“What have you learnt?” is the best question a VC could ask of their portfolio companies. #Founders
— Rohit Sharma (@rohit_x_) January 4, 2012
When founders and startups meet with Venture Capitalists, Angel investors, or potential advisors, most of the time is spent talking about the founder’s insights, technology, product, or the market they intend to innovate, disrupt, or create. In my experience across both sides of the money-table as a VC and as a founder, the hardest and the most insightful question is often not about the knowledge founders or startups have, but rather, what have they learnt. This concise question embodies just about everything the VCs want to know about you as well as your company.
What you “know” is the platform that you stand upon and the framework for building your product. What you “learnt” is the valuable part that allows you to create something of value, hopefully – a lot of value – for your customers. This is where you have the opportunity to figure out something that others have not understood yet. Thus, ‘learning’ is your unfair edge in an otherwise irrational pursuit where the odds are against you most of the time till you trump them with your learning, not knowledge.
If knowledge is velocity, what you have learnt determines your acceleration, i.e. the second derivative.
This seemingly simple question is in fact quite complex. When a VC asks you this question, they are judging multiple things at the same time:
what does it tell them about your learning style and pace of learning
what does it say about your willingness to learn
what does it say about your willingness to fail while learning
how does it educate them about your market, your technology area, your competitors
And when VCs ask this question of their portfolio companies, they are keenly focused on the acceleration (or deceleration) of your company, not the somewhat static ‘knowledge’ you started off with when they invested.
I also think this is also the question founders should ask potential investors. Rather than talk about fund size, investing philosophy, market-trends,.. (all things you must know before meeting them), ask them the following two questions:
1. What have they learnt in the past 2 years.
2. What new behavior, investments, or market developments do they expect to occur given that learning.
If you hear answers that are rambling, unfocused, or evasive, it will tell you more than their past record or their current investing ‘thesis’.
When you hear clueful answers, it should signal to you that the VC asking this question is more likely to be thinking ‘long-term’ vs. ‘flavor of the day’. VCs that can discuss what they have learnt and how they see it influencing the next few years are rare and good for early stage startups.
p.s. The words ‘learnt‘ and ‘learned‘ are interchangeable here. i have a preference for using ‘learnt’, having learnt my english language skills reading newspapers and listening to the BBC in India and later during graduate studies in Canada. “learned” is the more commonly used form of the word in U.S.A.