Since I can’t take chips off the table, the simplest first step for lowering stress was to stop investing in illiquid assets.
I sold large portions of liquid stocks—mostly early startup investments in China (e.g., Alibaba)—to help get me to “sleep at night” levels, even if they were lower than historical highs of the last 6 to 12 months. Beware of anchoring to former high prices (e.g., “I’ll sell when it gets back to X price per share . . .”). I only have 1 to 2 stock holdings remaining.
Some of you might suggest hedging startup investments with short positions, and I’d love to, but it’s not my forte, and it’s easy to get yourself into legal issues if done haphazardly.
The best approximation to a “hedge” that I’ve seen in the typically bull-market-dependent VC world is investing in businesses like Uber, which A) have a lot of international exposure (like U.S. blue chips), and B) could be considered macroeconomically counter-cyclical. For instance, it’s conceivable a stock market correction or crash could simultaneously lead fewer people to buy cars and/or more people to sign up as Uber drivers to supplement or replace their jobs. Ditto with Airbnb and others that have more variable than fixed costs compared to incumbents (e.g., Hilton).
What’s the Rush? Can You “Retire” and Come Back?
I’m in startups for the long game. In some capacity, I plan to be doing this 20 years from now.
Here’s the reality: If you’re spending your own money, or otherwise not banking on management fees, you can wait for the perfect pitches, even if it takes years. It might not be the “best” approach, but it’s more than enough. To get rich beyond your wildest dreams, it isn’t remotely necessary to bet on a Facebook or Airbnb every year. If you get a decent bet on ONE of those non-illusory, real-business unicorns every 10 years, or if you get 2 to 3 investments that turn $25K into $2.5 million, you can retire and have an outrageously wonderful quality of life. Many would argue that you need to invest in 50 to 100 startups to find that one lottery ticket. I think it’s possible to narrow those odds quite a bit (Peter Thiel on page 232 would likely agree), and a lot of it is predicated on maintaining stringent criteria; ensuring you have an informational, analytical, or behavioral advantage; and TIMING.
Most of my best investments were made during the “Dot-com Depression” of 2008–2009 (e.g., Uber, Shopify, Twitter, etc.), when only the hardcore remained standing on a battlefield littered with startup bodies. In lean times, when startups no longer grace magazine covers, founders are those who cannot help but build companies. LinkedIn in 2002 is another example.
Now, of course, great companies are still built during “frothy” periods. The froth just makes my job and detective work 10 times harder, and the margin of safety becomes much narrower.
Think of the “margin of safety” as wiggle room.
Warren Buffett is one of the most successful investors of the 20th century and a self-described “value investor.” He aims to buy stocks at a discount (below intrinsic value), so that even with a worst-case scenario, he can do well. This discount is referred to as the “margin of safety,” and it’s the bedrock principle of some of the brightest minds in the investing world (e.g., Seth Klarman). It doesn’t guarantee a good investment, but it allows room for error. Back to the startup world . . .
I want each of my investments, if successful, to have the ability to return my “entire fund,” which is how much capital I’ve earmarked for startups over two years, for instance. This usually means potential for a minimum 10x return. That 10x minimum is an important part of my recipe that allows margin for screwups.
For the fund-justifying ROI to have a snowball’s chance in hell of happening, I must A) know basic algebra to ensure my investment amounts (check sizes) permit it, and B) avoid companies that seem overpriced, where the 10x price is something the world has never seen before.
If you throw low-due-diligence Hail Marys everywhere and justify it with “they could be the next Uber!”, you will almost certainly be killed by 1,000 slow-bleeding $25K paper cuts. Despite current euphoria, applying something like Pascal’s wager to startups is a great way to go broke.
Good Startup Investors Who Suggest Being “Promiscuous” Are Still Methodical
It’s popular in startup land to talk about “moonshots,” the impossibly ambitious startups that will either change the world or incinerate themselves into stardust.
I’m a fan of funding ballsy founders (which includes women, such as Tracy DiNunzio, page 313), and I want many moonshots to be funded, but here’s the reality of my portfolio: As I’ve signed the investment docs for every big success I’ve had, I’ve always thought, “I will never lose money on this deal.”
The “this will be a home run or nothing” deals usually end up at nothing. I’m not saying such deals can’t work, but I try not to specialize in them.
These days, the real unicorns aren’t the media darlings with billion-dollar valuations. Those have become terrifyingly passé. The unicorns are the high-growth startups with a reasonable margin of safety.
Fortunately, I’m not in a rush, and I can wait for the tide to shift.
If you simply wait for blood in the streets, for when true believers are the only ones left, you can ensure that intrinsically driven founders are at least half of your meetings.
It might be morbid, but it’s practical. If you’re investing for life, don’t rush.Timing often overrides technique.
Are You Having a Breakdown or a Breakthrough? A Short How-To Guide
* * *
“Make your peace with the fact that saying ‘no’ often requires trading popularity for respect.”
—Greg McKeown, Essentialism
If you’re suffering from a feeling of overwhelm, it might be useful to ask yourself two questions:
In the midst of overwhelm, is life not showing me exactly what I should subtract?
Am I having a breakdown or a breakthrough?
As Marcus Aurelius and Ryan Holiday (page 334) would say, “The obstacle is the way.” This doesn’t mean seeing problems, accepting them, and leaving them to fester. Nor does it mean rationalizing problems into good things. To me, it means using pain to find clarity. If pain is examined and not ignored, it can show you what to excise from your life.
For me, step one is always the same: Write down the 20% of activities and people causing 80% or more of your negative emotions.
My step two is doing a “fear-setting” exercise on paper (page 463), in which I ask and answer, “What is really the worst that could happen if I stopped doing what I’m considering? And so what? How could I undo any damage?”
Allow me to share a real-world example: a transcript of the journal page that convinced me to write this and kickstart an extended startup vacation.
The questions in my mind were: “What is really the worst that could happen if I stopped angel investing for a minimum of 6 to 12 months? Do those worst-case scenarios really matter? How could I undo any potential damage? Could I do a 2-week test?”
As you’ll notice, I made lists of the guaranteed upsides versus speculative downsides. If we define “risk” as I like to—the likelihood of an irreversible negative outcome—we can see how stupid (and unnecessarily painful) all my fretting and procrastination was. All I needed to do was put it on paper.
* * *
Hit snooze 4–5 times, so up at ~10:15 instead of 8:33. The anxiety is mostly related to email and startups: new pitches, new intros, etc.
Do a 2-week test where “no” to ALL cold intros and pitches?
Why am I hesitant? For saying “no” to all:
PROS:
—100% guaranteed anxiety reduction
—Feeling of freedom
—Less indecision, less deliberation, far more bandwidth for CREATING, for READING, for PHYSICAL [TRAINING], for EXPERIMENTS
CONS (i.e., why not?):
—Might find the next Uber (<10% chance)
—Who cares? Wouldn’t materialize for 7–9 years minimum. If Uber pops (IPO), it won’t matter.
—Not get more deals. But who cares?
*Dinner with 5 friends fixes it.
*One blog post [for sourcing from readers] fixes it.
*NONE of my best deals (Shyp, Shopify, Uber, Twitter, Facebook, Alibaba, etc.) came from cold intros from acquaintances.
If try 2 weeks, how to ensure successful:
—I don’t even see [new] startup emails.
—No con-calls. [Cite] “con-call vacation” → push to email or EOD [end-of-day review with assistant].
—Offer [additional] “office hours” on Fridays [for existing portfolio]?
* * *
I ultimately realized: If I set up policies to avoid new startups for 2 weeks, the systems will persist. I might as well make it semi-permanent and take a real “startup vacation.”
Now it’s your turn: What do you need a vacation from?
My Challenge to You: Write Down the “What Ifs”
* * *
“I am an old man and I have known a great many troubles, but most of them never happened.”
—Mark Twain
“He who suffers before it is necessary suffers more than is necessary.”
—Seneca
Tonight or tomorrow morning, think of a decision you’ve been putting off, and challenge the fuzzy “what ifs” holding you hostage.
If not now, when? If left at the status quo, what will your life and stress look like in 6 months? In 1 year? In 3 years? Who around you will also suffer?
I hope you find the strength to say “no” when it matters most. I’m striving for the same, and only time will tell if I pull it off. So far, it’s turned out better than I ever could have imagined.
What will I spend my time on next? More crazy experiments and creative projects, of course. Things are going to get nuts.
But more important—how could you use a new lease on life?
To surf every day, like the attorney in The 4-Hour Workweek who quit the rat race to build his own business paradise in Brazil? To travel with your family around the world for more than 1,000 days? To learn languages or work remotely in more than 20 countries while building a massive business? It’s all possible. I know because those are all case studies from my readers. It can all be done. The options are practically limitless.
So start by writing them down. Dig into your fears, and you’ll often find that the mental monsters are harmless scarecrows. Sometimes, it just takes a piece of paper and a few questions to create a breakthrough.
What do you have to lose? Chances are, next to nothing.
3
Wise
“The struggle ends when the gratitude begins.”
—Neale Donald Walsch
“There is no way to happiness—happiness is the way.”
— Thich Nhat Hanh
“What you seek is seeking you.”
—Rumi
“[At the end of life,] you can let a lot of the rules that govern our daily lives fly out the window. Because you realize that we’re walking around in systems in society, and much of what consumes most of our days is not some natural order. We’re all navigating some superstructure that we humans created.”
* * *
BJ Miller
BJ Miller (TW: @zenhospice, zenhospice.org) is a palliative care physician at the University of California at San Francisco and an advisor to the Zen Hospice Project in San Francisco. He thinks deeply about how to create a dignified, graceful end of life for his patients.
He is an expert in death. Through that, he’s learned how we can dramatically improve our own lives, often with very small changes. He has guided or been involved with ~1,000 deaths, and he’s spotted patterns we can all learn from. BJ is also a triple amputee due to an electrocution accident in college. His 2015 TED talk, “What Really Matters at the End of Life,” was among the top 15 most viewed TED talks of 2015.
“Don’t believe everything that you think.”
This was BJ’s answer to “what would you put on a billboard?” He wasn’t sure of the source but attributed it to a bumper sticker. By the end of this profile, you’ll see how BJ loves this type of absurdity.
Stargazing as Therapy
“When you are struggling with just about anything, look up. Just ponder the night sky for a minute and realize that we’re all on the same planet at the same time. As far as we can tell, we’re the only planet with life like ours on it anywhere nearby. Then you start looking at the stars, and you realize that the light hitting your eye is ancient, [some of the] stars that you’re seeing, they no longer exist by the time that the light gets to you. Just mulling the bare-naked facts of the cosmos is enough to thrill me, awe me, freak me out, and kind of put all my neurotic anxieties in their proper place. A lot of people—when you’re standing at the edge of your horizon, at death’s door, you can be much more in tune with the cosmos.”
TF: Ed Cooke (page 517) does something surprisingly similar, and I’ve started doing “star therapy” every night that I can. The effects are disproportionate to the effort.
Delighting in Perishability
The following is BJ’s answer to “What $100 or less purchase has most positively impacted your life in recent memory?”
“I would probably point to a beautiful pinot noir from Joseph Swan up in Sonoma County. It’s like the artwork of Andy Goldsworthy, or anyone who delights in anything ephemeral. The charm in a bottle of wine, the craft, all the work that goes into it . . . actually delighting in the fact that it’s perishable and goes away I find really helpful. I’ve gotten a lot of miles out of a beautiful bottle of wine, not just for the taste and the buzz, but the symbolism of delighting in something that goes away.”
Here’s a Good Reason to Question Your “I Can’ts”
Be patient with this and read the whole thing. It’s worth it. Scuderia motorcycle dealership in San Francisco also aided BJ with his seemingly outrageous mission.
TIM: “I hate to focus on something perhaps superficial, but you just said ‘riding your motorcycle’ in passing. Now, I apologize if this sounds like a weird question, but you have three limbs that have been damaged [effectively amputated]. How do you ride a motorcycle?”
BJ: “You know, this was sort of a long dream that recently came true.”
TIM: “Congratulations. I mean, it’s fantastic. I’m just so curious about the logistics.”
BJ: “Thank you. Well, it’s interesting you ask. The man who helped make this dream come true, Randy, ended up being my patient and our resident at Zen Hospice Project not too long after he converted my motorcycle. So there’s a lot to this story, my friend.
“I love two wheels. I love the gyroscopic lifestyle. I love the feeling of it, and I’ve always loved riding bicycles. I’d always wanted to get on a motorcycle. But I kept going to shops, people would look at me, and I could never find a mechanic who was willing to take it on and try to help make it happen.
“A fellow named Mert Lawwill, who’s an old motorcycle racing champion—sort of legendary in that world—happens to live around here [Northern California] in Tiburon. I don’t know what inspired Mert, but he’s a machinist himself and a handy fella, and in his retirement, he got into the business of building a prosthetic component that lends itself very well to mounting an arm onto a bicycle or a motorcycle.
“So, the first piece of this puzzle was discovering Mert’s invention and getting a hold of it myself, which allowed me to get my prosthetic arm attached to a handlebar in a very functional way.”
TIM: “How are the hand controls modified?”
BJ: “Randy figured out . . . Aprilia made a model, the Mana, that is clutchless. This is essentially an automatic transmission. So do away with the clutc
h and gear changes. That’s a huge piece of the puzzle out of the way. Then Randy figured out a way to splice the brakes, front and rear in a certain ratio, into a single lever. So I’m doing nothing with my prosthetic feet except holding onto the bike. I’m doing nothing with my prosthetic arm except for holding onto the bike. All the action is in my right hand. Brakes are one lever, and then Randy built this box and moved all the controls—the turn signals, horn, and all that stuff—over to the right side of the bike at a good distance for my thumb to reach them. I have throttle, brake lever, and then the turn signal box all going with one hand.”
TIM: “That’s so awesome.”
BJ: “That’s it, you know. Away you go!”
TIM: “I just have to pause here for a second and just ask everyone listening: What bullshit excuses do you have for not going after whatever it is that you want? Please, write in, tell us on social media why these are real excuses with #bullshit afterwards. Oh my God, man, that’s such a great story.”
The Miracle of a Snowball
BJ described waking up in a burn unit after being electrocuted in college and losing three limbs:
“A burn unit is a particular place. A gruesome place. The pain that the patients are going through is gut-wrenching. Working in a burn unit is very difficult. People usually don’t last in a burn unit very long as a clinician. The thing that often kills burn victims after they’ve survived the initial trauma is infection, so burn units are incredibly sterile environments. Everyone’s gowned up, masked, and gloved. For the first several weeks, I could only have one person in my room at a time.
Tools of Titans Page 41
