Out of geo deals

We’ve recently been more actively looking at opportunities outside of our main market, continental Europe. Part of that is the draw of our DTC thesis: there’s just a lot more happening in NYC and London. And some of those deals are coming to us. 

We’ve done one investment in New York earlier this year and one in London just a few weeks ago. Both will stay unannounced until they’re ready to raise an A (this seems to have become market standard). 

When considering out of geo deals, the question always comes up: why are we seeing this instead of the locals? 

It’s the flip side of FOMO - the fear of errors of commission because we aren’t part of the chatter in that particular market. That’s certainly a risk from a pov of attracting follow-on investment at the next round. 

On the other hand, we are conviction investors. We have a fairly narrow thesis and when we come across something we like, we can make our minds up quickly. And we’re not afraid of being contrarian. 

A great business can attract financing from many sources and venture investors are only one of these. I believe as the DTC frenzy increases, we will see more specialized funds and financing methods (eg working capital) emerge. 

PS. I’m writing this only my phone with my toddler sleeping on my shoulder. Bliss. 

Autonomous weapons aka killer robots

I re-watched a video over this glorious summer weekend that put a little darkness inside me. It’s disturbing. 


Humans have always been particularly versatile when inventing ways to kill other humans. From rock to blade to arrow to gunpowder to WMD. It took 42 years from the flight of the first aircraft by the Wright Brothers to the carpet bombing of Dresden. For millenia our evolutionary biology trained us to recognize snakes. Now suddenly death came from above.

When was the first drone flown? When did facial recognition become viable? We have a few short years before these technologies will have become combined and weaponized. 

International law is one way of addressing the proliferation issue of cheap technologies being combined in lethal ways. The other of course is to develop defensive technology to counter them. Both need our support. 

The key question is then whether to tie yourself into an international treaty to ban autonomous weapons that may impact your ability to build defensive tech. I’d argue that it’s possible to do this, but folks may differ. On the whole, though, it’s too important a conversation not to have. 

Be culture

Interesting exchange this morning with a friend, European serial founder on the way to his second billion plus outcome. He doesn’t understand the way people talk about company culture, as if it’s some type of practice that gets added to the business. 

Culture is about being, he says. It’s about who you are and how you show up. And then it’s about who you hire and whom you promote. 

You can’t fake culture. If it’s not authentic to who you are as a founder, it won’t be the real culture of the company either. 

Obvious, surely, but it gets lost in the “start with why” stuff. 

A shift in perception

The world we inhabit is a product of our perceptions. These perceptions are shaped by our belief systems, whether conscious or unconscious.

 

I invested in a founder a while ago who is facing possibly the most challenging time right now in the life of his young company. And yet, when he calls me, he is palpably enthusiastic about his response to this challenge. He fully believes it is an incredible opportunity to once again change the trajectory of his company.

 

I love that energy. No matter what happens, he is learning and growing with the crisis.

 

On reflection, each moment gives us this opportunity. To decide who we want to be and to meet the world that way.

 

I’m resolving to live more from this place.

Dive down deep into the ocean

I saw this at Soho House Greek Street today. Apologies for the less than ideal pic. 



As someone who reads a lot of Grand Things of Great Import, like following your Personal Destiny and the Moral Imperatives of Virtuous Conduct, I loved the gentle exhortation not to take myself and ourselves so seriously. A good omen! 

Love,
Max 

Tracking phone usage

I’m writing this on my phone 📱 as per Fred’s recommendation yesterday. It still feels a bit awkward, especially adding links and photos. But I like trying it out. 

Speaking of trying things out and phones, my colleague Yacine pointed me towards an app called Mute earlier this week. It tracks your phone usage, including pickups and total time spent. And it tries to use loops to get you to reduce unnecessary usage. 

I’ve been using it for a few days. Here are my stats from yesterday:


I picked up my phone an astonishing 108 times and apparently checked it every 6 minutes. My longest streak without using it was 1:10 hours. I spent 6:17 hours on it out of the 18 hours that I was awake (either discipline or young kids, take your pick). That’s... concerning. 

I can’t wait for computing to move more into the background. But in the meantime, developing a more healthy, mindful relationship with my devices is a good idea. 

I’m going to use Mute for a few weeks and tell you how it goes. 

Our investment in Orbex

Our previously unannounced portfolio company Orbex came out of stealth yesterday with $40 million in private and public funding. Orbex is planning to launch orbital vehicles from the newly-announced UK Vertical Launch spaceport in Sutherland in the Scottish highlands. 

Orbex is a UK-based spaceflight company, with subsidiaries and production facilities in Denmark and Germany. The company is constructing a completely re-thought and re-designed orbital launch vehicle, called Prime, to deliver small satellites into Earth’s orbit. Prime launchers are up to 30% lighter and 20% more efficient than any other vehicle in the small launcher category, packing more power per cubic litre than many heavy launchers. Orbex staff members have professional backgrounds with NASA, ESA and several other commercial spaceflight organisations. 

We're delighted to be a small part of providing Europe with a small satellite launch capability. 

Croatia's president is Leslie Knope

The average blog post here gets maybe a hundred reads. Obviously it's targeted at a specific group of people - European founders - of which there are just a few thousand. 

But it's still funny that the most popular content I've put out in the last three months is:

It's not even original but poached from a Reddit comment. Oh well. Still love Parks & Rec, so any exposure I can give that show the better.

Extraordinary people do extraordinary things

How do you evaluate founders and founding teams? It’s hard to have to assess the “fitness” of an entrepreneur if your overarching sentiment is one of respect for the courage of the journey.  

Over time we have developed language around this question, things like personality traits (openness, agreeableness, conscientiousness, extroversion, neuroticism), functional skills (domain expertise, commercial insight, ...), and EQ (charisma, coachability, etc.). 

I find myself repeating a phrase that I heard (I think) early on my venture career: extraordinary people do extraordinary things

I like that lens on a founder's background. It's unlikely in my view that we are going to meet a world-changing team that hasn't done extraordinary things previously. It's a hard truth, but relying on your company to be your first extraordinary thing is not a great idea.

This is true both as guidance for raising venture capital, but also as life advice. Why wait to lead an extraordinary life until you have identified a commercial opportunity to pursue?

Now what that extraordinary thing is varies very widely: by no means do I mean that you need to have a CV stuffed with extracurricular BS that seems to be the required condition for Ivy League schools or Goldman Sachs. No, I'd much rather you had set up a charity in Tanzania, rowed around the world, participated in the Math (or Sports) Olympiad for your country, written a few terrible (or amazing) screenplays, invented the hashtag, or run a kick-ass subreddit. I like curious founders whose ambitions go beyond the commercial.

Of course I subscribe to the notion that great ideas, and teams, and companies can come from anywhere. And so I will often meet with companies that look very interesting but come from "unlikely" teams. Perhaps more so than other folks in our market, I will take these meetings because I believe openness and whatever the inverse of cynicism is is key to being a good VC. And many folks don't talk about the fact that they've done awesome things in the past - they feel it's not appropriate in a "business" setting, especially if they held conformist jobs like consulting, banking, or corporate.

I do believe in the notion of extraordinary people and, perhaps even more so, teams. And hence our current tagline: early-stage venture capital for exceptional European entrepreneurs. We hope to meet more of them. 

Introducing other investors

I am often asked to make introductions to other investors. Once we are committed to leading or joining a round, I love making these introductions. I like the company and the founders and I know showing them to other investors as a "pre-qualified" opportunity makes their job and the job of the founders easier. It builds our reputation with other investors for being a collaborative firm that finds good investments. And it helps the founders raise a larger round for our future portfolio company.

However, many founders ask for introductions to "other investors" once I've passed. This happens most frequently when I haven't even met the team. And sadly it's mostly first-time founders that then seem quite put out when I don't comply with their wishes.

There are a few reasons I decline making these introductions. First of all, I haven't evaluated the company beyond a short look. I probably passed on it because it is outside of my investment scope (e.g. enterprise software, late stage, low growth, no defensibility, weird ownership structure, small market, etc.) or because the team looked like an "unlikely" fit.* In most cases I haven't even met the team. 

That doesn't mean it can't be a good investment for other funds. They may have very different criteria from me. But I have my focus because that's where my expertise lies. And if I started qualifying deals for other investors that do very different things from me, I probably wouldn't be doing much else with my time. What's worse, I probably wouldn't be doing it very well.

Secondly, if the company is in my remit but I pass, what message does introducing the company send to other investors? It's a terrible signal - hey, here's a company I didn't think was good enough for us to invest in. Take a meeting because I value your judgement and time less than my own. You can see the problem. This is terrible for founders and so I end up saying "I'm sorry I don't do that." 

Next time this happens, I'll send the founder this blog post. So they know it's with their interest at heart that I'm not introducing them.