Oct 2024
I was recently inspired by Nick Chirls launch manifesto for his new firm Asylum Ventures. I don’t know Nick, but his words put form around an idea swimming in my head this past year exploring the VC world. There is a lack of focus on creation, artistry, and humanity in venture. At its core, venture is an asset class. If you are an institutional investor, you provide a service to LPs. Focusing on craftsmanship, true needle-moving innovation, and supporting world-moving founders is the job. That is how you deliver outsize risk-adjusted returns, not by playing it safe, being a sheep, flying to safety, etc. If you are investing in companies that can return the fund, you should inherently feel a bit uncomfortable every time you make an investment. We’ve seen how FOMO and hype-driven investing can result in disastrous returns (e.g., FTX). As an investor, my job is to invest the capital of my LPs in companies that offer a risk-reward profile that exceeds that of the other asset classes they invest in.
May 2024
My mission in any professional endeavor is to leave each situation better off. I want to help wherever and whenever possible. I am aiming to bring this mindset to early stage venture investing.
When I think about the ways I can help or “serve” in Khosla parlance, there are three pillars I anchor on: the three Cs:
The first and most obvious way you can help Founders change the world is by giving them capital. Capital can of course be money, but it’s not limited to that. If you can provide a place to work, intellectual property, or even your brand capital, these can also be incredibly valuable to Founders. At the end of the day, the job of an investor is to invest. We are paid by LPs to put their money to work in high-risk and high-reward asset class. The worst thing an investor can do is pontificate online, meet tons of founders under the premise of investing, and not make the bets that we are paid to make.
While money can be commoditized, connections and networks are not. There is no shortage of dollars allocated to venture, and the best Founders often have their pick of the litter of which VCs firms to let onto the cap table. Connections can be key difference makers for Founders. Introductions to potential customers, hires, investors, partners, vendors, etc. can serve as key points of leverage for the company to take off into new heights. Helping secure a leading technologist, a cluster of GPUs, or a brand-name investor can meaningfully impact the trajectory and success likelihood of a startup.
Perhaps the most important role an investor can play is that of a trusted advisor to the Founders. Providing candid, no-BS feedback is critical for a company to course-correct quickly when things go awry. Founders are often quite lonely, as they often have no true peers inside their company. Being an always-available sounding board, consultant, or just a friend can meaningfully impact the wellbeing of the Founders and subsequently of their company. Your candor and earnestness in dealing with Founders, whether it be in term sheet negotiation, board meetings, or otherwise, is critically important to building trust and setting the company up for success. Investors should be consistently candid and provide the tough feedback, words of encouragement, and strategic guidance needed to make the company a success.