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| Jose Berengueres, researcher and angel investor, shares his top 5 thinking tools. Photo: Natasha von Deringer. |
10 years fast forward, I have now switched sides and angel invest in my spare time. I think of it more as paying to mentor where my mission is to help entrepreneurs avoid the rookie mistakes that I made in my days. In any case it is certainly as exhilarating as my other hobby, which is sailing.
I think that Stockholm is the Silicon Valley of Europe and I spend a lot of time here. I would like to share the secret thinking tools that I use as an angel investor.
Well, first I should say that I rarely invest in ideas but in the person in front of me. You can change the idea, but one can rarely change the person. Second, I want to share a dirty little secret of mine. Even though I have published numerous papers, and I have a PhD in bioinspired robotics, and I give talks here and there… My IQ is not very high. In fact, it is pretty average – my family and my little sister can confirm this. However, early on I discovered that when I had a pencil in my hands, I could solve complex problems really fast, and effortlessly ace tests and other problems that life throws at me. So, I am going to share my top five thinking tools when it comes to mentoring and angel investing.
1. Business model canvas
When I teach the biz canvas tool to the innovation MBA students in Mexico, it goes like this. First, I ask the class to analyze the Zara clothing company using the canvas. This invariably is followed by some heavy sighs, protests and “Oh not the biz canvas again”. But I tell them (in a deep Elizabeth Holmes voice and psycho looks as much as I can): “JUST DO IT”. They do it. And they typically produce a piece of crap canvas because (garbage in, garbage out) it is based on a (naturally) superficial understanding of Zara. Then I show them an obscure documentary of the company from before the IPO that really tells you how Zara operates inside (what we call the profit model, the business logic and value creation model). Then I tell the students: “Redo the canvas”. Now, the canvas is completely different. And they go from indifference to “Aha…” Bottom line, if you don’t think the biz canvas is awesome it’s because you don’t have accurate information. Before making a canvas, start by doing deep research.
2. Wardley maps
Well, first I should say that I rarely invest in ideas but in the person in front of me. You can change the idea, but one can rarely change the person. Second, I want to share a dirty little secret of mine. Even though I have published numerous papers, and I have a PhD in bioinspired robotics, and I give talks here and there… My IQ is not very high. In fact, it is pretty average – my family and my little sister can confirm this. However, early on I discovered that when I had a pencil in my hands, I could solve complex problems really fast, and effortlessly ace tests and other problems that life throws at me. So, I am going to share my top five thinking tools when it comes to mentoring and angel investing.
1. Business model canvas
When I teach the biz canvas tool to the innovation MBA students in Mexico, it goes like this. First, I ask the class to analyze the Zara clothing company using the canvas. This invariably is followed by some heavy sighs, protests and “Oh not the biz canvas again”. But I tell them (in a deep Elizabeth Holmes voice and psycho looks as much as I can): “JUST DO IT”. They do it. And they typically produce a piece of crap canvas because (garbage in, garbage out) it is based on a (naturally) superficial understanding of Zara. Then I show them an obscure documentary of the company from before the IPO that really tells you how Zara operates inside (what we call the profit model, the business logic and value creation model). Then I tell the students: “Redo the canvas”. Now, the canvas is completely different. And they go from indifference to “Aha…” Bottom line, if you don’t think the biz canvas is awesome it’s because you don’t have accurate information. Before making a canvas, start by doing deep research.
2. Wardley maps
Wardley maps is a tool that maps the value chain of a business versus the risk of commoditization for each of the components in the chain. It is useful to know what parts of your business (or startup) are at risk of being commoditized by Amazon’s AWS for instance and which ones to keep in-house. We use this tool to decide whether to add certain functionality to an app or to exit certain functionality (pick your battles). This is the most revolutionary tool since the business canvas was invented.
3. Jobs to be done theory
This is a very powerful thinking framework. I am amazed at how many entrepreneurs do not really understand what their users are trying to accomplish when they use their website or a service. For example, a coffee shop. Most people think that people go to coffee shops to drink coffee. That is soooo incorrect. Most people go to a coffee shop to work on their laptop and to feel less lonely or perhaps to socialize if they see someone that piques their interest. Once you understand the jobs that your customers are trying to accomplish – it is straightforward to improve a product.
4. The 360
The 360 is a tool where you ask various generations (millennials, gen X, Z, Y, boomers) for their opinion on the app design and UX. It is amazing how many blind spots we have due to our age. If your team is only composed of white male engineers, you definitely can benefit from a 360. Point in case, why did Instagram succeed, when the other 100 or so founders trying to replicate the same idea (including me) failed? The founders of Instagram had taken photography lessons. They knew for example the importance of filters in photography, why square photos are easier to take than 3:4 photos, and other important things that they don’t teach in computer science or economics schools. Note: It was a girlfriend who suggested to add filters.
5. Gartner’s hype cycle and magic quadrants
Gartner’s hype cycle and magic quadrants are tools I use to avoid investing in hyped ideas. I – like Warren Buffet – like boring ideas because there is less competition (less Softbank, weworks and thermos like sexy ideas…). Also, if a founder is doing a “boring” non-hyped idea, it is a very good sign that he is a true geek and not a dilettante or worse, a wantpreneur! (You should e-mail me if you are the first type! I want to talk to you.) One example is citationsy.com – one of the startups we invested in this year. It is a tool that helps academics manage the references in the papers they write. When the opportunity to invest presented, I wired the money without having met or talked to the founding team even once! Who the hell does a startup about academic referencing?!! Later it turned out the founder is a complete brilliant geek! Love him. One of the first thing we did is a 360; the sales have tripled since.
/Jose Berengueres
3. Jobs to be done theory
This is a very powerful thinking framework. I am amazed at how many entrepreneurs do not really understand what their users are trying to accomplish when they use their website or a service. For example, a coffee shop. Most people think that people go to coffee shops to drink coffee. That is soooo incorrect. Most people go to a coffee shop to work on their laptop and to feel less lonely or perhaps to socialize if they see someone that piques their interest. Once you understand the jobs that your customers are trying to accomplish – it is straightforward to improve a product.
4. The 360
The 360 is a tool where you ask various generations (millennials, gen X, Z, Y, boomers) for their opinion on the app design and UX. It is amazing how many blind spots we have due to our age. If your team is only composed of white male engineers, you definitely can benefit from a 360. Point in case, why did Instagram succeed, when the other 100 or so founders trying to replicate the same idea (including me) failed? The founders of Instagram had taken photography lessons. They knew for example the importance of filters in photography, why square photos are easier to take than 3:4 photos, and other important things that they don’t teach in computer science or economics schools. Note: It was a girlfriend who suggested to add filters.
5. Gartner’s hype cycle and magic quadrants
Gartner’s hype cycle and magic quadrants are tools I use to avoid investing in hyped ideas. I – like Warren Buffet – like boring ideas because there is less competition (less Softbank, weworks and thermos like sexy ideas…). Also, if a founder is doing a “boring” non-hyped idea, it is a very good sign that he is a true geek and not a dilettante or worse, a wantpreneur! (You should e-mail me if you are the first type! I want to talk to you.) One example is citationsy.com – one of the startups we invested in this year. It is a tool that helps academics manage the references in the papers they write. When the opportunity to invest presented, I wired the money without having met or talked to the founding team even once! Who the hell does a startup about academic referencing?!! Later it turned out the founder is a complete brilliant geek! Love him. One of the first thing we did is a 360; the sales have tripled since.
/Jose Berengueres
