Avery Konda – If Your Intuition Sends an Alert, Listen!

Jun 20, 2019

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Avery Konda is all about positive business, impact investing, and #SocialImpactEverywhere. He is 23 years old, a podcast host, and an impact investor in 18 start-ups; all of which have a bottom line or mandate for positive impact. Avery works as the chief community engagement officer for Tandempark, an online volunteer platform, centralized volunteer portal, and volunteer management software that helps organizations recruit, schedule and communicate with their teams, while making it easier than ever for volunteers to discover and engage in local opportunities to strengthen and enrich their communities. The Social Impactors Podcast is all about impact. Avery works to highlight impactful individuals making positive social change in their communities.

“Some of the red flags of their competitive analysis just did not make sense. Their product although it was pretty was really, really just a shell of what it could be. And so all these things were red flags that you really should look at as a private investor or just in the investment space.”

Avery Konda

Worst investment ever

Avery started in investing young and slow. Putting a toe in the water, so to speak. He did not go in aggressively, but low input and low-risk investments. He would make some profit and learn, but that gave him “the investor itch”, mainly not itching for more money, but he did want to learn more and he loved the idea of making money from money. It was the sporadic start of a sometimes dangerous journey.

Young investor goes through learning phase

He learned about investing a lot, losing a lot or winning big. He learned about formulas strategies, and how some things will make money, but some things do not always work. And he learned these things the hard way, making some “pretty stupid” investments based on emotion, putting money into companies that he was emotionally attached to, which you should never do in the beginning or at any time, because you should never invest on an emotional basis. It should be very much an objective decision. He was an 18- or 19-year-old man and thought he knew the world, but he didn’t. His emotionally charged investments failed, he would regain confidence and invest again sporadically, making a little money one month, and investing more the next. Not a good idea, because you should only invest about 10% of your net worth. Sometimes he would invest more than 10%, when he points out he could have “saved that or … done the smart thing and taken my girlfriend on vacation. Because the ROI on that’s a lot more attainable sometimes.”

One early foray in angel investing tainted by emotion

Eventually he got into the private investment realm. One company he can’t name was a technology company, and again, it was based somewhat on emotional attachment as well, while trying to remain objective. He started off asking the right questions:

What’s your burn rate?
How much capital have you spent already from initial investors?
Who is in the team that you have behind it?
What was the mission?

But there were a lot of red flags. The Avery would like to highlight for young investors is the idea of using intuition, not as a basis for investing, but as a protector. If your intuition tells you something isn’t right then there is usually a good reason behind that. With this company though, Avery didn’t listen and was kind of caught in the Wow factor brought on by the “incredible product” and the “incredible team” who are doing “incredible things”, and that they “couldn’t fail”. Some of the red flags of where money was being spent and their competitive analysis didn’t make sense. And their product, although it was pretty was really just a shell of what it could be. So, as a private investor, or just in the investment space, these were red flags that you really should look. So he lost the entire investment, and at his age at the time, and the amount of net worth he had, it was a big deal and a big investment.

Company loses every month, is transparent, but does it through nonsensical spending

It did not happen overnight. He had kept telling himself there could be a way for this company to do something good, that these people could be good, but it slowly fell apart. Anytime the company would do an investor update, normally monthly, but they were still losing money, and they were losing money consistently. There were no signs of turning it around. The great thing was, the founders were very open about their failings, but while the transparency was nice, their spending didn’t make sense. They were in a new market that none of the founders had been in before. So he watched it slowly fall apart.

Failed angel uses loss as a learning opportunity

The good thing for Avery though was that he used it as a case study for himself. He stepped back and researched about where the company failed, learned about what they had done wrong, and he has used his takeaways as his guideline for investments since. He follows his guidelines to the T. And now, if his intuition warns him of red flags, his ears prick up very quickly.

Some lessons

Investing should very much be based on objective decision making. You should never invest on an emotional basis.

Only invest about 10% of your net worth. Never more.

Listen to your intuition, not for investment advice, but for warning signs. If your intuition about an investment or company doesn’t feel right, there is usually a good reason.

The next unicorn is just around the corner. Wait for it. Avery passes on wisdom form Jason Calacanis, the angel investor from Silicon Valley, who says every seven years the next unicorn business will come along.

“If an investment feels wrong, listen to your gut, listen to the intuition you have or listen to the research that you’ve been able to compile, and if the company doesn’t make sense … don’t invest in it? Eventually, you’ll come across that company where everything just falls in place. And that might be the next unicorn business.”

Avery Konda

To the young investor

Invest light, invest in multiple different pathways. Do simple low-risk investments such as Tax-Free Savings Account TFSAs or the equivalent in another country, or just learning about retirement funds and how to build them. Invest in the stock markets, but if you build that up, and let it sit, and you put little bit in over time, you could have a million dollars as a base for retirement. These are our building blocks and starting blocks. You can then take a small chunk of that, and learn how to invest in moderate and an aggressive portfolios. But never touch the retirement part.

Andrew’s takeaways

Stay focused on getting the fundamentals down. Angel and VC investment is sexy, but it is the area of investing that is of the highest risk. It’s best to own 10 or 20 companies as an angel investor, rather than betting it all on one. When we are young, we don’t have enough money to diversify across many different companies.

Develop your own guidelines. Andrew likes Avery’s idea here. There are a lot of books out there you can read and get good guidelines, but the key thing is to build your own guidelines that fit what you believe.

There’s only one sure way to get rich in the stock market. Leave your money in there for 30–40 years. The book about Warren Buffett’s, titled The Snowball, is all about this how money accumulates through the magic of compound interest. Which is also what the book Andrew wrote for his nieces is about. How to Start Building Your Wealth Investing in the Stock Market.

Don’t make the investment mistake that a lot of people have made, and then end up wishing: “I should have started a lot earlier.”

Actionable advice

Meet with a mentor, meet with someone in the industry you’re looking at who can really guide you along the way.

Andrew adds: If you’re not in an area where good mentors are accessible, read a book, and there are a lot out there for beginning investors, including his, see links below.

No. 1 goal for next the 12 months

Doing a lot of research and reading a lot more, meeting with mentors more often and getting more immersed into this world.

Parting words

Keep investing and invest when you can. Don’t wait for it.

You can also check out Andrew’s books

Connect with Avery Konda

Connect with Andrew Stotz

Further reading mentioned

Alice Schroeder (2009) The Snowball: Warren Buffett and the Business of Life