Strategy

In my post recently titled Does VC Fund Differentiation Matter? several people commented on some variation of “people” as the key to everything. I don’t view people as differentiation. I view them as the price of admission. Amy just walked by, read this over my shoulder, and said: “I don’t know what that means.” Hopefully, by the end of this post, it’ll be clearer … Yesterday I talked to several VCs or entrepreneurs considering becoming a VC. I didn’t know any of them – these were random intros from different people that I knew. I didn’t have an agenda for each call. I was just curious and felt like meeting a few new people yesterday. ...

I’ve met and emailed with many pre-seed and seed GPs in the past year. Over sushi last night with two of them, who are also long-time friends, one of them asked me “Brad, how do you think we are differentiated?” This generated a rant from me that went something like this. There are over 500 seed funds in the market right now. Maybe there’s a thousand. Many of them are angels raising a VC fund. Others are entrepreneurs / operators raising a VC fund. A few are existing VCs who are starting a new firm. I don’t even know what differentiation means anymore as it all blurs together. The operators say we know how to run businesses and help the CEOs that way. The angels say look at the deals we’ve done and the networks we have. Everyone describes the expertise they have around whatever the current hot new technologies are. Regional funds are trendy again. Differentiation is bullshit at this point – the only thing that matters is strategy and returns. And many of these funds / GPs have no realized returns, so all that really matters is strategy. ...

There’s a long-standing cliche concerning SaaS companies that once you get to $10m in ARR you are unkillable . As Jason Lemkin says in his post from early 2013: Inevitability in SaaS comes around $10m in ARR, plus or minus. Once you hit this point, you have a brand, you have a fully baked team, you have a robust product, and you have a self-generating stream of new leads and new business. Will you get from $10m ARR to $100M ARR? I don’t know. Is an IPO in your future? Not sure. But once you hit $10m in ARR or so, you cannot be killed by anything. That’s the power of compounding SaaS revenue. And actually, as we’ll get to, $10m in ARR — this is when it really gets fun. ...

I’ve been thinking about what “truth” means lately. With almost no effort I can find contradictory articles, thoughts, perspectives, statements, and opinions on almost everything being discussed today. I’m sure our election cycle is amplifying this, but I see this in a bunch of stuff I’m reading about tech as well. As someone who views independent critical thinking as extremely important, this dynamic is perplexing to me. A few months ago I wrote a post about TruthRank vs. PageRank . It started me down a path where I began separating types of truth. Specifically, I’ve begun referring to “your truth” vs. “the truth.” ...

I had a great interaction with a friend several months ago. The question he asked was: “How do you beat Michael Jordan at sports?” I thought about it for a second. I knew Michael Jordan was a good golfer and I don’t play golf. I figured he was in better shape than me and could beat me on a track. There is no way I could ever beat him at basketball. And baseball – well this video kind of says it all. ...

Yesterday we closed our fifth fund, Foundry Venture Capital 2016, L.P. As with all four of our other funds, it’s a $225 million fund. In 2007 we raised our first fund – Foundry Venture Capital 2007 . We subsequently raised a $225 million fund in 2010 , another one in 2013 , and a late stage fund in 2013 . Our 2013 fund was originally raised in 2012, but we didn’t start investing it until 2013 so we renamed it 2013. ...

There has been a cliche going around the last decade or so that goes “hope is not a strategy.” It inspired a book titled Hope Is Not a Strategy: The 6 Keys to Winning the Complex Sale and is repeated often by VCs in boardrooms when they are confronted with companies that are flailing, especially when trying to reach their revenue goals. I’ve been guilty of saying it a few times although it always left a funny taste in my mouth and I didn’t know why until this morning when I read a great essay (unpublished at this point) by Dov Seidman , the the Founder and CEO of LRN. In it Dov has a great punch line. ...

Yesterday I sent emails out passing on participating in two seed rounds for companies I really like. They had lots of investors trying to invest and each company was competitive with two other seed stage companies we’ve seen in the past 30 days. All are exciting, all are working on something that we like, and all of them are at the starting line with different strengths and weaknesses. ...

My partners at Foundry Group and I decided not to do something after a month of thoughtful deliberation. The decision is fresh so I’m not going to talk about the specifics, but our conclusion was that while it would be relatively easy to do and potential financially lucrative, it wasn’t consistent with our strategy. I used it as an example this morning during my run with @reecepacheco about fully engaging with your mentors. While we could have made this decision on our own, we talked to a number of people who we consider our mentors (including several peers, investors of ours, and folks that have been doing what we’ve been doing a lot longer than we have), got their direct feedback, synthesized it, and made a decision. Of course, we had plenty of conflicting data, but it was all additive to our decision. And it was ultimately our responsibility to make the call on what we wanted to do. ...