If you want Shaan to invest in your business
You have to know someone better than they do, if you want them to invest in you.
Shaan Puri is ready to invest in your business.
He kept $4 million to invest in you every year.
However, for him to invest in your business, you have to stand out.
Fortunately, it’s easy to know almost everyone’s motivations, therefore how to convince them, with these 6 timeless principles (frameworks).
Before that first you have to understand his natural rule: He invests only in early-stage startups.
Most investors do the same. The reasons are basic:
High growth potential: Early-stage startups normally work on innovative products/services, which has the potential to wreck-havoc a old-billionaires sleep. And generating significant returns is the most important target for every investor, anyway.
Lower valuations: Early-stage companies are valued in peanuts, which means an investor can acquire a laster stake in the company for lower investments, which increases potential returns once company is successful.
Closer relationship with founders: Investing in early-stage startups allows investors to establish a closer relationship with the founders, which can be beneficial in terms of providing guidance and support as the company grows. It can also increase the likelihood of future investment opportunities as the company continues to scale.
Then you need some personal personality:
Running a business is lego. But making a business that is not working to work is rubik’c cube. Understand this and work on it. It’s attractive to Shaan.
If you have low-tier talent in your team, that’s a problem. If you have high-tier team in your business, Shaan knows each of them will make each one better, which will make the business run better.
Know where you are going and why you are going there. Also know how you know whether you are going there and what to do to make you go there. Shaan knows without direction you can’t move forward.
Shaan takes complicated business stuff and makes it simple for people to understand. That was his bio for many months. So if you talk with him, use simple language.
Now we can move on to the principles that govern most decision-making.
1. The Anna Karenina principle:
Success requires many factors, but failure can be caused by a single weakness.
Leo Tolstoy's masterpiece novel "Anna Karenina" explores this concept, stating "Happy families are all alike; every unhappy family is unhappy in its own way." It is a story of Anna Karenina, a woman who is torn between her love for a wealthy cavalry officer and her marriage to a respected government official. Throughout the novel, Tolstoy weaves together themes of love, family, social class, morality, and the human condition to create a rich and multifaceted story that resonates with readers to this day.
This principle applies to business, where success demands a great team, compelling product, strong business model, and a clear go-to-market strategy.
To secure investment from Shaan, you must have all these elements in place, as a weak link could jeopardize your chances of success.
For example, a great team and strong business model won't matter if your go-to-market strategy is weak, and a compelling product and strong strategy won't matter without the skills to execute the business model.
2. The Icarus principle:
This principle warns against overreaching and being too ambitious.
Icarus and his dad wanted to escape prison so they produced wings from candles. Then Icarus flew too close to the sun and his wings melted, leading to his death. This metaphor applies to individuals or organisations that take unnecessary risks.
Over-promising or exaggerating potential can damage credibility and appear untrustworthy.
You should focus on being realistic, building a strong foundation and gradually scale up over time.
When you apply the Icarus principle, you can demonstrate a measured and calculated approach to growth, which Shaan would love.
3. The Hawthorne effect:
The Hawthorne effect refers to the phenomenon where individuals modify their behaviour or performance in response to the awareness of being observed or studied.
Picture this: you're trying to convince Shaan to invest in your business, but you're not sure what to focus on. You might be tempted to talk about your product features or your market potential, but the Hawthorne effect reminds us that there's more to it than that.
What you need to do is show Shaan that you're not just in it for the money. You need to demonstrate your passion, your commitment, and your dedication to success. You need to create a positive and energetic environment for your team, stay motivated and focused even when things get tough, and be transparent and honest in your interactions with him.
By doing these things, you're not just putting on a show for Shaan. You're actually increasing your chances of success by building a strong team culture, attracting loyal customers, and ultimately achieving your goals.
4. The Gell-Mann Amnesia Effect:
Here's the thing: people are more likely to believe what they read in the news, even if they know that the media often gets things wrong.
And that can be a problem when you are trying to pitch your business to someone like Shaan, who may come across incomplete or inaccurate information about your industry or competitors.
To combat this, you need to take a proactive approach in presenting your business to Shaan.
Provide him with accurate and comprehensive information about your business and industry, including any potential challenges and risks. By doing so, you can ensure that Shaan has a complete understanding of your business and is not swayed by potentially flawed external sources of information.
And remember that transparency is key. By being open and honest about your business, you can build trust and credibility with Shaan, increasing your chances of securing investment.
5. The Peter Principle:
It is a well-known concept in management theory, posits that people are often promoted to a level of incompetence.
This idea was first introduced by Laurence J. Peter and Raymond Hull in their book "The Peter Principle: Why Things Always Go Wrong" in 1969.
The crux of the theory is that individuals who perform well in their current positions are often promoted to higher positions, but now may not possess the necessary skills or qualifications to excel in their new roles.
When it comes to attracting investment from someone like Shaan Puri, the Peter Principle can be a crucial consideration.
Puri may be hesitant to invest in a company where the founders or management team lack the necessary experience or skills to succeed in their roles.
As such, it is important to demonstrate to Puri that the management team has a proven track record of success in their previous roles, a deep understanding of the relevant industry, and the ability to adapt and learn new skills as needed.
In essence, the Peter Principle highlights the importance of placing the right people in the right roles, and underscores the fact that success in one role does not necessarily translate to success in a higher position. By investing in companies with strong and capable management teams, Shaan can mitigate the risks associated with the Peter Principle and increase the chances of success for his investments.
6. The Red Queen principle:
The Red Queen Principle, on the other hand, is a concept from evolutionary biology that suggests organisms must continually adapt and evolve just to maintain their current level of fitness. The principle is named after the character from Lewis Carroll's "Through the Looking Glass" who famously said, "It takes all the running you can do, to keep in the same place."
Although the Red Queen principle is often applied in evolutionary biology, it can also be useful in other contexts such as business and economics. In the case of pitching your company to Shaan Puri, the Red Queen principle implies that constant innovation and evolution are essential to staying competitive in the market. This means staying up-to-date with changing customer needs, market trends, and technological advancements in order to maintain success.
By demonstrating that a company is constantly iterating and improving its product or service based on user feedback and market trends, and that it is staying current with new technologies and industry developments, you can show Shaan that you are committed to adapting and evolving in order to stay ahead of the competition.
Overall, the Red Queen principle emphasises the importance of constant adaptation and evolution in business, and provides a useful framework for entrepreneurs looking to secure investment from investors like Shaan Puri.
The takeaway:
As a savvy entrepreneur, you know that success is not just about having a great idea or a killer product. It's also about understanding the psychological principles that can influence the decisions of potential investors, like Shaan Puri.
If you want Shaan to invest in your business, obsessively learn about him, including his favourite songs. He spent 1000+ hours to read memos by CEOS to learn the writing game. Be that level crazy.
Shaan is the “The Framework Don“ so if you want to work with him, understanding the frameworks and principles that govern his decision-making is your key.
The set of framework questions he uses for vetting founders?
Are they committed?
Are they relentless?
Do they know what the hell are they talking about?
Do they learn quickly?
Have they done anything before?
Do I want to spend time with them?
Are they rational about the problem?
Are they irrational and ambitious about the solution?