We meet at lot of entrepreneurs and teams at Storm. While I think my partners may value some qualities differently, I think we would all agree on a core set of qualities in entrepreneurs we invest in that we believe contribute to success. These qualities are all important and where we have made some exceptions, I think in general we have been disappointed. I will cover each one in some depth in separate posts and welcome comments.
The first is transparency. I have been very fortunate to have worked with many entrepreneurs since starting Storm 11 years ago. I am convinced that having direct, open and honest conversations with management teams is part of the formula for success. It goes for both venture investor and entrepreneur. It reflects an attitude and an entrepreneurial style that sets a company’s culture of openness, abundant communication and most importantly accountability. Transparency is more than trust. The importance of trusting the entrepreneurs and founders we work with seems obvious. I would hope that we would never have to work with entrepreneurs we simply don’t trust. I also hope that entrepreneurs would never have to work with a venture investor that they don’t trust.
In the early stage investing that we do at Storm – especially seed investing – transparency is critical because it helps us better understand how best to contribute. Many founders are concerned about how much to share with their investors and for good reason. I have heard many stories from founders where their investors spend all of their time being critical instead of being constructive. Pointing out flaws and being critical is easy – execution and contribution are what matter most. Bad news is hard to deliver. No one wants to hear it. But it’s the bad news that completes the picture and puts into context the issues that are facing a startup. Things are going to go wrong in a start up on both the path to success as well as the one to failure. In my somewhat limited experience, success does not come by way of some sort of divine intervention. It is the result of a tremendous amount of iteration, focus and feedback whether it is about broad strategy, products, markets, financings etc. We have found that when teams are transparent with investors and have a culture of transparency, it makes for a more solid foundation for constructive interaction and contribution. It’s also true that when investors are transparent with founders it helps calibrate and put the company on the rails to success – even though it may be hard to hear (and deliver) at times.
As investors, I think it’s important to respect the concept transparency. It means that we have a responsibility to act appropriately with information. Regardless of the news, I need to be there to help in whatever way I can and sometimes it is just to be supportive and show the team I believe in them. My job is to maximize returns and potential for all shareholders including founders. Once I have made a decision to invest in a company, I have found supporting the company in any way that I can is the best way for me to contribute to the company’s success. I don’t view myself as part of the executive team – most of all because I am not. I have a different role as an investor and board member. The founders hire great people (sometimes with our help) to operate companies. We have to be there to make them successful and their success is what will make me successful ultimately as an investor. Let me know what you think.
We meet at lot of entrepreneurs and teams at Storm. While I think my partners may value some qualities differently, I think we would all agree on a core set of qualities in entrepreneurs we invest in that we believe contribute to success. These qualities are all important and where we have made some exceptions, I think in general we have been disappointed. I will cover each one in some depth in separate posts and welcome comments.
The first is transparency. I have been very fortunate to have worked with many entrepreneurs since starting Storm 11 years ago. I am convinced that having direct, open and honest conversations with management teams is part of the formula for success. It goes for both venture investor and entrepreneur. It reflects an attitude and an entrepreneurial style that sets a company’s culture of openness, abundant communication and most importantly accountability. Transparency is more than trust. The importance of trusting the entrepreneurs and founders we work with seems obvious. I would hope that we would never have to work with entrepreneurs we simply don’t trust. I also hope that entrepreneurs would never have to work with a venture investor that they don’t trust.
In the early stage investing that we do at Storm – especially seed investing – transparency is critical because it helps us better understand how best to contribute. Many founders are concerned about how much to share with their investors and for good reason. I have heard many stories from founders where their investors spend all of their time being critical instead of being constructive. Pointing out flaws and being critical is easy – execution and contribution are what matter most. Bad news is hard to deliver. No one wants to hear it. But it’s the bad news that completes the picture and puts into context the issues that are facing a startup. Things are going to go wrong in a start up on both the path to success as well as the one to failure.
In my somewhat limited experience, success does not come by way of some sort of divine intervention. It is the result of a tremendous amount of iteration, focus and feedback whether it is about broad strategy, products, markets, financings etc. We have found that when teams are transparent with investors and have a culture of transparency, it makes for a more solid foundation for constructive interaction and contribution. It’s also true that when investors are transparent with founders it helps calibrate and put the company on the rails to success – even though it may be hard to hear (and deliver) at times.
As investors, I think it’s important to respect the concept transparency. It means that we have a responsibility to act appropriately with information. Regardless of the news, I need to be there to help in whatever way I can and sometimes it is just to be supportive and show the team I believe in them. My job is to maximize returns and potential for all shareholders including founders. Once I have made a decision to invest in a company, I have found supporting the company in any way that I can is the best way for me to contribute to the company’s success. I don’t view myself as part of the executive team – most of all because I am not. I have a different role as an investor and board member. The founders hire great people (sometimes with our help) to operate companies. We have to be there to make them successful and their success is what will make me successful ultimately as an investor.
Let me know what you think.
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I’m not saying that early-stage/venture investors don’t add value. Specific people absolutely do add value and are important to the success of many companies. However, early-stage/venture investors shouldn’t be the primary focus of your time – and the good ones don’t want you to focus on them anyway. They want to help you build a great business – to put the priority of your time ahead of their own. The ability of a venture investor to prioritize the time of the entrepreneur ahead of their own time is a primary test of a great investor. The best venture investor partners are those who embrace modesty as a primary quality: in other words, they exist to help make the company (and by definition the founders) successful. In interviews, Peter Barris of New Enterprise Associates has specifically and frequently cited modesty as a primary cultural dynamic at NEA. I’ve experienced this first hand working with many partners at NEA – especially Harry Weller and Tom Grossi –and I believe it is a key component of NEA’s ability to scale successfully. John Lilly at Greylock is another great example of someone who demonstrates this type of modesty – putting the entrepreneur first.
I agree with you – the first job of a venture investor is to not screw things up and know when to stay out of the way. An hour meeting with an investor that is not useful is a precious hour an entrepreneur has lost building the company.
You’d be surprised the number of people who come to me and say, I want to start a company — without an idea for a company. This isn’t enough. The most successful founders have a driving passion and are compelled to change the world. Time and time again I’ve found the serial entrepreneurs are the ones who have this desire to change the world and have a clear vision on how to do it. The motivation cannot simply be a desire for the prestige of starting a company or the success. This is the foundation for a horrible company culture that will never survive. It has to be about having the vision, the passion, and the belief that they will change the world. I promise you, if you build a great company, the rewards will follow.