The man in the arena

it is the beginning of the year.

happy new year. 2012. the end of history?

maybe just something different.

expect the unexpected?

some of my companies are struggling.

the 2nd half of 2011 has been miserable. everyone is waiting. people seem to prefer to delay decisions. channels are clearing their inventory levels, with no new orders. people are zipping their pockets. money is not coming out. with a few exceptions.

two classes. the haves and have-not’s. the ones who have clear growth.  predictability. visibility. and the ones who are working just as hard. trying to figure it out. that is why we choose this.

i realize i am not in the trenches. my job, my line,  is to support the entrepreneurs who are in the front. not a lineman, a line-backer.

Here is how Teddy Roosevelt described it in an April 23rd, 1910, speech in the Sorbonne, now named citizenship in a republic.

here is looking at you

Amir, Israel, Yuval, Omer, Nili, Yonathan, Zvi, Tal, Guy, Avner, Pierre, Guri and Doron:

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better.

The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood;

who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause;

who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

together, beginning to end

Orna, my mentor, friend and colleague got me this book

Home, or in hebrew habyta by assaf inbari.

the story of kibbutz, a dream created in Israel 100 years ago.

a dream of community, socialism, values, sufficing with little and even less.

i was swept away by the book and recommend it to anyone who:

• can read hebrew,
• has a kibbutz in their background,
• cares about creating communities

or

• willing to give up convenience for values

the book is great because:

• it blurs the lines between fiction and facts in a new and breathtaking way
• it tells the story of the great kibbutz initiative that helped create israel in a way that was never told
• it makes you think about what it takes to be a pioneer and entrepreneur. what you are willing to give up, how long it will last, and what does partnership really mean

some of my takeaways:

• i think i understand my grandfather yeshayahou, who started a kibbutz and bestowed me with many values, much better now. sorry, grandpa, that i ended up a capitalist and not a socialist, but i hope i still have some time to fix that
• any partnership, or common shared pool which is absolute, can exist, and beautifully so, but only for a relatively short time. years, a decade, not much more. the concept of ‘contribute what you can and take what you need’ can not last far beyond when the founders  themselves change. definitely not beyond a generation, which i consider to be 15 years these days, unless the next generation also has a common set of values and needs, and can change from the original vision while staying together
• kids paid for their parents dreams, values and actions. paid dearly.

a good friend recently told me he wants to be my partner. ‘do you know what partnership means?’ he asked and answered:

you do all the work, we split the profits 50/50

rejection

wanted a deal real bad and lost it

first time in a long time

bitter

it is nice that this happens to a VC once in a while. we inflict this pain every day

good luck to the entrepreneur. i really want him to succeed.

but hey, not too much

Bronze anniversary

wednesday night was big.

Carmel graduated from her army course. that’s topic for another post. but let me tell you, i was proud

roger junk Bronze Anniversary

but also, Wednesday night was Limor and mine bronze anniversary. that’s 19 years. and 4 kids.3 cats and a dog.

wow

unbelievable. we have done some great things together. responded in some hard moments as a team. even if at times i was far away on some seemingly crucially important business trip. god bless her for keeping up with me and my nonsense.

of greater interest to me is not the fact that i first saw her in mid February. in Eran Karoly’s birthday on a Friday night. i have great memories of that evening. so, this last February we started a countdown to the day  we met 20 years ago. twenty years!!!

10 days

9, 8 ,7

4 days to go i told Limor that i was thinking about it and found out it was 21 years ago

now that is very Limor+Adi

it also means that last year. when it was really 20, we passed it by without noticing…

airlines, indications of the future

want to see the future?

airlines are not just an indication of the past, but also of the future

On the way back from the USA had  a short connect in CDG. suitcase did not make it with me. but across the gate from my flight to TLV, there stood in its majesty, a dream. the A380. next to it were a boeing 747 and a 777.

WOW

the size of the thing. its tail is almost twice as high as the Jambo 747, a dream of the past.

every time i see a plane take off i think: what a marvel of engineering. 200 tonnes up in the air. and a victory of the human spirit. to think that we could build machines that would fly. man, i do not see me having had that vision 200 years ago.

Now, planes, flights and service are a thing of the past. a routine we do not think about. in the past 10 years i hae used an airplane much, much more than a bus

speaking of service, on which airlines do you get the best service?
American ones, not so much
European ones? Better
Asian ones? Great

Shows you in which direction the world is going

what’s it like to be a VC

an amazing post about what it is like to be a VC.

a bit long, and without some of the really hairy stuff, like closing a company and the circus that comes with it.

by Mark Suster of GRP (global retail partners) – a good VC out of LA and London

had a chance to work with them about a decade ago, they know their stuff.

i do not know Mark, but ‘he gets it’. wish i had some of his humility and experience. and perhaps i have lost some of that passion?

here it is again:

One of the questions I’m most often asked is, “what’s it like being a VC?”  I’ve been a VC for nearly 3 years now.  Since I answer this all the time anyway I thought it might make an interesting blog post.  I always start my answer to this question with, “you’d have to be a pretty big baby to complain about being a VC.” That’s true.  Here’s why:

1. I get paid (well) for interesting people to come in and tell me how they want to change the world – Being an entrepreneur is like having blinders on.  At least for the best entrepreneurs.  Some people do the conference circuit too much, get involved in lots of side projects and attend every entrepreneur dinner.  For me that’s always a bad sign.  When I was running startups I felt like a horse with blinders on because I was super focused on the content management market and ignored many other markets.

One of the things that I’m loving about this side of the people is that it really satisfies my intellectual curiosity.  People come into my office several times per week and tell my about their plans for changing the world.  They outline the problems that exist in markets, their approach to the solutions, they update me on competitors and they show me their economic models.  We have debates about how the industries will change / evolve.  It is the equivalent of going to a coffee shop every day and having intellectual debates.  In fact, I often take meetings in coffee shops.  I LOVE this part of my job.

2. If I’m interested I get to spend more time with them, if I’m not I don’t have to – A few companies per month come in that have fascinating business ideas that warrant my spending more time trying to understand their people, company, technology and market.  I get to do a deep dive on their business model, product roadmap and competitive positioning.  If I  meet a company that I don’t find very interesting I don’t have to spend any more time with them.  I’m not saying I don’t spend time trying to help entrepreneurs that I am not planning to invest it – anyone who knows me can attest to the fact that I do.  But let’s face it, as a VC you spend time with whichever companies you want.  As a CEO I had to spend tons of time with clients who ran business operations that were uninteresting to me.  It was my job to be interested.  No more.  You’d have to be a big baby to complain about being a VC.

3. I have no quarterly sales targets for the first time in a decade – For anybody who’s ever been in a company with sales targets you can attest to what a fire drill the ends of March, June, September and December can be.  Not any more for me.  It’s liberating.  I will obviously be judged on my performance.  But it’s measured in years and not quarters.  Don’t get me wrong – I still feel the pressure to ensure that the companies I’ve invested in perform well. So I spend much time with them and trying to help.  But there’s a big difference.

4. I get paid to network – I love meeting people.  When I go to conferences I never sit in the meeting section – I always cruise the halls meeting people.  That’s where I meet interesting people who tell me the truth.  On stage you hear people giving you the marketing version of their company.  I get to politely ask the questions you’d like to ask like, “what were your revenues, how much money have you raised, what are your plans going forward?”  I only do this when I’m interested in the company and when they’re interested in me.  But in these circumstances these are all fair (necessary) questions.

Also, my job doesn’t involve the daily grind of customer complaints, product outages, business partner / channel problems, hiring / firing, etc.  I work hard, don’t get me wrong – more than you might think.  No “golf Wednesdays” for me!  And the VC job has plenty of admin and minutiae.  But I’m a people person and I get paid to spend lots of time with people.  I get to network with angels, VCs, entrepreneurs, lawyers, etc.  I love it.

5. I go where I want, when I want – I can’t overstate the importance of this in my life.  I worked nearly a decade as a consultant – first building large scale IT systems and then doing strategy consulting.  Then I spent many years as a startup CEO.  I was always in a “service” industry.  That means you’re always operating on the client’s schedule.  You get on a plane at a moment’s notice because a senior customer agreed to meet you.  You call in from your vacation because you’ve had a service outage.  I went to Ibiza in Spain with my wife and in-laws before we were married.  They couldn’t believe how much I was on the phone.  We were in the final phases of acquiring a business and I couldn’t just say, “I’ll call you in 7 days when I’m back on the grid.”  There are still time pressures on VCs, so that hasn’t changed completely.  But I do go where I want and when I want a lot more than I used to.

6. I have a T&E account – Enough said.

7. I love spending time with entrepreneurs in the “romantic phase” – I love the startup phase of a business where we’re still romantic about our dreams to change the world.  The problems are much more manageable.  Once my company got to more than 100 employees I felt like I became “chief psychologist.”  That was fine but I prefer the earlier days.  As a VC I spend tons of time with companies at an early stage in their business.  And in stead of one set of issues to deal with I get the variety of discussing issues with many teams.  That’s fun.

8. We have very small teams – When you’re in your twenties you aspire to manage teams.  I think it’s seen as a sign of making progress in your career.  The idea that people “report to you” must validate some primal need.  In your thirties you realize that managing people means you have less time to work on the things that you want to do.  You have hours sucked up in one-on-one feedback sessions, annual or semi-annual performance reviews and you end up spending a lot of time resolving conflicts across your team members.  I still like spending time with our teams – at GRP Partners we have a great team – but I don’t have large numbers of people to be responsible for.  If I decide to take a last-minute trip to spend 2 days on a company due diligence session nobody is wondering where I am.  You’d have to be a pretty big baby to complain about being a VC.

Still, the truth is that I miss being an entrepreneur all the time.  Here’s what VCs don’t get fulfilled now:

1. We sit on the sidelines – The down side of VC is that exact same as I remember in consulting.  Too many VCs see their entrepreneurs almost like pawns.  They speak of “my CEO’s.”  They talk about how this company failed because the management team didn’t listen to my advice and that one succeeded because we helped point them in the right direction.  I think realistic VCs know that we only have an impact at the margin.  Maybe 10-15%.  That’s why picking great teams is so important.  And I think that too many VC’s don’t realize that the entrepreneurs are our customers – but that’s a separate topic. I hate not getting to own results.  We have a great board chat and talk about our strategic direction but then you go out and execute.  You get the good and the bad.  Those high highs and low lows are your own.  You live them, breathe them.  We live vicariously through you.  It’s like the manager of a basketball team.  We secretly wish it were us that got to take that 3-pointer with the clock running out.  And we’d love the rush of the teammates holding us in the air if we sank it.

2. There is less team camaraderie – I really get along with my partners well.  I knew them for 8 years before I joined GRP.  We end up out a lot at events: dinners, cocktail parties, conferences.  We travel together.  We spend the entire day together on Mondays in our partners’ meetings and seeing companies present.  Still, it’s different in a startup.  When you’re preparing to launch your company at TechCrunch50 and everyone pulls all nighters for the days leading into it you’re building much deeper camaraderie than exists inside of VCs.  When your site crashes and you get slammed by customers and in the press – you’re all in the sh*tter together.  There is something about the relationships you build in those times.  About 1 year in I asked many VCs about this and the feeling was nearly universal.  They said, “yeah, but we get that through our board interactions.  We build camaraderie there through the shared experience.  That’s true.  But it’s not the same.

3. I have to say “no” all the time – As an entrepreneur you’re used to hearing that what you’re doing won’t work and you turn up in the office every day to prove them wrong. My first company was a SaaS business in 1999.  Everybody said that companies would never put their documents “in the cloud.”  I was sure they were wrong and had the debate weekly.  As an entrepreneur you’re always focused on the “how can we find a way to make the impossible happen?”  People said that Google was going to dominate this market – we know we can do a better job.  You know, the Apollo 13 moment.  As a VC I’m required to say “no” ALL THE TIME.  I don’t enjoy it.  We get thousands of business plans per year.  I meet hundreds of companies.  We can only do a few deals per year.  Definitionally we say “no” many times per week.  I was with a very prominent VC on Sand Hill Road this week.  I always ask other VCs there thoughts.  He said the biggest disappointment since he moved over to VC was Tuesday mornings.  That’s when the calls go out every week to say, “I’m sorry but we’ve decided to pass.”  It’s much nicer to say “yes.”  [thank you to Tereza for reminding me I left section this out]

4. We are in a “get rich slowly” business – OK, I’m not complaining.  But I think many entrepreneurs have a misconception about this.  True, we’re paid better than many startup executives on an annual basis.  But I know many young partners in this business who have never gotten a “carry” check.  The upside for entrepreneurs is the equity in their business.  The upside for VCs is this carry.  If you have a $100 million fund you don’t get paid your carry until you return the initial money to your investors and then you typically get 20% of the profits above this threshold.  Well, since the industry hasn’t performed well in the past 10 years you have many younger partners who are still waiting for those checks.  That is in stark contrast to the late 90’s goldrush where VC partners made millions overnight as their companies IPO’d for crazy valuations.  On the positive side, we have a portfolio and therefore more diverse chances of success.  But there is no “sell early” option for VCs where a $20 million exit could change our lives.  But we obviously choose this side of the table. You’d have to be a pretty big baby to complain about being a VC.

Overall, I’m very happy on this side of the table.  I try to get my entrepreneurial fix in other ways:

1. Running a local community / mentorship program – I run a group called LaunchPad LA.  We’re gearing up to make big announcements about our second year program.  I’ll write about that in a couple of weeks.  I get to help control direction, make decisions and own results.

2. Writing this bl0g – This blog is a huge creative outlet for me.  I get to choose what I write about.  I might be controversial some times and get flack.  Other times I might get great results and approbation.  I can publish daily for weeks or not publish at all for a month.  I own the results.  I’m enjoying the chaotic creativity that comes with blogging.

//

ולפאר מדינת ישראל – peer to peer

how about shachar peer!

wonderful results

alone, in a foreign country, with 16 body guards.

last year Dubai authorities did not let her in

this year, the event organizers tried to sideline her – but she is the Center of attention

no fake passports, and she is still executing

her ability to take the hostility of the crowd and organizers and turn it to positive energy is incredible. an important skill every entrepreneur should desire. and in my opinion a skill that can be learned.

what kind of an organization do you (want to) work for?

met a good friend yesterday, roni

she told me most companies or organizations you work for you have to lie

you lie

• to your customer
• to your boss
• to your self

or any combination of the above

this is most organizations.

the beauty in being an entrepreneur of a start-up, (or a VC – but let’s not kid ourselves, mainly the founders)  is that you can bring into life, or create, organizations that do not have this deceit built into their DNA

priceless

frictionless

what a joy

behind the shadows

this post is written in response to guy grimland’s article in the marker on VC responses to emails with an investment proposition

i would like to share with you my perspective:

• what i thought
• what i did
• and why

first the facts:

here is the email i got:

From: shadowscale shadowscale [mailto:shadowscale.startup@gmail.com]
Sent: Tuesday, January 19, 2010 4:43 PM
To: Adi Pundak-Mintz
Subject: Meeting with Gemni

Dear Adi

My name is Yinon Tzuk. I’m the co-founding CEO of Shadowscale, a startup focused on automatic optimization and scaling for enterprise and consumer web applications.
Our founding team is an organic team that left Checkpoint 2 years ago, after spending 3 years together building scaling, cloud based security products.

Since then we’ve spent the last 2 years developing a unique solution for enterprise/consumer web applications experiencing rapid growth.
These applications often suffer from accelerating infrastructure and operational costs, coupled with significant learning curves resulting in downtime, poor user experience, and revenue loss.

With our service customers can continue developing their applications on a SINGLE virtual web server and a SINGLE database, with simple real time data manipulation.
Instead of worrying about load balancing, caching, security, CDNs, code acceleration, backup and deployments – Shadowscale does the heavy lifting in the background.

The customer controls the application’s SLA, availability, security and speed/cost ratios via a dashboard and can implement any state of the art scaling module on demand.
With the ability to see performance data, bottlenecks and solutions customers can make meaningful choices about their infrastructure cost decisions and optimization without any actual learning curves, development and operational costs.

During October 2009 we deployed the first version of Shadowscale supporting automatic scaling for databases with a top tier US based enterprise beta partner, with excellent results – more deployments are planned to follow during Q1 2010.

I’d love to set up a meeting to tell you more about Shadowscale in person.

Regards,
Yinon Tzuk

here is my response

yinon

thanks for your nice note

someone from the team will be in touch by phone to get more details and see if there is room for a meeting

sounds like you are at an exciting phase, and congrats on the great work up till now

do you have a presentation

take a look at the link below to my VC related blog posts

looking forward

adi

blog https://adisababa.wordpress.com/category/vc

here is gemini’s response once guy called to ask for comments after disclosing ‘the hoax’ (more of which are to come)? and complaining that only one partner responded

Dear guy

Thanks for taking the time to talk to me while you are with your son

Here is gemini’s team response:

We try to reply to every opportunity within 48 hours

We try to research and discuss the opportunity as a group and call the entrepreneur or set a meeting within a week most of the time, and some times 2 weeks

It is our belief that in order to have a clear and synchronized process it is best that only the partner and associate from the relevant sector will lead the interaction with the entrepreneur. Therefore multiple responses are not productive. We believe this is a professional method for dealing with opportunities that come thru email our desire for professional conduct is borne from respect to the entrepreneur and a view of ‘treat others as you would be willing to be treated’

The success of israeli high tech, is lead by entrepreneurs, not VCs, and we try to remember this every day

i will try to add some thoughts:

this letter looked unusual, (there is no Yinon Tzuk on linked in), Gemini is misspelled, the email address, some essential material was missing, and this is not the right way to approach a VC. i still believe that people deserve a response. i am not even good enough on this topic most of the time. this includes my wife, my friends, CEOs of my companies. so i have a long way to go to improve

guy from my experience is

• intelligent
• motivated
• thinks out side of the box

i think this article is sad.

if you take one thing away from this episode it should be this

do not approach VCs via email

take the time to talk with people, find people who know the VCs and believe in you and in your idea and will introduce you and guide you through the first meeting and hopefully start a process. you can read more about my thoughts how to approach a VC, here.

you will get far more from the interaction (which, at times, is not enough)

i think this article is sad. why?

becuase we as a high tech industry and the VCs financing early stage entrepreneurship have far greater problems which should be addressed in depth and not through a yellow prism

for israeli VC s these may include:

• lack of belief in the vc model
• lack of belief in their ability to help
• lack of desire to work really hard. and boy, to be a good VC you need to either be really lucky or work really hard

most of these issues could be cleaned up by a more equitable and reasonable compensation structures.

for isreali entrepreneurs the issues to discuss may include:

• build a reasonable plan and execute against it
• optimize long term, not short term. (can VCs help here? are they part of the problem?)
• build a team and keep it together

but, don’t forget to wear sunscreen

founders, beware

every once in a while you read an article or a book that changes the way you think.

almost like falling in love, you think of it several times a day.

a month later you are a changed person.

please read this blog post. it was published 8 weeks ago, and its comments are very interesting as well. it claims that israeli startups fail because they do not understand and do not invest enough in marketing.

steve duplessie, from my experience is:

• smart
• a thought leader
• like many great people, not full of himself

a great book on a related matter is 4 steps to the epiphany, by steve blank, founder of… E.piphany, once a big company.

here is an abstract, from chapter 2 of the book

my comment to founders and management, before you start spending like crazy on marketing:

• try to create some measurements. cost per lead is a great start
• you will not win ‘the game’ if you do not build the best customer acquisition engine in the industry. no matter how good your product is
• engage with customers. listen. challenge your assumptions. engage with customers some more
• build a portfolio of marketing activities and test which ones work. start this early and slowly
• when you spend big, which you should, ask yourself: ‘am i  in good position to know what i am getting for this?’

since you are by now doing something repeatable and scaleable, it is less entrepreneurial.

so founders, beware.