A VC - Latest Comments in Swinging For The Fences

Re: Swinging For The Fences

Matt — Tue, 17 Nov 2009 17:20:34 -0000

In my first startup, it took two years of operation to get the attention of VCs to get real funding. VCs do not create companies, entrepreneurs do. A true pathological entrepreneur may seek VC backing, but does not require VC approval. You start companies because you have to.

I have no idea why there is so much gender bias in startups. Maybe it is just testosterone.

But I am intrigued by one factor in your comment. I have found that there are two varieties of businesspeople. The first is folks that "brand-borrow". Their God is HBS or Goldman or P&G or Google. They are constantly building their resume, and validation is central to their success.

The other group either can't execute on this plan or don't know better.

If you think of VC backing as another stamp on your resume, I could see why you would be angry at Fred's post. If you must have their stamp, then not hearing their pitch is like denying them the right to apply to Harvard.

Except the startup world is exactly opposite the resume-building world. VCs provide capital, not validation. Build a company. If you can't get funding, work on it without for a bit or get by with less. If your company gels, you will get funding.

But understand that for the most part VC backing is as much of a curse as a blessing. It is not a stamp of approval, it is a source of money and, occasionally, advice and access. If you want a resume, it is a terrible way to go.

Re: Swinging For The Fences

Matt — Tue, 17 Nov 2009 17:06:53 -0000

Unfortunately, in the real scheme of things, execution is the only thing with value. If an idea can be patented, then you should be able to develop it to the point of protecting it without a company. If it is a business concept, then the execution is the only value.

Re: Swinging For The Fences

Steve Curry — Thu, 05 Nov 2009 01:11:43 -0000

Garbanzo - agreed that many different experiences can help an entrepreneur to be successful, but, nothing succeeds like success. Some people have all the credentials, but never get a break. Those who have already had success in starting a business have a somewhat magical mix of work ethic, skills, a sense of timing and a bit 'o luck. I would rather bet on an excellent person, who tends to be "lucky" than a "hard-luck Charlie" - wouldn't you?

Re: Swinging For The Fences

desmondpieri — Mon, 02 Nov 2009 10:42:40 -0000

Another approach is to blend the "young entrepreneurs" with the "serial entrepreneur" via use of interim CEOs. Here's when it makes sense, in my view: http://bit.ly/4qwCL1

Re: Swinging For The Fences

fredwilson — Mon, 02 Nov 2009 05:48:40 -0000

Ah, the people vs idea question. Its a great one.

Here's how we do it

We are thesis driven investors with a very narrow domain experience. We only invest in ideas in that narrow band. That is why the idea and its stage of development is the first filter

But after passing that filter, the people are about 90pcnt of the investment decision

Re: Swinging For The Fences

Roger Toennis — Sun, 01 Nov 2009 14:50:46 -0000

Fred,

So is it the best ideas or the best people you invest in? You say "all I need is an email stating what they are working on. *IF* it is of interest, I'll take a meeting."

So it's really the idea that is king I guess?

Seems like it might be interesting if VC's took the approach of evaluating the entrepreneur first in some manner before evaluating the idea. I keep hearing that all the VC's believe the people factor is more important than the idea.

Yet you all seem to have the idea as first gating factor.

What if you were to create a "character/experience/passion" survey on survey monkey asking any budding entrepreneur to fill it out? It would be kind of like an Ivy league school application and in no part of the application would there be any mention of the "idea" the entrepreneur was thinking of.

Instead it would be all about what kind of person the survey taker is and why they want to be an entrepreneur. It would perhaps include them linking to all of the LinkedIn recommendations. It might even require some of the people who know the survey taker to come in and write recommendations for the person.

Then you could pick from the people who take the survey the "all stars" and put them together on founder teams. Introduce them to each other. Make sure they match on a personality and skills level and THEN AND ONLY THEN say...

"OK ladies/gents, we have a founder team. Now it's time to brainstorm on what idea you are going to start building into reality."

It occurs to me you might actually get a few more women and minorities and other non-traditional talented entrepreneurs that today somehow are "self selected" out of the process AND get some pretty killer teams.

I don't know, maybe this is just too innovative an approach for the innovation business?

Roger "the Old, (45 yr old) Non-traditional first time entrepreneur with passion talent and abilities most VCs just can't see" Toennis

;-)

Re: Swinging For The Fences

fredwilson — Sun, 01 Nov 2009 12:28:05 -0000

I had not seen that data. I am basing mine on the collective deal history of the three firms I've been part of plus the other vc firms I've invested in over the years

Re: Swinging For The Fences

Roger Toennis — Sun, 01 Nov 2009 12:23:36 -0000

Fred, (@Fredwilson) Do you have links to the data you refer to? I've seen data showing the EXACT opposite.

From Techcrunch See article "Old Guys Rule" http://www.techcrunch.com/2...

Quoting Vivek Wadhwa, an entrepreneur turned academic. Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Executive in Residence at Duke University.....

"I’ve got a message for all the Silicon Valley venture capitalists who think a CEO is over the hill after age 40. Old guys rule. And they are far more likely to be the founder of a successful technology company than most of you understand. How do I know this? Research that my team conducted, based on a survey of 549 entrepreneurs in high-growth industries, showed that the average founder of a high-growth company launched his venture at age 40. We also learned that these founders are likely to be married and have two or more kids. They typically have six to ten years of work experience and real-world ideas. They simply got tired of working for others and wanted to rise above their middle-class heritage.

Link to research paper http://ssrn.com/abstract=14...

"A Life maximally lived is a series of days in which you continuously question your preconceived notions of "truth"." - Me

Re: Swinging For The Fences

fredwilson — Sun, 01 Nov 2009 12:07:39 -0000

The data on this category of entrepreneur is not encouraging. Doesn't mean we don't back them. We do. But its not our bread and butter

Re: Swinging For The Fences

COMRADITY — Sun, 01 Nov 2009 11:32:20 -0000

As mentioned above, stay below the radar (added here) until you're ready to confront the enemy.

You two should find a way to get nominated to attend together the National Security Seminar Week at the Army War College. Tour of Gettsyburg included.

K---

Re: Swinging For The Fences

COMRADITY — Sun, 01 Nov 2009 11:21:03 -0000

It is possible no one has the skill set. Not because the skills are that difficult. Just because they aren't used in the market today and the market "establishment" is slow to learn or adopt new skills until they are convinced what works is broken and the alternative can be replicated efficiently on a large scale.

Resources are something else. So you've thought about feasibility as a criteria for prioritization and a roadmap. How about imagining the process your future customers will go through to discover you solve a problem no one else does or better than any one else? Who are the first to discover you and what are the most elementary reasons they would they adopt you? Is there a way to execute the first stage of that process on a small scale to get the most out of your limited resources? The goal here is not to get on anyone's radar map yet - better to stay below the radar, work out the kinks, and validate your reason for being.

For example, this is not where you want to be - this bicycle http://www.t-onedesign.com/... put Larry Chen on Fast Company Top 100 Creative people. Great exposure. But I can't figure out how or where to buy one.

Good luck!

Re: Swinging For The Fences

fredwilson — Sun, 01 Nov 2009 10:40:30 -0000

agreed

same with music and acting

Re: Swinging For The Fences

COMRADITY — Sun, 01 Nov 2009 10:37:33 -0000

Watching is not the same as being there though.

Re: Swinging For The Fences

Roger Toennis — Sun, 01 Nov 2009 10:21:18 -0000

What about first-time entrepreneurs over 40?

The people who after 20 years slogging through a mix of small and big company employment jobs make the giant leap to leave all that faux security behind and leap off a cliff into the entrepreneurial ocean? Despite having kids to feed and spouses to keep happy these stalwart folk manage to grit their teeth and dive into remaking their value proposition to society. They endeavor to become venture innovators instead of "inside the beast" innovators who had been fighting the now losing battle of innovation inside F500 companies.

It's easy for serial entrepreneurs who have already had success to swing for the fences. But the question is are they really as deeply committed to really "swinging the bat" with every fiber of their being? They already are somewhat fat and happy with payouts and adulations from prior exits"rings". Like aging power hitters with multiple championships already perhaps they have a fallback position to go to where failure IS an option in their latest "at bat"?

Young entrepreneurs do have their "athleticism" and can work crazy hours and play every inning and recover for more. But do they really know the nuances of the "game" that will allow them to "manufacture runs" with wit and guile. Like "Nuke Laloosh" in Bull Durham maybe they have a "million dollar arm" but still a "5 cent head" for the game.

The over-40 first time entrepreneur who has truly taken the leap to enter the venture ocean is like the career minor leaguer who gets his first shot at "the show" in his mid to late 30s. These stalwart "players" are the ones that deeply and truly appreciate and understand the urgency of making every "at bat" count. To truly appreciate how fleeting is that chance to dance with our dreams.

Like Moonlight "Doc" Graham in Field of Dreams...

"It was like coming this close to your dreams....and then watching them brush past you,
like a stranger in a crowd.

At the time, you don't think much of it. We don't recognize our most significant moments while they're happening. Back then I thought, "Well, there'll be other days." I didn't realize that was the only day."

The over40 first time entrepreneur is like Doc Graham getting to step back onto that field of dreams in Iowa with Shoeless Joe and feeling the rush of youth but still having the wisdom of his true age. living his dream of wanting to....

"... stare down a big-league pitcher.
Stare him down, then just as he goes into his windup, wink.
Make him think you know something he doesn't.

The chance to squint at a sky so blue that it hurts your eyes to look at it.
To feel the tingle in your arms as you connect with the ball.
To run the bases, stretch a double into a triple...
...and flop face first into third. Wrap your arms around the bag.

That's my wish."

Re: Swinging For The Fences

fredwilson — Sat, 31 Oct 2009 12:18:04 -0000

Or 50pcnt

Re: Swinging For The Fences

fredwilson — Sat, 31 Oct 2009 12:07:26 -0000

I'll take a meeting with anyone. I don't need to see their face or even know their sex before I meet them. All I need is an email from them stating what they are working on. If its of interest, I'll take a meeting

You know how many of those meetings turn out to be with women and american minorities?

Less than 5pcnt and probably less than 1pcnt

They self select themsleves out of the whole process

I don't know why or what I could do to change that

But I don't invest by quota. I invest in the best people and the best ideas that come my way

And I'm telling you what those people look like. You might not like that answer, but it is the truth

Re: Swinging For The Fences

fredwilson — Sat, 31 Oct 2009 09:32:39 -0000

Gold is the antithesis of venture capital. It is for depressed cynics

Re: Swinging For The Fences

fredwilson — Sat, 31 Oct 2009 09:20:22 -0000

That is for sure. One of our roles as investors is to help them avoid doing that. Usually we know these serial entrepreneurs really well

Re: Swinging For The Fences

Walter Henderson — Sat, 31 Oct 2009 08:50:37 -0000

There is already a couple of posts on TheFunded

you should read them

Re: Swinging For The Fences

edahan — Fri, 30 Oct 2009 23:00:54 -0000

Fred -

"When someone has two or three startups under their belt, they understand a bunch of things that a first time entrepreneur doesn't. They understand the value of setting a very clear vision and getting everyone on that page. They understand that they need to hire the very best people. They understand how to raise capital and pick their investors carefully. They understand how to make quick decisions and not let issues fester. They have a rolodex of talented people and potential business partners they can get on the phone or email quickly when they need them. Most of all, they ooze confidence and make everyone better around them."

Sounds like someone looking for a mortgage and putting 75% down.

Elliott Dahan
The Growth Group
elliott(a)thegrowthgroup.com

Re: Swinging For The Fences

GK — Fri, 30 Oct 2009 19:56:40 -0000

Fred - I respect your opinion and I'm sure it's rooted in deep experience, but I can't help but feel this is simply formulaic, narrow-minded thinking and borderline age discrimination. Not to mention, the very foundation of your argument is flawed since it maintains that young, but naive entrepreneurs are willing to take bigger risks while serial entrepreneurs (who have failed in the past or are moderately successful), are more disciplined and conservative risk takers. Isn't this is a bit of an oxymoron? The idea that there is an ideal startup "profile" is offensive and exclusive, frankly. Hardly entrepreneurial. Why can't VC's support great ideas backed by great talent, irrespective of a tendency to "profile"?

Regardless, I've heard similar, yet unfortunate, comments from other VCs and mentors, including Marc Andreesen. Yet, one need only take a slight spin on this kind of sentiment to suggest why there aren't more funded startups founded by women, African or Latin Americans, etc. Is it because they don't fit into an ideal startup profile???... And do VCs subconsciously dismiss them, regardless of how good their ideas or backgrounds are? I.e., if VCs are biased towards a certain startup age, gender or whatever, then I find this a sad endemic problem within the VC community and the reason for some of its own failures and lack of greater innovation. Not to demonize VCs, but comments like yours make it easier to compare VC firms with Wall Street short sellers.

In short, until "prejudices" like these are called out and changed, we'll continue to keep missing a broader range of talent and potential in this country.

Re: Swinging For The Fences

mytweetmark — Fri, 30 Oct 2009 16:39:26 -0000

Thanks for sharing this article. The timing for the read was perfect.

Cheers,
www.mytweetmark.com

Re: Swinging For The Fences

kidmercury — Fri, 30 Oct 2009 15:53:41 -0000

rare exception. and would be better if it was routed through the internet and then on tv.

Re: Swinging For The Fences

fredwilson — Fri, 30 Oct 2009 15:48:17 -0000

Better late than never

Re: Swinging For The Fences

fredwilson — Fri, 30 Oct 2009 15:45:40 -0000

I think live sports on tv is fantastic.