Churches of Entrepreneurship

Almost Vested Startup Church Entrepreneurship Zen and the Art of Motorcycle Maintenance

One of the most thought provoking books I have ever read is Zen and the Art of Motorcycle Maintenance by Robert M. Pirsig. Even many months after completing it I still find myself pondering several of the ideas explored.

One of the concepts I keep coming back to is the idea of the Church of Reason and how it relates to startups.

The Church of Reason

To explore the concept of the Church of Reason first we must discuss what exactly a church is. At its face, this seems an obvious question to answer. A church is a building in which people worship, predominately in the Christian faith. But what if the building is no longer used for this specific purpose, is the church still a church?

Pirsig gives the example of a roadside sports bar located in an old church. My wife and I for our last anniversary visited a vineyard located in an old church. Whatever example you use, the question remains, are either of those buildings really still churches?

Pirsig contends, and I agree, that the answer is no. The object of a church is defined by its purpose. If a church is not being used for worship, it is just a building. We may continue refer to the building as a church because of its familiar architecture or because that is how it has been known historically, but it no longer is a church. Not really. There is a deeper meaning to something being called a church. There is a required ‘spirit’ of the physical object. As that spirit leaves, the purpose and very essence of that object leaves with it. It becomes something else entirely. A simple building. A husk.

Pirsig draws a parallel from this line of reasoning to modern universities which he dubs “Churches of Reason.” Similar to religious churches, Pirsig argues that these Churches of Reason are intrinsically defined by their use or purpose. In the case of universities that purpose, that spirit, is to pursue truth through learning. To expand the boundaries of knowledge itself.

Just as with religious churches, these Churches of Reason become simple buildings as soon as the Spirit of the University leaves. As soon as the pursuit of truth and expansion of knowledge stop becoming the purpose for the endeavor, the buildings become nothing more than a mausoleum to their former holy endeavor. Husks.

Pirsig observed this loss of the Spirit of the University in the 60’s and 70’s when he was a professor himself writing Zen and the Art of Motorcycle Maintenance, his part auto-biography part philosophical treatise magnum opus. It saddens me to admit that this trend of the departure of the Spirit of the University not only continued, but has accelerated in the modern day.

But that is a discussion for another time. Next we will turn our attention to a different type of church.

Churches of Entrepreneurship.

The Church of Entrepreneurship

Startups are Churches of Entrepreneurship. They are the altars at which we worship the gods of technology and innovation while hoping that our sacrifices of blood, sweat, and tears change the world.

Just like other type of churches, the object is defined by its purpose. A fundamental part of any startup’s identity is the Spirit of Entrepreneurship that resides within it. The Spirit of Entrepreneurship is the driving passion to change the world through the creation of something new.

Really, the word “startup” is just a name for young companies in which the Spirit of Entrepreneurship resides. They are vehicles for the Spirit of Entrepreneurship to hopefully live and thrive. Just like with churches or universities, if you take the spirit out of the building, it is just a pile of bricks.

Startups are no different. Just because a company is young or small or technology-focused does not mean it is necessarily a startup. Without the driving passion to change the world through the creation of something new, they are just small, risky businesses. Bars within an old church. Husks.

This passion to exert one’s will on the world can come in many different shapes and sizes. There are mission driven founders. There are financially driven founders. There are rage driven founders (this was a new one for me that I heard about this week. Basically someone that is so infuriated by the status quo they say “screw it, I will change it myself”.) But while the prime motivating factor changes, the passionate drive of all strong founders is nearly identical.

This spirit of entrepreneurship can inhabit the halls of older incumbent companies as well, though it does so rarely and often in the places you would least expect. Be wary of large corporations touting their innovation groups and “startup culture.” The spirit of entrepreneurship does not reside somewhere simply because someone wishes it to. It can be born in a moment when a group of mavericks suddenly decides try to change the world against all odds. It can die just as quickly if not properly nourished.

Viewed through this lens, providing a nourishing environment that is ripe for the Spirit of Entrepreneurship to inhabit becomes of the utmost importance.

Doing so successfully is easier said than done. My favorite road map to doing so is laid out in Loonshots by Safhi Bahcall.

But even with help. It’s not easy.

And it shouldn’t be.

Things worth doing rarely are.

The Score is 0-0



I had the pleasure of watching the US women’s national team win the world cup today. It was an entertaining, if somewhat inevitable, match with the Dutch rarely looking threatening. The score was tied 0 - 0 at half-time before Team USA scored twice in the second half to defend their crown and walk away the victors.

Newspapers around the globe tomorrow will sing the team’s praises and tease out the insights and lessons from their performances over the past few weeks. For my part, the game reminded me of a recent quote and the powerful lesson it represents.

Petr Cech played goalkeeper for Arsenal for the past few years before retiring at the end of last season. A couple of months ago he did an AMA on the Arsenal subreddit and one of his responses has really stuck with me ever since.

When asked how he mentally resets after conceding a goal, Cech responded “In my head, every single second of the game the score is 0-0. I literally do the same process for 90 minutes all over again regardless of if we are winning or losing. I just concentrate on my job. That’s all I Do. Every. Single. Day.”

I love this attitude and think there is a lot to learn from it. People (myself included) too often let the cloud of recency bias hang over their actions. If the last time they tried something it was successful, they will think that this time they are invincible. If they were recently defeated, they will believe they’ll never even have a chance.

The much better approach is to think of the score as 0-0. No matter what has happened before. Play as if it’s all tied up.

The USWNT was the most talented team at this year’s world cup. By a mile. Their greatest challenge was not defeating their opponents. It was playing like the score was 0-0 despite the fact that they were defending world champions.

Adopting this mindset is harder than it sounds. Unconscious biases are just that, unconscious. The greatest tool in your toolkit to fight against the power of recency bias is process. Develop the right process and you will be able to train your sights on that process, no matter what the score is.

Every. Single. Day.

This lesson is especially important in the world of investing. Investors are humans too, and just like all other humans are susceptible to recency bias. A recent successful trade can breed feelings of invincibility on all future trades. A startup with a young founder that flamed out can lead you to believe that all startups led by young entrepreneurs are doomed to fail.

Investors need to practice the mindset of thinking and acting as if the score is 0-0. Try to maintain your mind’s neutrality during both the highs and the lows.

In venture capital, this can often be especially tricky. Given the nature of technology startups, companies often require multiple rounds of funding in order to be successful. This means that recency bias rears its ugly head, not with some uncorrelated trade, but with prior funding rounds of the very same company you are currently considering for investment.

It is almost impossible to avoid letting a company’s past performance, actions, and outlook color the way you think about another investment. Some investors even claim that this inside access gives them superior signals by which they are able to make their decisions. And there is likely some truth to that. But there is also the danger of allowing past occurrences to obfuscate current decisions.

When evaluating an investment in a company, it is absolutely essential that you act as if the score is 0-0. Do everything you can to determine whether the company’s current attributes and trajectory warrant an investment based upon their own merits, irrespective of past funding rounds in which you may or may not have participated.

As in life, the best way to do this is to develop a process. And then stick to it.

Every. Single. Day.



Ron Swanson USA

The Power of Reading Two Books: Truthspeakers and Toy Story

I love to read. It is my true happy place. No matter where I am or what I am doing, I know zen is only as far away as my current book.

I am in the habit of always reading two books at any given time, one fiction and one non-fiction. I think to neglect either does you a huge disservice. I truly believe that your imagination is like a muscle and that reading fiction is one of the best ways to exercise that muscle. And maybe it is just my learning style, but I learn through stories and for me, a good non-fiction story is the absolute best way to consume and learn new information. I generally read my fiction book before bed every night and I listen to my non-fiction book throughout the day on runs, my commute, or while doing the dishes.

The act of reading, just in and of itself, is rewarding, relaxing, and helps me expand my intellectual world. The beauty of reading two books at once is that, every so often, they align in the most magical sort of ways.

The fiction series I am currently reading is the Wheel of Time and I can honestly say that it is among my favorite fantasy series ever. The world, the magic, and most of all, the characters. All serve to paint an incredibly rich and compelling world across the course of 14 books (just started book 10, The Crossroads of Twilight).

What starts as a seemingly generic fantasy trope (a group of teenagers from a small village has greatness thrust upon them by a mysterious woman and embark on an epic quest where the fate of the world hangs in the balance) turns into so much more across the various twists and turns of the series. One such surprise is the Seanchan, who are the returning descendants of an army sent to a far off land thousands of years ago. They are as culturally unique as they are powerful and they have many interesting customs.

One custom that I found especially compelling was the role of the Soe’feia or Truthspeaker in the Seanchan’s imperial order. A Truthspeaker is a servant who is the trusted adviser of the Empress and the Imperial family. Despite their role as a servant, their purpose is to speak truth to their masters, no matter how harsh or unwelcome. Multiple times throughout the story characters are shocked by the brutal honesty displayed by these Truthspeakers to the most powerful of Seanchan royalty.

We all need Truthspeakers in our lives.

People who can hold a mirror up to ourselves. Even the ugly parts that we don’t like admitting we have.

I am lucky to have Truthspeakers in my life through friends and family, which is important because I need to be called on my own bullshit. A LOT. (my wife is seriously a saint I have no idea how she puts up with me).

Just as important to having Truthspeakers in our personal lives is to have someone who can tell it to you like it really is in our professional lives. This can be a boss, co-worker, or mentor, but it is vitally important to have someone that can help you see around the corners of your own bias and emotion.

How do you do this on a company level?

Enter book two.

The non-fiction book I am currently reading is Creativity, Inc. by Ed Catmull, the president of Pixar and Disney Animation. Creativity, Inc takes readers insides the halls of Pixar throughout its, at equal times, tumultuous and triumphant history. The book’s focus is not simply on presenting the facts that occurred over that time but exploring what sets Pixar apart as an organization and how other companies can break down similar barriers to creativity and success.

One such secret to success for Pixar has been the Pixar Braintrust, the company’s ace team of directors, operators, and creatives that are brought in to fix problems when they inevitably arise as part of the production for each movie. The only membership requirements for the Braintrust are a knack for storytelling and a willingness to be candid with one another. Ed view’s his primary role, not as a leader of this group, but as more of a facilitator whose focus is on maintaining the integrity and honesty of its process. Some of the absolute key changes made to the movies we have come to know and love over the years like Woody being a lovable cowboy to WALL-E being saved by EVE were hatched during braintrust meetings.

I love this concept and found the parallels between Pixar’s Braintrust and the Seanchan’s Truthspeakers simply too delightful to not write a post on them.

In the world of startups and venture capital, being an entrepreneur can feel isolating. I believe it is absolutely essential to any company’s success to develop a culture where the CEO has Truthspeakers around them that they can be relied upon to tell it like it really is. As a venture capitalist, I see my role as doing just that.

I haven’t run a company before.

I haven’t developed a world-changing technology.

But if I can do just one thing to add value to a company, I hope it is that I can speak with truth and candor when an entrepreneur needs it most.

Sports, Startups, and the Competition Trap


It has been an interesting week from a sporting perspective. A week that has made me reflect on my relationship with sport and with sport’s relationship with life.

Now I am a big sports fan in general, but my one true sports love has, and will always be, Arsenal FC. My dad was an Arsenal fan ever since he was a kid and I had little say in the matter with some of my earliest ever memories involving watching Arsenal games with my dad. To anyone who knows soccer, you will know what a long, strange journey being an Arsenal fan so often is. This week has been no exception.

It started last Sunday with a painful tie at home against Brighton. This was a horrible result which sealed our fate to finish 5th in the table and miss out on a coveted top-4 spot and automatic entrance into next year’s Champions League.

But not all hope was lost! On Thursday we played Valencia in the second leg of the Europa League semi-final, winning 4-2 and booking our ticket to the Europa League final at the end of the month. Besides being Arsenal’s opportunity to win our first European trophy in 25 years, the game also represents another chance to get into next year’s Champions League, with the Europa League victor always being granted automatic access.

Today, we won out 3-1 away to Burnley in a game that contained little significance other than helping our star striker, Pierre-Emerick Aubameyang, get the goals necessary to win this year’s Golden Boot trophy (awarded to the league’s top goalscorer).

The rollercoaster week did not end there. This is just covering Arsenal’s exploits on the field! If you are any sort of sports fan at all you will have likely heard of Liverpool and Tottenham’s exploits in the Champions League this past week. Both teams came from huge holes to win their respective semi-finals in spectacular fashion. Their fans and the sports world at large were jubilant. I was crushed. You see Liverpool and Tottenham are two of Arsenal’s fiercest rivals. Especially Tottenham.

And I just could not stand to see them win and their fans happy. It ate me up inside.

Now I am not overly proud of this negative mindset, but rooting against your rivals is a fundamental part of sports. It underlines a certain masochism that comes along with being a sports fan.

You are really only happy when your team wins and, by definition, most teams won’t win trophies each year. So you are setting yourself up for failure right off the bat. Even if you look at the teams who win all the time, expectations are so incredibly high that fans are still miserable when Real Madrid only wins one trophy in a year!

Now I love sports and that isn’t going to change. But being miserable at other people’s happiness was somewhat of a wake up call for me. That is just not how I want to go through life. I think there is a way to be a sports fan without the negativity. Focus on enjoying your team’s journey. The highs and the lows. Try not to focus too much on what everyone else is doing.

And remember, the most beautiful part of sports is that there is always next year.

This competition trap is not unique to sports. It is all too common in everyday life and business. We are so focused on what other people have we don’t appreciate what we have. We look at the 10% of peoples’ lives that they share on Instagram, we assume they live like that all the time, and then we compare it to the 100% of our lives that we are familiar with and can’t help but to feel like we don’t measure up.

Comparison is the death to joy.

Focusing on what other people have will only ever bring you negativity. Either you will be envious of what others have or you will look down on them for not having as much as you.

I think this phenomenon exists in businesses too.

All too often I think businesses get so wrapped up in competition with one another that they forget about the things that made them great in the first place.

Startups are especially susceptible to this. Too often entrepreneurs get overly wrapped up in their competition when that is really an issue for another day. Your competition is not going to matter if you are unable to create a product that solves a fundamental need for your customers. Entrepreneurs, leave competition until you find yourself in a more mature competitive market. No business was ever successful by focusing on what everyone else was doing.

Comparison is natural, but you will lose your way if you give your competitors too much of your attention.

Instead, focus on being the best that you can be. In life and in business.

Focus on the journey, not the destination.

And remember.

There is always next season.


venture capital and brushing your teeth











No place is this truer than with startups.






In the immortal words of Joel Embidd:

“Trust the process”



My advice for you:

Focus on doing the little things right.


Maintain consistent effort instead of bursts of hyperactivity.


And speaking of.

Brush daily with consistent application of effort.

You’ll be surprised where you end up.

Due Diligence: How Much is Too Much?

Venture Capital Technology Startup Due Diligence

A big part of my job is due diligence. This is a fancy bit of jargon that gets thrown around a lot in finance. All it really means is doing research to back up whether things that someone has claimed about their company are true. My boss is fond of reminding us that in our job we need to “trust, but verify.” Due diligence is that verification.

Spend a little bit of time in venture capital and you quickly discover that the rigor of different firms’ due diligence processes vary greatly. Some firms spend an incredible amount of time and resources digging into every small detail of a company. Others run light processes that can be completed quickly. At Rev1, we have what I believe to be a relatively robust process compared to other investors at our stage.

This spectrum makes sense.

Firms with more specific sector-focuses are likely subject matter experts on the spaces they invest, cutting down on time necessary to get themselves up to speed.

Firms that invest across a series of stages will likely have leaner due diligence processes for their earliest investments and more in-depth processes for their later investments. The idea here being that the effort per dollar of investment remains relatively constant. More dollars. More effort.

There is no right answer on what is the perfect amount of due diligence.

But there are wrong answers.

Conducting no due diligence can’t be correct. But doing too much diligence makes your life miserable (and the entrepreneur’s life you are working with even more so).

When I was at Carlyle, one of our founders was fond of saying “you should never focus on conducting the most complete, perfect due diligence. By the time you will have completed it, the investment round will no longer be open and it won’t even matter because you will have talked yourself out of doing the deal anyways.”

I think there is a good amount of truth in this. Venture capital is a risky game. You will never be able to conduct such a thorough due diligence process that you are able to remove ALL the risk from a deal. If you were able to, they wouldn’t exactly be able to call it risk capital investing now would they?

So the correct amount of due diligence lies somewhere between 0 and 100. But where?

I have been thinking about this question a lot recently. The answer (as with most things in business) is that it depends. It depends on the characteristics of your firm and the demands of your stakeholders.

My views on the optimal amount of due diligence have recently been informed by my reading of Fooled By Randomness by Nassim Nicholas Taleb. This is an excellent book which I highly recommend. The author is a veteran options trader and a foremost expert on probability and randomness.

Two concepts from his book have especially informed my views on due diligence.

The first is the idea of satisficing.

Satisficing is a decision making strategy where someone analyzes different alternatives until they find one that reaches a minimum acceptable threshold. And then they stop. I believe this concept should also be applied to investment due diligence.

Your goal should be to reach the minimum required confidence threshold necessary for you to make an investment while expending the least amount of effort and resources necessary to get there. Any additional due diligence past that point is a waste of your, and the entrepreneur’s, time.

This minimum required confidence threshold will change from person to person and firm to firm, but I do think there is value in understanding the idea of satisficing to help avoid using unnecessary time and effort. As with many things in life, due diligence follows the law of diminishing marginal return. Each additional level of comfort you can reach in an investment requires exponentially more and more effort. This is why it is so important to reach your required confidence threshold and to go no further. Even pushing on just a little bit can require a colossal amount of energy.

Not only is too much due diligence a waste of time, money, and energy, but it could actually lead to some pretty large cognitive blind spots.

The second concept from the book that applies to due diligence are the negative side-effects of conducting too thorough of an analysis.

Too thorough of an analysis?

Yes, that is right. Taleb points out that one of the major cognitive biases exhibited by people is that their confidence in the likelihood of a given outcome increases linearly with the amount of effort they expend analyzing the chances of its outcome. It’s the effort people put in to an analysis more so than the analysis itself that tends to influence people’s expectations around an event.

People trick themselves into thinking that more analysis = more certainty, when nothing could be further from the truth. The wrong kind of analysis will be a red herring that increases your confidence in, without actually increasing the accuracy of your predictions.

Venture capital due diligence is an environment ripe for this sort of error. In early stage VC, the risks are so incredibly high for every company. Conducting an excessive amount of due diligence doesn’t change this fact. But it does make us feel better about the investment. This dislocation between the actual risks of an investment and someone’s perceived risks can lead to incorrect decision making and overconfidence in those decisions.

The true danger is not in the risks itself, but in conducting so much analysis that we convince ourselves that the risks no longer apply.

With the ideas of satisficing and the dangers of over-analysis in mind, I believe the best way to conduct due diligence is to seek the no. “Seeking the No” is a cool sounding phrase that I just made up on the spot. The concept is to figure out the few things that would immediately make you say no to an investment and try to validate whether they are true or not. Work backwards from biggest things that would immediately make you cut bait with the company. If you find out any of these hot button issues are true, you can pack up shop right then and there. No more analysis necessary.

Assuming you can attain some comfort that the company does not breach any of your “DO NOT INVEST” red flags, then you can proceed with seeing if they fit what you actually want to see in an investment. What exactly those attributes are that you should be looking for is a topic for another post, but following this strategy of seeking the no should help you focus your efforts on only the investments that truly warrant your time.

Venture capital due diligence is a tale of modern day Sisyphus. You will never be able to truly understand all the risks inherent in a business. Trying to do so wastes precious resources, while giving yourself a false sense of security. Conduct the minimum amount of due diligence necessary to reach either a no or a yes. You will thank yourself for it. And so will your entrepreneurs.

Pink Dragons, Serendipity Vehicles, and Mentos

Serendipity Startups Tech Venture Capital

When I was a kid one of my all time favorite things to do on friday nights was to have a movie night (who am I kidding, that is still one of my favorite things to do). My mom and I would go to Blockbuster to pick out a movie or two and then we would skip next store to Papa Murphy’s to pick up some pizza (I will contend till my dying breath Papa Murphy’s is by far the most underrated pizza on the planet. So good). One of the movies I distinctly remember watching during multiple movie nights was Serendipity The Pink Dragon. Serendipity was a pink sea dragon who lived on a magical island with all of her friends learning life lessons about friendship. I have no idea why we ever picked this particular movie out, but I do remember watching it more than once (to this day, my go to nickname for a Lapras in any Pokemon game is Serendipity).

I was reminded of Serendipity the pink dragon while listening to this interview from Sara Dietschy with Nik Sharma and David Perell. This episode is definitely worth listening to. They cover a lot of ground from influencer marketing to direct-to-consumer brands to their own stories and how they got where they are today. As part of this last part, they spoke about the role that serendipity had in each of their lives. They drew a line in the sand between serendipity and luck. Luck is something good that just happens to you. Serendipity is something good that happens to you because your hard work and patience put you in a position where it could happen to you. I love this distinction.

If you talk to anyone with a modicum of success in life, the vast majority can point to a handful of “lucky” events where they caught a break or were given a chance to take on a project they were woefully underqualified for. Rare, however, is the successful person who had this happen to them while watching Netflix and eating cheetos on a Thursday afternoon.

Luck is a factor in everyone’s story. What differs is how prepared people are to take advantage of the situation when the dice start rolling their way.

That is where Serendipity Vehicles come in.

Serendipity Vehicles are a concept coined by David Perell in this post. He talks about purposefully building structures that increase the likelihood of both serendipitous things happening to you as well as increasing the chances that you are able to take advantage of them when they occur. Serendipity vehicles can range from simple structures like attending a dinner party to more much more complex things like writing books.

This blog is one of my serendipity vehicles. Twitter is another. Both require relatively minimal, but consistent, effort to maintain. Both have lead to significant outsized opportunities far and above what I would’ve ever expected.

Now all of this talk of lifestyle design may sound complicated, but I think the most important thing is simply the way you approach it. I think the best way to think about designing your serendipity vehicles is to make yourself into a Mentos. Mentos are a type of spherical candy that are sold all across the world. To be perfectly honest, I think they are pretty average. What is not average are the explosive effects they have when combined with any sort of carbonated beverage (but especially Diet Coke). There is a whole lot of science behind why this happens, but the short of it is that even though Mentos looks like smooth spheres, on a microscopic level their surfaces are very rough. This increased surface area acts environments where bubbles can form, launching soda up into the air. The key is the surface area.

You can make your life resemble Mentos by increasing your surface area so you have a lot of different places where serendipity bubbles can form.

Say yes to thing even if they are outside your comfort zone.

Cultivate curiosity in a broad range of subjects and areas.

Go out of your way to go to new places and meet new people.

Jump at opportunities even if the timing is not always ideal.

Create excuses to talk with interesting people.

Provide value to people instead of just asks.

At the end of the day, your goal should be to have as many areas in your life where serendipity can form as possible The challenge is to recognize serendipity and then make sure you are able to take advantage of it.

This advice is equally true for both individuals and startups.

Well designed startups are a lot like giant serendipity vehicles. A lot of work goes into designing them so that they are in a position to shoot for the stars as soon as a serendipitous customer connection or technological development breaks their way. As a founder you need to balance the need to stay focused on what you are building with providing yourself as much surface area as possible in order to take advantage of connections with investors, talent, customers, etc.

I can’t tell you what the right balance for that is. You will need to figure that out for yourself. But I can tell you what the wrong balances are. There are two.

1) Ignoring any thought of the outside world to focus solely on your business.

2) Ignoring your business to focus solely on hoping something happens in the outside world.

Everything in between is fair game.

No matter where you land on the spectrum between focusing your time and energy on building your business and increasing your surface area to optimize for serendipity, there is one lever that you can pull to maximize your chances for success.

Burning responsibly.

Responsibly managing your burn rate as a startup is one of the most important things you do as a founder. Burn too fast and you won’t get enough at bats to have something serendipitous happen for your business, no matter how much you optimize for it.

As an individual and as a business, design your life so that you can take advantage of serendipity when it comes knocking at your door.

That is how you and your company achieve success.

Board to Death

Photo by  Drew Beamer  on  Unsplash

Photo by Drew Beamer on Unsplash

The world of Venture Capital is very different than it appears from the outside. I have been surprised by many things since becoming an investor, but none more so, than the difficulties surrounding boards. From the outside looking in, boards appear simple. Incentives are aligned. Everyone wants what is best for the company. Experience and expertise are leveraged to make the company the best it can be.

If only it were that simple.

Properly managing boards as an entrepreneur is a dance. Defer to them too much and you will lose the magic that made board members want to support you in the first place. Don’t heed them enough and you will make avoidable mistakes and miss out on opportunities.

The biggest mistake I see entrepreneurs make in respect towards their boards is that they think about their boards with the wrong mindset. The second you grow mistrustful of your board and start thinking of them as antagonists trying to put up hurdles in the way of your company, the chances your company is going to become successful with you at the helm plummets to almost zero.

Alright, Erik chill out. Classic Berg exaggeration.

No I am serious. A toxic board relationship is THAT deadly. It may not happen that day. Or that month. But eventually allowing the relationship between you and the board to fester will come back to bite either you or the company. Or both.

I believe the best metaphor for a well run board is to think of the board as your boss. Because that is exactly what they are. The keys to a healthy relationship with a board are the same as with a healthy relationship with your boss.


As with most relationships in life, the most important thing when managing a board is communication. Regularly update your board (even, and especially, outside of official board meetings) on your successes, failures, and any ways that they can help. I maintain that investor updates are one of the highest leverage activities any entrepreneur can do. Keep your board in the loop with what is going on with your company and they will be able to leverage their experience to help you make the best possible decisions. Note that I am not saying to do whatever your board tells you to. If they knew what was best for your business in every possible scenario, they would’ve started your company themselves. Rely on your intuition. It got you this far. But your board has many lifetime’s worth of additional experience than you do. Use it. Take it into account and leverage it to make the best possible decisions. To do otherwise is simply foolish.


Just like all good bosses, boards have a responsibility to develop the CEO. Most startup entrepreneurs have not built a business before. Those that have, in all likelihood, have done so in a different sector or space. The board has a responsibility to coach and mentor the CEO to be the best that they can be. This means giving your CEO the tools they require to be successful. Equip them with resources and connect them with mentors who have been successful in this space before. A board’s fundamental job is to protect the interests of a company and its employees. The best way to do this is by making sure that the CEO performs at their absolute peak. If you as a board member believe your duty is to provide oversight without nourishment, advice without mentorship, you are neglecting your responsibilities to the company.


Communication is a two way street. Yes, the impetus lies squarely at the feet of the entrepreneur, but at the end of the day, they will only feel empowered to bring everything to the attention of the board if the board knows how to give appropriate levels of feedback. Successful boards design structures where they can hold their CEOs accountable in a constructive way. I think Fred Wilson has the best approach for ensuring that feedback loops are tight and honest. Entrepreneurs, don’t get defensive when the board gives you feedback. Every single one of their incentives is aligned with the success of the company. So are yours. Remember that they trying to help you make the company the best that it can possibly be.

From the outside looking in, no one will know how healthy your company is. You can survive with a bad board relationship for a little while. But, if you are consistently neglecting your relationship with your board, eventually it will blow up in your face. The key is to leverage their experience and remember that they are on your side.

Podcast of the Week: The Twenty Minute VC with Fred Destin

Twenty Minute VC

The first podcast I started listening to regularly when I really started to dive headlong into the VC world was The Twenty Minute VC with Harry Stebbings. His bite-sized episodes were a great place to get started in learning more about the ecosystem. Harry’s story was a great inspiration to me as well. His advice to get out there and start creating content was a big part of the reason I decided to get this blog started. Harry has been a huge help to me and is an excellent example of how hard work and determination can really take you places.

I have listened to A LOT of 20VC, but this episode is up there with my favorite ever. Fred Destin is Harry’s partner at Stride.VC. and I can honestly say that this is the first time I have ever finished a podcast and then immediately started it over from the beginning. After listening, you may want to do the same! I can honestly say that Harry has found himself one hell of a partner and I for one could not be more excited to follow their new fund closely!

How often should you update your investors?

Venture capital investor updates from entrepreneurs

Regular investor updates are one of the highest leverage activities entrepreneurs can do to make their company successful. They provide tangible value to companies and a positive signal to investors. And they don’t have to be hard.

If you follow me on twitter, you will have noticed that investor updates have been a topic on my mind a lot recently. There is some debate in the industry about how vital they are and what form they should take. Hopefully this post can codify my thoughts and be a resource to any entrepreneurs.

Help me, Help you

Should investor updates even be done? The answer is an overwhelming YES. Not to be confused with an emphatic YES or a confident YES. An overwhelming YES. Updating your investors is important for a few reasons.

First, investors cannot help you if they don’t know what you need. Investor updates are an opportunity to ask for help/guidance/connections. It may seem intimidating to open your company’s komono to some of the less than glamorous aspects of the business, but by the time investors find out about issues on their own, it will often be too late for them to help. This of course all operates under the assumption that your investors are able and willing to help you. If they are, great! Update them. If they aren’t, why are they your investors in the first place (a topic for another post perhaps)?

I am going to let you in on a little secret. Investors want to be helpful! There are better ways to make money in finance than being a VC. For the most part, VCs have an itch to help build the next great thing and providing help to portfolio companies allows them to scratch this itch. I know that is the case for me. Anyday I can make a fruitful introduction or help clean up a model for a portfolio company is a good day in my book. I think any other good investor would agree.

Brent Beshore describes entrepreneurship as a “daily knife fight”. It is not easy. Founders are faced with new issues and obstacles every day. Mobilizing your investors can help solve a lot of those problems. Why turn down a resource that is not only willing, but excited to help you succeed?

Timing is Everything

As with many things in life, the key to investor updates is consistency. Developing a regular cadence with your updates will take a lot of the punch out of anything that is less than perfect. An email received after not hearing from a founder for 6 months saying that a company missed one of their revenue milestones and need help hiring a VP of engineering seems like a catastrophe. An explanation of why a milestone target was missed and a request for help hiring a VP of engineering received as part of a regular investor update is a Tuesday.

There is some debate in the industry on how often companies should be updating their investors. Some investors believe quarterly updates are sufficient. This may work for later stage companies, but for early stage companies, I believe that monthly investor updates are always the way to go. Monthly updates allow you to keep your updates brief and to the point. In-depth strategic discussions can be left for quarterly board meetings.

How Much is too Much

Entrepreneurs have enough on their hands, so investor updates absolutely must be designed to keep the burden to a minimum. With a monthly cadence, your update can be brief. I suggest that entrepreneurs don’t spend more than 15-30 minutes putting together their update. Items noted should be whatever is top of mind. You don’t need to write a novel, just give your investors a sense of the momentum of the company and make any asks you need help with. Here is a template:

Hello Investors,

XYZ month was a productive one for ABCify! This month we accomplished A, B, and C. We are excited about Initiative X and are thrilled about new hire Y. We continue to execute on plan Z.

Thank you for your continued support,




  • Win 1

  • Win 2

  • Win 3


  • Challenge 1, brief explanation

  • Challenge 2, brief explanation

  • Challenge 3, brief explanation


  • Metric 1

  • Metric 2


  • Ask 1

  • Ask 2

That’s it. Seriously. If you fill in the blank with the above template your investors will LOVE you. This is a good thing. Happy investors make for happy fundraises. More than that, consistent updates are a very positive signal for investors. It shows that the entrepreneur is on top of things and is being thoughtful about their company.

And it shows that the founder is smart.

Because spending 15 minutes keeping your investors happy and leveraging their expertise to help you overcome obstacles is one of the most high-leverage activities you can do as an entrepreneur.

Podcast of the Week: Invest Like the Best, EP. 112 - Building Pick and Shovels, with Hunter Walk

I know, I know. I just did an episode from Invest Like the Best. I really wanted to do something from another show this week to maintain some semblance of variety, but this episode was simply too good to pass up. In it, Patrick interviews Hunter Walk about his early stage investment firm, Homebrew, his past experiences working at Google, as Head of Product at Youtube, and on the videogame, Second Life. This episode is chalked full of fascinating stories and actionable insights. I especially loved hearing about how Hunter helped solve copyright issues at Youtube and Hunter’s questions he asks every entrepreneur. Don’t miss this great episode!

Squirrel hunting is a lot like building a startup

Startup Hunting.jpg

A little bit of a stretch, I know, but stay with me here.

Thanksgiving menu

Thanksgiving is a BIG deal for my wife’s family. For the past 27 years, they have hosted 30+ people for Thanksgiving dinner (lunch) in their 200+ year old house. We fill the living room with tables and chairs and everyone squats down wherever they can. The menu is pretty outrageous in order to accomodate so many people. This is a far cry from the Thanksgivings I was used to growing up where it would just be the 5 of us in my family up at our cabin in the mountains reading, relaxing, and watching football.

Something else that is different with my wife’s family is Black Friday. I never used to do anything special for Black Friday, but my wife’s family has a very specific set of traditions. Every Black Friday, Caitlyn and her mom will go on and all day shopping spree while the guys of the family go hunting. Now I did not grow up around guns or hunting so the experience of tagging along is all very new to me. This year as we were going squirrel hunting, I was struck by some of the similarities between hunting and starting a successful technology startup. Here are a few things that are comparable.

Squirrel Dog (Market Validation Research)

As with any start up, hunting is a team sport. One of the keys to successfully squirrel hunting is have an aptly named Squirrel Dog. A Squirrel Dog is a dog that is trained to, you guessed it, go find the squirrels. They will go off on their own as you hike around and find the squirrels before “treeing” them by running around the base of any tree with a squirrel barking which both signals they have found something, and keeps the squirrel from running away. I found this behavior very similar to the market validation research that successful companies undertake before even building out a prototype or wireframe. The number one reason why startups fail is due to a lack of market demand for their product or service. By going out of you way you can ascertain exactly where the market opportunity (squirrel) is and devise an appropriate plan of attack.

Gun Choice (Product Market Fit)

Once your dog has treed a squirrel, you need to make sure you are equipped with the right gun for the task. Now I know next to nothing about firearms, but I do know enough to understand that you don’t go squirrel hunting with a .50 caliber rifle. Similarly, it doesn’t matter how perfectly poised for disruption a market is if you don’t have a product that truly addresses the problem people are facing. Now finding product market fit can often be a lot more difficult then picking the right gun for the job, but in either situation picking the wrong tool for the opportunity will leave you unsuccessful.

Taking The Shot (Execution)

Getting the squirrel in your sights with the proper gun is really just the start. If you aren’t able to execute the shot to perfection, it nothing else will matter. In venture, there is a debate on whether a market or a team is really what drives success. There are strong arguments for both, but as a seed-stage investor, I cannot help but believe that the right team is crucial. Even with the more ripe market and the perfectly formulated product, the startup could still be unsuccessful if the team is unable to execute.

Retriever (Business Model)

Assuming you are skilled enough to hit your target, there remains the question of how to extract your prize from the underbrush. You could hike through and get the remains yourself, but this would be a very manual process. Instead, most hunters will use a dog to retrieve for them. For startups, a scalable business model is absolutely essential for any type of meteoric growth. Many processes can be accomplished manually, but without some sort of business model to provide leverage, the company will be hamstrung as they struggle to meet the needs of their customers. Finding product market fit is the first priority for any entrepreneur, but developing a scalable business model is a close second.

Hunting Seasons (Market timing)

Even with the perfect market, an excellent product, a great team, and a scalable business model, you might fail simply because the market is not ready for your solution. Market timing is one of the hardest things for any startup to plan for because it is out of their control and requires founders to adjust opportunistically. You can find example after example of great ideas that failed because the supporting technology was just not there yet. Uber could never have existed before the proliferation of smartphones and GPS technology gave them the ability to put a dispatcher in anyone’s pocket. Other times changes in regulatory requirements can kill a business just as it is taking off. Just ask Juul. Timing is similarly important in hunting. To maintain a sustainable number of animals, hunting is only allowed in very specific seasons. You could face serious repercussions if you are found hunting the wrong animal at the wrong time.

Told you I could (mostly) make it work.

What I have learned about negotiation

Han could use some lessons on modern negotiation.

Han could use some lessons on modern negotiation.

Full disclosure: not much. But I have picked up a few things here and there that I thought were worth sharing.

Put the gun in the other person's hand

I heard this principle on a podcast. I think it is a Mungerism but it could also be a Buffetism. The concept is to let the other person drive your negotiation. Put them in a position of power and just ask them to do what they think is fair. Two reasons for this. One, this can often lead to better outcomes as the person you are negotiating with tries to live up to the trust you have put in them. Two, if they take advantage of the situation to screw you, you now have a crystal clear window into their character and can reevaluate your relationship moving forward. you now have someone you trust to work fairly with you in the future or you have someone who you know is only in it for them selves. Either way you're better off.

Negotiate from the ground up

I take this from a wonderfully simple post from Max Niederhofer on what he has learned about negotiation. I loved this post so much I hung it up on my wall! The strategy is commonly sited in negotiation how-to's, but bear's repeating. The key takeaways are to treat people on the other side of the table like the humans they are and that the more you prepare, the more likely you will get a good outcome. Start by knowing exactly how much you want to buy/sell something for. Then start 35% higher/lower in the applicable direction. Move 20% closer. Then 10% closer. Then 5%. Finally throw in something non-monetary that you have identified earlier that could be seen as a "win" for the other party. The decreasing intervals of this framework will signal you are getting closer to your break point. The kicker at the end will make the other party feel as if they have walked away winners. I very much align with Max’s view that negotiation is not winner take all. The key is to act emphatically and come to a scenario everyone around the table can feel comfortable with.

Make them blink

The most audacious and least widely applicable of the three strategies in this post. I take this from the podcast I highlighted earlier this week with Nick Kokonos. Nick describes his most recent book negotiation. He got together a bunch of publishers on the call (they had all agreed to this before hand so weren't completely blind sided.). He then starts off at a LUDICROUS number and slowly starts counting down. Eventually someone blinked at a point 2-3x what they were willing to offer one on one. This high pressure situations ramps up the fomo (fear of missing out for my non-millennial friends) faster than a Friday night in high school. Eventually someone will blink and offer you a good price because they are worried that someone knows something they don't since the price is so much higher than they were willing to offer initially. This strategy only works when you  a) are bargaining from an existing position of strength b) are able to get several similar buyers together in an auction setting and c) the negotiation is more transnational in nature and less about building a lasting relationship. 

One important caveat. This should all be taken with a healthy dose of salt grains. I am early in my career and haven't exactly been negotiating international joint developments protocols in my free time. The most high stakes negotiation I face on a regular basis is figuring out where to go to dinner with my wife (we are one of those couples where the negotiation centers more around wanting the other person to decide than actually feeling strongly about somewhere in particular.)

That being said, each of these strategies really resonated with me and when I am negotiating the name for Mars colony 3, these will be the paradigms I lean on.

Would you rather get rich or change the world?

penalty flag venture capital get rich or change the world.jpg

As part of my entrepreneurship concentration in college I took a few classes on entrepreneurship and venture capital with a professor that had been both a successful entrepreneur and venture capitalist. I thoroughly enjoyed his brusque and brutally honest style (he was known to carry around a yellow football penalty flag that he called his “Bullshit Flag” and was he did not hesitate to throw it whenever people got a little too fresh with the truth). One of the common questions he would ask us to ponder is would you rather invest in an entrepreneur interested in getting rich or changing the world. Invariably whenever he asked this he would then have us raise our hands depending on our answer.

I was always in the minority (or sometimes the only one) that said they would rather invest in an entrepreneur that was trying to change the world.

His argument is that the world of venture capital is tough and that only the fittest companies survive. If an entrepreneur isn’t dead set on getting rich, they won’t prioritize growth the way that you, as an investor, need them too. A focus on changing the world to stop short of the best financial outcome when it is just over the horizon. My response was always that there are a ton of ways to accrue wealth in this life and that only entrepreneurs that are truly passionate about solving a problem in the world will succeed. I believed that the wealth would come from the offshoot of that success, just not as its primary driver.

Of all the things I learned in this class, it was this conversation that always stuck with me the most (though I doubt I will ever forget his bullshit flag either!).

Would you rather get rich or change the world?

This is a question that I have been pondering and discussing a lot recently as I have had the opportunity to work with founders that clearly come from both camps. There are a lot of strong arguments people make for supporting the team trying to get rich. They will act in alignment with our goals as investors. They won’t settle for a less than excellent outcome. They won’t get pulled in different directions by their altruistic goals.

And at the end of the day, I have to admit I agree with a lot of the get rich argument. It makes sense from the perspective as an investor with a fiduciary responsibility to their LPs. And anyone who knows me will tell you that I am as much of a free-market capitalism loving libertarian as the next guy.

But I can’t help believing that the best investments are made in founding teams that truly believe that it is up to them to change the world. Teams that have experienced the problem they are fixing personally and who genuinely think that if they don’t solve this issue, no one else will.

I want to invest in the next Elon Musk, who thinks that it is his personal responsibility to make mankind an interplanetary species, rather than the next Jeff Bezos, who saw the online trend before anyone else and took advantage of it to build one of the world’s most dominant businesses. Now obviously investing in either the next Musk or Bezos would be an incredible investment, but the choice is clear to me.

I want to invest in the dreamers that have a mission and a purpose permeating everything they do. I want to invest in the builders that believe that tomorrow will be better than yesterday and that no problem is insurmountable. I want to invest in the founders that will never give up because they can’t stand the thought of letting the problem they are trying to solve effect one more person.

I want to invest in people trying to change the world.

If they win, we all win.

Venture Capital and the Red Queen

Venture Capital and the Red Queen

This past week I came across a fascinating concept in evolutionary biology called the Red Queen Hypothesis. The Red Queen Hypothesis proposes that organisms must maintain a perpetual state of adaptation and evolution, not only to gain a reproductive advantage against rivals from within their own species, but merely to survive in an ever-changing world filled with other constantly evolving organisms. The Red Queen Hypothesis paints evolution not as an inevitable outcome of generation after generation of survival of the fittest, but as a species-level arms race of life or death.

Evolutionary Biologist Leigh Van Valen developed the Red Queen Hypothesis as a potential explanation for why a species’ extinction rate is relatively flat over time. Under the core tenets of the theory of evolution, one would expect that as species evolve over time, the chance of them going extinct would diminish, but empirical evidence has shown this to not be the case. Van Valen named his hypothesis after the Red Queen from Lewis Carrol’s 1871 novel Through The Looking Glass (sequel to Alice’s Adventures in Wonderland). At one point in the book, the antagonistic Red Queen tells Alice that:


Exhibit 1. The wily and cunning fox. Notice the hallmarks of an evolutionary predator. Pointed ears, sharp claws and a stylish three piece suit with occasion appropriate accessories.


Exhibit 2. The swift hare. Large ears have developed to be able to sense the slightest sounds. Evolutionary biologists maintain that the true reason behind the hare’s insistence on wearing gloves and proclivity to ask “whaddup, doc?” were lost a millenia ago.


This idea of running just to stay where you are is an apt metaphor for the necessity of an organism to constantly evolve just to maintain its current place in the evolutionary order. The most obvious example of this in nature also involves running. Imagine the perpetual evolutionary dance between the wily fox and the swift hare. The hare constantly evolves to become faster as the slowest hares are removed from the gene pool by the hungry fox. The inverse happens to the fox, with their slowest numbers dying out from not being able to get enough food to eat. This plays out as a balancing act of co-evolution where both foxes and hares will get faster and faster over time. If either species stops keeping pace in this evolutionary arms race, it will either die out or be forced to adapt in other ways. As long as both the fox and the hare keep at roughly the same pace, their relationship will remain locked in place.

The world of technology startups and venture capital has many of the hallmarks of the Red Queen Hypothesis. Incumbents and disruptors are often locked in a battle of the hare and the fox. As soon as either starts slowing down, their demise is relatively swift. Companies need to constantly be reinventing themselves to stay on top. This is easier said than done. If you look at the tech titans of 20 years ago, only Microsoft has been able to maintain its status as one of the leaders in the space (and even then it is no longer as dominant as it once was). It will be interesting to look back in 20 more years and see whether the Amazons and Apples of the world are able to maintain the current status they enjoy. Some might point to the incredible power that today’s incumbent companies have, but at one point it was similarly hard to imagine that seemingly invincible tech titans like AOL and Xerox would ever fall from grace.

Startups have a biological imperative to constantly be growing and innovating. If they don’t, they will die just as surely as hares would if foxes suddenly evolved to be born with jetpacks. The other day I saw a well-regarded venture capitalist compare startups who take venture funding to sharks. Sharks are only able to “breathe” by constantly swimming so that water passes through their gills and can be absorbed. Constant innovation is similarly the only thing that keeps startups flush with oxygen. You may argue about whether this is the way that things should be, but it is hard to argue with the fact that once a company gets on the venture train, it is exceedingly difficult to get off at the next station. As a founder, you should understand that an ability to evolve and adapt is table stakes. It is not enough to build one great product. You need to constantly and consistently be improving and building better and better products.

How can this be done? Are all companies doomed to fail at the slightest slip up? What can a company do to keep on innovating?

Luckily our world is in a constant state of change which means that there will always be new opportunities for companies that truly build themselves to constantly innovate. The path to constant innovation is surprisingly straightforward, but only an extremely small number of companies ever execute on it over the long term.

The first step is to create a diverse and high quality talent pipeline that will continuously refresh your company with new ideas and perspectives. A focus on diversity must start on Day 1, because if you, as a founder, don’t start focusing on diversity within your first 10 hires, it will be extremely difficult to start doing so after our first 100 hires.

The second step is to keep your eye on the horizon. Reinvest in yourself to stay on the bleeding edge of innovation. Don’t rest on your laurels and expect that what worked yesterday will work tomorrow. Always be on the look out for new opportunities recently enabled by social or technological change. If companies only tried to build upon what made them initially successful, Amazon would be the world’s best place to shop online for books (but nothing else) and Netflix would be the first place we would all go to rent our favorite DVDs through the mail.

The third step is to think for the long-term, without losing the ability to block and tackle over the short term. Apple is the master of this. They never fail to deliver on their quarterly objectives, even as they maintain a long-range focus on the next quarter century. Their obsessive focus on long-term planning has allowed them to build products that people will love to use today, even as they incorporate the building blocks of what their future products will be 10 years down the road. When Apple first built the fingerprint scanners into iPhones, they were preparing us for a day when our face would be the key to our most valuable data. If you pay attention, Apple has slowly but surely been incorporating more and more health and AR focused capabilities into their products. Don’t be surprised when new products with each of those categories at the forefront are released in the coming years.

The fourth step is to think based on first principles about the way things should be done, not the ways that they are done today. The insurance industry has been notoriously slow to embrace new technology and innovation. There are some structural advantages insurance companies have that make it a great sector to be a part of, but these same structural advantages allow them to sometimes forego evolution. In Columbus, we have seen the birth of next-generation insurance companies like Root Insurance and Beam Dental that underwrite risk based on measured activity, instead of age and demographic characteristics. Constantly ask yourself why things are being done a certain way and how should they work based on your understanding of people and available technology.

And that’s all it takes. Not so hard right? The difficulty comes in execution… and the fact that everyone else out there is going to be the fox nipping at your heels. Success is possible, but it won’t ever be easy.

Run fast.

Run hard.

Run hungry.

And you might just stand a chance.

How to Invest Like the Best of the Midwest for the Rest


I had the privileged of seeing Andy Jenks, Partner at Drive Capital speak last week at Ohio State’s Venture and Startup Summit. Drive are the big dogs in town with over half a billion dollars in capital and investments into some of the top companies in the Midwest. I really enjoyed Andy’s speech and thought there were some insightful nuggets in there that were worth sharing.

The Midwest startup ecosystem is flourishing right before our eyes…

Now this is something Andy and I agree upon! The Midwest has all the ingredients to be a successful startup ecosystem. High quality universities, low-cost of living, and a strong corporate base combine to form a potent cocktail for growing new enterprises. The Midwest is also slowly, but surely starting to get some startup momentum. Successful startups inject new capital into an ecosystem and unleash the next generation of entrepreneurs in that area. In 2013, ExactTarget was acquired by SalesForce for $2.5 billion. In 2017, CoverMyMeds was acquired by McKesson for over a $1 billion. In 2018, Duo was acquired by Cisco for over $2 billion. Acquisitions like these will seed the next wave of great startups in the region.

… but investors on the coast still have a bias against the region despite their claims to the contrary.

This was disappointing to hear, but maybe not completely surprising. Despite increased media attention and success story after success story, Jenks claimed that coastal investors are still not willing to give Midwestern startups a fair shake. The cynical part of me would call this blatant geographic bias. The more optimistic part would point to the fact that venture investing is a relationship business and being located closer to the startups you are investing into means you can better support the entrepreneurs you are partnered with. The truth probably lies somewhere in the middle. The fact is that if a startup wants to raise serious institutional money from the coasts, they need to have better metrics and more traction than a similar startup in the bay area or New York would need to raise the same amount.

Getting the most out of your board

I love this one. Andy mentioned that he tells all of the founders of boards he serves on to “give him homework.” I think this is a great mentality from a board member, but even more so I think this should be a mindset that all founders should adopt. You don’t have to spend much time in the space to see that unhealthy founder-board relationships are pretty pervasive throughout the startup landscape. Too often founders look at their boards in an antagonistic light. This is a recipe for disaster as founders begin to withhold information from the board and then by the time these issues surface, it is too late for the board to help. The best boards have a symbiotic relationship with a company’s founding team. The board’s purpose is to support and advise the founder, not hound them or tell them how they can do their job better. I love the accountability that assigning each board member a task to complete before the next meeting brings. I think this is a great way to keep your board aligned and engaged, while generating value for the company from the most knowledgeable, experienced, and well-connected people at the table.

Focus on the market first

One of the most interesting parts of the presentation was Andy’s discussion about how Drive develops their investment theses. Drive takes a very market-driven approach to investing. They spend a lot of time building what they call “market maps”. These market maps chart out all the different aspects of a particular market and help Drive determine how they want to attack a particular market and what sort of companies they would be interested in investing in. There is a debate in venture about what matters more, the market or the team. What Drive would tell you is that markets need to be big enough to support the sort of outsized return they need to generate on their successful exits. Proponents of the market first approach will also point to the fact that a good team in a bad market will not be successful, but a bad team in a good market may still be successful despite themselves. My response would be that the absolute best teams have the ability to build markets that never existed before. My personal view aligns much more closely to that of Peter Thiel’s strategy, find a niche that you can attack, build a defensible position, and then build the market from there. To be honest, I think that much of the debate depends on what stage you are investing in. For larger, later-stage shops like Drive, it makes 100% sense to focus on market sizes because when you are deploying hundreds of millions of dollars at a time, every company you invest into needs to have a market large enough to support a billion (or even multi-billion) dollar enterprise. When you are investing in the the earliest stage companies, I believe it makes more sense to invest in the best possible teams. The best teams will be able to pivot when others won’t and may even be able to build a multi-billion dollar market where one never existed before.

There are things we need to still do better on

One of my favorite parts of Andy’s speech was that it was relatively pragmatic in nature. A lot of the presentations around the Midwest startup ecosystem can take on a very ra-ra tone, which makes sense. The great companies being built here continue to be overlooked and it is important to bring attention to them and the growth of the region as a whole. However, as promising as the Midwest’s trajectory is, not everything is perfect. Jenks highlighted a few ways that we need to improve if we really want to take the next step towards being a bonafide startup ecosystem. He urged investors and entrepreneurs alike to aim higher, raise more, and attack bigger markets. I like this. I will be the first to tell you that venture funding is not for everyone, but if it is right for your company, you are joining a game of fastballs and home runs, not grounders to left field (is it weird how many baseball metaphors I use when I am not even a big fan of the sport? I need to start working in more soccer references. Something to think on…). I want to invest in companies working on big ideas. Capital B BIG ideas. I want to invest in companies working on solving world hunger, traffic, cancer, the melting ice caps, and water shortages. And I think that the Midwest is the ideal place to build these sort of companies.

We need only to dream a bit bigger.


Photo by  NASA  on  Unsplash

Photo by NASA on Unsplash





My response:




Short answer: No.


Via NVCA. As of June 30, 2018.

Via NVCA. As of June 30, 2018.




This is a good thing.

For everyone.

To suggest otherwise is both alarmist and misguided.


The Big get Bigger: An Analysis of the Current Venture Climate

Figure 1. Via NVCA. As of Q2 2018.

Figure 1. Via NVCA. As of Q2 2018.

Anyone familiar with the venture capital industry will know that we are in an investing and fundraising environment that is relatively unprecedented in the history of venture capital. The rise of “mega-funds” totaling sizes of up to $100 billion in the case of Softbank’s Vision Fund, has lead to deals at sizes that have never been seen before. Uber’s most recent $500m round lead by Toyota valued the company at over $70 billion dollars. The high-dollar amounts and the relatively frothy fundraising environment have instigated headlines ranging in size and shape but almost universally pessimistic as to the outlook of the industry. Some people believe that we are in a bubble the likes of which has not been seen since 2000. Others, especially LPs, Corporate VCs, and Growth Equity shops believe it is an excellent time to get increased exposure to the space. I did some digging into the data to try to find out exactly what is going on.

Here’s what I found.

We are a long way away from seeing Dot-com crash levels

Figure 2. Via NVCA

Figure 2. Via NVCA

Some have compared the current venture climate to the Dot-com bubble of the early 2000s where companies could go public and double their value just by adding “.com” to the end of their name. Everything quickly came tumbling down and investors discovered that simply putting something on the internet was not a way to create lasting value. Despite high-valuation numbers, the current environment remains a far cry from the Dot-com bubble. As Figure 2 illustrates, the current climate is the outcome of an elongated period of sustained industry growth and demonstrates neither the hyper-acceleration of deals we saw in 1999 nor the crash’s sizable peak investment amount. If we are in a bubble, it will look very different when it bursts.

Fund sizes are not as big as you think they are

Figure 3. Via NVCA. As of Q2 2018.

Figure 3. Via NVCA. As of Q2 2018.

This one surprised me and definitely flies in the face of the popular narrative. When looking at the industry as a whole, fund sizes are not meaningfully larger than they were a decade ago. What is important to notice though is how the spread between the average fund size and median fund size has expanded. This indicates that the absolute largest funds at the top of the spectrum are dragging the average fund size up as the median fund size has risen much more modestly.

But median follow-on fund size is increasing…

Figure 4. Via NVCA. As of Q2 2018.

Figure 4. Via NVCA. As of Q2 2018.

…even as the time between funds shrinks

Figure 5. Via NVCA. As of Q2 2018.

Figure 5. Via NVCA. As of Q2 2018.

These trends definitely show the frothy fundraising environment that firms are enjoying. Venture firms have been able to raise larger follow-on funds more and more often. This phenomenon is not unique to venture capital. I saw first hand at my prior job just how much of a desire there was from institutional investors to gain exposure to alternative asset classes. It will be interesting to see if these trends are sustainable as deals take an increasingly long time to exit.

Deals are take an increasingly long time to exit

Figure 6. Via NVCA. As of Q2 2018.

Figure 6. Via NVCA. As of Q2 2018.

Told you so. The time to exit for venture backed companies has slowly crept upwards over the past decade. The exception to this is companies exiting through a public offering where time to IPO has stayed largely flat and is even slightly down versus a peak in 2012. This speed to IPO makes sense in light of the many venture backed companies that have had their shares publicly listed over the past couple of years including StitchFix, Snap, and Shopify (those are just the high profile ones starting with S! Seriously though do you think there is something there…? I’ve decided that I am going to name my future company Soogle.)

Corporate Venture Capital is getting in on the fun

Figure 7. Via NVCA. As of Q2 2018.

Figure 7. Via NVCA. As of Q2 2018.

One of the hot takes on the current environment I have heard a couple of times now is that “the growth of corporate venture programs is a clear sign that we are in a bubble.” This seems pretty difficult to say with any measure of confidence due to the fact that we have been through a grand total of ONE venture capital bubble before, but it is hard to ignore the growing leverage over the space that CVCs are enjoying. I found it very interesting that the percent of deals that have involved corporate venture arms has stayed relatively flat, even as the overall percentage of deal value has increased by approximately 50%. Corporates are putting significantly more capital to work as they take more ownership in bigger rounds.

Deals are bigger than they used to be

Figure 8. Via NVCA. As of Q2 2018.

Figure 8. Via NVCA. As of Q2 2018.

Speaking of bigger rounds. This chart of median deal size does a great job of illustrating the growth of later stage rounds compared to early rounds. As you can see, the driver behind the growth in deal size really is later stage rounds. This makes sense. There has been an explosion of both corporate VCs and Growth Equity shops to go along with larger mega funds. All of these groups have large funds that need to deploy large amounts of capital at once.

Even within Late stage, deal sizes are being driven by the top of the curve

Figure 9. Via NVCA. As of Q2 2018.

Figure 9. Via NVCA. As of Q2 2018.

This one is very interesting. This chart shows dollars invested into late stage rounds by deal size and does a great job of demonstrating that even in the later stages, the biggest deals are taking up a larger and larger portion of the pie.

Valuations are getting more and more expensive

Figure 10. Via NVCA. As of Q2 2018.

Figure 10. Via NVCA. As of Q2 2018.

Figure 10 shows the increasing pre-money valuations that we are seeing today. What is causing this growth in valuation? The relationship between deal size and valuation can be a little bit like the chicken and the egg. Are deals bigger because valuations are higher and firms need to deploy more capital to maintain their targeted ownership? Or are valuations higher because there is a glut of capital and entrepreneurs are getting more capital for less ownership in their company? Given the similar trends in private equity, I tend to believe it is more of the latter. I believe low interest rates have caused large institutional LPs to allocate more capital towards alternative assets in search of yield. Suddenly managers had significantly higher fund sizes and needed to allocate more dollars to each deal. Entrepreneurs (and investors!) don’t want to be over-diluted and this has pushed up valuations as they are able to command higher valuations for the higher deal sizes.

Seed deal size are increasing (even if relatively less than later stage)

Figure 11. Via NVCA. As of Q2 2018.

Figure 11. Via NVCA. As of Q2 2018.

Seed deals are showing a clear trend of getting bigger too. More deals are being done with larger round sizes. Hunter Walk has a great post about how seed is no longer a discrete round, but now more of a phase where companies may need to raise multiple rounds at higher and higher valuations before being ready for an institutional Series A. I suspect this is one of the big drivers for increasing seed sizes (on top of the macro-trends growing round sizes across the industry).

Angels are surprisingly disciplined (or more likely they are being shut out of deals)

Figure 12. Via NVCA. As of Q2 2018.

Figure 12. Via NVCA. As of Q2 2018.

Angel investors are not following the same trends as institutional investors. Figure 12 shows the growing discrepancy between angel and seed median round size. There are a few potential explanations of this. 1) Angels are maintaining price discipline (maybe out of necessity?) where others are not. 2) Friends and family rounds are not growing the same way other rounds are since they are not exposed to the same institutional LPs as funds are (could be). 3) Angels are being squeezed out of more expensive seed deals. My hunch is that it is likely a mix of all of the above, but if I had to put the blame on one thing, it would be angels getting squeezed out of rounds. For better or for worse, Entrepreneurs would generally prefer institutional investors to angel investors, with the abundance of capital being thrown around today, my guess is that angels aren’t getting into deals because there is simply enough interest from institutional investors to close out rounds. This one is very interesting to me because we are still seeing heavy involvement from angel investors in the deals we are executing at Rev1. Maybe we chalk this one up to the coasts?

So what did we learn from my deep dive? Digging into the statistics showed some of what we already knew, but it also revealed some insights I wasn’t expecting. The largest funds are getting bigger, deals are getting bigger, and valuations are getting bigger. Venture Capital firms are raising larger follow on funds at a more rapid clip than ever before. There are; however, some things we found that fly in the face of the popular narrative. Angel investors are not being effected (perhaps unsurprisingly) by some of the same trends effecting the industry at large, fund sizes are not meaningfully larger when you look at the industry as a whole, and the current environment has not yet reached the heights of the Dot-com bubble.

It is dangerous to rely too heavily on historical events as a sign of things to come. As with most things, the truth is somewhere in the middle.

How I got a job in Venture Capital

Photo by  Nick Jio  on  Unsplash

Photo by Nick Jio on Unsplash




Fake it till you make it 





Take advantage of the resources that are out there
















Network your socks off 

Does networking matter?


Moving on.





Be flexible 







Why VC


But for the right kind of person it is absolutely awesome!



I'll be your first informational interview. 

The Start of Something New


I am excited to announce that today is my first day working as an analyst at Rev1 Ventures in Columbus, Ohio! I could not be more excited about this next step in my career. Ever since my first exposure to the venture capital ecosystem as an intern at 3x5 Partners in Oregon, I have been fascinated with startups and the ambitious entrepreneurs that build them. Making my way into venture capital has been a goal of mine for years now and I am so grateful to the Rev1 team for this fantastic opportunity. This feels like a huge accomplishment, but I know that this is really just where the hard work begins! Very excited to roll up my sleeves and get started!

WHY Rev1? 

Rev1 is exactly the sort of firm I have been looking for. Rev1 invests in seed stage companies. As I went through my job search process I was very purposeful in targeting seed investors as opposed to later stage venture capital or growth equity firms. One of the things I learned during my time at Carlyle was that the later stage you are as an investor, the more your returns are concentrated in two areas: acquisition and exit. When you are buying billion dollar companies, there is only so much value you are able to add to the operations of a company. Large, developed companies tend to be able to run themselves pretty well without too much outside interference. The real returns in later stage private investments are all based around finding the right deals and executing on them. This is a lot harder than it sounds, but it really does work to drive returns for investors. This is all well and good, but I wanted to gain expertise in an area where there is a much bigger focus on partnering with companies to help them grow, not buying them and letting them run themselves until they are ripe to be sold. With Rev1's venture studio model, they are true partners in the entrepreneurial process. They work with entrepreneurs all the way from two guys with an idea in a garage, up to fully formed and fast growing companies. I am thrilled for the opportunity to work alongside entrepreneurs at the earliest stages of company formation. I believe that this role will provide me with an unparalleled opportunity to learn about what it takes to build and lead a successful business. 

WHY Ohio?

Chris Olsen, the founder of fellow Columbus-based VC firm, Drive Capital, calls the Midwest "the opportunity of our lifetime." The Midwest has all the ingredients necessary to support a vibrant entrepreneurial ecosystem as well as some key competitive advantages versus other geographies. Collectively, the Midwest would be the 5th largest economy in the world. It is home to incredible Universities and research institutions such as Ohio State University, University of Michigan, Notre Dame, University of Chicago, and many more. These institutions provide an incredible wealth of both technical talent and research/Intellectual Property to build companies around. Resources and talent are further provided by the 152 Fortune 500 companies that call the Midwest a home. The ethos of the Midwest is also ideal for building an entrepreneurial ecosystem. There is a palatable underdog status of the region compared to coastal tech centers. This has helped create a much more collaborative environment than one would see somewhere like San Francisco. From what little exposure I have had, there definitely seems to be a view that "a rising tide lifts all boats" and there is a focus on collaboration over competition, as everyone seeks to build up the region together. The Midwest has another "secret sauce" that helps set it apart versus other startup ecosystems: the cost. The cost of living in the Midwest can often be less than half that of living in coastal metropolitan areas. This allows companies to attract and retain top-level talent at a fraction of the cost of what would be required in somewhere like San Francisco or New York. I can personally vouch for this difference in cost myself. As part of our recent move to Columbus, my wife and I were able to double the square footage in our new apartment for approximately half the cost of our previous apartment just outside of DC.

Thanks to everyone that has provided me with wisdom and support throughout this process! Breaking into venture capital is not easy (I am sure there will be another blog post on this topic in the future!), and it is not an exageration to say that I could not have done it alone! 

I am so looking forward to my time with Rev1 and continuing to bring you my insights, thoughts, and views on startups and the world of venture capital. 

Until next time!