A VC - Latest Comments in Building Successful Long Term Relationships

Re: Building Successful Long Term Relationships

paramendra — Sat, 18 Jul 2009 03:02:55 -0000

Yes.

Re: Building Successful Long Term Relationships

paramendra — Sat, 18 Jul 2009 02:57:50 -0000

Thoughtful.

PS. How do you explain Larry Ellison's several marriages?

Re: Building Successful Long Term Relationships

fredwilson — Wed, 24 Jun 2009 18:07:30 -0000

I'll take the entrepreneur that requires a lot of shtick tolerance over a pushover any day

Re: Building Successful Long Term Relationships

fredwilson — Wed, 24 Jun 2009 17:38:20 -0000

We did not have the luxury of picking our investors when we raised USV 2004. We did end up with a terrific group of supportive and smart LPs. We got lucky

Re: Building Successful Long Term Relationships

anunigam — Wed, 24 Jun 2009 12:09:42 -0000

Hi Fred,

Great post and it is something I believe you have to do in marriage, but I wonder if that is what VCs always do in investing. I've heard stories that a certain very large search engine company had a tough time getting funding because VCs thought they were hard to work with, yet many now regret not investing in it. What are your thoughts to looking at the financial benefits for your LPs vs the relationship you have with the entrepreneurs? I think many a VC would put up with more if there is a bigger return on investment, right? Like marrying a prettier girl with many hangups for some other reward...

Anu

Re: Building Successful Long Term Relationships

fredwilson — Wed, 24 Jun 2009 09:09:13 -0000

Thanks!

Re: Building Successful Long Term Relationships

fredwilson — Wed, 24 Jun 2009 09:06:16 -0000

You've got a great life and a great family robin. I want to grow up and be like you!

Re: Building Successful Long Term Relationships

fredwilson — Wed, 24 Jun 2009 09:04:11 -0000

I get it but no investor is gonna invest if they can have control they negotiated for as part of the investment taken away from them in a 'divorce'

Don't take money from bad VCs. Do your diligence up front. One of the reasons I've been promoting blogging is there needs to be more transparency in the VC world. Entrepreneurs need to know who they are getting into business with

Re: Building Successful Long Term Relationships

Don Wenzer — Tue, 23 Jun 2009 20:38:56 -0000

Great insights on marriage and the idea of "shtick tolerance" of your spouse (even though the post is ultimately about long term relationships in the context of Venture Capital investing)

Re: Building Successful Long Term Relationships

Don Wenzer — Tue, 23 Jun 2009 20:36:09 -0000

comment

Re: Building Successful Long Term Relationships

Franchise Whale — Tue, 23 Jun 2009 15:47:34 -0000

Full entrepreneurial disclosure before marriage can save years of heartache. Fred sums it up nicely here.

Re: Building Successful Long Term Relationships

dmreinke — Tue, 23 Jun 2009 13:40:46 -0000

Love it, Fred. Been married for 13 years and plan on growing very old together. Whenever Michele and I make some implicit complaint about the other's schtick getting old, our refrain back to the other is always, "Ya, but you married me!"

Re: Building Successful Long Term Relationships

Chris Dodge — Tue, 23 Jun 2009 11:01:59 -0000

Late comment, but I'd be curious to ask about how you build and maintain the other side of your business, namely your Limited Partners. Do similar criteria apply when you decide to accept investments - particularly regarding the values and dreams components that are important to you? Are there differences whether the LPs are Institutional or private investors?

Thanks and happy belated Father's Day.

Re: Building Successful Long Term Relationships

Nicolas Sauvage — Tue, 23 Jun 2009 08:08:52 -0000

This is your best blog post ever, which says a lot. A lot to learn from you.

Re: Building Successful Long Term Relationships

fredwilson — Tue, 23 Jun 2009 08:00:14 -0000

Coltrane was playing in the restaurant we had breakfast in on fathers day. It was a fathers day present to me!

Re: Building Successful Long Term Relationships

fredwilson — Tue, 23 Jun 2009 07:58:14 -0000

Its my son's stories I hear over and over again!

Re: Building Successful Long Term Relationships

robinklein — Tue, 23 Jun 2009 01:47:45 -0000

Love this post, Fred.
I've been married 40 years!
Actively backing 40 entrpepreneurs - with my son, Saul - and my wife's constant and persistent support and encouragement.

You are a great partner, too.

Re: Building Successful Long Term Relationships

Guest — Mon, 22 Jun 2009 20:44:24 -0000

Let's stay with your analogy. I am sure in your 22-year marriage the GothamGal has had no problems leaving the kids with you on numerous occasions. However, there is another common example, we'll call her GhettoGal, who marries Prince Charming, only to discover in a year or so in that he has a drinking problem, leaves the kids on the street while he's drinking in the pub... leaves them with some crackwhores while he goes on a drinking binge, etc...

If we tell GhettoGal: "nobody made you marry him, why did you have kids with him?", well be right but not very helpful. What is helpful is a legal system that can intervene and assign custody to GhettoGal, for the benefit of the kids. And, thankfully, such system exists.

Not so in business, though. Here's what happened to me, I took money from this firm, OVP Venture Partners and had no problems with giving control, since all the right words were spoken. However, in a year they started messing with the business (NanoString Technologies), and only then did I became aware that they have been screwing around with everything for a decade or so: Their 1999 fund was $125M, they have only returned ~$20M of it to date. Their 2001 fund was $180M, and they have returned only ~$23M to date. So, you can imagine how I was "ZOMG, what have I done!!"...

I raised hell with their Limited Partners and was able to save the company, however, such method is very crude and only works for the most blatant things. It doesn't work for the finer things that need to be implemented. What is needed is a mechanism where I can stand in front of a judge and say "your honour, these people are ignorant and negligent, for the sake of the company AND their own investors (pension funds, college endowments, etc.) please give control to professionals who understand the business". Unfortunately, there is no such mechanism...

Re: Building Successful Long Term Relationships

fredwilson — Mon, 22 Jun 2009 19:51:20 -0000

Weekends are hard for me because I go out east in the summer

Maybe friday? Send me an email pls

Re: Building Successful Long Term Relationships

fredwilson — Mon, 22 Jun 2009 19:51:18 -0000

I've heard that a bunch on this one. Makes me feel great

Re: Building Successful Long Term Relationships

thewalrus — Mon, 22 Jun 2009 19:46:40 -0000

Great post Fred. As a long-time reader.....I really appreciate when you dive into these kind of topics in your blog. I have great respect for people that have the courage to express their values and ideals in their professional life. Idealism is often seen as weakness - I couldn't disagree more - being true to yourself is the only competitive advantage that can never be copied :)

....and I don't even want to get started on the concept of luck. Just don't believe in it. Luck is a choice, a relative perspective on life.

"You know, I want to be a force for real good. In other words, I know that there are bad forces,
forces put here that bring suffering to others and misery to the world, but I want to be the force which is truly for good" - John Coltrane

Re: Building Successful Long Term Relationships

Satish — Mon, 22 Jun 2009 18:53:35 -0000

I'm planning on being in the NY/NJ area Thu night through sun to hang out with my in-laws. let me know if you are free.

Re: Building Successful Long Term Relationships

Mike Su — Mon, 22 Jun 2009 18:39:23 -0000

Great post - and also will be the first of your posts that I've ever forwarded to my wife ;)

Re: Building Successful Long Term Relationships

joshpeck — Mon, 22 Jun 2009 18:04:58 -0000

A fine sentiment said well.

Re: Building Successful Long Term Relationships

Mrinal Desai — Mon, 22 Jun 2009 16:19:46 -0000

Unfortunately, businesses and long-term relationships are driven by different 'metrics' (if one at all for the latter) in terms of measuring success.

A genuine long-term relationship is independent of monetary ones and a business is all about those. What one puts first decides that nature of the relationship. I believe this is inherently why people dont trust a business or people in business.
There needs more businesses who value customer/employee success/happiness/delight first to enable 'collateral success' - the incidental profitability of their business because of their passion and values.

To exemplify the above, a teacher comes in to class and goes through the following set of questions:

She starts with a bucket, some big rocks enough to fill it, some small stones, some sand and water.

Once the big rocks were in the bucket - she asked "Is it full?"
All the students went "Yes"
Then she put the small stones in around the big rocks and asked again if it was full.
On hearing the expected "Yes" - she put the sand in and give it a shake to ask again - is it full?
Moving on after another "Yes", she poured the water into the bucket.
Now - imagine starting with water (in a relationship)