So, You Think You Have to Deal With A**holes? Think Again

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Who hasn't dealt with the occasional a**hole at work? Every American knows it to be one of the unavoidable rights of passage for an employee. Think about it- you have voluntarily chosen to work in an environment created by others and staffed with people not of your choosing. If you didn't have the luxury of choosing carefully you are basically a victim waiting to be victimized.

In fact, I agree with Mark Suster, who often makes the point that getting away from a**holes is probably the single greatest motivator for entrepreneurship in the world.

One thing that frustrates me to no end however, is hearing people who work for a wage complain constantly about all the unpleasant people they have to work with. My view is simple- if you can't stand it, no one is forcing you to work there so why not get the hell out of there? Start bootstrapping a business, join a startup, find a better environment- do something- but by all means- stop whining about it.

So for everyone that thinks they have it tough, here's the true story of a buddy of mine who's going through some tough times right now dealing with some real a**holes- and I mean a lot of them!

This guy is actually an incredible salesman and entrepreneur and co-founded a venture-backed company for 3 years that ended up going sideways after a herculean effort on his part. He was recently getting set to be a part of yet another venture but his wife let him know that she'd prefer it if he took a steady job for a while as they had plans to start a family. It so happens that she has a great job that pays well and has been the family's primary source of income for the previous four years of their marriage. Being a good spouse, he obliged and began a job hunt in earnest...

I saw him recently and asked him where he ended up working. It turns out was able to land a sales position with a medical device company wherein a large part of the job involves him assisting surgeons with a procedure that utlizes this company's device. He makes approximately $1,000 per procedure- not bad, right?

There's a slight problem. The procedure, which he described in excruciating detail, involves people's a**holes- literally. Yes that's correct- you read it right.

Basically, he has to prep the patients (many of whom are elderly and not terribly hygeinic) using iodine and then pieces of tape to "set the stage" for the physician (I won't elaborate), talk to the patients before, during and after the procedure as they are only slightly sedated during these surgeries, and deal with a miasma so rancid that he is often suffering from nausea throughout his workday. (The surgical mask is apparently no match for these odors). There are multiple such procedures daily and he dutifully assists the surgeons as this is part of the excellent customer service he must provide.

I want to point out that the story he told me was so foul that at some point I actually asked him to stop. (Normally I am a pretty good listener). I was literally becoming sick after just a few minutes of hearing about what he has to actually do 5 days a week.

The crazy thing about this was that the guy wasn't complaining to me. He was just telling me about it and saying that he needs to hang in there for now as it pays well and they're going to start a family soon.

Here's someone who has one of the most disgusting jobs a person could ever imagine- and he's handling it somehow. It was profoundly humbling talking to him. Next year he'll be on to his next start-up no doubt- but for now he's taking care of business and making sacrifices for his family's well being.

Anyway- there's some motivation for you next time you're dealing with some a**holes at work or are finding it challenging to bootstrap your next venture.  :)

For Part 31 in in this Series, click here

Venture Studio (13): Jeff Clavier, Founder SoftTech VC (or, "A Well-Tempered Clavier")

This is Episode (13) of Venture Studio

I sat down recently to speak with with angel investor turned MicroVC, Jeff Clavier, @jeff, founder of SoftTechVC I, II & III on a recent visit of his to NYC. (My thanks to the great people at Polaris Ventures' DogPatch Labs down in Greenwhich Village for hosting our talk.)

Jeff is a fascinating guy who saw a special opportunity in 2004 to invest in capital-efficient Web 2.0-type companies and got into angel investing in a big way, investing his own money in 20+ companies. He turned out to be enormously gifted at it. Hearkening back to my recent Series on Angel Investing, he most certainly skipped the "Mug" phase that Mark Suster and I have joked about. 

He then had the opportunity to raise a small fund and thus became what the press like to call a "Super-Angel"- but what really is more aptly-named, a MicroVC. After 65 investments in this Fund (SoftTech VC II), he has now launched SoftTechVC III, (aka "the real-deal"as he jokingly called it) which will still be a "small" fund, but certainly considerably larger than II.

It was great to hear Jeff's perspective on early-stage investing, the market segments that interest him these days and how he has evolved over the years as an investor. Enjoy.

:26  -  A little background on @jeff & how he first got into angel investing

1:19 -  Raising his first micro-fund in 2004, which was $15M in size

1:43 - The pioneers in the MicroVC space, including Josh Kopelman

2:23 - On making 65 investments in SoftTechVC II w/10 exits already(!)

3:05 - Launching SoftTechVC III & venture partner Charles Hudson

4:14 - What types of companies/sectors will III be investing in? (See Matrix)  Listen carefully here about Jeff's approach to various sectors

6:02 - After 99 investments & reaching this level- what changes in your approach?

7:21 - Epic Line: "In our business there's no pride- we basically do whatever it takes to help our companies"

7:31 - Jeff's perspective on acquisitions (of which he's had 17!) and how he works w/his portfolio company entrepreneurs in this regard

9:01 -  Has he noticed network effects amongst his portfolio companies?

9:55 - Jeff invests in a bunch of NYC companies- what are his thoughts on NYC?

11:11 - What are the biggest challenges for him?

12:47 - What's an average day like for Jeff?

SOFTTECH VC III (so far)

                  

               

Angel Profiling (3): So Are Super Angels Extinct?

This post is part of my ongoing Series on Angel Investing. It was also republished on Fortune Finance, where I am an occasional contributor.

As we all know by now, all the major-league superangels have pretty much raised their own small funds of late. Conway’s got SV Angel, Senkut runs Felicis, Maples runs Floodgate, Sacca’s got lowercase capital, McClure of course runs 500 Hats, and Dixon’s one of the crew at Founder Collective. Many of them of course still get called “superangels” by entrepreneurs, VC’s and by the media- and I’m certainly guilty of doing this as well.  Recently, though, two guys I respect a great deal, Jerry Neumann and Mark Suster, have been quite adamant about why doing this is just wrong. Jerry actually took me to task in a very gentlemanly way here and we discussed it again in a recent one-on-one conversation. Mark of course came right out and called the superangel an extinct species when he recently spoke up at Columbia! I think he was only being slightly tongue-and-cheek.

Their main point is that once superangels actually start investing via these small funds, (thereby accepting other people’s money), they are officially VC’s and there are no “if, ands or buts” about it! Mark told me there’s absolutely no nuance to this issue when I asked him this recently.

So why does this even matter and who cares? I guess the deeper, "meta-level" importance of what they are saying is that no matter how great/prominent an angel you've been in the past, once you're managing LP money you can no longer 'masquerade' as a touchy-feely angel who is "all about the entrepreneur" in that you have a very strong fiduciary obligation to your investors. Nor should you be "calling-out" traditional VC's publicly as if you are really any different for that matter.

My take on this is that there is actually an important nuance to all this. In several of these funds what has actually happened is that a bunch of angels have joined together and thrown some capital into a fund structure. And sure, yes- it is a fund structure because they want to incentivize the guys who are actually running the operation on a day-to-day basis. But in my view there being a fund structure is not solely determinative of “what they are”- rather, what is determinative is how the investors in these vehicles see each other and their respective roles. In some of these funds the atmosphere is still all about a bunch of friends and fellow angels pooling some of their capital and letting one of their own (usually someone quite prominent) manage the day-to-day operations of what are essentially angel investments. The mentality and the incentives have not really changed too much just because there is a fund structure. So my point is that some of these groups are actually more like an angel groups than a venture capital fund. Most venture funds have some institutional investors (pension funds, university endowments, family offices) as LP’s. In the case of some of these “superangel vehicles”, it’s just a bunch of friends/fellow angels doing their thing without any hierarchies (ie. no MD's, Principals, Associates, etc.). The mentality is often “this is a good vehicle for me to support entrepreneurs, have fun and make some money with my friends”. Unlike a traditional venture fund, no one is making their living off the management fees- in fact- these fees often go into the basic expenses for administrating the “fund”.

I know I’m going to take some heat for this, so let me be clear. What I am saying is that some of these superangel funds may structurally resemble traditional VC funds, but they are something altogether different- and more akin to an angel group. I do believe that such entities merit a separate classification in our minds than traditional VC. I am also expressly not endorsing certain broad-brush critiques of VC motivations I have been hearing all year- in fact I disagree with almost all of them. In my opinion, VC motivations are really tied entirely to the quality and caliber of the people you are dealing with at the various funds.

I therefore declare that reports of the death of the so-called "superangel" have been greatly exaggerated.  In fact I would submit that in Darwinian fashion he has mutated somewhat to adapt to the necessities of an evolving entrepreneurial ecosystem.

For Part 4 of this mini-series, click here.

Mark Suster Brings Down the House at Columbia University

Last night I had the pleasure of conducting a wide-ranging interview with Mark Suster at Columbia University's Business School. The event was organized by the Columbia Venture Community and co-hosted by Columbia Tech Ventures and the New York Venture Community, although we had many guests from the Silicon Alley community at large. Mark spoke candidly about his life experience and insights gleaned over the years from being a 2x entrepreneur, mentor, and more recently as a venture investor in front of a packed crowd of entrepreneurship enthusiasts from the student body, faculty, alumni ranks and from the venture capital and angel communities alike. The video, which was shot by Tobin Schwaiger-Hastanan, is posted just above. 

It was a special evening, not just for his candor and insights- but also for the fact that Mark ended up staying with us for hours- late into the night, meeting and talking with everyone who wanted to chat with him after his talk had ended. The Columbia community has been abuzz about his appearance since then- and people were was still raving about him today at Steve Blank's talk. Ironically, I had posted my appreciation for people who give so much of themselves to the community just yesterday!

If you can't listen to the entire 2 hours of the talk itself, I highly recommend you go to the following sections of his talk:

Minute 33: What he's looking for in an entrepreneur. "Someone who can go right up to the line"... "Something you can't teach people"

Minute 37:27: "Life in a startup is a lot of fighting"

Minute 40: Co-founders and Compensation

Minute 42: On Mentorship and Mentorship Programs  

Minute 49: On the NY and LA entrepreneurial ecosystems

Minute 50: The Importance of "Patron" Companies

Minute 56: Super-Angels: "They don't exist, it's an extinct species" .... "It's Bull#*%!!"

Minute 57: New Class of Early-Stage VC's 

Minute 59: The Signaling Problem: "Complete and Utter Bull$%@"

Minute 59: VC's of all types

Minute 1:06 The Importance of Learning from Other Entrepreneurs

Minute 1:13 Awesome Q & A Begins!! 

Hope you enjoy!

(Suster prior to "bringing down the house" at Columbia University)

Remembering Dersu Uzala, Siberian Entrepreneur- Community Organizer

This is part of my Series on Entrepreneurial Culture.

As another epic (and frenetic!) week of awesome Silicon Alley entrepreneurship events draws to a close,  many of the thoughts and emotions I experienced last year around this time bubbled to the surface once more. Amazingly, the community energy, sense of togetherness and momentum here NYC is just getting better and better somehow. Just tonight at Columbia for example- we're actually hosting Mark Suster in front of a sold-out, standing-room-only crowd, and tomorrow morning none other than Steve Blank!  Here are examples of two very experienced and talented guys with a national presence who are constantly giving back, cultivating and educating the entrepreneurial communty. And here they are in NYC- joining us and enlivening our atmosphere. Anyway, I'm re-posting some of these thoughts once more, as I'm sure only a handful of early loyalists to these scribblings of mine actually saw it when I originally posted it last year:

It occurred to me recently that when you find yourself around folks that take great care to cultivate the particular ecosystem in which they dwell, the environment is always uplifting and enriching.  A recent venture event I attended of this kind brought to mind that great character, Dersu Uzala, who Kurosawa immortalized in one of my favorite films of the same name.  So as to set the stage for my main point, I’ll recall now one of the early scenes from memory, so forgive me if I omit some details.

On a freezing cold night in the Siberian forest a group of Russian soldiers are suddenly joined by a mysterious Nanai tribesman as they sit warming themselves around a fire. He seems ancient and does not greet them as they sit in stunned silence watching him as he slowly lights his pipe. After some minutes he breaks the charged silence and strikes up a conversation with them. It turns out that this is the beginning of their remarkable adventure with this nomadic tiger hunter who serves as their guide through the wilderness. The men soon learn that wherever he goes he is looking out not just for himself, but for those around him and who might come after him. Twice he saves the lives of Captain Arseniev and his men by virtue of his great experience and wisdom and in one scene they watch with fascination as he leaves some food behind in a remote shelter for anyone that might stumble there after their departure.

The Russian soldiers never forget Dersu. If you’re able to rent the film from NetFlix, I doubt that you will forget him either.  Let me know what you think.

We who make our livings in the world of start-ups also dwell in our own precious ecosystem comprised of entrepreneurs, investors, advisors, inventors and technologists. It seems to me that how we tend to it and how we treat each other along the way will be the ultimate measure of how much we can achieve.

Angel Profiling (1): A Moveable Feast of Mugs, Maniacs and Masters of the Game

        

  

 
 
This is part of my ongoing Series on Angel Investing.

Mark Suster, one of the best VC bloggers out there, recently put out his own five-part series on Angel Investing. As usual, (despite running a big VC fund, Launchpad L.A., hosting This Week in Venture Capital and being a family man), this latest series of his was totally comprehensive and got to the very heart of the subject.  As one who has been an angel since 2001 and an author of my own much more primitive series on the subject, I devoured Mark's efforts and had much the same experience as Howard Lindzon- who likened reading these posts to being on a roller-coaster ride!   

Prior to the posting of his recent series, I always got a kick out of Mark's various off-the-cuff comments about Angel Investing in which he referred to it as a "Mug's Game". I knew from first-hand experience what he was talking about but it wasn't until he authored his series that he elaborated on this general opinion. Anyway, he lays out five major pre-requisites for becoming a great angel investor. Without the following, Mark is essentially saying- you are either sh*t-out-of-luck or a plain Mug. (yes, this is meant to be tongue-and-cheek).... Here they are:

• Access to the best dealflow... (being at the "right poker table")
• Possessing the requisite domain knowledge
• Having strong relationships with VC's
• Possessing deep pockets (so you can follow-on and avoid being crushed)
• Having access to the eventual buyers of these companies

He is no doubt correct, though I pointed out to him that one also needs to account for a wide swath of angels who are involved for different reasons. He agreed and elaborated on this towards the end of this post.

Anyway, his series and our exchange inspired me to provide you with a fuller picture of the angel community. Therefore, in this mini-series of my own I intend to elaborate on the subject of angel investing and to give fledgling angels and others interested in this space the opportunity to learn more about who we are, (it's extremely varied and diverse!), how you become an angel, and what the general options are in this landscape.

So let's commence some Angel Profiling, shall we?

 To begin, cast your eye over the photos above that headline this post and in the upper levels you will see the faces of some of the "pro-level guys" as I call them. Many of these guys all have the qualities and attributes that Mark laid out in his series, which, for reference purposes, we'll call the "Susterian qualities". I'm talking about Ron Conway, Aydin Senkut, Mike Maples, Jason Calacanis, Jeff Clavier, Chris Sacca and others. Just in the last few days some of these elite "super-angels" have been accused by TechCrunch's Michael Arrington of holding secret gatherings in order to collude and drive deal terms in the Valley. Dave McClure denied it here, but Ron Conway, who was not at the dinner, unleashed on some of his fellow elites with this email TechCrunch recently got ahold of. The press is calling this fascinating episode: AngelGate!

But who are the people in the photos on the bottom row below? No doubt, here are the "Mugs" that Mark refers to... I, for example, am the guy getting his ass kicked in the bottom right-hand photo and the people "cramming me down" are some venture capitalists joined by some angry co-investors on a British deal circa 2001 when I first got started.

(yes- any first-time readers- (and Mom perhaps)- I am kidding...)

The reality is that angels come in all sizes and shapes and with varying motivations and goals. There is actually massive diversity in our ranks. Are there some Mugs among us? Sure there are. I was one myself when I got started no doubt. Are there some maniacs out there as well? Damn right there are! But there's a whole swath of angels in the middle, many of whom have a good idea of what they are doing and why they are doing it and, though not in the pro-leagues- are "in control of themselves" so to speak.  Here are some News Flashes for you that the mainstream press hardly ever takes note of:

• Not all angels live in Silicon Valley!
• Not all angels are interested in consumer internet companies!
• There are vibrant angel communities in NYC, Boston and in other cities around the US!
• Angels account for 90% of all start-up funding in the US!
• Angels put up $20 Billion a year into approximately 50,000 startups!*
• Friends & Family put up an estimated $60 Billion a year into startups!*
• There are an estimated 225,00 angels in the United States*
• There are currently ~300 active angel groups in the United States*

            *Source: Angel Capital Association

Furthermore, Angels have all kinds of reasons and motivations for investing. You can pretty much categorize us as follows:

• Friends and Family supporting "our own"
• "Mugs" who don't know what the heck they are getting into and don't realize it (me circa 2001)!
  
• Maniacs Tilting at Windmills (who don't know what they're doing, realize it, and don't care)
  
• "Weekend Warriors" of varying skills and motivations, (this includes participants in Angel Groups)
  
• Entrepreneurs Giving Back and supporting the younger generation
  
• Celeb Angels (Ashton Kutcher, Will.i.am, etc.)
  
• VC Angels (VC's who do some angel investing on the side)
  
• Professional Angels (the pro-leaguers I have mentioned above)

In the coming mini-series I am going to round-out this fascinating landscape with various posts which will include but are not limited to a map of the overlapping and concentric circles of the angel landscape, a list of angels who blog, and a description of the ones I call the "Dark Angels". Stay tuned!

For Part 2 of this mini-series, click here.

Evening Read: 6-10-2010

The 10-20-30 PowerPoint Rule by Kawasaki

Ten Things A Janitor Can Teach You About Leadership

The Panel Pile-Up: Avoid At All Cost!

Steering Grads to Startups at HackNY

How Dana White Built UFC into a Powerhouse Using Social Media

37signals Crushing It with ReWork!

New York's Webutante Ball!

Steve Blank Crushes-It According to Suster

Night Club Effect in Financings according to @cdixon

Hsieh on Why He Sold Zappos

USV Hires New Analyst

24 Year Old Sells Company to Google for $70M