A job to do
Why everyone, and venture capital investors in particular, should read ‘Competing against luck’
The COVID induced public market dip in March 2020 did not stop global venture capital (VC) investment surging well into H1 2022. And while a year over year (YOY) drop was noted in 2022, comparing data from various analyses shows 2021 was off the charts. And considering that year to be an anomaly makes sense, as the rise in venture investing had already seen records broken in 2018, compared to internet startup ‘bubblelicious’ times such as the dot com bubble (2001).
This, the retail investor fuelled public market tech bubble and the crypto boom all meant that 2021 was a year that followed a crazy year only to be crazier than the craziest year in past decades. All this cash entering economies both in the form of spending and investing (private equity included), besides various other macro-economic ingredients, mean we continue to see sustained high inflation, which will bite into purchasing power and earnings for the foreseeable future.
Without diving into macro-economics, monetary policy or analysing the large scale ‘market corrections’ that have taken place in 2022, one thing is certain; when it comes to venture capital there will be a lot less ‘Softbanks’ and a lot more ‘Buffets’ in 2023 and potentially 2024. That, and the ‘VC Tourists’ will move on to other pastures.
Inclusive investing
Boom times bring about a lot of hyped up investing and a lot less due diligence, that too is clear. Yet the question that has been asked throughout, though not enough, is whether this money is channelled in an equitable manner (spoiler alert, it is not). During the current ‘bust’, despite various voices continuing to raise the importance of diversity and inclusion in investing, more stringent due diligence is likely to lead to a less diverse palate of startups invested in.
Quoting statistics is tricky as percentages are varied, have questionable sample sizes, are highly market or industry specific and/or are simply hard to verify. One thing is certain, they are low. Besides all this there are multiple dimensions when it comes to considering equality, diversity and inclusion (EDI* or DEI, see footnote). That topic, as with macro-economics, I also leave to the experts, such as DIAL global (corporate context) or Diversity VC (venture capital context).
Let’s get to the point on why the book that ‘founded’ the Jobs to be Done theory is a must read for everyone, and in particular venture investors.
For one, it is the very foundation of product-market fit informed by longitudinal research. Yet more importantly;
‘you ain’t got a clue what I’ve been through’
It is unlikely you or I have a true holistic understanding of someone else’s life. As many of you will know, our brains, especially as we grow older, develop shortcuts and hence our perspectives become increasingly influenced by unconscious bias, no matter how hard we fight it.
Combine this with heightened information fatigue, digital bubbles emerging since the early 2000’s to replace the geographical and political silos of the past and the overall complexity in our modern, polarised yet highly connected world. It is safe to assume that we can’t truly define product-market fit without a thoroughly informed qualitative outlook on the world, that is, before we quantify an opportunity and its longer term potential.
This outlook is one that bends beyond the financial savvy, experience, optimistic yet informed thinking processes and growth mindset that any venture investor might have nailed down. Due diligence that focuses too much on quantitative trends fuelled by bias, knowledge (‘the more I learn the less I know’) and experiences of the ‘decision makers’ will always have flaws. Sure, decisions need making, yet a concrete example of how a VC firm can enrich their firm’s investment thesis and global outlook has been done in the form of recruiting highly diverse angel cohorts.
The job to do now
Any investment decision making group or singular person might not include or be that someone who actually needs to get a job done that a particular product might help some of us do (wow, that was a mouthful).
So before you do your job, pick up the book give it a read, and just as Goethe did in Jena, give yourself time to process all of that information by going out for a daily walk (not for the exercise, but for letting the mind run wild).
We can’t know it all, and we shouldn’t, yet consistently opening up our mind to other people’s jobs that need doing, while working with the pressure of making what can be highly ‘uninformed’ investment decisions, will surely help build a better future, together.
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*= there are various ways to refer to this topic in a business context; I’ve chosen the most widely referenced. Yet this can also read as DEI (Diversity, Equity and Inclusion) with some organisations adding ‘Belonging’.
Ah alright, one more tweet:
