Acronyms. Love them or hate them, they’re a key part of our industry, and one in particular has been giving me pause: B2B BNPL. With all the attention around B2C credit, the B2B world is having its moment, modernising how B2B transactions are made, and making things simpler — and more lucrative — for all parties involved.

This is great news, particularly considering the sheer size of the B2B lending market — measured in the trillions — but B2B BNPL is puzzling. In a consumer context, BNPL (in its current incarnation) refers to a new form of short term instalment credit, available at point of sale, with the cost subsidised by the merchant. The term ‘BNPL’ is therefore positioned as a new financial product that provides an alternative to using a credit card (*or simply buying later).

In the B2B market, this doesn’t translate in the same way. Buyers largely don’t expect to pay upfront. Somewhere between 60–90% of B2B commerce already involves some form of credit. The simplest form of this credit is an inter-company IOU (i.e. the supplier giving their customer permission to ‘pay later’). Or there might be a lender in the mix in the form of invoice factoring or discounting. Buyers expect to ‘pay by invoice’ with the benefit of ‘net payment terms’ (i.e. pay 30, 60 or 90 days after purchase).

‘Buy now, pay later’ is not a new behaviour or financial product in this context but if you believe, as I do, that there is an inevitable digitisation of B2B transactions then there is also a whole new set of pain points created for B2B payments, financing and purchase workflows.

It was in this context that I met the team at Sprinque.

How we crossed paths

Hat tip to my friend Jiri Havran at Seed X for the timely introduction on this one. I’d been exploring the theme for a while and he knew exactly the team for me to meet. After my first call with Juan my concluding notes read:

“obsessed with the problem, opinionated solution, super commercial, hugely ambitious, massive market, 100% product-led fintech opportunity >> MEET CO-FOUNDERS ASAP!!”

How Sprinque fits our investment thesis

Opinionated products

Before we dive in, let’s remind ourselves of some basic observations about the vast majority of B2B transactions:

• They currently take place offline
• They include some form of credit (i.e. the buyer doesn’t pay in full upfront)
• And there is often an ongoing repeat relationship between buyer and seller

Where does Sprinque stand on these?

• Opinion #1: Trade finance, not BNPL. Most B2B commerce is based on repeat relationships → buyers want their own trade account (with predictable net payment terms). They don’t want new payment terms for each purchase. Hence Sprinque underwrites the buyer (not the transaction) and offers them ongoing trade credit terms, rather than a ‘pay later’ button on each new transaction.
• Opinion #2: Purchase flow agnostic. Put simply, B2B commerce is not the same as consumer commerce and never will be, even for online transactions. B2B transactions are characterised by: higher value purchases, more complex purchasing and approval journeys, less homogenous product SKUs, the buyer is often not the person paying. All of this means that consumer payment methods are not fit for purpose. Sprinque is solving for high value and high complexity from the start. They want to exist wherever the transactions are, across all B2B sales channels, regardless of what that looks like.
• Opinion #3: End-to-end platform. Embedded lending is worthless if there is nowhere to embed. Sprinque’s focus on high value and high complexity means they provide an end-to-end solution to solve merchant pain.
• Opinion #4: Global mindset from Day 1. Digitising any B2B commerce is hard for merchants but doing it cross-border is even harder. Sprinque are designing their technology, product, regulatory approach and GTM to internationalise from the beginning.

Crafted with love

Juan, Manoj and Mark have a shared love for the user, the problem and for using great software product to solve real user pain. It was clear to me from our first calls that all three founders were obsessed with speaking to potential customers and found delight in uncovering hidden insights as to why current solutions don’t work. And despite their significant domain experience across product, technology, GTM and payments, they were all problem oriented from the beginning, rather than assuming they knew the solution.

Loved by many

In the vast majority of cases, the provision of credit in B2B trade creates the following pain…

• For a new buyer: it is a terrible UX. To get credit terms from a seller, they have to provide unstructured information over email, offer trade references, and wait for credit approval before their first purchase.
• For a seller: it’s cumbersome, expensive and risky.

Sprinque’s value to the seller:

• Higher conversion → more revenue
• Improved cashflow / less risk (versus extending credit from their own balance sheet)
• ‘Sell and forget’ → there is no workflow overhead at all. Discussing credit with customers is not even part of the sales conversation anymore.

Sprinque’s value to the buyer:

• Credit terms available where and when they need them — full visibility on what they can spend
• Improved cashflow (versus no credit)
• ‘Buy and forget’ → better UX, at POS and post purchase

The current pure-play B2B ecommerce market is growing very fast but is still relatively small; the broader B2B commerce market is close to infinite. If Sprinque can help all merchant types reach new customers, improve conversion, improve retention, increase repeat purchase rates, increase AOV and improve cash-flow… there’s a lot of love to create!

Our take on what the future holds

There are two types of market opportunity to address:

(1) Industries where trade credit, invoice financing and factoring have existed for decades and are the norm (this is the majority). Here, Sprinque is not creating a new financial product but instead solving for:

• Lack of automation
• Lack of data sharing
• Friction for buyer and seller in the process

(2) Other markets where companies are currently unable to use factoring due to the nature of the trade e.g. small size of customers (i.e. no data available) or small transaction sizes (underwriting is not commercially viable).

My thesis… in either of these two market opportunities, any trade finance solution that lowers customer barriers to purchasing (through the provision of new credit or better UX) will win significant market share.

I really didn’t want to invest in this company.

Yes, you read that right. Probably not the opener you’d expect but (sadly) it’s true.

I was introduced to Ophelos by two separate people — both of whom I trust and both had strong endorsements of the founding team — and yet both times I turned down the initial invitation.

Ophelos were pitching themselves as a “challenger debt collection agency”. My lazy lizard brain told me I didn’t want to be in the debt collection business and as for building an ‘agency’, well, it’s almost a dirty word amongst technology startups. Two easy reasons to say no. And, as it turns out, two reasons I was wrong. I’ll explain why but first let me set the scene with the founding team and origin story.

Note to self: Keep an open mind. Powerful outcomes can come from overcoming my preconceptions.

(*BIG thanks to @alexflamant for the initial intro and @mattwichrowski for persisting with me. We’re delighted to have led Ophelos’s $2.3m pre-seed round alongside our friends at Fly Ventures.)

Origin story…

Amon (co-founder CEO) and Paul (co-founder COO) met whilst working at ASAPP, a New York-based venture-backed AI startup. Amon was a director of their EMEA business and Paul was Head of International. They were the first of the ASAPP team to land in London and quickly became close. ASAPP’s proposition was AI enablement for enterprise contact centres. Whilst selling into the financial services industry, Amon & Paul saw first-hand how large the internal debt collection teams were as part of these contact centres (e.g. in one case, there were 4,000 call centre agents devoted solely to debt collection). They also saw how analogue the phone-based practices were within these teams. Amon became obsessed with the idea of applying technology and machine learning to optimise and solve many of the problems associated with debt collection (both enterprise and end-customer problems). Paul had previously been Head of Watson Group at IBM in EMEA and didn’t need much persuading. As part of their learning, they realised there had only been a handful of technical research papers written on the debt collection subject in the last 50 years. Only one of these papers was from the last 5 years — enter Qingchen (Ophelos co-founder and Chief Scientist). Qingchen, who is now also a professor at the University of Hong Kong, had written a paper titled: Data-driven Consumer Debt Collection via Machine Learning and Approximate Dynamic Programming. Not the catchiest of titles but his unique knowledge and experience meant that the stage was finally set for Ophelos.

Why I was wrong…

Your own reaction when reading “debt collection” might have been similar to mine. It’s definitely not sexy. It conjures up all sorts of images we’d prefer not to think about — bailiffs, fear tactics, injustice and ultimately an uncomfortable amount of personal hardship. I’m not sure anyone grows up wanting to innovate in this market. And yet this is exactly the reason not to bury our collective heads in the sand.

There are some markets we’d prefer not to exist because of the societal consequences they create. Debt collection isn’t one of them. So long as we want to keep paying for products and services whilst we consume them, there will be debt. And for as long as there is debt (regardless of what you call it) there will be debt collection — because life isn’t predictable or within our individual control. Quite simply, our economy and society can’t function without debt or indeed the practice of enforcing unpaid debts.

Rather than pretending debt collection doesn’t exist, the most powerful thing we can do is focus on the quality of people, products, and services tackling this market. Or as the Ophelos team would say: “Reimagining debt collection — for good.”

How Ophelos fits our investment thesis…

We invest in opinionated products, crafted with love and loved by many.

Opinionated products

The debt collection industry is dominated by incumbent agencies that employ analogue and labour-intensive processes. The combination of letters, SMS, human call centre agents, and lots of persistence, has historically resulted in the best debt recovery rates. There is logic in this approach if you default to the lowest common denominator and believe that all people with overdue debt are in some way ‘bad’ (i.e. have done something wrong or are intentionally not paying their debts).

The Ophelos founders have a different point of view on the world. The beliefs that struck me when I first met them, and the things I believe will define the products they build can be summarised as follows:

• People want to pay off their debt — trite but true. This simple belief has major implications for the solution one would design to tackle this market. It’s akin to the eBay founding principle — “people are basically good” — a belief that allowed eBay to bet on building online peer-to-peer trust. People in debt are not criminals. The vast majority of overdue debts are due to changes in circumstances that are outside of a person's control. If you build the right tools to help them get out of debt, this will naturally become the path of least resistance.
• People want to self serve — money is one of the most personal parts of our lives. And issues with money can frequently be shame-ridden. People often don’t want to talk to their closest friends and family about money issues, let alone a complete stranger on the phone. The Ophelos team believes that people want the chance to self-serve their way out of debt, AND they deserve the same quality of digital user journey that exists in nearly all other areas of their lives.
• Machine learning can help — yes, we’re all tired of ‘AI’ applied to everything and anything. There are some problems well suited for today’s machine learning capabilities and others that are not. Ophelos believes (and has convincingly proven) that debt collection is one of the perfect ‘narrow’ problems where AI makes a big impact on performance.
• Build full-stack — the Ophelos founders could have used their SaaS backgrounds and machine learning knowledge to optimise debt collection performance within enterprise debt collection teams. And, in the future, I believe they will pursue this strategy to have an even greater impact. But, in the short term, they believe the best way to change the debt collection experience for end-users and to improve collections performance for enterprise, is to control the process end-to-end. This requires building a full-stack debt collection agency.

Crafted with love

At Connect we back founders who want to build product-led companies. Product management experience amongst a founding team can be invaluable but it’s not essential. Of more interest to us is the way in which founders think and go about solving customer problems.

• Crafted: the Ophelos founders started with an obsession for the customer problem but they weren’t prescriptive on the solution. They developed high empathy for their customers and spent time researching and talking with each of their stakeholders. They had opinions on what they thought the solution might be but ultimately went about proving their hypotheses with data. And importantly, each of these tests was approached in a way that allowed them to get to an answer in the fastest possible time. They also naturally defaulted to solving each part of the customer problem with software.
• With love: as I said earlier, I don’t think anyone grows up wanting to innovate in this market. There is a larger purpose at work here for the Ophelos founders and it’s best demonstrated by their social impact thesis and the fact they’ve committed to becoming a B Corp.

Loved

This requires a reframe. Ophelos’s customers may never tell anyone about their delightful user experience and, in the nicest possible way, they probably hope never to use the product ever again. But none of this is to say that Ophelos is unloveable. The important thing for us is: (i) the quality of the customer experience, (ii) the importance of this experience to the customer’s life, and (iii) the size of the relative benefit versus a customer’s available alternatives. Through this lens, we believe Ophelos has huge potential for customer love.

By many

This is the one area of my investment thesis where I’d happily be proven wrong. Fewer people falling into debt arrears would be an objectively good thing (all other things being equal). But this isn’t a reality. Yes, the macroeconomic cycle will drive variations in the annual market size, but the underlying structure will remain the same. Global debt levels have roughly tripled in the last 20 years and 20% of this (c.$50 trillion — pre-Covid) is household debt. The debt collection market within English-speaking countries equates to c.$18bn.

Consumer credit is fundamental to the operation of our economy and society. Individual factors outside of our control will always mean that a large number of people fall into arrears and need debt management support every year. Rather than trying to restrict the size of the debt market, or make it harder for some people to access it, I believe building better debt collection products is a fundamental part of creating a healthier consumer credit industry.

The Wrap…

Call me naive but ultimately I’m an optimist and believe great talent and technology applied to the right problems can change our world for the better. I backed Amon, Paul, and Qingchen because they were passionate about taking on the really important but unsexy problem of building better debt collection experiences for those that need them.

I believe this can create a win-win for the industry:

• enterprises (i.e those selling products and services) can achieve better collections performance on their overdue arrears (i.e. more money collected + at lower cost + with less brand risk)
• customers (i.e. people with overdue debt) can experience a better journey and outcome (i.e. more self-serve + more personalisation + more flexibility + more focused human support if and when they need it)

And this is just the beginning of the larger Ophelos vision to create “a world where everyone is financially educated, empowered and equal”.

Investing in Ophelos was originally published in Connect Ventures on Medium, where people are continuing the conversation by highlighting and responding to this story.

Today, Emma announced their $2.5m seed round led by Connect Ventures.

Emma, the personal finance tracker, scores $2.5M seed led by Connect Ventures

I’m super pumped to be working with Edoardo and Antonio — two of the most focused, obsessed and resilient founders I’ve been lucky enough to know.

I could say lots more brilliant things about the founders, the product and the metrics but that’s not the reason I’m writing this.

I’m writing this to learn and hold myself accountable.

At Connect our entire investment approach is built around low volume + high conviction + high support. My partners and I each invest in 2–3 companies per year and work closely with each of them over time. We think this is the most fun and effective way to operate, both for us and the founders we invest in, but it also requires a high degree of conviction when there are so many amazing founders and opportunities in the market.

Connect = low volume + high conviction + high support

Startup investing is perhaps one of the worst learning environments possible — dictated by long feedback loops and relatively few data points. VC’s love to post rationalise and often suffer extreme hindsight / narrative bias.

This fact, combined with our low volume + high conviction approach to seed investing, makes it even more important for me to be clear on my thesis and decision process from the outset. We’re always super clear on this within our own partnership discussions, but there’s no better way to learn and hold myself accountable than also putting this thought process out in the open. There’s no hiding from it and there’s less potential for post-rationalising.

The reason I invested in Emma is because I see neobanks as just the beginning of the revolution that will take place in our personal finance lives. Neobanks are still banks. Their vertically integrated business models will use current accounts as a loss leader to sell more and more of their own financial products and services. This is ok and I’m grateful for the superior product experience — I’m an avid user myself. But I believe the future could look quite different.

Whenever an industry is rebuilt with software, the moats and distribution models are likely to shift. I believe open banking creates an opportunity for vertically integrated monopolies to be superseded by horizontal products and platforms. In personal finance, a horizontal product would be something that works to help me make the best financial decisions available— it would be always-on and always independent. It would sit between me, my financial data and the increasing long tail of financial products and services available in the market.

Vertically integrated monopolies superseded by horizontal products and platforms.

When we make a new investment at Connect, part of our internal investment memo is what we call the “champion view”. This is where I (attempt to) convey my thesis to my partners. I’ve copied this part of the Emma investment memo below — word for word in it’s original format.

I welcome your feedback and also look forward to re-reading and learning from it in the future. 🤓

Overview: Emma is a financial advocate that helps people budget, track and save their money.

Vision: “We are on a mission to empower millions of individuals to live a better and more fulfilling financial life.”

Champion view:

Thesis — financial education and empowerment for the masses

Banking has always been about bundling core infrastructure (payments and secure storage) with services (financial products and advice). The infrastructure was the acquisition tool that gave banks the consumer trust and distribution to provide services.

The trust and distribution model for banks historically was people and branches. People and branches are now being replaced by software. And regulation is driving a wedge between the infrastructure layer and the services. Banks are literally being forced to unbundle their offering.

None of the above is new observation but it is the starting point for the Emma investment thesis…

Software is the new trust and distribution layer. And open banking gives any user the ability to share their data with any software provider. This creates the opportunity for a new (independent) software intermediary to exist between consumers and providers of financial services. Consumer choice does exist today (in the form of comparison tools) but these intermediaries weren’t built in an era where they had full access to a consumer’s financial life. This new era creates an opportunity for the best software to win and rebuild distribution.

Emma has started by building best of breed PFM tools. This is the entry point to build consumer trust, engagement and, importantly, the most holistic view of a user’s financial life that has ever existed (Emma knows more about me after 3 months than my primary bank does after 20 years). Emma’s reinforcing flywheel will be:

better product <-> more engagement <-> more data <-> more trust

There is no equivalent today for the role that Emma can play in future. This is not about building a better PFM versus 10 years ago. This is about building a new category of tool that uses software to scale the very best financial analysis, advice and support to the mass market.

2019

• August: World After Capital (Albert Wenger) + The Intelligent Investor (Benjamin Graham)
• July: Rich Dad Poor Dad (Robert Kiyosaki) + The Longevity Diet (Valter Longo)
• June: Trillion Dollar Coach (Eric Schmidt, Jonathan Rosenberg, Alan Eagle) + Why We Sleep (Matthew Walker)
• May: Lost Connections (Johann Hari) + Meditations (Marcus Aurelius)
• Apr: Thinking in Bets (Annie Duke) + Doing Good Better (William MacAskill)
• Mar: Radical Candour (Kim Scott)
• Feb: The Upside of Stress (Kelly McGonigal)
• Jan: The Happiness Advantage (Shawn Achor) + 7 Powers (Hamilton Helmer)

2018

• Dec: Essentialsm (Greg Mckeown)
• Nov: Homo Deus (Yuval Noah Harari) + Zen And The Art Of Motorcycle Maintenance (Robert Pirsig)
• Oct: Mindset (Carol Dweck) + The Mind Illuminated (John Yates, Matthew Immergut, Jeremy Graves)
• Sep: Outliers (Malcolm Gladwell) + Mastery (Robert Greene)
• Aug: Valley Boy (Tom Perkins) + Venture Capitalists At Work (Tarang Shah, Sheetal Shah)
• July: Mindfulness in Plain English (Henepola Gunaratana)
• Jun: Principles (Ray Dalio)
• Jun: How We Die (Sherwin Nuland)
• May: Wherever You Go, There You Are (Jon Kabat-Zinn)
• Apr: The Top Five Regrets of the Dying (Bronnie Ware)
• Mar: Originals (Adam Grant)
• Feb: Never Split the Difference (Chris Voss)
• Jan: Mastering Coaching (Max Landsberg)

2017

• Dec: Waking Up (Sam Harris)
• Nov: A Feminist Manifesto in Fifteen Suggestions (Chimamanda Ngozi Adichie) + Awareness (Anthony De Mello)
• Oct: StandOut 2.0 (Marcus Buckingham)
• Sep: Nudge (Richard Thaler, Cass Sunstein)
• Aug: Play Bigger (Al Ramadan, Dave Peterson, Christopher Lochhead, Kevin Maney)
• July: How To Win Friends and Influence People (Dale Carnegie)
• Jun: High Output Management (Andy Grove)
• May: The Power of Habit (Charles Duhigg)
• Apr: Sapiens (Yuval Noah Harari)
• Mar: Zero to One (Peter Thiel)
• Feb: The Black Swan (Nassim Taleb)
• Jan: Man’s Search For Meaning (Viktor Frankl)

Pre 2017

• The Hard Thing About Hard Things (Ben Horowitz)
• WillPower (Roy Baumeister, John Tierney)
• Start With Why (Simon Sinek)
• Focal Point (Brian Tracy)
• The Checklist Manifesto (Atul Gawande)
• The 7 Habits of Highly Effective People (Stephen Covey)
• Thinking Fast & Slow (Daniel Kahneman)
• Getting Things Done (David Allen)
• Good to Great (Jim Collins)

I was helping some founders recently whilst they deliberated about which investors to bring into their funding round. They’d already decided the lead investor and were oversubscribed for the balance.

No doubt this is a luxury problem but it’s not always straightforward and requires careful consideration — just like any decision to allow an investor onto your cap table.

Below is the framework we came up with for helping to make the decision.

What am I missing? Whether you’re a VC or founder I’d love to learn from your experience — please feel free to comment and I will update this post accordingly so as to be as helpful as possible to others in future.

(Note: this was for a seed round and assumed: (a) the company needed additional investors to raise the total capital they needed, and (b) the new non-lead investors wouldn’t have a board seat)

Reasons to bring an additional investor into the round:

• Brand: is the investor’s brand strong and relevant enough to be a positive signal for your company in future funding rounds and senior hiring?
• Experience: does the investor have specific knowledge or experience that could help you grow the business and is additive to the investor group?
• Network: does the investor have a network that could be valuable to you in building the company (e.g. funding, hiring, sales) and is additive to the investor group?
• Loyalty: do you need to honour a pre-existing commitment, or do you feel you owe it to someone who helped you earlier on in your startup journey?

(*The first 3 are about ‘value add’. The final point might seem trivial but is about protecting your reputation, or just feeling good about the process.)

Reasons not to bring an additional investor into the round:

• Squeezing: by bringing an additional investor into the round, will you be squeezing allocations and risking your relationship with other investors?
• Ownership: will any of the investors become so small that they won’t care enough? (hint: they won’t tell you they don’t care but it might be inevitable if their £ investment or % ownership is too far from their target fund model. This level will be different for every investor and you’ll only know by asking lots of questions.)
• Shareholder management: make no mistake, each and every investor will require time, energy and effort on behalf of the founders, even if it’s only one meeting per year. It all adds up.
• Decision making: each investor will have a point of view on future funding rounds, and will need to sign legal documents etc. They might not be able to veto anything on their own but they can be slow or frustrate the process.
• Follow-on capacity: more investors in the round does not necessarily increase future funding capacity. Diffusion of responsibility can mean that non-lead investors see their investment as an “option” rather than a commitment of support they need to honour when times are tough. I’d advocate that fewer investors with larger ownership will feel more obligation to support the company in future.
• Signalling risk: do any of the investors in this round also typically ‘lead’ investments in later rounds? If so, and they don’t step-up to lead your next round, then — at best — it’s something you’ll need to justify repeatedly to new investors in future, and— at worst — it creates a major red flag and puts new investors off completely. (*‘signalling risk’ is a subject that needs it’s own separate post)
• Information risk: all investors will have confidentiality obligations. But, generally speaking, a broader circle of trust leads to to an increased risk of information being miscommunicated or inadvertently falling into the wrong hands.

As with all decisions, there are trade-offs and the benefits needs to outweigh the potential disadvantages and risks for your company at each stage of funding.

For more thoughts on this subject, Sam Altman’s short post is worth reading…

Party rounds

I was recently interviewed by two founders to be an investor in their company. I wrote about the experience (and benefits) of this approach here…

Interviewing to be your investor

The questions started by asking about relevant companies I’d invested in and the lessons I’d learned from those companies. Every startup journey is so different that providing very specific learnings didn’t feel helpful. And yet, there’s too many generalist lessons to choose from. I limited myself to twelve and here’s what I wrote… (*thanks to my friend Tom Billings for the nudge)

1. I know nothing: in startups, every time I think I have something figured out, someone else comes along and does it differently and better

2. Cash is king: running low on cash was the single biggest source of friction and stress for founders and boards

3. Resilience is crucial: Bill Gates said it best…

“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”

4. Founder decision making:

• (a) Beginner’s mind: question everything, seek lots of advice and data, then trust your instincts and move on
• (b) Once you’ve made a decision, all you’ve got is your ability to learn from it (most decisions can be iterated or reversed)
• (c) Avoid ‘resulting’: you can’t be right all the time and you can’t tell the quality of a decision by its outcome — focus on decision process and nudging the odds in your direction over time

5. Founder self-awareness and learning: the role of a founder is not a single thing over time, it is a constant personal growth journey. The best founders embrace this and actively try to recruit themselves out of a job. (*getting a coach can really help)

6. The founder psychological battle:

• (a) Extreme pessimism — expecting, looking for and fixing major existential problems in the business; combined with
• (b) Extreme optimism — otherwise you’d never continue, and you need to take everyone on the journey with you

7. Boards: There are diminishing (and potentially negative) returns to each additional VC you seat around the board table

8. Forecasts: a valuable exercise but the one thing we know for sure is that things won’t go to plan

“I have no use whatsoever for projections or forecasts. They create an illusion of apparent precision. The more meticulous they are, the more concerned you should be.” (Warren Buffet)

9. The journey: it’s always longer, more painful and more expensive than you think, optimise for people you trust and want to work with

10. Funding: always be clear on what your next round investors are looking for (investment optionality is valuable, even if you don’t know you need it)

11. Before you scale: understand your customer economics, then check again

12. Great companies are bought not sold — cliché but true

VCs are pretty tough to fire once you’ve hired them!

I recently offered to invest in two co-founders.

Before agreeing a deal they rightly wanted to put me through my paces. They’re both first time founders but instinctively knew the relationship we were building was going to be important.

Maybe they’d also read my previous posts on:

• The things you should know about a VC (before they invest)
• VC Value Add: Buyer Beware

I was impressed when they decided to treat the final stages of our discussion like an interview process. I’d already had several weeks of doing my homework on them — and had decided to make an investment as a result. Now it was their turn. I was formally interviewing for the role of board member and investor in their company.

As part of sending them our term sheet I also shared written answers to their questions. With their agreement I’ve posted the questions below for the benefit of others.

Different questions will be important to different founders but the thoughtfulness and thoroughness of their approach, delivered in the right way and at the right time, was excellent.

Questions…

Relevant experience

• Which companies have you invested in that are similar to [Company], and in what way?
• What did you learn from those investments?
• How did you add to their success?

Strategy

• What are the most important short-term goals for [Company]?
• What is the most important medium — long term goal for [Company]?
• How will you help [Company] achieve these goals?

Networks

How can your existing networks be leveraged by [Company]?

• Distribution / Sales
• Hiring
• Commercial
• Tech & product
• Fund raising for next round & corporate exits

Yours and your firms USPs

• Why do you think [Company] should work with you and your firm as opposed to other VCs?

Style

• How do you see yourself working with [Company]?
• What do you want to get out of it?
• What are your personal medium — long term goals?

Time and attention is our most valuable resource.

The first thing I do every Monday morning is write an email to my team with a summary of what I did in the previous week. I use a set template and it takes no more than 15 mins to write.

The email includes the following categories (it would naturally differ for other roles and industries):

• People I met
• Events I attended
• Marketing activity (anything related to external content, press, messaging)
• Fundraising (yes, VCs have investors too)
• Upcoming (anything specific my team should be aware of in the week ahead)
• Company management (meetings and projects related to the ongoing management of Connect as a firm)
• Portfolio management (board meeting updates / company fundraising updates / anything else that’s important)
• Dealflow management (new companies I met / companies I’m spending more time on)

I only include a very short summary on each item. If anything warrants more detail then I make sure to discuss it in our team meeting later the same day.

The benefits for me…

• A weekly routine for reviewing (in a structured way) how I’m spending my time — this is the most valuable part of the process. For example, it quickly becomes obvious if I’m spending too much time on internal company admin versus meeting new investment opportunities.
• It reminds me of the key issues I need to update my team on (i.e. the things that need to be discussed in more detail in our team meeting or 1-on-1). Without this preparation my contribution to our team meeting risks being sporadic.
• It clarifies my actions for the week ahead —including the people and companies I need to follow up with.

The benefits for my team…

• It gives them insight into what I’m working on
• It’s easy to skim read before our team meeting (and takes less time than a verbal update)
• It’s helpful context for the discussions that will take place in the team meeting itself
• It often reveals a useful piece of information that would otherwise have been too trivial to discuss in-person — this is my favourite benefit
• It helps openness and collaboration (despite my team already having shared access to my diary)
• It signals that I care about how I use my time — I’m accountable to my team

I started doing this ‘diary audit’ for my own benefit, to make sure I was focused on the right ratio of activity over time. I really noticed the benefits so I began to share it with my team. My team also noticed the benefits and began to reciprocate. Now everyone uses the same structure. This is great — I often find the stickiest team habits are the ones that happen organically.

I now get a really helpful weekly summary completed in less than 30mins on a Monday morning (15mins to write my own and 3mins to read the update from each of my team).

Every team and person is different but I can highly recommend some version of this process to help you personally track your time and also promote sharing across your team.

(I promise there is a valuable company building lesson at the end of this post — forgive me whilst I first outline the essentials 😉)

What you DON’T do in life is more important than what you DO do.

This is controversial logic in a World that celebrates doers. All of our feedback loops are pre-programmed to reward and celebrate doing.

When was the last time you got positive feedback at work for what you didn’t do?

When was the last time you saw an Instagram post celebrating — “this is what I’m not doing right now!”

Or perhaps most importantly, when did you last congratulate yourself for choosing to say NO!

I’m not talking about saying ‘no’ to bad habits or behaviours. This is obvious. Bad behaviours stem from a lack of desire or commitment, rather than a lack of understanding. Instead I’m talking about saying ‘no’ to things that we know are good for us.

If we pause for even a moment, it’s obvious to see that saying ‘yes’ to all the good things in life is just a mental trap. There have always been, and will always be, more good things than there is time to complete them.

We constantly justify our actions based on things that need to be done. If something needs to be done and it’s good for us then we rarely stop to question whether it’s the right thing to be doing.

Warren Buffet sums it up best…

“The difference between successful people and really successful people is that really successful people say no to almost everything.”

The key word here is “almost”.

Really successful people achieve seemingly impossible goals because by saying ‘no’ to almost everything, they can focus and excel at something else.

Buffett is well known to practice what he preaches. He’s an individual with almost limitless financial resources. He could choose to do whatever he wants, whenever he wants to do it. And yet to stay at such a high level of performance for such a long period of time he’s chosen to consistently spend 80% of his day reading and learning. The compounding impact of this type of behaviour cannot be underestimated.

All of what I’ve said above is motivated by the fact I recently read ‘Essentialism: The Disciplined Pursuit of Less’ by Greg McKeown.

(thanks to ahmed husain for the recommendation on this one)

Essentialism: The Disciplined Pursuit of Less

“…the basic value proposition of Essentialism: only once you give yourself permission to stop trying to do it all, to stop saying yes to everyone, can you make your highest contribution towards the things that really matter”

(Greg McKeown)

Like many books, the key message could probably be delivered in a short blog post (or in a single quote like the one above). But, sadly for us mere humans, reading shorthand isn’t effective at changing our behaviour. If any of the above resonates for you, and/or you recognise this inner struggle in yourself, then I’d highly recommend reading the book.

Based on what i’ve said above the most likely misconception of Essentialism is that it’s a philosophy of saying ‘no’. This is of course a vital component but in reality this is a philosophy about being able to say ‘yes’ — to the right things.

This is not another productivity book about how to get things off your to-do list. Instead it’s about getting the right things on the list in the first place.

If you’re interested in the subject but your reading list is already a mile high then the podcast between Tim Ferris and Greg McKeown is a good place to start.

Greg McKeown - How to Master Essentialism (#355)

I said at the beginning of this post that I would finish with a valuable company building lesson. I’m sure it’s already obvious:

Start-ups are perhaps the best example where a seemingly impossible goal needs to be achieved with too little time and resource. The only way to beat the odds is to practice a form of Essentialism. To create a systematic way to make sure you and your team are focusing on the right things at the right time. Saying YES to achieving the desired outcome requires saying NO to a lot of other things along the way.

“Essentialism is a disciplined, systematic, approach for determining where our highest point of contribution lies, then making execution of those things almost effortless”

(Greg McKeown)

I’ve said it before and I’ll say it again… this was the book I enjoyed the most in 2018. One short Stoic quote per day for each and every day of the year.

Whilst skimming back to the beginning of the book to start a new year in 2019, there were two extracts that really struck a cord with me. The first was as follows…

Jan 1st: Control And Choice

“The chief task in life is simply this: to identify and separate matters so that I can say clearly to myself which are externals not under my control, and which have to do with the choices I actually control. Where do I look for good and evil? Not to uncontrollable externals, but within myself to the choices that are my own…”

(Epictetus, Discourses)

Now re-read and replace the word ‘life’ with ‘a startup’.

This is one of those lessons that is so painfully obvious it’s difficult to understand why anyone would bother to teach it. If we truly can’t change something then why would we ever spend any time on it? And yet, if you’re human like me, you know all too well that we spend a disproportionate amount of time thinking and acting on things that are fundamentally outside of our control. Startups are built by people and this element of human nature can have distracting and damaging consequences.

In the book ‘The 7 Habits of Highly Effective People’, Stephen Covey articulates this same point by distinguishing between our Circle of Concern (things we care about but can’t control) and Circle of Influence:

The Stoics would rightly say that there’s no point wasting time and energy on the things we can’t control. For example, worrying about our competitors recent funding round or big-hitting new hire. This is easy in theory but more difficult in practice. Covey’s approach might offer some guidance on how to apply this knowledge in the real World.

Covey would agree with the Stoics but would also go a stage further. He states that a positive and proactive focus on the things we can control will actually have a secondary effect of increasing our Circle of Influence (the left-hand circle above). For example, by successfully focusing on the things we can directly control within our own business (e.g. product, marketing and hiring), we can indirectly have an impact on our competitors ability to raise their next funding round or make their next senior hire.

In contrast, by spending too much time focused on the things we can’t control in our business we may actually reduce our influence on the things we should be able to control directly. Using the same example above, it’s not difficult to imagine a scenario where an unhealthy concern for our competitor leads us to make a reactive decision (e.g. shipping a new product feature before its ready) which then backfires and reduces our ability to manoeuvre later.

How about starting 2019 by re-focusing our efforts on the things we can directly control? At the very least we will waste less (emotional) energy on the things we can’t control and if Covey is right, we may also increase our Circle of Influence.