Decision Making as a Muscle
Batko OS #7 - My Investment Muscle Gym
Over the past 15 months, I’ve met 213 founders. After each 30mins meeting, I write up what magic I saw in the company, my concerns and score the Team, Market, Product and Distribution.
The killer question is the last one.
“Would I personally invest $10k in this startup? Why? Why not?”
In the last year, based on my answer, I would have deployed $260k in 26 startups.
That fantasy portfolio is now worth ~$500k (1.92x TVPI).
The best part of the process is that I have all my initial thoughts in writing.
Writing is like holding up a mirror to the truth.
Without it, it's easy to look back and convince yourself that you would have made the right decision.
“The first principle is that you must not fool yourself and you are the easiest person to fool.” -- Richard Feynman
Upon Reflection 🤔
I’m often wrong.
I used to rate technical founders higher than non-technical founders.
I believed programming was the thing stopping me from having my own startup. I daydreamed about all the things I’d be able to create if I were able to code. Surely, technical founders are more likely to succeed? Now, I know the technical element is only one piece of the puzzle and by no means the most important.
I used to rate founders higher if they had traction.
Surely, if they validated that people are willing to pay for the product they are more likely to succeed. Turns out early traction isn’t everything. There are a lot of ways to die.
I used to rate founders higher if I liked them as a person - the ultimate bias.
Surprise, surprise - turns out just because someone is likeable doesn’t mean you should give them money. 🤦♂️
I reflect on my decision-making regularly.
Every quarter, I check each startup’s website and hit up the founder for an update. I mark them with a new status on their progress and with rough valuation. This gives me a quantitative anchor as to whether I’m on the money as a fantasy investor. More importantly, it is a chance to validate the original reasons for my investment decision.
Being right for the wrong reason is still wrong.
It is not skill but luck.
Wading through the data is painful and the insights can be confronting.
But now, I’m more aware of my biases and have a better understanding of what’s crucial when building a business.
I can recalibrate my decision-making.
We don’t learn from mistakes.
We learn from reflecting on mistakes.
When is your reflection time? ⏳
When do you stop running and reflect on the route you took?
In my professional life I reflect:
quarterly - on my investment decision-making
weekly - on the last 7 days (ie Edrolo OS helps you)
daily - write two paragraphs on what decisions I made
As a team, at Startmate, we reflect:
quarterly - as a full day team offsite
after each large milestone - selection process, or after a cohort for either the accelerator or fellowship
We’re getting better.
We know as we gather feedback, reflect on it and measure.
What is your cadence?