Friday, December 9, 2016

Investing Like A Fox: An Interview With Legendary Angel Investor John Ason

This post was originally published on MarketTamerTradeIdeas.com

John Ason has invested in over 80 early stage companies across a 20 year career, often as the lead angel and chalking up impressive exits such as xlibris.com, diapers.com and centrak.com. This longevity is remarkable not only considering that angel investing is a notoriously high-risk field, but also that New York City’s tech scene is much younger than Silicon Valley and itself is only a few decades old. John spoke about what mental models he brings to investing, how to make an investment decision in one minute and why we need more women entrepreneurs.
What is your investing philosophy?
The great British political philosopher, Isaiah Berlin, expanded upon a Greek poet who said “The fox knows many things, but the hedgehog knows one big thing” to distinguish between two ways of seeing the world. “Foxes” have an outlook that is divergent, even contradictory, while “hedgehogs” relate everything to a single organizing truth.
An early stage angel investor needs to think like a fox as the process of creating new markets or disrupting existing markets will necessarily conflict with one’s initial assumptions. Most other investors and VCs think like hedgehogs, they are totally data driven and cannot accept anything that deviates from their usual metrics.
At the same time, startups are likes foxes—they are searching and experimenting with many different ways to make money. My job is to help a fox-startup become a hedgehog company—be totally focused on a customer segment to generate revenue—so they can attract hedgehog money to grow to scale.
How do you assess companies?
Almost all my investments are pre-revenue and pre-customer so I find business plans and those large lengthy presentation decks a complete waste of time—they cloud rather than clarify. Instead, I ask for a single page executive summary. I see about 4,000 of these pitches annually and will typically take one minute to make a decision to either meet the founders or reject. After meeting with the founders, about half I will invest in.

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