The idea starts with a short video, in which I try to capture the wisdom of “thinking out of the box” in the very traditional field – angel investing.
I met John at a peculiarly cool ski-pitch event, the 2-day franca of entrepreneurs and investors coming together, dining, chatting, and skiing in the far part of New Jersey. Thanks to the courtesy of Peak Pitch.
In the brief conversation I had with John and checking on his career background, I am in awe, much inspired and favoured. I have a very unusual and insouciant life so far, so his seemingly freestyle investing has attracted my interests greatly and served as a torchlight of my own life. When he says he invests out of “intuition” or “gut feeling”, many of you may feel the wow effects. Most of the investors, no matter how much emotion-driven, are unlikely to admit that their career is an impulse-played gamble. Many would still try to analyse the macro market, the system of the founding team, the sales, etc. before they put their cash token in that milk box, praying their cows would become anointed and beat the crowd.
John says, no, no all those troubles.
He can say so only after he has gained success using his untraditional mindset, sitting on a pile of failures that the public tends to ignore. In our conversation, I tried to explore the bruises John had. He spread his hands, and said, “oh too many.”
Fortunately, after 22 years of beating the currents and being beaten by the currents, he is in a much better position now.
When we just met, we talked about how he began snowballing his rudimentary capital before getting into angel. He made his fortune in the security market in a few years, after first losing all of his money for so much that he couldn’t even pay his taxes. My eyes were brightened like the green dots of tiger cubs in the dark – oh I’ve been there too, a well-off girl trying my luck and losing all my money that I couldn’t even afford to eat a meal.
Another anecdote is that I started off wanting to portray a “cool” video, so I wanted him to pretend “bossy”. He said, well, for him, investing or having fortunes makes no difference between him and the mass. He is not a boss and does not want to be “bossy”. Casual style is the cue.
Indeed, casual style is the cue. I am not a big fan of the people and things that have been glossed as if success windfalls in one day – but impressions of John, being through things, having made it there, and chilling are pretty cool.
Q1: John you are known as the most prolific and wide ranging angel investor in New York. Please tell me about some companies you have invested in and what is the common denominator?
I have done over 90 early seed stage companies. Some of them are Xlibris – the first internet book publisher circa 1996; Centrak – a real time location based system for hospitals, it was an IOT company before IOT was known; Tunity – we unmute muted TVs in airports and sports bars by sending you the voice over the internet; Scentbird – a perfume subscription company where you can get just about any perfume for $15 a month and Trendalytics – company predicts fashion sales by ingesting a trillion data points every day. What is common is that all these companies had no revenues, no customers and were in industries I knew nothing about.
Q2: Well this goes against the grain of what investors usually want to see like revenues, business models, industry experts etc.
Yes I struggled with this. After about 10 years of investing I was no longer accepting any business plans or looking at any spreadsheets. I did understand that my investments were based on intuition. I then met David Dabscheck, a visiting scholar at Columbia, he introduced me to the concept of Foxes and Hedgehogs. Foxes are generalists who take appropriate risks like creating new markets or disrupting existing markets. Hedgehogs do one thing all day – they eat, they are subject matter experts and/or industry veterans who create better products, cheaper products, find niches in market, make the industry more efficient etc. The Foxes are early seed stage angels like me and the micro VCs who are chartered to be like angels. The Hedgehogs are most angels, all angel groups, most VCs.
Q3: This is interesting. Did this new paradigm answer any other questions?
Yes – it predicted that Fox entrepreneurs would get investment from Fox investors and Hedgehogs from Hedgehogs. To my surprise this was true for my portfolio. It also predicted that Fox founders would come from outside the industry. And for my five biggest exits whose total sale price exceeded $4 billion dollars, all the founders were from outside the industry with no prior experience in the industry.
Q4: WOW!! You have been doing this for over 20 years are there any new challenges you are pursuing?
Yes! I have been to 18 countries speaking at conferences, judging pitches, helping governments build startup ecosystems etc. I have done 16 international companies. The majority have failed but that is the price of tuition. What I am trying to address is the severe risk aversion of entrepreneurs and the severe lack of capital for Fox companies.
Q5: Well I am sure many entrepreneurs would like to talk to you. How should they contact you?
I only accept a one-page executive summaries sent to firstname.lastname@example.org.
Watch our video vlog #16: Investing Like a Fox
Remember, send a ONE-PAGER to email@example.com; if you have other enquires, please also send to his email directly. You can say that you see Zhu’s article!
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