Building a Business for the Long Term
Vibrant culture driven by shared values separates the best companies from the rest. Without clearly stated values, a “company” is just a temporary group of people, not a sustainable organization. Working together over the past 10 years, we’ve identified a set of four core values that define Loup Ventures:
- Intelligent Intensity
- Radical Honesty
- Intentional Generosity
- Contrarian Curiosity
It’s easy to work hard and hard to work smart, but optimal to work hard and smart. Hard work only matters if its focused on the right things. Otherwise it’s just busyness.
We make sure we’re working hard and smart on the right things in three ways:
- We track metrics important to our success. What gets measured improves. This is not groundbreaking. Even bad businesses track metrics.
- We track quality in those metrics. This is more unique and measures whether we’re working on the right things. An example is tracking followup meetings with companies as a measure of deal flow quality. In interest of our time and the time of potential investments, we don’t have follow up just for the sake of follow up. If you only track measurements of output, not quality, beware the true value of that output. The hardest part of tracking quality is finding the correct metrics beyond subjective measures that can easily fall to human misjudgment.
- We measure our metrics by value/time. This is the crux of working smart. What is our output, as measured by the quantity and quality metrics, in how much time? The higher this number, the smarter we’re working.
We strive to be 80% right in 20% of the time. No decision, estimate, or conclusion can ever be 100% right because, in the time it would take to be certain of something, the world would change and alter the correctness of the decision. Intelligent intensity combines focused hard work and speed with a rejection of commitment bias, which means we’re comfortable with updating our conclusions on the fly. As the saying goes, when the facts change, we change our minds.
Since we only have three partners, it’s easy for us to force “disagree and commit” as Jeff Bezos recommended in his 2016 Amazon Shareholder’s Letter; however, we do have, and welcome, open disagreement in conjunction with our simple majority rule.
Without disagreement, there is no discussion. Without discussion, there is no strategy. Without strategy, we cannot be successful as a venture firm. We’ve debated and disagreed on everything from our media strategy, to the audience for our content, to how much we should spend on travel and more. We embrace constructive disagreement as a healthy part of running a good company.
When we do disagree, we get over it fast. Holding grudges holds us back as partners. More importantly, when we disagree and the “winning” side ends up being wrong, we all own the decision and get over it fast. Owning mistakes, even when out of your control, leads to learning and improvement.
Another application of radical honesty is that we try to give insightful feedback to entrepreneurs. Like most venture firms, we only invest in 1-2% of potential investments we see, which means we say no a lot. We do our best to give companies that don’t fit our criteria some quick feedback as to why. We hope this feedback helps the companies work through potential issues we perceive, informed by the scores of deals we see every month. It’s hard to hear critical feedback about something you’re passionate about and dedicating your life to building, and that means it can be scary for us to give it. We hurt when investors tell us no, too. But radical honesty in feedback is important because we want to see as many AI, robotics, VR, and AR companies succeed as possible, whether we’re involved or not. Feedback makes us all better, no matter how hard it is to hear.
We believe in the power of generosity — the ability of one person to unexpectedly delight another. Our work is too often performed in a context where generosity isn’t practiced. And when this value is missing, companies, and the experiences they create for their customers, often fail to unexpectedly delight.
Generosity can be an incredibly powerful business tool. Internally, it generates a virtuous cycle of colleagues supporting each other, which yields better work through true collaboration. A simple example: our team plays a running game of who can pay for lunch before the others pull out their credit cards. But this extends to delegating tasks, getting work done, and even compensation. Externally, the value of generosity impacts how we interact with all our stakeholders, going above and beyond to offer more than is expected.
But this is not generosity for generosity’s sake. Intentional generosity is a tool that should be smartly wielded to the advantage of not just the recipient, but the provider as well. It’s mutually beneficial.
If you do things the way everyone else does, expect the same results. We want to achieve uncommon results, which means we need to think for ourselves and see things differently.
We strive to be contrarian when contrarianism is warranted, not just for the sake of being contrarian. When the herd is right, we’re fine to follow, but we always question while we follow. We always make sure to see the other side. When the herd is wrong, we diverge to form our own path, led by curiosity. We try to remain open, fascinated, and optimistic in everything we do.
Some of our views are commonplace, like the importance of AR and AI in the near term, but some of our views aren’t as well accepted. One is our belief in the potential of VR to be the biggest technological development ever, although it will take several decades. Another is our broader inclusion of AR to include devices beyond smartphones and headmounted hardware. We see hearables and even apparel as critical parts of AR. Yet another is our feeling that the majority of American jobs are at risk of automation over the next 30 years, which may be sooner than most.
Living Out Our Values
Language brings culture to life and integrates the values of an organization into the day-to-day. Over the last 10 years, a set of “rules” has emerged that brings the Loup Ventures culture to life. These rules are the vocabulary of our culture. They serve as guides for our behavior. They help make complex concepts easy to communicate. When we invoke a rule, we just get it. Even though these are mostly valuable internally, we thought we’d share:
- Rule #1: Walk through walls (Never give up)
- Rule #2: Drive for the gate (Never give up)
- Rule #3: Get over it (Take ownership of mistakes and move on quickly)
- Rule #4: Publish or perish (Constantly fuel the brand)
- Rule #5: Be transparent (Information is free and public)
- Rule #6: Work quickly (Be 80% right in 20% of the time spent)
- Rule #7: Revenue/time (Work smart)
- Rule #8: Skate to where the puck is going (Embrace the future)
Our shared values were, by definition, things that the three of us were doing before we started working with one another. The more time we spent together, the more clearly the values emerged, and our set of rules bring those values to life. Culture, values and language must be an organic outgrowth of the founders of any company, and they should act as guiding principles for how you run your business and who you hire. We want to build Loup Ventures for the long term and our values lay the groundwork for us to do so.
Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.