Thinking About Thinking

Does It Occupy Your Shower Time?

Posted in Philosophy, Venture Capital by larrycheng on June 4, 2009

For 3+ years now, I have had the continued pleasure of serving with two luminaries of the VC industry – Bob Kagle of Benchmark Capital and Jim Breyer of Accel Partners – on the Board of Directors of Prosper.  Bob is most noted for having served on the boards of eBay and Ariba among many others.  Jim is most noted for being on the boards of Facebook and Wal-Mart among many others.  Both are great guys who have been as kind as they have been insightful throughout the Prosper experience. 

A conversation yesterday reminded me of my first meeting with Bob Kagle just prior to our investment in Prosper.  It was January 2006, and Bob happened to be in Boston for a ZipCar board meeting.  We decided to have breakfast at the Nine Zero hotel which is right by Boston Common.  As we got to know each other over the breakfast, I took the opportunity to ask Bob about his key learnings over what has been and continues to be a very successful venture career.  What he said was rather simple.  He said that he has learned over time to only invest in what he’s truly passionate about.  In his own words, if a company does not occupy his “shower time” – i.e. he can’t stop thinking about it even if he’s in the shower – it’s not the company for him.  When a company consumes his thoughts 24×7, that’s when he knows. 

Showerhead

With each successive year in this business, I appreciate Bob’s lesson more and more.  Earlier in my career, I would sometimes unconsciously support investments in companies that I had only fallen “in like” with.  You know, it’s the good company, with the good market, with the good team, with good performance.  It’s the good opportunity.  I have learned that the odds of success aren’t great for those companies.  One of the key disciplines in this business is learning to wait until you see the great one, where you have fallen “in love” with a company.  The company that occupies your “shower time” and many other waking moments – those are the investments to make. 

The other thing I appreciate about Bob’s lesson is that the shower represents alone time (no snide remarks please).  In investments, there are two competing forces at work.  You have to want as much quality information, advice, diligence, and external wisdom on a prospective investment as you possibly can get.  You need to be relentless about turning over every source of information you can acquire and to listen to as many reputable voices as you can.  And, then at some point the switch has to flip.  You need to shut everyone else out, hear your own voice, and have complete conviction around that.  At the end of the day, if you make decisions based on how other people think, there’s no constancy.  Your true north can’t be the moving target of someone else’s point of view – it has to ultimately be informed by others but come from within yourself.  And, if it takes a hot shower to figure that out – that’s time well spent.