How to Keep a Beginner's Mindset Throughout Your Investing Career
Andy Louis-Charles is the Chief Strategy Officer at Custom Ink, a seasoned angel investor, and an early member of the Angel Squad network. Even with 10+ years of investing under his belt, he was amped to join the Squad and sharpen his mental models.
Below, he dives into some key lessons he’s learned through Angel Squad, including:
- Maintaining a beginner’s mindset
- The value of letting yourself be humbled
- Why your biggest win won’t be in your own industry
“Success in early-stage investing isn’t about the percentage of investments that’s successful. It’s the magnitude by which you’re right. It’s not about being right often. It’s about being right big.”
For Part 1 of our conversation with Andy, click here.
Keep a beginner’s mindset through your entire investing career
Maintaining a “beginner’s mindset” is especially important in angel investing because, at the beginning, you will almost definitely fail.
In fact, that might be the case for a vast majority of your career in investing.
That’s why humbling yourself is crucial, says Andy.
You need to understand that mistakes are the status quo and that you can never entirely anticipate what those mistakes, hurdles, or outcomes will be.
It’s about magnitude of outcomes—not frequency
Along those lines, investing in early-stage ventures isn’t about how many of them succeed. It’s about how massive those successes become.
In Andy’s words: “It’s not about being right often. It’s about being right big.”
- Let’s say you make 100 total investments.
- 97 of them may net zero or totally underperform.
- But if 3 of them are runaway successes with large payoffs, you’ve come out on top.
If someone asks Andy who the top performers in his portfolio will be a few years from now, he might make some guesses. But, in reality, he knows those guesses may be completely off.
Angel investing yields shocking victors. That’s how the game will always play out.
“In early-stage investing, you will not get it right a vast majority of the time. There’s a humbling that needs to happen. You need that beginner’s mindset.”
Your biggest win probably won’t come from your own industry
As an early-stage index investor, Andy frequently relies on input from his Squad cohort and other folks from his trusted network of angels.
If he only invests in the industries that he understands personally, he’ll miss out on huge wins.
Of course, fundamental components of go-to-market strategy, distribution, and unit economics are universal. But it’s not enough to apply those principles to sectors he has less experience in and just hope for the best.
To increase the likelihood of success, you have to maintain (again) a beginner’s mindset and be willing to solicit help from the experts who understand the dynamics of those industries.
The willingness to do the work and track down that knowledge will yield dividends.
Be open-minded to great opportunities outside of your wheelhouse
Andy frequently comes back to two complementary pieces of advice.
- Your biggest wins may come from industries that you don’t belong to.
- If you only invest in what you know, you will not be able to outperform the market.
You may get lucky and have something perfect come your way in your industry. However, if it makes too much sense to you, it may not be the innovative, runaway business idea you want.
Ultimately, you need to maintain open-mindedness as an investor.
Winning investments usually have an X factor—a combination of a reliable GTM playbook in an accommodating market, a resilient founder, and an unfair advantage in their competitive space.
If you stay humble and open-minded, you won’t need to know an industry perfectly (or even have any meaningful experience in it) to learn to recognize these signs and capitalize on them.
“As an early-stage investor, you need to be willing to learn on every single deal and remember that your biggest winners may actually come from industries where you have little-to-no background.”