Fifty Four. / The Hard Launch Edition.
On VHS’s Launch, The Onion Model of Risk, and the Power of an Empathetic Apology.
Hey, everybody.
Man, it’s been a minute! Before anything, I hope you all had a relatively smooth and restful 2023, and as this wild year comes to a close, I’ve been reflecting on it all and it’s been…a roller coaster. There’s been some great ups mixed with really tough downs, and it finished with some pretty rough patches, leaving me crawling towards the finish line.
It is what it is, but as some of you know, I’m an eternal (and more often cautious these days) optimist, so I’m going to focus on the bright sides and major learnings. This year is closing up with a humanitarian crisis, and where people would rather scream into the void on social media instead of finding ways to help, I hope that this turmoil gives some sort of hope towards people finding, well, a way forward and taking real action.
We all still have a lot of growing up to do.
What are you currently working on?
So, after putting together a bunch of puzzle pieces, VHS Ventures is LIVE! You can find everything there (the thesis, portfolio, our new Board of Advisors, etc.), as I realized the website really just looks like a fancy Linktree. With the launch came a few events, from dinners to happy hours, and I can’t wait to do even more of them in 2024, along with traveling around a bunch again for work. Want to reach me for VHS-related items? You can at sumeet@vhs.vc.
On the Opportunity Music Project front, we’re incredibly close to closing out a major end of year donation fundraiser of $50k, where a major foundation will also match if we hit the number! Please check out more here, and it would mean the world to me if you’d consider donating, even if it’s $10.
What are you currently excited about?
Getting VHS Ventures off the ground has been a full circle moment for me. After working for the past decade helping to launch two other firms and help build this ecosystem up in the best way I can, it’s great to truly own the beginning and the end of cycles. There’s still a long, LONG road ahead for its success, but it definitely feels like I’ve climbed to the top of a mountain range, to get a nice view from that peak and see the next ones to climb up ahead.
What’s a story or article that you're currently thinking about?
I was cleaning up emails a few weeks ago and one referenced a piece in 2007 by Marc Andreessen that referenced “The Onion Model of Risk.” It’s a really, really good exercise that every investor should have already been doing and that I believe every founder should do moving forward:
Founder risk—does the startup have the right founding team? A common founding team might include a great technologist, plus someone who can run the company, at least to start. Is the technologist really all that? Is the business person capable of running the company? Is the business person missing from the team altogether? Is it a business person or business people with no technologist, and therefore virtually unfundable? (Ed. Note: For consumer brands, we replace these with Operator and Marketer.)
Market risk—is there a market for the product (using the term product and service interchangeably)? Will anyone want it? Will they pay for it? How much will they pay? How do we know?
Competition risk—are there too many other startups already doing this? Is this startup sufficiently differentiated from the other startups, and also differentiated from any large incumbents?
Timing risk—is it too early? Is it too late?
Financing risk—after we invest in this round, how many additional rounds of financing will be required for the company to become profitable, and what will the dollar total be? How certain are we about these estimates? How do we know?
Marketing risk—will this startup be able to cut through the noise? How much will marketing cost? Do the economics of customer acquisition—the cost to acquire a customer, and the revenue that customer will generate—work?
Distribution risk—does this startup need certain distribution partners to succeed? Will it be able to get them? How? (For example, this is a common problem with mobile startups that need deals with major mobile carriers to succeed.)
Technology risk—can the product be built? Does it involve rocket science—or an equivalent, like artificial intelligence or natural language processing? Are there fundamental breakthroughs that need to happen? If so, how certain are we that they will happen, or that this team will be able to make them?
Product risk—even assuming the product can in theory be built, can this team build it?
Hiring risk—what positions does the startup need to hire for in order to execute its plan? E.g. a startup planning to build a high-scale web service will need a VP of Operations—will the founding team be able to hire a good one?
Location risk—where is the startup located? Can it hire the right talent in that location? And will I as the VC need to drive more than 20 minutes in my Mercedes SLR McLaren to get there? (Ed.Note: lol.)
I don’t always agree with Marc, but this take is one that I can’t agree with more.
What’s a product you’re currently obsessed with?
The Therabody SmartGoggles. We got them for my sister-in-law and, quite frankly, I’ve been eyeing getting a pair for a while now…especially as I’ve been dealing with migraines this month.
Wild Card: What’s an item you can’t shake your mind off of?
Three items today:
I recently read a post on IG this month talking about the power of the apology. Unfortunately, in my opinion, it leaves out one very important part of that power: the need to give grace for other’s struggles.
In these emotion-heavy times, where we’ve more often than not pushed aside thoughtful discussion and ration for verbal rage and immovable stubbornness, we end up becoming the worst of ourselves and turning our traumas into contests. That NEVER should be the case, but we’ve all allowed this to happen, because in that rage, we forgot to stop and consider what the other person we’ve directed that rage at is going through.
When we relearn that, the power of the apology becomes, truly empathetic. We truly mean it instead of assuming you’re principally right and just saying it to move forward.I’ll try to create more editions in 2024, but this is also an open call for contributors! Feel free to check out the archive for examples, and I’ll proactively be reaching out to people to contribute, but don’t be shy to ask. If you’re interested, email me at sumeetshahwork@gmail.com or sumeet@vhs.vc with the subject line “Le Cinq - Contributor Opportunity.”
I mentioned earlier that this year ended on a not-so-great note, and I finished one of these past weeks feeling like I just went 12 rounds with a prime Mike Tyson, coming out completely battered and bruised physically, emotionally, and mentally. My self confidence was in tatters, and I just wanted to take the weekend to myself to try and find a way to reset.
That Saturday morning, I got a call from my older brother, Sachin, who, well, gave me the pep talk/motivational speech I needed to get back off the canvas. A mixture of compassion (imagining what I must have gone through) and strategy (working through how to handle things in the short-term and long-term), he coached me towards a way forward, offering to be an extra ear if necessary.
Sachin’s in the middle, if that wasn’t obvious. Now, my older brother has always been an incredible person throughout my life, but he’s really become even more special lately, from becoming a new dad to him and his wife Jessica checking in here and there on how both Tash and I are doing. That call has also become a framework for if and when I need to help people stuck in a rut, because we all just need a little mix of compassion and coaching every now and then.
Thank you, Sachin, for being an incredible human.
"Reputation is what people think of you. Character is what you are."
- Oxford, The King’s Man
~ C O L O P H O N ~
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