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Why I Invest

Steve Schlafman
Steve Schlafman
5 min read

Last Friday night after a long week, I decided to go for a long run and listen to a Buddhist lecture on the true nature of existence and the self. About ten minutes into the run, I started to contemplate why I have chosen various paths in life such as becoming a venture investor. Since I have decided to make this my life’s work, I began to examine what really drove this long-term decision and whether I was being honest with myself. As soon as I returned home and showered, I opened up my computer and published the following tweet.

Ryan Hoover of Product Hunt was the first to reply and suggested that I expand on the tweet and provide commentary and context on each one. I hadn’t considered writing a post, but ultimately decided it would be enlightening and cathartic to dive into each reason and expose myself.

Below is an expanded view into all the reasons that I have chosen VC as a career. I’ve also tried to be honest about what drives me. While this list captures how I feel today, I’m sure it will evolve over time as I learn more about myself and my worldview changes.

Challenging: I’ve learned that it’s really damn hard to be a great venture investor. One needs to be conversant in many disciplines and have a variety of skills: networking, negotiating, spotting trends, reading founders, understanding psychology, maintaining conviction in the face of opposition, providing advice, analyzing markets, supporting my founders and partners, etc. Additionally, venture is incredibly dynamic because the world is always changing. There are many variables are outside of my control that need to swing in my favor in order to be successful. The only thing I really have control over is my investment decisions. If I’m honest with myself, the difficult nature of this business fuels my engine because I’m afraid of failure.

Competitive: Somewhat related to my first point, venture is insanely competitive. In fact, one could make an argument that our business is more competitive today than ever before. Billions of dollars have flowed into the asset class over the last five years. There are now hundreds of early-stage firms and accelerators all over the country looking to invest in the next great company. Dozens of firms are building insanely talented teams, value-creating platforms and deep networks that span geographies and sectors. I was taught at a young age to embrace competition because it forces me to look in the mirror, adapt and improve. I’d also be lying if I didn’t admit my ego loves to win.

Intellectual: While early-stage VC is technically within the realm of finance, it requires knowledge that extends well beyond any one field: technology, product development, design, branding, psychology, history, mathematics, manufacturing, supply chain, marketing, operations, and human resources.Depending on the company and pitch, I often rely upon a combination of these disciplines, many of which I’m still figuring out. That’s why pattern recognition is so important. Within a given year, I’ll see more than a thousand companies and meet with hundreds of founders. During this span, I’ll make millions of snap judgements and “micro decisions” that results in only a handful of investments. Because markets are constantly changing and innovation never stops, I need to rely upon my intellectual curiosity and desire to learn to keep up.

Social: Early-stage VC is so heavily dependent on working with, helping and understanding people. There are hundreds of social interactions per day across a variety of mediums — in person, on Twitter, over email, etc. The job relies upon a range of social skills and draws out a range of emotions each day. I’ve found being a good communicator and having empathy are two of the most critical skills since this is a human-driven business. I receive so much energy from founders, my partners, other investors, friends and family. I love it. Thankfully, my super power in life is connecting with people.

Inspiring: On a weekly basis, I meet with dozens of founders who believe they’re going to succeed and build something that impacts the world. That’s inspiring. I also witness portfolio companies start from nothing and become large companies that employ hundreds of lives. Finally, I have a front row seat to see my founders develop as leaders, grow their skills and overcome adversity.

Humbling: Building companies is really fucking hard. Not all of them succeed and become unicorns. Whenever I lead a new investment, I usually trick myself into thinking it’s the greatest company ever, but try to understand the opportunity and risks going in. In reality, it’s impossible to predict exactly what is going to happen. Since the large majority of startups fail, investors have to deal with the fallout of our decisions. I’ve had plenty of investment ideas that never materialized. I’ve made a number of investments that went to zero. I’ve had LPs tell me no. It’s pall art of the game. When things don’t go as I expected, a big serving of humble pie is a nice reminder that I’m far from perfect, I have way more to prove, and I have a lot of work ahead of me.

Impactful: VCs play a primary role in deciding what gets funded. We can be enablers and supporters of change. I’ve come to believe that we have an ethical and moral responsibility to be supporters of positive change. While we’re not the builders and creators of change, we vote with our dollars and help advise the companies that are making a dent. Seeing the impact is extremely gratifying. It’s not just about the growth of the company and the benefits to society, but also the growth of the founders and people involved. Driving impact is a huge reason why I love being an investor.

Teamwork: I believe VC is a team sport. Most firms are collections of personalities and experiences. Our long-term success depends on the investment decisions that we make as a team. Our success also depends on the group collectively supporting our portfolios and building the firm. I’ve always believed that our brand is built by the sum total of the positive and negative interactions that founders have with our firm. I’ve always loved team sports like football because everyone has to work together and do their jobs to achieve a common set of goals. VC is no different.

Money: I’d be lying if I said that money wasn’t important. It is. I also realize that money provides freedom and the means to acquire things but doesn’t create happiness. The latter is really what matters. For me, I value freedom and experiences. I didn’t come from a wealthy family. My mom worked two jobs. I paid my way through college. I suppose I chose a career that pays well so I can have freedom and hopefully not have to worry since I’ve seen what that looks like. Perhaps, I’m driven by a deep-rooted fear that stems from childhood. Regardless of what drives me, we’re in the business of making money for our Limited Partners so we need to drive returns and make money for them.

The Hustle: VC is a ground game. It’s won out on the street. Working from the office all day won’t lead to results in my opinion. To be great, I believeit’s a 24x7 job. Blogging. Producing events. Networking. Emailing. Taking meeting after meeting after meeting. Going to conferences. Hosting board meetings. Attending dinners and meetups. Reading blogs, articles and books. And so on. The frenzy is easily one of my favorite aspects of VC.Perhaps my hustle stems from my fear of failure (read: anxiety) and desire to win (read: ego) but nonetheless I enjoy the grind.

Determined: I’ve always had a bit of a chip on my shoulder which helps me as a VC. I was obese as a kid. I grew up in a competitive household. I wasn’t a top student in middle school or high school. I basically flunked my SATs. I didn’t attend a top tier college or get an advanced degree. I haven’t founded a billion dollar startup. All of these and more drive me. Ever since I graduated from college, I’ve been determined to succeed in my career and in life. I’ve done that by working my butt off, being intellectually curious, treating others with respect and honesty, and trusting my instincts. Bottom line: I’m determined to be a great investor by being a good partner at RRE, supporting my founders who are creating impact, and driving returns for our investors who pay us to be great.

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Exec coach. Writer. Student of Change.