Memories Venture Capital

I enjoyed reading this post by Dan Levitan reminiscing about his 20 years at Maveron. I was fortunate to have been on the board of a Maveron company early in the firm’s life – and learned a lot from them!

Business Stanford Venture Capital

Intensive vs. Extensive Growth – and more – Peter Thiel at Stanford

Last night, Peter Thiel spoke at Stanford – about a wide sweep of topics including entrepreneurship, innovation, macro economic trends and the role of technology in the world. It was a very stimulating discussion across this wide range of topics.

Peter Thiel at Stanford - November 30, 2010One of the more interesting notions that Peter shared was the difference between intensive growth and extensive growth. Intensive growth is hard work, that’s where the real innovations and breakthroughs occur. Extensive growth is much more about replication and scaling – ramping a business once the breakthroughs have been made. He described intensive growth as all about getting “from zero to one” and extensive growth being all about getting from “one to N”.

Peter noted that many venture investors focus on extensive growth. They want to invest once the breakthroughs have been demonstrated – and scaling is what’s ahead. As an investor, he’s more interested in the work being done in areas of intensive growth – a focus that’s different from many – but certainly not all – VCs.

Another recurring theme from Peter’s remarks was the whole issue of the “right people.” He repeatedly spoke about how his investment decisions revolve much less around the business plan and much more about whether the group of people he’s talking to can demonstrate passion, a desire to change the world, and, importantly, an ability to work together effectively – and with shared sacrifice. The ability of a team to effectively pivot as the business evolves and opportunities emerge is critical – and is basically what he’s trying to assess upfront.

A final point about startup success he discussed was his conclusion that you could tell a lot about whether a new venture might succeed or fail if you looked at just the CEO’s salary. In his experience, CEOs who were paid $120,000 or less much more frequently led their businesses to success – versus CEOs making $160,000 or more where success was less likely. He explained that while this might seem simplistic, the CEO salary level actually has many, many effects on the company and, importantly, on the people who join. If the cash comp is less up front, everyone – including management and investors – are much more aligned for equity returns. Similarly, the team will be made up of folks who are really committed to the dream – and not focused as much on current cash. A fascinating discussion with lots of insight!

[Update: a video of the event is here. More notes on his talk here.]

Business Venture Capital

The View from Sand Hill Road

Over on PEHub, Connie Loizos provides an update on how the current economic slowdown/recession/depression (pick your poison!) is affecting Silicon Valley and startups – based on interviews with investors and startup entrepreneurs.

I’ve spoken to several VCs in the last few weeks and they all are repeating the “cash is king” mantra – and doing what they can to help their portfolio companies survive on what cash they have. For companies with revenues, the magic of cash flow break-even can be very fulfilling these days. For pre-revenue companies, it’s obviously very challenging.

One investor recently told me that what’s not happening are Series B deals. Seed and series A deals are happening – at a slower pace – and series C financings – where traction with customers and revenue from them has been demonstrated and it’s only a question of more capital to ramp. But, series B deals are very difficult for those who are running out of their series A cash but still lack clear business viability. The audacity of hope is out of the air – for now – only real revenue coming in qualifies.

Blogs/Weblogs Venture Capital

Blogging — It’s Good for You

From Scientific American. I should do more blogging apparently! Fred Davis mostly enjoys his life in public.

Links Venture Capital

August in September

David Hornik posts about The August Annual Schmoozefest which, of course, takes place in September. A great time was had by all – including yours truly (who’s admittedly not a particularly effective Schmoozer!)

Of course there was one “rock star” who showed up – and was just impossible to get close to! At least he was taking pictures!

(Via VentureBlog.)

Venture Capital

VC Pitches

New VC blogger Seth Levine shares his thoughts about how entrepreneurs should think about presentations to VC’s.

I’m amazed how often entrepreneurs fail to put their best foot forward when they do get a meeting by having a sub-par presentation. I think it’s because too many entrepreneurs know their business so well that they forget how to describe it to people who don’t.

Venture Capital

Term Sheet Terms

Brad Feld of Mobius Venture Capital has posted a couple of great reads for entrepreneurs on his blog this week: Term Sheet: Price and Term Sheet: Liquidation Preference.

Between Brad and David Hornik‘s VentureBlog posts, there soon won’t be any trade secrets left in the Magicians’ Club!

Business Venture Capital

Pure Entrepreneurs

This morning’s Boston Globe has an article by Scott Kirsner on entrepreneurship.

Pure entrepreneurs are loopy and obsessed. They have a vision of the future, and while others are casting their lines into the water to see what will bite, pure entrepreneurs are jumping over the gunwales and swimming after the white whale.

San Francisco/California Venture Capital

Venture Capital Returns

NPR’s Laura Sydell reports on the world according to Buck’s — things are getting better according to Jamis. Too bad she says Sand Hill Road is in Palo Alto — it’s actually in Menlo Park!

Venture Capital

Model Venture Financing Documents

David Hornik points to the National Venture Capital Association’s Model Financing Documents for venture investments. Be sure to check out the term sheet for an illustration of all the in’s and out’s possible for investment terms in a new company!