Archive for June, 2009
I’d like to propose that “entrepreneur friendly VC” is code for “suckup VC,” and “hardass VC” is code for “d*ck VC,” and that you should avoid both. Here’s why.
I just retweeted a Twitter post which stated:
Avoid “entrepreneur friendly” VCs, instead choose “hardass, potentially will fire you, but WILL make your company successful” VCs.
I promptly got a reply from @Joshu saying:
Problem is, “entrepreneur friendly” is code for “tries not to be a dick,” you know the stories.
This was really timely for me, as it echoed conversations I have had a number of times over the past few weeks.
In one of these conversations, an entrepreneur I was in serious discussions with told me he that one of my portfolio entrepreneurs called me his toughest board member. And, the entrepreneur who I was in discussions with said he was attracted to that because he felt his current board, while comfortable, did not push him enough and he wanted a board that would force him to be better rather than suckup to him.
In another conversation, someone I know told me their VC board member was “a total d*ck.”
And just last night I had a great conversation with yet another entrepreneur, one who I currently work with, who honestly told me sometimes I could be pushy, and that occasionally annoyed him (especially when it was something I was a broken record on), but that overall he appreciated that I took stands and was willing to challenge him.
Which leads me to suggest to entrepreneurs that they pick their VC neither on the basis of being “entrepreneur friendly” nor “hardass.” I think there are two fundamental questions to ask: will the VC be a good partner in good times and bad; and what are the tangible ways he or she will help me build my business?
Being a good partner means alot of different things, but it certainly includes challenging the entrepreneur in some instances and supporting them in others. Everyone has different styles, but I think the important thing is to develop a meangingful, trust-based relationship with entrepreneurs, so that when you support them they put weight on the fact you are supportive; and, on the other hand, they will take note and give serious consideration when you disagree with them. A good VC board member should work hard to support the entrepreneur any way he/she can, and, no question, it helps to have a good chemistry with an entrepreneur. But by the same token the measure of a board member’s success is not whether the entrepreneur considers him a pal. Supportive is one thing; suckup or yes man is another.
On the other hand, being willing to take a stand is a far cry from being a “hardass.” There are VCs out there with amazing track records who are known for being hardasses, and plenty of entrepreneurs are willing to endure the hardass because they think it is worth the value they will get. That is a rational tradeoff, but it is not to say that the VC is valuable because he is a hardass. If you check around, trust me, you will find entrepreneurs who believe they have gotten tons of value from their VC, but did not have to put up with a hardass board member.
So, my advice is, try to find the VC who can be a great partner without being a suckup, and can add lots of value without being a hardass.
Steven Johnson’s cover article in this month’s Time Magazine has a great insight:
“more significant [than the question whether Twitter sells to Google is] the fact that many of its core features and applications have been developed by people who are not on the Twitter payroll….This is not just a matter of people finding a new use for a tool designed to do something else. In Twitter’s case, the users have been redesigning the tool itself…. It’s like inventing a toaster oven and then looking around a year later and seeing that your customers have of their own accord figured out a way to turn it into a microwave.”
Johnson has honed in on one of the most striking and exciting things that is happening on the web today — user powered innovation.
Even if only in retrospect, I now realize this is an important theme running across many of Polaris’s consumer web investments over the last few years.
For starters, nowhere is the user community a more central force for product innovation than with WordPress, where literally thousands of users/third party developers provide a rich ecosystem of plug-ins, ad-ons and extensions, and gather in popular confabs called “Wordcamps” around the globe.
Sproutbuilder is all about bringing the power of flash development to the consumers of flash content.
And, only recently emerging from stealth, LOLApps provides tools that allow Facebook users to create their own customized apps.
Notwithstanding the economic stormclouds still hovering out there, I have never been more convinced than now that the web’s radical empowerment of users is ushering an unprecedented wave of innovation.
I can’t tell you how many times this point has surfaced in my life over the past year so. And it did again this morning. Time and again, I see portfolio companies making sluggish progress then suddenly sprinting faster with the hiring of a great product manager or two.
And, one of the things that has me really excited these days is not just the number of promising new startups we are seeing, but also the flow of talented young PMs into startups.
Though, as I just tweeted, a number of my companies are looking for PMs, so if any of you know of any out there send em my way!
Yes, this is a direct quote, and it came from one of my portfolio CEOs who I was speaking with this morning.
The topic was product strategy, and a debate the CEO had been having within the company. Some camps wanted to have a longer dev cycle to build out a fully formed, fully functional version of the entertainment experience they are pursuing. Others preferred a much more iterative “lean starup” approach whereby they built everything in small bite-sizes and then tested.
The CEO, who in retrospect appreciates the virtue of the “build, test, iterate” approach as opposed to the “big bang” approach, made the comment to me that, since his lameass investors had provided the company with so little capital, they had no choice but to go small and iterate rapidly.
It is a rare day when an entrepreneur actually confesses that his VC actually was right about something, so, even if we were only right by accident, I am going to enjoy this one.
