A Focus On The Company Not The Investment

I said something on stage at Launch yesterday that I’d like to elaborate on:

I do not mean that your investment isn’t important and I do not mean that making money isn’t the focus of a venture capital firm and a venture capital investor. Both are absolutely true.

However, I believe if you are invested in a startup at an early stage that goes on to become a “great company”, that your investment is going to work out fabulously well.

So I think that putting all of your energy into helping the entrepreneur and the team around them build a great company is the best way to accomplish generating great returns on investment.

Venture capital is one of those asset classes where you can impact your investment. And the best VCs do that very well. I’ve studied the great VCs and how they conduct themselves. And what I have seen is that this focus on the company first and everything else second is what separates the best ones from the rest.

#VC & Technology

Comments (Archived):

  1. scottythebody

    I like that way of thinking. The product of your labor isn’t “return” it’s “great businesses”

  2. JimHirshfield

    Yesssssss.I’ve often pointed out to entrepreneurs to pick VCs that are startup builders and not just financial engineers. A good financier does not make one a good VC.

    1. LE

      startup buildersIn this context how would you define “startup builder”?

      1. JimHirshfield

        They have operational experience or have funded so many companies that they know what you should focus on, what’s important operationally at that stage, business/revenue models that are best for your product/market, they provide introductions to industry players and potential customers, etc.

        1. pointsnfigures

          No doubt-which is why consultants and investment bankers don’t necessarily make good VCs

          1. JimHirshfield

            Right.And what about ex-floor traders? 😉

          2. pointsnfigures

            Seriously, not all of them would be good startup investors. Believe me when I tell you I took my lumps-and learned a lot while losing a lot of money. That being said, there are some similar characteristics in each for success. Floor trading was much more complicated than shouting, elbowing for position, and getting lucky. Last summer I had lunch with a floor trader that wanted to angel invest. They told me it must be easy. Find a company, invest at a $2M valuation and sell at a $10M valuation. Yup. Simple. Most floor traders think buy/sell (and so do hedge funds) Exactly Fred’s point.

          3. JimHirshfield

            Sounds like your lunch mate should stay away from poker games; likely to get taken easily.

  3. brgormz

    as Ben Horowitz put it in an email quoted by Fab founder Jason Goldberg: “just build something great”

    1. JimHirshfield

      How’d that work out?

  4. Paul Rubillo

    Great lesson here, especially for the new breed of angel investors that may not understand great businesses can take years to build. Focus should be on how to help and not on when can we cash out.

  5. reece

    was just thinking about this this morning…considering investor differentiation — often verticals, stage etc… but even amongst early stage investors, i’m not sure how many are actually “company builders”…

    1. JimHirshfield

      I’ve worked with some that have operational experience…as in, they worked at a startup or five before becoming a VC.

      1. reece

        @jimhirshfield sure.. there are people with experience, but i’m curious — did they dig in with you to work on issues with your team for hours at a time… and/or point out the land-mines ahead of you that relate to company building (note: i’m talking less about “get to X users by Y date or you’ll be f’d because you’ll have $0 money left”) and more the “lay out a plan for your team’s well-being/training/retention etc”? feel like what i hear from most founders is that investors are helpful with the investment side of things… but i don’t hear tons of stories of investors digging in on the human side of the equation

        1. JimHirshfield

          Yes. Of the last few startups I worked at there was one partner at the fund that held the smallest stake in the company that went the farthest to help with strategy and introductions. A rare breed.And although he’s not in need of, or fishing for compliments, Fred has been incredibly helpful at Disqus. Likewise, Albert during my limited time at MongoDB.

          1. reece

            @JimHirshfield:disqus funny how the people with the smallest piece of the pie sometimes put in the most effort. i’ve had a few of those. they’re amazing…and yes, despite never having them as investors, Fred and team are stellar in my experience

          2. JimHirshfield

            Indeed. And, astonishingly, I’ve had investors that have ignored my emails requesting assistance.

          3. reece

            @JimHirshfield:disqus haven’t we all…

    2. fredwilson

      i don’t consider myself a business builderthat’s you Reecei consider myself a consigliere to business builders

      1. andyswan

        Never go against the family Fredo!!!

      2. reece

        @fredwilson:disqus ha. thanksnot saying the VC ‘does the work’… more that there are few who have branded their capital as ‘company builders’… even the firms who are former entrepreneurs still don’t seem to be speaking to this… just kind of a paragraph on their site instead of hands on work (but then again, i haven’t worked with everyone. am sure it all depends on partner etc)

      3. Nick Devane

        Would you kill Fredo for one of your companies?

        1. LE

          And does he have a fat guy to do the dirty work.

      4. LE

        One of the things that made Henry Kravis so great. He didn’t want to give an opinion on the new logo for an investment that he made, and fired the guy (CEO I believe) who asked his opinion. Warren is similar I would imagine.One thing I can tell you is this. If you know a great deal about things it’s almost impossible to keep yourself out of helping with the decisions. If you know very little you have to be hands off. Having skills and knowing things can actually be a disadvantage.That’s the reason that I would be the perfect owner of a sports team. I don’t know anything about sports and would just have to hire and trust others.

        1. Mike O'Horo

          Or you could be Daniel Snyder, who doesn’t know anything about sports, and who hires others and meddles incessantly. The result is the deplorable Washington Redskins.

      5. pointsnfigures

        In NYC he uses cannoli. In LA, kale.



        1. John Rhoads


      7. John Rhoads

        Nobody will do the work for you, but they will tell you how’d they’d do it better if they were you ☺

  6. Zach Rabin

    This is sort of the fundamental difference between VC and PE, no?VC’s want to help *build* the next great company, and those in the PE sector, want to *fund* the next great company.

    1. fredwilson

      even more so between VC and public markets

    2. John Rhoads

      PE often use a management option package, strategic relationships etc.It’s quite similar other than size and the ability to recap the balance sheet.Bad actors aside in both strategies for value creation

  7. Brandon Burns

    If you weren’t going to focus on the company first, what would you focus on?Excuse me if I’m too dense to see the alternative.

    1. andyswan

      Your exit.Example: I own some $TUBE stock and have zero impact on their business. My focus is on mitigating risk through options and when I’m going to exit

      1. Brandon Burns

        Wouldn’t a focus on what’s best for the company = a focus on your best exit? Seems simple and obvious to me.

        1. pointsnfigures

          for some it’s not. they focus on the terms of their investment-and how to monetize their investment the fastest-which might not be the best for the company.

          1. FAKE GRIMLOCK


          2. LE

            ZUCKERBERG GLAD HIM NOT DO THAT.I don’t think it’s safe to assume that everyone in the world wants to make so much money that they essentially lose their freedom and have to live in a fishbowl. $100,000,000 or even $20,000,000 buys a nice life and plenty of smoke being blow up the you know what.Fred has mentioned how annoying it is to Gotham Gal (this is from memory) if they are eating dinner and someone comes up and pitches them.Now imagine you are Warren Buffett or Mark Zuckerberg or a Google Guy? Or Mark Cuban?Would you want that? I wouldn’t. No way. To have a billion people up your ass? To have a constant target on your back?That said of course people try to make a great deal of money and have success. But no question that it can be a case of “be careful what you wish for”.

    2. Kevin Schultz

      The deal itself (i.e. the finance part of it). I’ve seen some bad “investments” made that were really looking at balance sheets in a vacuum and thinking that by just combining companies or adding debt you can increase value. It usually doesn’t work out well. It also seems to happen more in the PE space than VC, but I think it also applies to VC.

      1. Brandon Burns

        If backdoor tactics usually don’t work, why continue to try? Why not focus on what’s best for the company? Is that not the obvious answer?

    3. Matt Zagaja

      Great article by Steven Levy on Medium the other day explaining this kind of situation as it relates to Yahoo! and Alibaba:https://medium.com/backchan

    4. LE

      I think there is another conflict going on here that nobody discusses and I’ve given some thought to this actually.To answer the question “why not help your startups more” the answer could be simply that if a startup has multiple investors why should 1 particular investor put in the effort while the other investors sit and do nothing (and reap the benefits)?For example let’s say Fred wants to do what I believe Mark Cuban does with people he invests in. I think (I’d have to confirm this) Mark has an entire support structure that takes care of certain things so the investments don’t have to. Maybe business advice, maybe taking care of invoicing, maybe inhouse legal let’s go with that.If a VC like Fred did that it would obviously cost money. So how do you then allocate that expense so USV has some benefit other than “be a nice guy” and “help the companies that you invest in”. And what things to help with? And will those things move the needle? Adding that feature get’s you what? (Question, not statement..)Excuse me if I’m too dense to see the alternative.You know when I see stuff like that what I am going to say. Let’s see how well you know me.

      1. Joe Cardillo

        Re: support structure, believe that is correct – a friend who’s thing is funded by Cuban has described invoicing and legal as being part of what they receive.

        1. LE

          Do you know how he charges for that? Is it a revenue generator for CubanInc?

          1. Joe Cardillo

            I think it’s provided at cost, but I’ll ask and get back. If that’s the case it’s a pretty interesting approach, and while I believe that CEO/founders have to learn to build full breadth of a company, maybe hacking together finance isn’t really the way to go, for example, so that would make a lot of sense.

          2. LE

            Business wise it doesn’t make sense to provide it “at cost”.Besides like in the movie business (and film accounting) what is “cost” anyway? How are they allocating overhead? Do the people who share this overhead also provide benefits to Cuban in another way?There is a great benefit in not having to deal with the “day to day” shit that goes with operating a business when starting at a small scale (many hats and all of that). If you have a good central resource or someone you can depend on (and hand things off to) that gives you more time to concentrate on important things. So why does it need to be “at cost”?I know the logic of “well this is why you let Mark invest vs. someone else” but let’s face it nobody makes a decision based on that type of thing.I am always in favor of paying for things and for people be allowed to earn a living.

          3. Joe Cardillo

            That’s a good point, I should have clarified that – in this instance with my friend’s co at cost meaning that other co’s in Cuban’s portfolio do partnerships / exchanges with them. I’m not sure how the exact value is worked out, but there’s something in it for both of them. I’ll see what he says.I do agree with you on that last point, I’m a fan of paying people and getting paid for good work. Of course how much is always subject to interpretation and market, but even for artists and non-profits I feel the same way.

          4. LE

            that other co’s in Cuban’s portfolio do partnershipsOh for that of course Mark shouldn’t earn a vig (or “affiliate” fee) other than the company that gets the business doing well which puts more money in his pocket in theory. I just mean services/products that Mark has operational control over and operates like a business. In other words he owns the copier that makes the copies and the computer that cuts the check (for lack of a better way to put it). And employes the person who helps with the marketing and so on.

          5. FAKE GRIMLOCK


          6. Chimpwithcans

            “Even for Artists”…ha ha ha ha! Was that sarcasm or honesty?

          7. Joe Cardillo

            Ha! No, it was serious…when I’m not doing the startup thing a lot of my life involves playing / hosting DIY music, ‘zines, arts education, etc. There are some really talented folks who feel totally removed from capitalism (which makes sense) and I spend a lot of time trying to figure out how to get people paid for good work. I think partly embedded in my response was that in the arts and non-profit world a lot of people are suspicious about capitalism and money as a motivator. Though the same types of problems exist there anyway.

          8. Chimpwithcans

            Ah that’s great – I totally agree. My best friend (fine artist) fall’s under the same bracket. Though he is into the self-promotion of his work on social media, and is doing ok, i think if he engaged more in the market forces he could do much better. I think he feels that too often it would require a sacrifice of his artistic integrity.

      2. Brandon Burns

        Let me edit out the sarcasm and rephrase:Please excuse the others who are too dense to see that there is no better alternative.

  8. Tom Labus

    Keep the spotlight on the company not on the VCs. Some guys want to be rock stars and are in tne news way too much.

    1. JimHirshfield

      So much happier looking in your Twitter avatar than your Disqus avatar. Depressing to read too much into that. :-/

      1. LE

        Yeah I like that avatar much better than the “bro” avatar.

        1. andyswan


      2. LE

        He kinda looks like a smiling Jason Statham in that avatar.

      3. andyswan

        I’m intrigued

        1. JimHirshfield

          “I’m intrigued” describes the expression on your face or you’re intrigued by my comment?

          1. andyswan

            Your comment

          2. JimHirshfield

            Well now, your Disqus avatar is updated. Everything’s coming up roses, Swantham.

  9. PhilipSugar

    The same can be said for entrepreneurs. There are many people that start a company to “flip it” or because its the “cool” thing to do. (I know this makes me sound like a cranky curmudgeon)

    1. Corbett Morgan

      not cranky. i think startup culture can mislead entrepreneurs. it’s easy to wake up and think about outcomes, but in my (brief) experience, the magic happens when you wake up every day and are obsessed with nothing other than solving your users’ problem. the passion comes in when it’s a glaring problem you’ve had yourself.

    2. LE

      The same thing happened in medicine in a similar way.Back when money and success was not the primary motivation (people cared about the patient) you had different type of person going into medicine. Once it became lucrative (which resulted in more prestige) everybody and their Uncle wanted to be a doctor. However with Medicine there was a “governor” that is you had to make it through medical school and have good grades.Entrepreneurship oddly enough, the opposite.One thing I noticed when in undergraduate business school (a long time ago) was the MBA’s at that school were typically people who might be a history or english or other liberal arts major in UG school and then decided to pursue business. The undergraduate business majors on the other hand were people who were always trying to make a buck and knew early on they wanted to be in business.I think in some ways the people who are trying to be entrepreneurs now have a big disadvantage if they are just deciding to “be in business”. There are many things they simply don’t know. It would be like me deciding to be a sports fan after not thinking about sports for the first X years of my life.

      1. Joe Cardillo

        Definitely, this. IMHO the biggest thing an entrepreneur has to be ok with is uncertainty. There’s just more than you can control or anticipate, and that may not suit people who just want to be in business and aren’t necessarily passionate, perhaps obsessed with the thing they’re building and who they’re building it for.

        1. LE

          Exactly. When you like something you aren’t just interested in “hosing off the suds” [1]. And you don’t think “well I wouldn’t want to do that but I would do this”. You are all in. Whatever it takes you are there. How they vet people in Navy Seal training I’m sure… No job to large or to small no job beneath you whatever it takes you are committed. Not just the fun parts but all parts. And no whining either. [2]For example, a theme in comments from time to time on AVC is someone wanting to be Fred. However no doubt those people only want the fun and easy parts of Fred’s job and not all the effort that goes behind “being Fred” (which is not the same as “being John Malkovich”).[1] My analogy for someone who comes by and wants to do the easy part of washing a car, the fun part that is, and not the hard work.[2] I see this whining a great deal on hacker news. Guys who are stressed out because they are working long days and don’t get any time for fun. They are burnt out. Guess what? Not everyone gets burnt out by that stuff. Many people thrive on it. Maybe you just aren’t cut out for the life then.

          1. BillMcNeely

            You would be suprised how hard it is just to get to BUD/S. BUD/S is the EASY part.Out of my recruit training class of 900 we got narrowed down to a little over 40 who were deemed strong swimmers through the basic water survival test. After that we got to go through 4 different swim strokes, 30 minutes of treading water with a brick. After that i think there were about 20 of us left. When we went back to the locker room 5 of us were disqualified for wearing eye glasses. So there 15 left. In the end I think only 7 were deemed fit to apply for BUD/s and a couple of those did not have the right job so maybe 3 or 4 out of 900 got to go to day 1 of BUD/s

          2. PhilipSugar

            Did you wear the Trident???

          3. BillMcNeely

            No. I was considered above average sailor and then soldier I did not make it to start gate of either BUD/S or Special Forces Selection. The bar is really high. Like startups it take skill, will and a dash of luck to make it.

          4. PhilipSugar

            I have two fraternity brothers that went through BUD/S, one twice. (one broke a collar bone when a telephone pole fell during the last week)Knowing what they went through and the injuries suffered, I would not say it is “EASY”.

          5. BillMcNeely

            Over generalization on my part.I would not either. Just the selection process even before you get to BUD/s is pretty stringent. No one talks about that. If you wear the Trident you earned it.

      2. Emily Merkle

        Disagree. In some disciplines, core tenets merge with and enhance biz ie industrial/organizational psychology, and psychology in general. Lends perspective to what business is about – people

  10. Matt A. Myers

    This is why finding a good investor starts with asking advice. If they are helpful then you have an idea they can be helpful, and it’s the start of building trust and a relationship.Asking for money without a foundation or familiarity is like asking for change from a stranger – not very effective.If you’re some well-known name, known and familiar by reputation, then that could make the process easier, get you in conversation with more people more quickly – but perhaps could create too much noise as well.I imagine it’s just a matter of having a pool of good people and contacts and whomever’s ready and aligned to invest is who will end up investing.

  11. Christopher

    Very true – but it’s almost universally true in business I would argue. Businesses which focus on short term financial performance (e.g. exploiting customer pricing elasticities) over the customer experience, are all pursuing an ultimately very flaky strategy. As technology makes it easier for challengers to pick off individual pieces of the value chain, financially oriented businesses will suffer because they don’t have the “proposition foundations” to stabilise their declining finances. Transferwise is a good example as it erodes banks’ international payments revenue – it wins on both fees and usability.

  12. William Mougayar

    I remember you recently gave me this advice, “Do what’s good for the startup.” I did, and it paid big dividends. I forgot about myself, and it got returned.That line stuck with me as well, from yesterday.https://twitter.com/wmougay



      1. LE

        That analogy is actually applicable to exercise as well. And the key to my “well honed tried and tested master formula” for keeping in shape is to never exceed limits or exert in a way that will cause injury. Because once you are injured you can’t exercise and then the “system” falls apart. And “all the stops after that going to be a problem”. [1]You’d be surprised at how many people continually push themselves and make that mistake. Pacing and restraint are important.[1] More than “not being able to exercise”. Pull muscle in arm from doing to many pullups and all the sudden you can’t sleep in the same positions as with no injury. Not good sleep causes attention problems and also an increase in appetite. The weight gain then results in making it harder to exercise. And so on.

        1. FAKE GRIMLOCK


          1. LE

            EXCEPT WHEN NOT.

          2. FAKE GRIMLOCK


        2. Emily Merkle

          Much easier said than done but work toward

  13. Jess Bachman

    “If you plant an apple tree and pick all the apples too soon, you may kill the tree, but at least will get some apples. Whereas if you plant the tree and focus on it’s heath and strength, you should have glorious apples for decades.” – Venture Investing and the Botanical Arts. p 206.

  14. Twain Twain

    Imo, there are 2 parts to value and they’re synergistic:(1.) Quantifiable investment value — aka accounting value.(2.) Qualifiable investment value —- aka human value.Historically, some investors thought of Investment Value in terms of a see-saw game. That is, if they control one side (Investment Costs) then the upside is Pure Profit. It really is an over-simplistic and not especially helpful game.Instead, once they realize the game isn’t like a see-saw but like Double Dutch wherein the investors and the company are both holding the ropes of play and need to consistently give+take on the rope slack to build the momentum as well as accommodate the person skipping in the middle………Then it’s win-win on both sides of the value game.https://www.youtube.com/wat

  15. JaredMermey

    Recently I had a few discussions with VCs about how they can influence their companies. I was surprised to hear how many thought they could not positively help their companies but for a few very passive ways — mostly intros whether to potential hires, potential clients/partnerships, or later stage investors. I found this refreshing but found myself arguing that I thought their exposure to so many companies would allow them to recognize patterns and help steer high level strategy. The VCs disagreed.Have you written on how a VC can help/hurt his or her investment? If not, would be a fun post to read.

  16. laude05

    If a business does well, the stock eventually follows.Warren BuffettProfit is not a goal, it’s a byproduct.

    1. Sam

      I am wholeheartedly on board with Fred’s comment — as well as the comments of the AVC community. But I will point out they are at odds with the legal underpinnings of business. Corporate law is frustratingly antiquated in its singular focus on maximizing shareholder value as the one and only purpose of the corporation, its executives, and its board. It’s the crack in the armor of a public company that enables activist minority investors to wreak such havoc on a multi-year business plan — at the expense of a 6-12 month value maximization path.(And apologies to all for the guest post. I got the message a few days ago and will be building a Disqus profile here soon.)



    1. Richard

      whole lot easier say that we were wrong on product than we were wrong on team.



  18. Supratim Dasgupta

    Fred, what you blogged today is all so natural & obvious stuff.

  19. laurie kalmanson

    and the city and the ecosystem. compilation of oldest motion picture footage of nyc, featuring union sq in many frames / decades http://www.omgfacts.com/lis

  20. Chris Heivly

    This feels very similar to my advice when people put an “exit” slide in their pitch deck. Just build a great company and exit opportunities will evolve.

  21. pointsnfigures

    Great point-and why it’s so stupid for public company execs to say they are going to focus on “shareholder value”. If I hear that one more time I will puke. Focus on building a great team, great product, growing revenue and the shareholder value will take care of itself.

    1. PhilipSugar

      When I hear that I think: I am not the one that built this company, but I really need to maximize my personal worth over my short tenure which happens if I can juice the stock price for my options. You almost never hear founders say I want to maximize shareholder value. Duh, they are probably one of the biggest shareholders.It also really pisses me off when I hear an investor tell a founder we have a fiduciary responsibility to increase shareholder value which translates into the same thing.

      1. pointsnfigures

        In startup world fiduciary responsibility should read SURVIVE

        1. PhilipSugar

          I mean after you have survived. That is where the pain begins.

        2. thinkdisruptive

          In any world…..”Maximization of shareholder value” almost always results in short-term gaming of the system because it is much easier to manipulate statements, back-date or post-date revenues and expenses, defer or eliminate investments in future products, reduce costs by cutting marketing, etc. than it is to the do the work of building a company designed to survive indefinitely. All of these will result in better short-term profitability and better ratios, and therefore theoretically higher shareholder value when measured strictly by current and past numbers, however, all of these tactics also result in making companies more disruptable, and more prone to failure. A company that is focused on growth and creating new markets has much higher probability of surviving in the long term, and will generate much bigger cashflows and have greater NPV than one that doesn’t, and this idea is not exclusive to startups.

      2. LE

        I am not old enough to even remember when the stock market was about anything other than short term stock price and essentially gambling. I mean you know that in this day an age it would be extremely difficult to be able to sell investors on long term unless you are Jeff “honk honk” Bezos, right?People buy a stock so they can sell it for more than they bought it for, right? There is no relationship between money that you invest in a stock and what you get out of that investment other than dividends (which are what nominal?) and an increase in the value of the stock so you can sell it at some point. Which depends on a great deal more than what is going on at the company.Apple is making record profits will translate into people bidding up the stock price it’s not as if that money makes its way into the pockets of shareholders in any other way other than dividends. So the game then becomes “what do I think others will think about this news/event to the stock price”.Did you see the 60 Minutes report on lumber liquidators?I watched that and obviously thought “stock will tank, company will have a huge liability”. [1] Unfortunately I would also have to take into account what others would do as well which is why I don’t “bet” or “invest” in stocks.[1] Old enough to remember what happened to Audi on 60 Minutes.

        1. Emily Merkle

          The whole concept of “the market” is based on false premises like valuation and generalized EBITA. It is a constantly and not generalizable game of hedging and timing. Also all automated. A friend of mine developed a trading algo 0:00:00:001 faster than the NYSE. He got squashed quickly

        2. John Rhoads

          I heard Tim speak about this one and his perspective was that the stock market was an outcome, a heavily trailing one, of how the business did… It didn’t show the future but the past.

          1. Emily Merkle

            it’s bs

          2. John Rhoads

            I understand some of your comments, but they feel negative and I would be interested to hear your proposals and ideas – i.e. how to move the conversation forward.40-60% is algo trading done by holders for <90days. “These are specualtors not share HOLDERS” – Clayton Christenson.But kind of like the comment on democracy “It’s the worst form of government except for all the others” – Winston Churchill — I’m not sure what the better alternatives are other than community consensus on future cash flow estimates.I’ve read a little on some proposals that suggest semi-liquidity and holding periods to impose more costs on short-term speculators, but this would be at the sacrifice of earlier less robust companies seeking public market liquidity. You could argue with some of the recent trends firms are deciding to stay private for longer to avoid the scrutiny and rigor of pubic markets already.

          3. Emily Merkle

            Clayton is mistakin you. Speculators are shareholders. Semantics. You cannot predict future cash flow accurately enough with the variables that are also factored in, and many extraneous. And not transparent

          4. Emily Merkle

            Hi John, I am sorry, I wanted to elaborate and agree with you on one point. Staying private longer is an option. The public markets are just that – “markets” – I say they are bs because they are unduly influenced by a vocal and savvy minority that knows how they work – the “speculators”, which include everyone from hobbyist flippers to hedge funds – but moreso the industry vets and press that know how to spin projections and reports put out by publicly-held companies. There is a truth in value there, it is up to the trader to determine it, and it gets lost in the spin (enter factors that are not transparent). Algo trading is fine, I have no problem with it. What I have a problem with are the powers that be that decide who gets what access to what when how. And that lies with the influence, and the sway, and the old-school. I’d like to see more open access to the markets for people like my colleague who did out-do them, not out of malfeasance, but was punished for it for no reason. More transparency all-around. Less spin/more media willing to be a bit more objective.

  22. BrianAllman

    this falls directly in line with Hunter Walks post on the 10x Angel; the more value you put in the more likely you are to get that back in multiples. Every entrepreneur I know is working to find these leaders…

  23. baba12

    I find that this topic about how one VC firm differentiates itself from the next one besides the areas/sectors they maybe investing in and the size and time of the investments, there isn’t any VC firm out there who is going to ever say they are unfair and or assholian in the way they conduct themselves. It is a given that they are going to do everything they can to help the companies either by not stepping on their toes or by helping them connect and sell their product/services. It is also something very stupid of people interviewing VC’s at events like Launch or elsewhere asking the question what is that makes them invest in a company… I have never heard and will never hear a VC ever say they invested because the idea was just too amazing or that they just went their gut instinct.. Every VC says they invest for the same reasons i.e. people (with track records) or ventures that traction and or ventures that also have revenue to boot.It seems like people asking this question have nothing else to ask and or are just using it as a means to fluff the conversation up. Is there any other unit of measure that a VC uses to invest, I doubt it, and should they use any other unit of measure – Probably Not…Anyone who is starting a venture and or seeking to raise some capital is pretty aware as to what is needed for someone to give them money.It would be nice if Fred would just have a FAQ or a list of things that a entrepreneur should have as a checklist for them to use before even trying to email him. He mentioned he responds to 20 people who emailed without being introduced.. could reduce the number of people who email him to take a look at what they have etc…But truly I wonder if Fred(Mr.Wilson) doesn’t get frustrated being asked the same questions over and over again year after year.Even this blog post seems like the topic has been discussed before in some form here on AVC…

  24. JamesHRH

    Sequoia uses this philosophy to put bullets in founders. Which is fair, most of the time & totally required when the founder turns out not to share this philosophy ( happens a lot – founders putting themselves ahead of company ).

  25. Mrinal

    imho, seems to be that one should always have a cause that transcends any measurable return always in life i.e collateral success, Fred.

  26. Dr Washington Y. Sanchez

    That was such a great discussion. Started listening to it late last night and couldn’t stop; 1 am past and I’m lying in bed listening on my headphones.

  27. Kenny Fraser

    Simple but true.

  28. Charles Stanton

    Missed the chance to post yesterday about the smart watch. I believe there is a great chance the applications built on the watch, ie built on this new platform, will ultimately drive the product into consumer’s hands (onto their hands?). As in, there will be a few incredible apps that completely change the way we think about using technology, that we have never experienced before because we’ve never used anything like this. You will buy the watch to just be able to use those apps. The difference between the iphone and ipad is not great enough to make apps for the ipad that completely differentiate the app experience from the iphone. This is not true for the watch. Fin.

  29. george

    I might paraphrase this by saying people first and profits second. Having the right talent and decision-makers drives the true depth of your investment value.

  30. Chimpwithcans

    The response to this issue in Public markets has been to focus on governance red flags and triggers, such as remuneration structure, board structure etc. It seems the VC model looks less at these risks and downside, more at the operators and their overall investment (time, passion) in the company, and resulting potential upside.

  31. awaldstein

    Reminds me of the discussion around whether you are building a company to flip or to build value over a long time.You do the same work every day regardless of intent.

  32. Ben Kinnard

    Many shareholders seem to forget that companies don’t make profits – they make products which make profits.Just like how many of the wealthiest people in the world (Gates, Zuckerberg etc.) got there because they didn’t care about money, otherwise they would have cashed out much earlier

  33. Bala


  34. Alex Dunsdon

    I don’t understand lazy selfish people. Maybe they make more money short term . But I like people who are simply wired to ‘do the right thing’

  35. James Ferguson @kWIQly

    On the subject of VC that “contract out” workload for investments (legal accounting etc).If as an entrepreneur I can have someone that is reliable do something important for me cheaper and know that it is in their interests to maximise my benefit arising, it is worth a few points (contrast dumb money that does nothing but raise reporting and comms. hurdles).No all vcs need not offer this service, but as a VC to go into a round with someone who does is a benefit.Bottom line – VC support services are a differentiator, need not become the norm, will help deal flow, make good sense.Reliably lifting the burden from an entrepreneurial team is THE growth hack for a (hands-on) investor!Contacts, leads recommendations, cash, HR, strategic advice – same applies

  36. John Rhoads

    Interesting way to get advisors to care about your company – have them be financially invested. These people are busy and in demand.Think of investment as a way to get people more aligned with YOUR issue of being fully and totally invested in the success.You want them on board for their advice and fullest support. A good way to make them care after being a kind and likeable person is to take their money! “My mind and my heart think about survival. That wanders to where my money is”. Gotta have people fighting for survival on your behalf.

  37. Val Tsanev

    Agreed. Focus on creating a great company that adds value and the return on investment will follow. Focus on return on investment too early and you become a speculator, not an investor and most likely you will generate no ROI. Personally I am not a big fan investing in anything that is not already in the market to some small extent and several hypotheses have been tested and proven with paying customers. Investments from investors should support increase of revenues and not initial generation of revenues and this way almost by definition those investors have to focus on the company rather than the investment.

  38. jeff ludlum.

    Hear Hear. I believe that same philosophy holds true for folks in sales jobs (given the right environment). It’s not about the Boiler Room Mentality, but rather focusing on developing relationships, and then the perspective of your company/products competitive advantage, with prospects (and then customers) who need your products. Top Line, and Bottom Line will follow.

  39. Sophia

    I’m the one who tweeted that quote first. Here’s my response back to Fred: http://blog.redclaydesign.c…I think he was right to elaborate, but there’s much more to be taken from that one sentence.