People ask me what is the single most important skill/trait of successful venture capitalists. There are certainly many things that you need to be able to do to be good at venture capital.
But one thing that stands out above all others in my mind is the ability to connect people, open doors, get meetings, make good stuff happen.
When I decided to start Flatiron Partners in early 1996 I had spent ten years learning the venture capital business. I knew how to source deals, diligence deals, close deals, manage deals, and exit deals. But I didn’t really have a great network, certainly nowhere close to what I have now.
So I looked for someone who had one. I found Jerry Colonna, who had been editor of Information Week magazine and he knew everyone in the enterprise computing business. He had also spent a year building TechWeb, one of the first commercial websites, and a year at CMG @Ventures, one of the first Internet only venture firms. He had connections like nobody I had ever met.
It was a marriage made in heaven. I knew how to do deals. Jerry knew how to source deals and make good stuff happen once we had made the investment. And until the market broke on us in 2000, we had the golden touch. I am not saying we were the best venture firm or anything like that. But we made a bunch of good investments and I think we really helped them get off the ground and build value. We generated a lot of gains pretty quickly. It was a great time for doing that.
By the time we decided to stop doing new deals at Flatiron at the end of 2000 (we are still managing a number of investments from that era), I had built my network significantly. It seems like everyone and anyone doing stuff in the web business came through our offices at Flatiron Partners at one point during the 1996-2000 time period. I still meet people who tell me they met me during that time. I honestly don’t remember everyone, but I sure remember most of them.
So when Brad and I decided to form Union Square Ventures in the summer of 2003, I knew that connections were going to be key. I brought my network and Brad brought his from 20+ years at AT&T, the last 10 in at AT&T Ventures. The beauty of the partnership is that our networks didn’t have a ton of overlap.
But I wanted to do more. And so when I started blogging I realized that I was starting to build a new set of relationships. My blog was the hub of a social network that touched a lot of people I didn’t know but who could be helpful to our firm and our portfolio companies. But it has surpassed my expectations by an order of magnitude.
These days, I bet I spend half of my time connecting people. I enjoy it. I think I am making everyone’s lives better. At least that is what I am trying to do. I don’t introduce someone to someone else if I think there’s no chance the relationship is going to mutually valuable. That’s part of being a good connector. You have to think about the win/win. Make sure it’s going to be good for both parties.
And if I think about the VCs who I want to work with the most, they are also great connectors. And the best entrepreneurs can smell who is a connector and who isn’t.
So if you want to get into the venture capital business, become a connector. Find a job that lets you build your network. Work it hard. Be a connector as often as you can. It pays dividends. Everyday.
UPDATE: Tim O’Reilly pinged me about a comment I made about Techweb in the original version of this post where I said TechWeb was the first commercial website. Tim corrected me that GNN was the first commercial website. I stand corrected and so does this post.