How to Improve Your Odds of Getting to Yes with a VC — “Land and Expand”

If you’ve read any of my ongoing series on fund raising from venture capitalist (episode 1 — controlling your psychology) you no doubt have heard me say that raising capital is a sales & marketing process. You company is the product and you’re selling an equity ownership in your company but much more broadly you’re selling trust & confidence that you’re going to build something enormously valuable and that you’re going to be enjoyable to work hand-in-hand with over the coming decade of each other’s lives.

In order to understand how to “get to yes” with a VC you first need to understand how VC partnerships make decisions and then you can understand how to increase your odds of closing a deal.

VC Partnerships

Start by understanding how many partners are at the firm you are approaching. It’s pretty easy since nearly every VC lists its partners on the website. Some firms are trickier since they artificially call everybody “partner” but they’re not all “investment partners.” It’s super easy to suss all this out. Find a portfolio company or two that they’ve invested in. Find one that’s on the earlier-stage size or one that raised a long time ago and never scaled and get to know the founder & CEO. They can likely give you the entire playbook of the partnership if you build a meaningful relationship with them and they trust you. The key to your “consigliere” is that they can’t be crazy busy because they’re scaling at meteoric rates. You can’t try to meet the executive team at Bird to understand the Upfront Ventures partnership dynamics because they’re too damn busy dealing with explosive growth.

What do you want to know?

  • How many partners are there?
  • Which partners are active and which are less active?
  • Who in the firm has “pull” to get deals done when they want to?
  • Which partners work well with which other partners?
  • Who are the most optimistic partners and who are the most generally skeptical partners?
  • How does the partnership typically make its final investment decisions?

Decision Dynamics

Each firm makes decisions in different ways so understanding the firm’s decision framework matters. Some firms are “consensus driven” and look for unanimity in the decision or near unanimity. Some partnerships are “conviction driven” meaning they’re looking for a super committed partner who will slam his or her proverbial fist on the table to push through a deal. Those partnerships want to know that the “sponsor” of the deal is willing to have his or her head on the chopping block advocating for this deal. In larger partnership you often have “shadow partners” who serve as the role of an advocate (or detractor) to the main sponsoring partner.

In any

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Automation Will Make Lifelong Learning a Necessary Part of Work

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President Emmanuel Macron together with many Silicon Valley CEOs will kick off the VivaTech conference in Paris this week with the aim of showcasing the “good” side of technology. Our research highlights some of those benefits, especially the productivity growth and performance gains that automation and artificial intelligence can bring to the economy — and to society more broadly, if these technologies are used to tackle major issues such as fighting disease and tackling climate change. But we also note some critical challenges that need to be overcome. Foremost among them: a massive shift in the skills that we will need in the workplace in the future.

To see just how big those shifts could be, our latest research analyzed skill requirements for individual work activities in more than 800 occupations to examine the number of hours that the workforce spends on 25 core skills today. We then

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Perpetrating a Fraud

I noticed Elon Musk wasn’t too happy with the press he has been getting.  First the wild melt down on the analysts call and now the tweeting.  Holman Jenkins of the WSJ wrote an article yesterday about it.

There have been other frauds out of the startup world.  The idea seems so magical and the person behind it is so good at selling it along with other tailwinds propelling it we want it to be true.  Theranos, UBeam, and others have proven to be snake oil.

I was involved in a deal in Chicago where a guy took a photo of himself, gave a fake Fed wire and wired a rubber check to an entrepreneur.  People are not always what they seem.

I think Musk is a tremendous entrepreneur.  I don’t think Tesla is a fraud.  It just doesn’t make money.

In startups, really stupid ideas that are cool if Continue reading "Perpetrating a Fraud"

How to Help the Employees You Gain in a Merger Succeed

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Lance Grandahl/Unsplash

The term “acqui-hire” is a nifty neologism that enjoys the virtue of being well-defined in M&A circles while suffering the vice of being misunderstood. Ostensibly, young companies are “acqui-hired” more for their best people than for any real interest in their products, services, or ongoing operations. Talent acquisition is acqui-hiring’s main purpose, say innovation pundits — everything else matters less.

This is true in much the same way television can be defined as “radio, but with pictures” — technically accurate, to be sure, but missing the larger value and impact of the experience.

Consider Jet.com founder Marc Lore: Walmart paid $3.3 billion in 2016 for Lore’s company in its increasingly desperate efforts to more effectively compete against Amazon. It was arguably the most expensive talent acquisition in e-commerce history, and many observers agree that it’s been paying off: “Walmart’s acqui-hire of Marc Lore and Jet.com was brilliant,”

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The 3 Types of Diversity That Shape Our Identities

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Diversity means different things to different people. In a study of 180 Spanish corporate managers, we explored perceptions of diversity and found that depending on who is answering, diversity usually means one of three things: demographic diversity (our gender, race, sexual orientation, and so on), experiential diversity (our affinities, hobbies, and abilities), and cognitive diversity (how we approach problems and think about things). All three types shape identity — or rather, identities.

Demographic diversity is tied to our identities of origin — characteristics that classify us at birth and that we will carry around for the rest of our lives. Experiential diversity is based on life experiences that shape our emotional universe. Affinity bonds us to people with whom we share some of our likes and dislikes, building emotional communities. Experiential diversity influences we might call identities of growth. Cognitive diversity makes us look for other minds to

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GDPR Is Upon Us

As we all know from the flood of emails coming into our inboxes explaining that privacy policies have changed and more, the dawn of the GDPR era is upon us.

Technically companies have until tomorrow, May 25th, to get into compliance with GDPR.

USV portfolio companies have been working on getting compliant for more than a year and we have been active in helping them do so and advising them on best practices.

I blogged about GDPR here at AVC last September in hopes that all of you would also start working on getting compliant.

If you have customers or users in Europe, you must comply with GDPR. But many companies are taking the approach that they will be GDPR compliant with all of their customers, regardless of geography.

For this reason, GDPR is the biggest user data privacy regulation to hit the Internet, at least in the last decade,

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Cancer is Bad. Bid On Lunch With Me To Raise $$$ To Fight It.

Lunch or coffee with me and Satya. Money goes to Leukemia and Lymphoma Society. 

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Auction ends May 31st.

We are tossing in BONUS ITEMS to raise even more money!

The winner gets:

  1. Lunch/coffee with me and Satya Patel
  2. 30 minute call with Beth Scheer, Homebrew’s Head of Talent. She spent her career at Google, Salesforce and now venture capital. Talk recruiting strategies, compensation best practices, how to hire passive candidates, how to deal with a Google/Salesforce counter-offer to a candidate you want to land, etc

AND IF BIDDING REACHES $2500 WE’RE GONNA GIVE YOU ANOTHER PRIZE -> 

3. 30 minute call with ONE of the following founder/CEOs to get advice on whatever you want – company building, bootstrapping, raising venture capital, building a brand. These founders have raised hundreds of millions of dollars from top VCs, celebs and strategic investors – maybe their advice helps YOU land the big

🙂
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Is Your Emotional Intelligence Authentic, or Self-Serving?

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Kittiyut Phornphibul/EyeEm/Getty Images

It’s possible to fake emotional intelligence. Similar to knockoffs of luxury watches or handbags, there are emotions and actions that look like the real thing but really aren’t. With the best of intentions, I’ve seen smart leaders charge into sensitive interactions armed with what they believed was a combination of deep empathy, attuned listening, and self-awareness but was, in fact, a way to serve their own emotional needs. It’s important to learn to spot these forgeries, especially if you’re the forger.

Plenty of research has documented manipulative misuses of emotional intelligence — the intentionally subtle regulating of one’s emotions to engineer responses from others that might not be in their best interest. Given that most people aren’t sociopaths, in my experience, the more common misuses of emotional intelligence are subconscious. To safeguard against inadvertently falling prey to them, we need deeper levels of self-examination. Here are three

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Measuring and Boosting Engineering Velocity

I have been recommending our portfolio company Code Climate‘s relatively new Velocity product in most of my recent Board meetings.

I hear from management teams again and again that they want to understand their engineering utilization and velocity and benchmark it.

Everyone feels like they are not getting enough production out of engineering but have no way of knowing if that is just how they feel or the reality of the situation.

Velocity is a great tool to figure all of that out.

Becuase you can’t manage what you can’t measure.

If you feel like you need more visibility into your engineer team’s production, check out Velocity.

Blockchain Phones? Really!

It seems a whole new slew of phones that are optimized for blockchain applications are currently under development.   Sirin Labs is going to debut its Finney phone in October 2018 which runs a custom Android OS.  The phone will have built-in crypto wallets and will allow seamless behind-the-scenes conversions between different types of tokens. Blacture is also working on the Motif phone, which is supposed to launch in Fall 2018.

These are exciting developments, for sure. And while they might not make sense now, but don’t be surprised to see phone makers such as Apple start to incorporate chips and OS level integration for seamless behind the scenes conversions. For me, this is a trend to watch.

How Nokia Embraced the Emotional Side of Strategy

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How do emotions shape strategy making? We investigated this topic when we studied how Nokia executives dealt with the company’s severe strategic challenges between 2007 and 2013. As part of this research, we conducted 120 interviews, including nine with board members and 19 with top managers.

Recall that Nokia dominated the mobile and smartphone markets in 2007-2008 when Apple launched the iPhone and Google the Android operating system. The new rivals revolutionized customer expectations, causing Nokia’s Symbian operating system to become outdated. However, Nokia held on to Symbian until 2011, when it eventually switched to Windows operating system, which also underperformed. Ultimately, Nokia initiated a radical strategic renewal in 2013 by divesting its mobile phone business and focusing on manufacturing network equipment and software, patent licensing, and opportunities in wearable technology and the internet of things. This bold strategic leap was, we found, in part facilitated

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Do They Have “It”?

One of the best parts of Ben Horowitz book “The Hard Thing About Hard Things” is his section on hiring and firing.  In it, he talks about hiring a guy to head up sales for one of his companies. The guy didn’t have a textbook resume.

He wasn’t from a name school.  I recall he was a college grad from Southern Utah.  That sounds like a salsa commercial in the making.  He didn’t have the right background.  But there was something about him that Ben liked and connected with and he hired him.

The guy crushed it.

I think that is one of the toughest things in hiring and firing is figuring out if the person has the right stuff to do the job they are being hired to do.

When people are analyzing other people, they often use heuristics.  They look to de-risk the decision and often they are Continue reading "Do They Have “It”?"

Making Time for Networking as a Working Parent

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Loic Djim/Unsplash

Networks matter for career success. They help you find people who can assist you with projects, refer you to new employers, and make connections to new and bigger opportunities. In a famous study by Ronald Burt, people who made efforts to improve their networks were 42%–74% more likely to be promoted than those who didn’t.

Here’s the challenge: networks often seem to grow during after-hours activities, like after-work drinks, weekend off-sites, or far-away conferences. And that poses a problem for most working parents. How do you meet new people if traveling to conferences is out of the question? How do you strengthen connections with colleagues after work if you also need to hurry home for soccer practice? For many working parents, those problems don’t get solved and their network growth ceases (and maybe even shrinks).

But being a working parent doesn’t mean the end of a thriving

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How AI Is Making Prediction Cheaper

Avi Goldfarb, a professor at the University of Toronto’s Rotman School of Management, explains the economics of machine learning, a branch of artificial intelligence that makes predictions. He says as prediction gets cheaper and better, machines are going to be doing more of it. That means businesses — and individual workers — need to figure out how to take advantage of the technology to stay competitive. Goldfarb is the coauthor of the book Prediction Machines: The Simple Economics of Artificial Intelligence.

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Technology Is Changing What a Premium Automotive Brand Looks Like

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Many mature industries are experiencing significant technological disruption. The automotive industry is being disrupted by electric vehicles and self-driving cars, just as home appliances is being disrupted by the Internet of Things and smart appliances, home entertainment by on-demand content providers, and apparel by online personal stylists such as Stitch Fix and Trunk Club.

Leaders in every industry are no doubt keeping a vigilant eye on such developments, yet one very important aspect of this disruption has been largely overlooked: technology fundamentally changes what makes your brand premium.

The traditional drivers of brand premium are being joined (and to varying degrees supplanted) by newer, tech-enabled variables: software, interactive products, digital interactions, immersive experiences, and predictive services, to name a few.

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Here’s how technology is changing the game in the automotive industry:

Product: hardware vs. software. While hardware currently accounts for 90% of the perceived value of a car,

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