Three lessons from ten years of investing

“It takes 10 years and $30m to become a great investor.”

This quote has stuck with me from the first time I saw it. I believe the legendary investor John Doerr said it at some point, but I can’t track down the original quote anymore. Of course, I thought it was a complete exaggeration when I started full-time investing on November 1, 2007 – the day after my last day at AbeBooks. How hard could investing be?

Now, 10 years and $30m+ later, I believe those words.

Why does it take so much time and money to develop into a great investor? Long feedback loops, ever-changing patterns and themes, and the impact of sheer luck on investment and start-up outcomes are just a few reasons. Think back to where we were in 2007. BlackBerry and Nokia were on top of the mobile world. The iPhone had just launched and Facebook had 50 million users.

These ten years of investing have taught me so much and I want to share three of the biggest lessons:

1. Focus on the process, not the outcome

USV’s Andy Weissman wrote a great post about process and predicting the future. No one has a crystal ball and as investors, we can’t control what happens with the start-ups we invest in. Good investing isn’t about guessing what’s going to happen in the future, rather it’s about creating a process to control how we make investment decisions. At Version One, we make thesis-driven decisions; we’re continually refining both our thesis and “founder checklist” and Angela and I discuss every potential investment intensively. Decisions don’t have to be unanimous.

2. Create an environment that maximizes rapid learning

When you stop learning, you stop growing. Adding Angela to the V1 partnership has been a huge asset for me – it has had a bigger impact than I could have ever predicted at the time. I’ve also found it important to build a close-knit network of like-minded investors in order to share, challenge and collaborate. And then, no matter how busy the week gets, you need to set aside enough time for reading, writing, and reflecting.

3. Fight hard for the best possible outcome, but know your limits

Once you invest in a company, you want to do all you can to make it as big of a success as possible. And for investors who have previously run companies, there’s always a temptation to dig in and exert your opinion. But, I’ve learned that an investor needs to accept where, when and how much he/she can move the needle. The ultimate decision always needs to be with the entrepreneur. Remembering who is running the company will release an incredible amount of pressure and tension in the investor-entrepreneur relationship.

The last ten years have been an incredible ride, with over 75 backed companies and close to 20 exits. I’ve been able to experience highs and lows with some amazingly inspiring and ambitious entrepreneurs (some of whom I’m now getting the chance to back a second time). It has been an incredible personal learning experience and I’m looking forward to the next ten years!

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