Chris Sims is a partner at The Alchemy Fund, which invests in early-stage startups in New England. He’s been on both sides of the startup coin, as a founder and as an investor. He’s also an MFN advisor, and we’re happy that he’s generous enough to share his experience and tips with our community. Video shot and edited by MFN Communications Associate Natalia Giacomozzi.
VIDEO TRANSCRIPT
I’m Chris Sims. I spent the first half of my career in Silicon Valley, primarily working on startups as a founder. I even started a company right in my living room with some college friends. After that experience, I moved back east and began working with larger companies in consulting roles and as a general manager in a public company. I’ve had the opportunity to manage both very small and very large organizations, noticing the similarities between them. A couple of years ago, I founded The Alchemy Fund, marking my debut into the world of investing. Now, I invest in and work alongside early-stage startups, assisting their founders.
I often point to Sherlock Holmes as an excellent guide for founders. His stories provide insight into the customer discovery process and the concept of being “hypothesis-driven.” We often hear about the importance of being hypothesis-driven and testing those hypotheses, but what does that truly entail? When you delve into a Sherlock Holmes story, you’ll find that a significant portion revolves around Watson observing what seems like pure magic, struggling to comprehend it. Then, in the story’s final sections, Holmes explains his deductive process.
It’s intriguing because Holmes displays certain behaviors that are valuable for founders. For starters, he begins with a strong hypothesis, guiding where he should look and what he expects to find. If he discovers anomalies or gets confirmation, he progresses; but if proven wrong, he quickly abandons that hypothesis. Consequently, he cycles through many hypotheses rapidly until he zeroes in on the correct one, always inching closer to the truth.
To an outsider, Holmes’s deductions might appear magical, as if he knew the answers from the beginning. However, revisiting the stories shows that he makes mistakes. He sometimes chases false leads, wasting time on avenues that lead nowhere. But he’s quick to discard unproductive paths.
This is similar to the startup journey. Success is about the speed of iteration. It’s not about always being right, but about how quickly you can pivot when you’re not. Considering the limited resources and time a startup has, the effectiveness of an early-stage startup can be gauged by how many approaches they can test within a given period. For instance, in a year, if a startup can experiment with 50 different strategies instead of just delving deep into two—with each having a mere 5% chance of success—the former is more likely to find success. Testing just two approaches significantly diminishes those odds.
