I Got Lucky
A recent commenter suggested that I blog about the post-MBA experience I had when I got into the venture capital business. This is my version of the story and I’ll make it as brief as I can. There are several lessons to take away from it. I’ll get to them at the end.
In 1986, between the summer of my first and second year at Wharton (Univ of Penn’s business school), I got a break, the first of many, and convinced a partner in a small venture capital firm in NYC called Euclid Partners to have lunch with me. At the urging of the Gotham Gal, I called Bliss (Bliss McCrum Jr) one friday morning and asked him if he’d meet me. He said he was free for lunch and asked me what kind of sandwich I wanted. Flustered, I said tuna because that was the only thing I could think of. I got off the phone, called the Gotham Gal who was at work and told her the news. She informed me that I’d need some nice shoes to go along with the suit I had just bought for interviews. So on my way to see Bliss I stopped off at a shoe store, bought some nice shoes and showed up for my lunch promptly at noon. It went great and I walked out with an invitation to spend my summer at Euclid Partners. I spent the next 10 years working there including mondays and fridays during my second year at Wharton.
I didn’t know anything about the technology business and venture capital when I showed up for work at Euclid. I knew how to write software and knew a fair bit about personal computers. But nothing about the business of software and computers. And I had never worked in a real operating position. In fact, I never have and probably never will. This was a severe handicap and for the next 10 years I kind of stumbled around the venture capital business. I learned a lot about the investing side of the business, how to find deals, how to structure them, how to manage them, how to be on a board, how to get an exit. But I really didn’t have a sector focus. Our firm, Euclid Partners was small ($25mm and $40mm funds while I was there), and we invested in life sciences and info tech. And all sectors of both, including biotech, medical devices, software, services companies, hardware companies, communications companies. We weren’t particularly experts in anything and I certainly wasn’t. It wasn’t a stellar start to my venture capital career.
Then I got lucky. The Internet came along. I didn’t know anything about the business of the Internet. But then nobody else did either. I was 10 years into my career which wasn’t going anywhere as far as I could tell, I was antsy to do something big, and here was something that sure looked big to me. I convinced Euclid to invest in a few early Internet deals and became friends with the crazy entrepreneurs who ran them. It was a blast and in the span of two years, 1994 and 1995, I had found my calling.
I left Euclid in early 1996, started Flatiron Partners with Jerry Colonna who had been doing Internet deals at CMGI, and we decided to invest $150mm in Internet deals as fast as we could find them. I got lucky once again when we quickly convinced Chase Capital Partners and SOFTBANK to put up the $150mm (basically as a pledge fund). It worked out great. I had ten years of experience doing venture deals so I understood finding deals, pricing them, structuring them, managing them and exiting them. Jerry had been in the technology publishing business so he understood media business models, had real operating experience, and from his CMGI experience he knew a lot more of the crazy entrepreneurs starting Internet businesses in the mid 90s. That $150mm turned into $750mm in the span of three years which of course were the three best years to be investing early stage venture capital ever. Timing is everything in life.
So that’s how I got to where I am. I wouldn’t suggest anyone take that career path. It won’t work unless you get incredibly lucky. Had the Internet not come along, I would have continued to stumble around the information technology business investing opportunistically in a hodgepodge of deals and generating mediocre returns at best.
If you want to be a top tier venture investor, you must be recognized as one of the experts in the field you invest in. When I was at Euclid, I used to watch in admiration as guys like Bill Kaiser worked the enterprise software business or Paul Ferri worked the communications equipment business. They knew the business cold and if you wanted to start a company in their area of expertise you went to them first. That’s what you have to get to if you want to make top tier returns in the venture capital business.
The way you do that is you work for at least ten years in the industry, getting operating experience, building a killer rolodex, and learning how the business works from the inside. Then in your mid to late 30s, you can make the move to the venture capital business, as a partner, not as a wet behind the ears associate who doesn’t know anything other than how to push numbers around a spreadsheet.
I did it all wrong and got lucky. I don’t recommend anyone reading this to try it the way I did it. If you choose to get an MBA, get a real job out of business school. Help to build a few businesses in an industry sector you really like. Become an expert in that industry. Then try your hand at venture capital. You’ll be much better at it than I was my first ten years in the business.
Comments (Archived):
Thanks Fred – that’s a great story and great advice.
Of course, Fred, you didn’t mention the “give” that goes with get. I got lucky when Jerry and you showed up for lunch that day and my company became Flatiron’s first deal.Thanks for that.(Boy are we old or what?)
that is very true seth. and we got lucky that we got to work with you. this story is in fact 22 years long and i left a lot of good stuff out, the part about yoyodyne included!
Thanks for this, Fred. It’s a great story, and hopefully puts a much more realistic spin on the career ambitions of soon-to-be MBA grads! (You could do it your way, but much better to build real expertise first.)
For us post-MBA’ers with “real” jobs, trying to become industry experts, it’s intriguing to hear that the VC world could be a viable option later down the line. Prior to reading this, I would’ve thought that I missed the boat. Thanks for further muddying up my career path. đ
I am not so sure about your post-MBA job advice. In-the-box ârealâ jobs just lead to more in-the-box jobs and perpetuate conventional thinking. Finding the strength to break out of that â especially when family obligations kick in — can be extraordinarily difficult.I agree with you that one can never underestimate the need to be lucky. Smelling where the luck can be found is like figuring out which craps table to walk up to. I learned this lesson from my father, a successful serial entrepreneur (before the term existed) and pretty good craps shooter: if your table is cold, go to the one with all the noise. The one with the noise for you was the Internet. Youâd be surprised how many people arenât wired to do that. Iâm not sure I am, but I am working on it.I am reading Nassim Nichols Talebâs âBlack Swanâ, a book about unpredictable events. He writes about staying in a predictable Gaussian curve-driven world (which he dubbed âMediocrestanâ) vs. a place where luck and fat tails are the norm (âExtremistanâ). He cites many inventions that were created either by mistake and/or simply by accident â but had a large does of luck involved. Taleb specifically addresses the VC world. You might find it an interesting read.
Jonathan makes a good point about not getting too attached to the inside of the box; someone could write a post with just as much detail about how to make the most of your operational career.I don’t yet have the benefit of hindsight, but my goals in an operational role include:- Start at smaller companies where you can work across many roles- Develop expertise in sectors with potential for future explosive growth (e.g. if you go to GE, work in clean energy not appliances)- Excel at whatever you do, and make sure to find a work environment that allows you to excel and be challengedDoes anyone who’s actually gone through this process have anything to add?
Jonathan – you make a great point here. In fact I’m living this right now. Just finished the MBA at Columbia, am looking for a VC job, and have kids on the way. It puts on alot of added pressure but my wife is incredibly supportive and knows that things will work out in the end.I also have to say, this sort of job search is not for the faint of heart, or those who aren’t comfortable with putting themselves out there. Over the last year I have probably corresponded with (I’m taking a swag here) 100 investment professionals at various firms. I’ve caught a few breaks so far, but not the ‘tuna sandwich lunch’ break that Fred had đ You constantly have to be reaching out, re-reaching out, and making sure you are at top of mind with the folks at the firms you’re interested in. Honestly, having had some sales experience at my last job, alot of it is sales/bizdev 101 type of stuff.Another tip I would throw out there is bringing something to the table when you meet with firms. Bring them some deals, interesting thoughts on how to look at a sector, or help them make fruitful connections between relevant folks in your personal network and their portfolio. It certainly makes for a much better conversation than “Hey, are you guys hiring?”Hope that helps some of the VC hopefuls out there. Although I am still a VC hopeful myself đ
Fred,Good things happen to good people.Thanks for sharing this story with us!Alex
This is really great. I cant count the number of times MBA’s/Consultants/bankers who want to become a VC without industry/operating experience. This is really good career advise. This is much better than the stuff one gets on Vault or anywhere else.I wonder if Path 101 will pick up on this “aggregated” blog based career advise.
Sure, there were some macro- developments that helped you along, but “luck” has many forms – more than a few would say that you made a great deal of your luck. If you had it all over to do again, would you follow your own advice post-MBA and get a “real” operating job?
well it’s hard to say what i would do if i could go back and do it all over again. i like to think i’d join a tech startup in NYC but there weren’t too many of them back then in 1986
Great story, Fred. I’m happy to hear I’m on the “right” path…See you for lunch someday…Peter
“I got Lucky”…. it’s been a long time
Thanks Fred – really appreciate the post.
Great post Fred. Thanks for writing about this.
Thank you for this inspiring story.It was exactly what I needed to hear.I have followed the second path you suggested, opting for strong operational experience.At this stage, I have been successful on my own and with small ventures, but have not âgotten luckyâ yet.My niche is the Internet as well, with a focus on Social Media and predicting trends.How do you suggest I begin a more serious VC career?Would you be open to grabbing a tuna sandwich?ThanksDominic
Great story Fred! Most folks, myself included, probably imagined you as this smooth operator from day 1 and it was all but inevitable that you’d land where you are now. It’s awesome to be able to get some real perspective on what it takes to become successful in a particular field (ambition, balls (it definitely took ’em to cold call Bliss), timing, etc.)Thanks for sharing that with us.-Wayne
Of course Fred left out a crucial part…how he canceled our first lunch designed to talk about getting into business together so he could attend his daughter Jessica’s kindergarten graduation. Little did he realize that–at THAT moment and not at “hello”–he had me. I knew he had his head screwed on right and his heart in the right place and then we’d be great partners. And we were.JerryPS And when we DID get together for lunch finally, I believe we couldn’t stop talking about how brilliant Seth Godin was and and how we both loved Yoyodyne.
I think we’re skipping a step of how CCP found out about the whole venture in the first place đ
yes, i left out a lot of details. including my indebtedness to you Al, and the whole FreeLoader team for getting me hooked on this Internet thing in the first place
Great post, Fred! Would be interesting to know what exactly you told Bliss to make him to make you an offer you could not refuse.
Honestly I don’t really know.
Great story and an excellent lesson, but I feel for Bliss and partners. After 10 years of support and teaching you the business, the windfall of carry that you produced when you hit your stride goes to the partnership that you created 3 years earlier.This says two things to me 1.) venture is a tough business to grow, nurture and maintain talent and I think this helps explain why its difficult to enter at a young age 2.) There’s nothing like significant equity ownership and proper incentives to jumpstart performance.
Great post, Fred. As a incoming MBA student, at Penn no less, this is incredibly useful advice to get my career started.
Fred -Is there any real ‘path’ to success as a VC? I’ve been lucky enough to work with 25 VCs or so over the past decade and the best ones all come from very different backgrounds and have had very different paths, much like great entrepreneurs. To me, it is such a quirky thing to ultimately become a successful VC (or entrepreneur) that I’m not sure there really is any path.
Fred -Is there any real ‘path’ to success as a VC? I’ve been lucky enough to work with 25 VCs or so over the past decade and the best ones all come from very different backgrounds and have had very different paths, much like great entrepreneurs. To me, it is such a quirky thing to ultimately become a successful VC (or entrepreneur) that I’m not sure there really is any path.(apologies for the re-post, just trying out Disqus for the first time)
Thanks for posting this!
Thanks for the post, has some excellent advice. I believe that the best in any industry including VC’s need a varied background. It is not enough to just have great operational background but understanding, finance, deals etc paired with industry experience and extreme intellectual curiousity is what helps push the cream to the top.
Here is a blog from May of 2068 on some VC website:WILSON QUOTE OF THE DAY:”I did it all wrong and got lucky. “
well if i end up in the General’s league then I will be very happy
Fred-I’m going to grad school in August in Minneapolis. Hearing stories like this give me a good perspective. For what it’s worth, I’m sure there are a lot of other people such as myself who now look up to you and how you operate. This coming from a marketer with no interest in being in venture capital.Take care.
Offering perspective helps the whole industry. Thanks for sharing.There is a great slim volume called ‘Lucky or Smart’ by Bo Peabody the Tripod.com founder, my partners and I all read after Dogster.com hit, but before we knew if we could make it big.The day I finally write my blog review of the book I’ve been meaning to write since then I’ll assuredly be linking to this entry too.
Hey Ted, I had Bo on Venture Voice a while back. I loved Bo’s answer to the lucky or smart question: ‘ was smart enough to know I was lucky’. Sounds like Fred is too.
“Then I got lucky. The Internet came along.”Preach it brother. I had *no idea* what to do with a BA in history when I graduated in 1998. I bet a lot of people reading this blog can relate.
Its funny reading those words again. They didn’t seem so obvious when I wrote them this morning
The post dot com bubble must have tested your resolve. You abviously stuck with it, but you must have some interestign stories and lessons to share from tjse tough times.
Many. I learned most of what I now know between 2000 and 2003
Adversity is usually the best teacher. We just don’t like the teacher much, so knowledge comes the hard way and in slow dribbles…
I have a BA in history and I feel slightly less lost!
I’ve just finished “The Black Swan.” Your career is it! I love it. I will be in NYC next Thursday thru Monday. Lunch? Coffee?? Nope. I’m not looking for a job. I’m a friend of Howard Lindzon’s.
Email me and we’ll see
Awesome. A classic.
Fred is a genius. He is the real deal and I think about the very best in the business.As the saying goes (to paraphrase) “those who succeed find the conditions for success. And if they can’f find them, they create them”I like the tuna fish story. That sounds like me.
Thanks for kind words alex. I don’t know about the genius part and I think I’ve got a ways to go before best in the business is true.
Alex Iskold is right – Good things happen to good people. After being good people, timing, or being in the right place at the right time, is also extremely important.
think the key was that call you made to Bliss and got the first meeting – many never attempt those (out of fear of failure for many, imho) and probably rightfully so since one is usually an underdog for those. As Muhammad Ali said – the fight is decided before you enter the ring.
The gotham gal gets a lot of the credit for that call. she has high expectations
Your ‘luck’ has a lot do with your wife and family. You deserve it. Thanks for the post.
I love how your wife and daughter play such key roles (see story and first few comments). Right before I read this story, I was surfing, waiting for my sweetie to come home so we can have a late dinner at Franklin Cafe in Boston, one of the few Boston places worth eating at, I swear to all you Manhattanites, on a stack of Bibles. Anyway, as I clicked on my bookmark for your site, yes I still use bookmarks because I can’t get behind RSS, I thought, why in hell do I read A VC nearly every single day, straight, for four or five years, almost never missing a day? I have no freaking idea. I am a simple, humble marketer who loves business and business stories, I guess, and you tell great ones. Go Fred. Very inspiring. I too have at least ten dead years in my career history closet. I guess it makes the good years all the sweeter.
Any successful person who denies or doesn’t admit that luck played a major role in his/her success is a liar.BUT:Chance favors the prepared mind.Btw, it wasn’t just luck – YOU ASKED FOR THE ORDER!;)
And, of course, the harder you work, the luckier you get. Thnx Fred for another great bit of sharing.
Wow, 1986. I was in sixth grade.Thanks for sharing that. Sometimes that kind of stuff is the most inspiring/interesting. 50+ comments, so many folks obviously agree.
I enjoyed this post. It sheds light on a period in our lives when I wasn’t, shall we say, available.
Availability is two way street
luck or brilliance? An MBA from Wharton takes more than luck, it takes brains, resources, but I’m not one of the privileged class that had that option. I did bust my ass for a PhD from a small private school. Got involved in a small Internet startup that raised about $100M in capital. It was a roller coaster ride and eventually bottomed out for me when I lost it all in the stock market crash.Now I’m a corporate grunt slaving away hoping to retire “early” at 60.I don’t know if I lacked luck or brilliance, probably both.
ex-POSO,I think you missed the (unsaid) point sprinkled throughout the comments.People make their own luck.And everybody’s brilliant. Really.
Fascinating. “I did it all wrong and got lucky.” Thanks for the info.
While I agree that there operating experience can be extremely valuable to VC firms, perhaps it gets paid more lip service than practice? From what I’ve seen, the folks with actual operating experience (usually one, max two) at firms of all sizes typically are either the founders of the firm or are labeled “Operating Partner” and don’t participate in the carry. Also, practically everyone and their brother wants to be a venture capitalist these days, so getting access to the “available” slots has become much, much more competitive. Even the smallest VC firms (I am at a mid-size firm) can afford to be very, very picky. Start with an Ivy League/MIT/Stanford MBA and you may pass the initial screen. What you’ll then typically hear is that you need hard-core transactional experience either via the venture capital, private equity, investment banking or legal side to even get anyone’s attention. If you get that far, realize that said ex-bankers and ex-big-firm lawyers are now heavily populating the business, and the familiarity bias–many people tend to hire people like themselves–one bumps up against can be and usually is a real barrier if you’re not an ex-banker or ex-practicing lawyer (or you’re not the son or daughter of someone well-known/connected in the business).Operating experience can be very valuable and very rewarding, whether or not the newly minted MBAs eventually want to move over to the venture side. And it’s nice to say that VC firms value operating experience as much if not more than transactional experience. I actually think that should be that way our business moves, and is a nice ideal to work toward. I just haven’t really seen or heard that to be the case in the way any of these firms hires new people. While it’s not impossible to get hired without transactional experience, I would say that it is much more difficult.
I read Fed’s post very differently. It is not about the MBA, per-se, or even experience, transactional or operational that you put on the resume. There is a component of quality to the experience, educational or job-related, and I think [hope?] that it is the “quality” that matters.I think the key phrase in the post is “If you want to be a top tier venture investor, you must be recognized as one of the experts in the field you invest in.” I would imagine that this is why the list of successful VCs (or CEOs, or anyone else) is so different in background and similar in results. No degree will make you a leader in the field, and just having a position and experience – operational or transactional or coffee-getting is not going to cut it.The people I admire most are the people who set out to become leaders in their field and do it consistently – whether working long hours or working on themselves after hours – and deliberately. The qualities of curiosity, and conscious pursuit of where this curiosity might lead are some of the hardest skills to cultivate, and a hardly taught in degree-granting institutions.:) I will know when I am a leader and an expert when Fred knows who I am without a having to see my resume. Ah, what a lunch it wold be :)On a personal note – I am amazed at how many Penn alums are out there. Go Quakers đ
One thing that would help me know you is if you commented with your real name. I understand handles are a big part of the internet culture. But I think most of the relationships that have moved from online to offline for me have real names associated with their comments
Fred,You are right, I should have left my name. I was not sure if disquswould also show you my email address.sf == Slava Frid.Getting out of the safe zone of writing on professional topics intoposting socially, especially on non-neutral topics such asprofessional development, is a big step for a lot of people (myselfincluded)
Thanks Slava, that helps
Luck is for those who don’t plan!
Thanks for sharing your experience!It’s great to have example of how people get their way to VC industry. I’m planning to get into one the Ivy League MBA school next year and probably after that, I want to try my luck in the VC industry.I’m also curious to know if my operational background is going to help me (let’s see if the last paragraphs will turn out to be true in the future.
I think a lot of people encounter their share of luck along the way, taking the risk and capitalizing on that luck is what I think leads to stand out successes. The idea of following a formula to achieve it though seems more of a path to mediocrity, well at least a bit boring. I have always loved to do things the wrong way, success is good, but succeeding when odds are against you is better.
Thanks for the great post. I recently read Jim Cramer’s book “Confessions of a Street Addict,” which mentions your involvement in the funding of TheStreet.com. In one of the later chapters (I’m sure you’ve read or heard about at least parts of the work), Jim describes a note his wife left for him on her last day in the office. It read: “It’s good to be good, but it’s better to be lucky.” Anyway, without wanting to run the risk of sounding like a bit of a squish, it’s pretty cool to see what can happen at the confluence of those characteristics.
Very interesting article thanks Fred. Having been involved in the Internet space for 15yrs (and looking at opportunities in the venture space) I really admire you acknowledging the strengths that a management/operating role brings to the table. Having talked to many senior managers on their thoughts of MBA programs I wonder if you could share some of yours about how it relates to the VC world. Reading some of the comments it seems that most see a business degree as a way into becoming a VC – what about people who have the smarts, operating experience and desire without a business degree? Are we at the point where an MBA is a pre-requisite for aspiring venture capitalists?
This post was so helpful, at a really important time (for me). Thanks Fred.
Wow.That’s great to hear
Another note of thanks. This answers several of the major questions I have wanted to ask you!
Getting lucky is half the battle. The other half, I’ve been told, is showing up. Put those two together and it’s pure magic! Thanks for sharing your story with the A VC reading public, as knowledge like this is hard-won.
I would counter that there is no “right” career path for a VC. Operating experience is no substitute for a good investment gut. When I look at the top VCs, the depth and types of operating experience vary widely. They all pick good companies, they all have good deal flow, they are all well versed in their investment focus area, but I don’t see success correlating with operating experience or any other resume component at all.I do see a disproportionately high concentration of Harvard MBAs though. That degree doesn’t appear to correlate with success, but it does seem to correlate with access to jobs in the field.
My partner at flatiron, jerry colonna, went to queens collegeHe was one of the best vcs I’ve ever worked with
Fred,Thanks for an inspirational post. -Sajal
After working in the startup environment since eighteen, four months interning, graduating at the top of my class and networking like crazy, I finally landed a VC position. If you want to know how, call my office at 2am. Any day of the week. I’ll be there.
picking the right industry is going to require a bit of luck too.
Good Advise