Impressive Entrepreneurs

August 9, 2013

Reading Paul Graham’s wonderful post on How to Convince Investors prompted me think back over my last 5 years in venture capital and what traits stood out among entrepreneurs that I was most impressed by.

Of course this is a subjective view, and based on a cohort of a few thousand people. There will always be many exceptions but I still find it helpful as a reference list. As an investor in early stage companies, across a broad range of technologies and industries, backing great entrepreneurs is the easiest way for me to increases my odds of success.

Entrepreneurs who have impressed me most tend to be:

  1. soft spoken and amazingly calm, even under stress. They don’t appear to be easily over-excited by success or failure.
  2. extremely product oriented. They are not enamored by technology, creativity of their idea, or their past laurels. It’s all about the product for them.
  3. resourceful with time and money. They are somehow able to get so much done with so little.
  4. surround themselves with top talent and network, and shun mediocrity at all times.
  5. convinced they will eventually win even if they don’t yet know how. Their attitude gets reflected in the culture of companies they build.
  6. extremely knowledgable about their space. It doesn’t matter their age or complexity of industry they are tackling. They can explain their vision in starkly simple ways, but if I want to double-click on any topic, they come prepared to be challenged.
  7. unashamed if they don’t have all the answers. They don’t try to BS their way out of a question and get back to me later if it was a relevant question.
  8. charismatic and pull me into their conversation. They don’t just deliver facts and business models, but help me see what’s going on in their mind.
  9. genuine in their answer to: “what are you looking for in an investor?”
  10. understand the motivations of professional investors. Without letting it interfere with their vision, they are able to help investors see what success could look like.

It is the greatest privilege of my job to meet amazing entrepreneurs and company builders on a regular basis. When I am lucky I am able to back some great entrepreneurs. At other times I may have let my own smartness get in the way of success. Either way, I know I will succeed mostly because amazing entrepreneurs will find ways to solve int’g and relevant problems in creative ways, and will allow me to partner with them.


The EnergyMakers Show

September 20, 2012

Paul Dickerson, former COO of Department of Energy’s EERE program, is a friend and a strong supporter of advanced energy for the USA. Paul has been active in this field for a long time and I am glad that his voice has been heard all the way from Texas to Washington D.C.

Paul has been hosting a regular local TV show called The EnergyMakers. I was recently in Houston for a Cleantech conference and Paul asked if I would be able to join him for a few minutes to be interviewed on the show. It was a pleasure to join Paul, to do the recording, and to just catch up on what exciting stuff each of us was seeing in our respective circles.

Here is that show’s recording. You can watch me talking about General Catalyst’s background as an entrepreneur focused firm, some of our global energy related investments, how we see ourselves as partners to early stage entrepreneurs, and some themes that I am currently most interested in. The edited version appears to be some what of a commercial for us, but maybe of interest to you.


What are Resourceful Entrepreneurs (for University spinouts)?

February 23, 2012

Starting a company from scratch is not easy, especially a university startup. I have had hundreds, if not thousands, of conversations with people who have interest in university spinouts and they all point to the many difficulties that they have had to face. The risks stack up high in the face of success: technology is often pre-maturely spun out, translational research, engineering, productization often needs to happen on a startup’s lean budget, and manufacturability and costs are often not even close to thought through when the inventions are typically made and disclosed. Then you layer on top complications of dealing with IP licensing offices, finding early customers, hiring great talent when you have nothing but a professor, passion and some pieces of paper to show for yourself, and then there is the sometimes terrible task of fundraising.

However, there are entrepreneurs, and investors, who just cannot resist the charm of building companies based on university IP.  I think I am one of them as well. I believe in the value of university spinouts and that is why I have chosen to co-organize University Research and Entrepreneurship Symposium (URES) every year. At URES we bring together university technologies & technologists, technology licensing officers, angel/VC and strategic investors AND successful entrepreneurs who are likely looking for the next big thing. WHen these circles overlap, and discussions take place in a frank open manner, good things can happen.

At GC, we continue to believe in university startups for many reasons: its where some of the most amazing innovation happens, usually serendipitously. Our society is built on technological progress that is often initiated by the great thinkers at our leading research universities, and whose work has been partly supported by us, i.e. government. If we believe in taking not just incremental, but quantum steps forward in how we think about and solve human problems, then bringing university research to real world is an honorable and valuable challenge.  And financial rewards are plenty for those who are able to succeed, be in IT, Health Sciences, Energy or other areas.

I belong to the camp that believes that while the probability is high that any single university spinout may not make for a dramatic commercial success, it is also not a total hit or miss game. There are general learnings that have emerged over the many decades of entrepreneurs and investors commercializing university research, and if due/disciplined attention is paid to them chances of success improve significantly.

There is considerable debate in entrepreneurship circles that the university startup creation process is a bit broken (i.e. startups built around core and deep technologies developed through research at universities). For example we often notice:

  1. technologies that are incremental in nature getting spun out as companies when they really should be licensed to existing companies.
  2. wrong mix of technologists, entrepreneurs and investors in earliest days of a company. A giant messed up soup of skills/needs match.
  3. mind-numbing slow process of getting some faculty members to understand that invention is an important, but only a first step in what it takes reach even moderate commercial success.
  4. lack of technologist joining startup as inception who can carry with him/her the entire breadth and depth of knowledge around the topic.
  5. difficulties in navigating the IP licensing process, esp if Tech Licensing Offices are inexperienced, not motivated to license to startups, and otherwise constrained by regulations or laws.
  6. etc.

Every time I think of all the difficulties that most university spinouts face, and then I look at those startups that have succeeded, one thing almost always stands out as stark difference. And that is the nature and quality of the entrepreneurs behind the effort. Successful startups almost always tend to have resourceful, brilliant, creative entrepreneurs. Investors often say that it is the team that is the most important variable in a successful startup, and I agree that its a true statement. But it is nowhere more true than in the case of university research spinouts. At URES, perhaps the most important conversation we can have is around this topic. At this invite only event we invite researchers from across the east coast universities to present technologies that they are most excited about for their commercial potential. And we invite investors to hear those pitches and ideas and build networks…but perhaps an extremely important category of people we invite to this event are the entrepreneurs who have successfully built companies before and are either looking for the next big thing, or are invested enough in the startup ecosystem to provide advice, support and guidance to startups even before incorporation. They bring a tremendous amount of practical wisdom and experience to the table.

I have written some of my thoughts on commercializing university technologies in a blog post elsewhere. But at this year’s URES on April 18, 2012 I will be leading a lunch discussion titled “What are Resourceful Entrepreneurs?”. We will talk about some of the topics I mention above. If you are interested in joining, drop me a note (bz at gcvp.com) and we will try our best to get you an invite. I won’t be doing all the telling. All of you will be. And hopefully we will all come out wiser.


What’s going on when investors say “no, but we want to track”?

February 11, 2011

When you, as an entrepreneur, are in discussions with an investor and they tell you their decision is that its not a good fit right now but they want to stay close and track the company, what is really going on? Should you call on them periodically and give them updates? Should you wait until they call back? Are there milestones you should hit before making the next connection? Are they passing on you and probably don’t want to think about this opportunity again?

Two events made me stop and think about this. (1) I recently said this to a company myself, and (2) an entrepreneur friend of mine heard this from an investor, he kept calling upon the investor periodically, and suddenly the investor stopped responding to his emails/calls.

I think investors say this to entrepreneurs more often than they would admit, and half the time don’t realize that they might be leaving entrepreneurs, especially first-time entrepreneurs, guessing what is going on. In my opinion, there are at least two reasons why investors say this. And I believe investors should provided more clarity around this comment to the entrepreneurs than many currently do.

1. In many industries, investors have key metrics in mind that they think provide an adequate picture of how a company might be performing. These metrics may include absolute number and/or growth in eye-balls, downloads, members, paying members, customers, revenue etc (for software/internet type companies) or cost, performance, reliability/durability etc (for more engineering/hardware type companies). When investors come to understand certain metrics as key performance indicators of traction or sustained product improvement, they want to see real numbers before making an investment. And not just a snapshot but a trend. Mark Suster wrote a nice article describing his investment in lines not dots, and that analogy holds true for more hard engineering/hardware/materials type businesses as well. When investors are not satisfied with the data, i.e. either not enough of it is as yet available, or its a mixed bag without clear sustained trend,s then they are likely to tell entrepreneurs that they want to track and keep an eye on those metrics. Unfortunately many investors don’t fully describe this reasoning to the entrepreneurs. Maybe they are not so confident that their metrics are the right ones in the first place! But I wish they did so the entrepreneurs would know when their company might actually become interesting to that investor again. It would save a lot of time and polite no thank yous on either side.

2. While some seed investing today seems to be getting done in rapid fire mode, I have come to believe that investors should really only invest when they have built a strong personal conviction around a potential investment opportunity, even when it is a small check to write. In general this is true for individual investors as well as in partnerships. It is hard to lean forward, bang on the table, and commit personal time to helping the start-up going forward unless a high degree of personal conviction is reached. And in early stage investing that I focus on, often that conviction is neither determined via the metrics I stated above or a well-written business plan. Often that conviction is based on feelings about the space in which the enterprise is going to be built, or the quality of the entrepreneur(s). Since both these measures are so qualitative, it is often hard to describe to the entrepreneur the unease that an investor might feel around an investment opportunity. One easy way out is to punt the issue and call it a “track”. This is not fair to the entrepreneur but happens often enough that it should be called out as seriously bad practice. Just say no, help them in any way you can in the time you can volunteer, and move on.

If you are an entrepreneur and you hear that from an investor, including me, please do ask back which one of the two reasons above led to that decision. It will help make future communications more efficient and effective.


We need to keep our entrepreneurs here: Startup visas can jump-start the economy

December 2, 2009

US visas for founders of start-ups is an  important topic that I feel rather strongly about. There are no ifs or buts about it. It is a crime that we do not have a mechanism to retain the brightest minds from other countries in our own who would create exciting & dynamic new ventures, create jobs for educated Americans, lead the way in global innovation, and open new frontiers for our economy. We need to  immediately figure out a way to enable anybody who wants to start a legit business in the US to stay here.

Brad Feld and Paul Kedrosky have done an excellent job describing why we need to have:

(a) a special class of visa called ‘Startup visa’ for founders of startups. Founders that are able to raise a nominal amount of capital as validation of their company creation idea should be given a visa so they stay here and pursue their venture.

(b) a visa stapled to every graduate degree awarded in the US to retain the brightest minds here instead of sending them away after training them at our top universities. These young, highly educated, motivated and creative individuals are precisely what this country needs – for innovation, job creation, global leadership.

I have been an entrepreneur who created at least a couple dozen jobs in the US, and am now an investor in startups that create even more jobs….but I almost never became an entrepreneur due to visa issues.

Even with a highly technical Ph.D from MIT, I had no legal way of staying in this country after graduation to  start a company. I had a couple of business ideas in mind but no way of pursuing them formally.  My entrepreneurship passion was almost destined to die in entrepreneurship classes at MIT.

The only way for me to stay in the country post-graduation was to get a job in a large corporation that would sponsor an H1-B work visa. So I did that and joined a large management consulting firm. I liked my work, but lets be clear: I did not create any new jobs for Americans, or create much economic value/contribution to US economy in any meaningful manner (besides paying taxes) until I was able to join the entrepreneurship ranks mostly due to a lucky option available to me to retain my visa status in the US. For a few reasons, we created our new company initially as a subsidiary of our angel investor’s company, and fortunately for me I was able to transfer my H1-B visa to that parent company while I applied for a permanent residency as a person of interest to the US. Had that visa transfer not been possible (and most non-US citizen/resident startup founders don’t have such corporate structures available to them), I would have had to stay in my corporate job for additional 6-7 years (possibly my most productive years). I think 7 years later, with a bigger salary+bonus package in a comfy corporate job, leaving to do a startup would have been infinitely harder. I was able to take a big risk when I did partly because I had less to lose at a young age, and partly because passions ran strong. Now I wish for more people to have the kind of opportunity I had in this country.

I am posting some sections of Brad and Paul’s article in Wall Street Journal below:

While fast-growing companies have long been the main source of new jobs and innovation, this country makes it outrageously difficult for immigrants to launch new companies here. This doesn’t make any sense. After all, Google, Pfizer, Intel, Yahoo, DuPont, eBay and Procter & Gamble are all former start-ups founded by immigrants. Where would this country be today without their world-changing innovations?

Immigrants have not only founded big, well-known companies. Foreign-born residents made up just 12.5% of the U.S. population in 2008. But nearly 40% of technology company founders and 52% of founders of companies in Silicon Valley.

Yet we don’t seem to care. We send recent, foreign-born university science and engineering graduates back to their own countries after their student visas expire—unless these creative sorts are willing to spend some of the most entrepreneurial years of their lives working in a big company under an H-1B visa after they finish their studies.

In the 21st century […] opportunities don’t wait for our interminable, employment-based visa programs. As a result rather than saying “Come and create jobs here” we, in effect, tell them to shove off. Come back when you have a few million in sales— at which point they will be rooted elsewhere and creating jobs somewhere else.

That needs to end now. Immigrants who come here to create companies create jobs. We need the jobs.

The U.S. remains one of the most attractive countries for entrepreneurs. It has a culture of risk taking, capital formation, and an economic dynamism that is the envy of the world. This gives us a competitive edge that we should not let slip through our fingers.

via Paul Kedrosky and Brad Feld: Start-up Visas Can Jump-Start the Economy – WSJ.com.


Global heroes: Entrepreneurs

March 18, 2009

Link to Economist article

A special report on entrepreneurship

Global heroes

Mar 12th 2009
From The Economist print edition

Illustration by Nick Dewar

IN DECEMBER last year, three weeks after the terrorist attacks in Mumbai and in the midst of the worst global recession since the 1930s, 1,700 bright-eyed Indians gathered in a hotel in Bangalore for a conference on entrepreneurship. They mobbed business heroes such as Azim Premji, who transformed Wipro from a vegetable-oil company into a software giant, and Nandan Nilekani, one of the founders of Infosys, another software giant. They also engaged in a frenzy of networking. The conference was so popular that the organisers had to erect a huge tent to take the overflow. The aspiring entrepreneurs did not just want to strike it rich; they wanted to play their part in forging a new India. Speaker after speaker praised entrepreneurship as a powerful force for doing good as well as doing well.

Back in 1942 Joseph Schumpeter gave warning that the bureaucratisation of capitalism was killing the spirit of entrepreneurship. Instead of risking the turmoil of “creative destruction”, Keynesian economists, working hand in glove with big business and big government, claimed to be able to provide orderly prosperity. But perspectives have changed in the intervening decades, and Schumpeter’s entrepreneurs are once again roaming the globe.

Since the Reagan-Thatcher revolution of the 1980s, governments of almost every ideological stripe have embraced entrepreneurship. The European Union, the United Nations and the World Bank have also become evangelists. Indeed, the trend is now so well established that it has become the object of satire. Listen to me, says the leading character in one of the best novels of 2008, Aravind Adiga’s “The White Tiger”, and “you will know everything there is to know about how entrepreneurship is born, nurtured, and developed in this, the glorious 21st century of man.”

This special report will argue that the entrepreneurial idea has gone mainstream, supported by political leaders on the left as well as on the right, championed by powerful pressure groups, reinforced by a growing infrastructure of universities and venture capitalists and embodied by wildly popular business heroes such as Oprah Winfrey, Richard Branson and India’s software kings. The report will also contend that entrepreneurialism needs to be rethought: in almost all instances it involves not creative destruction but creative creation.

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