The Post Money Value

Ruh Oh - Time for a butt whoppin (mine)

I love the smell of my ass frying in the morning..not.

Okay, so I put up a post trying to make a point about people going to far with the BS vs. just using the phrase I don't know.  I enhanced what goes on in my office everyday to make this point and, my bad, it appears to have taken a wrong turn.  Lots of comments raining on my blog parade. So let's hit the ol reset button and try this again with some clarity.

No, contrary to what the first post appeared to show, I am not lying or having fun and young start-ups expense. Mea culpa, oops, not explained correctly.  And, no, I'm not an anti-OS/2 person. And no, I'm not living in an Ivory Tower looking down on the little people wanting my money.  Sorry, folks, not where I was coming from.

Here's the key message I'm trying to get across.  Saying "I don't know" or "I'll have to check" or words to that effect is critically important when it comes to being able to build trust, understanding, etc, between the VC and company.  I respect, admire, and appreciate "I don't know" and "I'll check" as signs of maturity and professionalism. 

What happens way too often is people say what they think we want to hear. For example, I've lost count the number of people who come into my office and apologize for using Firefox vs. IE thinking I, as a former Microsoft person, actually cares.  I need a two way street, open communications, and the knowledge that the management team can speak their minds on issues so we can have a fulsome conversation when things go sideways or when heavy duty decisions need to be made.

So, yes, I'll flip a silly tech comment out there to watch body language. I want to get a reaction and yes, I totally understand this may be the first meeting and that many people are going to try and 'be polite' or whatever.  I always say, usually immediately, "I'm kidding" and virtually all of the time, 'the joke' breaks the ice a bit.  

As I've said countless time folks, this is all about people and relationships.  Your managerial relationship with your people, your customers and your relationship with me.

If I say in a meeting "Don't you think [Microsoft/Google/KFC] is going to offer your[app/service]", your answer is clearly important but what's critical to me is the reaction and how the question is handled.  Watching somebody respond to "I don't get it, why would anybody do this" is (to me) almost more important than the words.  The tone, body language, patience, etc, are all factors that lots of time get overlooked but matter.

For example, if I say to a coder who is giving a demo, "wouldn't that be easier to code in Cobol vs. JAVA", some of you will conclude I'm being a goof/prick/dork. But I watch the reactions while immediately saying "I'm kidding" which results in me getting a split second (or more) insight into that person.  The instantaneous and spontaneous reaction complete with body language is valuable. Plus, as I've said, that "I'm kidding" helps take some of the edge off.

Another example: I had a CEO make a statement about "the majority of women" do some action. I said that's doesn't jibe with the data I've read on the same topic, are you sure?  The CEO shot the CFO a dirty look, and tap danced around my comments clearly making stuff up to compensate.  And this small thing sent the CEO off topic for the rest of the meeting. I was concerned enough that I went to his office and did a follow up meeting because the point was minor but the reaction seemed over the top.  Turns out the CFO had simply flipped a number. So a minority thing was now a majority thing.  It was minor but this told me something about the people, the team interaction, etc.  The tap dance in my office was unnecessary.  It would have been fine with "Really? We have the data let us go check".  That's my larger point.  It is not about embarrassing anyone rather getting to know who I'm entrusting millions of dollars to.

So, while I'm sorry for creating a rukus in the comments section, please don't ignore the larger point.  Selling is good. Promoting (even self promoting) is okay.  Bullshitting is not.

Knowing the difference is, in my opinion, a character trait of a great CEO/Founder/Manager.

Thanks to all for commenting and stopping by the blog.

VC Hot Questions #1

As a result of the Blackberry Partners Fund, we've been spending lots of time reviewing opportunities side by side with another VC. This is happening here (North America), Europe and in Israel for us.  As part of this side by side stuff, I've gotten to see lots of other VCs, most smarter than me, up close when it comes to reviewing presentations, speaking to the management teams, etc.

Here is one tip for you and your meetings with the VC world. Sometimes there are questions that you just know are actually minefield laden, third rail, bad places to be.

For example, this set:

"Help me understand how the current management team gets the company to 50 million a year in revenue?"

"Do you think you and your team are strong enough to get it over the finish line?"

"What's the track record of your management team with respect to successful exits?"

All of these are code for: "Who's the CEO?"

I've said it before and I'll say it again:

Your best positioning when you are starting a company is to start with and keep the title of founder. You get the maximum flexibility in dealing with company growth and minimal impact on your ego.  You can answer any of the above with "Look, I'm the founder and we're running a million miles an hour towards being successful as you can see here... The objective is to find a financial part and a solid board to help me, as the founder, grow the management team and knock this baby out of the park"

This, of course, assumes you believe that statement.  If you think you know it all, view the VC world as just another electronic teller machine ripe for a withdrawal, don't come knocking.  More on this later, meetings are about to start.

Fun Kindle Fact

I've just hit the 50th flight where I've had the Kindle out and in use. 50 flights in a row where nobody tells me to turn off my book. Landing here in SFO. Fun Fun.

--------------------------------------------- Rick Segal, Partner, JLA Ventures rick@jlaventures.com

From the Trenches: OS Who?

Between reviewing tons of plans, conducting due diligence meetings, and being in an airplane 40 of the last 90 days, blogging has been light.  On the other hand, I've been pulling together lots of fun data for all you start-up types out there.

Today's lesson; the fine art of tap dancing in meetings.  I've been making the case to a number of people that there is something about entrepreneurs which prevent them from using the phrase "I don't know."  Everybody just wants to try the BS their way through everything.

Over the last pile of meetings/interviews, etc, I've been testing this theory. 

I'm in a meeting with the founders (or management) of company X.  Regardless of the company size, type, offering, etc, I say the following:

"You know, IBM's latest build of OS/2 is really starting to stick with high performance, multi-threaded and security hardened sites.  Have you guys spent any time reviewing the new Arthur Anderson study on this? It lists thousands of case studies."

And then I wait for the answer(s).  In thirty cases, so far, I have gotten zero responses like:

• WTF are you talking about?
• Huh?
• Very Funny.
• Lord, you're so old and out of touch, it's downright scary. I'm outta here.

Instead, I get responses that fall into these buckets:

• My CTO was briefing us on this, I think last week or something. He makes those calls, super smart.
• Cool. I'm a big fan of IBM, I used this in my last job.
• This is pretty interesting, can you possibly get us an introduction to Arthur Anderson and/or get us a copy of the report?
• It's excellent you guys keep up with this stuff and pass it along to your portfolio companies.
• We've been evaluating the best way to handle our threads and this might be the solution we've been looking for.
• I saw a thread on Slashdot talking about this, thanks for the confirmation.

Trust me: Huh?  That's a fine answer.  For those of you who might get annoyed I flip these random brain farts into the mix, sorry, the whole process of trying to make a good (and reasonably quick) call on what to spend time on can be a grind.  I try to mix it up and glean some character traits, etc, that might make the difference.  Salesmanship = good, Bullshitake = bad.

Bonus: You can get what is supposed to be the 'next level' of OS/2 here.