Fear of Missing out in Venture Capital

This post was an email I sent to my other six partners at ONEVC a few weeks ago. The topic of conversation was how we should react & respond to cold emails in the workplace. I struggled with this in the first two years of my career as a VC.

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Here it is:

I’m writing this response because it is worth in the “venture training” side of the house.

1 — NO FOMO

Wake up as if you have already lost the next Google, Uber, etc. It will happen to VCs. Always operate with no FOMO. For more on this, look at “BVPs Anti-Portfolio,” and you’ll know that even a VC firm with >100 IPOs often makes mistakes. It will happen to us, and we should never operate out of fear.

2 — You don’t have to be responsive to everyone

I used to think that I had to respond to every message and be responsive to everyone that wanted to get in touch.

At one point, I was accepting every LinkedIn request with a “how can I help you?” response, to test this premise to the fullest extension.

This strategy generated 0 deals. I did create mental anxiety and wasted my time. I wasn’t able to help anyone nor help our companies or our firm, due to the lack of intention.

3 — Be careful with cold emails

Never say no to cold emails. Read and treat them with careful attention. One of our companies (Rappi) wrote a cold email to Sequoia for their Series A and got the deal done.

I am saying no to shitty cold emails. Generally, they will not output anything good.

A lot of good things can come out randomness and cold messages in early-stage VC. I have had plenty of terrible meetings to understand when to respond to a cold note.

4 — Be memorable and of service

Anytime we interact with someone we are carrying the weight of our brand corporate and personal. All interactions must be remarkable. Venture Capital is hard.

On average, our funnel converts at 0.6% rate, which means that for the 99.4% that we DO INTERACT we have to be incredible.

After all, we’re saying no to their dream of building a new company.

When in doubt, add more value than what you can capture.

5 — Every response has a cost

It is expensive to spend a lot of time interacting with people in which there is no intention to do business with. Save your time and the firms by ignoring messages. It won’t impact your reputation negatively. Replying but not being incredible, hurts you and ONEVC.

Which means…

6 — We should only respond when there is **no FOMO** and a real intention of being resourceful.

Time management is crucial in early-stage venture.

Given how little research this founder did on ONEVC, it is clear that we are a part of a comprehensive blast. It is a waste of our time.

7 — Try it for yourself

I encourage you guys to respond to these emails and have some terrible meetings. It is proper training for the long-run. Meet some crappy founders, and you’ll see it for yourself.

8 — Trust your gut.

If you believe that this company is the next Google, by all means, respond to this email and interact with them.

Never forget:

Time and reputation are more important than capital.

Connecting to your dark side

Everyone that has built something meaningful must have gotten in touch with “the dark side.”

I woke up thinking about it and how it probably impulsed many to win. From business people to pro-athletes.

It is a combination of being present with the reassurance that you are on the right path of greatness. A mix between fear and courage, in which you smell the battlefield blood. The battlefield can be the gym, office or anything actually.

The journey of building a VC firm, when you are the only full-time partner is lonely in many ways.

I meditated for about 10 minutes, trying to get my mind a ease, given the size and variety of the to-do list I have to tackle this Monday.

I had moderate success.

We are born alone and we die alone. Nonetheless, the importance of enjoying the journey is paramount for tranquility and happiness.

It is never about the end goal. During a positive conversation with one of our partners, he told me about the importance of enjoying the journey and all the challenging moments we had and will have.

Like Freud said, we must subdue our impetuous desires and get things done, because well, it is another beautiful Monday.

Legacy is built daily. The Bezos Family.

This weekend I watched this cool fireside chat between Jeff Bezos and his brother. Watch it in one sitting rather than in pieces.

Daily, before I leave my bedroom for the day I stare at this post-it note that says "legacy is built daily". It is a powerful reminder.

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It goes well with "Bezos Day 1 policy", or the discipline that I see Sequoia Capital insert in their companies, with their anti-shortcuts approach, mixed with daily paranoia, Grove style.

It reminded be of the importance of family and world exploration.

It made me think that I need to venture out a bit more and not stare at my phone so much.

I doubt that Bezos would have quit his Wall Street job if he didn't have such stellar grandparents that thought him grit from a young age.

Nobody becomes this wealthy and powerful by accident.

Also, I love his approach to dating.

"I want a woman that can break me out of a third world prison".

Same.

Don't ask for introductions if the VC turns you down

It drives me crazy when founders don’t understand how the world works. Once a week, right after a formal turndown, I get a founder asking me if I can introduce them to other investors.

This is a weak and stupid ask.

As some of you know, I believe in long-term alignment of interests, "funeral style."

It is how the venture business works. It is how humans work. Everyone has an agenda, even if it is a subconscious one.

A big part of our work as investors is to make introductions to our portfolio companies, friends and partners.

In business, it is better to have full-stack support or no support at all because weak links will destroy you and your company over time.

At ONEVC, we write US$250–500K checks in US$2–3M seed rounds.

We end up being a relevant, sizable investor, while not being able to take care of your financing needs. Because of that, we are experts in syndicating your round and prefer to be the first or, at most, second check in your round.

We believe in making decisions out of conviction and independent thinking.

Because of that, it is key that when we send a double-opt-in for a deal to other investors, they know that we have our reputation and LP capital behind that intention.

This is true alignment of interests.

Anything outside of that scope is weak and speculative. Given the high level of imperfect information in the seed world, great investors can't afford to help people that they are not interested in investing right now.

A weak, non-aligned intro it will hurt your startup and your reputation. As soon as another investor tells me about a company, my first question will be: have you invested already? If the answer is anything but a yes, it shows weakness.

As a founder, if you can't understand this business principle you are too naive for the business world and I hope that this post helps you.

It is more important to grasp why you are being rejected — which is why at ONEVC we are always thoughtful without turndowns — rather than trying to get more introductions from people that are not interested in aligning with you right now.

If you are rejected, don't suffer. Try to understand why and move on.

Exception to the rule:

There are times in which an introduction to other investors is applicable.

For instance, if you are too early or too late for the stage we invest. Maybe I know angels, accelerators or growth firms that can be helpful — often we make these intros.

Another situation is when you are in a market that we don't make investments, but we happened to have met, such as energy or satellites.

It might take 18 years for your IPO

Today I finished reading an excellent memoir.

Shoe Dog, the recently published book by Phil Knight — Founder and Executive Chairman of Nike — is a fantastic read that demonstrates how challenging it is to build a massive, global business.

I lost count how many times Nike was in a near-death situation during the book. How many times they were cash constrained due to working capital requirements. The global fights against factories, distributors, piracy and even the US government. They are fighters.

Nike avoided their IPO as much as possible. I did not know that it took them 18 years to get there, but it was a necessary stepping stone for them to be around for the long term. Think of it as an old school version of a Unicorn graduation. Their IPO happened at the same $22/share price of Apple, and they went public in the same week. It might explain why Nike and Apple always had a friendly relationship.

Phil is honest with himself during the book. Mostly about the fact that he probably wasn't a heavenly father while building Nike. He talks about the difficulties of prematurely losing his son in a diving accident. I salute him for his openness on this complex topic. Sometimes these business memoirs expose little vulnerability, making them pasteurized tales of how one wins in life. Nobody needs lessons like that.

If you are a founder or investor, do yourself a favor and read this book. It will help you understand that when in doubt, you shall hustle more. Its all about "The Grit" and not running out of cash at the end of the day.