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The 10:30 p.m. phone call
The green button test
Much of the value an investor offers is being available, being willing to tell the truth, and being there. Picture a phone lighting up at 10:30 at night with a founder's name on it. The test only works if you want to talk to the founder at any time, even an inconvenient one, because you are signing up for a very long journey.
Nearly all the credit for these companies, 99.99999% of it, goes to the founders and management teams. Having someone who wants to talk to you or help you is still useful, whatever percentage of the value it creates.
A signal in the writing
A second signal shows up in the writing. At a firm with a very written culture, memos on companies he isn't excited about are extremely hard to write, and portions of the memo come easily when he is.
Why do memos beat slides in meetings?
Amazon is the best-known case outside investing: Jeff Bezos replaced slide presentations in senior meetings with six-page narrative memos in 2004. Meetings begin with everyone reading silently. Prose forces writers to connect their points with reasons, which bullet points let them skip.
Why is writing hard without real conviction?
In 2002, Leonid Rozenblit and Frank Keil at Yale reported what they called the illusion of explanatory depth. People rate their understanding of how things work as high until asked to write out an explanation, after which their ratings fall. Writing makes missing links visible in a way that thinking does not.
How long does a venture investor stay involved?
Venture funds are commonly set up with a life of about ten years, often with extensions. A company backed at an early stage may take most of that period to reach a public offering or a sale. Funds make most of their investments in the first few years of that period.
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