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Initially published on Medium — May 17, 2017
A little over a year ago, through some luck and hustle, I joined Brett and Jonathon full-time at Ludlow Ventures — an early stage technology focused venture firm. Over the course of the past year, I’ve done my best to document some of the most important lessons I’ve learned.
Like most jobs, in the venture capital industry, you are only as good as your reputation. This is, perhaps, one of the most obvious aspects of the venture capital industry; however, it is extremely difficult to earn. In my opinion, there are only two ways you can improve your reputation: brand and proprietary network.
Reputation is, ultimately, what enables you to see (and win) deals.
I’m certainly not the first to say this. However, I’ve learned first-hand that you are only as good as the deals you see. If you ask any investor their thoughts on this, they will almost certainly tell you that they would have preferred to pass on Facebook’s seed round than never have known of Facebook’s existence at the seed stage.
The logic is simple: you can learn and reflect on why you passed on Facebook and make sure you don’t do it again. It is significantly harder to identify why you never saw Facebook at the seed stage.
Many VC firms embrace this mentality. Bessemer, for example, created the infamous anti-portfolio. Given the extremely long feedback loops in the venture industry, it’s important to be able to reflect and understand what you got wrong (or right).
Seeing every deal at the seed stage is obviously impossible, but you should make it your priority to know of as many top tier seed stage companies as possible.
At the seed stage, convincing yourself that a company will fail for X, Y, and Z reasons is extremely easy.
Regardless of who you talk with, you can always poke holes into a company’s vision or plans. It’s important to listen (and understand) these concerns, but it’s equally important to identify why you should be excited.
One of the most difficult aspects of being a VC is tip-toeing the line between optimism and pessimism.
We’ve learned from many of the best venture capitalists that investing in areas that others ignore is often the key to achieving out-sized returns.
Bill Gurley said it best:
You can only make money by being right about something that most people think is wrong.