When I decided to become a VC in 2010 I had lots of reservations. After all most VC funds don’t succeed. The Canadian VC industry in particular has not historically delivered returns (though there are some great new funds backing great companies – so hopefully that’s changing). In any event, history reveals that my tenure as a VC was short-lived. Still, during my brief time there, I began working on an investment thesis that I still believe can result in superior VC returns.
Some VCs, such as Foundry Group are theme-driven. Union Square also focuses more or less on a singular theme – large networks of engaged users. Other VCs look at markets more broadly and try and predict where they’re headed. Others still look at underlying technologies and invest in those waiting for a market use case to emerge.
There is no one path to success as an investor. As in all great outcomes, luck & timing play a huge role. It’s not just about having a great strategy or knowing the right people.
From my vantage point as a seed stage investor, I had one core belief – all we were backing were teams. Everything else was subject to change. The product changes. Market focus. Positioning. You name it. Everything except the founders.
Now, I know what you’re saying – founders get replaced all the time! That’s why VCs are so evil, right? But here’s what I see: if you look at all the big breakout successes. The companies valued in the billions or on there way to that, they all have one thing in common: they have been founder-led from the start.
So, my investment thesis was pretty simple: back founders with the talent, vision and ambition to become World-class CEOs. And then support them, coach them, give them whatever they needed to help them succeed. Act as a service provider to them. Not a boss. Great entrepreneurs don’t want bosses.
In support of that thesis, I began interviewing great founding CEOs. Over time I spoke with:
Mike McDerment, FreshBooks
Tobias Lutke, Shopify
Yona Schtern, Beyond The Rack
Ryan Holmes, Hootsuite
Razor Suleman, Achievers
Reid Hoffman, Linkedin
Jeff Lawson, Twilio
Ranjith Kumaran, Yousendit
Matt Blumberg, Return Path
Isaac Saldana, Sendgrid
I also spoke with several VCs with a great track record of backing exceptional CEOs. Brad Feld was particularly generous with his time.
Anyway, I learned a lot from these discussions. The intention had been to take all that learning and write a book. But, now that I’m operating again, that’s just crazy talk. So, over the next few posts I will be sharing some of those learnings with you.
If you get nothing else from the posts that follow hopefully you will get how important it is get seasoned founders like these guys as mentors. It’s the biggest thing you can do for yourself.