20/52: Let's pretend
#CapitalAtRisk
The 2010s was the decade of the Entrepreneur. The 2020s will be the decade of the Investor.
“Abandon the ‘passion mindset’ and instead adopt the ‘craftsman mindset’”
Cal Newport
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Getting into VC
The most common piece of advice I give to people who want to get into VC is, “pretend you already work there”.
There aren’t many available jobs in VC. VC firms are small, openings rarely come up, and people at the top want to stay there so how do you stand out?
After giving the same advice to lots of people over the years such as founders, business school students, consultant types or people wanting to escape corporates, I thought it would be useful to share this more widely1.
Craft your contribution
There are two stories to tell that illustrate the advice I give:
Nina Mufleh. Nina really wanted to work at Airbnb, had tried applying through all the usual channels and thought she’d tried everything. Then thought, no, I haven’t. She created Nina4AirBnB — a website that showed off what she could contribute to AirBnB. You can read more on Nina’s story here.
Ryan Graves. Ryan really wanted to work at FourSquare, had tried applying through all the usual channels and thought he’d tried everything…. You get the picture… so he figured out what to contribute (lots of Mayor Deals) and of course FourSquare took notice. You can read more on Ryan’s story here and by the way, as you’ll see, Ryan used that same hustle to become Uber’s first employee and that worked out pretty well.
See what they did there? The lesson from Nina and Ryan is to figure out what you can contribute, then pretend you already work there to deliver that contribution, don’t wait to be picked.
How to pretend you work at a VC
What’s the equivalent for all the MBAs and others who see VC as the current cool place to work?
Well, contrary to some advice, it’s not helping with deal flow — shoving deal flow in front of a VC is easy to do but hard to prove it’s of any value. The reason is, each VC thinks they have the best deal flow method, thinks they’re the best at evaluating that deal flow and are they really going to trust a fresh MBA’s ability to select deals? Plus they’ve been a VC for years and years yet still most of their investments fail!
Therefore suggesting a startup you just met and then excitedly trying to justify it as an investment opportunity won’t work because:
It doesn’t really take that much hard work — there are decent sounding startups everywhere.
Of course it sounds exciting and has many positives you can share with the VC — the founder is selling!
If the founder of that startup can’t get in front of that VC themselves then they’re not that great a founder.
It’s impossible to prove, without 10+ years and a failures and a few exits, that the suggestions you give are good investment opportunities, so what actual value are you adding by putting more names in the hat?2
If not deal flow then what?
Let’s get back to basics for a second. Great investors get great returns, right? So how about you focus on what drives returns?
Here’s a scenario to mull over…
Imagine you want to work for the hottest VC in town. Now imagine how wonderful it would be if a founder of one of their portfolio companies was in a meeting with their VC, pounding the table saying that they just have to hire you — they’d be saying, “This person wants to get into VC and has been so incredibly helpful with sales, hiring, introductions… it would be really stupid if they were to go get a job with a rival VC!”
That’s a pretty good thing to have happen. So how do you make it happen?
Be helpful and expect nothing in return
Find the VC you want to work for, identify two or three really great portfolio companies of theirs that you like and then work your ass off for them Nina/Ryan-style. Obviously the aim is to be helpful so you don’t do anything that’ll backfire, and for this you don’t really need permission do you?
So again, don’t be a hindrance, but what does the startup need that you can give? I bet they need customers — if B2C tell your friends and become the best referrals/evangelist person you can be, and if B2B then you must know some businesses (maybe the one you already work at) that would benefit — meet with your corporate contacts and be the startup’s sales lead. Maybe they need to hire — list the smartest people you know, send the list to the startup founder with good reasons why those people are the best.
The other thing about this approach is that if you can’t help startups then you won’t be a very good VC so it’s a good test for your own motivations.
Helping startups contributes to the investors getting good returns. It’s in this way that the VC will look good for their ‘boss’, the Limited Partners who have invested in their fund.
Be so good they can’t ignore you
Overall I think it’s about taking things into your own hands — don’t wait to be picked. Sure, apply for the positions you see advertised but beyond that have you really tried everything? And if not, why not? If you’re not willing to do the equivalent of what Nina and Ryan did, but for VC, then maybe this is how you find out that it’s not really for you after all. (There will be something you’ll do the above for, so if not VC then what?)
The headlines are still:
It is brutally difficult to land a job in a VC — there are a tonne of people trying to do this because it's now a trendy sector to work in and VC firms are small and there's rarely the chance of promotion.
I'd ask yourself why — really why — you want to do this. Any reason is fine (typically it's money, fame, awards/recognition, pleasing someone) as long as you're honest with yourself about why that is.
Once you're in a VC (and I'm talking about a typical Associate or Principal role in a decent sized fund of, say, $50m or $100m+) it's still brutal. It's the new investment banking — so think, 100 hour weeks trying to find the best deals and getting berated by your boss if you don't see a deal that some other A-list firm invests in (it's one thing to see it and reject it, quite another not to see it in the first place).
That all sounds quite negative — sorry! It's just that people outside VC have this rosey view of VC because they listen to Marc Andreessen and the like on podcasts opining on the future and want to do that. I mean who wouldn't?! The thing is Marc just gets to do that because he put the hard work in for decades.
It's like anything — to be successful you there are no shortcuts (the 'longcut' *is* the shortcut) so you have to work smarter just to get going and harder because your competition won’t.
And you have to love it because the guaranteed result is that doing something that turns into a success will be extremely difficult at times. If you don’t love it you'll give up (I've given up on many things3 I thought I might like, but when push came to shove I just didn't love it enough to go through the tough patches and come through the other side4).
How/why do I think that above? Here's how I sort of got into venture…
Studied Computer Science at Durham University, loved learning about tech but didn't want to be a programmer.
Started hearing via podcasts like TWiT about interesting startups in 2003-06 (when I was studying) that were coming out of Silicon Valley (Twitter, Facebook and Gmail all started during this time).
Moved to London and worked in financial services and was incredibly bored. That was 4 years of misery.
Wanted to work for smaller and smaller companies because I wanted to work hard but I wanted the rewards for it!
Went to Imperial College Business School part-time during 2008-10 while working and discovered VC.
Got a job with an early stage investor in 2010 (took a 50% salary cut).
I loved that job — each week I was doing a full day's work then out on 3 or 4 nights at startup networking events.
Worked on a project to help 52 startups raise £23m+ (a big amount in 2011!).
So built a lot of goodwill and good, trusted, relationships.
Did YCLDN — at the time the biggest tech event in London — and got a lot of kudos and connections.
Started 9others with Katie Lewis in 2011.
Left the early stage investment firm after four amazing years.
Started a co-working space in King’s Cross, London, to make ends meet.
Always wanted to do the investing stuff for myself.
I was most inspired by Chris Sacca whom I first found on this in September 2012.
Started helping some HNWIs do some investing (someone else's money and decision but I got some of the upside).
Did some off-the-radar 9others events and advisory work to make money.
Saved some money up and started angel investing.
Wrote a book.
I still do consulting & advising (as little as possible for as much as possible!) so that I can carry on investing.
I've done 24 deals, had 4 exits and 6 failures, so 14 are still in play (listed here).
With all that I still think I'm nowhere near done. I still love it. I think of myself as being 1/3 of the way through this VC career. I have 2/3 to go (so another 20-25 years at least).
So in summary, think about what you can contribute. Try something small. Do something, don’t strategise endlessly.
Actions speak. Do something.
In other news
🥳 The 9others Summer Party is coming up. It’s on Thursday 20th June in Whitechapel. Details and sign-up here.
🎧 Two podcasts that are out and worth listening to:
My First Million with Shaan Puri who interviewed Mohnish Pabrai. Listen here.
The Social Radars with Jessica Livingston who interviewed Ron Conway. Listen here.
💰 There are more & more ‘Fund-of-funds’ cropping up. I’ve spoken with some but if you’re connected to any keen to talk to emerging GPs please hit reply and let me know.
More from me…
If you like my writing you can get more by buying my book, ‘Find your 9others’. It’s on Amazon here.
Q&A
🆓 Free subscribers get a short preview and all free public posts. NB: All posts in 2024 will have paid-subscriber-only parts.
💰 Paid subscribers get access to all posts, the angel investor Q&A podcast I did during the 2020 lockdowns, the full archive and can request a video call to ask me anything and talk about the things I don’t share anywhere else.
💰💰💰 Founding Members get all paid benefits plus you get to WhatsApp me unlimited questions for discussion, you get a one hour discussion session once a quarter plus a great lunch (most likely in London) on me.
Important: None of these posts are investment advice. If you are thinking about investing you should seek the advice of a suitably qualified independent advisor.
#CapitalAtRisk
Most recently a friend introduced me to someone over email who wants to get into VC. I replied with a lot of the above, which prompted this post.
A better proof point for being able to identify a good startup is to find one you like and work for them — help them with sales, operations, communications, firefighting (in other words just get stuff done as a generalist), take some early equity, stick at it until the exit then take all that experience to a VC. Warning: this sort of proof may take 5–10 years and will probably have its own 1–6 month ‘contribution’ phase.
Another good proof point for being able to identify a good startup is to find one you like and invest in it. Investing your own money is just so massively different than investing VC money as an associate of the firm. It sounds the same and people try to convince themselves they’d act the same but it’s really not. I thought it was all the same until I actually did it. Proving your worth this way will take a long time too. And if you do it well you may not need that VC job working for someone else after all.
An ‘order ahead’ service for coffee shops, a cafe selling just breakfast cereal, importing solar iPhone chargers from China, exporting British bedding to Africa, importing coffee from Kenya. All started, all stopped.
Not that it’s all wonderful either, I just remember being soooo miserable in big meaningless corporate jobs and wanted work to be ‘mostly good, most of the time’.