Soapbox of the Month

Rigorous Thinking

Written by Maria

“What do you think?" There isn’t a day that goes by when one of the GPs at my firm doesn’t ask me this question, and honestly, I used to hate it. I’m often bad at articulating them clearly, not because I don't have opinions.

It’s not that I don’t have ideas about a company or initiative we're working on. My opinions were usually a mix of gut feelings and bias, but I hadn’t dug into why I thought a certain way. I’d never stopped to ask myself, "What do I think?"

Over time, I noticed a pattern in my responses to this question. I’d ramble about my general impressions of a company when asked what I thought. I’d sprinkle in details from founder conversations or some diligence I’d done, but mostly, I’d speak in broad strokes, unstructured thoughts that even I struggled to make sense of. Unsurprisingly, this approach was not only unconvincing but often left me more confused about my perspective (ironic, right?) 

Over the past few months, I’ve started diving into becoming a more rigorous thinker. I’m sure my approach will evolve, but I wanted to capture how I’m beginning to build a more robust framework for thinking through decisions. In startups and VC, it’s easy and often incentivized to ignore truth for speed in the short term. However, you can move faster and make better decisions by developing structured pathways for clear thinking.

One of the best ways to become a rigorous thinker is using mental models. This concept isn’t new, and it’s been discussed by countless others for centuries, but I wanted to share how I’m applying two models, Circle of Competence and 2nd Order Thinking, to build more rigor in my thinking.

Circle of Competence: 

A circle of competence is an area where you have knowledge or expertise. When you operate within your circle of competence, you have a competitive edge because you understand the history, trends, attitudes, and behaviors within that space. Over time, you can expand this circle, strengthening your understanding and intuition. 

Shane Parrish describes it well in The Great Mental Models: "When we are within a circle of competence, we know what we don't know. We can make decisions quickly and accurately, define problems precisely, and identify additional information we need. We have a proven track record and can adapt our language to different contexts, zooming in and out seamlessly on what is knowable." 

For a long time, I struggled with the concept of a circle of competence, often dismissing it by thinking I didn’t have enough experience to be competent in any area. And while I may not be Mark Andreessen (not close…yet), I’ve realized that I do have emerging circles of competence rooted in my own life experiences. Right now, these circles are shaped by the industries that influenced me growing up, the work of the adults around me, and my background as a student. Circles of competence are built gradually and adapt as environments and dynamics shift. To establish and maintain these circles, you need a desire to learn, a commitment to monitor and test your assumptions, and regular feedback from those outside your circle. 

As I work to build a circle of competence in venture capital, I'm consistently putting myself in situations where I can learn from those with much more experience in the industry. Understanding how they think, combined with my own experiences, time, and practice, is helping me improve at assessing companies—and, hopefully, becoming a better investor. It’s not about being written or being wrong. It’s about having exposure to multiple ways of thinking and understanding the context and nuance around them. 

2nd Order Thinking: 

Second-order thinking is about pushing your mind beyond an action's immediate cause and effect. It’s the ability to consider the second and third layers of consequences resulting from a single decision.

Take dinner, for example. I have two options if I'm hungry: make a balanced meal at home or grab Raising Cane’s down the street. The first cause and effect for each is straightforward: the home-cooked meal will not be satisfying taste-wise, while Raising Cane’s satisfies my cravings because I love tenders and Cane’s sauce more than anything else! Based on first-order thinking, Raising Cane’s is the obvious choice. But if I think in the second and third layers, things look different. Eating at home may not fulfill all my cravings, but I’ll nourish my body correctly, sleep better, and have fuel for tomorrow’s workout. If I choose Raising Cane’s, I’ll enjoy the meal immediately, but my tummy will inevitably hurt, I’ll have inadequate nutrients for my workout, and I'll feel sluggish all evening. 

First-order thinking often favors short-term decisions, while second-order thinking encourages us to consider the longer-term consequences of our actions.

Second-order thinking can sometimes slow decision-making as people evaluate all possible adverse outcomes. I use it as a tool to make more informed choices without expecting to foresee every result. It’s about challenging myself to think more deeply about the effects of my decisions.

Second-order thinking is a critical tool when evaluating companies as an investor, where there’s a constant stream of companies to assess. Thinking through the second and third outcomes of my choices helps me look beyond the immediate attraction of a company or its initial traction to consider how it aligns with our firm’s investment goals and thesis. Second-order thinking also guides my decision-making when choosing which companies to spend more time on or push forward in the pipeline. It keeps me mindful of my blind spots and helps me consider the potential downstream effects of my choices.

Building a more rigorous approach to decision-making has changed how I handle the dreaded “What do you think?” question. Using tools like the mental models above, I’ve gone from rambling through gut reactions to articulating clearer, more thoughtful perspectives. I’m learning to dig into why I think a certain way and what effects my decisions have in the long term. While there’s still much more to learn, these mental models are helping me tackle decisions with greater confidence and thought. 

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CAREER 🧑‍💻

Micro-retirement. Maybe you’ve heard of it?

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Micro or mini retirements are similar to a sabbatical - they are non-permanent breaks from work that might last anywhere from a few months to a few years. It’s been a rising trend over the last few years. People in their 20s and 30s and even in their 50s are taking a break to travel, spend time with family, and pursue hobbies or other personal interests.

Here’s a great podcast episode by WSJ: How Some People Work Mini-Retirements Into Their Career. Also love this article outlining the potential financial risks of taking a micro retirement.

Our take: while micro-retirements often go hand-in-hand with privilege, success, and support, we’d love to see this trend continue. Taking a break from work can be so healthy. We hope to see a workplace that encourages people to explore the world and their interests outside of work.

CULTURE 🌈

It’s election season… and this year electing betting is legal in the U.S. Wild timing.

Here’s a great podcast episode by The Prof G Podcast with CEO of Kalshi, a regulated exchange and prediction market that lets you trade on future events. The episode gives really great insight into Kalshi’s journey and their logic behind why they think election betting should be legal.

Robinhood also announced its own presidential election market last week.

While election betting is taking off with over $100 million bets on Kalshi, there’s been a ton of criticism, too. There are many concerns around election betting including:

• people are confusing betting markets with polling data (note that most of these bets are being placed by men!)

• fears that betting on elections could generate efforts to manipulate the outcome of a given race

• market odds can be manipulated with large wagers

• someone with a large bet might be incentivized to manipulate voters

• civil unrest from folks who placed bets on a candidate that lost the election

Our hot take is that this could be a potential disaster… Please bet responsibly. Maybe invest the capital you wanted to bet into your Roth IRA or retirement account…

CAPITAL 💸

Every VC is a little different, but most first calls with investors at the pre-seed are much more casual than you think.

Many first calls are simply for the investor and founder to get to know each other better. The best first calls are with founders whose “pitches/story” flow smoothly and don’t feel rehearsed (even though they usually are).

We both loved Amanda Roberts's (former GP @ Cowboy Ventures) takes on her pitch feedback.

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