February 9, 2021
5 min read
Investing in "the next unicorns before they are unicorns" is the goal of every investor, but Victory Square Technologies CEO Shafin Diamond does it in a way that's excitingly inspiring, insightful, and down-to-earth. This was on full display in a Q&A with TKS students he hosted last night, in which Diamond's answers ranged from tactical advice about advisers and legal agreements, to high-level insights about successful founders and startups, to getting genuinely excited about students' early ventures. It's the TKS Q&A that best matched the energy of the program, and the one I've enjoyed the most so far. Here are three big takeaways I had.
"Tech has become very commoditized," Diamond says. Most VCs aren't that involved in the companies they invest in. In contrast, VST is much more involved, with a greater emphasis on ambitious visions and capable founders. "We usually write the first checks. We join ventures almost like co-founders," Diamond explains. "80-90% of our investments are based on the founder and team."
What does VST look for? One consideration is a founder's personal drive and commitment. "The biggest thing we look for is a founder's 'why'," Diamond says. "What's their personal connection, their emotional investment, in the pain point they're tackling?" He references Marc Andreesen1: "Being an entrepreneur is like chewing glass and staring into the abyss of death." A founder needs to have deep-rooted reasons driving them to keep going.
Another point is vision: look not for what's big right now, but what the next big thing is. VST's current portfolio companies work with AI, blockchain, VR/AR/MR, and other emerging technologies.
What's interesting about Diamond's consideration for vision is that specific ideas aren't necessarily what he values, but a founder's ability to come up with disruptive visions. "I'm betting on people who can see things differently, who can see the things that aren't working in our system," Diamond says. Different backgrounds often help such an ability be developed, Diamond says. People with different cultures, upbringings, and experiences are able to bring extra angles and approaches to problem solving and product development.
The people-centric approach is in line with VST's overall hands-on approach, too. Beyond straightforward investments, "we're looking to add people to our family," Diamond puts it.
He tells the story of an entrepreneur he met in Delhi, whose persistence inspired him to have VST sponsor the entrepeneur with a visa to come to Canada. Diamond wasn't a fan of the entrepreneur's first idea, and it failed. But he had faith in the entrepreneur's approach; their second and third startups succeeded, and today they're running a VC fund.
It was clear from Diamond's Q&A that this philosophy was more than concepts and anecdotes. When TKS student Ayaan Esmail mentions his senior home monitoring startup and an experience with his mother falling ill that drove him to explore preventative medicine, Diamond lights up, talking about a medical industry wide shift from post-diagnosis treatment to preventative care, an area where VST is doubling down. Diamond gets excited, too, about Anupra Chandran's work in fighting aging.
"You're excited about their ideas," Nadeem chimes in. "What considerations would you have if you were asked to invest in someone this young?"
"I would cut a check to both of them," Diamond replies. "These two will do something disruptive. It might not be what they're working on now, but they'll do something disruptive."
He brings up a quote credited to William Gibson, inventor of the cyberpunk genre2: "Founders who live in the future have the best chance of winning big."
The quote applies to those with huge, disruptive visions: one must be able and willing to imagine a future radically better than the current one to work towards it. This is what we train for in TKS by learning about emerging exponential technologies and their applications, or what activists accomplish by dismantling social norms and constructions within their circles of influence.
In the meantime, it's a valuable reminder for less ambitious projects, too: the vision of a world changed for the better with your product is a more powerful force than momentary business models or growth strategies. I remind myself that a world where learners and builders are able to manage and share their knowledge 10x more effectively is what drives me to keep building Updately.
TKS student Ruhani Walia runs a project called Ending Maternal Mortality, which recently got $20,000 in funding to develop a novel drug distribution model in Jigawa, Nigeria to tackle post-partum hemorrhage. Ruhani is passionate about the problem because of childbirth and fertility problems that run through her family.
The team has expanded from three, to a half dozen, to almost a dozen members since its beginnings last April. I was part of it for a month, leaving because even though I enjoyed the team and the work was impactful, I couldn't find a sense of personal drive to push through the ambiguous problem-solving.
Ruhani asks a great question: "How do I extend that 'why' aspect to the rest of the team?"
"It mostly comes down to the founders," Diamond answers. "Startups are the ultimate team sport -- the quality of the team falls in line with the quality of the founders. The Lakers are built around LeBron, what players can bring out his maximum performance, for example."
Diamond reveals an even deeper connection between his approach to entrepreneurship and sports when Anupra asks if there are any common mindsets or traits he looks for in founders.
"Most of our founders have had some sort of involvement with team sports," Diamond says, something I've personally never heard an investor or founder say before. "It shows you how to work with others, how to be mentally tough.
"Building a successful company is the ultimate team sport," he re-iterates. "You need someone who can lead, motivate, uplift others when people are down, guide people through challenging times."
Diamond follows this with an even more interesting comparison: "In any sort of sport or game, when you get down, there's a no-quit condition." When a business or pursuit starts struggling, we often start asking ourselves whether it's worth pursuing on, whether there was something we got wrong that means we should perhaps give up and move on. Down 4-20 in a game of ping pong, though, I don't question for a second whether or not to try and score 16 consecutive points and get back in the game, however improbable it is. The same no-quit mindset is what's required to take a startup, through all hardship and probability of failure, to success.
Diamond shares a last great insight when he's asked to give closing thoughts.
"These are interesting times," he says. "Necessity is the mother of innovation. So much innovation came out of the dot-com crash, and then the 08-09 financial crisis. There are a tremendous amount of opportunities now. Over the next decade we'll see disruption across every sector, geography, and market."
Diamond names robotics, AI, blockchain, gene sequencing, and energy storage as five converging trillion-dollar markets to keep our eyes on, and applauds TKS students for being curious and diving into such emerging technologies already.
"Ten years ago, Amazon, Facebook, and all these other companies were tiny upstarts," Diamond reminds us, and predicts: "The next decade will breed the next giants, leveraging new technology to reimagine every industry as we know it."
...though Andreesen references Chuck Parker and Sean Parker, and this specific quote is from Elon Musk ↩
...though this seems to come from a podcast hosted by Mike Maples that quotes William Gibson, not a direct quote. ↩
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