You've Paid Dieus, You're Astod of the v C Now?

“Because there are so many people that I like, respect and trust in my network, the key is to filter that down to the relationships that are most informed, people that you trust for the right information.”

– Gary Swart

What you will learn

• Why prioritisation on an area of expertise is most important (02:46)
• What are the important aspects of prioritisation (04:23)
• How creating an information routine helps prioritisation (07:01)
• Why reaching out with a favour keep you top of mind (09:32)
• What is deal, delegate, or delete (11:53)
• How to structure and frame information (15:09)
• How frameworks will filter opportunities you should take or avoid (17:39)
• How to consume information while doing other things to achieve work-life balance (19:53)
• What is the important difference between an operator and a venture capitalist (24:43)
• How to avoid decision fatigue (28:38)
• The benefits of a digital detox (31:00)

Episode Resources

• ODesk
• Upwork
• Peloton
• New York Times
• Washington Post
• Wall Street Journal
• San Franciso Chronicle
• Inc. Magazine
• Fortune Magazine
• Kara Swisher
• Tim Ferris
• Amy Schulman
• Pfizer
• Darren Carroll
• Eli Lilly
• Amir Nashat
• Massachusetts Institute of Technology (MIT)
• Alexandria Cantley
• Harvard University
• Isaac Ciechanover
• Kindle ebook reader

Transcript

Gary Swart: Ross, it’s so nice to be here. Nice to see you again.

Ross: Gary, you’ve been a CEO of a large company, you’re now a venture capitalist, you have information all over the place so you have to make sense in your roles. How do you do it?

Gary: Ross, not only do I have information coming from all sources, but it’s getting harder and harder. Especially in a COVID world, you’re online, you’re always on your phone or your PC, it’s just getting harder and harder. But one of the things that I realized is that the answer is in your question. I used to be a CEO of a company, and now I’m a venture capitalist, when I was looking at my next job, I decided that I wanted to build more balance into my career. As a CEO, it’s so hard. My priorities were work, family, health, and fitness. I had little time outside those three. I found that I was trying to build more things into health and fitness, which I now redefine as balance. I would say first and foremost, it was designing a career around my prioritization of what was important to me, and balance is now more important than ever, in my work life.

Ross: There’s overload in terms of quality of work, but also in terms of the amount of information. Arguably, if you’re a VC, you have lots of companies that you have responsibilities for, and many more that you’re passing to see whether they make the cut. Surely, there’s an immense amount for you to be keeping across, not to mention just seeing what’s happening in the environment.

Gary: Absolutely. Probably most important is to prioritize, and filter yet again. I remember when I was switching from an operator into the venture job, somebody said to me, in your first year of the venture, you see a hundred things, you’re going to want to do 50 of them, and by your fifth year in the venture, you’re going to see a hundred things, you don’t want to do any of them. It’s so true. Somebody told me early on was to prioritize, come up with your area of expertise, and don’t get too distracted by everything. I was coming out of the future of work, a marketplace business, having run oDesk for nine years, now Upwork. I started by saying, I’m a marketplace guy in the future of work and my first deal was in hybrid cloud management. It’s so easy to get distracted by a shiny object. Fortunately, that turned out to be a good investment, that company was acquired by Cisco. But now I’ve learned to filter and to pick a specialty in the niche, it gets much narrower on what your hill actually is, one, it helps you just stay more organized but two, it helps you to say no to things a lot sooner.

Ross: Let’s dig into that prioritization. You’re saying part of the prioritization is saying, this is what I know, this is what I’m going to stick to and I’m not going to be looking outside of it, is that right?

Gary: Yes, it is. What happens is, things may still be appealing, and you may take a meeting, but your chances of investing in it get narrower and narrower when you have a focus. I say don’t ignore a yellow light, the light is either red or green, the problem is when the light is yellow, and you still proceed forward. One of those times, you’re going to blow through a red light and get caught so it’s just better to stop at red lights earlier and not waste time.

Ross: Are there any other aspects to the prioritization in terms of values, the time it will take, geography, or any other filters?

Gary: Early on, again, along the lines of looking at everything, I remember, I was looking at a deal that was based in Minneapolis. I remember one of my partners saying Really? You want to go to Minneapolis, like once a month for a board meeting, there’s not enough in the Bay Area? I ended up passing on that deal and it turned out to be a very good deal. I said no, because of geography. I regretted that, but now post-COVID, it’s hard to get back on a plane. I have to go to a board meeting in Boston in a few weeks.
On one hand, I’m looking forward to going to Boston, on the other hand, I’m saying oh, my gosh, it’s been nice to not have to get to the airport, fly cross country, get out to Burlington, Massachusetts, from Boston and go through the rigmarole just to sit in the boardroom. There is something around geography but I also think you can miss out on some great deals. The key is trying to organize around what’s most important to you. I always have said impact, growth and development, financial reward, and balance, on top of working with great people in something that you feel really passionate about and that you love. If it’s a great person, and it’s something you love, and the company has a huge opportunity for impact, and you’re going to learn a lot, then maybe your balance suffers a little bit, and it means getting on a plane, but trying to keep the prioritization around great people, impact, growth and development, financial reward, balance, and something that you care about, I think is important.

Ross: Before you even just look at any company, you have to get a sense of what’s changing in the world; when you say future, it means that it’s happening, it’s changing, it’s moving fast. Let’s just get back to the basics in terms of routine? Do you have an information routine? Do you wake up in the morning, look at particular sources? What are your sources of information? What are your inputs? How do you make a sense of what’s going on?

Gary: I think that’s something really important. You can have information overload just from email, so what I get inbound is unsolicited. I have to say I have never done a deal or done anything from unsolicited emails. First and foremost is who is sending you a message, who’s reaching out to you, who’s the universe of people that you trust, who would you call to ask about something important that hit your desk, probably one of the best things you can do is limit the number of sources that you trust for information. Let’s say that that’s 20 people, 20 people would be a lot. Every once in a while, maybe 21 enters onto your radar, and maybe number 17 falls off the list but keeping that universe tight, and recognizing who’s important in that universe, and then keeping in contact with those people, and staying top of mind, I think that is a really important technique.
My universe tends to get too big, and then all of a sudden, you hear from somebody that you haven’t spoken to in two years, you say, oh, my gosh, I used to love that person and we did this great thing together, and I definitely should meet them for a coffee and hear what they have to say, so I tend to get distracted because, I don’t want to say my network is so big, but because there are so many people that I like, respect and trust in my network, but the key is trying to filter that down to the relationships that are most informed people that you trust for the right information. That’s a good technique. You didn’t ask this, but you get to the next step where you like something, who do you reach out to for that second opinion? If you’re going to ask around, who do you trust as the expert for information in different areas, I think is really important.

Ross: Let’s say you have got a core group of trusted people who you know know and understand what’s going on, do you just set up conversations? How do you reach out to them? Obviously, there’s a value exchange, I’m sure they’re tapping your insights at the same time as you’re tapping theirs, how do you use them as sources of information and insight?

Gary: I think an important thing is to do the job before you get the job. What I prefer to do is figure out how can I add value to that group., maybe you’re on a board with somebody, maybe you find a deal that’s not right for you, but maybe right for a person on that list, and you’re making that connection; by doing these things, you stay top of mind. I say do the job before you get the job. I’m not reaching out to Ross, for a favor, I’m reaching out to Ross with a favor. It’s really important.
I can give you a quick anecdote. I had breakfast with somebody that I would consider on that list, or at least they used to be on the list, I would say I’d probably fallen out of touch with this person, but it was a seed investor that I trusted a lot and always respected, and we had breakfast. I said this is the sweet spot for me and here are the deals that I like, and about a month later, I met this company, and unfortunately, I met them too late. They accepted a term sheet two days after I met him for the first time. It turns out that this person I had brunch with a month earlier was on the board of that company. I called him and said, Hey, we just had brunch, I told you my sweet spot, this company is in that sweet spot. He said you know what, I just forgot, he goes, you would be perfect for this company, it just slipped my mind, and they raised so fast, they just started last week. It wasn’t top of mind a month earlier but here we are three weeks later, and I was just too late, so you have to stay top of mind, you’ve got to be in the river if you will.

Ross: Right. In terms of internet-based, media-based, or other sources, do you have a particular routine, the particular sources that you go to or not?

Gary: It’s so funny, Ross. I would say, during the election, I spent way too much time on Twitter consuming news that wasn’t important or, in some cases, accurate. I got totally pulled in and I realized that I was getting pulled into this vortex, which is maybe the curse and the beauty of a platform like Twitter. I realized that that was not the best source of information.

Ross: It can be fun.

Gary: Oh, it’s fun. It was amazing. I got consumed in probably both the positive and a negative way. I just got pulled way too in. But for us, Polaris now does a lot at the intersection of healthcare and technology. I’m trying to come up to speed on the healthcare side, it is coming mostly from the tech side. Among a lot of the distribution lists there, where they’re talking about deals being funded, and things important in that world, I would say that I’ve concentrated my efforts more around healthcare than the tech side since I’m probably more familiar with the tech side. I rely on my partners. Some of our partners are physicians by training, so they’re sending around interesting white papers, or things that are relevant to areas that we’re looking at, things like telemedicine, or remote patient monitoring, or health care services, or health IT, anything around that, trying to get smart about the future with regards to healthcare and technology, really at the intersection. We’ll ask around. I’ll try and organize materials. If I get something where it’s interesting, but not important, I might park it for later. But I’m very much a disciple of a zero inbox, deal with it, delegate it, or delete it. I find that if I table something, rarely do I get back to it. It’s almost like it must not have been that important if I tabled it. I try and deal with it, delegate it, or delete it.

Ross: When you’ve got let’s say, for example, these white papers, information around the healthcare and technology, do you take notes in any form, do you just soak that in, do you build some kind of structures or frameworks for thinking about the space? Do you identify any gaps that you are trying to fill?

Gary: We, as a firm, build the structure around the areas of interest. I personally will try and put it into a bucket, like, where would this fit in this framework? Like remote patient monitoring or telemedicine or healthcare services or health IT. Then what specifically, is this a data play, is this an infrastructure play, is this mental health, or a specific disease? I’ll try and figure out where does it fit in that framework, and then try and prioritize it. Say, okay, how important is this? For example, a few months ago, we invested in a mental health company, and then I was looking at everything around mental health, and trying to get smart about the technology plays, the biometrics, the wearables, Stella, the Pure Platform, so we went deep on that and the beauty is we have associates at Polaris, who are good at research. We ended up with a 20-page memo that summarized the whole landscape. I was able to delegate a lot of that to come up with a summary of the whole thing without having to dive into each piece of information individually.

Ross: Is that framework just internal, proprietary, visible, or shared with any people outside the firm?

Gary: That’s proprietary, although I share it with people who are close to us, who may be on the sourcing side, or experts in the field, or people who are at seed stage firms, where we typically don’t compete in order to help filter or help guide opportunities to us.

Ross: Right. That framework then becomes a way of being able to understand where things fit within a landscape and set some of the priorities which you see whether they’re relevant to you or not.

Gary: Exactly. If you think about it, a two-by-two framework of the level of interest, how interested are we on the x-axis? And how qualified is the opportunity on the Y? Things can be really interesting, just not qualified. I typically don’t do seed-stage deals, we may but we typically don’t. That means that they’re beyond the seed stage, they have some revenue. Then, where did it come from? Who sourced the opportunity? And is it a first-time founder? I often say people PowerPoint and Excel, are they, exceptional people? Are they telling a good story? Do they have some Excel to back it up? And so there’s a certain level of qualification, where it may be interesting, but not qualified. If you trust, you put a filter on the front you trust where that information comes from, then right off the bat, you have other people filtering for you.

Ross: Right. I suppose that there are two ways. One is that you need to tell them the frame, in a way if you’re delegating the research, you need to tell them what you’re looking for and what the frame is. That’s part of almost the synthesis or the higher-level thinking and then there’s still the application of that, or making sense, or the big picture, higher-order thinking which comes from that.

Gary: Yes. Some things may be qualified but not that interesting because they fit-out of an area of focus, or which may move over to the right, we may become interested if it’s so qualified, or something may not be qualified today because it’s too early, but something that we like, we can add some value, stay close, and maybe interesting later.

Ross: Is there anything you do in terms of managing your schedule to block out time in particular for searching for information or thinking about that, or deep dives, or getting into a synthesis frame of mind to see the higher bigger picture, or just scanning?

Gary: Probably not enough, I will say this. I did say that balance was more important to me and along those lines, I like to exercise. What I’ll do is I’ll save some information for when I’m on the peloton. I find that I can have the music and the instructor on the peloton on low. I actually enjoy consuming material while I’m getting a little bit of exercise, so on the bike is not a bad time to do that, stationary bike, not a road bike. I live in the Palo Alto area but we also have a house in Santa Cruz, which is about an hour away, so the drive back and forth across the hill, that’s two hours a day where I can either one, have a conference call or two, consume content, so I find that that’s a great way to get through a lot of material, and that’s listening not actually reading. On the bike, it’s mostly reading not listening.

Ross: How fast do you listen to your audio?

Gary: 1.5x.

Ross: There is such a thing as too fast.

Gary: Yes. Here’s the interesting thing. I actually read at 0.75x. Sometimes I have to reread things over. Listening is preferred for me in a lot of cases.

Ross: But you do choose to read when you’re on the bike?

Gary: Yes. To your question about diving deeper, and really looking at a landscape and trying to get smart, one of the things that I found is, that’s probably not my strength, and so leveraging others to help do that. If somebody helps organize it, I’m fine consuming it, but the actual going and organizing, it’s probably not my strong suit, so leveraging others to do that. In a lot of cases, there are experts, you can subscribe to services even. Fortunately, we have resources in our firm that can help with that. As I mentioned earlier around that mental health memo, that was spectacular, hiring somebody who’s really good at doing all the research, and creating that landscape was fantastic.

Ross: There are particular information sources; do you use aggregators? Do you go to major media publications, to industry journals, to anything which you find as consistent sources of information?

Gary: It’s all of the above. As far as the major media publications, I subscribe to The New York Times, The Washington Post, The Wall Street Journal, San Francisco Chronicle, because I live in the Bay Area. I still like that periodicals, like Inc. Magazine and Fortune and the like, I like consuming those on weekends in the backyard. I find there’s a lot of fluff, but I also enjoy some of the articles here and there. I still like the print version. For all the others, online is fine. I start my day with the New York Times digest, to me, it’s almost like world news. I’ll start with the New York Times, I’ll go to the Wall Street Journal. New York Times is general, their digest is a little bit of politics, a little bit of COVID, a little bit of late-night humor, what happened on the late night last night, I like to enjoy that as a high level. The Wall Street Journal’s financial, the Washington Post is political, so just to get through those, that can be half an hour on the peloton, 45 minutes on the peloton, just to get through the world news before I dive into industry-specific or, venture-specific stuff. I still like TechCrunch, I still like Kara Swisher, I’ll still listen to her podcast, we were talking about Tim Ferriss earlier, so listening to founder stories or interviews, I feel like I learned a lot there as well.

Ross: So this comes back to you’re very experienced, paid your dues, you’re the VC now, how do you feel that that has come together in terms of the breadth of your understanding? Or is this simply by accretion, where just over time, you’re building experience? Are there any ways that you facilitate that wisdom over time?

Ross: The interesting thing, Ross, is one of my good friends says the experience is what you get when you don’t get all the other things you want. I’m older now. I’ve had a long career. I feel like I’ve had a lot of different experiences, successful startups, failed startups, I started at a little tiny company that through a series of mergers and acquisitions, and going public, and more acquisitions, and getting acquired, was ultimately acquired by IBM. I went from employee number 25 to employee number 125,000. You just can’t replicate that experience. I feel like I’ve learned a lot of valuable lessons through this journey. I love sharing my stories. The wisdom, if you want to define it as wisdom, a lot of it was mistakes, it was the experience that came from parts of the journey that maybe weren’t enjoyable or successful even, but that I enjoy talking about. I’ll spend a lot of time chatting with entrepreneurs, speaking at various business schools, there’s a couple of case studies on oDesk, our strategy, and why we took the strategy, and even about the oDesk-Enlace merger, why we chose to merge, and I’ll still speak as the protagonist at different business schools on that case, and I enjoy that.
For me, it’s part of honing and thinking about the experiences, and what did I actually learn? But maybe, to your question, that doesn’t make you a great investor. It may make you a decent operator but that doesn’t make you a great venture capitalist. Venture capital is about making money for your limited partners. It’s not about the experience. There may be people on the players’ team that are better investors but what I like about the venture job, especially with our firm is that you feel like you’re part of a team. My strength as an operator, maybe somebody else picked the investment, but now I can help that CEO to become or be a better CEO whether it’s through coaching, counseling, or stories about some of my experiences. Because I have so many battle scars in this area, my operational experience makes me a valuable member of our team with varied skill sets.
As I mentioned, the other interesting thing is that we’re investing at the intersection of healthcare and technology. I mostly come from the technology side. But, my partner, Amy Schulmer ran consumer products and was General Counsel at Pfizer, Darren Carroll ran Eli Lilly, Amir Nashat is a Ph.D. scientist at MIT, and Alexandria Cantley came out of Harvard, and Isaac Ciechanover is a physician by training. We’ve got this varied skill set on our bench and can bring lots of different resources to bear in a healthcare technology opportunity.

Ross: Fantastic. Any final thoughts or advice? Let’s say there’s someone who’s an aspiring VC or investor, do you have any advice around this idea of thriving on overload, of making sense of what’s by its nature, too much information, to be able to make better decisions?

Gary: Yes, too much information for sure. Number one is, I would say, limit the information. How do you do that? You filter it, you define and prioritize the sources that you trust, and focus there. We talked about deal with, delegate, or delete. I would say avoid decision fatigue, like too many inputs. I struggled with this as a CEO. You have enough information, but you want more information. I’ll give you an example of this, we redid our house a few years ago, and I remember looking at two doorknobs, do you want this one or that one and saying, I like this one better, and that one is good enough, my wife would say, we need to look at more doorknobs, and I’m like, we have enough, we don’t want more doorknobs, I’ll be like, okay, so three, we’ll pick A, B, or C. It’s avoiding decision fatigue; too many inputs is not great.
Then as we talked about, how do you organize the material in a way that makes sense for you, whether it be through frameworks or the like, and then I would say, there’s one other thing that you can do, and you asked this, and I didn’t give this as an answer. You said you take time for yourself to actually do the deep dive and to think about and strategize about the future of work and what specifically, and the like; there, a really valuable thing to do is just unplug. Too many inputs or too many distractions, there’s got to be flow time where you shut this off, and you shut that off and you say, I’m just going to do this. I don’t know if you picked up on this, but I’m a multi-tasker. I’m consuming while I’m on the bike. Sometimes that can be valuable, other times not so much. Multitasking can be good but also taking the time to unplug and think about it.
If you don’t mind, I know this is running on, but just one quick story around that. My wife had a milestone birthday a few years ago and she said, we’re going away, we went to Hawaii and she said, I would like a digital detox vacation, so no devices. I said I prefer a Kindle as opposed to a hardcover book. She said, Nope, no Kindle because you can get your email. I like the Apple Watch, she was like, no Apple Watch. You can still get messages. She said, for my birthday, I would like digital detox and she packed his suitcase full of hardcover books. She did the research and had a whole suitcase filled with books. We have four kids and she brought everybody into the room and said, Okay, pick a book. I read three books in six days in Hawaii, and it was fantastic. It was so great. Now, you could have your phone in the room when you weren’t in public, but nothing at the table, nothing on the beach, nothing when everybody was together. I have to say it was really good. It was so good that on a subsequent vacation, my kid said, how about digital detox? Just a point about unplugging and taking time to not over-consume.

Ross: Absolutely. It’s not a complete cure, but it can certainly help balance out. Thank you so much for your time and your insight, Gary. It’s been a fantastic conversation.

Gary: Thanks, Ross. Sorry for my information overload. I’m so passionate about it. I probably tried to pack too much information into this conversation.

Ross: Not at all. Thanks.

Gary: Awesome. Thanks, Ross.