An Angel Investor's Secrets For Rapid Growth - Andrew Chen

There is a secret to the products that have been built out of Silicon Valley, which is that many of the largest products that have ever been built, whether these are social media apps, whether these are marketplace companies, whether these are collaboration tools like Slack and Zoom and Dropbox and Airtable and Notion and so on, what Network Effects tells you is, it- for this style of product, these are products where the more users that use them, the more valuable the products become. (whoosh)

Andrew Chen, welcome to the show.

Thank you for having me.

Man, we were just talking, how did you find the time to write a 400-page book with all of the other stuff that you do?

(laughs) . Uh, well, the, the, the fun part about it was, it was just like having two jobs, um, at once, and this was also one where, um, having, having the COVID, uh, you know, break actually, um, made it so that when you're stuck at home, it's like having your own, uh, Wal- Walden Pond, uh, you know. You're, you're just stuck in your office, and you're like, "Well, what am I gonna do? I'm just gonna, you know, write this whole thing." Uh, but no, a- actually, um, I, I ended up, um, doing a bunch of really funny things just to force myself to write, and so I not only put everything in my calendar, I actually, um, uh, turned on all the... I had a separate computer with just the apps for writing on it, and I turned on all the, like, kid protection, safe things, so I blocked, you know, Twitter and Reddit and all my favorite websites, uh, you know, from the thing. And, uh, and then, and then, I just, I just tried to write as, as, as much as I could. Um, so anyway, it was, it, it took three years, but, but now, now I'm here, which is great.

Big lift, man. It's so funny now that, um, our habits on particular machines mean that we need to create our own, like you say, walled-off gardens that are these little oases of work. And these stupid games, you've got a time box-

(laughs)

... which I use as well to lock your phone away.

Yeah. Exactly.

I know that you've got one of those. Um-

Yes.

Yeah, man. How important... Obviously, so your, your job advising companies, investing is m- an executive role. Like, by definition, it's an advisory role, but you do a lot of writing, so how important has having a, a public-facing communication channel been for someone whose main job is kind of a bit more back of house?

Yeah. Well, I think, um, one of, one of the big things that, um, that, that people think about as, as an investor, if you break down the skillset, you basically can say there is a sourcing part of the job, right? That's getting, that's, that's making sure that all the most interesting startups come to you and you're, you're meeting them in the first place. There is a picking part of the job where you try to make sure that, um, you're picking the right startups, and that is very, very hard. It's very random, especially because you're often, um, in, in, in the case of, uh, you know, Clubhouse, for example, I met the team when they were two people. They had 500 daily active users when we led the investment. I was one of the first 100 or so, um, u- users on the product. And so it's, it's so early, it's so random, um, so how can you make sure that, that you're picking the best ones? There's a third, uh, dimension, which is winning, um, which is making sure that the, the startups that have a lot of options for investors, that they pick you over, over others. And then there's operating and making sure that you're actually helping the companies after the investment. And so the nice thing about writing a book is it actually touches a lot of different aspects of those four skills. And so, um, when, when you, when you write a book, it's obviously, uh, you know, number one, um, kind of an, an advertisement of your, of your, of your skills and your expertise out in the world. That's very, um, you know, helpful, and people, um, k- know me, uh, uh, partly from my blog and from my social media already, and so the book is kind of an extension of that. Um, writing the book forces you to, uh, refine your thinking, uh, down on, on, on, on a piece of paper that you're trying to describe to people. And so that has actually been really helpful for, from a picking standpoint, 'cause now I'm like, okay, yeah, what retention rates do I think about? How do I evaluate if a company actually is- has momentum or not? Um, and then, and then for winning, um, you know, the, the... it's, it's b- by being an expert in a space, it's great, and then operating, um, it's so... It's gonna be very, very helpful once the book is out, um, in, in six days to be able to actually hand the book to entrepreneurs and say, you know, "Hey this is, this is how I think about things." Um, and, and, and, uh, you know, and have a high density way to convey a lot of, uh, information.