Skin-In-The-Game — On Giving and Receiving Advice

Panostaja (https://panostaja.fi/en/) a Finnish investment and growth partner company, asked just recently asked me to join their advisory network. The idea of the network is to as Panostaja states in their website to bring in

“ New perspectives and a diverse range of experience provide an optimal foundation for success. This is why we have put together an advisory network comprising top experts in their fields that can help realize the growth strategies of our segment”.

I am honoured to be part of the group as there are seasoned entrepreneurs involved.

As I started in the group I began to wonder what is the actual investment philosophy, what kind of principles I am using to make judgment and how should I approach the task? I am curious to learn from the other group members, but obviously I have to do my own homework as well.

I came across a fantastic tweet by Andrew Duggan (@ajduggan). In this tweet he summaries Nassim Nicholas Taleb’s book Skin-in-The-Game into 10 tweets. I took the liberty to select a few to reflect and ponder my own principles.

1. Don’t take advice from people who don’t have skin in the game — Panostaja is a bit different venture capital firm. They invest from their own assets. This gives a totally new level of shared risk taking and co-entrepreneurship mode. When giving advice to Panostaja I try to apply the same mentality. “If I would follow my own advice, would I allocate money on it?”
2. You will never fully convince some that they are wrong: only reality can — The investment decisions are always somewhat betting on the future. We may have opinions about the future: how the market will evolve, what the entrepreneurs think, what competitors are doing. It is vital to acknowledge that our opinions are just opinions and have a fortitude to look for reality to give us signs
3. Doers win by doing and not by convincing — Like Michael Jordan said the things he learned at Basketball was through errors. The ability to make mistakes, correct and try again is the sign of an entrepreneur.
4. People will select mediocrity over uncertainty — This means that we are more prone to select something we already know over unknown even if the current solution is not the optimal. All companies wanting to innovate, disrupt, change, grow have to overcome the customers need to be play safe.
5. What matters is that she / he is afraid of losing. — More you have to lose, the more fragile you are. — I feel that the big impact from co-investor like Panostaja is that you are not alone. The fear of losing is better when you have someone to share the same fear with. The trust between entrepreneur and investor is key to create peace of mind to make leaps of faith.
6. Society doesn’t evolve by consensus, voting, committees, majority, conferences or polling; only a few people suffice to disproportionately move the needle. — the doers, entrepreneurs, the ones who really want to work are the ones investments should be looking for. The ideas, products, services do not manifest the value if there isn’t someone doing something valuable.

With these thoughts I’ll embark to explore the world of investments from a venture capital point of view. Happy to be part of the journey and looking forward to hearing from the future entrepreneurs and doers what you think.

Let’s stay in touch,

Mikko-Pekka