Don’t pay lip service to values
By: Daniel Bookman
Tags: Gen Z, Investing, Authenticity, Values, Venture Capital

Photo by Fineas Anton

Today was a good day. As part of my job, I get to meet with deep thinkers and people at the peak of their respective industries, and for this I am incredibly grateful. Today, I had the pleasure of meeting two fantastic individuals. The two meetings were unrelated and delved into different topics, but the content of the discussions overlap to an extent, compelling me to put this to paper.

Lunchtime: The importance of optimizing for values

Accompaniments: Chicken shwarma, red cabbage, spicy yogurt tahini, sesame seeds, onions, cilantro, pita

My first meeting was a treat. In a transactional world (indeed, in the world’s most transactional city), too often the business precedes the personal. This makes sense where we seek an immediate return on our time, but does not compute if you’re in the business of developing enduring relationships. It is within this context, that my lunch-partner and I delved into the importance of values.

Partnering with someone who shares our values is something we strive for in our personal and professional relationships. I believe we do so because these people are a mirror within which we see our own reflection — we define our own values in part by the type of people we choose to associate with.

Aligning ourselves with people who possess similar values is also an example of strategic thinking; it’s a form of risk management. In a world of endless possibilities and impossible-to-foresee situations, we cannot possibly plan for every eventuality. Therefore, the only way to risk-manage outcomes in your personal and professional relationships, is to align yourself with someone who possesses similar values to you.

We cannot predict how Person A is going to react in Situation B; it is just too large a set to predict or plan for. We therefore need to focus on Person A instead and how we can manage risk by, amongst other things, understanding Person A’s underlying drivers. Of course, predicting how person A will react is also a very challenging task, as we can be capricious, impulsive and irrational animals. The only tool we have at our disposal is therefore our ability to assess Person A’s values. Critically, we can assess their values ahead of time, without the urgency that a Situation B may impose upon us.

Values — and their relative strengths — are the tragic heroes in our daily struggle against our animal impulses. The forces of greed, fear, envy, insecurity and many others, have been hard-wired into our brain over the course of millions of years of evolution. They are here to stay, despite the fact that your ‘cave’ is now a shoe-box studio in Manhattan.

We should therefore accept that all humans will be driven by these impulses; what varies between different people — and the only possible target of our predictive and analytical powers — is the relative strength of each person’s values. While modern urban life has undoubtedly blunted our primal senses, the ability to read our fellow humans remains an innate ability. Call it ‘intuition’.

Understanding a person’s values is the only way to predict their behaviour with any accuracy. Therefore, when picking a personal or business partner, make sure you test their values; it will save you the stress of trying to predict their behaviour in an unpredictable world, as you’ll have a better feel for the guiding framework they carry moment-to-moment.

Afternoon: The application of values to today’s emerging companies

Accompaniments: Water, kombucha

My second meeting would be considered a more traditional NYC venture capital meeting. Thankfully, it didn’t devolve into a pissing contest and battle of the aphorisms. Instead, it was a thoughtful discussion about where we are today in venture and how shifts in our world are (or are not) being incorporated into the thinking of companies and investment leaders. Amongst other things, we touched on the topic of authenticity.

Authenticity is directly related to the above concept of values. To my mind, one definition of authenticity is the degree to which you give effect to, or remain loyal to, your stated values. The concept clearly has important, and more consequential lessons for personal relationships, but here I will focus instead on the business context.

The prompt for the discussion was the comparison of Goldman Sachs and Facebook at a recent conference my afternoon-partner attended. She remarked how we are now in a place where Facebook is held up for constant derision and scrutiny, while Goldmans somehow retains relative esteem amongst media and market commentators. To many people, the perceptions are somewhat inconsistent when we consider each enterprise’s stated values:

“to give people the power to build community and bring the world closer together.” “[to] bring people, capital and ideas together to help our clients and the communities we serve.”

Objectively, we would expect Facebook’s mission and values to be received with greater public adulation, especially when compared with Goldman Sachs, the paragon of modern capitalism (and the protagonist in some wonderful conspiracy theories). But the current state of affairs can be easily explained in relation to authenticity, or a lack thereof.

Facebook claims to connect the world, but in reality is a megaphone for loud, divisive voices and a source of inflammatory misinformation and half-truths. In comparison, Goldmans is a red meat-eating capitalist institution that will go to the ends of the earth to make money.

While Goldmans’ dresses its mission in more benign language, it is under no illusions as to who or what it is: and neither are we, we know exactly what Goldmans is. The main difference between Facebook and Goldmans is the degree to which they are true to their stated values.

Put another way, it is Facebook’s inauthenticity that is partially responsible for its current reputation. I believe we have a capacity to accept somebody for who they are, whether or not we agree with them, as long as they faithfully represent who they are. In contrast, inauthenticity can be fatal in a business context.

There are important lessons here as investors. These lessons become more pronounced when we consider the rising Gen Z, tomorrow’s consumer. A few brief points on this generation, as I think today’s decision makers and investment committee members fundamentally misunderstand them:

They are savvy.

They are resourceful.

They demand authenticity.

The lesson here for entrepreneurs and investors is the same as that covered earlier in the day over a chicken shwarma. Test the values of your partners and investees in the same way described, especially as the world of VC and investing has a tendency to pour fire on the flames of our impulses. Once you introduce the incentives present in VC, you materially increase the risk that your partner or investee will deviate from their values in response to said incentives.

Dessert: Food for thought

Accompaniments: Nothing.

The world is a beautifully complex and fraught place. The supercharged world of venture investing amplifies these challenges, but also presents immense opportunities. As we enter a new global paradigm, it is incumbent on us as investors to understand what our investee’s customers are demanding: trust, integrity and authenticity. More importantly, we should never settle for less than this in our personal lives too. There are only so many truly important decisions in life: make them count.

Note: This was a post I wrote in June 2019, posted in October 2019.