Disappointment
Being a Knicks fan teaches you a lot about disappointment. At one point this spring, we thought we were going to get a couple top free agents and the first pick in the draft. We ended up with a lot less.
Fortunately, I have learned a lot about disappointment in three decades of backing early-stage startups. Our business is one where a third of things we do don’t work out at all and another third deliver a lot less than we had hoped when we pulled the trigger. Only a third of our investments deliver on what we expected when we made them.
Fortunately about ten percent of the investments we make so vastly outperform our expectations, that they make up for everything else we do.
So we live with a lot of disappointment. And one of the questions I struggle with is how much of that disappointment do we share with the founders and teams we work with.
Certainly feedback helps founders. But if the feedback is too negative and too downbeat, it is not helpful and can also lead to tune-out.
So I have found that many times I need to bite my tongue and take the disappointment in stride and chalk it up to the cost of doing business in early-stage investing. You have to be an optimist to make early-stage investments and you can’t let the disappointments take that optimism out of you.
Which takes me back to the Knicks. It has been twenty years since the Knicks had a winning culture. That is a lot of losing to endure. But I keep buying the seasons tickets in hopes that things will change. I am going to stay positive and hope for the best.
Comments (Archived):
Thought on future post.Experience working with repeat entrepreneurs.Curious if in this circumstance you often see successful entrepreneurs approach you for capital pre having an idea on a business and how you think about this.Obviously this is something you approach more now than when you started.Thanks!
That’s nothing compared to being a big Mets fan as a kid in New York in the 70’s!I honestly think it gave me an endless sense of hope and patience for “one day it will come” (which did happen in the following decade).
I’ll call your Mets fan and raise you Chicago Cubs fan. Equivalent of going all in.
yep both were always down at the bottom, kindred spirits. We saw a lot of each other then!
Crushed me in 69. Mets were good in the 80s. Cubs, never good….until now. It’s sure fun to watch them battle.
The Mets were -10 games out in August of ‘69 and ended up beating the Cubs by +8 games. The Mets had to play lights out, but the Cubs crashed and burned like no other.
You need an endless store of optimism for early stage.As a Nets fan I’m still in shock but not sure if this right move.
I’m under the impression that 1/3-1/3-1/3, plus 10% over the top, is a strong track record.
I don’t share disappointment but I do share honest feedback. There is a fine line as you point out.Sort of shocking about the Knicks. 1973 was a long time ago now. Maybe you need to draft someone from SIU (Walt Frazier). My friend’s son is the head coach there now and he will turn out some great players. FWIW, the Bulls don’t look much better. Not even in the conversation about where to go. Been since 1996. Maybe the Garden doesn’t have the draw and pull it used to.BTW, Hedge fund manager Cliff Asness will show you statistics based on conditional probability that being a New York Rangers fan is the worse experience in sports when it comes to winning championships.
I understand your Knicks disappointment. We waited 24 years (and that’s a very long time) for the Raptors to become NBA champions even after they gave us a few years where they got close.Well, on the positive side, your season tickets still give you the opportunity to watch other visiting good players, but it’s a lame consolation.
And there lies part of the problem. Dolan & Co. know the fan base—a good chunk corporate—will continue to underwrite season tix sales even w/ decades of an inferior product and increased pricing. The Knicks have proven to be price inelastic on the fan side—(loyalty or stupidity?)—while players, you know the guys that actually play the game, aren’t drinking the same Kool-Aid. There’s a no confidence vote in ownership and mgt. that is far more powerful than the alleged mystique of playing in NYC and The Garden.
As I’ve stated here before, I had the rare opportunity to get to know George Steinbrenner when I lived in Tampa. He owned a hotel there called the Bay Harbor Inn and was close friends with the founder of the company I worked for.This relationship afforded us the chance to visit with George away from the spotlight. And, growing up a Yankee fan, I occasionally had to pinch myself. His public persona was different. In private, he couldn’t have been a more engaging and open individual. And, a great sense of humor. My takeaway, from this experience, was his passion for the Yankees and his players.He was clearly driven to keep the Yankees at the top, while making certain the luster of the brand remained intact. He wasn’t about to let the Yankee tradition fall under his watch. That seems to me to be the kind of drive you want from owners and managers (and founders). He seemed to relish being the point man who made the calls and took the heat. Maybe more of that is needed.A time and experience I will always treasure. Many special memories.P.S. He loved and respected Billy Martin. (as he did with his team)
I met Steinbrenner a few times. He was charming to me, but then the company I worked for was honoring him w/ a prestigious award. I’ve heard first-hand horror stories from people who worked for him, including from Brian Cashman. When George would enter the Yankees’ NYC offices someone would frequently yell “fire in the hole.”
Brian would definitely know more about that environment. There could easily have been a drink, at his hotel, by that name. However, it was a different story in that very relaxed setting. A memorable story, relating to that, was the day Ted Turner waltzed into Steinbrenner’s office, at Yankee Stadium, unannounced, and lectured him about living in Tampa. The gravity of letting Turner get as far as his office might have weighed heavy on some of the front office people. I guess I’m fortunate I never worked for the Yankee organization.
Oh come now Mr. Wilson. Only the sports fan supporting the team in the league with relegation can know the true feeling of disappointment. The NBA structure mollycoddles you.
And then there is the story of Nate Lashley, who just won the PGA tour event in Detroit wire-to-wire. His parents and girlfriend died in a plane crash 15 years ago while on route to watch him play in an NCAA event. He quit the game after that. Then started again and has been grinding in mini-tour events for years. He made $24K last year in Canada.He was not even supposed to play, but was second-alternate in the qualifiers. Then he shoots a pair of 63s and wins his first event ever. One of the most amazing “come back” stories in pro golf.I know startups don’t have 15 years to come back. But how some people grind for that long with faith and hope is amazing to me.
This post reminds me of Harvey Dent from The Dark Knight.
It’s a mistake to think of these 90% of USVs efforts to be jejune
As you know a lot about business, I don’t need to tell you, that many problems in companies start at the very top. Dolan is the reason for years on inept.
I understand your pain. I had suffered through 23 years of Packer fandom with no hope. Once patience among the ridiculously loyal fan base started wearing thin (and after 20+ years it was starting to go there, despite selling out every game), the board of directors realized that they needed to hire responsible people to make the right decisions (specifically, Ron Wolf), delegate authority to them and allow them to build out an organizational infrastructure that started to attract difference-makers that the Packers never would have been able to get before (e.g., Reggie White). The board hired those people and empowered them. There is now a generation of fans that don’t realize how bad they were before 1992.So here is an instance where feedback about disappointment made a difference. Of course, one of the key questions is whether in the Knicks’ situation is whether feedback can actually be a motivator.
As a Bears fan, I liked it when the Packers were bad.
What a fascinating look at calling it quits. For the clients you fund, it’s a more or less rational process. But for the local sports team, feelings take over and endless failure can be endured.I wonder if emotional factors intrude into funding decisions, for example if a founder has become your friend.Warren Buffett stuck with his loss-making textile company for 20 years before bailing out – presumably due to a combination of sunk costs and an emotional bond to the business. I’d love to know whether irrational attachments are something that Union Square Ventures has to contend with.
I feel performance is a reflection of leadership -maybe Jimmy Dolan will let you and Spike Lee form a syndicate to take over ownership. As a young girl at the ripe age of 9, one of my dreams was to be part owner of the Knicks! #stayingpositiveandhopingforthebest I was a huge fan during the heart braking Reggie Miller/ Indiana Pacer rivalry era. #bringback90sKnicks
Well you did get Bobby Portis for $15mm/year, so that’s nice!
Great post Fred but I think the knicks for the first time ever are practicing patience and discipline that I think we can all benefit from. We are all chasing instant gratification but the reality is building anything of greatness is a lot of hard work, effort and time. I think the Knicks dodged two bullets in free agency this year. Kevin Durant is an amazing player but he will be 32 coming out of one of the toughest injuries to ever return from. I understand the willingness to get him but we have been plagued by players in the past at large contracts that were unhealthy. In regards to Kyrie Irving he has demonstrated over and over he is not a great team player. He wanted the spotlight so left Lebron, He then went to a very talented Celtics team and the statistics show the team played better without him and was more efficient. When things don’t go his way he is also difficult to deal with. I honestly think it is (50/50) that the Nets will be a contender. I don’t think they will be very strong next year and the reality is in the NBA if you’re not a top 3 team in your conference you are irrelevant. In fact you either win or lose.The struggle I have with the Knicks is that if you look at Dolan and his organization the people that are responsible for countless eff ups are still with him. In any structured Tech company or disciplined business you would replace the management team aka Steve Mills and the others that have made many errors. Unfortunately Dolan will not sell the team any time soon and the ball stops with him and who knows how many of those missed moves were his call. the Knicks are at a cross roads where due to the countless errors they’ve made and lack of performance I sadly don’t think top players really even take them seriously any more so I don’t even think they had a legit chance in the first place to land Durant or Irving.Given the cards I think we made the right choice. Hopefully Scott Perry and Fizdale and the rest of the organization can really develop the young talent we have and given the situation turn this organization around. It’s hard to have faith due to their track record but perhaps they’re finally learning from all their countless impulse moves.
“I’m just starting to see daylight.”In what sense?
Ah, perspective.I wondered where you were going with the first 2/3 of that comment. Then, a strong finish.I think its human nature that we tend to lose perspective. Like entropy increases, or water travels downhill, the natural state of perspective is for it to get buried..to be lost.Our mind readily leaps to rationalizations, but our mind readily forsakes perspective.
Thanks for sharing that Charlie.
Success has a thousand fathers; failure has none.Human nature is complicated. People do not examine lessons from crashes and burns because they do not want to be associated with it for fear of what that might mean to their future. It takes awareness to see without prejudices and not worry about external perception.Of course, it is also easier to move on especially when you are the investor with a portfolio and not the founder who was all-in.Too often, people talk about their past failures only after a subsequent success.Kudos to you for being transparent.
You want to have a job. You can (1) create one for yourself or (2) have someone else create one for you. With (1) you can be sure the job is about the best one for you; with (2) you can be sure it’s about the best for the person who creates the job for you. More simply, in both cases you can be sure the job is best for the person who creates it!E.g., at times I’ve thought about being an employee again. I have a huge background in computing: That is overwhelmingly sufficient for (1) but still not enough for (2). So, I wrote the code for my Web site. I used .NET, etc. sufficient to get the code well enough structured, i.e., no “technical debt” and no “refactoring” needed, and, it appears, running very reliably and doing what I intended. So, there I did enough with .NET to get my work done, for (1). But, that work would not be sufficient for (2) because somehow nearly everyone creating a job has their own favorite list of a dozen or so pieces of infrastructure software, e.g., SQL Server, MySQL, MongoDB, PostgreSQL, C, C++, Rust, Go, Python, Java, JavaScript, Clojure, on and on, where waste time and effort with someone else’s favorite tools even though already have good skills with tools plenty sufficient for the real work. Bummer.This stuff of (1) versus (2) is an old story: Somehow recently in the US too many people have tried to settle for (2). Not so good.Recently I reviewed what I remember from the street I lived on for 16 years growing up: Of the families I remember, ALL of the men were in case (1) except Dad working for the US Navy as (2). It appears that as a country we need to try harder to make (1) work.
On a tangent, the concept of entropy is also a useful lens through which to view the world.For non-physicists, the Wikipedia definition of entropy is not useful (at least not the top part of it, at time of reading, i.e. now). This one may be a bit better:https://www.britannica.com/…Excerpt:[Entropy, the measure of a system’s thermal energy per unit temperature that is unavailable for doing useful work. Because work is obtained from ordered molecular motion, the amount of entropy is also a measure of the molecular disorder, or randomness, of a system. The concept of entropy provides deep insight into the direction of spontaneous change for many everyday phenomena. ]
Yep. Entropy is the best metaphor to describe life and work. In the absence of deliberate, intentional effort to fix or improve something, the said thing devolves eventually to nothing.Your room, company, finances, relationships, are all subject to forces of entropy. There are no exceptions.