April 19, 2006
Counter Cliche: I Know When I See One, Too
I haven’t written a counter to one of Fred’s VC Cliche’s of the Week for a while now, but today’s was too good to resist. While I haven’t (and most entrepreneurs haven’t) worked with 200 VCs, I have seen, heard about, been one (sort of), and worked with enough of them to know enough to comment as follows: as is the case with Fred and entrepreneurs, I’m not sure I can define what makes a great VC in one phrase, but I know one when I see one, and here are some of the characteristics they exhibit:
– Major pattern recognition — "I’ve seen this movie before, and I know how it ends…";
– Deep understanding of the market and/or customer set to add strategic value;
– Fundamental desire to be a product manager or marketing manager of your product, but also —
– Ability to stay out of the weeds with day-to-day details when the Board meeting ends;
– Always ready with a story or bon mot about other crazy investors or even crazier entrepreneurs to make you feel better about your own life;
– Complete transparency about the motives of his/her fellow GPs and LPs and ability/appetite for follow-on financings (and needless to say, no/limited blocking of transactions that are clearly in the company’s best interests but might run counter to his/her firm’s own short-term interests);
– Willingness to jump into a debate with the strongest of convictions, yet without 100% of the facts, since 100% of the facts are never available;
– Equal willingness to admit being wrong if a clear and compelling argument comes forth; and of course the most critical —
– No fear of yielding to Management when Management knows best!
– Note — note included — major rolodex (a nice to have, but not required)
The other part of the counter cliche is that I’m sure there are some great entrepreneurs who only exhibit a few of Fred’s list of traits…much as I’m sure there are some great VCs who only exhibit a few of my list above.