The strengths and weaknesses of VCs

Edited excerpt from “Did you learn anything useful in VC?” by Sarah Tavel:

The most common question I get is “Did you learn anything actually useful in VC?”

Yes.

1. You learn how to ask the right questions. VCs spend a huge amount of their time asking questions, and thus learn the craft of asking the right questions.

2. You learn how to read people. As a VC, you’re constantly meeting founders and building your pattern recognition for reading people.

3. You learn how to learn. In VC, you’re constantly ramping up in a new area. Each company you evaluate brings with it its own ecosystem that you need to understand. Similarly, trends in the tech ecosystem turnover quickly.

There’s a flipside to these three though:

1. In startups, you’ve got to answer the questions. As a VC, my muscle for asking questions was a lot stronger than my muscle for answering them.

2. You don’t learn how to read an organization. VC firms tend to be smaller partnerships. People who have come from larger companies definitely have a leg up in this regard.

3. You’re not specialized. VCs rarely specialize. Sure – I knew the e-commerce ecosystem cold, but that doesn’t compare to spending several years working at Google.

Notes:
(1) Sarah’s post is about what she learned as a VC. But entrepreneurs can read it as a description of the strengths and weaknesses of VCs.
(2) Cf. Investors, VCs and product advice.

The best people train themselves

Edited excerpt from Colin Jensen’s answer to From the perspective of a CEO, what are the most underrated skills most employees lack?:

Don’t ask to be trained.

The one thing I never want to hear, but have heard as much as anything over the years, is that an employee doesn’t know how to do something. Great, google it, find a book–but don’t take three other employees off their jobs to write a curriculum to train you.

“Training” is for corporations to document that they’ve trained you, mostly when their insurance company or licensure requires it. Sometimes it exists so companies can reinforce a mystique that they’re like no other place you’ve ever seen or you have to do things their way to fit in.

But successful people don’t have a voice in their heads telling them what’s “possible,” or what they “can” do. So saying “I haven’t done that before” or “I’m not trained in that” sounds to them like “I refuse to put any thought into this job.”

I personally remember the profound flattery I felt when a boss told me to write him a simple software program by next Tuesday. I had never taken a programming class. And whenever I tell that story, someone in the room always pipes up about how they wouldn’t have taken it and how I should have asserted my rights (rather than write the darned program!). But those guys don’t go far.

Notes:
(1) When is there a need for organized training? When does organized training work?
(2) Thank you Persha Valman for the tip.

Startup founder? You should be meeting with other founders

Excerpted (with edits) from Single Founders or Co-Founders? by Ben Yoskovitz:

As entrepreneurial communities grow all over the world, it’s becoming a lot easier to find other people with similar experiences. A single founder doesn’t have to sit in a room by herself and despair, she can go out for beers with other founders in equally difficult situations and commiserate.

That’s a huge thing. I would encourage more founders to do that and not stay locked up in a dark room alone. Sometimes founders just need to vent, but sometimes they can get constructive advice and input too.

Don’t follow your passion

By Marc Andreessen:

  • Thesis: “Do what you love” / “Follow your passion” is dangerous and destructive career advice.
  • We tend to hear it from (a) Highly successful people who (b) Have become successful doing what they love.
  • The problem is that we do NOT hear from people who have failed to become successful by doing what they love.
  • Particularly pernicious problem in tournament-style fields with a few big winners & lots of losers: media, athletics, startups.
  • Better career advice may be “Do what contributes” — focus on the beneficial value created for other people vs just one’s own ego.
  • People who contribute the most are often the most satisfied with what they do — and in fields with high renumeration, make the most $.
  • Perhaps difficult advice since requires focus on others vs oneself — perhaps bad fit with endemic narcissism in modern culture?
  • Requires delayed gratification — may toil for many years to get the payoff of contributing value to the world, vs short-term happiness.

Notes:
(1) Doesn’t “Do what contributes most” often overlap with “Do what you’re best at”, which often overlaps with “Do what you most enjoy”? In other words, isn’t the way to contribute the most often by doing what you’re best at and most passionate about?
(2) Many people make the mistake of defining what they most enjoy in terms of the topics they love (such as “I love politics”), rather than the types of task they love doing (such as “I love writing” or “I love problem solving” or “I love working with people”). See The best career advice you can give in two minutes.
(3) Even if “Do what contributes most” often overlaps with “Do what you’re best at and most enjoy”, there’s a crucial difference. “Do what contributes most” is about the difference you make to other people, whereas”Do what you’re best at and most enjoy” is self-centered.
(4) In his remarkable biography of the Lubavitcher Rebbe, Joseph Telushkin describes how numerous people’s lives were transformed by the Rebbe. The Rebbe saw his role as helping people to fulfill their unique potential to make the world a better place. People who met with the Rebbe were struck by his utter selflessness, total focus on them, and deep understanding of their unique capabilities. But the meetings were often disconcerting. He would challenge each person to assess whether they could contribute more. This is entirely consistent with Marc Andreesen’s point.

With freemium, you know you’re solving a customer’s problem

Edited excerpt from What Do You Need to Do to Improve Sales? Here’s a Start… by Mark Suster:

Ask yourself whether the person you’re dealing with has a problem that is solved by the solution you offer. If they don’t – you simply won’t sell anything.

That’s why many great sales starts with generating inbound marketing leads. If you create content marketing programs and drive traffic to websites where you can measure how long somebody spends reading your materials or downloading your white papers you’ve at least confirmed some level of interest.

If you have a product, knowing who the “typical buyer” by department or title is helps you greatly because you can quickly get to somebody likely to be familiar with the space in which you’re selling.

If you generate outbound email campaigns to groups of potential buyers you can use SalesLoft or tools like Yesware and ToutApp to track whether people opened your emails, clicked on your links, downloaded your documents, etc.

The other obvious area in determining interested parties is to find referrals from trusted sources. That’s why companies partner with vendors with complementary service offerings.

Let me make it simple: If you can’t identify a problem that a prospect has that you can quantifiably solve you won’t sell anything.

Notes:
(1) Note the similarities to What problem are you solving? and Focus on the job, not the customer type.
(2) This is the beauty of freemium models. You create the customers’ problem by making them hit the paywall, and your conversion data tells you if the problem is serious enough that customers will pay to solve it.

What to do when an associate from a VC fund reaches out to you

Edited excerpt from Entrepreneurs and Calls from VC Associates by David Cummings:

Here are a few thoughts on calls from VC associates:

  • Associates cast a wide net and engage with as many entrepreneurs as possible, regardless of whether or not they’re a good fit yet.
  • While associates source deals for the partners, most of the firm’s investments come from referrals and existing partner relationships — not from associates cold calling.
  • Know that associates aren’t the decision makers at the firm and that they spend a huge amount of time cold emailing and cold calling startups (not too different from a sales rep).
  • Before taking a call from an associate, ask a number of qualifying questions, and only take the call if raising money is on the horizon (remember that the best time to raise money is when you don’t need it).
  • If getting ready to raise money, associates can be a good testing ground and opportunity to practice the pitch.
  • Make an ask at the end of the call to be introduced to three portfolio companies that might be potential customers.

In the end, most entrepreneurs shouldn’t engage with associates unless they’re going to raise money in the near-term and they’ve pre-qualified the firm to ensure it’s a good fit.

Five insights from an ex-VC that are useful for entrepreneurs

Edited excerpt from Seven things I learned in venture by Sam Gerstenzang:

1. The winners always have something that looks hugely wrong with them.
2. The best way to become quickly knowledgeable is to find the right people and talk to them.
3. There is no template for success, and no one knows what works.
4. Big things growing really fast get really big, really fast.
5. There is a huge advantage to being right early on.

Best practices in copywriting for marketing your product

Edited excerpt from 10 UX copywriting tips for designers by John Moore Williams:

When you’re writing copy

1. Embrace the power of “you”: The word “you” catches attention and establishes a relationship between you and your reader.

2. Don’t make it about you [the seller]. I [the buyer] want to know what all that work means to me.

3. Don’t try to sound smart. Aim for a 5th-grade reading level.

When you’re editing copy

4. Read it aloud. If it doesn’t sound right read aloud, it’s not conversational.

5. Be the editor writers hate. Aim to cut 50% of your word count with each editing round.

6. Remember that writing and editing are different. Don’t try to write and edit at the same time.

When you’re designing copy

7. Label. People don’t know what they’re looking at unless you tell them.

8. Embed links in relevant, descriptive language. Make sure your links make it extremely clear what will happen on click.

9. Design with content in mind. Consider whether design is helping or hindering your writing.

10. Scale the page to the topic. If your product’s unfamiliar, complex, or expensive, you’ll usually need more content.

Notes:
(1) Re. “Don’t make it about you. I want to know what all that work means to me.” See Make me better and I’ll buy your product and What problem are you solving?
(2) Thank you Eran Ben-Shushan, co-founder of Bizzabo, for recommending the article.

The difference between a great company and a lousy company

Edited except from The Hard Thing About Hard Things by Ben Horowitz:

In good organizations, people can focus on their work and have confidence that if they get their work done, good things will happen for both the company and them personally.

In a poor organization, people spend much of their time fighting organizational boundaries, infighting, and broken processes. They are not even clear on what their jobs are, so there is no way to know if they are getting the job done or not.

Notes:
(1) How do you ensure that if people get their work done, good things will happen for both the company and them personally? Define clear goals; identify levers to achieve those goals; appoint owners; measure results.
(2) See: Setting clear goals = empowerment, Managers and metrics, and Mark Pincus’ management advice.