VC Cliche of the Week

Have you ever heard someone say, we "roll up our sleeves and help the entrepreneur build the business"?

If you are an entrepreneur who has raised venture money or if you are an LP who invests in venture funds, I am certain you've heard this cliche.

It's in the same category as "value added investor".  It sounds really good coming out of your mouth.  But its not what you say, its what you do.

And how many VCs really do this?

In my experience, not enough.

Rolling up your sleeves means getting your hands dirty. 

It means making a conscious decision that you are going to focus a significant amount of time and energy away from finding deals and raising funds and actually work on portfolio companies.

That's not always something many VCs want to do when they really think about the opportunity costs.

My favorite story about this goes back to the early 90s when I was a wet behind the ears VC who had just taken his first board seat.

I went to the first board meeting. It was in Buffalo, NY and the two entrepreneurs were Ron Schreiber and Jordan Levy, both of whom have become good friends and great VCs.

After the meeting, Jordan took me aside and said "Freddy (he still calls me that), if you want us to listen to anything you say in these meetings, you are going to have to spend some serious time getting to know our business".

I guess Jordan and Ron didn't like the idea of some wet behind the ear VC trying to tell them how to run their business.

I quickly recognized that I had to earn the right to tell them what I thought they should do.

So a couple weeks later, I cleared my calendar for 2-3 days and flew to Buffalo.

Jordan had arranged for me to spend time in every part of the business, from help desk to finance to sales and everything else.

I rolled up my sleeves and got my hands dirty.

I met almost every employee and learned what each job entailed. I even did some of the jobs.

By the end of my stay in Buffalo that week, I had a much better idea of what the business was all about.

And it made me a much better Board member.

I am glad I learned that lesson so early in my career as a Board member and I have Jordan to thank for it.

It's a lesson that has stuck with me.  My first instinct after I make an investment is to jump in with both feet and get wet.

Use the product/service. Talk to customers.  Sell the product/service. Get feedback. Recruit management. Generate PR.  Whatever it takes as long as its legal and ethical.

It makes me a better investor and a better Board member.

And if you think about it like you are working for the CEO, not the other way around, it generally is appreciated.

Then when things aren't going so well, you can start making suggestions and you'll be heard.  And the suggestions you make wil be good ones.

So I think rolling up your sleeves is the best thing you can do as a VC, but its work and it requires a committment that not all VCs have.

Comments

[Bob Struble]

You walk the talk on this one Fred. You forgot to metion help the company negotiate major deals.

[Malaika Martin]

Oh, I've always wanted to do that but in a consulting capacity. This way you would get to know the company and it's internal issues, how it operates on a day to day basis. I think you would also get a more real idea of what the company's issues are than you could from just interviewing senior staff.

But you are right that necessary as it may be for truly top notch work, it would be time consuming to the point where it might divert your attention away from "higher pursuits".

[Joe White]

that's why we like you Fred...I have offered a similar "boot camp" to my VCs in the past and never had one take me up on it, which I never, ever understood. the "sell more" and "spend less" colleagues of yours -- and oh boy are there plenty of those -- should take a lesson from this post.

[Charlie Crystle]

Right on. We've got some open slots for you in sales, Fred. Plus we have the Amish, so there's always that. Nice post.

[One of the many Simons]

Dear Fred,

I agree with the value of 'rolling up your sleeves' in the beginning of every venture capitalist-portfolio company relationship, both as a way for the vc to learn about the business and as a way for the vc to gain credibility with the entrepreneur.

My question to you pertains to a related issue, what happens further into the relationship when the vc begins assuming a more active role in the affairs of the company due to the real lack of some crucial skill on the part of the portfolio company?

Specifically, where do you, as a venture capitalist, draw the line between activities that can be considered, 'rolling up your sleeves', and activities that can be considered assuming a function at the portfolio company?

How do you delineate where your role ends and the role of the portfolio company begins? Do you have a bright-line test? Or do you think that this is an arbitrary distinction?

Given the fact that you only have a finite amount of time to devote to each portfolio company and need to invest in a certain number of companies in order to achieve the proper level of diversification, this becomes an important constraint.

In my opinion, this leads to one of the biggest disconnects between entrepreneurs and venture capitalists.

An entrepreneur will walk into your office and say, "I have the greatest product/service in the world" and expect you to invest on the merits of the product or service alone.

What they don't understand is that even if they do indeed have the best product or service in the world, that that is only part of the venture capitalist's calculation for deciding whether to invest.

What they fail to grasp (and it is worth repeating) is that the venture capitalist has a limited amount of time which he or she needs to spread over a number of companies in order to achieve the required level of diversification.

The way that the venture capitalist solves this problem, leveraging his or her time, is by investing in companies with great management teams (and not necessarily the best products or services).

The better the management team, the less time the vc needs to spend untangling messes and the more time the vc has to focus on what ever aspect of the vc business he or she adds the most value to, be it sales and marketing for portfolio companies, strategy, recruiting, etc.

Curious as to your thoughts on this issue.

Kind regards,

Simon

[steve]

good one fred.

but i'd rather an investor *not* do what you suggest if they are a devotee of the Blackberry School of Management.

I may be an old fuddy duddy but I believe Blackberries and their ilk are destroying our ability to think and communicate in depth. I have had an investor complain that my emails were unacceptable because they were 600 words long (that's about 2 double-spaced pages). Obviously I was jamming their Blackberry, and the fact that I had some very nuanced developments to report -- the result of which was the company had some very serious strategic issues and decisions to make -- was secondary.

Also, many investors don't really focus on anything anymore because they are always keeping one eye and two thumbs on their blackberries. meetings are a joke. phone calls are exercises in futility. ("i'm sorry, say that again?").

i'm fine if an investor prefers to be passive, or only involved at a board level. but if an investor wants to "roll up their sleeves," i hope they simultanoeusly put aside their toys.

[Keith]

As a guy who has been a successful VC and CEO, I have to say this: I don't want VCs mucking around in my business. You cannot be an investor and an employee. The CEO runs the company, and when VCs get confused and play director AND line person, it gets silly fast. I don't want--or need--VCs selling, or recruiting, or negotiating, or strategizing. They are not IN the company, they don't work FOR the company, at most they are investors IN the company.

VCs often say: "but we're not just MONEY!". Yeah, you are. And expensive bloody money at that.

[Nabeel Hyatt]

There's a difference between taking the time to be informed so that you can give more deeply understood feedback at board meetings, and meddling in an operating company. You absolutely cannot operate a business from afar, but I don't think that is what is being suggested by the post.

Informed directors is a positive thing. Micromanaging directors generally either have personal confidence issues or never should have invested in that business in the first place.

[ad aware]

ad aware - antivirus - antivirus gratuit - bitdefender - blague blonde - blague humour - clone cd - edonkey - emule - emule telecharger - firewall - horoscope chinois - jeux a telecharger - kazaa - kazaa lite - kazaa lite telecharger - kazaa telecharger - logiciel antivirus - logiciel a telecharger - messenger 7.5 - messenger msn - mp3 gratuit - mp3 telecharger - msn 7.5 telecharger - msn-messenger 7.5 - msn messenger 7.5 telecharger - msn telecharger - musique mp3 - nero - nero 6 - nero burning - nero burning rom - norton 2005 - norton antivirus 2005 - recette de cuisine - skype - tablature guitare - tarot - telecharger acrobat - telecharger antivirus - telecharger antivirus gratuit - telecharger chanson - telecharger clone cd - telecharger codec divx - telecharger divx - telecharger divx gratuit - telecharger divx gratuitement - telecharger divx player - telecharger emoticone - telecharger emoticone gratuit - telecharger emule - telecharger emule gratuit - telecharger e mule gratuit - telecharger emule gratuitement - telecharger e mule gratuitement - telecharger fr - telecharger kazaa en francais - telecharger kazaa gratuit - telecharger kazaa gratuitement - telecharger kazaa lite - telecharger logiciel divx - telecharger logiciel gratuit - telecharger messenger - telecharger messenger 7.5 - telecharger mp3 - telecharger msn 7.5 - telecharger msn 7.5 francais - telecharger msn gratuitement - telecharger msn mesenger - telecharger msn messager - telecharger msn messenger 7.5 - telecharger msn messenger 8.0 - telecharger msn messenger gratuit - telecharger msn messenger gratuitement - telecharger msn plus - telecharger music mp3 - telecharger musique gratuite - telecharger nero - telecharger nero 6 - telecharger nero gratuit - telecharger nero gratuitement - telecharger norton antivirus - telecharger norton antivirus 2005 - telecharger shareaza - telecharger shareaza gratuit - telecharger shareaza gratuitement - telecharger skype - telecharger winamp - telecharger winzip - telecharger winzip gratuit - telecharger yahoo messenger - winmx - zodiaque - zone alarm

[amateur couple]

amateur couple amateur gay amateur gratuit amateur libertin amateur nu amateur porno amateur sex amateur sexe amateur video amateur webcam amateur x amateur anal fisting anal anime asiatique nu asiatique bite black anal blacks on blonde webcam gratuit webcam sexe femme black webcam chat cul cul gratuit couple amateur erotique ejac feminine ejac facial defloration coquin blonde salope bondage voyeur gratuit erotique gratuit bukkake cul de femme black teens ejac faciale chatte chatte humide double anal film x amateur free porn movies femme mature femme nu femme erotique femme facile xxx fetichisme femme mure film amateur femme en chaleur femme cochon film sexe femme sex x amateur femme coquin femme mure nu femme sexe fille facile femme nu gratuite film sexe gratuit femme photo hardcore gros penis grosse salope hentai x histoire erotique young porn gros teton gratuit sexe jeune gay video grosse femme grosse bite jeune femme gros sein gros cul gros sexe jeune amatrice hentai jeune chatte jeune femme nue hard sexe jeune lesbienne mangas erotique jeune nu voyeur france mangas sexe jeune vierge mature lesbian mature gratuit lesbienne nu mamie jeune gay masturbation femme lesbienne photo lesbienne gratuit lesbienne gratuite jeune sexe jeune salope lesbienne jeune fille voyeur mature mature sex sex mangas sexy lingerie video coquin video de cul transsexuelle sexe video sexy mature triple penetration video amateur video amateur x sexe vieille sexe mature sexe porno sex xxx teen amateur sexe webcam sex femme video cul gratuit sexe video gratuit teen porn sexe video gratuite sex mature sexe photo mature women photo gratuite sexe photo de cul photo gay gratuite photo de cul gratuite photo amateur mure petite chatte photo salope photo lesbienne mature sexe video hentai video lesbienne photo gay gratuit photo femme video erotique partouze photo cul gratuite photo sexe amateur photo de chatte penetration photo gratuite femme nu photo fille photo xxx portail du sexe photo sein photo sexe gratuit video salope porn porno asiatique photo sexe porno mature porno black sein de france video mature photo sexe gratuite sein salope gratuit photo transsexuelle porno amateur photo voyeur porno sexe poitrine salope salope gratuite video sexe sexe femme video xxx gratuit sexe hard gratuit sexe fr sexe amateur gratuit sex amateur gratuit sexe en direct sexe gratuit photo sexe hard sexe gratuis sexe gratuit sexe feminin sexe amateur sexe gratuit video video sexe gratuit video xxx sein enorme sein gratuit sexe sexe gaulois sex amateur sexe extreme sexe hardcore blague codec divx ad aware antivirus divx a telecharger antivirus en ligne chanson a telecharger codec telecharger carte postale ancienne antivirus gratuit blague humour divx codec carte postale virtuelle blague blonde divx dvd clone cd bitdefender carte postale antivirus a telecharger antivirus gratuit a telecharger emule telecharger gratuit film gratuit a telecharger film porno a telecharger film porno gratuit a telecharger film x a telecharger fond d ecran a telecharger horoscope horoscope cancer divx gratuit edonkey edonkey 2000 emoticone a telecharger emoticone a telecharger gratuit emule france emule gratuit emule telecharger film a telecharger emule film x gratuit a telecharger firewall horoscope taureau horoscope verseau jeu a telecharger jeu pc a telecharger jeux a telecharger jeux a telecharger gratuit jeux a telecharger sur pc jeux de voiture jeux flash a telecharger horoscope capricorne horoscope chinois horoscope du jour horoscope gemeau horoscope gratuit horoscope lion horoscope poisson horoscope sagittaire horoscope scorpion horoscope vierge imesh kazaa msn messenger 7.5 telecharger messenger 7.5 mp3 gratuit telecharger mc afee logiciel gratuit mp3 gratuit msn messenger telecharger kazaa telecharger messenger mp3 telecharger logiciel antivirus msn messenger plus kazaa lite telecharger kazaa lite logiciel architecture mp3 telecharger gratuit msn 7.5 telecharger msn messenger 7.5 messenger msn recette partition guitare nero burning rom partition de musique musique mp3 musique mp3 a telecharger nero 6 norton antivirus 2005 nero express nero norton 2005 musique a telecharger gratuite musique musique a telecharger gratuitement norton musique a telecharger gratuit nero burning musique a telecharger msn telecharger partition gratuite recette minceur recette de salade shareaza telecharger recette gateau chocolat recette punch recette courgette recette gateau recette cocktail sims 2 telecharger recette sangria recette pain recette facile sims 2 telechargement recette paella recette crepe recette de cuisine recette dessert recette de julie recette de confiture recette barbecue telecharger kazaa lite gratuit telecharger emule telecharger les sims gratuitement telecharger kazaa little telecharger kazaa gratuitement telecharger gratuitement msn telecharger kazaa lite telecharger emoticone telecharger emule gratuit telecharger kazaa en francais telecharger gratuitement kazaa telecharger e mule gratuit telecharger gratuitement msn messenger telecharger divx gratuit telecharger les sims 2 telecharger les sims gratuit telecharger jeu flash telecharger kazaa gratuit telecharger gratuitement logiciel telecharger emule gratuitement solution jeu telecharger divx solution jeu video telechargement gratuit de film telecharger clone cd telechargement film x gratuit telechargement logiciel telechargement film divx telecharger antivirus gratuit solution telecharger codec divx telechargement film telecharger chanson skype telechargement film porno gratuit telechargement film porno telecharger acrobat reader telecharger antivirus tablature guitare tablature telecharger mp3 telecharger mp3 gratuitement telecharger msn telecharger msn 7.5 telecharger msn 7.5 francais telecharger msn 8.0 telecharger msn gratuit telecharger msn gratuitement telecharger msn mesenger telecharger msn messenger 7.5 telecharger msn messenger 8.0 telecharger msn messenger plus telecharger msn plus telecharger music mp3 telecharger musique gratuite telecharger logiciel divx telecharger logiciel gratuit telecharger logiciel mp3 gratuit telecharger messenger telecharger messenger 7.5 telecharger winamp telecharger windows messenger telecharger winzip telecharger winzip gratuit telecharger yahoo messenger zone alarm telecharger nero telecharger nero 6 telecharger nero gratuit telecharger nero gratuitement telecharger norton antivirus 2005 telecharger shareaza telecharger shareaza gratuit telecharger shareaza gratuitement telecharger video telecharger video porno gratuit telecharger video sex telecharger video x