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What is needed to pay the Covid stimulus bill?

More innovation, creativity & business-building, leading to a new wave of growth!! Here’s how it works.

Yesterday, I read an awesome article by Morgan Housel on how the US (or any nation for that matter) is expected to manage trillions of new national debt that is getting created due to this crisis. It traces events back from WW II and has some really interesting insights.

Essentially, national debt is different from the “personal” debt of individuals. The latter have finite career spans and lives; therefore, debt has a repayment end-date. Nations have an infinite life span and can technically remain indebted indefinitely, even with rising debt.

For nations, debt management, not repayment, is the key concern. As long as nominal GDP growth is higher than the budget deficit growth, the debt/GDP ratio will keep doing down. So, the focus becomes “growing out of debt”, not reducing debt.

Here’s how the US managed its WW II debt:

Due to the war, Govt. debt as % of GDP rose from ~20% in 1929 to ~120% in 1946.
Post-war, tax rates were kept high: a) tax as % of GDP rose from ~8% pre-war to ~14% avg. post-war till now, b) top marginal tax rate rose from ~24% pre-war to 80–90% levels post-war for about 20 years.
So, even though spending as % of GDP kept increasing from ~3% levels pre-WW I to ~17% for 80 years post-WW II, debt/ GDP ratio kept falling.

That’s how the war debt effectively got “paid off”, even with high annual fiscal deficits. It never really got repaid in the traditional finance sense, but the US grew out of it by increasing GDP at a faster rate than debt, via unlocking innovation & creativity.

Morgan’s article predicts a high likelihood of tax rates increasing over the coming years, with a simultaneous increase in Govt. spending to drive growth. There is a post-WW II like economic scenario possible where deficit keeps rising but is also accompanied by faster GDP growth.

My Take: $10 trillion+ of stimulus is unavoidable, as is ongoing welfare benefits for the next several quarters, maybe even years. The bet then is — can the US maintain its democratic, innovation & entrepreneurial DNA to unlock the next wave of economic productivity-led growth? If it’s able to do this — GDP growth outpacing debt growth, this COVID debt will again be maintained and eventually outgrown out of, over this generation.

My bet is YES, there is an extremely high likelihood that this will happen. There will be medium-term pain for all of us. And yes, a more equitable redistribution of wealth will be an ongoing policy challenge. But, based on my socio-economic experience as an immigrant and thinking at a fundamental level, I believe that the US is still the most strongly positioned nation globally to unlock the next phase of human ingenuity & creativity for our planet.

A combination of democratic values, civil liberties, technical innovation, entrepreneurship, and access to capital is extremely potent. Besides the US, I don’t see any nation in the world that offers this holistic combination in a compelling way. Even with all its challenges around economic inequality, social divide and a currently-unimpressive political landscape, over the long term, I expect the US to emerge stronger from this crisis.

User research as the art of story-t̶e̶l̶l̶i̶n̶g̶ hearing

At Workomo, we operate on an extremely agile & iterative execution cadence. Since launching the first sign-up landing page in June’19-end, we have iterated quickly & decisively. Workomo’s first MVP was released in Aug’19 — a simple web app that was nothing but an “automated spreadsheet++”, something I built for myself. We immediately started moving towards a much more “contextual” product, releasing Workomo Chrome extension v1 in Oct’19 and v2 in Dec’19. Again, based on user feedback, we realized that Workomo needed to be mobile-first. We again did a fast cross-platform iteration, releasing the iOS app v1 in private beta last month and are now, on track to release a significantly upgraded v2 in Feb’20-end.

The key to executing at this pace has been intense customer development. Especially in this new year, user research has been a P0 for us, with specific monthly goals being set on what we want to achieve on this front.

Personally, for me, this has been a steep learning curve on how to speak to users. Based on the last several months of iterating on Workomo, I am sharing my top 10 field techniques that hopefully, will be helpful for your own user research process.

Maximize in-person interviews — in Q4 of last year, we did many user interviews over the phone & zoom calls. Starting Jan’20, we have doubled-down only on in-person interviews in the Bay Area. And what a difference it makes! The ability to connect with users and read their body language — when they are pausing, thinking hard or feeling uncomfortable, these are invaluable signals for conducting effective user research. So, get over your inertia of stepping out of the building, log the required miles and go where users are.
Choose a comfortable meeting ambiance — in my experience, relaxed coffee shops with spread-out seating arrangements & less background noise, make it easier to connect, listen and share. User research needs to happen with “intent”, so food, drinks & music are usually distractions that are best avoided.
Voice-record with permission — taking physical notes during user research is incredibly distracting for both sides, and very often, important moments in the conversation that require an immediate “Why?” counter-question, fall through the cracks. I highly recommend taking explicit permission from the user, and then, doing a voice memo recording of the discussion. Having an audio file also makes it easier to evangelize within the larger product & engineering team, as well as for your own later reference for analysis.
Understand user’s life through open-ended questions — let users drive the conversation flow, and in turn, immerse yourself in understanding aspects they are organically inclined to talk about. As founders, we have a tendency to execute user research as a “filling the gaps” exercise. However, this is often not a useful approach for in-person interviews (might work for surveys). Rather, I recommend the “hear their story” approach, driven by genuine interest & curiosity. How do they approach things? What do they care about? Why they do what they do? What do they find easy…and hard? Your job is to collect enough of these stories, synthesize them and then do an aggregated gap analysis. Think of it like connecting the dots; even better if each dot is unique and different from the other one.
Don’t bias users — asking leading questions like “will you use this feature?” or “is this feature good?” will always lead to biased answers. Avoid putting things in the heads of users, so feature-centric questions are usually best avoided. Something I recently learned from my founding team is to always keep demo of the actual product towards the latter half of the meeting, once users have already answered your persona-based questions. This will ensure their answers in the first half remain unbiased.
The 5 “Whys” technique — I had read a while back about how Toyota pioneered this technique to get to the root of any problem. I have found this technique to be immensely valuable for user research. A mistake I made many times earlier was trying to go “wide” by asking one new question after another. User interviews give better return-on-effort if you go “deep” by asking multiple Whys on each question and let that guide the overall research flow. Each interview then becomes valuable to understand one aspect of the problem deeply, and by putting many such deep interviews together, hopefully, the overall picture starts to unravel.
Use tag-teams — I always felt handicapped in doing user research alone, as it’s impossible for one person to simultaneously listen, analyze, ask a “why”, process the flow and decide on a new question. I have found tag-teaming to be a better approach, where 2 people take turns to ask questions & engage with the user, while the other listens, absorbs and decides on what new set of questions are emerging. It also helps in making the process less monotonous.
Mentally plot each user on the “adoption curve” — post each interview, as you debrief with your tag-team partner to analyze responses, do 2 things — a) map the user to either an existing or emerging “persona” in your head and b) place the user (& persona) on a specific part of the adoption curve. This will help you in TAM & GTM planning. As a corollary, try and speak to people at “extremes” of this adoption curve, so you start putting boundary conditions and your product’s specific adoption curve starts emerging.

Source: The Four Steps to the Epiphany by Steve Blank

9. Talk to “target” users, as opposed to “convenient” users — user research can be an incredibly grueling process end-to-end, from identifying users, getting intros or conducting cold outreach, to coordinating logistics, commute times etc. This creates a tendency to speak with users that require less effort, even though they may not be relevant for your product. Keep your research process honest & aligned with company goals, to avoid capturing signals that are just plain wrong.

10. Embrace the “I just don’t have this problem” response — consciously talk to users who aren’t normally your target audience and aren’t even using comparable or competing products. Sometimes, they will give you ideas that can help you increase your TAM.

Before I sign-off, I strongly recommend these 2 YC talks on user research — How to run a user interview by Emmett Shear (Founder & CEO of Justin.tv and Twitch); and How to talk to users by Eric Migicovsky (YC Partner). Eric, in particular, highlights the following first-principles way of framing questions that applies to almost all contexts:

— What is the hardest thing about…?

— Tell me the last time you faced this hard challenge?

— Why do you think it’s so hard?

— What, if anything, have you tried to do to solve the problem?

— What don’t you love about the solutions you have tried?

Would love to hear any user research best practices that have worked for you over the years.

About us: Workomo is a “System of Intelligence” for professional relationships, targeted at global power professionals or “prosumers”. Our iOS app is currently in private beta. If you would like to give it a spin & provide early adopter feedback, do leave a comment on this post and we will get in touch with you directly.

Reflections from the last decade as a banker->VC->operator->founder

Starting the 2010s as a fresh b-school grad, the last decade has been grueling, challenging, uncomfortable, full of highs & lows but significantly net positive on professional & personal satisfaction. Post-facto, if I have to give it a theme for myself, it would be “taking risk & embracing change”.

I distinctly remember watching the legendary Steve Jobs Stanford commencement speech on YouTube in mid-2010, while I was going through a phase of disillusionment and feeling a strong disconnect with the way I perceived the world to be operating. As I saw him speak, for the first time, I got a life-approach framework that finally made sense to me — my job was to execute on my “voice” (instinct/ conviction/ belief/ interests/ enjoyment), create enough “dots” (businesses/ opportunities/ relationships/ products/ investments) and trust the universe that these dots will all connect in hindsight and reveal the overall picture much later in life.

Following this approach, I consciously put myself through a series of diverse experiences that positioned me to create enough of these dots. These spanned various sectors & functions (investment banking, venture capital, startup operator, big tech, angel investor & now, founder) as well as markets (US, India, China, SEA). Over the last decade, I lived/ spent considerable time in Hyderabad, Chicago, Mumbai, Bangalore, Hangzhou, and San Francisco. Of course, a lot of this was a result of spotting & reacting to opportunities that presented themselves in an organic flow of life, but there was always a strong underlying intent behind taking risks, stretching limits, keeping oneself uncomfortable & embracing change.

I have been fortunate that in this last decade, this approach has resulted in several professional dots — investing in the first Internet wave of India, VC portfolio companies going public/ getting acquired, being part of $2Bn+ of tech investments from angel to late-stage, taking businesses global out of the US and China, being part of products that have touched 100s of millions of users globally, supporting & working alongside so many world-class founders, investors & colleagues, working under the leadership of the likes of Jack Ma and Joe Tsai, traveling the world and operating across cultures to get things done. My hope is that all these dots will start connecting in the next decade, and a worth-while picture shall emerge at some point.

Given the last decade has been a “foundation” phase for me professionally, I thought it will be useful to pen down my experiential learnings, with the hope that it might benefit you. The caveat is that these are all very specific from my context. I hate generalizing and therefore, will request that you absorb these for what you feel they are worth to you. Also, rather than making an overall list, I will capture the top points for each functional phase of my career during the last decade, so you can pick & choose what is contextually relevant for you. I have also ordered the sections chronologically, from the earliest to most recent.

Top professional learnings for the decade of 2010s:

A. As a VC

Identifying & backing awesome founders as early as possible is still the main driver of returns.
High-quality & timely “deal access” is key to VC success, as is identifying the winners early and doubling down on them.
As a VC professional, if top-quality founders want to take your check and have you onboard irrespective of the firm brand behind you, that’s when you know you are doing a good job.
Trusting your conviction on the “fundamental value” of a company and holding on to it even during chasms, leads to potentially outsized returns.
It takes a long period of time (min. 5 to a max. of 10+ years) for value to accrue & then get realized.
There is space for many different types of funds & investing strategies. The key is to survive the bad times.
In good times & bad times, the flywheel of “raise-deploy-exit-raise” needs to continue. Capital has to keep churning.
Important to create a few but really deep co-investor relationships, to be able to partner & grow together.
Creating an authentic & consistent personal brand (digital + offline word-of-mouth) is a source of significant professional leverage as a VC.
The world is a big place and there are many sources of capital with varying belief systems. Sometimes, just one person needs to bite the bullet for a company to be king-made.
Finally, however smart you think you are, it’s still extraordinarily hard to pick. Important to still maintain a diversified portfolio.

B. As a startup operator

Despite how much capital or how large a team the company has, it’s still damn hard to build & regularly ship a decent working product that customers like.
Despite how much capital or how large a team the company has, it’s still damn hard to achieve product-market fit. You will be surprised by how many well-known and well-funded companies might, in reality, have no PMF.
More often than not, over-capitalization induces bad behavior across multiple levels in a company.
The best way to drive positivity in the culture is rallying people around business momentum (users, revenue, shipping product etc.). No momentum = disillusioned employees + too much time to have negative water-cooler conversations + internal political struggles = screwing-up culture bit-by-bit each day.
Over-hiring is one of the biggest crimes in a startup.
Irrespective of stage & functional skillset, a solid execution ninja will always merit a place on the team.
Rigorous ops & program management is an often under-valued skillset.
In every aspect of the startup — focus, focus, focus.

C. As a big tech operator

Actively chase roles that have the potential for max impact.
Align with most-empowered & internally-influential leaders. You are unlikely to make fast progress under a weak leader.
Focus as much on building internal relationships, as external ones.
Focus as much on building your internal personal brand, as the external one.
Stay away from any role that makes you a paper-pusher.
Identify & double-down on what uniquely sets you apart from the clutter of peers.
Figure out the “game” as soon as possible (it varies for each company and often, even amongst teams). Be ready to play the game, else be prepared to get sidelined. Ideal scenario — if you have the capability & backing, change the “game” itself.
Follow-up —be persistent, don’t take no for an answer, control your ego.
Over-prepare — every meeting is important & needs prep. Every “let’s grab a coffee”, “let’s have a quick call”, “let’s do a quick huddle” will influence your perception & trajectory within the company.
Learn how to position & sell…your vision, your story, your plan, your headcount reqs, your budget, and yourself.

D. As an angel

Have invested in about 18 companies over last 5 years via my investing platform Operators Studio. Here’s what I have learned:

Write checks only of amounts that you can immediately write-off mentally.
No one can pick at an angel stage. Create an extremely diversified portfolio.
Diversify across multiple vectors — sector, vintage, markets, stage.
If you are personally convinced of the sheer ability of a founder, just write a check.
Be reasonable about what operating value-add you can realistically provide. Don’t overpromise.
Assume that in 50% of cases, co-founders will split.
Post 24 months of investment, you will likely lose all touch with founders and receive minimal company updates/ info.
Ideally, have some sort of a broad investing framework. Assume it won’t work in most cases, but will likely improve your odds.
Follow your playbook, but don’t stop being opportunistic. If you are getting a chance to board a potential rocketship, frikkin’ take it.

E. As a founder (still very early days for me)

Still in nascent stages of building Workomo, but here are my recent learnings as a founder:

Doing “0-to-1” is extremely hard.
There is no “playbook”. You have to figure things out and make your own way.
All popular startup narratives & playbooks are post-facto, polished versions of reality. Discount them heavily.
Figuring out what people want is damn hard. Making & shipping it is even harder.
In the first 2–3 years of starting-up, your biggest enemy will be your own mental state (negativity, envy, anger, hopelessness, anxiety, frustration, disappointment). Manage it proactively on a daily basis.
Try to keep your self-worth disconnected from your startup’s progress & outcomes. As Taleb says, outcomes in this world are highly random anyway.
Keep multiple anchors of happiness — family, friends, travel, health, interests, community. Don’t over-index your life on just your startup. It’s a part of your life, not your whole life.

Hope you found these decade-long learnings helpful. Let me know what you think.

A decade of YC learnings on what not to do

Recently saw an amazing SaaStr talk by Michael Seibel (YC Partner) on a decade of learnings from YC (or to put it in another way, top mistakes startups make post demo day). These have been framed as learnings mainly for the post-seed stage (once a company has raised $1–2Mn), but in my view, are broadly applicable to any startup. As we close out 2019, I thought I will recap the top 10 highlights from this talk, just so all of us have this sober perspective heading into 2020.

Assuming that just because you have raised a seed round, you have achieved PMF — “Don’t let investors convince you that you are further along than you actually are.”
Hiring too quickly — per Michael, the standard startup model is, post a ~$1Mn seed round, grow to 8–10 people. Once this happens, the primary job of a CEO becomes “management” whereas it should be driving the company to PMF. Side notes (2a) Trying to take on too many problems or products at the same time. (2b) You want employees who are excited to drive the company to PMF, and not be under the impression that they are joining a company that already has PMF. (2c) An early stage, pre-PMF company should be minimizing # of non-essential employees. (2d) If an employee isn’t becoming an essential employee in first 3 months, it’s unlikely they will ever become one.
Not understanding their business model — “not just pursuing the business model strategy that interests you, but one that is commensurate with what your product needs.”
Not understanding what’s the right time to sell your product to founders/ tech startups as early customers — there are both pros and cons of this strategy. It really depends on what you are selling.
Assuming investors will be a large differentiator — “An A grade investor is someone who signs the paperwork, wires the money on time, and then doesn’t bother you.”
Not establishing best practices around hiring — “do simple things like setting up an intelligent interview process that candidates will enjoy going through, having an open communication process around equity & clearly talking about the candidate’s roles & responsibilities.”
Not establishing best practices around management — “eg. consistent 1:1 meetings between employees and managers, some type of all-hands meeting, getting employee buy-in on direction & strategy.”
Not clearly defining roles & responsibilities between founders — “avoid each startup decision going into a founder committee for resolution.”
Not having level 3 conversations within founding teams to resolve conflict — creating an environment of resolution, not attacking. Not bottling-up conflict issues.
Assuming Series A will be as easy to raise as an angel round — “important to get into Series A discussions with adequate leverage”. Side notes (10a) Don’t get impacted by TechCrunch articles on some Joe raising a $10Mn round for a business that will clearly fail. You don’t know the background circumstances behind that deal. (10b) People who had trouble raising money in their 20s, were finding it significantly easier to raise money in their 30s — this is because 1) investors are considerably more inclined to invest in 2nd-time founders, and 2) if you have been in the Bay Area for 10 years, you are most likely pitching people you already know.

Closing thought: as per Michael, the struggle with most companies is not that their thesis was off. It’s that either their timing was off OR they couldn’t iterate enough on the product to get to the solution that actually solves the problem statement. So, if you keep the team small, iterate quickly and ignore the hype, you can actually spend the time required to solve the problem. You might end up taking 1 yr or 3 yrs to get to PMF — stay lean till then and go to Series A once you have PMF, which gives you significant leverage.

PS: I loved this final quote from him — “In the startup journey, be prepared that both good times and bad times will feel bad.”

LinkedIn Search is broken… and another Workomo use case

Workomo gives you actionable context on the people who truly matter!

I love the days when I organically encounter a solid use-case for Workomo (“Relationships Intelligence for Power Professionals”). Today, I was having a Whatsapp discussion with a good friend, who is also an ex-founder (I had invested in her last startup). As part of another early stage startup now, she is incubating a new micro-lending product in India, and wanted to check with me whether I could intro her to someone working in the space.

Now, being an active startup ecosystem stakeholder & connector, I really want to help her. Given my Alibaba/ Ant Financial/ Paytm background, finding someone with “lending” experience/ expertise should be fairly easy for me. Except it’s not. Barring 1–2 people who are top-of-mind for me right now, it’s extremely hard for me to know who among the people I already know/ have shared history or context with, will be relevant for a potential warm intro. I tried to do a LinkedIn search with keywords like “lending” and “fintech”, but got crappy results wherein I don’t even know any of the people in the first page search results. PS: I don’t even know why I am being shown “company results for fintech”, which btw, are also beyond crappy.

Actual search results page from my LinkedIn profile

Compare this with how Workomo helped me solve for this pain point. Currently, the product is in early private beta stage, wherein for me personally, I am tracking about ~160 of my top-priority professional relationships. These are ex-colleagues, customers, batch-mates, investors etc. — essentially, people with whom I already have a shared history, context, modicum of trust and double opt-in.

I went into Workomo, clicked on the “Relationships” tab and ran a search with the keywords “fintech” and “lending” (at an MVP stage, these are few of the many manual tags I have been using to curate my relationships). I got 9 and 2 search results respectively, comprising founders, VCs and operators, all of whom I know well-enough to ping and check.

This is what Workomo is doing at such an early MVP stage. We are in process of building an AI-powered “context engine” that will ingest hundreds of signals and “auto-tag” your top-priority relationships. Imagine your own, personalized, contextual “LinkedIn Search”, working in the way it should, helping you search & curate a high-quality dataset comprising only of relationships that truly matter to you!

Intrigued? Sign-up to request a private beta invite today. We will be delighted to partner with you as an early adopter, in building Workomo out.

Public vs private markets…and WeWork

Fred Wilson recently wrote a great post on how WeWork’s botched IPO exhibits the stark differences between public and private markets.

As a founder, my major takeaway from the post was that one needs to be crystal clear on the type of company one is building. That should reflect in how you build, take it to market, price, capitalize, grow and eventually exit. North Star Metric reflecting all these being (gross & operating) “margins”.

Fred’s post also offers some critical insights for tech investors. It’s imperative that investors understand what is really the “type” of business being evaluated — differentiation, pricing power, cost of customer acquisition, scalability etc, all ultimately getting reflected in gross & operating margins. Smart investor behavior dictates peeling the onion significantly on all these issues.

Any business solving a real problem for the world, and if executed on well, has “value”. It isn’t about Uber, WeWork or Peloton being good or bad. They are solving a problem and that’s why customers use them. The key is to value them appropriately, based on fundamentals.

As Graham/Buffet say — “any company can be a good buy at the right price”. That’s why people invest in junk bonds, distressed assets etc. The challenge is in figuring out this “right price” in private markets, where information availability is significantly lower. At these stages, there is no perfect pricing mechanism, no feedback loops, no liquidity to correct mistakes.

Unlike public markets, private markets are driven by a bunch of individuals and not “Mr Market”. They are full of irrationalities, driven by emotional drivers like FOMO, personal passions, vision-over-fundamentals etc. Private market valuations aren’t driven by sound financial theory like DCF, Comparables etc. There just isn’t enough data!!

Imagine as a VC, a solid founder coming to you with a disruptive vision but not much execution. Your instinct (“heart”) says this could be big. How do you value this company? In absence of data, your estimate of value will have no choice but to be driven by 1) your “heart”: conviction and how badly you want it, 2) “buy-sell” dynamics: how much are others willing to pay relative to you and 3) comps from past experience. Though sub-optimal, this isn’t particularly bad as, in absence of data, you need some basis to value these companies, so they get funded and execution continues. That’s how game-changing companies will be built.

To summarize,

Valuing assets in public vs private markets is drastically different.
Due to lack of data, private markets value companies based on emotion+past experience+buy-sell dynamics.
Therefore, a valuation reset when IPOs happen should be expected more often than not.
The best private market investors get it right more often, despite playing at the mercy of emotional drivers and market externalities.
This public-private valuation contrast will always exist.
Sustainable, well-run businesses will withstand, adapt & survive.

“Why am I doing this?”

Have been reading Can’t Hurt Me, the amazing life story of David Goggins. He is a retired Navy SEAL, extreme endurance athlete, accomplished ultra-marathoner and now motivational speaker (thanks Anirudh Singh for recommending this awesome book to me). To quote his personal website, David is the “only member of the U.S. Armed Forces to complete SEAL training (including two Hell Weeks), the U.S. Army Ranger School (where he graduated as Enlisted Honor Man) and Air Force Tactical Air Controller training”.

In the book, David talks about coming from an extremely disadvantaged background and an environment full of poverty, domestic violence, an abusive father, racial discrimination and learning challenges. From a stage in his life where he was extremely overweight, doing menial jobs like cleaning vermin for restaurants in graveyard shifts and essentially, not knowing why he even existed, he rose to become a Navy SEAL and in process, cleared not one, but 2 Hell Weeks. A Hell Week is the single most-toughest military training of its kind in the world, where trainees don’t sleep for an entire week, do multiple land, sea and air based exercises, in an environment where trainers try and break them at every moment to get them to quit.

David just didn’t stop at becoming a SEAL, and went on to test his mental toughness while finishing multiple ultra-marathons, ultra-triathlons and other endurance feats.

How did David do this? And what do you and I have to learn from this?

For me, this book has come at a great time. Over last year or so, as I have been trying to build Workomo from scratch, this book has led me to view these initial building years as my own (of course, a much, much, simpler version of) SEAL training. And there is something to be learnt from David here!

It’s all in the mind. All of us have limitless potential. The only reason we don’t stretch our boundaries is because we let our minds create walls of comfort, risk and certainty around us. Essentially, optimizing for survival vs shooting for becoming the best version of ourselves. The mind is our greatest enemy…and friend. When David couldn’t control his mind, he was aimless, unhealthy & unfocused. When he made his mind his best friend, he rose from weighing more than 225 lbs and not being able to run continuously for more than 10 mins, to completing 2 Hell Weeks and becoming a Navy SEAL in….less than 12 months!! For all of us either already working on big challenges, or trying to get the motivation to take on big challenges, we have to actively work on our minds first.

But how do you become mentally tough? The answer lies in a simple question — “why am I doing this?”. David Goggins shares an interesting trend from his extreme pursuits — be it during the SEAL Hell Week or during a 100 mile, 24 hour, non-stop ultra-marathon, there comes a point where the pain is too much to handle, where your mind, your body, your soul, everything is on the verge of giving up. I call it the “chasm”. At this point, a person typically asks an internal question — “why am I doing this?”. For instance, during a SEAL training chasm, a trainee starts thinking of being at home, curled up in bed, next to their partner. Or while at the 3/4th mark in an ultra-marathon, thinks of rather being at a beach, having a beer and chilling out. At the chasm, people go two ways. The ones that don’t receive a strong, fundamental and cathartic internal answer to the “why” question, quit. The others — they get an answer to the “why” question straight from their soul. To them, alternatives aren’t an option, winning this will save them, give them meaning, give virtue to their existence, maybe even keep them sane.

Interestingly, for the 2nd bucket of people, getting this answer from their soul re-energizes them. They cross the chasm and enter what is called as the “Second Wind” — a burst of fresh energy, feeling less pain, getting a new wave of intent & motivation. David mentions his second winds during ultra-marathons, where he stopped feeling ankle fractures, blisters on his feet or dislocated toe-nails, and just kept running. This second wind usually carries people to the finish line.

Another by-product of crossing the chasm. People who don’t quit, then start accepting the pain, and even enjoying it. The answer to their “why” impacts their very existence, and they know that living through this pain is probably the only way they will get closer to finding the answers they are looking for. They might never find them, but are at least trying & getting closer.

As a founder, I face cycles of steep highs and deep lows. Some days start with a panicky feeling, others are full of “what should I do now?” questions. Am sure every founder would confirm experiencing the chasm on a periodic basis, especially in the first 36 months of trying to build a company. What I have learnt from David Goggins is observing my answer to the “why am I doing this?” question. Is it coming from a deep place inside me? Is it cathartic enough? Does it have a direct impact on the meaning of my very existence? In smart people, a current state of “desire” is always there. The more important question is the source of this desire. How deep & soulful is that source is what will ultimately determine whether you quit at the chasm, or enter your second wind.

Reading about the life of David Goggins has had a big impact on the way I perceive myself, my journey as well as other startup teams, both as a founder & investor. When I see pedigreed, Ivy League founders giving up quickly at the chasm, I now have additional perspective of the “why” question and perhaps, their answer to it wasn’t strong enough. The “return-on-pain” wasn’t justified in their life math!

Relatedly, I now try to probe the “why” question much more deeply for anyone am looking to collaborate with. For teams/ companies/ individuals that have not quit at the chasm and survived, I feel there will be tremendous latent value in them. As a founder, I am now consciously training my mind to survive the chasms, while as an investor, I will proactively look for teams/ companies/ individuals with these characteristics.

If as a startup team, you are in a good market and have a demonstrated ability to survive the chasms (which also means, the answer to your “why” is cathartic enough), your probability of success is significantly higher. Become the David Goggins of your field!

Do this to become a true contrarian in your career

Taken from Talk at Google presentation by Bruce Flatt, CEO of Brookfield Asset Management

“Contrarian” is one of the favorite words of Silicon Valley. Investors want to be contrarian in their picks, founders want to be contrarian in their ideas, employees want to be contrarian in the company they choose to join. In today’s age of near-perfect information flow, one has to be a contrarian to generate any sort of “Alpha” as a professional. This is in terms of both spotting opportunities, as well as timing your entry and exits. Of course, just being contrarian isn’t good enough. As Howard Marks (legendary value investor and Founder of Oaktree Capital) cheekily says, “you have to be a contrarian…and you have to be right!!”.

Over my career, I have made several moves that, at least at the time, I thought were fairly contrarian. Left a Partner track VC job to move to the Bay Area and start from scratch as a startup operator in a brand-new ecosystem. Had 2 startup offers — one from a pre-IPO enterprise software company and other from a maverick Series B startup trying to beat Google in search; joined the latter. Left a meaty role at Alibaba to start Workomo at a tricky mid-stage of my career. Invested in several companies at Operators Studio, where the businesses were (and are) considered “unsexy” from a VC perspective. Whether the above moves turn out to be right or wrong, I need a decade more to find out 🙂

Am a believer in what Robin Sharma says “if you do what everybody else is doing, you will get the results that everybody else is getting” (which is, being average). Through-out my career, I have consciously sought risk and tried to keep myself uncomfortable.

Since early 2018, when I started institutionalizing the Operators Studio investing thesis as well as ideating for my startup, I noticed something interesting. When I discussed some of my previous contrarian moves with friends & colleagues, while they perceived them as “hard to understand” or “highly risky”, I was able to naturally see those opportunities as “an obvious gap” or “the downside is really quite limited”. Clearly, these choices were taking me down a different path compared to my peers, and therefore, perhaps I was being contrarian in spotting & evaluating those opportunities. But I hadn’t articulated the mental model that I was intuitively using while making those decisions.

Over last year or so, I have tried to de-construct the above decision-making process, and then put it together again to arrive at what I call my “Zone of Real Contrarianism”. One caveat — this is my deconstruction of how I attempt to act in a contrarian way during big decisions. Not claiming this as a universal mental model but perhaps, you might derive some value out of it.

The diagram is pretty self-explanatory — to me, real contrarianism is at the intersection of what you have really high personal conviction on, and what the majority are unable to see or agree with. However, it’s important that your personal conviction is:

Authentic — needs to come from an authentic place inside you; represents your personality, values, ideals, and what you stand for (not copied or overly influenced/ inspired by others)
On-the-ground — original beliefs result from exhibiting skin-in-the-game in this world; being out there, understanding & playing the game (not deriving ideas & conclusions from being a desk-jockey or paper-pusher)
Execution-led — observing your environment as you execute; the unpredictable, unplanned & idiosyncratic nature of execution makes it a prime breeding ground for non-obvious ideas & gaps

Nassim Nicholas Taleb defines complex systems as where the behavior of individual elements doesn’t explain the behavior of the collective or the ensemble (eg. while people are individually sane, they are prone to exhibiting irrational mob behavior as a collective). My thesis is that due to this very nature, complex systems are a gold-mine for contrarian ideas, provided you operate with skin-in-the-game in it. As a professional, I seek them out proactively (starting companies, venture investing, white space opportunities in large companies, operating in radically-new geographies & markets) to at least have a shot at generating career alpha.

Would love to hear your feedback on this mental model, and your thoughts on how to be a true contrarian in one’s career (& life).

PS: am currently building Workomo, a smart & simple professional relationships management hub for the new-age professional. If you find it intriguing, do sign-up for free private beta access.

Who is Michael Ovitz?

Have been reading “Who is Michael Ovitz” over last few weeks. He was the founder of CAA and one of the most influential & powerful people in Hollywood for many decades, shaping & reviving umpteen celebrity careers.

The most eye-opening thing for me in the book has been how the careers of almost all Hollywood legends, from Dustin Hoffman & Paul Newman to Bill Murray & Martin Scorsese, have been riddled with the following:

Extreme highs & lows
Frequently getting typecast in a tough-to-break image
Being considered only as good as your last movie box office performance
Making critical choices just based on “who” they wanted to support/work with
Finally, being written-off many times

Remember seeing lot of these elements also play out in Andre Agassi’s outstanding autobiography “Open”, which btw is a must-read. Just goes to show the frequent mistake we all make in seeing lives of legends in a “post-facto” way, rather than understanding what went on behind the scenes. These post-facto perceptions get even more played up by the media, which loves binary narratives to generate eyeballs (someone is either a straight-line genius, or a complete loser who lacks any ability whatsoever).

Personally, I now consciously strive to peel the onion on such narratives (had written a post earlier on how Silicon Valley narratives fool us). Helps me maintain my sanity, as I build Workomo and Operators Studio :).

Why Operators Studio invested in the “Gartner for Deeptech” — BIS Research?

Am excited to share a new investment by Operators Studio — welcome BIS Research to the global OS portfolio. BIS provides a full knowledge services stack on deep tech, which includes off-the-shelf reports, custom research engagements & on-demand, subject-matter expert consultations, to global enterprises. While traditional research firms such as Gartner & Forrester widely cover popular technologies such as SaaS, Enterprise Mobility, Consumer Internet etc., “frontier” technologies like precision medicine, advanced materials, space tech etc. are largely uncovered & therefore, wide open from a business research & market intelligence perspective.

Over last few years, Operators Studio has backed cutting-edge product/ platform companies such as Dharma (crypto lending protocol), MyAlly (AI recruiting solution), TravelX (AI-powered travel retail platform), Tydy (employee onboarding automation) and Trailze (multi-modal navigation for micro-mobility). We have also backed online-offline infrastructure plays such as Yulu (urban micro-mobility) and 91Springboard (co-working), as well as venture ecosystem plays like LetsVenture (angel investing & startup fundraising platform).

Investing approach across all these investments has been consistent — identifying & backing:

Gritty founders that are…
Building or leveraging technology to…
Solve “real” operating problems for the world, and…
Build sustainable businesses over the long-term.

Doesn’t matter if the space is considered “unsexy” by financial investors or media. We get more excited by operating problems & warrior founders, rather than buzzwords, hype, trends or moonshots.

So, what got me excited about BIS Research? I have been spending time with Faisal Ahmad, Co-founder & CEO, over last year or so. Over multiple brainstorming discussions, it was clear to me that BIS was demonstrating all elements of the OS investing approach:

Open market segment— within knowledge services, deep tech is a relatively open segment and uncovered as yet by the likes of Gartner & Forrester. Knowledge capabilities required to serve this space are high, so significant entry barriers are there and also, customer retention tends to be solid given this isn’t a commoditized service. Having earlier invested in another startup (which shut down) that was solving a similar problem but using pop-up expert teams (which, in hindsight, wasn’t the right solution for the customer problem), my confidence on the thesis of “enterprises need actionable knowledge on deep technologies, in order to make smarter business decisions” is high. BIS has built what customers want, and there are enough proof points for that.
Attractive economics — having started my career at Evalueserve, and later on as a venture investor, observed companies such as Mu Sigma, Fractal & Inductis, I have been a believer in high-end knowledge services as an attractive business opportunity that doesn’t require huge amounts of external capital to scale and isn’t a “winner-takes-all” market. I know most investors tend to gravitate towards “product” plays but that’s where Operators Studio is different. We care more about solving real operating problems, whether through products and/ or services, and building sustainable businesses around them.
Gritty team— as a young, first time founder, Faisal & team have bootstrapped the company to >500 large enterprise customers, including >200 Fortune 2000 companies, spread across US, EU & Japan. BIS has built a lean, capital-efficient & profitable knowledge services engine, led by a team that is committed to building it for the long term.

At Operators Studio, we believe in the Howard Marks quote “look where others aren’t looking”.

And this approach has led us to BIS Research! The company is strongly poised to become the “Gartner for Deeptech”, offering a full knowledge stack that leverages a combination of technology & human expertise. Operators Studio is excited to support BIS in this journey.