The WSJ today published an article called “Drop in Tech Stocks Hits Startup Funding” (more here). The piece outlined how the NASDAQ correction is in turn affecting VCs and angels.
I’m not a pro at the public markets and its ripple effects, but I do feel strongly about this: time horizon really matters.
If your time horizon in owning equity is a few seconds or a few months, then, what the public markets do is really important. If the market is softening, it makes sense to unload your position ahead of everyone else (if you can).
But, if your time horizon is many years, then you can handle the short-term volatility. VC funds are 10 years-long, and so, we’re not paid to be traders. I would find it too nerve-racking to be eyeing a Bloomberg machine all day. Instead, I can think about the future and what trends might unfold and what business today can benefit.
Similarly, founders I know are committed: they pour their lives into their companies, and when things get rough, they bear down. Their time horizons are long and they’re willing to gut out the tough times. You really cannot replace that.
“Hired guns” usually don’t have as much persistence. You see various execs., who are hired later, often cycle into companies. Most don’t have the staying power of founders.
Founders really matter. They have extremely long time horizons.
I am sick as a dog today, but I wanted to write about Passover.
And, our ancestors had to endure a great deal for us to be here, whilst the struggle against discrimination continues today. Elizabeth Ducoff, for example, Tweeted this regarding the recent shootings in Kansas:
Grateful to celebrate my grandfather’s 85th bday + Passover tonite. He escaped the Holocaust, but yesterday is a reminder there’s more to do
— Elizabeth Ducoff (@elizabethducoff) April 14, 2014
I recently watched a moving PBS Series called “The Story of the Jews.” Most touching of all for me was a 90-second snippet. It covers Holocaust Memorial Day in Israel. An air raid siren goes off, and the whole nation pauses. Cars stop on the highway and the drivers get out. Everyone stands, in silence, at attention.
Video is below (or, click here). Watch min 2:00 to 3:30.
So, to all my Jewish friends, as you celebrate the Feast of Freedom: Chag Pesach Sameach!
Eric’s oldest child has been accepted to many awesome colleges. It’s a happy time for them.
Also, some of my children are in high school, and so, the reality of college admissions is increasingly getting closer. Those children are currently deciding what courses to take next year.
One has been asking me for advice and wonders how to balance personal interests vs. managing the optics for college admissions.
I think back on my own experience and realize how irrelevant it is. You see, I applied to colleges sight unseen and was pretty naive about it. Back then, there was no Common App., parents didn’t hire admissions consultants, and the admissions rate at Yale College was 18%. Now, Yale admits only 6%. It is crazy.
So, my advice has been this: take courses that will help you grow and better understand what you’re called to do in life. And, let the college admissions chips fall where they may. Don’t overload on AP courses and suffer sleep deprivation for years, unless you really like the subject matter.
Here’s why. If the odds of getting into a fancy school are so absurdly low, it means that legions of qualified applicants are being rejected. So, there’s likely more randomness in the process. Call it luck or standard error.
So, why manage optics if so much of the process is outside of one’s control? Instead, take courses for the old-fashioned reasons of finding your passion and what forces you to grow as a person.
Maybe that’s a naive view, but I’m new to this. I’d love to hear from other parents who have been through this process.
Should I push my children to take more advanced courses? That doesn’t feel right to me.
Through TechStars Boston, I’ve met up a few times with entrepreneur Leo Koenig of KinematIQ. Each time, I’ve been struck by how thoughtful he is about business in general, and, moreover, how he handles the ups and down of being a founder.
I increasingly receive questions from founders, asking me about how to deal with stress. I think it’s a critical ability to develop. And, what better way to hear about “how to” than from another entrepreneur?
So, I asked Leo to do a guest blog post and happily received the note below. Also, he has a cool blog, and so, check that out, too:
Being an entrepreneur isn’t easy, especially when it is your first go around. It’s likely one of the most challenging and demanding jobs one can have.
You bet your life on an idea (at least you feel like you do), and chances that you will make it are a mere one out of ten. You’re constantly facing challenges and problems that you never encountered before, so you are way out of your comfort zone to begin with. Your business is always a month, missed deadline or just simply bad luck away from failing.
On top of that, you are pretty much alone out there, especially as the CEO. You can’t really share your worries and fears with anyone. You need to be and act optimistic, encouraging and confident in front of investors, partners and your team. Sounds like a perfect recipe for disaster, and if this is the way you look at entrepreneurship, it certainly is.
Here’s the good news: You are doing something beautiful, and should be really enjoying what you are doing. The good news also is, the more fun you have, the more relaxed you are and the more you enjoy what you do, the more is your business likely to succeed.
Ever hear baseball players during a struggle saying that they are pressing too much? Trying to hit a home run every at bat? Their answer to the problem is simple: “I’ve just got to go out there, play ball and have fun. Take one pitch at a time”. Don’t worry if you are not there yet – and I don’t think anyone (including myself) will ever be there 100% – but there are many things one can do to get in a state of mind that is rather relaxed, enjoyable and productive at the same time (some call it flow).
This is perhaps the most powerful tool of all of them, yet the hardest one to achieve as well. You’ve probably heard about meditation by now, it’s all over the start-up world and mandatory in some Silicon Valley companies. Meditation is one of the tools to achieve mindfulness.
The basic concept behind mindfulness is to detach one self from thoughts and conditioning, and embrace the only thing you will ever have – the present moment. There “is” simply no future or past, there is always just the present moment. Not surprisingly, the state of flow, a highly productive and happy state of mind, is said to be achieved when you are 100% present.
Ironically, this state of presence, most iconic scientists and artists had their biggest break through. It’s not when they think, it’s when they stop thinking.
So, how do you achieve a state of mindfulness? As mentioned, meditation is one possibility, but I don’t think it’s the answer to it all – how can meditating for half an hour (ever tried that after a busy and hectic day?) help you if you go right back to stress mode? There are other, “hidden” forms of meditation that many of us aren’t perhaps aware of. We can tell they make us feel good, and the reason is that they put us in a mindful state.
First, there are a few things one can throughout the everyday grind that bring mindfulness into your life. Take a step back and observe. Really enjoy the food you are eating, recognize the tastes. When you walk outside, don’t just look down, look up and observe your surrounding, you’ll be surprised about the things you notice that you missed before. Just sit back and take a deep breath, and notice the sounds around you. Talk to people, and listen to them.
Also, there is a lot of mindfulness to certain activities. Ever had those moments where you “completely forget all the stuff around you”? After playing a hockey game, after a night out with your friends, or perhaps after a good kiteboarding session? Those things immerse you into the present moment and switch off your consciousness, you just “are” and enjoy what you do.
Action sports are a particular powerful form of meditation, and even though I am a rather small sample size, I myself have my most creative and productive moments during or after a kite-boarding session.
Be your real self. First off, every bit of success will feel as hollow as an empty bottle if it is the result of you putting on a facade, and every failure will be a worthwhile and helpful experience if you stayed true to your values and self throughout.
More importantly, though, authenticity is the only way to build strong and lasting relationships, and it is arguably the most important trait of strong leaders. Last but not least, not being yourself to obtain something from others is a rather selfish act, as ironic as this might appear to be.
Authenticity is a tough nut to crack, fear creeps in easily and pulls you back to fulfill norms and do what others want you to do, especially because there are so many accomplished and opinionated people around you that give “advice” or have a strong opinion on how your (or any) business should be run. Chances are you will get 120 different opinions from 100 different people. If you follow each of them, you’ll quickly be lost, running hard and scrambling to keep up without a clear direction.
Truth is, you know your business better than anyone else, you know yourself and your team better than anyone else, and your strong opinion and leadership have gotten you to where you are now, so stay true to those values and be yourself.
When astronauts first traveled to the moon, everybody anxiously anticipated what the experience on the moon would be. Yet, once there, all the astronauts did is look back towards that blue ball hanging in the middle of space, our planet. From that viewpoint, but also when things go really wrong (and failing a business is not one of them), you will gain perspective. You’re caught in your everyday life, and things seem immensely relevant because they are surrounding you, but rest assured, all that is completely irrelevant.
People get perspective when they are facing death (aka when shit goes really wrong!). That’t when they look back on things and wonder “why on earth did I worry about this promotion so much? Why didn’t I spend more time with friends and family?” The same applies for your business, take a step back, look at the long term vision, and make sure you build a business that is there to last and do good.
A great way to gain perspective is travel. Takes you out of your everyday grind and into a totally new environment. The beauty about travel is, the cheaper you travel, the richer your experience will be.
It’s been proven by science – the more fun you have at work and with what you are doing, the better you will be. Fun and laughing is in some regards still frowned upon – if you don’t suffer, you don’t work hard enough. A perfect lose-lose situation. You hate your job, ruin your health and personal life, and are anything but productive at work because you hate what you do.
Have fun with it, laugh, do what you love, and you will be successful. And be careful what you define as success – if it is tied to money and power, or even working 100-hr. weeks, you might want to take some perspective and rethink your values.
The irony in all this is that not focusing on money in the first place will likely make you end up with much more of it. Build a great company, make customers happy, build truly awesome products, have a ton of fun along the way, and money will come. You will actually enjoy busting your rear end for your company.
Here’s a warning, though, there will be people who hate you for having fun at what you do, and they’ll do everything they can to take that fun away from you and make you fear for your life. “You will fail”. It’s called jealousy.
Don’t be mad, instead be grateful that they care for what you do – just make sure you don’t listen to them and stay mindful, true to yourself and keep your perspective. You owe it to yourself, your team and the world.
A good way to check in if you are on the right path is to step back and take a few minutes to yourself every day, and reflect on the last few days. If you think you don’t have the time for that, you already know that you have lost it.
Perhaps one last note, the four things described above all amplify each other. Mindfulness creates authenticity, perspective and fun. Authenticity makes you mindful and is fun. You get it.
Our VC firm’s tagline is “Venture Builders.” As Eric often says, our Mission is about helping entrepreneurs create real businesses, not just products.
The are many ways through which to make money in venture capital. One is “venture banking” where you initiate a new investment starting in later-stage rounds, once a company already has scaling and predictable revenues. It has been a lucrative part of venture capital for some time, if you can time the public markets correctly.
But, that’s not our business.
Eric and I get a lot of emotional satisfaction from what we do. Some days are very difficult, as companies struggle. Other days are very fun, as companies soar.
In spite of what mainstream media writes, being a founder of a start-up (and, an investor in one) is a hard business. There’s an interesting article on the “venture capital funnel” from CB Insights in this morning’s Twitter feed. Here’s a summary chart, which shows that only 4% of seed companies become Unicorns, whilst 75% of all seeds eventually die or become orphaned:
So, what does this mean for the entrepreneur? I think of three things:
- Do you feel compelled to start a company? I think it’s a calling rather than a job.
- Do you enjoy the daily journey? The oasis is so very far away, you must enjoy the day-to-day.
- Do you find deep meaning in entrepreneurship? I think a connection to your work is highly motivating.
As for me, I have been in VC since 1998 and have seen some great days for the industry and am witnessing incredible shrinkage as the industry declines (more here). So many VCs I know have retired or have been pushed out, and I keep hearing of more and more cases.
The flip side is that I garner incredible meaning from what I do. The companies we’ve backed over two funds have generated hundreds of jobs, and to me, that is a good thing to do.
And, if it works out, it can be incredibly lucrative financially for the entrepreneur and the VC. A huge outcome creates a great deal of shareholder value, and that leads to meaningful checks going to all employees. This in turn leads to economic empowerment, whereby people no longer have to work for The Man. Wealth creates freedom.
All this is very motivating.