I love podcast like this. I had no idea who Andy Weissman was (he’s a partner at Union Square Ventures). I had no idea what his firm did (thesis based investments around network effects). Basically, I knew nothing, but learned a lot. Here’s 5 things I learned from Weissman’s interview with William Channer at Dorm Room Tycoon.
1/ The “No’s” never stop. “We got told ‘no’ a lot and it hurt and it stung and it stayed with us and we used it to motivated us. Part of being a founder at the early stages is that you’re running up against a wall a lot. Going with that rhythm and not really getting discouraged is a really important piece because in the early stages the words ‘no’ or ‘this is dumb’ come up a lot no matter what. I have seen it in every single company. You have to be able to roll with that and learn from those difficult periods.”
A lot of people who are big time say that when they were small fries they heard the word ‘no.’ They also say it still happens. Louis C.K. said he just gets personal ‘no’s’ now. Jack Nicholson for example, called him to say; “the writing’s terrific, but I’m not going to do it.” Brian Grazer said people still tell him ‘no’ a lot, only now it’s in a nicer way.
2/ Know thyself. “From being a founder to a manager, there’s a scaling process that goes with that.”
Weissman said there are two ways companies need to scale; in business and in management. Sophia Amoruso was quick to realize she couldn’t scale as a manager and stepped aside as CEO. Ezra Klein said, “I can’t do teleconference calls.” Elizabeth Gilbert said “I needed to go roll around in the world.” Knowing yourself is a great help.
“I’m always saying, better your strengths and punt your weaknesses.” – Gary Vaynerchuk
Tren Griffin said; “one of the great contrasts in life is between people who know a moat when they see it and people who know how build one out of nothing.” Weissman recognizes this too, “we don’t run these companies…if we were good at operating companies we would operate these companies, but we’re not.”
“You really want to study your strengths and reverse engineer your successes.” – Brett Steenbarger
If you – as a founder – know you can’t scale yourself or your business, don’t do it. Weissman said, “if you take money from a venture capitalist, the way the economics of the VC world work, an investor like me needs to make 10 or 100 X on our money.” That sounds fine, who could have a problem with that? Weissman continued: “you must be comfortable taking big risks, including existential risks around managing that business.”
3/ Pattern recognition. “We have seen lots of different types of business at lots of different types of stages and we have good pattern recognitions that provide frameworks for how to support the decisions entrepreneurs need to make.”
In my my research on failed startups, startups always needed more time or more money – sometimes both. You can save time with a good guide, one that knows the lay of the land, that is, one that knows the patterns. That’s what Weissman provides.
In the 2016 Berkshire Hathaway meeting Warren Buffett said, “pattern recognition gets very important in evaluating humans and businesses.” Jim Chanos credited pattern recognition for his stock shorting success.
4/ Scratch your own itch. “A characteristic that resonates with us is a founder that has real direct experience with the problem they’re trying to solve. They feel that problem on a personal level because they’ve experienced it, therefore they have an intense desire to solve that problem.”
Another finding from my research on failed startup was the surprising number of founders who didn’t really care. They hoped to strike gold, but when things got tough, they bailed because they never cared. Farnam Street was Shane Parrish’s attempt to scratch his itch for education. AngelList was Naval Ravikant’s attempt to scratch his itch for a better connection place for startups.
5/ The availability bias. Interviewer William Channer asked, “when things go wrong, how does a founder get fired from his company?”
Weissman answered, “It’s a reality in business, it’s not specific to taking on venture capital. We notice it more acutely, all of us who are in our startup world because we see when it happens. I don’t know if it happens more or less.”
Part of the problem with a diet of only podcasts is the type of people who go on podcasts. Ezra Klein said it this way, “there are an unusual percentage of people who get to go on podcasts who have this particular schooling experience.” He was referencing smart(ish) kids that were bored at school. Chris Dixon said, “VC gets a lot of attention in the press, but it’s actually a very small industry.”
On the other hand, the availability bias can help. Ryan Holiday said that it helps him write his books.