3 Books Every Investor Should Read

As an entrepreneur, when I consider the ideal investor I would like to have, it’s a lot more than someone with money. I want them to have characteristics like:

  1. Able to make smart bets: Investments are largely made when it’s too early to tell with certainty who or what will win in a market. 
  2. Add value and insights: This is more than replaying personal war stories and biasing from your own experiences.
  3. Asking good questions: Someone who pushes founders to take a step back and recognize the things that matter often comes more from asking questions than providing answers.

Being great at those three things is no small task. Fortunately, there’s been some great books written that can supplement the knowledge and know-how of even the most veteran entrepreneur or get a new investor off on the right foot. These are books I’ve read and re-read because they’ve providing so much value to me and I believe can specifically help investors as well.

The Innovators Dilemma by Clayton Christensen

Disruption is a brutally abused word in tech these days. Clayton Christensen brings it back to reality and explains how it really works in this classic written in the 90s (and has arguably gotten better with age).

As an investor this is critical so you can call BS on an entrepreneur that claims they’re disruptive, but really are hopeless. This book will help you understand not only how to recognize disruptive technology in its earliest days, but what it means to get in the market, grab a position and successfully grow and take down the incumbents. Benjamin Tseng, a Bay Area VC, has a great post also discussing the value of this book for investors here.

Investor Scenario: A founder claims they have a disruptive innovation and are telling you about their immediate mass market plans, The research in Christensen’s book will help you guide them a better approach or to pass on the deal.

The Master Switch by Tim Wu

Over the past 100 years, communication platforms have dramatically changed and evolved. During this time, we’ve seen the emergence of the telephone, radio, television, email, the internet and more. Without fail, every time one of these new mediums emerged, they fought an uphill battle to eventually win the market.

This book goes perfectly hand in hand with Innovator’s Dilemma by walking you through how many technologies were slowly commercialized and changed the world. By the time you get to the end the patterns will be impossible to miss and priceless to match against what you see in new markets emerging (some of which you hopefully can invest and place strong bets on).

Investor Scenario: A founder has a transformative technology. Knowing the patterns of past innovative companies, you can help them anticipate resistance they may face both in the market and legally.

Tribal Leadership by Logan, King & Fischer-Wright

A book on culture to go hand in hand with two on innovation cycles? Absolutely. While there are other books out there I’ve rated higher on culture, none are more powerful for an investor.

You only get a limited amount of time with a founder and their team, so knowing how to quickly tell the difference between a strong team culture and one struggling is huge. What makes Tribal Leadership special is how it helps identify the key words that you can listen for to tip off how a company is really doing. 

Armed with this information, you can help a founder get back on track if some of the team has issues.  It can also help you decide if you should pass on an investment that looked good otherwise; a motivated, excited team will be significantly more productive, work longer hours and help recruit the best talent. You need those for the characteristics for a company to hit deadlines and win the market.

Investor Scenario: You visit one of your investment’s offices. If you overhear employees talking about their excitement for the mission, they’re operating at a high level. If instead they’re complaining about how much their work or a project sucks, you may want to ask the founder some questions.

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Unfortunately, many business books are a complete waste of time. Luckily, gems like the 3 books above exist and help tremendously to educate us, change our perspectives and diversify our knowledge on important subjects. I’d love to hear any great book recommendations in the comments for investors or entrepreneurs.

Lessons Learned from Observing the OnSwipe Investment Announcement

I really enjoyed seeing the explosion of stuff for local Jason Baptiste and his startup OnSwipe. To really see how this all works, you need to read all the articles surrounding the events of the last 24 hours:

This morning:

TechStars NYC Announces their companies in their first class with one Mystery company:

BostInnovation: “NYC TechStars Companies Announced”

note the allusion: “And a mystery company focused on building a “Platform for Tablet Publishing and Advertising.”  I immediately thought of PadPressed (the old name for OnSwipe) for a lot of reasons I won’t go into, but couldn’t figure out why they wouldn’t be announced.  Then it was cleared up…

Tonight:

1) TechCrunch Announces the Funding:

OnSwipe Raises, Like, A Million Dollars

2) Jason’s take on the OnSwipe Blog:

“The Road Ahead: Why Tablet Publishing Is Transforming The Way We Consume Media”

3) And Boston Angel Wayne Chang talks about his investment in OnSwipe:

“Proud To Be a Part of OnSwipe”

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So what to learn from this? A few quick lessons and observations:

1) A mystery breeds intrigue

Being the mystery company…of the first TechStars…in tech hotbed and media mecca New York City…is a heck of a way to start things off with a bang.  TechStars tries to help companies make more noise and this is huge for OnSwipe.  On top of the buzz the other companies get, OnSwipe gets a huge extra magnification as people were looking to see what that 11th company was up to.

Lesson: If you can create some intrigue…definitely do! People love a good mystery.

2) Announce it and be AS LOUD AS POSSIBLE!

So we’ve got the source for Startup Tech News aka- Tech Crunch, writing about your funding announcement, a brilliant manifesto on the company blog by a truly gifted writer and the Angel investor that was the first to commit all writing about it at the same time.  Now that’s how you burn up Twitter and the social webs!

Lesson: The more ways you can get your message out, the wider the reach and the greater the buzz you can create.  Buzz = ongoing press attention, easier recruiting of employees and plenty of opportunity for serendipity.

3) The First Commit Came from BOSTON and was a new Angel

I’ve heard more than I care to about what it’s like to try to raise angel money in Boston and so it’s thrilling to hear that the first commitment for investing in OnSwipe was a Boston Angel (see Wayne Chang’s blog post).

Lesson: Boston.is.not.dead. There’s good people and if you show you have the right idea, the right team and the right skills, you can get funded around here.

4) Jason is the PERFECT choice to execute on this idea

Jason is a truly gifted writer/blogger both on his own blog: http://jasonlbaptiste.com/ as well as for the past few months Dharmesh Shah’s widely read OnStartups Blog: http://onstartups.com/ So when you take someone who is reaching tons of people because of his gift of writing…and happens to be giving tons of great advice on being an entrepreneur, that’s a perfect fit for someone that wants to lead a company that wants to change the way content is consumed.

Lesson: If you’re pursuing an idea, think about why you are the PERFECT choice for the idea. Then make sure the investors you pitch know why.

5) Jason has the BIG VISION investors love

So besides solid domain expertise, a solid personal brand to leverage and an initial product that is apparently already impressing investors, you have a guy ready to take on a big vision of how to transform an industry.  In his post on OnSwipe, he says it all:

“…50 billion dollars of traditional media spend needs to shift online.  Our belief is that it’s in a holding pattern and can’t. There’s a disconnect between award winning beautiful ads found in print and tasteless spam ads that litter the web. We think touch enabled devices can let this change by providing advertising people actually enjoy with the best of the web layered on- mobile, local, social, and more.”

Lesson: Think BIG, but be grounded in understanding the macro trends and opportunities.  Share that vision with the world and execute.

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So to me, this is a home run all around at this stage. Yes, they still have to execute, but they’ve got an exciting and awesome set of pieces in motion.

This is the first of what I’m sure will be many more major steps in the future of OnSwipe.  I wish Jason and the rest of his team all the best and look forward to using it on my iPad soon.