VC Cliché of the Week

I’ve always been a fan of the cliché. They summarize situations so well. Like my “hit by a bus” post.

I started out in the VC business working for two guys, Milt Pappas and Bliss McCrum, who had been in the venture business for close to 20 years when I joined them. They had developed a ton of experience and Bliss, in particular, had a tendency to summarize that experience with clichés.

I always loved it when Bliss would say something like “that dog won’t hunt” after meeting with a management team. He could have said, “I don’t see how that deal is going to work”, or “I think we should pass on the deal”, but “that dog won’t hunt” was always more colorful and more fun.

I’ve added a bunch more clichés to my repertoire over the years and I intend to lay one on you each week.

I’ll start out with one of Bliss’ favorites – Hope is not a strategy.

There is always an element of optimism in every venture deal. But often times the optimism gets in the way of critical thinking.

I remember attending a board meeting with Bliss early in my career and the CEO presented the sales pipeline. There were a ton of deals on the pipeline that were going to close within the next quarter.

But the company was running out of cash. The CEO was confident the sales would close and everything would be fine. Bliss asked him, “what happens if we don’t close the deals?” The CEO didn’t have an answer.  He simply hadn’t considered that possibility.

Out came the cliché. Bliss said, “well hope is not a strategy and I suggest you get one, and quick.”  That company developed a plan B which came in handy when the sales didn’t come in and we salvaged the deal and got our money back.

So when developing your business plan, don’t be too optimistic, think about the downside, and develop a strategy for dealing with it.