Top 3 Things I Learned As A VC

This past Friday was my last day at Spark Capital.

It has been a privilege to be a part of this team. I have grown in ways that I didn’t expect, and was glad to be part of a firm that allowed me to interact with such wonderful entrepreneurs and early stage investors each day. I owe a lot to the partners at Spark for their support and mentorship and am proud to say that I was a part of building this firm over the past several years.

When you end something and embark on a new adventure, it’s always important to look back. I didn’t really intend to become an investor when I moved back to Boston from Silicon Valley. But I did, and I learned so much that it’s hard to distill into a few points. But here are a few highlights:

1. The value of diversity. In starting a company, there is a big temptation to form a team that looks just like you. Either in terms of personality or ability. It’s especially true in private equity partnerships, because the team of partners must work together to make difficult investment decisions. But in the case of Spark (and in many successful founding teams) it’s diversity that creates great outcomes. I’ve always respected the way that the Spark founders surrounded themselves with people with a fair bit of non-overlapping backgrounds and personalities. At times, it creates more tension and conflict. But if diversity is coupled with mutual respect, the conflict leads to more creativity and better decisions.

2. The role of a good board member. I had limited exposure to boards prior entering Venture Capital. My leadership professor in B school, Rob Kaplan, actually encouraged me to take a class on boards of directors. In retrospect, I should have taken his advice. What’s interesting is that board members can range from being damaging, to non-existent, to ridiculously helpful. A good board member wears many hats: from business development guru, to CEO coach/shrink, to product strategist, etc. And this is all under the umbrella of fulfilling one’s fiduciary responsibility to the company’s shareholders (and to the investor’s own Limited Partners). It’s the ultimate unstructured job, but it’s also one that brings considerable influence (mainly through the levers of approving a company’s budget and hiring/firing senior management). Obviously, I have a lot more to learn in this area over the coming years, but it was great to be able to watch experienced board members add value to companies on a regular basis.

3. The art of evaluating people. There may not be another job where you have to make snap judgements on people so frequently. In a given week, I probably meet 15 people for the first time in 1:1 type meetings (and many more in group settings). And if we are digging in on a potential investment, we really go deep and spend a lot of time with the team and do a bunch of reference checking. Over the past couple years, I hope that I’ve developed some pattern recognition for the kinds of entrepreneurs that I think will be successful and would be a good fit for me to work with. I’ve also learned some tricks to structure the way I evaluate people that allow me to drive towards objective criteria vs. just gut feel (btw, I recommend Geoff Smart’s book or paper for anyone looking for a good framework for this). Finally, I’ve also learned that you want to be diligent in reference checking, and really try hard to find some real negative feedback. No one is perfect, and exceptional people are often polarizing. It doesn’t pay to ignore or avoid the negative feedback.

There are plenty of other learnings that I will continue to share in the coming months on my blog. But this all begs the question: What’s next?

The answer is that I’m starting something new that I am very excited about. My co-founders and I have already begun laying the groundwork, but we aren’t ready to talk openly about what we are doing just yet (stealth mode is back in vogue again, after all.) That said, I’ve always been a pretty open and transparent guy, so I’m sure I’ll be sharing more details soon.

In the meantime, I’m going to continue to be active in the local entrepreneurial eco-system, and will continue to be an advisor to startups that I’m excited about. I’m also planning to make a number of small angel investments along the way as well.

Stay tuned for more!

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3 Comments

  • Rob – Congrats on making the leap. As I found, VC –> starting a company is a windy but rewarding road. Let’s find some time to catch up soon!

    Good luck,
    Vic

  • Congratulations on the exciting adventures to come! Could not agree with you more about point #3, it’s why I made a full time career out of human capital after many years as a VC myself.

  • Thanks for sharing, and best of luck in startup land! One question — why angel vs. venture (LP) investing?

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