🧰 Venture Tools #006

Smart people make bad decisions

The Phantom Galaxy Across the Spectrum - NASA’s James Webb Space Telescope

🎶 Prelude

I took a brief break from the newsletter last week due to some health issues of someone close to me, but we’re back with a vengeance this week. On a related note I’d be interested to speak to founders looking to disrupt the healthcare system in the UK. We often hear the phrase ‘the NHS is a national treasure’ parroted by politicians. This is a dangerous mindset that stifles innovation and ultimately costs lives. On many metrics we compare terribly to healthcare systems of far poorer countries. Private healthcare companies in the UK have become large, bloated and stagnant. Time for change.

💡Insight - How to make decisions

Smart people make bad decisions.

From Napoleon’s decision to invade Russia to Ronald Wayne selling his 10% Apple stake for $800 (today worth ~$200b) - history is littered with seemingly very smart people making awful choices.

Improving your decision-making process is a high-leverage time investment which will pay significant dividends in your life.

‘If you can make twice as many decisions at half the precision, that’s actually often better’

Patrick Collison - Co-Founder & CEO Stripe

Speed of execution is a significant advantage startups have versus large incumbents. Startups are also at higher risk of death with 1 or 2 bad decisions potentially ending in disaster for the company.

You need to build a process for prioritising and making decisions.

One popular model for making decisions you may have heard of is the Eisenhower Matrix. This divides decisions into 4 categories based on urgency & importance, you can read more about it here.

The decision model I use was developed by a former Canadian spy: Shane Parrish. It’s simply called The Decision Matrix:

Inconsequential: delegate

Consequential + reversible: make decisions and rapidly iterate after gathering data

Consequential + irreversible: invest your time here

You can read more about the Decision Matrix and other mental models on the Farnam Street blog here.

🛠️ Tools

1. Don’t do these mistakes when raising capital - by Dragos Novac.

2. The Non-Obvious Guide to Fundraising by Gigi Levy-Weiss at NFX.

3. Excellent thread on how the goal posts have changed for raising a round for SaaS & B2B Fintech companies since Spring by Andrea Funsten.

   Andrea Funsten @AndreaFunsten

   The goalposts for raising a Pre-Seed, Seed and Series A round have changed since the Spring. Here are benchmarks that I would aim for as a founder of a SaaS or b2b fintech company in this current market 𝑛𝑜𝑡𝑒: 𝑡ℎ𝑒𝑟𝑒 𝑎𝑟𝑒 𝑒𝑥𝑐𝑒𝑝𝑡𝑖𝑜𝑛𝑠 𝑡𝑜 𝑎𝑙𝑙 𝑜𝑓 𝑡ℎ𝑒𝑠𝑒

4. AI: Startup vs Incumbent Value - brilliant post on how large tech incumbents tend to capture most value with significant platform shifts, but why the latest wave of AI may be different… by Elad Gil.

5. Find your VC software stack - the world’s largest directory of tools and resources for venture capital and angel investors - by Max Fleitmann, Stéphane Nasser & Sina Sadegh.

6. How to Build a Great Series A Pitch and Deck by Janelle Tam.

7. How to Angel Invest by Shruti Gandi.

8. Inside the Collapse at Pollen - it’s strange this hasn’t got more mainstream media attention. The company raised more than $200m from prominent VCs and then failed to pay staff wages. A good post-mortem here from Gergely Orosz.

9. How to hire - an old but still relevant post by Sam Altman.

10. Michael Gilroy wrote this interesting thread and article on how Coatue are evaluating Fintech companies. ‘The Rule of 200’.

Michael B. Gilroy @MBGilroy

1/ After a decade long venture-fueled run in fintech, we’re in the midst of our most important year yet. We took a hard look at the data across the sector in this whitepaper + deck.

coatue.comFintech and the Pursuit of the Prize: Who Stands to Win Over the Next Decade?Fintech and the Pursuit of the Prize: Who Stands to Win Over the Next Decade?

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Thank you for reading. Feedback is always welcome. Have an awesome week 🤌