Recap: A Fireside Chat with Yohei Nakajima

Untapped Capital x Automatter. Automation wonks unite!

Every month, Yohei Nakajima looks at thousands of companies. He puts up to 200 in his pipeline and pulls in data about each one for further evaluation. He sends outreach to founders and meets with dozens.

He makes high-signal, mutual connections with several potential LPs.

He makes meaningful introductions for founders.

And he works a strict 9 to 5.

In the venture industry, Yohei is one of the foremost practitioners of the principles I wrote about in “Productivity Culture” Is A Dystopia Machine. He’s one of the keenest operational thinkers around and he’s always looking for ways to automate so that he can do more in less time. That level of focus of his how and why is what enables him to manage Untapped Capital (along with Kiva cofounder Jessica Jackley) with such healthy boundaries.

Yohei was one of the first people to understand and implement automation in venture. He previously ran the pipeline for Techstars and developed myriad tools and tricks to build a world class outbound operation to reach new startups. He was also one of the first people to share an automation hack with us around the time Automatter was born. We knew we had to bring him in for a fireside chat and we’re so glad he agreed.

Read on to learn about how Yohei keeps his pipeline clean, the power of reducing context switching, and the compounding effects of making great introductions.

Under-networked founders is the thesis. Outbound is the strategy.

Early in his career, Yohei was the Director of Pipeline for Techstars. That’s where he built his outbound superpowers. He melded his pattern-matching instinct and developed his process and automation skills through an immediate feedback loop with dozens of investors and operators in the Techstars ecosystem.

The great thing about outbound is every single company I talk to, I'm already interested in investing in them.

90% of the companies Yohei meets with come through his own research and vetting followed by targeted cold outreach. Counter to conventional wisdom about vetting for credibility via closed networks, Yohei vets by product, positioning, and category before connecting with the founders. Because of this, he can form an opinion without being influenced by the typical insular, exclusive signals of the venture funding world. And the state of the business itself can be a testament to the team’s capabilities.

I realized that the benefit of doing outbound is that I meet founders, great founders, with not as strong of a network. And there's a huge opportunity, both from an impact perspective — they're strong founders anyway, they just need a couple intros to succeed — but also from a return perspective. I can get in at much lower valuations.

Preserving your pipeline’s integrity is as much about knowing and streamlining your process as it is about actively cleaning your data.

During our fireside, we talked about data scraping, which has been in the news recently for unsavory reasons. While it can be a useful tool for certain activities, some firms have been known to scrape and then blast emails to fill the top of their funnels. Yohei is much more intentional in his approach.

I look at thousands of companies a month. I add about 150 to 200 companies into our pipeline each month. I probably only add one in 100 or one in 200 companies that I come across. Every single company that's in our pipeline — at this point, 1500 — are all companies that I thought were interesting upon just looking at it. I just don't want to add too much noise to my pipeline, so I don't scrape.

Filling the pipeline creates work. That work changes across the entire lifecycle and each step demands different processes, different mindsets, and different data strategies.

To manage a pipeline this big while still maintaining healthy work/life boundaries, you can’t be constantly context-switching. So Yohei draws firm lines in his work process and then builds everything to support deep productivity:

I have a hunting bucket, which is when I'm looking at lists of startups. And if one piques my interest, I bookmark it. At that point, I don't look at anything outside of that list and maybe their website. In my hunting mode, I almost never type anything, I'm only clicking. And that's important for me. I'm not tab switching either. And the way I make sure I'm super efficient there is I use Pocket as a bookmarking tool…

The next time I sit down, I have my initial diligence task. And I sit down for a couple of hours, go through them, and I'll score them one through four, I'll add tags to them. And then I move them into one of three buckets. One is passed. Upon looking digging a little more, I just know there's no way l’ll invest. About a third go into reference, which is “Oh, okay, they're actually raised too much, they're too late for me, I just didn't see that.” Because I'm not going to look up Crunchbase in my hunting flow because it distracts me.

And then a third go into my interesting bucket, which is essentially my queue of companies to reach out to. And this is a pretty decently large list. But I just look at my calendar, I'm like, “Okay, I have the time in the next few weeks to talk to companies. Let's go through my interesting queue, sorted by score, and just reach out to the ones that I want to talk to.”

So I have my hunting bucket and then my initial filtering bucket and then my outreach bucket as three separate tasks and I'm usually never switching between those.

He generously showed us the dashboards he built for his Airtable CRM. You can see a blurred version of one of his views below. It shows at a glance how his activity compares to prior months and which deals he’s most closely tracking right now.

He also showed us another dashboard he calls “Warnings,” which triages and batches stale deals or companies where data and status as reflected in the CRM are in conflict. Most can be resolved in seconds, but they won’t be resolved unless the scaffolding is built to make it easy. Because it’s there, this CRM is a reliable view into the Untapped pipeline.

When you make good introductions, your network becomes easier to maintain.

I’m sure you’ve been there: You asked someone if they’re open to taking an introduction and you wonder to yourself if you’re being a bother. This person is doing me a favor, right? How many times can I call on their generosity?

Yohei has always been known for having a large network. And he says you need to flip that mindset around.

The way I maintain a large network is by making introductions… If you have friend A and friend B, you can, say, catch up with them once a year to maintain that friendship. But if you introduce A and B and they become really good friends and they're talking once a month, you could actually not talk to them for five years, and they're still going to be your good friends, because you connected those two people. So making an introduction is really high ROI, because it's less time I need to spend with each person to maintain a longer relationship if that relationship holds.

Making introductions is a compounding activity. High-signal introductions increase the strength of your existing network by making the web of connections within denser. As that core gets stronger, you can maintain it with relatively less attention and thus increase your reach. You can then repeat the cycle over and over.

Dunbar’s Number is a red herring.

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