Roger Ehrenberg - Data Scientists at Work - page 132

Gutierrez: How have you learned these lessons?
Ehrenberg: I would say it's a combination of my successes and failures. Over
the five years after Wall Street but before starting IA Ventures, I seeded forty
companies as an angel investor. This experience gave me a good amount of
data, both good and bad, with respect to what makes for a successful company
in terms of founder personas, the common threads separating success and
failure, and what is most productive in my own interactions with founders and
their companies.
Through my reflections I came to appreciate the fact that the human element—
psychology—was as important as—if not more important than—the
quantitative and technical assessment of a team. This is why—and I've written
about this many times—venture investing is an artisanal business. It doesn't
matter how bright somebody is—I've known phenomenally brilliant people
who are abysmal failures when it comes to starting companies because they
just don't have the empathy, they don't have the people skills, and they don't
have the perspective. So it's not just about building in a vacuum. It's about
colliding with the market and with other human beings. I think that's a lesson
that deeply resonated with me.
Gutierrez: What's an example of founders who displayed great psychology?
Ehrenberg: My biggest success as an angel investor is Buddy Media. If you
know Mike and Kass Lazerow—these are very smart people, but their raw
processing power, which is great, is dwarfed by their team-building and leader-
ship skills. They created a culture at that company that is second to none.
Whether the team was three people or three hundred people—and I saw
it from both ends—they built a team of A+ players with an esprit de corps
that even as it became hard for them to deeply know every single person,
there was still that sense of belonging to Buddy, and that meant something.
The job Mike and Kass did in building culture and communicating mission was
absolutely stunning, and it led to an equally stunning result for employees and
investors alike.
Now, of course, Mike had the vision when Facebook was 20 million people
that it was going to change the world. That was the big thing he got right.
There were actually three different attempts at figuring out the right path
for Buddy. There was virtual currency on Facebook, there was app develop-
ment, and, finally, there was instrumenting Facebook pages and becoming a
dashboard for big brands and marketers to measure, monetize, and reward
engagement on the social nets. However, that didn't happen overnight. Mike,
Kass and the team were flexible enough and humble enough to know what
was working, what wasn't working, staying cool, testing, adjusting, and keeping
the faith of their investors and their team all the way along. Then once they hit
it they stepped on the gas, which lead to one of the most successful outcomes
in New York start-up history.