October 2023 · By Andrew Sutherland
I’ve made more than 100 investment decisions over the last 7 years. Most are nos, but some become investments. They could be for-profit companies, non-profits, or political candidates or projects. Seeing a lot of opportunities has meant I needed a rigorous process. So I made my own worksheet. When I’m done filling it out, it’s clear to me if I want to invest or not. Writing is thinking, after all. This tool is nice because I can look later on to see if I made good decisions. Here are the questions I use:
I ask this one first because it’s helpful to me to describe in my own words what the thing is. This makes sure I actually understand what they’re doing.
I want to live in a world with excellent education, excellent cities, and excellent computers. I want a world of abundance, and I want to see smaller gaps between rich and poor. If I can’t tell myself a story for how this investment works towards these goals, it’s not worth it for me.
This is my favorite question, and the one most frequently dispositive. I see some really interesting ideas. But sometimes founders seem too bought into their own hype. They might be visionary but very hard to work with. Asking if I would work for someone is a good proxy for if I think high-caliber people would work for this person. At the end of the day, the only way to make something successful is by hiring great people to help you. I’ve avoided a number of companies that have later blown up because of this question. Conversely, I’ve made some great investments that were shaky on other fronts but the person was someone I’d want to work for.
If everything goes right, what happens? This is a useful exercise because things are usually small when you invest, but could become big. It wasn’t clear for years that Quizlet could be a massive education company. It wasn’t clear that Replit would be big. Imagining a shiny future helps me get excited about the opportunity.
I aim to be a principal agent - to make things happen myself, not just help others make things happen. My interests are cities, computers, and education. If there’s something that would help me on my own projects, that’s exciting. If there’s something I can help a lot with, that’s exciting. If it’s interesting but I have no value to add besides money, it’s hard to justify. Other people can make that investment.
Writing this down can help me see something I’m overlooking. It can be harder for women to network into fundraising circles that are mostly men. Someone who has conquered a lot of personal adversity but is just starting out in business, for example, could be a very good bet.
If someone I respect sent this to me, that carries weight. Writing about this might provoke me to negotiate for a better deal or understand its economics better. This is also just useful to write somewhere so I can see it later.
Sometimes a thought doesn’t fit in any of the above buckets, but is still important. This is near the end so by this point my thoughts are flowing freely. I often have surprising insights here.
Here I write my final decision in one simple sentence. I nicked this from Reid Hoffman via Rahul Vohra. Simply: “You should have one overwhelming reason to do something. When you have multiple, it’s often a fuzzy decision, not well made.”
Writing a singular reason often provides me a lot of clarity. It also is a great tie-in to the next part.
This isn’t a question, but it’s the last step of the worksheet. By now, my reasoning is clear. Almost all decisions mechanically require an email to share a decision, so I might as well write it now. I can usually scooch my single decisive reason into an email, along with a couple more sentences, and boom. Decision made!