jump to navigation

New England Patriots, Entrepreneurship and Venture Capital December 30, 2007

Posted by John in Technology.
trackback

I read Becky Buckman’s article yesterday on Venture Capital and then watched my New England Patriots go perfect. Afterward, I was thinking how similar today’s entrepreneurial environment is to pro football.   In reflecting on the Patriots historic win it made me think about all the entrepreneurs starting and building companies in today’s Internet era.  Like the NFL, there is parity in today’s entrepreneurial environment .  It doesn’t cost much to start an internet venture.  Get some open source and just add ‘water’.  Another entrepreneurial and VC trend is that startups are not just starting in Silicon Valley.   Startups are global now.  It’s harder to be a VC in today’s market.  You don’t have all the deals within a stones throw from Sand Hill Road.  Additionally as Marc Andressen said in his sarcastic bubble post .  Here we sit, with over $7 billion in venture funding this year chasing exactly zero good ideas.   

In an age of salary cap where the NFL established parity among teams, how can the Patriots put together such a dominant team?  How come all the best football players want to play for New England?  Because they flat out reward people who want to play football.  They live and breed football throughout their organization.  They want players who strive to play the best competitive football together as a team.  Patriots Coach, Bill Belichick, is a football guy.  I’ll never forget the last play of Doug Fluties career.  Coach Bill let him kick an extra point by ‘drop kicking’ the ball.  That’s old school football.  The extra point meant nothing to winning that game but spoke volumes about Coach Bill’s attitude about people and football.  He also lets linebackers catch footballs for touchdowns on designed plays.  Coach Bill loves football and lets the best players play.  If I played football I’d want to play for him.    

As entrepreneurial founders build their business and raise money, who do they want to play for.  It made me think who is the best VC in the world today.  Who is the VC version of the Patriots organization?  Which VCs do entrepreneurs want to work with?  Which VC s ‘really’ live, breed, and support entrepreneurship?  Which VCs value working with the best entrepreneurs to build the best ventures?  Who are the New England Patriots of the VC business?    

In today’s entrepreneurial climate you don’t here entrepreneurs saying,  “I really want to work with Sequoia”.  In fact the general trend among founders is to avoid venture capital.  Why?  A founder can’t relate to the dynamics of the big VCs and they don’t know if they can trust them.  Ultimately their goals are not congruent. 

It has been said that the traditional VCs care more about their image and their political position in their firm than the outcome of any of their ‘investments’ or founders.  It is well known in Silicon Valley that VCs often root against one of their own partners investments,  so they can attain more seniority and bonus in their firm.  Sites like TheFunded are changing that.  Word gets out and gets out fast.   

Like the NFL there is a new era in venture capital.  It is changing.  There is new formula for domination.  Are Sequoia and Kleiner the Miami Dolphins of 1972?Yesterdays Wall Street Journal had an article about the Founders fund and Peter Theil.  The NY Times on Saturday had an article about Chris Sacca and the Google alumni investing together.  You have Jon Callaghan and Toni Schneider at True Ventures, First Round Capital, and other.  They are digging deep in trenches doing good deals.  Is this the new winning formula in VC?  One that rewards the founders and the entrepreneurial skill?  It’s not just about the money any more.  It’s about building something together as teams.  Entrepreneurs want to work with like minded investors – ones with passion, skills, and knowledge to build a competitive and successful company. 

My opinion:  like the Patriots it all starts at the top of the VCs organization and it flows down to the coach (partners) and players (founders).  In entrepreneurship today the best VCs are experienced entrepreneurs who understand what it takes to be a founder and reward founding entrepreneurs for their performance.  This combined with lower capital requirements is why the I think the Founders Fund, True Ventures, and First Round Capitals will be the next Sequoia and Kleiner Perkins in venture.

Comments»

1. Jim Turner - December 30, 2007

We need to figure out how to huddle up that dream team.

2. Alan Wilensky - December 30, 2007

For the life of me, I can’t understand the follow mentality. I have tried to get meetings, and at informal pitch events, well surveyed vertical markets, with real paying subscribers, get less than nothing from valley VCs. They want what the others are doing, they want:

YAVSS = Yet Another Video Sharing Site

YASN = Yet Another Social Network.

YAFTP = Yet Another Free Telephone Play.

YAYFC = Yet Another Yahoo Flop (Copy of, that is)

G-d forbid any of these partners should put a fraction of what was spewed into Edgeio or umpteen other half-baked social media ventures that never had a chance.

You know, I used to poo-poo the Bootstrap business blogs when I first started stoping for capital for my ‘stupid idea’ (as one VC put it), because I though the mezzanine code requirements where beyond an out of pocket model. Lots of objects, J2ME, you know.

But now I realize that I should have started with the 20-30k I came here with, rather than going to those stupid VC pitch meetings and networking events.

As a matter of fact, I am beginning to think that the ultimate qualifier for a “good’ venture, is if the VC community thinks the idea, stinks;

Seeing what these parters are doing now regarding placement of capital in duplicate ad-supported ventures-of-no-hope, is malfeasance, or at minimum, hubris.

The Edgeio deal is the case history of the decade. Two of the premier insiders of insiders, one a serial entrepreneur and the other a VC publishing mogul with past ties to institutional investing, burned six million in cash! Then, they had the gall to auction the dead assets for a sixteenth of the investment, — wait for it now…while posting and playing the debacle on one of the founders web properties:

The erstwhile CEO of Edgeio said of the asset auction that, ‘…we are expecting up to six million to be recovered in the bidding’, that comment is paraphrased, but is public record on TechCrunch.

The asset was sold for less than 300k. The irony? Edgeio had at least a somewhat differentiated model, compared to the clone YAVSS and YASN we see capital being poured into.

7 million here, 5 million there, a social network for florists. another personal profile site for jobs or some spock clone.

My G-d people. I made my first fortune a a due diligence consultant in the mid-90’s helping institutional investors dig through patent and IP asset files, and doing post postmortem vetting of product strategies so that these investors could some how make cases against the companies that snowed them.

I though I would NEVER see those days again. But you know what? I am seeing it again. They are allowing themselves to be shined on, deliberately.

I have a great portfolio for postmortem analysis of malfeasance of companies and VC partners, and I have experience working with attorneys. I see a revival of my practice of old.

3. Anon Entrepreneur - December 30, 2007

Loved the post especially the Pats reference. Interesting angle but I have to agree with you. The VCs are in a slump. I see it all the time and hear it first hand that venture partners in the same firm fight among themselves for their own ego. This at the expense of their investments. Bad stuff. The problem is that these VCs are on too many boards. The best VCs are these new guys and guys like Brad Feld. They are savvy and think about the investment as if they were on the team but they recognize that they aren’t the founders.

The best Internet VCs in this day and age are entrepreneurs turned VC. I don’t think that Sequoia and Kleiner are done yet. They still have some strong partners but I’ve heard some bad stories on Sequoia killing deals.

Go Pats.

4. Jake Griffen - December 30, 2007

Alan #2: great comment. Lets here those stories of malfeasance of VC partners.

John: I really enjoyed this post.

Cheers from Boston
Jake

5. iPhone guy - December 30, 2007

wow right on the money – pun intended. Venture guys just don’t have the skills in the modern web area. They are guessing. I’ll take a x google or paypal and/or experienced entrepreneur over some old MBA venture guy. Most venture guys are clueless on the Internet. This worries me that bubble tendencies are here.

6. bentrem - January 2, 2008

*I /always/ drop to the base of your posts to find the Comment link!*

Over lunch (poutine! *grin*) I was reading a back issue of InformationWeek (26NOV07, dead tree edition); there was one of a series of posts/reactions to “Do serious businesses buy from startups?” and one that comes to mind suggested that VC priorities are not always best for new-born entities. IIRC, “of 10 invested in, 1 will thrive, 1 will do ok, 8 will fail. Missions cannot rely on software that has an 80% chance of dropping off the radar.” [my words]

I recall former Secretary of Labor *oh, my … spelling?* Shultz on “patient capital” … and wonder if VC’s stress startups in un-helpful directions.

7. Venture Capital Outlook « Furrier.org - January 2, 2008

[…] either increase or remain the same in 2007.I have been watching the VC trends for years and it is clear new players are establishing new standards in technology investing.  How this translates into returns is another question. The financial side will depend on the […]

8. Furrier.org - January 3, 2008

iphone guy: There are some great VCs out there both in SV and east coast. My point is that the VC success formula is changing. The best VCs in the Internet area have business experience and have been entrepreneurs before.

I think that we’ll see some new names come out and lead the next big investments.

9. Furrier.org - January 3, 2008

Anon: The smartest VCs are the ones that don’t advertise that they are the smartest one in the room. The best VCs see things the others don’t. When VCs invest in categories you know that category is overplayed.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: