WayTooEarly

Business Plan Hyperbole

Business Plan Hyperbole

This will be the greatest blog post ever. Its unique content and message has no equal, and we have not heard of any potential competitors  The idea behind this post is so important, I'm somwhat afraid of your reading it without signing our ironclad NDA. However, I've been told that most Venture Capitalists won't sign such things, so I'll trust you to keep it quiet. In any case any potential competitor will be deterred by our soon to be filed provisional patent application, with its broad claims.

This post should revolutionize the way in which business plan information is delivered. Rather than just overstating the facts and underestimating any problems, we'll completely ignore both.

It's only now, with the advent of Web 4.0 thinking and the new "new bubble VCs" that we can be confident in helping fund the hyperbolic claims being made in this and most plans that we received.

The key message, then is that if you want your plan to be heard above the clutter, by all means use the language of this post.  But if you want me to listen to your message, please tone it down and add a dose of reality.

The Year Of

One of my favorite recurring features in Fred Wilson's terrific blog, A_VC, is the VC cliche of the week.  For this way too early investor, the cliche that sucks me in time after time is "But this is the year of %hotitem:"  For us geeks, %hotitem instantiates the cliche.  I've seen dozens of such instantiations: Network, Voice, Security, Windows, ebooks and so on. I'll talk about a few of them from time to time.
      The year of the Network started being touted around 1980.  At that time, a mostly forgotten San Antonio company called Datapoint had developed a local networking technology called Arcnet, which was going to lead to all  the word processors being connected.  I did some work with them, but never invested (they were public).  In 1982, however,I did invest in Sytek, which built the first broadband local network and actually wrote NetBios with IBM.  General Instruments, which was the leader in cable boxes, actually bought half the company, since Sytek's technology worked on unused cable channels.  Even IBM was a key OEM of the technology. But that was a little too early for the world to want cable modems - after all, the web hadn't yet been invented.  We did make a little money on Sytek because of the R&D tax credit structure of the way we invested.
      Then 3COM and Ungerman-Bass began making Ethernet networking affordable. And Novell made software to make it desirable. So, from 1986 to 1989, each year was going to be "The year of the Network" - the time when the hockey stick portion of the sales curve would happen.  By that time, I had turned to some other technology's purported year of.
      Last year, it was the year of Web2.0.  It seems that this year is either the year of mobile, or the year of video (or maybe of mobile video).  But I've learned that the phrase is a great tipoff that, while the consultants and journalists who are touting it may see the future, they can't easily predict the timing.  So you better have that 6th P of my last post if you're going to invest based on it being The Year of..

The 6th P

For many years, i have responded to the question "What factors do you consider in makinga venture investment/" i have responded, "The Four Ps."  These arose from a discussion I had with John Doerr in the late 1980's.

The Four Ps are:

People - I want the entrrepeneur to be someone I'd enjoy working with, intellegent,  honest and hardworking.

Products - the product (or service) should have a large market.

Plans - The entrepreneur should have the ability to make and execute plans
and
Profits - this should all lead to obscene profits.

Starting about 1996, when I was a lead investor in Idealab, I was inspired by Bill Gross to add a Fifth P.

Passion - the entrepreneur must exhibit real passion for the idea, since he or shee will be giving up some of their personal life to make it happen, and needs to believe strongly in what they're doing.

More recently, as I've begun to reflect on the Way Too Early theme of my investing career, I've added the 6th P

Persistence - the ability to stay with it through all the many setbacks that happen during the long time it may take from idea to profitable execution.

"a foolish consistency[persistence] is the hobgoblin of small minds" goes the old saying, but the emphasis should be on foolish - since true persistence is what has kept me in various investments, and kept those entrepreneurs going, for 3, 5, 10 and even 20 years.

How do you tell if an entrepreneur has the passion and persistence? Passion usually shows itself in the first few minutes of the relationship. The quality of their voice, the animation with which an idea is presented, the rapid response to any questions, all can elicit the passion.

Persistence is harder to judge. How much follow up do they do.  How long did they stay with their last idea?  Jeff Hawkins has persisted in his study of how our brains work for decades, and I think he's getting somewhere.  When he's brought that persistence and passion to ventures, he's had great success.  I've been equally persistent with Franklin Electronic Publishers, working with them for 24 years, and in the electronic book arena for over 17 years.

Why Way Too Early

This weblog is meant to allow me to vent about the travails and joys of working at the earliest stages of companies and technologies. I've been doing it for 30 years, and have formed a lot of opinions, some of which will be shared. I have had many experiences, some of which can be recounted, some of which still can't while the statute of limitations applies.

I hope that the venture community is at the right stage to take these comments with the appropriate grains of salt, and that I don't offend the entrepreneurs involved.

This weblog is meant to allow me to vent about the travails and joys of working at the earliest stages of companies and technologies. I've been doing it for 30 years, and have formed a lot of opinions, some of which will be shared. I have had many experiences, some of which can be recounted, some of which still can't while the statute of limitations applies.

I hope that the venture community is at the right stage to take these comments with the appropriate grains of salt, and that I don't offend the entrepreneurs involved.