Novice Investor #18 - ARR Waterfall, Andrew Tate and Greatness Without Goals
Happy August All!
For those of you in London, I am hoping you all survived the 40-degrees-plus day! Ironically, I escaped the heat to the South of France for a few days. Some holiday spam below.
At Kennet, we are keeping busy and should be announcing a new investment any day now. I also had the pleasure of visiting eStoreMedia in Warsaw last week for a team bonding session and strategy day. I am still recovering from a second-place finish in the go-karting. Congrats to CEO, Bartosz Kielbinski for taking the Win!
ARR Waterfall
This month I am sharing a nice and simple video on how to quickly generate an ARR waterfall table in a format we investors like to view. If you are raising money or report ARR in board decks, this is the best way to show it. Sometimes it can be a pain to generate. Some nifty excel formulae can make the task much quicker!
Productivity Tech
As some of you know, I am a big fan of using a Kindle over boomer manuscripts. One of the reasons is the ability to highlight insightful passages and even new vocabulary I want to remember. Up until last month, I was making highlights but never actually reviewing them (pretty pointless). Meet Readwise, a slick integration tool that takes your highlights from Kindle and sends you an email each week with five random highlights to help those insightful learnings stay top of mind. It also has a great integration into Notion, my digital place of work and organisation. It automatically creates a page in Notion with an entry for each book containing the highlights. This is very handy for me as I can add my review notes of each book before sharing them here.
There is a certain feeling of joy I get when I have organised and automated a part of my life. Readwise has definitely triggered that feeling. Recommend!
Books & Podcasts
To Be a Man - Robert Augustus Masters
For any other male TikTok users out there, I am sure you have seen the recent explosion of content creators, like Andrew Tate, pushing content that many people are coining as a revolution in masculinity. Some of what these creators say is positive like getting in shape, making money and being strong mentally. Although an awful lot of the videos contain outrageous viewpoints designed to drive engagement and often share pretty awful advice.
To counteract the influence of this questionable content my TikTok FYP is throwing at me, I read a book on masculinity from a more balanced and educated content creator, Robert Augustus Masters, who has a PhD in Psychology.
Originally, I thought the book would teach me how to hunt a deer with my bare hands or the best ways of barbequing meat. Unfortunately, it was quite the opposite. Robert is an incredibly spiritual and poetic guy which made the book seem more like a confusing therapy session than a practical guide.
There are a few nuggets of wisdom in there about channelling anger towards action as opposed to aggression and how to better communicate with people. However, unless your EIQ is at a zero baseline most of the content will be familiar already, so it is probably not worth the long and very poetic read.
Invest Like the Best - Greatness Without Goals
This is a very thought-provoking listen. Ken Stanley, a professor in Computer Science who authored the book “Why Greatness Cannot Be Planned” explains how lofty, ambitious goals cannot be accomplished with traditional goal setting or objective-based strategies. Obvious examples are penicillin’s discovery via mould, computers invented using vacuum tubes which were invented in a prior century and Viagra being discovered trying to cure hypertension. The stepping stones to any great invention or innovation were never conceived with the said invention in mind.
His epiphany occurred after running an online image breeding experiment where participants were given a picture of a blob (parent), they then got to choose the next iteration of the blob (child) which differed slightly from the parent. With thousands of people individually choosing their favourite child blobs, many great images of cars or butterflies evolved in as little as 70 iterations. He then tasked an advanced image recognition algorithm to get a picture of a car by picking the next blob that most resembled a car. Even after 30,000 iterations, the algorithm never recreated an image of a car. The conclusion is that great innovations require stepping stones (vacuum tubes), that at the time of creation would have no perceived relationship to the ultimate goal of that innovation. Innovation should not be constrained to expert panels determining what will help progress society. We need more independence to create seemingly useless stepping stones, that may one day enable much greater innovations.
To overlay this lesson on a personal level, goals such as losing weight or passing an exam still require rigid goals to be successful. For more lofty personal ambitions such as becoming a billionaire or a Fortune 500 CEO, an objective-based strategy may be less effective and cause unnecessary stress. A better strategy is to focus on exploration and curiosity. Get exposure to and learn as much as you can to notice when stepping stones align to build something novel and interesting. Always pursue the interesting. Always be bold ;).
Kennet Partners’ Investment Target
Kennet Partners is a Growth Equity investor with over 20 years of experience partnering with European and US SaaS companies. If you know any companies which fit our criteria, please reach out.
Investment size: $8m - $30m
Maturity: Over $3m in ARR
Growth: > 30%
Type: Bootstrapped and capital-efficient B2B SaaS businesses
Geography: Europe & US
Disclaimer: None of the content in the Newsletter should be taken as financial advice.