HBS Retrospective

After three long (stuffed startup in between the first and second) years I’ve finally graduated from HBS.  Looking back, it was an unquestionably amazing experience in all of the most unexpected ways.

I originally came to business school for three primary reasons

• Credibility – HBS is one of the best name-brand degrees out there.
• Financial Toolkit – I was working on a company with good exit potential and wanted to understand just how to value it (google failed me!)
• Professional Contacts – I wanted to meet likeminded people and tap into great new professional opportunities.

As it turns out the only thing I really got from the experience that I expected was the financial toolkit.  I learned a TON about how acquisitions are valued in theory (discounted cashflow) as well as reality (market comps and asset values).  However, as an HBS grad I found I had less credibility than when I was a Microsoftie and never ended up leveraging the relationships I developed at HBS for professional reasons (less than 2% of HBS goes into entrepreneurship).

What I did leave the school with were the following:

• Community – This was the most valuable and surprising to me.  The cohort I came to know and love in both years was truly amazing.  Not only were they the accomplished and ambitious young professionals I expected, but they were incredibly kind hearted and fun loving human beings.  I know that I’ll forever be a part of the the best social club in the world.
• Nothing to prove – Up to this point I’d always felt like I had to prove myself to society.  Be it by garnering recognition or financial rewards – there was always another rung to climb.  HBS does provide a cloak of accomplishment (you went there?  must be doing something right) universally recognized.  Now I can settle down and do what feels right to me – not society.
• No Fear – Getting the degree means you never have to worry about money again.  As far as I know nobody with an HBS MBA has struggled to find a job that pays enough to cover basic needs.  It’s a meal card for the rest of my life.  This frees up the rest of my time and risk appetite to do only what I love with no fear.  One of my favorite professors (Shikhar Ghosh) is fond of saying his students have around 2500 weeks to live.  Use them wisely.   

In short, I came to HBS to improve my career and they ended up setting the foundation for the rest of my life.  The last three years will easily be the most transformational in my life, and yet I couldn’t be more excited about the decades to (hopefully) come!

Priority > Urgency

Time is the most precious of commodities.  However, the vast majority of people I know are unable to effectively manage their time and allocate this limited resource to the most important tasks.

The biggest challenge here is confusing urgency with priority.  Urgent issues are one that need to be dealt with right now!  If you don’t act now, the opportunity disappears.  The pressure of an exploding opportunity often spurs us to action.  At HBS we fondly refer to this as FOMO (Fear of Missing Out).  On the other hand, items with priority are those which are truly important to you.  The stuff that matters.

As responsibilities and opportunities grow (and they inevitably will over time) the number of urgent tasks will quickly grow in volume to consume your enter life.  Without careful thought this can lead any but the most deliberate to spend their whole life blocking and tackling the urgent minutia – and completely missing what truly matters to them.

So how is one to avoid this trivial existence?  Triage.  Just like in any good intake ward – there are firm rules for who to treat first – the same should exist for your life.  Take a day and make a list of the most important goals in your life (build a great company, find a spouse, grow my relationships with close friend/family).  Then, be ruthless.

Every opportunity should be compared against that list of what matters to you.  If it doesn’t fit into one of your life goals.  Just say no! Nothing is  more liberating psychologically and nothing will make you more effective at the things that matter.  High volume mediocrity is still mediocrity.

If you’re a young employee – this is especially important to keep in mind.  Everyone will try and dump thankless work on you.  Don’t take it.  If you don’t gain anything from doing minutia (and if you’re at a big company you won’t).  Just say no. Don’t do things just because you are asked to.  Take  a strategic view.  If it doesn’t help you in the long run Go find better things to do with your time that will make for a great resume bullet point.

As a parting thought, I’ll share one of the most insightful questions of my first year – posed by Shikhar Ghosh. If you’re around 30 years old right now you have 50 years left.  Another way to look at this is 50 years x 50 weeks – you have 2500 weeks to live. 

What will you do?

Whaling Venture Capital

In the new semester I’m enrolled in a course on the history of Venture Capital with Felda Hardymon and Tom Nicholas.  The fist case traced the history of the industry back to the swashbuckling day of hunting whales for oil (sorry PETA).

At that time there were three parties involved (aside from the whales):

• Investors – wealthy individuals (doctors, lawyers, merchants) looking for investments more exciting than banks and mortgages can offer.
• Captains (entrepreneurs) – they ran the ships and were the operational engine behind the venture.
• Agents (VC) – the folks that coordinated captains and capital to get expeditions funded and underway.

Sound familiar?  This system, pioneered with the advent of new money (folks who can finance ventures that aren’t kings) required a new kind of coordinator who could aggregate capital and link it to strong capital.  Enter the Agent (aka VC). 

This model is a very high fidelity echo of the world we work in today.  Everything from the risk distribution (your ship sinks/you catch a whale) to the distribution of returns (the few most successful enterprises reaped the vast majority of rewards).

What’s fascinating is how economically impactful this model was.  Of the 900 whaling ships at the peak of this industry (which could bring in almost $100M 700 were American.  Why?  America was the country that truly embraced the Venture Capital Model.  To this day, Venture Capital is by far the most effective way to translate capital into job growth.

The hall marks of the VC asset class are:

Persistence.  This means a successful firm will likely continue to be successful.  Making investments in companies is very difficult to externally verify.  A huge amount of trust and instinct goes into the decision making process on all sides.  Subsequently, personal relationships are at the core of this industry.  As you are successful and grow – so do your relationships.  This also exists in Private Equity – making VC/PE the most persistent investment classes (by far!).

Cyclicality.  Whaling, like startups, follows a boom and bust cycles.  Either you catch the great white whale or you don’t.  Boom or Bust.  The returns on these investments (adjusted for risk) far outweigh those of any other class.  However, investors need to be able to whether the storms (aka losing all your money).

If nothing else we can all feel a little more rugged and seaworthy – as we are the whaling captains of modern day.  Just avoid being Ahab!