A number of people have written in and correctly identified the Adventure reference of my blog title. Here’s the full reference and why I chose it as the title for my ramblings.   When I was a kid I used to love playing “Adventure” (written by Will Crowther and Don Woods back in the late 70’s). My dad worked for Digital Equipment Corporation, so I was rarely without a computer of some sort (terminals in those days; first with a 300 baud modem and eventually a super speedy 2400 baud model that didn’t even require you to insert your phone receiver into two plastic cup things to make the connection – you could actually plug your phone line directly into the modem!). I also had basically unlimited VAX time since I could log into an account my dad set up for me pretty much any time from home. I liked computers and spent a lot of time trying to write up rudimentary BASIC code and, of course, playing Adventure. I eventually mapped out the entire adventure world (I still have the pencil written map in a box of memorabilia from my childhood).

I remember that one of the hardest things to map was the “twisty maze of passageways, all alike” (also knows as the Pirate’s Maze). The first few times I ended up in this maze I just gave up and quit the game. It was a place that basically took you around in circles and didn’t let  you out. After a few tries, I realized that the way to map the maze was to take a bunch of things into it and start dropping them in rooms (you could pick up tools and implements along the way in Adventure). Eventually you’d get back to a room that you had dropped something in and in this way you could actually map out the maze (despite each room’s description being exactly the same). From there you could figure out how to get out from any entry point (reversing your direction when you went in didn’t work).

To a large extent this process encompasses a lot of what I still do today. A good part of the leverage VCs bring to their portfolio companies comes from having seen many companies go through lots of situations and leveraging learning from the past on current situations. This sounds pretty basic – don’t make the same mistake twice; do the stuff that worked again, etc. The trick, of course, is figuring out when you are in the same room again since a lot of the rooms sound the same, but are in a totally different part of the maze. This is one of the keys to successful stewardship of companies (for VCs as well as entrepreneurs). Since the business world is dynamic, you are never really in the exact same room again, but one needs to learn to recognize similarities across situations and apply past experience to the present. This is why I think it takes real time to become a successful venture capitalist. You need to have those experiences behind you in order to build upon them. I think it is also one of the reasons that many successful venture capitalists have spent some time in the operating world – it’s easier to recognize situations from the outside if you’ve been in them before on the inside. While I think others would not emphasize this latter point (and certainly there have been successful venture capitalists who do not have an operating stint in their background), this is clearly a theme at Mobius where all of the investment staff has operations experience in their past.

On a personal note, I know that this is one of the ways that I’ve grown the most as a venture capitalist over the past three years – I needed to both understand how my operating experiences relate to the current situations portfolio companies find themselves in and I needed to build (and continue to build) a base of experience as a VC that both helpes me to recognize what room of the maze I’m in and, importantly, where to go from there.

sjl

This isn’t a post on venture capital or anything else related to business but rather something much closer to home . . .    If you have a window well, please make sure it is covered. My wife and I have two dogs, one of whom is a 12 year old yellow lab named Beau. Beau is quite possibly the sweetest dog ever born (I’m of the belief that every person gets to have one truly exceptional dog in their lifetimes – Beau is this dog for us).  Beau wandered away the other night. We couldn’t find him for several hours. I finally started checking the window wells in some of the adjacent houses and found him in an uncovered well at a house down the block that is under construction. It was dark and the window well was flush with the ground – I almost fell in myself. Beau was pretty seriously hurt. Friday we thought things were over for him (he couldn’t walk at all), but now things are looking a little better as he’s regained use of his front legs and some use of his back legs. He’s taking steroids and we’re hoping that his back/spinal chord was bruised (in which case he’ll regain much of his abilities) and not broken (which would be very very bad news). While the accident was clearly my fault (he wandered off and should not have been in a position to fall into the well), I have a couple of observations:

1) I can’t believe how many window wells are uncovered. There were more uncovered wells around us than covered ones (and these are wide, deep wells). Most had little or no lip on them. Many were very close to a walkway or alley. One is our own well, which is probably 7 feet deep and has only about a 6 inch lip. We ordered a cover for it when we moved in,  but it isn’t ready yet.

2) I’m amazed at the local codes. I know that they codes are weak, because when we bought our house we asked for one of the window wells to be covered and were told no, citing that it wasn’t code. As I understand it, in my county the only wells that are required to be covered are those within 3 feet of a curb/walkway or within 15 feet of a door. The one in question at our house was about 3 ½ feet from the sidewalk.

I think it irresponsible of builders and homeowners not to do something about exposed wells. I also think the codes need to be changed. We called the guy that we hired to make our well cover this morning to try to hurry things up. In the meantime we’re going to see what we can do to make things safer at our house. We’re also going to ask our neighbors to do the same. As sad as we our about what happened to our dog, things could have been much worse if it had been a child who had wandered off. While I don’t even want to think about that situation, I found out from some of our neighbors that several children have fallen into wells in our community (resulting in a few lawsuits).  This is a scary situation. My wife and I are going to petition the local zoning board to try to get the rules changed.  I’ll let you know how it goes.

In the meantime,  if you have a window well please cover it!

From time to time I’m planning on writing posts aimed at giving some insight into the venture industry. Brad (sometimes co-authored by Jason Mendelson, our GC) has done a series of these that I think are very informative. In fact, my very first blog was a guest column for Brad that described splits and the various ways to calculate them in a venture deal (and why this matters to entrepreneurs). I sit through a lot of venture presentations. Literally hundreds of them. Some are very good but a good number of them are really poor. Seriously. This amazes me. I think it’s pretty hard to get an audience with a VC (I think about the number of plans we receive every year that we don’t see the pitch for vs. the number that we invite in for a meeting). 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. Here’s a couple of do’s and don’t that I hope will be helpful. Also below is a list of what a good venture presentation should include (I believe this was originally put together by my colleague Chris Wand a few years ago).
– DO have a 2 or 3 sentence description of what you do. This should be simple and straightforward. You grandparents should hear you sa this and say ‘oh – I get it’.
– DO make sure you start your presentation by telling the people who you are talking to what it is you do (I’m truly amazed by the number of times it takes 6 or 10 powerpoint slides to get to the part of the presentation where I finally understand what it is the company that is presenting actually does)
– DON’T assume that the problem that you solve is obvious. Make sure you do a good job outlining what it is that you ‘fix’
– DON’T have a financial plan that shows you becoming the most successful [insert your company type here] company ever in existence. I’m amazed how many enterprise software companies show us with a plan that has them generating $50m in revenue in their 4^th year . . . while at the same time insisting that their plan is ‘very conservative’
– DO make sure you do time checks – first at the beginning of the presentation to know how long you have an audience for, and then periodically to make sure you are still on schedule
– DO make sure you then organize your presentation around the time you have (which is to say, understand the meat of your presentation and make sure you get to it in the time you have allotted); a corollary to this is to make sure that you skip sections that you are asked to skip. We regularly spend 10 or 15 minutes time going through something (for example the market overview of a market we already know broadly very well) that we’ve asked an entrepreneur to skip over, only to run out of time during the real guts of the presentation (i.e., defining how the company’s technology is unique from that which we’ve seen before). – DO make sure you practice your presentation out of order and interrupted – a lot of good presenters get completely flustered if they get off track or have to take things in a different order than they planned – you should expect that you’ll get interrupted with questions, asked to skip over sections and challenged on certain points – practice your presentation that way. Questions to answer in a venture presentation. (n.b., please don’t see this as an end-all/be-all list, but rather as just a guide):
Vision
– What is your big vision?
– What problem are you trying to solve and for whom?
– Where do you want to be in the future Market – –

Opportunity
– How big is the market you are pursuing and how fast is it growing?
– How established is the market?
– Do you have a credible claim on being one of the top two or three players in this market?
Product/Service
– What is your product or service?
– How does it solve your customer’s problem?
– What is unique about your product/service?
Customer
– Who are your existing customers?
– Who is your target customer?
– What defines an ‘ideal’ customer prospect?
– Who actually writes you the check? Who do you sell to? Who needs to sign off on the purchase?
– Use specific customer examples where possible?
Value Proposition
– What is your value proposition to your customer?
– What kind of ROI can your customers expect by using your product/service?
– What pain are you eliminating?
– Are you selling vitamins, aspirin or antibiotics (i.e., a luxury, a nice to have or a need to have)
Management Team
– Who is the management team?
– What is their experience?
– What team members are missing and what is the plan to fill these open positions?

Revenue Model
– How do you make money?
– What is your revenue model?
– What is required to become profitable?
Stage of Development
– What is your stage of development? Technology/product? Team? Financial metrics? Revenue?
– What has been your progress to date? (make today’s reality vs. the future you are pitching clear)
– What are your future milestones?
Fund Raising
– What funds have already been raised?
– How much money are you raising and what is your valuation expectation?
– How will the money be spent?
– How long will the new money last and what milestones will be met?
– How much additional financing do you anticipate and when?
Competition
– Who is your existing and likely competition?
– Who is adjacent to you in the market that could enter your market?
– What are your competitors strengths and weaknesses?
– Why are you different?
Partnerships
– Who are your current and possible future technology and distribution partners?
– How dependent is your model on these partners?
Fit with Investors
– How does your business fit with the VC’s existing portfolio and expertise?
– Are there any synergies or possible conflicts with existing portfolio companies?
Other
– What assumptions are key to the success of the business?
– What ‘gotchas’ could change the business outlook overnight? Technology? New market entrants? Changes in standards or regulations?
– What are your companies weak links?

Someone once told me a story that I think about often. It went something like this:

Two friends were walking together through some fields when they came to a high wall. The wall stretched as far as they could see in both directions. As they were talking about what to do in this impassable situation one of the men takes off his favorite felt hat and throws it over the wall. The other looks at him and says “why did you do that – that was your favorite hat,” to which his friend responds “now we’re going to have to find a way over that wall.”

A little corny perhaps, but the lesson is a good one and particularly relevant to life as a VC (or just life in general) where we sometimes forget that our jobs are to throw hats over impossible walls and figure out a way around or over them. Sure, gathering data is important; taking a measured stand is important; and jumping off of a bridge with the idea that you will figure out how to make a parachute on the way down is probably not the greatest idea. But sometimes the right thing to do is to jump into the unknown and take the stand that you will figure it out.

This story has relevance to blogging as well. I wasn’t expecting the ‘holy crap’ feeling I had last night after I had posted my first blog entry and sent a note around to some friends letting them know that I was on my way. What am I going to write about, and who is going to care anyway? A friend wrote to me after he had read my first entry saying that he too had been thinking about starting up a blog, but that the anticipation of feeling exposed and out there after taking the jump was stopping him (he actually used more colorful language not worth subjecting y’all to). Well – my hat is lying firmly on the other side of the wall. Not sure if I’m going to find a way over it, but here’s to trying!

sjl

p.s. RB – hat’s off, man!

I spend a reasonable amount of time on-line (or in my RSS reader) and more recently have begun to read an increasing number of web logs. It’s a fascinating phenomenon – a voice for everyone (although not necessarily a listener, but more on that in another post). I work for Mobius Venture Capital and have been interested in the emergence of some prominent VC’s in the blog world (my boss, Brad Feld, has a very popular and I think informative blog; other blogs, including some of the venture blogs I read are listed here on my site). One thing I’ve noticed is that most of the VC bloggers seem to be partners (two notable exceptions are Ryan McIntyre and Robin Bordoli – both colleagues of mine at Mobius). I’m not entirely sure why this is. My initial assumption is that those of us non-partners who work in VC are simply too busy (trying to become partners) to put anything together; or perhaps it’s because in the world of VC people care a lot about what partners think and say and not as much about what the rest of us say. So I decided to test this theory by starting a blog of my own. I’m calling it “VC Adventure (you are in a twisty maze of passageways, all alike”) because I’m intending to muse about the twists and turns of the VC world (points to the first person who gets the full reference). I’d like to talk directly about my view of the world – the triumphs and frustrations I go through with my companies and in my firm as I try to figure out what kind of venture capitalist I’d like to be.

I’ve been at Mobius for just over 3 years – joining just in time for the downside of the bubble. I’ve worked with about 25 companies during my time at Mobius – my current active investments are listed on this site. Before Mobius I worked for what turned out to be a failed internet/datacomm company – Verado Holdings (formerly FirstWorld Communications). I did a bunch of stuff there (m&a; corporate development; investor relations; corporate planning), but most importantly I had the opportunity to run a large portion of their business (at a time when the company had decided to focus elsewhere) while I sold them. This was a fantastic experience – I was responsible for a 350 person, $40m business; a business that was going through significant turmoil. I was pretty green and certainly way over my head but leaned through the help of some outstanding colleagues and by making lots of mistakes. Eventually these businesses were sold and I moved on from Verado about a year before they finally shut their doors.

So . . . there you have it. At least a small snapshot of my business background and a perspective of what I’m hoping to accomplish by writing this blog. There is, of course, a lot more to me than Mobius or business – I’m a new dad; an avid reader; a rabid mountain biker and snowboarder; etc. I’m sure some of these topics will sneak their way into my blog from time to time. I hope you’ll enjoy reading about (and commenting on) my perspective on being a young VC; on business and life.