Database Reference
In-Depth Information
There's no way to short-circuit the process of getting to know someone.
That's why I constantly refer to my friend Mark Suster's post on “Lines, not
Dots,”
1
and why it's so important to build relationships over time to really
get to know founders—and vice versa, for them to get to know us. We are
extremely firm about the fact that we don't chase and we don't get into bid-
ding wars. If somebody has five term sheets and they are selecting on the
basis of price—that's not a founder for us. We don't begrudge it. By all means,
especially if it's a seasoned founder and they really don't see that much value
coming from who the specific investor is, then we're not the right investor.
I believe—and I believe if you were to speak to our founders, they would cor-
roborate this —that people who end up working with us specifically want IA
Ventures. People want me, Brad, and Jesse because they want us as individuals
and as a team, like the way we interact with companies, and value our knowl-
edge and domain experience. Those are people we want to partner with for
years. It's got to be where they want us as much as we want them. If it's heavily
skewed where we want them, but they don't really want us, then that's just a
bad fit.
Gutierrez:
How soon do you know if it's going to be a good or bad fit?
Ehrenberg:
Remember, most of the people we're backing are first-time
founders. If somebody is optimizing for price as their objective function and
price is it, then that's not the right company for us. Somebody who generally
wants money and doesn't want engagement or support is either a seasoned
start-up veteran or someone who believes investors aren't partners but sim-
ply sources of capital. While we have backed serial founders who are very
experienced and neither need nor want much support, this is not the usual
profile. If a first-time founder who lacks experience is also a poor communica-
tor, this type of founder generally doesn't work for us.
The Holy Grail for us is a great founding team who is interested in and highly
capable of running and building a business. If we can assist in ways they find
valuable, great, but we generally just let them do their thing. However, at this
early stage of our own firm development, we don't have many repeat found-
ers. So we're getting a lot of new entrepreneurs who value our help on an
array of topics. This is not about “imparting our wisdom,” but simply trying to
help a young company in concrete ways that they value and that are important
to the business. This what I mean by chemistry—where the combination of
brilliant, visionary, and self-aware fits with our passions and interests.
Gutierrez:
In a competitive hiring environment where it seems like you could
throw a stone and hit a hundred new startups, how do you coach a team on
finding the right people with the right combination of talents?
1
Mark Suster, “Invest in Lines, Not Dots” (Bothsid.es, November 15, 2010:
www.bothsidesofthetable.com/2010/11/15/invest-in-lines-not-dots/
).
