When we invest in a startup, we’re in it for the long haul. It’s seven years on average, but we’re hoping to create lifelong relationships with the people we support, even if the startup that we’re supporting you on does not work out.
One of the biggest predictors of success that we’ve seen so far is working with founders that share our values. When evaluating an investment, we spend time sharing our values and listening to the values that the founders and their team bring to the table.
We’ve decided to share our core values, along with some of the mental models that we and the best entrepreneurs in our portfolio have used to be successful. We didn’t come up with most of these, but these are the ones that have worked for us.
Tell the truth. Be direct –The best way to create a healthy business relationship is to be direct. We promise, we won’t be offended.
Magma is in it for the long haul – Avoid short term thinking. Startups are long term commitments. We’ll be with you for the next 7-10 years, so please think about the long term when making decisions. Read more on Farnham Street blog.
Skin in the game – Magma has skin in the game because all of us are taking way below market salaries and all partners have invested money into the fund. We ask that you have skin in the game by taking risks with us. And that you give employees skin in the game by giving them stock options. Read more: Lack of Skin in The Game Causes Problems.
Don’t read into other people’s motives – Never attribute to malice what you can attribute to stupidity, laziness, a mistake or just being too busy. You never know what the other person is thinking, so it’s best to think that people are doing their best. Read more on Farnham Street Blog.
Eat your own dog food – Follow your own advice, use your own product, and even better, use other startups products. Read more via Forbes.
If you don’t know the answer, say you don’t know. Ask someone for help or even better do research and figure it out on your own and then ask someone to confirm your findings. Read more about media training.
Treat entrepreneurs how we wanted to be treated as entrepreneurs – Magma is made up of entrepreneurs. Our goal is to treat you how we wished we’d been treated when we had our own startups. Treat your team how you’d want to be treated if you were an employee. Watch our video about how and why we got started.
Treat company money and our investment as if it were your own money – What decisions would you make if the money in the company came 100% from your own pocket? Use this as a lens to make your spending decisions. Read more from Fred Wilson.
Yes is best, No is second best. Maybe is worst. Try to give a clear yes or no in all situations. A “maybe” means you have to keep the brainspace and can be a big waste of time. A corollary to this is Derek Sivers’ Hell Yes or No.
Magma’s Mental Models
Always provide solutions to problems, rather than simply identifying them. Tell us the problem and how you would solve it and why you think this is the solution to the problem. It doesn’t matter if it’s the wrong solution or a bad one.
Avoid making the same mistake more than once. Record your mistake and share with the team. This is how we avoid making them again.
Do your job. Don’t ask others to do it for you, unless you can’t do it without their help.
Get shit done. It’s about results, not how many hours you put in. There’s no reward for being the first in and last out of the office if you’re not being efficient. Read It Doesn’t Have to be Crazy at Work.
Focus on the lead domino – Ask yourself what one task would make all of your other tasks easier and focus on that one. Read more: Pushing the lead domino.
Focus on the 80/20 and even better, the 90/10 – Startups have limited resources, so focus on 10% or 20% of the things that you do that bring 80 or 90% of the impact. Work hard to identify what’s work and provides an outsized impact. Double and triple down on what works at the early stage. Read more via Tim Ferriss.
Always be closing. Avoid vanity metrics – Sales, traction and happy clients are what matter. Read more: Don’t be fooled by vanity metrics.
Delegation works – As a leader, your #1 responsibility is to make sure you’re not a bottleneck for the rest of your team. Read more: Advice from Ben Horowitz.
Magma is like a high level professional sports team, not a family. A high level sports team expects all of its team members to perform at a high level. If it doesn’t work out, we can part ways and still be friends. A family has to accept all levels of performance without judgement. Read more: Netflix’s culture at work.
Shorten your feedback loops – Early stage startups are about finding product market fit and then growing quickly. The most successful startups have short feedback loops between an experiment, feedback and making a decision. More information from Mark Suster.
Do the work that doesn’t scale – Get out of the office and do the work that will get you the initial traction and data you need to be successful. Read more via Paul Graham.
We’d love to hear about your values and strategies you use with your team to get things done. If you think we’re missing something or have something wrong, please reach out or make a comment below.