Thursday, December 8, 2016

Good Things: What I'm Thankful For This Year

1.  The birth of our second daughter
2.  Speech therapists
3.  Snapchat's IPO filing
4.  Remembering to put out our daughters' shoes for St. Nicholas Day
5.  Jon David Armstrong
6.  Forgiveness 
7.  Costanoa Ventures at the Costanoa Lodge
8.  The Cubs, the Tribe and the Cavs
9.  Jeff Harbach and Bill Tobin 
10.  Michael Kim
11.  Hyper-converged storage
12.  Docker
13.  Getting to see Jeff Fernandez three times in one week every October
14.  Annual meeting swag
15.  Vests (the ultimate annual meeting swag)
16.  AbbVie
17.  Feld Thoughts
18.  Joanna Rupp
19.  Getting over my fear of heights, caves, the dark and claustrophobia thanks to Michael Eisenberg
20.  Gatorade
21.  The Lion Guard
22.  Samir Kaji
23.  French onion soup
24.  1K status and the anxiety-riddled pursuit of Global Services on United Airlines
25.  Leah

Tuesday, September 27, 2016

The Loneliness of Venture

I'm going to have a lonely Fall.  The loneliness of traveling away from my wife and two daughters, didn't propel me to reflect on some "woe is me" tragedy seeking pity from the "tough life" of being a hardworking LP.  No, rather it aroused an introspective look at what came from the past two weeks of loneliness: an opportunity for reflection and creative thinking. Loneliness is not sufficient for creativity, it is necessary.  When we allow ourselves to move away from the routine of everyday life, we are better able to think critically and reflect about our own thoughts.

Brave New World author Aldous Huxley once wrote "If one's different, one's bound to be lonely". There is a  narrow gap between loneliness and solitude. Solitude can lead to creative focus but loneliness can lead to depression. Through solitude one is happy to be alone and recognizes the opportunity for a clearness and singleness of thought that comes with that peace. This struggle between solitude and loneliness was best described by Thomas Mann who said "solitude gives birth to the original in us, to beauty unfamiliar and perilous" but also "it gives birth to the opposite: to the perverse the illicit, the absurd".   

Modern studies in psychology have tried to differentiate between solitude and loneliness. One school of thought is that loneliness is the product of rejection, either a rejection inflicted by society or inflicted on oneself and therefore lends itself most to creativity. This is a very interesting notion as it would suggest that solitude alone is not enough for the creative process. Rather, solitude driven at some point by social rejection. 

I can't suggest that entrepreneurs and their investors seek solitude because of some social rejection. However, I do think that there are likely many instances where folks pursuing entrepreneurial endeavors do so because someone said that it couldn't be done and that the simple notion of disruption suggests there is rejection of the status quo, and often rejection by the status quo. Bold and brazen, or contrarian thinking, thrives on rejection because it is unfamiliar.  

I think there is great power in making parallels to many great entrepreneurs and venture capitalists who have high emotional intelligence and seek solitude in their own thoughts. I think that venture is naturally a lonely profession because although most investors have partners, it is still an individual sport. We are often alone with our thoughts in determining if we want to make an investment and why, only to then to discuss it with our partner(s) to seek input. Rejection can be a powerful tool here because it may have the ability to power ambition and be a cause of loneliness. I think there is likely a key correlation between some of the most successful entrepreneurs and investors and their ability to find creativity from solitude. 

Some of the most creative investors, like the folks at Foundry Group, have an annual month-long sabbatical with little to no work responsibilities where the other partners pitch in to give the partner on sabbatical the opportunity to focus on creative thinking and recharge his batteries.

After further thought, I don't think it will be a lonely Fall, but an opportunity to harvest the solitude afforded from autumn's extensive travel.  

Thursday, April 28, 2016

Non InCautus Futuri: Artis Ventures

Earlier this morning, AbbVie announced it was acquiring Stemcentrx for $10.2 billion, making it the largest venture-backed healthcare M&A event in the history of the industry. Lots of press is going to be made today about Sequoia Capital and Founders Fund having been an investor. What is going to be overlooked is that Stuart Peterson and Artis Ventures were the first outside investor in the Company leading a $20 million Series A financing by committing $17 million. Some folks may not be familiar with Artis Ventures or Stuart Peterson. Stuart is joined by his long-time partner Mike Harden. Who is one of the few Washington and Lee University graduates to go into venture (shout out to our alma mater). Mike and Stuart live the W&L motto non incautus futuri "Never unmindful of the future".  They think big and pursue BHAG: Big - Hairy - Audacious - Goals.  They are not investors in incrementalism. They have invested in some extraordinarily transformative businesses like YouTube, Stem CentRx, Cohesity, Nimble Storage, Juicero, Bracket Computing, Modern Meadow, Aruba Networks and Practice Fusion among several others. If you're wondering what the unifying theme is -- it's that Stuart and Mike are conviction-based investors looking to back companies and entrepreneurs making an impact in people's lives. They're not pie in the sky dreamers or impact investors, they are very savvy fundamental investors, paying homage to their very successful careers as long/short public equities managers. Stem cell oncology therapeutics could not be a more important initiative and curing small cell lung cancer could not be a more audacious goal. Perhaps most importantly, they are extraordinarily generous, kind and trustworthy people. Part of that comes from Stuart's childhood growing up on a farm and not forgetting his roots. Part of that comes from Mike's acceptance into a lifetime commitment to W&L's Honor Code.

Saturday, April 2, 2016

Finding Saturday People

Last week was Holy Week and I should have written this post last Saturday between Good Friday and Easter Sunday, but it felt more important to write it this weekend as we brought home our second daughter from the hospital yesterday (a Friday). On Good Friday, the disciples didn't know that Easter Sunday was coming and that resurrection was on its way. They showed up on Saturday in the darkness, an unknowing place.  As my wife (Leah) and I move forward rearing our two daughters we seek to surround ourselves with "Saturday people". Friday people show up when there is a true crisis but are the loudest mourners. They rally at someone's bedside or walk in protest. But then Saturday comes and the spotlight is lifted and darkness and uncertainty follows. Sunday people show up for resurrection when the clouds have lifted and its time to rejoice. Saturday people show up for the wake, they show up for the ceremony and not the reception. Saturday people see the ugly tears and don't leave in the face uncertainty. They show up for chemotherapy treatments long after the diagnosis. Today is Saturday and my little sister is in town for the weekend helping Leah and I as we welcome our second daughter home with a spirited 22-month old on the loose. My sister (Emmy) is a Saturday person. 

Whether you're an entrepreneur, a venture capitalist, or a parent --- find Saturday people in your lives. Find VCs who help you through a crisis at your company or in your life and stand by you because they believe in YOU and dream with you. Find LPs who support you at the trough and lift you up to the peak that you both know is possible. Find LPs that believe in you as a person and want to help you build a business.  Ignore those who say they're not in this business to make friends or only care about performance. Yes, if you're a fiduciary, performance is the stick by which we all are measured. But more importantly, find Saturday LPs that believe your future performance is indicative of your current persona. Find Saturday LPs that call you to say you're doing a great job or understand how hard it is to have partner leave and ask what they can do for you. Find Saturday LPs that ask not what you can do for them, but what they can do for you.  Find Saturday LPs that believe in the Full Gospel of Venture Capital. 

Tuesday, March 29, 2016

Seed Fund Investment Period "Vesting"

I've grown worried lately as tales of Lake Wobegon are fewer and farther between these days and not all the unicorns are good looking and the seed funds are above average.  What I'm most worried about is the Valley startup employee mentality toward employer loyalty and tenure with employees jumping from one startup to the next as their options vest and they chase unicorn employers with the hopes of finding gold in them thar hills. I think we've begun to see this spill over into the seed fund universe where former founders/startup employees who made a little cash began angel investing and then decided to become fiduciaries and manage Other People's Money (OPM). There is an increasing number of seed fund GPs who view the investment period of their funds as the term of their funds and are leaving 1-3 years into their new-found careers as venture capitalists. I know we're the "limited" in limited partner, but these are still partnerships. We're seeing a number of GPs leave because they "always wanted to be an entrepreneur".

Generally, employee options vest over four years with a one-year cliff. Wouldn't it be great if all of these newly-formed seed funds had similar vesting, whereby if all the GPs didn't stay for a full four-year investment period, that the LPs got to keep that portion of the departing GP's carry? If a company is saying to its employees, after four years, it's clear that you have earned your keep and we value you, isn't there a pretty solid argument that GPs should have to earn their keep (at least new ones) over a four year period as well? Because of the pace of deployment by so many seed funds in the past three years, there isn't much relief if a few GPs at a firm bail, or all of them frankly, because a key person event is generally only trigger-able during the investment period.  If everyone leaves after the investment period, LPs are generally left with the choice to dissolve the fund with a 51-85% vote and receive illiquid in-kind stock certificates, or let whichever GPs are left let it ride. Maybe the remaining GPs raise a successor fund, or they slowly exit stage right. Maybe the workaround is to only invest in seed funds that don't follow-on after the seed round.  At least then, if a GP or several GPs leave, there isn't much left to manage out. The cooling in the markets is likely only beginning and I'm worried about what this foretells for the countless new seed funds that were raised in the last 2-4 hours (oops, I mean years).