E219: How Emerging Managers Can Beat Multi-Stage Firms
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this insightful episode, venture capitalist Mike shares his unique approach to pre-seed investing through his firm "Coachable Superheroes," which focuses on impact investing in education, climate, healthcare, and economic mobility. (01:22) Mike discusses his distinctive 30-day evaluation process where he works directly alongside founders to assess their true character and capabilities beyond traditional pitches and credentials. The conversation explores the critical importance of "earned secrets" - insights gained through deep domain expertise - and how the collision between unknown opportunities and incredible talent generates outsized returns. (11:38) Throughout the discussion, Mike emphasizes the value of solo GPs in the venture ecosystem, their operational empathy, and their ability to move quickly with conviction.
- Main Theme: The evolution of early-stage venture investing toward deeper founder evaluation, impact-driven opportunities, and the unique advantages that solo GPs bring to the pre-seed ecosystem.
Speakers
Mike (Solo GP at Coachable Superheroes)
Mike is a solo general partner at his impact-focused venture fund "Coachable Superheroes," which invests in pre-seed companies across education, climate, healthcare, and economic mobility sectors. He brings extensive operational experience as a former multiple-time CMO and has worked at prestigious institutions including Bank of America and Vanguard. Mike is also the host of the podcast "Alone Together," which focuses on the solo GP community and has developed a unique 30-day founder evaluation process that sets his investment approach apart from traditional venture capital methods.
Key Takeaways
Master Action-Oriented Self-Awareness
The most predictive trait for startup success is what Mike calls "action-oriented self-awareness" - the ability to execute quickly while simultaneously internalizing and responding to market feedback. (02:14) This isn't just about moving fast or being coachable separately; founders need both capabilities working in tandem. Those who execute without feedback become stubborn, while those who absorb feedback without action become paralyzed. The most successful founders demonstrate this dual capability by rapidly testing hypotheses, learning from results, and pivoting their approach based on real market signals rather than assumptions.
Seek Earned Secrets Through Domain Collision
Ben Horowitz's concept of "earned secrets" becomes exponentially more powerful when domain expertise collides with unknown opportunities. (11:37) Mike explains that the greatest returns come from founders who possess deep, hard-won knowledge in one area and apply it to solve problems in adjacent or entirely different spaces. For example, understanding that every mental health problem becomes a financial problem led to the creation of Moneystack, which provides financial counseling for people with mental health issues. (14:09) This creates massive market opportunities that remain hidden from competitors because so few people possess the unique combination of insights needed to see the connection.
Focus on Value Creation Over Value Extraction
The path to building trillion-dollar companies requires an obsessive focus on creating massive customer value rather than extracting maximum revenue from day one. (15:54) Mike emphasizes that if you can solve genuinely massive human problems - like energy, mental health, or economic mobility - the monetization will naturally follow. Companies that achieve the largest outcomes typically create platforms that benefit entire ecosystems rather than zero-sum relationships with customers. This approach not only leads to better unit economics and customer loyalty but also attracts the kind of talent and resources needed to scale to enormous market sizes.
Evaluate Founders Through Direct Observation
Traditional venture capital relies heavily on pattern matching and pitch presentations, but Mike's 30-day embedded process reveals the critical difference between what founders say they'll do and what they actually execute. (30:44) The biggest mistake investors make is superimposing their own story onto founders rather than observing actual behaviors and decision-making processes. This direct observation method helps identify founders who possess the psychological frameworks necessary to navigate the unknown challenges of building billion-dollar companies, rather than those who simply interview well or have impressive credentials.
Leverage Solo GP Advantages for Speed and Conviction
Solo GPs offer unique advantages to early-stage startups through faster decision-making, operational empathy, and cultural alignment with founder struggles. (23:16) Unlike large venture firms with complex partnership dynamics, solo GPs can move quickly with conviction and provide genuine operational support based on recent hands-on experience. They understand the resource constraints and hustle required at the pre-seed stage because they face similar challenges in building their own funds. (27:39) This alignment creates better partnerships and often leads to more favorable terms for founders while maintaining strong network connections through the broader solo GP community.
Statistics & Facts
- Mike's fund invests in four specific impact sectors: education, climate, healthcare, and economic mobility, with a focus on pre-seed companies typically under $10 million cap. (16:52) This sector focus is based on the thesis that solving big human problems naturally creates large market opportunities without requiring aggressive value extraction strategies.
- In Mike's 30-day evaluation process, historically only one in two companies that go through the full assessment receive investment. (02:01) This selectivity rate demonstrates the rigor of the evaluation process and helps ensure that only founders with demonstrated action-oriented self-awareness receive funding.
- Mike has completed eight investments from his current fund plus 25 angel investments in his "fund zero," providing a substantial data set for testing his founder evaluation methodology. (06:32) This track record allows him to continuously refine his approach based on actual founder performance rather than theoretical frameworks.
