Going into my freshman year in college, I was on a mission to imbibe the legends of the value investing world (Buffet, Munger, Ben Graham, etc). The first step — as most college kids interested in finance do — was landing any job I could find in the field. I worked 4 or 5 different internships doing everything from equity research to global macro research, investment banking, and asset management.
At the end of it, despite scratching the surface of every possible vector I could in finance, I found most of the work painfully boring beyond a certain point. Looking back, the projects I worked on were removed from the day-to-day action of the businesses we financed and that left me unsatisfied.
I discovered venture capital during my junior year of college, when a close friend of mine (who turned out to be my co-founder) would recount incredibly compelling founding stories of startups he backed. Out of pure curiosity, I proposed to write all his investment memos as long as I could meet the founders and sit in to pitch meetings. Throughout that process, I found venture investing more colorful and impactful than anything I ever worked on before, so I dove head first into it.
First, I look for excellent communicators and stewards of the company's vision and mission. In pitch or board meetings you can tell who possesses the skill. Instead of verbally dashing off reponses to important or heated questions, some of the best founders I know always find a way to beautifully articulate thoughtful responses. They are just very clear and precise in the way they communicate their goals both orally and in writing. This inevitably plays a huge role in their ability to hire top talent, raise capital, and attract customers. Second, I look to their personal stories or professional backgrounds for evidence of (a) a deep sense of connection and commitment to their company's mission (b) a fire in their belly i.e. they are disatisfied with the status quo and are incredibly hungry to win and (c) grit; it takes a lot of energy and perserverance to transform an idea into a business. Third, I look for unfair personal advantages. As much as I want to believe that pure genius is good enough to build a large company, it simply is not. Great founders are incredibly resourcesful and have unfair acess to top engineers, salespeople, customers, and other important stakeholders in their markets. This is exactly why repeat founders (even those who failed) attract so much capital. Fourth, I look for founders with a growth mentality. Founders who are deliberate about self-improvement are better equipped at dealing with future business or personal problems. It's easy to dismiss the importance of getting coached due to lack of time, but just like great athletes, becoming great in the CEO role requires self-awareness and lots of hardwork, mentorship, and training.
I work well with founders who have an open mind and heart that are willing to trust in me. The relationship tends to start off on the right foot when we're making early commitments with lots of conviction. Post-investment, I'm first and foremost looking to develop a meaningful friendship. I want to be the first person they go to dinner with once they close their next round. I want them to be open to calling me at 11pm to work through a strategy problem or just vent about some issue in their personal life. The founder/CEO role can get very lonely, I find it so important to to be able to lean on some of your investors for both tactical and emotional support in hard times without the fear of being judged. Second, since Reshape is a domain-specific venture firm that specializes in companies with missions that cross real estate and technology, we tend to be much more active than the average venture firm in companies we back. Our team is constantly breaking down doors of landlords and developers to facilitate revenue-generating partnerships for our portfolio companies. Third, do no harm i.e. don't distract, don't annoy, just support. Treat every interaction with respect and integrity.
Help me get up to speed in advance of the pitch on your market and product so we can spend as much time as possible on the few things that matter.
Empower the underdogs: from direct personal life experiences, I get tons of satisfaction backing or building businesses that empower individuals or groups that are meant to be left behind. I think Stripe and Shopify are the epitomes of companies that embody the value. It should be no surprise that they are some of the most loved technology companies in the world.
Paul Graham famously spoke about San Francisco and Silicon Valley creating a “serendipity” for technology and venture creation, but nothing and I mean nothing matches New York’s people, energy, and culture. There is a magic that’s created when you have such a diverse and ambitious group of human beings from all over the world and from all walks of life living and creating in one place.
In my view, there is still no better place to start a company or source talent. Beyond that, the New York tech community is a welcoming, inclusive, global and diverse group of people — both on the VC and operator side — so by the time VCs invest in start-ups there is already a trust, a camaraderie, and bond that allows for incredibly strong partnerships. The strength of those relationships in this community is unparalleled.
Second, it is common knowledge that there are industries that are ripe to succeed in NYC (fintech, consumer, and real estate) given the unique density of people and businesses it houses. The proof is in the pudding when you look at the growth in VC funding and the profile of tech exits over the last 5 years. NYC tech had an incredible run of outcomes led by wonderful brands such as Peloton, Lemonade, Jet, Datadog, Flatiron Health, Mirror. I’m sure I’m missing a ton, but the point is some businesses can only start in NYC and as the tune goes: “If you can make it there, you’ll make it anywhere…”
Third, and when you add it all up, NYC has the right balance of capital, ideas, people, and an environment that allows tech to thrive here. Innovation occurs in cities that are safe, flush with risk capital, that enable a free flow of ideas, and that house dense clusters of young, ambitious individuals.
Despite the pandemic (and how that may affect funding or operating of future tech businesses), there is no doubt in my mind that New York will continue to be one of the only cities in the world to fire on all cylinders. I have so much love for and faith in this city that has taken me in as it has millions of people. It shocks me how undervalued NYC is in this moment time, I just wish its stock was investable as I’d be aggressively buying it up.