My pal Adeo asked me a prescient question today: which would I rather invest in: a) a solid team with deep experience in a vertical, or b) a supremely talented team who doesn’t have a lot of domain experience.
“I prefer investing in the sponge, not the rock,” I told him.
The problem with people who have a ton of experience in a vertical is that they bring a ton of bias, as well. So, for every “I have a perfect person we can hire to do X!” you get two or three “I’ve been doing this for 20 years — trust me, this is how it is done!”
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Fresh eyes on a problem are frequently game-changing, and let’s face it, you can always hire or buy experience down the road if you need it. So, Facebook hired tons of lobbyists to deal with Washington, and Twitter hired journalists to support news organizations — but a lobbyist could have never created Facebook, nor could a journalist have created Twitter. They would have brought too much baggage.
As an investor I like the sponge brains not the rock brains. The ones who can soak every last ounce of information from everyone they meet and then squeeze out the good stuff into their product.
Rock brains as so stuck in what’s always been that they can’t really imagine a different world.
The Early Days of Blogging
Back in the early days of blogging many people came from journalism — including myself! I had a magazine and thought that the editing process was the magic. I would get pitched by my Silicon Alley Reporter journalists and would give a thumbs up to whatever I thought sounded the most interesting.
When we editors saw traditional journalists like Om Malik and Peter Rojas publishing whatever the hell they pleased without permission, let alone fact-checking or an editor, we were appalled, to say the least.
We were mortified that they inserted their personal opinions and disclosed their biases — how dare they not be objective! The audience could never handle knowing how a political reporter voted, let alone what their stances were on issues like gun control, abortion, or health care!
To actually know that Walt Mossberg used Apple products would be the end of days!!! At least that is what we thought.
A month or two into the blogging movement I realized, “f-@#$@#$K! I’m more interested in reading this unfiltered stuff than the stuff I’m assigning to my writers.” I could hear that line in my head again: “Something is happening but you don’t what it is — do you … Mr. Jones.”
Rock brains couldn’t get it. They had to be shown — heck they had to have their asses kicked — over and over in order to get it. That’s why none of the major publications were able to make great blogs, even though they had hundreds of qualified writers just sitting there chomping at the bit to do so!
Back in the day Arthur Sulzberger invited me to have lunch with his top staff right after we sold Weblogs, Inc. to AOL. Literally, the top 12 editors and business people at the Grey Lady were sitting there in their fancy new glass building.
They asked me what they should do about the blogs that were, at the time, kicking their asses.
“Why don’t you start domain names like stylesection.com, theethicist.com, and theboss.com, and let your writers let their hair down on them? Just put a disclaimer at the top that these are random personal notes from your top editors!” I said.
When you’re thirty-something and 12 folks in their 50s and 60s, who have much more experience, talent, and success than you, look at you like you’re stupid you might think for a moment that they are right.
And I did. For about 10 seconds, until I realized something. I asked, “You guys have no idea how screwed you are, do you?”
They were perplexed and asked me to explain.
“Well, you’re up against 100 folks in every category who love film, fashion, and food — for example — as much as or more than you do. They are going to take your readers because they are more authentically passionate than you are.” The room was dead silent.
They thanked me for coming and as I left I could see the reflection of everyone debating what I said.
A year later every vertical at the magazine had a blog and, although I’m sure they would have gotten to it eventually without my help, it was clear that their rock brains were soaking it in.
In conclusion, angel investors or VCs don’t care if you spend 15 years doing something — they care if you’ll spend 15 hours per day learning about that thing and making something better.
Sponges are more powerful than rocks.
Tell me your best sponge v. rock story in the comments and I’ll give you a ticket to the LAUNCH Festival on March 2-4th.
PS – 50 seats left for awesome DEVELOPERS and DESIGNERS at the LAUNCH Hackathon starting this Friday!!! Also, I’m going to invest $100,000 in the top teams — and let at least two of the winners into the LAUNCH Incubator! So, get in there people!
PPS – Speakers … my gosh, look at these speakers!