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How to Think Like a VC and Embrace Failure in Day-to-Day Life

2,421 views Wait, is this logic right? • Mar 28, 2023
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Slog Reference: Thinking like a VC

Description

Gain an insider's perspective on the thought processes and decision-making strategies of successful venture capitalists (VCs) in this expert-led video presentation. Through the use of real-world case studies, you will learn to adopt the key mindset principles of the most accomplished investors, allowing you to overcome setbacks and achieve sustained success in your daily life.

Hope you enjoyed FutureIQ by Navin Kabra and Shrikant Joshi. Do hit us up on Twitter:
@ngkabra http://twitter.com/ngkabra
@shrikant https://twitter.com/shrikant

Book and other recommendations from the video:
Ender's game: https://tapthe.link/EndersGameBook
The curious incident: https://tapthe.link/DogInTheNightTime
Paul graham essays: https://tapthe.link/PGEssays
Zero to One: https://tapthe.link/ZeroToOne
Yakov Perelman books:
32 Simple tricks for mental calculations: https://tapthe.link/Z5nPWFJvv
Physics for entertainment: https://tapthe.link/zepnD3XLq
Mathematics for fun: https://tapthe.link/cU849D3PQ

Listen to The FutureIQ Podcast on the podcast provider of your choice: https://tapthe.link/FutureIQRSS

Watch other episodes:
Are you Baloo Or Bagheera: https://youtu.be/Zj4IlAtCwok
System 1 vs System 2: https://youtu.be/DIVTMooO7o4
Goodhart's Law: https://youtu.be/OU5W-b_e8a4
Top scientific breakthroughs: https://youtu.be/m2ul_1KYXpA

Chapters:
00:00 Introduction
00:20 Bollywood economics
03:33 Psychology of venture capitalists
05:30 Real life examples
08:37 Finding jobs
10:33 Making friends
15:11 Shoot your shot
18:23 VC thinking in content

#futureiq #paretoprinciple

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Thinking like a VC

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Transcript

do you know what's common between failures in Bollywood movies failures in business and failures in your life so today I want to talk about how to think like a venture capitalist right thinking like a VC but before we get to that I want to start with a factoid and a story okay so when I was young my uncle had a theater right and that's why I knew a little about the movie business okay and I was shocked to find out that 8 out of 10 Bollywood movies lose most of their money okay wow the ninth one just barely breaks even okay so I was surprised I mean just one movie is making a decent profit and how is
this industry even function it took me a little while to realize that the 10th movie which makes a profit which makes so much profit as to make up for all the losses in the other eight and that's what is called keeping all of Bollywood afloat now you know why Salman keeps the entire Bollywood industry afloat this is actually that is true you know you think it's a joke but it's not no I'm it's part joke and a lot of Truth yeah and you know it was just a factoid I didn't connect it up until I got involved in startups in like my 30s right but okay let's go back to my childhood right uh well no uh as in you know okay let's the
other uh one I want to talk about is my mom okay when she wants to buy a book okay what she does is that she'll hear about the book somewhere then she will go and read up reviews on that book and all the reviews have to be good otherwise she will not consider the book true then she will ask me to find out how much the book costs then she will ask somebody else if they know about the book did they like the book and after all of this research only then she will buy a book which costs 130 rupees okay I kind of get that because uh reading a book is investing time and you might she
might want to I I guess I mean more than that um you know she grew up uh I mean a middle class India in like you know last century where money was always right right so you have to be Thrifty right and middle class India does not spend money without being sure that there is a good return on investment on that money right yeah that it should be worth it it has to be and that's exactly what my mom is doing with books right but I mean we call it middle class mentality but the idea is yeah I get I get what she's trying to do and I kind of understand where she's coming from
me on the other hand when I buy books I don't think that much right often I mean I look at a book I read the back cover it seems interesting enough I will buy it right and if I buy 10 books eight of them I don't read oh I see where you're going with this where I read and it doesn't work as well for me but the 10th book makes up for all the money I spent on the other eight thinking like a VC thinking like a VC so where does VC come into the picture exactly when uh I started uh getting interested in the startup industry that's when I found out that this is how
the VC industry Works similar to Bollywood right a venture capitalist invests in our portfolio of startups okay correct correct and their business is similar 8 out of 10 startups are going to off the startups they invest in are going to fail and not return any money one of them will have just sort of a middling success so it just barely Returns the money or gives like a little ten percent profit or something like that but the 10th startup becomes a unicorn succeeds so much that all the Investments that the VC made on all 10 startups is basically cleared out it's basically cleared out okay now the numbers might be different it won't be 8 out of 10 and
exactly right but the basic idea is there what I'm basically thinking is as long as the 10th startup makes enough for you to not worry about the eight that you've lost money on the ninth that you are not making any additional revenue on your profit on it it works the equation Works in in that sense right exactly so it has to be at least a 10x return for it to be any any useful right so um and what I started realizing connecting it back to these two stories is that you know I grew up uh in a middle class household so really like my mother and every time I spent money I needed to see an Roi but as I got more and more
involved in the startup industry I realized that there is this other style of thinking and that there are areas of my life where I should be or could be applying that thinking to get a much better value out of things right okay like what areas of your life can you give us an example um I'll give first simple examples and then we can go to more complex ones simplest example is that on social media right earlier I used to think before every post I used to think three times okay does this make sense should I put this or not right and a lot of people are like that I am like that because when I post something on social media it
has to be a good quality it has to have some value to the person reading it otherwise I feel like I'm wasting the other person's time correct what you are doing is doing the same thought process with the tweet that my mom does with books look I am happy being compared with naveen's Mom but this somehow sounds like an you know not right yeah so uh I mean we'll come to that I'm not saying that what my mom does is always wrong okay okay but we'll come to that later but the thing is that you know don't think so much see as in I see if I put out a tweet and then it does you know nobody likes it there is
nobody no responses to it I see it as a failure it feels like a failure because if nobody is engaging with it then you haven't really a added value and B correct you are alone in the world yes what we have to learn in thinking like a VC see a VC invest in 10 startups and sees eight failures so it's like he's put out 10 tweets and eight of them have got no engagement exactly a VC does not is not bothered by that as long as there is one outside success right that's how you should be doing your social media also you're going to see a lot of posts on my timeline from now on so I'm not going to
apologize for it he told me to think like a VC absolutely absolutely if you see some of the most successful people on social media have a very high volume yes I can think of several of them right yeah but uh and you know to you it might look like a whole bunch of them are not high quality yeah okay but the point is that just like in a VC if the VC new which one is going to give the return they would have just invested in that one right correct the whole point is that beforehand you don't know which one is going to succeed that is one and second is that each one that succeeds
should be capable of a 10x return or more right right so that's how you should think of your social media post right that if it clicks it has to click for it to make any sense I'll see social media is anywhere look most people view it as frivolous although I don't because for me I have gotten so much out of uh social media I mean lifelong friends uh business me connects yes right so uh but still yeah you know people might view uh social media's privileges so why don't we take um something else okay like what finding jobs right you can only have one job how does this how does applying for a job huh right
don't be like you know oh my God should I apply or not should I send them my resume or not right you just Triton okay or 50 right or 100 or 100 because you you're going to get lots of rejections the main thing I want you to get comfortable with is the failure a lot of people are so worried about failure that they don't shoot their shot okay right now because you you shoot your shot I am going to come back to that a little later or shoot your shot means very different things and I'm not sure if that applies in context but on the topic of jobs yeah uh one of the worries is not just that
uh every notice that there are going to be failures but that every failure is uh it it diminishes your confidence so which is why a lot of people don't yeah so if do you think that a VC uh who sees eight failed startups is it going to diminish their confidence it it yeah probably does right yeah but they train themselves to not okay if they can't if they can't deal with those eight failures they will not be a VC they'll not be a good VC same thing applies to you all right so I think uh what what you're explaining about this job scenario particularly applies in case of freshers who are looking for their first job yeah yeah
all right because people who are already in a job and looking to switch probably will not need to apply a hundred times so but pressures will probably you'll be surprised but see I mean you know this doesn't have to apply in each and every situation but take another example right like that uh you just moved to a new place right you have no friends now to make friends I don't have to move to a new place for that yeah so same thing applies right you are so afraid of I mean at least I am right of just you know connecting to someone who is just a acquaintance or even maybe a stranger and saying you know let's get together
for a coffee and talk about it and all of that right and you know that you know in 8 out of 10 it is not going to click and that time got wasted plus you feel like a failure this feels a bit ruthless to me see it is not ruthless you are exploring right let's go exploring well this one is sorry man I'm late okay but the other t-shirt that I sometimes wear does say let's go exploring so yeah we are going exploring but at the same time yeah if it doesn't work out it doesn't work out the other person also realizes it doesn't work out so no no skin off anybody's nose just remember see uh I
mean when you have invested in 10 startups right when one of the startup fails the maximum that you lose is just your investment okay same thing with like you know you invested in trying out a new friend or a relationship right the maximum you lose is that one the time for that one meeting right right whereas when the 10th one succeeds you have a friend for a lifetime yeah right so the point being that when it succeeds how much is the return the larger the return the more you should be willing to try uh things that are likely to fail the more investment and failures are Justified okay so the way I see it is we uh what you're
describing seems like a high risk High reward situation which I completely understand yeah and you're also saying that we need to stop thinking in the middle class mentality actually I'm not saying that okay because middle class I grew up middle class and I really respect that mentality okay it is a good mentality for most things okay when I am looking for genes to buy okay right it's like oh this Gene didn't work out for me so it I'm a failure and then the one that works it does not give me 10x return on anything right does yeah there's no 10x return there so there whatever you know middle class things you do that uh you know is this
important about money it is called don't call it middle class things you do it's just being being prudent with your money no no it's not just being proven with your money it's two more steps right you do research on the product you're buying you find out if it is going to uh be durable and it is going to be comfortable and yes you know you put in a lot of effort into that right yes so there it is okay right because a success doesn't isn't 10x most things in life don't have a 10x success then the ROI is just you know there it is okay to uh do all the due diligence and be afraid of failure and you know try to do
things in such a way that you don't fail right you don't want to be in a situation where you spent on genes and then you don't ever wear them after the first time good point so what I what I hear from this conversation so far is there are clear situations where you should be thinking like a VC yeah and there are clear situations where you you should be thinking or you should apply this um this prudent thinking this middle class mental I I hate calling it materialize mentality but it's the closest example I can uh it's the closest phrasing I can think of but how do you differentiate between the two when do you think like a VC and when do
you not think like a VC just see when it succeeds how much is it going to change your life so you need to estimate that beforehand yes yes and in most cases you would know upfront how much it is going to change your life if it succeeds right if it is just a minor thing then you want to be prudent okay if the change can be a major thing and the investment is small compared to the ROI then you want to think like a VC hold on this applies to everything in life sure including relationships including relationships including shooting your shot yes this is why I said be very careful because shooting your shot means
very different to the Next Generation to the Gen Z yes so you are saying they should be shooting their shot every time well as in not every time but far more than they normally do okay now I need you to explain this what do you mean by far more than they usually do because they do a lot yeah no not necessarily right everybody is afraid of failure oh okay everybody is afraid of failure everybody like thinks over and over and over again should I do this should I not do this should I do this right and overthinking right so being prudent right doing as much due diligence as my mom does for buying jeans everything that's not necessary in some
cases where the ROI is huge this video just went on a completely rear tangent with a mixer and a millennial telling a Zoomer to go shoot your shot and telling them scientific reasons why they should be shooting way more than they are like what what Universe are we in reason U.S has far more startups and far more successful startups and far more Founders than the rest of the world one of the reasons is because they are all there is like a first uh pressure to be dating in high school right and you have to shoot your shot you have to uh deal with failures and that same mentality is needed to do a successful startup I it's a very warped
explanation and a very warped idea but I think I get it so you know what Zoomers go shoot your shot shoot all the shots you want have fun so um let me take a simpler example okay that you know when you are buying books okay okay a book costs you in terms of time and money time and money the money is actually very small compared to any other uh you know if you take the number of hours you spend on a book uh versus how much money uh per hour right it is Trivial correct the time you spend is some level of investment but uh you know you can fail fast as in you start reading it didn't
work you give up right fail fast is a very interesting thought and I think we have a video on that yeah yeah fail fast is an important part but a book that clicks right can have such a huge impact right uh I have two examples one is that I have uh my copy of Ender's Game and of the Curious incident of the dog in the night time has been read by so many kids and so many adults that it is like the ROI is incredible right also the uh books by ya Perlman on maths and science that we bought when I was in sixth standard have been so important to me that I feel that my JV rank can be
attributed directly to that right oh so yeah the ROI for books yeah that makes sense that makes sense so um from what you've been saying so far it seems like people should be applying this VC thinking to this Channel and all the videos that we are making for this channel absolutely right okay we are doing that uh I mean at two levels right one is that I have done uh all kinds of things uh related to content like this right I have used Twitter I have used sub stack I have used posters I have used blog spot I have used you know that are at least 10 of them right uh posters doesn't exist and all of the others will
put links to them in the description well actually no a bunch of them failed eight of them failed right so the really active ones is primarily Twitter uh okay and so we put links to naveen's Twitter and my Twitter and not Twitter anymore but probably are Mastered on handles as well in uh in the description um so yeah and you know doing a YouTube uh channel was part of that I I am not at all a video person I am not comfortable with video but I'm giving it a shot I might fail this might go nowhere but you have to try right even within this channel what episodes uh we do what topics we put for episodes
same concept right yeah eight out of these 10 videos might not work but ninths and tenths or maybe one of the ninth and tenth if they work who knows yeah I mean you talk to Akash uh I mean he has a bunch of other video channels and this is exactly what he is seeing that you know one video can get way more uh views than everything else combined yeah one video can basically make the channel into what it is yeah and I agree with that so where can people go to read more about this concept of thinking like a VC so so funnily enough this is not like a well-known concept as such of at least
applying the thinking like a VC to regular life right I don't remember seeing any books on this topic no so I have not seen either this is just something I came up with but the good thing is that there are so many good VCS writing about how to think like a good VC name a few uh so Paul Graham okay a Peter Thiel these are two important examples because they write very well okay so uh Paul Graham essays right he has a website with all his essays right A lot of them are about the startup world he is a VC when you read them it is about startups right but given what we have discussed
you can take those ideas and apply them to your life and you will find that there's a lot of insights there that you can use similarly Peter thiel's book zero to one is about startups but don't have to use it in a startup concept you can use those ideas in your life hmm that's actually a very interesting way to look at things take ideas from the startup life and apply them to your life so whatever failures happened in startups take learnings from them and apply so that you don't face similar failures in your life and that is I think a very good place to say bye bye my name is srikanth he's Naveen this was future IQ goodbye