Seth Levine's VC Adventure

The stupid things VCs say

 

Entrepreneur: "Yah, we've talked with Ryan about this"

Me: "Oh. So Ryan already sat through this presentation"

Entrepreneur: "Um, yah - something like that"

 

Oops – that wasn't what I really meant.

Is your VC a rockstar?

I had two people at VC in the Rockies this week say that VC's were rockstars.

I hope that's not really what most VCs actually think. I always thought of entrepreneurs as rockstars. We're just the groupies.

Who do I work for?

In a recent post I pointed out how autonomous the venture business can be. If that’s the case, then, who do I work for?

Brad hired me and I spent several years working directly for him (i.e., supporting him in his investments). He’s still my boss, although we don’t have a traditional reporting relationship (I’m a junior partner – a Principal in our nomenclature – and he’s a senior partner – a Managing Director). I use him as a sounding board and advisor a lot but we don’t really have much of a boss/employee relationship. To some extent I work ‘for’ the other Managing Directors of Mobius but more in the same way someone at a company works ‘for’ their board of directors or their investors. Certainly I work for our investors – my job is to return them more money than they gave us and I have a direct responsibility to be a good steward of their money and trust in us.

More than anything, though, I really work for the management teams of the companies I manage and sit on the boards of. This may seem counter intuitive – as a board member, technically they work for me (and the rest of the board - something that is certainly clear when we’ve made a management changes). I don’t get the feeling that this view is shared particularly widely across the venture community, but I think it’s the right way to look at it. I spend more time with the management teams of the companies I work with than I do with any other group and ultimately everything I do is judged by their success – and by extension, my ability to help them become successful.

Why are VCs so indecisive?

Ever notice how indecisive many VCs are? Maybe I’m just quick tempered, but it bugs the hell out of me that so many of my venture colleagues can’t seem to make a decision. Sometimes this shows up in overanalyzing a prospective investment (just to turn it down later for a completely unrelated reason which came up in the first week of their diligence); sometimes in the line “we’re waiting to see if any other investor is interested in this deal before deciding to pursue it”; sometimes in a delay taking an action with a CEO when its clear something needs to be done; sometimes in simply not having a definitive opinion on any issue – ever – until someone else has spoken out. You get the picture (and I’m sure many of you have lived through it). I’m not at all saying we should say ‘yes’ to everything; nor am I suggesting that sometimes its not ok to simply have no opinion. But sometimes. . . perhaps most of the time . . . being definitive (even if you are definitively wrong) is better than being non-committal (and therefore noncommittally neither right nor wrong). Grrr.

An army of one

One of the reasons I started this blog was to try to give readers some insights on life as a venture capitalist. I was reading some old posts and realized that I haven’t written on this topic in a while.

Funny thing about venture capital – something I’ve really noticed as I transitioned from supporting other partners on their deals to exclusively managing my own portfolio – it’s a pretty lonely business. I have an extremely close relationship with my partners and of course bounce thoughts, ideas and questions off of them on a regular basis (something I think we at Mobius we are extremely good at doing). But for the most part, I spend my days doing my own thing and generally have limited overlap with what they are working on (they manage their own portfolios; we intersect on fund management and looking at new investment opportunities, but that’s about it). My “colleagues” are for the most part other board members of the companies I work with and the management teams of those companies. I spend a huge amount of time with these two groups of people. I travel pretty often, but almost never with anyone else. My partners do the same. As a result we overlap in the office only one or two days per week. This kind of snuck up on me over the past 2 years but I’ve been thinking about it a lot over the last few months. For my personality this works great – I love the autonomy and have never been the kind of person who wanted or needed close supervision. But it’s definitely different than any other work I’ve done and I can’t help but think how unusual a working structure it is – something I never considered before I got into the business.

Ideas for your elevator pitch

Sean has obviously read some of my ramblings on how to present your business succinctly...

Should I quit my venture job?

Perhaps it’s just a sign of a bubble, but I’ve had several people (entrepreneurs, partners at venture firms and junior partners/senior associates) ask me in the past month whether I was thinking about leaving venture capital to join a company. Their thinking generally follows the logic that given the new Web 2.0 paradigm (presumably they mean the idea that you can build a net business relatively inexpensively, generate some traffic and either cash flow it or sell it off) there’s a better chance to create wealth in the next 2-4 years by working on the operating side of the world than in venture capital.

Given how difficult it is to land a job in venture capital (not to mention how fun the work is), it may sound strange that people are even considering this, but in the course of these conversations a number of examples always come up of sr. associate/vp/principal level colleagues who have jumped ship for what is perceived to be the greener pastures of the company side of the fence.

I’ve been thinking about this phenomenon for the past few weeks – not because I’m actually considering leaving my venture job (note to Brad – the title of this post was rhetorical), but because I’m fascinated by people’s perceptions about opportunities. While I’m certainly convinced that many companies that are currently in their formative stages will be successful I think there’s a perception that the world of the next generation web is easier than it really is. Couple that with the notion that G/Y/M/I are staring to pick up their acquisition pace and you can understand how people are getting stars in their eyes.

I personally don’t buy it (at least for me). But then again, I subscribe to David’s notion that most of this is about luck anyway, so maybe it doesn’t matter which side of the fence you’re on – as long as you’re working with people you like and having fun.

What makes a great start-up market?

Here’s one take on that ubiquitous question (ubiquitous at least for those of us who live outside of the bay area). The simple answer is Nerds and Money, but the more complex answer is much more amusing.

Link - http://www.paulgraham.com/siliconvalley.html

Sand Hill Slave

Here's a different view of venture capital - from someone who has clearly seen quite a bit.  Very amusing!  Be sure to check out the worst ever VC names.

(from Paul Kedrosky's Infectious Greed)

What your business does in fewer than 5 sentences

I had a chance to sit through the practice session for a handful of the companies that are presenting at this year’s VC in the Rockies conference (not too late to register, by the way – it’s a great showcase of Colorado venture deals, not to mention world class skiing).

Many of them had one common trait: they sucked at actually describing what it is their business does. Some just seemed to forget to mention it, while others appeared to try, but either get bogged down in the complexity of it or just fell short of the mark.

This was surprising but amazingly consistent.

Maybe they had all practiced their pitch too much or perhaps they were just too close to their company to be objective about how people hear their business description, but whatever the reason I found myself scratching my head and wondering how it could be that we were on slide 8 without any real idea of exactly what the presenting company did.

In the first minute of your presentation you absolutely, positively need to tell your listener what you do. This should be a description that your grandmother understands and should take you only a few sentences. Try practicing on the guy at the coffee shop or your neighbor.

For my complete view on venture presentations, see “How to put together a good venture presentation” from last January.