By Eriko Suzuki, Partner at Fresco Capital

I am a portfolio worker and a Venture Capitalist.

I am both Partner at Fresco Capital, a mission focused global early stage startup investor and Director at Mistletoe’s Investment Group, a social impact investor founded by Taizo Son, the younger brother of Softbank CEO Masayoshi Son.

As we all know, new ways of work have been evolving. The financial crisis which occurred exactly 10 years ago, propelled employers to look for lower cost labor and employees to think more flexibly, and their needs were matched and enabled through the development of digital platforms. Today, we not only see freelancers who work from project to project, but also parallel workers or portfolio workers who take on multiple tasks and roles simultaneously. Such ways of work are now more proactively embraced by millennials and generation z cohorts who value work flexibility.

Yet, even in the US and Silicon Valley, I have not come across a fellow portfolio worker or “contributor” type Venture Capitalist.

How did I get here?

I personally “strumbled” (a combination of struggling, hustling and stumbling) into this portfolio worker career, through my journey to find meaningful work whilst also raising a family.

I started my career in investment banking as I wanted to acquire business skills to one day build a socially impactful enterprise. I also had my first child and worked banking hours whilst raising him, but eventually decided to join a large global luxury retail company for more manageable hours. However, the 9–5 arrangement put me on a “mommy track”, and I felt unable to gain the deep operational experience to one day launch that social enterprise. So I jumped on the opportunity to bring a US drone startup to Japan as country manager.

Then, as the startup pivoted and I searched for my next “gig”, I stumbled upon Mistletoe, a social impact VC at which I could combine my skills in finance and technology to support socially impactful businesses.

It was finally finding this ideal job, that gave me the impetus or a no more excuses attitude, to make things work. At the time of my joining, Mistletoe did not have any employees working flexible hours etc., but I set about to make such a culture.

This experience lead me to write my book, “How we live will be how we work” (Daiwashobo, 2018), in which one of the key message is to find work that you are passionate about, and make work work.

Soon after, I also joined Fresco, to further pursue all of my passions, and become a portfolio worker VC. At Fresco, I am able to support mission driven global minded entrepreneurs through a more traditional VC investing model and also help bring about large scale change by helping our investors which are large corporations better embrace technology and innovation.

Why portfolio working is the future

I am truly grateful that Fresco and Mistletoe appreciate me for walking the walk as an investor in future of work trends, and I personally swear by this portfolio worker VC career.

It was on a recent panel at a Tech in Asia conference, that I became even more convinced.

The panel was on “Japan’s startup ecosystem” and as we were joined by the Chief Strategy Officer of a large VC firm and early investor of Mercari, a flea market platform which recently went public only 5 years after its establishment with a $3.6bn market cap, we had all anticipated to talk about “hot” investment trends or latest exits, etc.

Instead, we spent 30 minutes talking about people and one of the key points of the panel was that “winners” like Mercari is increasingly hiring portfolio workers. The best people are often already hired, but can be convinced to join other projects on a part time basis, and such people contribute significant value even in a this part time capacity.

In fact, attracting such multitalented polymaths through attractive work environments, is the key to growth and success, even for all of Japan’s innovation ecosystem.

Companies or projects which do not allow their employees to work flexibly and do not hire portfolio workers will see their demise as they will further and further be disabled to hire and attract talent.

We are in a world where the winners-take-all the best talent.

I also thought this can be true for the ones being hired as well.

Recently, I have been contemplating taking on yet another portfolio work, particularly in the crypto/blockchain space which I am also passionate about.

Very luckily, I have received several offers to join exciting teams and projects even in my part time capacity. Extrapolating from my lucky scenario, I wondered if we are entering an era in which a few highly qualified individuals will hold multiple portfolio roles at multiple organizations, while others may not even be able to get a single role.

Multi-hired individuals will enjoy a network effect of sorts, because through their multiple roles, they can accumulate more networks, connections, and information which will also enable them to be more sensitive to the winds of the market and acquire the best and most updated know-how and skills.

On the contrary, individuals working on only one role might have less opportunities to update their skills and thus can more easily become irrelevant or outdated.

The hired get more hired.

A winners-take-all-jobs world.

Of course, there is a finite number of portfolio work one person can take on, at least with the current state of human augmentation tech. Nevertheless, while we shun the giant Amazons and Facebooks today (and hence my fascination with blockchain decentralized technologies which help to disintermediate such forces), we may indeed enter the era of GAFA of people instead.

Whilst I prefer to see a world in which almost everyone is involved in several projects across the globe which are most fitting to them, which are relatively evenly disperesed and equitably decentralized, we may indeed see “superpeople” who become contributors to multiple projects and even run companies, foundations, build products, designing, etc. all at the same time all to themselves.

How to be a portfolio worker

So what should we do?

The message is simple.

Start flexing your portfolio worker muscles sooner rather than later.

Start small, as indeed juggling multiple roles is not easy and context switching requires focus and self-discipline. One could even start for probono projects or by working on small moonlighting hobby passion projects

I am also still learning and iterating these processes.

However, I believe one of the most important skills are open and active communication.

I personally strive to have open and real time communication on job descriptions and KPIs.

Open and transparent communication is also important in clarifying access to information. In lieu of bureaucratic red tape and overzealous firewalls, we can cultivate a culture for respecting security and confidentiality. For my personal case, I openly communicate to our portfolio companies that I work for more than one VC and that should they feel any conflicts or concerns, I will seek their guidance and thoughts.

One might also think that heavy self promotion and branding is necessary for portfolio work.

Though it may be true, I am an introvert and often feel very uncomfortable doing such things, so instead I try to be hyper-authentic. I openly express both perhaps my strengths but also my weaknesses and vulnerabilities, and luckily, I have found that this has lead to building more sincere networks and long-lasting relationships.

Finally again, I am still learning, and am bound to make mistakes.

However, I also try to embrace this fact. We are all pioneers in this new way of work.

And as I say “we”, I hope to connect to more people in this way of work.

If you are a closeted portfolio worker VC please reach out.

Additionally, we at Fresco invest globally in the future of work, so if you find such platforms for the future, which I would imagine will be decentralized and equitable platforms which highlight each individual’s unique skillsets and experiences and connect them to projects globally, please also reach out!

An image of an opening inviting to another space, or is it a guiding minaret?)

Why I have a portfolio career, as a Venture Capitalist was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Fresco’s Evolution: A New Look, The Same Mission

When Fresco Capital first started investing in early 2012, one of the least impressive things about us was our website. To be blunt, it sucked. We know, because Tytus hand coded it himself in HTML. We also know because people told us.

However, as our entrepreneurial roots suggest, Fresco is not just a VC fund. We are a startup, too. And just like the companies we invest in, we are constantly evolving.

In 2017, we launched our third fund, we welcomed our 50th founder team to our portfolio, and we added our fifth Venture Partner to our growing network of local teams. We soon realized we had outgrown previous skin and it was time to embrace our own evolution; a time to refresh our brand, our website, and our messaging. So, we worked with one of our close partners, Rival Schools, to do just that. Given the team has world class expertise on localizing user experience, branding, and messaging to suit a global audience, we knew we were in safe hands.

We wanted a design that reflected our global team, our partnership based approach, as well as our belief that our team is greater as a whole than as a sum of its parts. We were aiming to visually represent the simplicity of our mission, but the complexity of our approach. Here is how we look now:

Our mission: Building global ecosystems

Although our shape may have a changed a little on the outside, Fresco remains the same on the inside. In fact, our growth has only strengthened our commitment and our excitement about our core mission:

You’ll notice our mission isn’t just about being the best at investing in technology companies. Just like our logo, the idea of “building global ecosystems” may seem simple, but it is an approach that embraces the complex.

An ecosystem can be defined as a complex network or interconnected system. Whether we’re working with founders, our LPs, or our partners, we believe the most effective investment strategy is to look beyond just us, and instead focus on empowering others. That is the only way to truly enable exponential change. One person, one product, one platform, one investor, one country, can only do so much. If we are able to build ecosystems filled with individuals, startups, and investors that are passionate about solving big problems, then the impact will be unimaginable in scale. And, if that’s not what we’re striving for, then why even be here?

Our approach: Thinking global, acting local

Our portfolio companies are leveraging technology to solve the world’s biggest problems in the future of work, education, and healthcare. These problems are global in scale, but implementing any solution requires a deep understanding and appreciation for local challenges.

It would be impossible for any one person to understand or appreciate the nuances of doing business in every local market, so we have focused on building a diverse team of specialists. Each with their own unique network, set of experiences, point of view, and passion. In our new website, we put a bigger spotlight on some of our favourite local partners, with whom we have worked with closely over the years and trust to be the absolute best at what they do.

Our motivation: Why we’re global

Though we are strongly motivated by our mission, we must also admit we’re not simply building global ecosystems out of the goodness of our hearts. There is a clear and direct connection between helping our portfolio companies scale globally and higher returns for our fund investors.

Global companies are worth more money — they have more revenue, less concentrated risk, and higher valuations. They can extend runway by optimizing their operations, increasing access to later stage capital, and diversifying their relationships with potential acquirers. We’ve seen this play out across our existing portfolio, which now spans 54 companies, 12 countries, 7 exits, and a total market value of US$1.6 billion.

We talk to and work with founders all day, every day, about how to build a company that scales and endures over time. Indeed, successful business models have mission, values, and financial incentives aligned by design. So it’s natural for us to apply the same approach in building our own business.

Our bottom line: We can’t do it alone

Given all of the chaos endured in the past year, we believe that now is the time to double down our mission. The world is faced with an unprecedented level of uncertainty, inequality, and risk, and it is our responsibility to work together globally to source, build, and scale the world’s most promising technology solutions to our most critical challenges in the future of work, education, and healthcare.

We look forward to hearing from you and working together toward as we grow and evolve as a firm, and as an ecosystem in and of ourselves.

Why We’ve Doubled Down on our Mission was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Capturing the view from Mori Tower, Roppongi Hills, Tokyo (Photo credit: Junko Nagao)

Since I moved to Japan over a year and a half ago, almost every business meeting I have had starts the same way. We file into a room, smile politely at each other, parade around the table to exchange business cards in the proper order, we sit down in our prescribed seats, and then there is an inevitable moment of awkwardness, followed by a perplexed stare, alternating between me, my Japanese colleague, and my business card.

In Japan, being polite, particularly in a business context, is of the utmost importance. I know people are not trying to be rude. I’m used to it by now, and I can’t blame them. I know I am unusual. The first question they ask is usually to slyly confirm that I am actually a Managing Partner of Fresco Capital. Given my age, my gender, and my most obvious foreign-ness, the fact that I am sitting across from them as an equal is undeniably shocking. The reactions are always entertaining — some are delighted, some are clearly offended, others in complete denial.

The first few months of this, my cheeks would burn in embarrassment as I responded politely to confirm my position and deliver the introduction of Fresco Capital, my heart filled with pre-emptive defensiveness and the chip on my shoulder aching deeply. Now, I revel in the routine and am grateful for my ability to use their response as a strong filter for potential partnership. You have to be open and curious to new things to find success in the world we live in today, and here I am, able to gauge that within the first thirty seconds of a meeting. Lucky me.

Then, comes their real question, accompanied by a puzzled brow and a heavy air of anticipation: “Allison-san, but why are you in Japan?” I used to dread this question, because just like anything in our quickly advancing world, the answer is complex and there are an infinite number of ways I could reply, most of which would not be relevant or appropriate for a business context. So, I experimented with different responses, carefully gauging the subsequent temperature of the meeting given a certain response, and attempted to rapidly iterate my way to a productive answer. At least I learned quickly that sarcasm is not well received here.

Connecting the Dots

“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever.”

— Steve Jobs

Reflections at the Imperial Palace, Tokyo.

Part of the problem was that, until very recently, I honestly didn’t have a full picture as to why I believed so strongly it made sense for me, and for Fresco, to set up our first new global office and team in Japan. Sure, I had an intense personal attraction to Japan, as well as a strong “Spidey sense” that there was a big opportunity for us to be one of the few global VCs in Japan. And whether it comes to people, investments, or partnerships, I’ve learned to trust my gut.

When we decided to bring Fresco to Japan, the dots looked a little bit like this:

Pros:

• I’ve wanted to live in Japan since I was ten years old, when I made a best friend at summer camp who was from Tokyo. She started teaching me about Japan, and I was hooked. I tried to move here after college, but couldn’t make it work, and ended up going to Goldman Sachs in New York City instead.
• I love sushi more than anything else in the world. Seriously, though.
• Tokyo air is cleaner than Hong Kong, and Japan is arguably the safest country in the world.
• We were just starting to raise a new fund, and there were interested investors in Japan.
• My partners were keen to expand our global presence and set up a new international office.
• Our portfolio companies were interested in expanding to Japan, or were already beginning the process, but needed help.
• My then-fiance’s employer asked him to move to Tokyo and long distance sucks.

Cons:

• My then-fiance became my ex-fiance, which was sad and embarrassing and very clearly crossed off more than one of the pros.
• As a result, I knew exactly zero people in Japan.
• I hadn’t spoken Japanese in nearly ten years.
• After finally building our reputation in Hong Kong and China, we would be starting from square one, yet again.

Now that I have been in Japan for a year and a half, we raised a fund from Japanese LPs, I built a team of the most intelligent, forward thinking, and well connected Japanese partners, and we have brought four of our portfolio companies to Japan, I am starting to see the dots crystallise into a critical pattern that clarifies that initial gut feeling of why I and Fresco and need to be in Japan right now.

So, Here’s Why:

Our role as venture capitalists and my personal role as a trailblazer and explorer of the unknown is to create the future. We are living in unprecedented times, and the ways of building value in the past are no longer working. Our personal lives, our governments, our corporations, our jobs, and our infrastructure are being transformed by fundamental shifts in demographics, technology, and globalisation. Consequently, these key trends are shaping the period in which we live, and Japan is the first country in the world delicately poised on the precipice of these changes, reluctantly forced to navigate this complex but critical new era.

Just what are these critical shifts how are they playing out in Japan?

Reflections at the Imperial Palace, Tokyo.

1) Demographics

As a society, we created a series of formal structures to help individuals navigate their lives on Earth. These include the construct of marriage, a formal education system, corporate careers, pensions, and healthcare. Today, people are living longer, women are economically empowered, birth rates in developing countries are declining, and the Baby Boomer generation is retiring. These trends are forcing us to re-examine how and why we plan our lives and redefine the social and political structures that we have traditionally relied upon.

Japan is on the cutting edge of this trend. Long known for their health and long life expectancy, a child born in Japan today has a 50% chance of living to 109, the longest in the world. Simultaneously, birth rates in Japan have declined and the overall population is now declining at the fastest rate globally. Every year, Japan sells more adult diapers than baby diapers. How will the jobs market and government infrastructure adapt? A retiring generation of Baby Boomers is dramatically stressing pensions and healthcare, which were previously predicated upon an assumption that the current working population could support retirees. How will the country cope and how will infrastructure need to transform to support these unexpected trends? I don’t know, but we will soon find out.

Shibuya crossing, photo credit Daryan Shamkhali

2) Urbanization

As outlined in The 100-Year Life, “We are quietly witnessing the most extraordinary migration that humanity has ever experienced… from the countryside to the city.” In 2010, 3.6 billion people lived in cities, but by 2050 that number will be 6.3 billion. This is changing the shape and needs of urban infrastructure, and technology pays a key role in creating efficiencies that did not exist before.

Again, Japan is on the forefront of this trend. With over 38 million people, Tokyo is the largest city in the world. As of 2015, 93.5% of the population in Japan lives in cities (compared with a global average of 54%, 81% in the United States, and 55% in China). Not only that, but the migration continues as the population ages and technology jobs are proliferating in urban centres. Tokyo’s population is increasing at nearly 1% per year, and 90% of the people moving to Tokyo are between the ages of 15–29, even as the general population of Japan is rapidly declining.

Ueyama, Okayama. Rural areas have been hit hardest by the stagnating economy.

3) Stagnating Economic Growth

After the Great Financial Crisis rocked the US economy, then Europe, then the rest of the world, we have entered an unprecedented time of economic stagnation. Governments have responded by cutting interest rates to near-zero, and this has impacted the growth and development financial markets, savings rates, inflation, and GDP growth. Though the US and Europe are only now starting to grapple with the long term effects of these policies, Japan has been plagued by these trends for years and is now being forced to find new ways to climb out of its economic rut.

Vending machines and advertisement for the Robot Show, Shibuya.

4) Technology & Automation of Jobs

The internet is a relatively recent invention, but the change it is bringing on the world is accelerating rapidly. Personal computers have democratised access to information and resources, and social networks have opened up opportunities and connections that were previously seen as proprietary. Technology has impacted or been integrated into all products and services, and in this sense, every company is now a technology company in some way. As a result, every job is now a technology job, many jobs are now being automated or replaced completely, and new jobs are emerging on an hourly basis.

Both historically, with the automation of the manufacturing process, and socially, with the Japanese cultural fascination with robots, Japan has adapted and even embraced automation unlike any other country in the world. With a generation ready to retire, Japan is in a position to remain a thought leader in this sense. By 2060, the population in Japan is expected to be 87 million, a dramatic reduction from a high of 127 million. As stated in the 100-Year Life, “rather than worrying that robots are going to take our jobs, we should be delighted that they are arriving just in time to boost a flagging working population and maintain output, productivity, and living standards.” Indeed, if there is anywhere in the world where that may be true, it is Japan.

The Olympics are forcing Japan to think more globally.

5) Globalisation

As evidenced by the refugee crisis in Europe, global trade, the outsourcing of jobs, the current proliferation of cyberattacks, shifts in commodity prices, and the increase in correlation of global financial markets, the world is more connected than ever. People are scared, national identities are being threatened, and politicians are struggling to figure out how to adapt. As evidenced by Brexit, the election of Donald Trump and the subsequent impending reality of a wall, we are now facing resistance to globalisation in the form of isolationism and anti-immigration policies.

Though it remains to be seen how this will impact the US or European economy, for better or worse, this inward-looking, nationalistic approach is not new to Japan. The impact it has had on economic growth and innovation is alarming, and with the 2020 Olympics looming, Japan is now facing a critical moment where its leaders are seeing that opening up to the rest of the world is the only option. Again, what this looks like and how Japanese society, culture, and the economy will adapt remains to be seen. But the time to find the answers is now.

Conclusion: An Era of Questions

“Be patient toward all that is unsolved in your heart and try to love the questions themselves, like locked rooms and like books that are now written in a very foreign tongue. Do not now seek the answers, which cannot be given you because you would not be able to live them. And the point is, to live everything. Live the questions now. Perhaps you will then gradually, without noticing it, live along some distant day into the answer.” — Rainer Maria Rilke, Letters to a Young Poet

The view of Mt. Fuji from Yamanaka Lake, Yamanakako

More than ever, the future is plagued by questions. How will we, as both individuals and societies, adapt to these critical shifts in the the fabric of our world? What will the future look like and what role should we play in creating it? Many people travel the world looking for answers. What I have learned is that, thanks to the internet, Google, and good old human egos, answers are everywhere. However, given the complexity and interconnectedness of this next stage of growth, none of them are fully relevant.

My raison d’être in Japan is not to find the answers — because, there are none (yet). More importantly, living and working in Japan is forcing me to face and engage with the most difficult questions facing our generation. Just like I had to iterate my way to the proper response to, “Why am I here?”, Fresco’s presence in Japan is allowing us, our partners, our investors, and our portfolio companies to test solutions at a pace not possible anywhere else in the world. Hopefully, what we discover together will prove to be one of the most valuable exports Japan has ever seen.

For the last 15 years or so, I’ve been making the trek to the Consumer Electronics Show out in Las Vegas every winter. It’s where all the coolest next-generation gadgets and technologies are showcased.

I just got back from CES 2017 and I have to say it was one of the most exciting events I can remember. There were more than 177,000 people at last year’s event, and if I had to guess, I’d say we beat that number this year.

If you’ve never been to CES before, let me try to paint a picture. Events are scattered all across the city. But no matter where you wind up, the geeks hang out in the back showcasing their wares in small booths while the brand-name companies (e.g., Samsung and Sony) set up shop up front in larger booths.

That being the case, it appears the Internet of Things has finally become mainstream. This year, the IoT booths moved from the back of the room to the front of the room while VR and AR technologies were all over the back booths this year. We can expect these nascent technologies to make it to the front over the next few years as they develop further.

CES continues to attract more and more folks from around the globe. This year, there were more foreign entrepreneurs, investors, and professionals at CES — from China and Japan in particular.

There were also a number of other themes I picked on over the four-day event.

Smaller Companies Turned Out

At an event as large as CES, you obviously expect to run into the Amazons, Nikons, and Sonys of the world. (e.g.Nikon Project Helix)

They’re still there. But nowadays, the smaller booths are filled up by companies located all across the world. This year, companies from (not surprisingly) China and (surprisingly) Paris appeared to have spent the much money to showcase at CES.

Having all of these smaller companies with cool little products is great. It’s not every day that you’re able to check out an ozone ionizer that you can stick in your shoe to get the smell out. Or take a 3-D body scan and get a five inch 3-D printed version of yourself.

Fifteen years ago, that kind of product wouldn’t have a chance at CES. Today, they’re everywhere. What is more important is that they are not even in production yet, just a small batch run and now taking pre-orders or publicizing their Kickstarter. This wasn’t possible, even five years ago.

Car Manufacturers Prefer CES

The future of the car seems to hinge on technology.

Cars were everywhere at CES this year. There were connected cars and autonomous vehicles. Car manufacturers appear much more interested in releasing cars at CES instead of at the standard auto shows. They’re not going to the Detroit Auto Show to launch a new line; they’re coming to Vegas and doing that at CES.

All of the big name manufacturers — like Ford, BMW, GM, and Volkswagen — made the trek to CES. Of course Faraday was there, but more importantly, they took 64,000 pre-orders at CES for their $200k that is only in the concept phase. Even compared to last year, it was very apparent that technology is taking over the automobile industry.

The IoT Was Really Everywhere

At CES events in the past, IoT booths were all about mesh networks and sensors. Today, we’re seeing sensors in consumer products.

Everything is connected. There was even a connected hairbrush, which is the epitome of an unnecessary connected device. Still, products like that are great because in the coming years, the market will push out unnecessary devices. It’s just a simple issue of supply and demand.

Samsung — which has successfully shaken off its Note 7 debacle — was all the rage at CES. They built an entire connected kitchen which was completely mobbed. Everything was connected to the point we literally thought everything was connected. Unfortunately, the sink wasn’t connected — which we were kind of bummed about. It is silly. But if everything else is connected. . .

Thank You, Alexa

Alexa was truly everywhere, too.

Amazon opened up its API, and have manufacturers very obviously jumped all over it already. It bears repeating: Alexa was everywhere. Amazon even found a way to partner with physical buildings and futuristic robots.

Amazon made a huge investment in Alexa, which has already found a home in a number of IoT applications. In essence, Alexa is now the interface for all IoT devices that connects everything together. Who knows what the future will hold?

Looking Forward: CES 2018

Drones are becoming increasingly popular, but it’s relatively still “geeky”. I suspect we’ll see more mainstream drones at CES next year.

There are so many startups working on AI, AR, and VR. I am expecting to pursue an enormous selection of small batch manufacturers working with these technologies in 2018.

See you in Vegas next year!

Some people think venture capital is just fine and doesn’t need to change. Others want to turn it into a hyper liquid automated platform.

It’s time to call bullshit on both views.

Traditional venture capital needs to be transformed and the process will happen one person at a time.

I gave a presentation to a group of family office investors and corporate investors about the “Do’s and Don’ts of Venture Investing” earlier this year using martial arts training as a metaphor. It covers a lot of basics, with details here and here.

The discussion below starts with some of the traditional issues around risk and return, then moves on to ideas about how to transform venture capital.

At the black belt level, the emphasis shifts to higher level training, including awareness of self and the environment.

A typical mistake for a beginner in karate is to punch before stepping. This results in no power — as we learned in brown belt, strength starts from the bottom and flows upwards. It seems easy which why it’s actually difficult and in fact many people simply don’t even notice the mistake. Even with the incorrect technique, it still feels correct.

Getting the timing right in venture investing is similarly a challenge. The biggest mistake is to sell too early. The only thing worse than missing out on a billion dollar investment is being an early investor and then selling out to a new investor for a small profit and missing out on the much bigger gain. I know of one investor who came in very early into Alibaba only to sell soon just to get the money back because of concerns about risk. Whoops.

Of course, there are certain situations where it’s better to sell. This can happen especially when a wave of lemming behaviour overcomes investors to jump into a theme.

There’s no formula for getting the right timing to sell, but compared to all other investments venture capital is about long-term returns, so you should be thinking in terms of years and decades, not day trading.

The foundation of looking at the risk vs. return over time is to always evaluate decisions as if you were investing for the first time. In reality, that’s difficult in venture capital because of the knowledge built up over time after an initial investment and the overall lack of liquidity. Still, it helps to set the right framework. A more detached assessment of risk vs. return tends to lead away from binary all or nothing decisions and towards a more measured approach.

Of course, the process is not all about numbers. In fact, understanding the motivation of founders, other investors and of course your own goals is critical. If the company has been grinding it out for 10+ years and everyone is ready to move on, it may not matter that the best financial decision would be to continue for another 10 years because from a motivation perspective the journey has finished. Conversely, if the company has just received a lucrative M&A offer, this might be just the catalyst for a highly motivated founder to push for a more aggressive scaling up strategy and reject the early exit. Human inputs can be the most important factors when it comes to evaluating risk vs. return.

People are surrounded by external distractions. In addition, our minds are constantly creating internal distractions. This noise stops us from concentrating.

One description of traditional martial arts is “moving meditation”. Embedded in this description is the idea of having an empty mind. The first step is to navigate external distractions. The more difficult challenge is to manage internal distractions. Rather than trying to push the distractions out of our mind with mental energy, which is impossible, the training emphasizes acknowledging distractions and then being able to let go of them. Empty mind is not a static state of being, it is a dynamic process.

At first glance, it seems ridiculous that an empty mind would be an important skill for venture investing. Traditional wisdom suggest that experience, especially domain expertise, is necessary to be a successful venture investor.

The problem with experience is that it is actually one form of noise. The deeper the experience, the louder the noise. If you have 23 years of experience building microcomputers and some kid comes along with an idea for a personal computer, all your experience screams “impossible, no way this will work”. If you’ve spent all your career selling packaged software and someone suggest selling software for a monthly subscription, your instincts react immediately that customers simply wouldn’t trust software that they don’t own. If you’ve built billion dollar satellites and a young team proposes to create a network of cubesats, the first reaction is to treat it as a toy project. That’s the voice of experience speaking.

An empty mind allows even experienced venture investors to stay open to new opportunities. You can’t ignore your experience — those thoughts will always be there. Instead, acknowledge them, let them float away, and then let your empty mind stay open.

The common assumption is that martial arts focuses on fighting. But upon closer inspection, there’s a clear emphasis on peace by many traditional martial arts teachers. Fighting is the last option of traditional martial arts.

Many startup founders and venture investors make heavy use of war and sports metaphors — destroy the competition, hunt down customers, don’t be a loser.

Words and metaphors influence behaviour and actions. So by definition people being led by these words will be approaching the world with at zero sum perspective. For them to win, others have to lose. Zero sum thinking implies a lack of new value creation. If you believe that technology is supposed to create new value, not simply take value from others, then by definition these zero sum metaphors should be rejected.

Of course many others will continue to view the world from a zero sum perspective no matter what you do. Instead of wasting your energy on constantly fighting with them, focus instead on partners who you can trust.

Trust is much easier to build with aligned incentives and shared values. Aligned incentives alone may not be enough if the partner is going to find a way to cheat at the first opportunity. Shared values create great intentions but without aligned incentives, there may be no tangible outcomes. So it’s important to have both.

The right partners will help you reach your goals faster no matter what games others are playing.

Reaching a black belt level in traditional martial arts is not an end goal. It is more like reaching the starting line of the journey. At the higher levels, this learning includes the willingness to embrace paradox in many ways.

Traditional karate training obviously places a big emphasis on learning the basics. The only way to do this is through repetition so that it becomes automatic.

But the ultimate goal is not to become a clone of others from the past. Instead, every single karate student has a unique signature style. If you try to develop your signature style at the white belt level, you’ll just be fooling yourself. The style develops naturally over time without any extra effort through the process of repetition.

Learning from other investors about venture investing is a great shortcut. After all, nobody has the time to invent it all from nothing. To this day, I’m still reading Fred Wilson and Brad Feld on a regular basis.

You should absolutely learn from what venture investors are sharing both in public content and in private meetings.

But a copy and paste approach is unlikely to be optimal. Every venture investor’s background is unique. Each era is different. And it’s all path dependent. As an example, one of the big differences about our team at Fresco Capital compared to most other venture investors is our global cross-border approach. Most early stage investors are local and that works for them. We’ve chosen to be different precisely because of our background and experiences.

Instead of a copy and past approach, better to take the time to find trusted partners and work together with them. Co-create solutions that meet your unique needs. The ideal partners adds strengths to fill your gaps. This could be knowledge, network or other resources.

A key part of our global approach is working with local partners who are on the ground everyday in the local market. So just being global is not enough — working with these local partners is a key differentiation.

Martial arts starts with physical training. At a certain point, however, the mental and spiritual aspects of martial arts become more important than the physical training.

This doesn’t mean that the physical training is not important. The physical training is a gateway to reach the mental and spiritual benefits. Rather than being independent, they are integrated.

Venture investing starts with financial returns. This has to be the foundation. And many people do view venture investing as a box that takes money in and spits money out a few years later.

But this view overlooks the potential direct and indirect benefits beyond just the box of cash perspective. There can be positive effects on revenues, efficiency, and speed for related businesses. There may be harder to measure, but perhaps even more important, soft benefits such as upgraded team skills, improved innovation and entirely new business units which grow larger than existing businesses. Most importantly of all, all of this investment in innovation can, and should, be used to actually improve people’s lives.

It’s important to emphasize that these additional benefits are unlikely to materialize if financial returns don’t set a strong foundation. So start with the financial returns. But don’t limit your imagination to a box of cash. The ultimate potential is much bigger.

Venture capital investors are always questioning and challenging assumptions in other industries. It’s important that venture capital itself faces the same kinds of questions and challenges.

While industry insiders are looking for new ways to differentiate, a little extra push from external forces can only help accelerate the process.

Ultimately, the best way to learn something is share it with others. In karate, this means training new students and then having them train students. This passes on the physical skills plus also the philosophy and values. None of this can be truly learned by reading a blog post or watching a video.

There is no substitute for person to person training.

Historically, venture capital was a very secretive industry. Knowledge was not shared and venture capital firms put a lot of efforts into controlling information flow. This started to change in the past 15 years as the industry started to open up. Blogs and in person events have allowed people to learn more about venture investing. But the reality is that most of the activity is still behind closed doors.

True innovation requires an open ecosystem, and venture capital also needs to join this trend. So our view is that successful venture investors should not be trying to hide the secrets of investing from others.

We believe there is tremendous value to be created in sharing knowledge about venture investing with others. More and more new investors are getting involved in venture capital. Without effective co-operation, that money may be completely wasted on bad investments.

Rather than hoping that other investors fail, we believe that the startup ecosystem desperately needs more high quality investors. This is not a zero sum game.

Of course, the challenge is to identify the right kinds of partners. There has to be an alignment of both values and incentives.

There’s a saying in karate: “a black belt is just a white belt who never gave up”. Learning to learn is the most important lesson of all. I’m still learning plenty about both karate and venture capital.

It’s this learning that is the secret power of how we can transform venture capital one person at a time.

At the start of 2017, people are planning for the year, quarter, month, week and even day. If you plan for 10 years, that’s viewed as long-term. A few crazy people have a 100 year plan. But who has a 1,000 year plan?

Hiroshi Tsukakoshi. I came across his masterpiece, Tree-Ring Management, at a bookstore in Narita airport, hidden in the tiny English section between travel and language books.

Tsukakoshi gives a 100 year calendar to all of his new employees when they first join and also asks them to think about their 1,000 year plan.

Why?

He gives his own reasons in the book and you should read those directly from him. Here’s why I like the idea.

1) Take the long view, appreciate now

It’s not about me or you. It’s not even about my children or your children. It’s about generations upon generations in the future. That gives us perspective from the long view. To see beyond the horizon.

At the same time, the length of our individual lives is insignificant. Mark your forecast death date on a 1,000 year calendar. Even if you’re off by 23 years, it’s still roughly in the same spot. This gives you the emotional conviction that time is short. Appreciate the moment you have right now.

2) Dream big, start small

To make a positive impact that lasts 1,000 years ain’t easy. It’s like rolling a snowball down a hill. Even when you die, the snowball is going to be small. But if the snowball is made in the right way and the hill is long enough and various random elements align, just maybe it’s possible that in 1,000 years the snowball is still rolling and growing. The only way to get there is to dream big.

To make that giant snowball, you don’t start by building a giant snowball. You start by making a small snowball. Then finding a mountain. Then rolling. And learning from what happens. Maybe you made a mistake creating the snowball. Maybe it was the wrong timing. Maybe it was the wrong mountain. Keep learning and doing. But start small.

3) Everything connects, improve yourself

We’ve got social networks, airplane networks and AI networks. The list is endless. In the past, it really could take 1,000 years for an idea to spread across a network. Now it can take 1,000 milliseconds. This creates a giant opportunity for a 1,000 year plan to impact more things faster and is one key difference from the past.

But everything being connected is also overwhelming for us. A 1,000 year perspective helps eliminate the noise. Before I can tell you how to improve, I’d better start by improving myself. Before you tell others where to focus their attention, it’s worth managing your own attention habits. Before we can change history, we have to be able to change ourselves.

What?

If you take a 1,000 year view, what should you do?

1) Find something

Explore. Maybe you’ll find something new. And it’s not just about physically going somewhere. Zero, heliocentricity and gravity were all found.

2) Make something

Create. Maybe people will like it. The wheel, the Tao Te Ching and the Mona Lisa are still pretty popular.

3) Change something

Transform. Maybe there’s a better way. Politics, religion and business are all in desperate need of an upgrade.

How?

Some people are already working with a 1,000 year plan mentality.

But it can be hard to start. Here are a few ideas.

1) Ask

Take a look at something around you right now and ask “is this the catalyst for my 1,000 year plan?” Most likely the answer will be “no”. So keep looking, and asking, all day. By the end of day one, you should have at least 101 bad ideas. Keep going till you find something interesting.

2) Observe

The next time you feel happy/surprised/angry or maybe just have a funny feeling in your gut, think about what’s causing that. Triggers of emotions tend to be good places to start looking. But don’t stop with emotions. Start observing everything.

3) Remix

Take two random things and combine them. The new remix is probably a bad idea but save it just in case. Make 99. They’re all probably bad but save them just in case. Keep going and at some point you’ll start to notice patterns and outliers. Follow those.

The best time to make a 1,000 year plan is now.

Start the survey

A lot of startups and well established businesses struggle with when the right time to expand into new verticals or new geographies. The short of it: Not before you’re dominating your first vertical and first consumer segment.

There’s an old tale in Silicon Valley that goes something like this: When Jeff Bezos, founder of Amazon, pitched his initial idea to Kleiner Perkins Caufield Byers, he told the VCs there that he wanted to sell everything online; every product in the market converted to the online channel as the future of transactions. But one of the VCs suggested he refine that idea: First, you must go deep in one vertical before eventually expanding into the next. And how do you know when to stop expanding in a particular vertical? When you’ve stopped learning.

Such as the cycle continues, as you continue expanding to new verticals, you won’t have to go as deep and your time to entry will be significantly shortened each time around. Over time, your company becomes wide — on an expedited timeline compared to the first plunge — and not because the company fully understands the business model and market factors to success.

Ultimately Bezos, of course, took the advice and decided to go deep in books before he went wide. After drilling all the way down into books, Amazon owned the market — even forcing companies like Borders (who chose to useAmazon to handle its ecommerce efforts) out of business.

Up next were CDs and DVDs — all the things you’d buy in a store. Then on and on Amazon went, adding everything from diapers to espresso machines to its arsenal. The company kept pace with technology, too, adding Kindle, streaming music, and streaming video options.

Deep and Wide in Action

My first startup spent a really long time focusing on recruitment and job advertising. Eventually, we added real estate and auto to our offerings, and we only had to spend a fraction of time during expansion. Pricing was the same, acquisition was the same, and the backend database was the same. We spent six months on the first vertical and three months on the second.

Another startup, Telerik, also followed suit, going deep by going deep with a robust Microsoft developer tools and then wide with cross-platform developer toolkit marketplace. We then switched to building out solutions for CMS, but because it was radically different from what we originally built, we were forced to go deep again. This wasn’t as fast and seamless, due to the differences, and it took just as long to master.

When you go deep, the right way, you gain the expertise and infrastructure to expand into new verticals. Then you’re well-positioned to go wide — and quickly.

Lessons from Amazon

Amazon spent about three years on books before moving into CDs, then six months on CDs before moving into DVDs, then four months on DVDs before opening up Amazon Auctions (which competed directly with eBay at the time but pivoted to what is the Amazon Marketplace today).

When you go deep into the first vertical successfully (e.g., after one year), it should be a lot quicker (e.g., six months) to make progress into the second vertical. And it should be even quicker (e.g., three months) to make progress in third. And so on. If it’s taking you longer to make progress in a subsequent vertical, you’re probably doing something wrong.

In order to stick to the “half time to success” formula, here are three major things to keep in mind:

• Move on when you stop learning. Don’t target the next vertical until you figure out the successful, scalable sales channel and business model before jumping to the next one. When Telerik hopped from dev tools to CMS, we faced challenges because the market and segment were both different. You must move into a market with a similar business model and segment to be able to go wide according to the shortened time frame. In Amazon’s case, books, CDs, and DVDs were no brainers.

• You need to diversify. A lot of companies stay on the proverbial books, CDs, DVDs track and then get sold or collapse. Companies that IPO or become big, on the other hand, go deep and wide in several different industries.

• Think outside the box. It’s no secret Amazon dominates the ecommerce market; the company was singlehandedly responsible for 60% of the United States’ ecommerce growth last year. After conquering ecommerce, the company wasn’t finished. It expanded deep into cloud computing with Amazon Web Services. Now, it’s going deep into brick-and-mortar with newly announced grocery stores you can walk into and out ofwithout standing in a line. It’s not hard to see them going wide there, too.

When you master one way to do something, it’s much easier to target a new vertical or a new geography with the same tactic. Go deep first, learn the tricks, and then go wide. That’s the ticket to a strong, sustainable business with limitless potential.

1. Corporate Innovation Strategy

How should companies approach innovation in an unstable world?

“Every contemporary company has to be a balanced mix of established products and new products that are searching for profitable business models.” — Tendayi Viki

Tendayi introduces a useful five part framework for how established companies can manage the inherent tension of managing both established products and new innovation. Read more…

How to set up a corporate innovation outpost?

“Successful Innovation Outposts typically develop over a period of time through three stages. In the first stage the Outpost focusses on networking and partnering in the Innovation Cluster in which it is based (i.e. Silicon Valley, Boston). In the second stage, it moves into Investing, Inventing, Incubating and Acquiring technologies and companies, and in the third stage building product(s).” —Steve Blank

Steve shares the details of the three stages of setting up a corporate innovation outpost, including key questions and milestones. Read more…

Is your innovation outpost working?

“You have no dedicated system for keeping track of startup ecosystem interactions and information.” — Tytus Michalski

Tytus reviews this and four more warning signs about innovation strategy and outposts along with the solutions for how to fix these problems. Read more…

2. Engaging the Ecosystem

Why should large companies work with startups?

“The most innovative companies are also the most valuable.” — Kite

Both the data and the anecdotal stories combine for compelling evidence that the most innovative companies are engaging proactively with startups in many ways to create more value for all stakeholders. Read more…

How to build a successful innovation ecosystem?

“Just as momentum is the product of mass and velocity, the ecosystem with the most participants and fastest turnover of ideas will be the most successful.” — Martin Curley

Martin provides case studies, context and 12 principles for successful ecosystem innovation across companies, customers and other partners. Read more…

Where are the opportunities in the global ecosystem?

“We love small businesses, we love young people, and we love women.” — Jack Ma

Jack Ma shares his views on global ecosystem opportunities and more during an interview with Stanford GSB. Read more…

3. Innovation as DNA

How to innovate like Google?

“To better understand how Google innovates, I took a close look at what it’s doing in one area: Deep Learning.” — Greg Satell

Writing for the Harvard Business Review, Greg uses Deep Learning at Google as a specific case study to learn about how the company has put innovation at the core of its DNA. Read more…

How to get started with intrapreneurship?

“Never before has there been such a push for employees to take ownership of their own corner of a company.” — Alyson Krueger

Alyson provides examples of intrapreneurship, overall context about why more employees are interested in this option and the benefits for companies. Read more…

What will change most in the next 10 years?

“That’s a good question. But a better question is: What’s not going to change in the next 10–20 years?” — Jeff Bezos

Peter Diamandis highlights this important point by Jeff Bezos about focusing resources on high conviction trends, and expands with his own ideas about what won’t change even in an unstable world. Read more…

What other content do you highly recommend about corporate innovation?