Nikhil Basu Trivedi: How I Make Startup Investment Decisions - nFactorial Show #2

A few takeaways from our Tuesday conversation:

- 5 parts of venture investing: finding companies to invest, making investment decisions, winning the right to invest, helping companies, getting to exit

- My investing framework: 1) early signs of product-market fit; 2) potential for decade long customer relationships (e.g. subscription model); 3) mission driven founders doing their life’s work

- Not having an investment framework can lead to investor's FOMO

- Effective AUM on Robinhood can be higher than that of incumbents because despite smaller dollar amounts, users trade more frequently

- Developing investment theses bottom-up: step 1) meet an interesting company; step 2) holistically study the entire space this company represents

- Reasons most coding bootcamps failed to scale beyond tens of millions of dollars of annual revenue: a) they all end up looking the same; b) learning to code is not for everyone

- Behind the scenes of an investment committee. 4 options per deal: strongly supportive, slightly supportive, slightly non-supportive, strongly non-supportive. To invest, at least 2 strongly supportive votes and a majority of supportive votes.

- Book recommendations: '7 Powers: The Foundations of Business Strategy' by Hamilton Helmer, 'Anti-Fragile' by Nassim Taleb

- 'Arming the rebels' thesis: Shopify grew from 2B to 90B in public markets. 45x is a dream venture investment. Nikhil bought SHOP when it was ~$80/share. His public portfolio is all tech: 10% Shopify, 10% Zoom, 15% Amazon, 15% Netflix, Apple, Salesforce, Google, Tesla, Twiter, ARKK ETF, SCHG ETF.

- Favorite podcasts: 'Stratechery' by Ben Thompson, 'Invest Like The Best' by Patrick O'Shaughnessy, The Twenty Minute VC by Harry Stebbings

- Advice to Micro-VC: don't boil the ocean, you have to be a specialist

- Favorite restaurants: 'Indian Accent' in New Delhi, 'Babel' in South Africa, 'Burma Superstar' in SF

- Favorite quotes: "History will be kind to me for I intend to write it" -Winston Churchill; "Don't be the best, be the only" -Jerry Garcia, lead guitarist of The Grateful Dead.

- Indicators to pay attention to when making an investment in a startup: growth rate, what percentage of it is organic growth rate, LTV, CAC, payback period to measure efficiency, NPS to measure product-market fit

For more insights, give it a listen: https://www.youtube.com/watch?v=1gmiSq6qXG0 [added the timestamps for easier navigation]

P/S: announcing the guest of episode #3 next week!