Made in Humane Club
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CopiedFound this on Twitter.
It turns out that Lighter Fluid I think is the perfect metaphor for Venture Capital — not Gasoline. Why? Well, lighter fluid is indeed super helpful for starting fires… dump a little on some kindling … throw a match in, it lights faster and better / kicks things off. It absolutely helps accelerate your time to ‘fire’. It is quite a useful (and fun!) tool. That said, if you dump lighter fluid on a wet log… or really any fire that isn’t well built, then you at best get a nice jolt of fire / show for a few seconds, before the fluid all burns off and you are left with nothing. No fire… just a brief show and lots of wasted lighter fluid. People like to say that Venture Capital is Gasoline… but that really isn’t true. With enough Gas you can make anything burn… logs / even wet ones … will eventually catch — dump enough fuel it works… but that isn’t really how VC works. What you need for dollars to be meaningful is for the fire to be primed, the logs to be dry — the product-market fit to be real, the fire to be well vented and built. Then you throw a little ‘VC’ lighter fluid on top to make things go bigger faster.
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Why it matters to your customer: Typically, in highly technical or highly creative fields, the cost of getting decisions wrong can be high.
Why it matters to you: As you grow older, Labor ceases to be a strong leverage. A younger professional can learn the skill or read up the facts faster and provide the same service at a lower rate. In the longer run, judgment determines what know-how will make you irreplaceable?
- Unlike skills and facts, judgement is something highly technical or highly creative that can only be earned out there in the field through experience.
- Judgement allows you (and you alone) to take better decisions and gives you the wisdom to navigate out of complex situations.
How to build this leverage?
- Build on what you’ve got.
- Build this leverage in a field that you really care about and are genuinely curious about or have a point of view — something specific to your Lived experiences. Something that doesn’t feel like work. Something in which, you, you alone can operate on the frontier of a field by yourself. You dig deeper than other people do, deeper than what seems rational just because you’re interested.
- Build this leverage in a field that is either highly technical or highly creative — something tangible. For example, no one became a CEO by building a career in social media marketing.
- Progressively refine your judgment through years of constant observation, note taking and forming of new associations until you are an authority. You need to be able to observe shifts in the current, as well as connect seemingly disconnected events to explain trends. Think and act independently. Don’t conform.
However, judgment is also restrictive. For example, Sachin Tendulkar has built great judgment in the game of cricket, however that does not make him a good Member of Parliament.
How to signal Judgment? Blog extensively about it. Own up your mistakes or when you change your mind. Take responsibility. Don’t scapegoat.
Examples
- Expert operators drop complexity of the system they operate because they know Complexity slows down execution.
- Expansion in social status hinders truth-seeking and thus discovery of Judgment.
- Loserthink
Footnotes:
- Tim Urban on Twitter: “I might define it like this https://t.co/rwbLTZD9JC” / Twitter
- Dokkodo
- Naval Ravikant
CopiedThe only way that we can live is if we grow. The only way that we can grow is if we change. The only way that we can change is if we learn. The only way we can learn is if we are exposed. And the only way that we can become exposed is if we throw ourselves out into the open. Do it. Throw yourself.
-C. JoyBell C.
CopiedMoney is also called capital or cash.
Why it matters:
- Money is important because it gives you to freedom to do what you want without jeopardizing the basics of life. A life without sufficient money can leads to powerlessness or ruthlessness.
- It is the most liquid form of leverage that can be converted into other forms of leverage. For example, you can hire people with Labor and Judgment, or Buy your way in to a Owned Network, etc.
- In-hand cash allows you to Build multiple entry and exit options.
- Failure to manage Cashflow leads to Risk of Ruin.
How to get capital to do business:
Below are the ways to get capital:
- Inherit it.
- Earn it. This is a deterministic path but it takes too long. Eventually, you’ll bootstrap a Profitable business and own 100% of the company.
- Borrow it from banks is generally a low probability, high risk option.
- Raise it from six sources:
- Friends and family usually invest in your idea not because they want to profit from it, but because they want to be enablers.
- Crowdfunding works well for opportunities for which good product-market fit already exists. It allows you to sell an idea to an audience prior to building it out.
- Often media startups do not generate high returns. Awards and grants are a good way to raise risk capital: risk-free money to try out the startup and see if it scales.
- After you have launched, join accelerators, to scale up quickly. Preferably seek support from accelerators who specialize in helping media startups.
- Look for high net-worth individuals or angel investors, who are invested in the idea or cause.
- Venture capitalists invest into companies in exchange for equity. They are usually hugely invested in the growth of the venture. Most for-profit VC money is looking for 30% year-on-year growth. However, most media businesses cannot provide that kind of returns.
Footnotes:
- Naval Ravikant
- The Narrow Road, Felix Dennis
CopiedJoseph Heller, American novelist and the author of Catch-22.
“Yeah, but I have something he’ll never have: Enough.”
The essence of maintaining work-life balance, enjoying what you do, and building a sustainable operation is having a sense of this is enough — from a sense of satisfaction.
CopiedIn order to win, you’ve to first survive. Hence, always take Risk II.
- Risk is what you don’t see.
- Risk I — Risk of ruin: Risks you wont get to continue playing (survive) if you get it wrong. For example, Russian Roulette.
- Risk II — Other risks: Risks you can survive.
CopiedOften there isn’t sufficient capital to execute on broad mandates.
“A thin layer of investment spread across everything we do and thus a focus on nothing in particular.”
Reference:
CopiedOwned Identity, Owned Network, Investments, Entrepreneurship, and Editorial Product is closer to biology than physics.
- Physics discovers and documents immutable laws that can be observed and verified.
- In contrast, biology (and evolution to be more precise) is based on chance. That’s why there are many breeds of dogs. Similarly, the same tea plant based on its environment (altitude, humidity, sunlight, etc) gives a different taste and smell.
Hence, once you discover the right fit for you, then double down after conviction.
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