If someone gives you absolute answers to entrepreneur questions, understand their framework first

I am always wary of absolute statements such as “We only invest in entrepreneurs” or “The best way to hire is to have a strong culture” or “Raise money from top tier VC’s, else you will not have a Unicorn exit”.

Why? Primarily because there is no one right answer. The answer is always “It depends”, but “it depends” is a hollow and unsatisfying answer.

So I prefer frameworks.

A framework is a mechanism to think about your particular situation and unique constraints and apply the possible approaches to come up with a personalized strategy.

I was reminded of that by Dave McClure, who talks about portfolio size in his latest post on Venture Capitalists.

When VC’s tell me they want to be “stock pickers” not index fund managers, I tend to have a lot more questions.

A “stock picker” assumes they know something everyone else does not. They have a key market insights, some differentiated information that’s not available to anyone else or knowledge that most others are missing.

An “index fund” manager believes that they dont have that insight, but can make money nonetheless by tracking market returns.

Turns out in the VC world, most VC’s think of themselves as “Stock Pickers”. That is one strategy to win in Venture and generate outsized returns.

To call every other strategy not-workable, is incorrect. While many folks call the other approaches “spray and pray” or “finishing with a net”, the strategy might work.

A framework to think is probably a better approach. That framework has to put desired outcomes on one side, the constraints in the middle and the inputs on the other side.

Outcomes and Constraints
Outcomes and Constraints

This framework visualization is not the only way to think about answering a question. There are many cases, when an “expert” might have learned something unique, analyzed the situation and provided the constraints in a more prioritized fashion. So, instead of looking at all the constraints, you can look at the 2-3 that matter.

Over the last 3-4 weeks, I have been putting together more frameworks to outline problems and questions I have encountered and worksheets or templates that work.

Going back to the VC conundrum, if an investor believes that there’s only one way to approach early stage investing, then they are possibly wrong.

The constraints I have heard from VC’s who follow the stock picker approach is that they dont want to sit on too many boards, dont have time to help more than 5-6 companies at the same time, or that they dont have time to find more than 10 companies are worth investing in.

If those are the constraints, then there are better and more different ways to solve for those constraints.

You can not sit on the board, and still have influence rights, you can hire people to help your portfolio and use technology to find more relevant companies and founders.

Most constraints can be solved, as long as you are clear about the outcomes you desire.

Some constraints you do not want to compromise on, and that is a constraint as well.

As an entrepreneur, though, if you are given only “one answer” or “one approach” or “one strategy” to be successful, you are talking to a fairly inexperienced person who you should probably not take advice from in the first place.

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