I was surprised last night at 11 pm to get an email from one of my CEOs. His flight was cancelled due to bad weather and he was going to have to bush-whack his way home on a train. He was also feeling pretty run down, he admitted.
So, we emailed back and forth and had an open discussion. I suggested that he re-frame his thinking to focus on the bright side: a market that was accelerating for his company, his supportive Board, and an incredible opportunity to build a big company that can create lasting impact and value.
But, I know, in those moments, it’s easier said than done. I know, in those moments, that you believe the positive things but the negative seems to get in the way. So, giving someone permission to vent is totally cool. And, that’s what I tried to do last night with this CEO.
I think the best thing you can do sometimes as a VC is this: listen and empathize.
Moritz Plassnig this morning sent me a great article through a Tweet. It’s called “The Most Important Question You Can Ask Yourself Today”. It is well worth reading. Author Mark Manson writes:
What’s more interesting to me is what pain do you want? What are you willing to struggle for? Because that seems to be a greater determinant of how our lives end up.
Everybody wants to have an amazing job and financial independence — but not everyone is willing to suffer through 60-hour work weeks, long commutes, obnoxious paperwork, to navigate arbitrary corporate hierarchies and the blasé confines of an infinite cubicle hell. People want to be rich without the risk, with the delayed gratification necessary to accumulate wealth.
Coincidentally, The New Yorker came out today. I glimpsed briefly through it after noticing Nelson Mandela was on the cover. He’s definitely a man who was able to articulate and understand trade-offs in life. Though he was married and had two daughters, he took on a personal mission of great danger. Ultimately, for 18 years, he was imprisoned in an eight-foot-by-seven-foot cell. He was allowed to send one letter and to receive one letter every six months.
An incredible struggle….
There’s a cool article in today’s Wall Street Journal. It’s about a VC who leaves work to pursue his dream of competing in the Olympics.
I think the best paragraph in the article was this one:
His…epiphany came after his usual speech to entrepreneurs about following one’s dreams. Lying in his hotel bed, he thought, “I am so full of bull,” and asked, “what are the deepest, darkest things I have been too scared to do?”
Of course, not everyone has the financial flexibility to leave a job and train. And, often it really is hard to articulate a life-long dream. They often are hidden under layers. I love my job, but it took a couple of jobs before I came upon VC.
But, perhaps, can get you closer? And, everyone has the ability to take at least one small step each day towards finding that dream. I think the key is to stop “kicking the can” and assuming that you have time tomorrow.
Might as well start today?
This is an amazing story about survival (parentless while young and becoming a refugee), grit (finding his way to the U.S. and seeking to improve his economic prospects as an adult) and hope (he has amazing strength and perseverance).
I love reading stories like this. In my job, I work with people who tend to have options: they’re looking to start a company, join a start-up, and change the world. This story, though, helps me stay grounded. There are tons of people out there who are struggling. They don’t have options.
I hope we remember them this holiday season and give our time, talent or treasure.
Below, is a short video of Jacob (or, click here).
Now that e-commerce appears to be less hot, we’re increasingly looking at the category. As I’ve written in the past, Customer Acquisition Cost is a key driver of the business. Another thing we look at in particular is industry structure. Specifically, we look at the supply chain and try to see where the “fat” is and whether there’s room for dis-intermediaton. We like companies going after that fat.
For example, let’s take a look at the wine industry. It’s a pretty scary industry against which much VC money has been thrown. What’s alluring about it is that many states mandate what’s called “three-tier distribution,” with products going from wineries to wholesalers to retailers. It would be much more efficient for example if wineries could ship directly to retailers. But, in some states, they must go through a wholesaler in the middle. These wholesalers are licensed by the state and have a strong lobbying group.
On the face of it, an e-commerce site could greatly cut out the wholesaler “fat” by going directly to the consumer. In some states, that has worked. In some states, it has not, due to tight regulations. In the case of the latter, there were cost inefficiencies, but you couldn’t really go after them.
In another example, we can look at the pets supplies business. Remember the whole Pets.com-sock-puppet moment in 1999? A raft of VC-backed e-commerce start-ups went after that vertical, and the journeys unfortunately didn’t end well. That was a tough vertical in retrospect; when you looked at the gross margins by product in that vertical, they’re pretty low. In fact, it’s pretty hard to lock up proprietary items. You didn’t have a sourcing advantage.
As I was looking at a number of those new start-ups, I did due diligence by going to my local pet store and interviewing the manager. He ordered products from three or so catalog-based wholesalers, and he felt they all had roughly the same goods at the same prices. So, there wasn’t fat in the manufacturing tier. Moreover, selling products didn’t seem profitable. He seemed to make his money off selling live animals.
So, that’s one lens through which to look at e-commerce: is there “fat” there and can you cut it out? If you’ve got an e-commerce business plan, would love to hear your views.