Good morning friends! I hope everyone has been doing well. We are already 2 weeks into the new year and I am still trying to think through what I want my objectives for 2024 to be. This email marks the official first week of content for our journey. This week I'll be discussing how to analyze the problems startups are solving, the ‘Father of Venture Capital’, and the stages of a startup.

Fishing in Venture 🎣

Recently, I was meeting with a startup who was tackling the AdTech space. As a quick primer for those who might be unfamiliar, AdTech refers to any startup that develops technology or software designed to disrupt the advertising and marketing industry. Now, back to my story — this founder was explaining to me how they were disrupting the AdTech space. It struck me as a neat idea. Although, we all have neat ideas.

I thought to myself, “Is this a problem worth solving?” This question, first posed to me by one of my managing directors (shoutout to Charlie), has since become a guiding principle in my journey within VC. It's easy to become enamored with our own ideas, but Charlie’s question serves as a crucial reality check. We all encounter numerous problems and naturally, our minds race to solve them. My own mind often feels like a boat full of fish, ideas flopping around with nowhere to go. Most aren’t even worth a second thought. 

We, as humans, are constantly surrounded by problems in our everyday lives. While many of these problems may not warrant the investment of time and money, or may seem too minor to address, striking a balance is crucial in the VC world. We must differentiate between issues that are too insignificant and those so vast they could take millions of dollars and years to solve or monetize.

This approach has reshaped how I evaluate opportunities. Now, when a new idea swims into my net, I don’t just ask if it’s a good idea; I ask if it's the right fish to catch. Is it a problem that resonates with a wider audience? Is it feasible to tackle with the resources at hand? Learning to identify these problems that the market desires a solution for is like finding the perfect fishing spot; it takes time, patience, and a lot of casting, but the eventual catch can be extraordinarily rewarding.

While I don’t know this balance perfectly, I want to challenge us to continually meet with founders and observe what are driving the consumers of the world. This will help us to learn the rhythm of how to fish for great startups.

Fish of the Week 🐟

Georges Doriot: 'The Father of Venture Capital'

Georges Doriot stands as a legendary figure in the VC world. His story is not just one of numbers and investments, but of vision, courage, and wisdom. A Harvard professor and an innovative thinker, Doriot embarked on a remarkable venture in 1946 by founding American Research and Development Corporation (ARDC), pioneering the concept of venture capital as we know it today.

Doriot's philosophy was simple yet profound: "Always invest in a grade-A man with a grade-B idea. Never invest in a grade-B man with a grade-A idea." Guided by this principle, he was not just fishing for successful businesses; he was seeking entrepreneurs with the spark – the potential to disrupt not just industries, but the world. See, Venture Capital is more of a people business. Yes, it is driven by finance and innovation — but at its core we are investing the right people. His most famous investment, Digital Equipment Corporation (DEC), is a testament to this belief. A initial investment of $70,000 in DEC($770K today!) , a company started by a young engineer from MIT named Ken Olsen, eventually reaped over $355 million ($3.9B today!). But Doriot's role was more than an investor; he was a mentor and a guiding lighthouse for startups in murky waters.

The legacy of Georges Doriot in venture capital is a book of stories – stories of hustle, betting on gritty founders, and the pursuit of innovation. He wasn't merely riding the waves of finance; he was creating them, inspiring others to follow in his wake. Doriot's journey reminds us that the heart of venture capital lies in the adventurous spirit of supporting dreams and building futures. The most important thing to think about when we are approaching the VC & Entrepreneurship world is to have fun doing it.

Ebbs & Flows 🌊

We are almost to the end! In the spirit of learning, I wanted to go back to the basics with our ebbs & flows section. Just as fish vary by species and life stage, startups too are classified by their lifecycle stages. Imagine a startup as a journey from a tiny spark of an idea – maybe it’s some chicken scratch on a napkin – or a fully mature, thriving business.

The first stage, Pre-Seed, is like the hatchling phase in a fish's life. Here, the idea is taking shape, but it's still in its infancy. Entrepreneurs at this stage are often mapping out their concept, doing market research, conducting customer discovery or maybe building a prototype. They're not quite ready to swim in open waters yet, but they're preparing to go-to-market with their solution.

Next up is the Seed stage, where startups are like young fish, exploring their surroundings. In this stage, they might receive their first significant investment, typically used for product development, market testing, and building a team. The aim is to prove that their idea has potential – it's about showing that they can swim.

As we move to Series A, the startup is growing, like a fish that’s found its school. Here, the focus shifts to refining their product, growing their customer base, and scaling their operations. It's about expanding their territory in the ocean as fast as they can.

Series B and Series C represent more mature stages of growth. Now, these startups are like experienced swimmers, navigating stronger currents. They are expanding, maybe even internationally, improving their product, and scaling their operations further. They're not just swimming; they're making waves.

As we progress beyond Series C to D and sometimes E, the startup is at its peak maturity, much like a fully grown, dominant fish in the ocean. These stages often involve preparing for a big change, like going public or being acquired, marking a significant milestone in their journey. As investors, we start to get excited when our investment approaches this stage. The exit that will provide our returns is hopefully on the horizon!

That marks the end of our first week together! Thanks for sticking with me and I hope everyone enjoys a restful weekend ahead of them. If you want to chat about anything we have talked about (or haven’t) please feel free to reach out to me at [email protected]

Thank you for your support!