Because of how many confounding variables exist in early stage venture capital (including luck), it can be hard to extract concrete and repeatable lessons. Strong opinions loosely held etc. Below are some of my more strongly held opinions on seed stage investing having spent 7 years in venture and having made ~15 investments since joining 1984 Ventures in 2021.
On ideas
- It’s generally dangerous to overindex on the exact initial idea. So many founders pivot - either just slightly within their initial category, or even more broadly
- This is something I’ve now experienced many times that I’ve (finally) begun to internalize it
- What seems to be more important is playing in a broadly interesting and investable category
- Nonetheless, if there is a fundamental weakness in a business model (e.g. a category that’s prone to disintermediation, a highly concentrates set of buyers, a PLG motion where buyers don’t have budget to purchase tools), it’s unlikely this gets corrected with time
On founders
- Even in the early stages, formidable founders feel (at a least a little bit) formidable. This can be for a few reasons: they have unstoppable energy, they impress you with the clarity of their thought and insight, they’ve already done or built something impressive
- Founder slope really does matter. A small subset of founders do grow their skills quickly (e.g. an engineer centric founder learning sales) and learn to become leaders. It’s not essential to back people who have all these skills at the outset.
- It’s totally fine to back young founders who haven’t been CEOs before
- The best founders have a sense of urgency. From my vantage point, urgency feels binary. It doesn’t feel like something that can be taught or learnt beyond a certain age
- Similarly, the best founders have a top 1% work ethic and are more focused on their company than anything else (including their family, unfortunately).
- It’s painful for me to write that because I am aware that what I am seeking out is extreme behavior and extreme people
- The best founders either intrinsically know, or end up figuring out, what great looks like. And they continue to be dissatisfied and on the hunt for more/better/the next thing
- Shipping velocity gives you the best shot of building something that hits PMF. Without someone who can ship quickly on the founding team, your chance of pulling this off really does shrink
On entrepreneurship
- Entrepreneurship is a game of constant reinvention. Resting on your laurels (with a cool initial product) will not take you the distance. It’s just step 1 in a series of compounding steps. This is linked to the sense of urgency (and dissatisfaction) mentioned above