My Big 3 Regrets

NEW STARTUPS

Startups that you can invest in with as little as $100 right now:

• 1⃣ Getaway Space - If Delta sky lounges & EV-charging had a baby (LINK)

• 2⃣ GorillaTech - Have crypto payments rebranded as AI payments? (LINK)

• 3⃣ Unpluq - Making phones less addictive with a piece of plastic (LINK)

MY PORTFOLIO TOPS 40 INVESTMENTS

Hard to believe it, but I’ve ramped up my startup portfolio to 40 total investments.

I fully expect at least a quarter of the startups in my portfolio to wind up duds, and a couple already have. But on the flipside - 1 or 2 big winners could easily make my entire portfolio immensely profitable.

As an investor I don’t want to commit any unforced errors - investing in duds that are easily avoidable.

In my investing career I’ve had a few unforced errors, but all have been valuable teaching lessons. Here are a few of my biggest regrets/learnings in my six years of startup investing.

1. INVESTING TO ‘LEARN SOMETHING’

Early on, I came across a couple of startups that were positioned in industries I knew little to nothing about.

Being in my early twenties, I thought to myself: I’m going to be at this for a long time. I better dip my toes in and learn all I can about this industry I’m not familiar with.

It seemed like a relatively safe tradeoff of outcomes - I would either make money, or lose it BUT gain valuable knowledge on the inner-workings of that industry.

Founders are expected to share updates with their investors, and this firsthand knowledge was extremely important in my eyes.

In hindsight, this was a foolish approach that allowed me to invest in a crypto company with no business model or vision (looking at you, Praise Coin).

This approach was misguided for a couple reasons.

First I expected that I would be receiving regular business updates from each startup, which has turned out not to be the case. Only 7 of the startup in my portfolio provide regular updates (another 13 more give sporadic updates).

The sad reality is that a number of startups will ghost you. 

Not always a bad thing, there’s a few I haven’t heard from that I know are doing just fine - but not ideal if you’re looking for the inside scoop.

Secondly, startups that raise via crowdfunding know that they are sending investor updates to hundreds or even thousands of people.

At that number, it’s safe to assume that the information included in the updates will be public knowledge. To protect themselves from competition, many startups opt not to include the juiciest details, the most impactful insights they’re gleaning.

So if ‘learning’ is the main thesis behind an investment decision, that is an expensive & inefficient way to go about it.

From now on I’m sticking to investments that can do one thing - make me money.

2. NOT PROPERLY DOING DUE DILIGENCE

My very 1st investment is doing incredible, it’s an absolute home-run. I have a high degree of confidence that that one investment can return my entire portfolio when they decide to sell.

My 2nd investment, well…

It went to zero in less than 2 years.

It had seemed relatively safe at the time I invested - a Texas brewery was launching their brand of beer in cans, and offering a revenue share on every can of beer they sold until a multiple of the investment was paid back.

The brewery was already in operation and open to the public, the investment was specifically related to their new canning operation.

I thought that the canned beer could have commercial success, and at the least fall back on the sales conducted through the brewery itself. A safe plan right?

Well it turns out that I had not conducted the right level of due diligence.

Had I done so, I would have realized that this brewery in Texas was being heavily impacted by construction in the area.

Foot traffic was down dramatically, and sales had tanked.

What ended up happening, is this brewer used the funds from the crowdfunding campaign to pay off their debts on the brewery side of operations.

Potentially illegal and extremely shady move from the owner - they never even launched the canned beer and perhaps had no intentions of ever doing so.

If I had poked around to make sure the brewery was in a strong financial position, this error could have been completely avoidable.

3. INVESTING IN FOUNDERS THAT AREN’T INTENSE 

Have you ever met a really rich, self-made person?

Hardly ever do they come off as a totally normal guy or girl.

They might be a bit odd, slightly quirky - but that’s just a downstream effect of their true unifying characteristic.

Perusing over my portfolio of startups, one thing stands out to me with the winners - INTENSITY.

This is the magic sauce that unites many of the winners.

To build a successful startup, you need to go up against the grain day in and day out.

You’re basically eating sh*t sandwiches all day and waking up asking for more. 

Most people in this situation get hammered down, defeated - and can’t carry on.

But those select few that possess INTENSITY - laser focus and confidence to push through that are the ones often capable of success.

Intensity comes in many forms, I don’t want people to get confused and solely invest in people that talk loud.

A few examples of different types of intensity:

• Beehiiv: Founder Tyler Denk has one of the most aggressive product roadmaps in the game…and he delivers on it. Beehiiv somehow drops 3 crazy big features every week while their competitors can barely update the font they use in the logo. AND he does this while writing an essay in his newsletter every week.

• AtomBeam: Founder Charles Yeomans takes time to write multiple paragraph responses to numerous investor questions, answering all their questions with great detail and thought. After a long day of managing the day-to-day, this is an impressive performance of intensity & care that I do not see with other founders.

• Offline: Every single month, David Shaner records a 30 minute long video that walks investors through all aspects of the business. He goes a mile wide and a mile deep, even when the performance is faltering. He knows his stuff, and sticks to an aggressive content schedule like clockwork.

The intense founders won’t win 100% of the time, but they seldom let you down. 

Now, tell me how intensely you liked/disliked this article: