Investing in many different companies, with different founders, different cultures, and different missions requires the ability to adapt to each and every one. I like to think about it as playing a role in a play.
Even though I am the same person, with the same fundamental beliefs, I end up playing very different roles in the companies I invest in and work with. The Fred Wilson that works with Coinbase is different than the Fred Wilson that works with Kickstarter and the Fred Wilson that works with Etsy and the Fred Wilson that works with SoundCloud and the Fred Wilson that worked with Twitter.
It starts with the founders and the mission. They set the course for the company. As an investor, you show up and something is already underway. You have to take the time to understand where the company is headed, why it was formed in the first place, where it is going and why. You have to figure out how to insert yourself into that journey in a way that is constructive and value adding. And you have to do that work before you invest because if you can’t figure out how to play a role that is constructive and value adding, you should not make that investment and join that Board.
Some founders start companies to make money first and foremost. It is important to understand that. They will be “coin operated” and transactional.
Some founders start companies to solve a very specific problem, often one that they themselves have. They will be very product and market focused.
Some founders start companies to chart a course that is different from others. They will be iconoclasts who like to zig when others zag.
Some founders build companies to sell.
Some founders build companies to go public.
Some founders build companies to outlive them.
What I have learned is that there is no right way to build a business, no right way to exit a business, no right way to operate a business. There are many different ways to do the startup thing. And I have learned that getting everyone on the same page about the specific way you are going to do it is critical. If everyone on the management team, investor group, and Board are bought into the long term vision and wanting to go to the same place, on that specific opportunity, then great things can happen.
If, on the other hand, there is tension between the founders about the direction, or between the Board and founders about the direction, or between the management team and the founders about the direction, or between members of the management team about the direction, then it makes it very hard to move things forward.
I know that people who read AVC, who follow the investments we make at USV, who work in USV-funded portfolio companies often scratch their head trying to figure out why what is right for one company is not right for another.
Why is it that its a great idea for one of our portfolio companies to move to a token based business model and do an ICO when it is not a great idea for another one of our portfolio companies to do that?
Why is it that it is a great idea for one of our portfolio companies to accept an M&A offer before they have reached their potential when it is not a great idea for another one of our portfolio companies to do that?
Why is it that it is a great idea for one of our portfolio companies to go public when it is a bad idea for another one of our portfolio companies to do that?
To understand these conflicting choices that companies we work with make, it is important to understand how these companies were funded, what the vision was, what they founders wanted out of the effort, what the investors signed up for, how they were capitalized, how they were managed, and how all of that changed over the years. And it is hard to understand those things from afar.
To understand it better, you need to think about each company as a different journey, to a different place, and all of us – the employees, the management, the founders, the investors, the board members – as role players in that journey. And when you choose to join a company as an employee or an investor or as the CEO, you really need to take the time to understand that journey before you step into that role. Because you will be playing it, possibly for a long time.