OVP Venture Partners - Behind Closed Doors (Part 4)

Behind Closed Doors (Part 4)

Written by Gerry Langeler
Tuesday, August 25, 2009


Now for one of the really tragic whispers emanating from an OVP partners meeting... "Right team, wrong idea." We really agonize over this one. It doesn't happen all that often, but every once in a while we get this absolutely killer team in to present, with deep domain expertise in an exciting market. And then, after they explain their business concept we say... "Is that the best they can come up with? What a shame!" (and then we shed a collective tear) It is so hard to get really high performance teams put together than it pains us to see one going after a target that is just too small to be interesting, or too far ahead of the market to be financable, or too crowded to be sustainable. I have to admit, there have been times we've come close to backing these all-stars in the hopes that they'd figure out some other business to conquer nearby the original target (without blowing a wad of cash first). In fact, it turns out that some of the best startups we've seen (whether we backed them or not) fall into the category of "missed on the original plan, but adjusted." Great teams can do that. The problem is, great teams can also simply fail if pointed in the wrong direction - or burn so much cash bumping into trees in the forest that it is the same as failure to us. So, if you have pulled together that once-in-a-lifetime team, please work hard to make sure the business you are chasing is worthy of the talent. You don't want to see a VC cry, do you? Wait...let me rephrase that..... Bookmark Email This Comments (4) ... written by Derek, September 07, 2009 When faced with a "right team, wrong idea" situation, how up-front are you in terms of the criticism of the idea and working towards something that may be a higher-value proposition? Is the team often dedicated enough where they are in too deep to change strategy, or is it more the case where there are too many potential deals on the horizon? How hard do you work to get a "team of all stars" to do something you would find investable? report abuse vote down vote up Votes: +0 ... written by Gerry Langeler, September 08, 2009 Good question! I think we do a fairly nice job of being up front in these situations - much more so than in the reverse case (wrong team, right idea), because it is frankly easier to say "we think you all are terrific, but your idea needs work" than the opposite. Sometimes, a team is indeed wedded to their idea and doesn't care to hear what we have to say. But, about half the time we do get into a great conversation about what other opportunities might be available in the same general area that could be more venture fund-able. The ones that break our hearts are those that we see early, hear our feedback - but are wedded to their original idea. They accept our turn down and then, later, revise their plan to something we would have backed but figuring we said "No" once, don't circle back. They get funded by someone else and we cry in our beer. To answer your last query - there is a shop-worn but truism in this business. You invest in five things: people - people - people - product - market. And there aren't that many all-star teams we get to see, regardless of total deal flow. So, when we find a killer team, we work hard to get them into a killer product/market fit. report abuse vote down vote up Votes: +0 ... written by Matthew Artero, September 22, 2009 How do you weigh "people - people - people - product - market" Tom Perkins, formerly of KPCB, says you can't get the best people in the early stage because people of world class quality don't need to take the risk. He says to start with the technical founder (inventor/developer) and then grow the company to where a great CEO and great VP of Marketing are willing to join. So is there ever a time when you don't have the people you need/want but consider that the products and market have the potential to attract the people you need/want in the future? Maybe that means you are still looking for the right people, just as you say, for the early period. Perhaps you could tell us what you mean by "right team" and "people-people-people". The standard answer is experience, done it before. But what about those times when all you have is the technology and the market and no CEO experience? What constitutes the right person or people in various situations? Thank you report abuse vote down vote up Votes: +0 ... written by Gerry Langeler, September 22, 2009 We certainly do find times when the people component is not quite there, but the opportunity is compelling. In those cases, we try to outline for the founding team where we see the holes, or where we see what may be a lack of headroom - so there aren't surprises down the road. Then, we work with the team to fill those holes or if someone hits their ceiling, find a place for them to continue to contribute while others are brought in to go forward. Also, while Tom Perkins point can be right, it isn't always. We have seen terrific founders who were absolutely top of the line willing to take start-up risk because they wanted start-up rewards, and the excitement of growing something of their own. As to what we look for, domain expertise is vital, so you don't trip over obvious rocks. Then we look for folks who, if they don't have the actual experience they will need (a la a first time CEO) have relevant experience. Perhaps they've managed a complex organization, but it was just in one functional area. Perhaps they've led a project team where they didn't have direct management reporting of a group, but had to integrate diverse elements. Those are "CEO-ness" skills that can transfer. report abuse vote down vote up Votes: +0 Write comment Name Email Comment smaller \| bigger I have read and agree to the Terms of Usage. Write the displayed characters

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