Whichever side of the venture capital table you are on — founder, or investor — I believe that one of the most elusive, yet most important (if not the most important) traits you must attain, is Wisdom.
Both founders and investors have to make countless decisions based on imperfect information, looking at incomplete puzzles and trying to figure out the few puzzles that have the potential to become completed versus the vast majority that are dead ends and never will. This judgement muscle is fueled by wisdom.
Wisdom is one of the hardest things for a human to develop. In fact, in the Bible, after Solomon has finally built G-d’s temple, G-d appears to Solomon and as gratitude, awards him that magical “one wish:’ “Ask for whatever you want me to give you.” Solomon considers all of the things that are hardest to attain, for which he could really benefit from this once-in-a-lifetime Divine gratuity, and responds: “Give me wisdom” (2 Chronicles 1:7–10). Solomon asked for what he determined to be, arguably, the hardest thing for man to get on his own.
In the absence of a deity bequeathing it to us we need to figure out what wisdom is, and how to get it ourselves. There are many definitions but I’d argue that Wisdom (W) is the output of two main inputs: Intelligence (I), applied over Experience (E):
W = I x E
Either variable can “juice” the result. A “wise old man” may have limited raw intellect but by virtue of “all the things he’s seen” can be quite wise. A young brilliant scientist may be a “blue flame” intellectual and may have flashes of great insight but probably hasn’t yet developed discerning, consistent wisdom. That exposes the difficulty in attaining wisdom — Experience (E) is itself made up of a derivative formula: a string of independent lesson-producing events (L), encountered over a period of Time (T):
E = L x T
This last element — time — is what really holds people back from attaining wisdom when they need it. You can’t short-cut time.
When I raised my first, tiny, venture capital fund in 2014, to capitalize on a specific mismatch of supply and demand for early-stage capital in my city’s resurgent startup ecosystem, I was 44 years old. I was a relatively late entrant to the investing game with no prior experience. I knew I needed to get wise, fast, in order to make good decisions with the small amount of capital my first (three!) LPs had given me, and with the type of incomplete information that every investor faces. But wisdom is the result of experiences which are themselves the result of — time.
Crap — I had no time.
Again other than a deity short-cutting it for you, how can you “hack” time?
I figured it out: Wisdom by Proxy.
If I didn’t have the time to develop my own wisdom, I’d simply borrow others’. It turns out that there are many people smarter than you at any given time in your chosen field. Many of them write, blog, or otherwise share their — Wisdom. The exercise or “hack” becomes a concentrated exploration into, and exploitation of, the collective wisdom of those willing to share it. Remarkably (albeit in most cases with some element of self-interest), many are willing to share their wisdom. I became an aggressive reader — an activity I religiously carve out at least two hours for a day, to this day — in a never-ending gerbil-wheel of devour, distill, decide, repeat. It’s critical to distill — to contemplate these many available “wisdom” inputs and decide on your own, which are relevant and which are inapplicable, which you agree with and which you don’t. But the “wisdom muscle” of figuring out which “wisdoms” are worthy of adopting, is an easier muscle to flex than developing one from scratch on your own. Some of those I found and latched on to I’ve gotten to meet in person, and few have even become personal mentors and friends.
Founders can do this too. There are generalist innovators/entrepreneurs that you must read. You must read Bezos’ annual letters. Skim the “From the Operators” section of Mattermark Daily, and comb through CB Insights’ startup postmortems to learn from other founders’ experiences. Find and identify the primary voices in your field: SaaS, AR/VR, marketplaces, whatever — Twitter and Medium enable you to find and follow these folks easily. Etc. Etc.
Wisdom by Proxy works. It requires a disciplined effort to continually find and evaluate the “thought leaders” that are most relevant for you, constantly keeping your eyes and ears open for new ones, and “switching out” those whose views and opinions start to get stale or less relevant as your business (and your wisdom) evolves. You’ll gain more confidence in your decisions-based-on-imperfect-information exercises because at least from now on those decisions will be partially based on lessons or signals that you’ve learned from others’ shared experiences and conclusions.
A further tip: the best thought leaders are those who are themselves still learning from and filtering their own thought leaders in reaching their wisdoms and conclusions — imagine the extrapolative benefit you get from this filter/funnel of many others’ filter/funnels.
If you pursue Wisdom by Proxy, very quickly people start to look at you a little differently. And more importantly — you have a much better chance of navigating the sea of incomplete puzzles we encounter every day.