A VC - Latest Comments in Doubling Down

Re: Doubling Down

fredwilson — Sat, 15 Aug 2009 12:31:22 -0000

Good suggestion. I'll add it to the list

Re: Doubling Down

thomasloarie — Fri, 14 Aug 2009 14:32:52 -0000

I fully agree. Learn what the problem is (internal or external), analyze if the value proposition is still valid (the environment does change increasing/decreasing the value of the opportunity), and determine if the management team is up to the task. I have been in deals where some investors back out and others doubled down. Those who doubled down ended up big winners.

Re: Doubling Down

dmreinke — Fri, 14 Aug 2009 10:20:52 -0000

Good post for those of us facing the entrepreneurial double-down question. Fred would love to see a post by you talking about the impact of doubling down for entrepreneurs.....when it works, it's a beautiful thing. But even when it's the right decision at the time, it doesn't always lead to success for the entrepreneur. No portfolio for us!

Re: Doubling Down

Mohit — Thu, 13 Aug 2009 02:51:53 -0000

All of my notes only go to show the hard work you put into doubling down- and how wonderfully and simply you communicated the thought!

You are on my #followthursday (!) :-)

Re: Doubling Down

fredwilson — Wed, 12 Aug 2009 08:33:14 -0000

I call em as I see em (or feel em in this case)

Re: Doubling Down

Donna Brewington White — Wed, 12 Aug 2009 06:48:16 -0000

Very cool! Look forward to that. BTW, Happy Birthday and PLEASE do not say that 48 is old. (I'm mixing comments here for sake of efficiency - that was a different post.)

Re: Doubling Down

fredwilson — Wed, 12 Aug 2009 05:29:11 -0000

I am going to write a post about focus today

Re: Doubling Down

Donna Brewington White — Tue, 11 Aug 2009 02:46:50 -0000

So many applications for this advice...not just for VC investment decisions. This is one I'll save and read over a few times...and of course pass along... Reminds me loosely of a quote I heard recently: "Focus is not about deciding what to do with more intensity. It's about deciding what not to do at all." I don't want to force the comparison, but your doubling down example is about focus when the stakes are high and the potential gain even more so. So a more expanded view is the dual approach...deciding "what not to do at all" AND "what to do with more intensity." Thanks once again, Fred, for helping to expand my thinking.

Re: Doubling Down

TDKlein — Mon, 10 Aug 2009 10:57:04 -0000

Fred,
Your post reminded me of another piece of sage Doubling Down advice i received early in my VC career: if you go back into a troubled investment, get to either the top or the bottom of the right side of the balance sheet and make sure you have the capital to stay there. In your case, you had the key ingredient to successfully doubling down, enough additional capital to see the investments all the way through. Congrats to you and your investors for sticking it out.

Re: Doubling Down

brianberliner — Sun, 09 Aug 2009 21:11:59 -0000

Fred: Great post, as is usual for you.

This really got me thinking about how VC follow-on investment decisions are made, and reminded me of the time I spent with Sevin Rosen Funds. I learned a ton from observing those guys. In my opinion, it's not just the status of the company, market, and competition that is taken into account when the "doubling down" decision is made. The VC will always have other factors in the back (and at times forefront) of their mind that will also lead them to double down more often than an outside observer (like myself) would think. I added some commentary on my blog:

http://www.brianberliner.co...

Enjoy!

-Brian

Re: Doubling Down

Mohit — Sun, 09 Aug 2009 21:08:22 -0000

Thanks. The factors you would change "the strategy, team, or cost structure, or all three" are factors you were already evaluating as part of regular board meetings? Would it be fair to say that you would have picked companies that you could have supported with your follow on fundraising, specifically ones that would have fit the risk-return profile of your new "core" portfolio?

To rephrase, did you exit companies that went on to make it big that just did not fit the risk reward profile of your new "core" portfolio?

If this is true, you are illustrating that a VC's decision making is, for starters, pretty difficult on the VC as well.

Re: Doubling Down

Carl Rahn Griffith — Sun, 09 Aug 2009 21:07:04 -0000

They are certainly the real-deal, Fred - and continue to impress.

Can see them delivering a few great albums over the years ahead. They have too much 'Sheffield Steel' to split over 'artistic differences' - creative pragmatism with lashings of irony and wit. It's a pleasure to witness their youth and talent. Gits ;-)

PS, interesting season-opening match at Sheffield Wednesday on Saturday - where has one year gone? Wow. Scary.

Re: Doubling Down

Jim Peterson — Sun, 09 Aug 2009 20:59:09 -0000

Fred:

Great post that also applies to stock investing.

Doubling down on great companies purchased in the first quarter that sank with everything else in early March would have resulted in nice returns becoming "outsized returns". I wish I would have doubled down on Apple and Johnson and Johnson (for instance). I will next time.

Re: Doubling Down

$3236 — Sun, 09 Aug 2009 19:45:35 -0000

Fred - Great post and thanks for the double down. I've often thought the double-down situations were analogous to betting your hand in hold 'em. It seems the decision for the VC is often, "will we put more money in to see another card and how much does that card cost?" If the cost is small relative to the amount of money in the pot, you pay to see the card. If the hand isn't that strong and the cost for another card is high relative to the money already committed, you fold.

Re: Doubling Down

fredwilson — Sun, 09 Aug 2009 18:36:24 -0000

Yes. People do change. But they have to buy into the change

Re: Doubling Down

fredwilson — Sun, 09 Aug 2009 18:35:23 -0000

This blog is my book. Its all I can do to keep it fresh

Re: Doubling Down

fredwilson — Sun, 09 Aug 2009 18:35:20 -0000

Agreed. Don't stay away from VCs. Stay away from bad VCs

Re: Doubling Down

fredwilson — Sun, 09 Aug 2009 18:34:36 -0000

No worries. I nuked the dup

Re: Doubling Down

fredwilson — Sun, 09 Aug 2009 18:31:19 -0000

Yup. It all comes down to team

Re: Doubling Down

fredwilson — Sun, 09 Aug 2009 18:29:28 -0000

Saw your sheffield boys twice this past week carl. They still rock and are doing your city proud

Re: Doubling Down

GlennKelman — Sun, 09 Aug 2009 13:56:02 -0000

Great post Fred; is it possible to use your leverage to change a company's strategy or cost structure without changing the management team? In other words, will a CEO ever enthusiastically and faithfully execute on an idea that she had previously resisted?

I have seen it happen; in fact I've been someone who resisted an obvious change myself until an impending financing forced us to think through where exactly we were headed. But the change we went through seemed miraculous and unusual to us when in fact it may be more commonplace than I realized.

Re: Doubling Down

ShanaC — Sun, 09 Aug 2009 13:44:50 -0000

Posted to FB, I know a lot of people running panicked with their life, or seeming panicked, or unsure, and are scrambling.

Between this (definitely) and a post here or there, you probably could come up with a great speech or book for that 18-22 age group about how to assess oneself and one's skills and then from that skillset, how to choose what one should do. Are you involved in any schools in the area- I'm tempted to copy this and read it to those applying to college, a bit modified.

Re: Doubling Down

SkipSnow — Sun, 09 Aug 2009 13:15:52 -0000

Fred:

As a founder of a business, I have to say that I find your post refreshing and reassuring. The only consistent advice I have been receiving from folks who have founded businesses, some with lots of success and some who have not done so well, is stay away from the VC folks until you have to work with them. They say that the VC community is only interested in the exit, only interested in the short term win, and does not wish to nurture a great idea that might take time and effort to incubate.
Your post makes me realize that it is not my job to stay away from the VC community, but to find folks like yourself with a well adjusted compass guiding you to figure out what is the best thing one can do with troubled investments. Of course folks like me, wish that we only would present sunny days to folks who trust us with their hard earned money, but in the course of starting a business, it is inevitable that there will be storms, and finding a team of investors who can look a storm straight in the eye, and make a plan to move forward despite that storm, that is what folks like me want.
Thanks for making me believe that we can do so.

Re: Doubling Down

johnebbert — Sun, 09 Aug 2009 13:09:39 -0000

Thanks for this - seems applicable to either side of the investment community whether you're a VC or entrepreneur. Over the past year, at times I've felt like I've been doubling down every month. As long as I meet my goals, I should be all right. A recession is not the time to cut and run - as I see it, it's a rare opportunity if you can stick it out.

Re: Doubling Down

eric norlin — Sun, 09 Aug 2009 12:52:12 -0000

great post, fred. reflecting a bit on it here:

http://defragcon.com/Blog/?...