In a past life, I built consumer products. Building consumer products is all about “mining for flywheels” and extracting as much as possible from each well before it goes dry. Growth flywheels, talent flywheels, data flywheels, etc — all of these help your company grow bigger the faster they spin. But just like some things can make flywheels spin faster, other things can make flywheels spin slower. Adding unnecessary friction to your product onboarding flow can slow your product’s growth. Having an unappealing employer brand can slow your team growth. And so on.
Turns out, VC is a flywheel, too. And like consumer products, you want to get that flywheel spinning fast. When you invest in compelling companies, it makes it easier to meet other compelling founders, which in turn can lead to more compelling investments. When your investments return capital, you can recycle that capital into companies with bigger potential outcomes. When you surround yourself with other great partners, you increase the radius of potential investments (or potential hires). Conversely, having a bad “founder UX” when being pitched by startups can very quickly bring your VC flywheel to a screeching halt (founders never forget).
But the difference between VC flywheels and product flywheels is that in VC, the flywheel doesn’t always help you. In fact, it can sometimes hurt you. For example: just because you have access to more companies doesn’t mean you should invest in them all (you’d exhaust your bandwidth, let alone your capital base). Just because your flywheel is landing you invitations to speak at a bunch of conferences doesn’t mean you should waste your time flying all over the country (and not meeting founders). That’s because you, unlike a consumer product, are not software. You are not infinitely scalable. Instead, you need to get the flywheel spinning, but stick to your principles and the stuff that really matters for you. It’s kind of like staying up on a wave for as long as possible before toppling over near the shore. You want to specifically work on the things you need to improve in your form, not just try to copy Kelly Slater.
So get your VC flywheel spinning. But choose very carefully where and how to spend your time. Because just like a great product that’s shooting up the App Store charts, it’s hard to get the flywheel spinning again once it stops.
Thanks for reading! Feel free to follow me here on LinkedIn or X if you want to connect. And if you enjoyed reading this, I'd really appreciate it if you shared with your friends or teammates. 🙏