facts. However, most stories are, at best, collections of cherry picked facts pulled together with the goal of convincing the reader to adopt a particular view. At their worst, many stories don’t contain any facts.

However, the facts are always there. Sometimes they emerge and a story based on cherry picked facts, or no facts, collapses. Sometimes they don’t and such a story continues.

Which outcome prevails depends on a combination of the power of the people telling the story, the availability of the facts, and the degree to which a comprehensive review of the facts supports a single view.

In the context of startup investments, most news articles about startups are stories. A startup’s financial statements and KPI’s represent the facts.

Butterfleye is acquired by Ooma

Butterfleye is a producer of wireless security cameras with image recognition technology. I wrote about the company, which we had invested in at Aslanoba Capital, here and here.

Butterfleye was recently acquired by VoIP phone service provider Ooma.

Building a hardware business is hard. The combination of supply chain commoditization and the large budgets required to differentiate your brand in a world where consumers have access to tens of unbranded products through horizontal e-commerce sites, are big challenges.

Led by its founder Ben Nader, the Butterfleye team did a great job in light of these challenges. I congratulate them for the acquisition.

Making versus reading the headlines

When I read the headlines in the tech news, sometimes I feel like I’m not doing enough. There are so many people working on world-changing projects that reading about the amazing things they’re attempting to do and doing is humbling.

Upon deeper reflection, the feeling of humility relative to the goals and outcomes achieved by others in the tech community cedes its place to a feeling of gratitude for all that they’re doing. When producers produce, it’s primarily consumers who benefit, so I’m grateful to all the producers.

Finally, the feeling of gratitude cedes it way to questioning why I am not contributing more.

A great way to test whether you’re doing enough and thinking big enough is to ask yourself whether, if done well, the projects you’re working on will also be featured in the headlines.

Rather than read the headlines, your life gives you the opportunity to make them.

The human you’re doing business with

Before investing in a startup, investors evaluate and develop a view on the startup’s team and market. Similarly, entrepreneurs do the same on the investor and the terms being offered.

However, it’s useful to complement this methodical business analysis with an understanding of the person that you’re partnering with, beyond their role as entrepreneur or investor. In other words, it’s useful to understand the human you’re about to partner with.

What are their values? What do they enjoy doing when not working? Do they have a family and kids and if so what do their family members do? Where and how were they brought up? When they are hopefully old and look back on their life, what do they want to have achieved?

Exploring questions like these over an informal breakfast, lunch, or dinner serves two purposes.

First, it lets you understand if your personal backgrounds, values, and goals are likely to make you good partners.

Second, in the event that you decide to partner and something goes wrong in the future, which to different degrees it always does, it helps you recognize the human behind the business problem. This makes it more likely for you to, together, show the intent necessary to overcome the problem.