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April 22, 2014

Not sure why, but over the last few years, quite a few people I know took on EIR roles at various VC firms in both the East Coast and in Silicon Valley.  Overall, there are positives and negatives to being an EIR.  The positives are kind of obvious:

  • A reasonable paycheck to work off of while you think through your next company
  • Exposure to a large data set of portfolio companies and companies that a VC reviews
  • Expansion of one’s network through the network of the VC
  • Usually few official “strings” attached to the VC aside from an implicit or explicit expectation that the firm get a “first look” at a company that is started during this time.
  • Exposure to the venture capital process and a behind-the-scenes look to how VC’s work and evaluate deals

The negatives are relatively well known too. Mainly, they revolve around the signaling and reduced optionality that the entrepreneur may give up by hitching themselves to one firm over others even if that firm has no official rights associated with financing that entrepreneur’s company.

Personally, I don’t feel that strongly one way or another that entrepreneurs absolutely should or shouldn’t consider EIR opportunities.  But watching a number of folks go through this, there is another, less obvious downside to the EIR role: it becomes hard to avoid absorbing the negativity of the VC process.

I’ve said before that one of the downsides of Venture Capital is that it tends to be a negative job. You say “no” all day long, you spend the most time on companies that are struggling, etc. VC’s get really good at analyzing investment opportunities and pointing out all the reasons why an opportunity won’t work, or is too high risk, or is too expensive, or is deficient on a dozen other dimensions.  It’s hard to avoid this when investing is your day job and you say “no” 99% of the time, but I think it’s not necessarily the most helpful atmosphere for entrepreneurs that are trying to figure out a company to start. Even just hearing the internal chatter about companies can be a bit toxic, but on top of that, EIR’s end up getting pulled into specific discussions around companies, and sectors, and even sit in on company pitches in their areas of expertise.

All of these probably seem like a selling point to founders, who would be eager to expand their horizons and understand how the capital side of the innovation business works.  And for some founders, it probably does help.  But I think many if not most founders will find it difficult to absorb the learnings of Venture Capital as an EIR without also becoming much more critical and overly-analytical about the companies they are looking to start.

All that said, here are some other suggestions for entrepreneurs who do think an EIR gig is a fit, but want to avoid some of these challenges:

  • Focus on firms and EIR roles that are structured around significantly helping you find your next company.  This isn’t all that obvious. Many VCs do EIR’s primarily to draw someone on the outskirts of their network into their network.  Once they are in, they don’t do anything particularly differentiated to significantly enhance one’s likelihood of hatching her next company – they basically get a desk, a paycheck, and can “hang out” or grab coffee with the investment team once in a while.  Talk to past EIRs and try to tease out how instrumental the VC firm was in helping them find an idea, shape their team, etc through something structured and programmatic or just plain effort and sweat equity.
  • Avoid the temptation to play VC. This is something else I’ve seen – an EIR role ends up being a way to “get to know” a talented entrepreneur with the potential that he or she would actually join the investing team instead. It’s easy to get sucked into “playing VC”, and it’s insanely distracting to be put in the position of deciding whether to pursue venture vs. actually work in earnest to start a company. I think it’s hard to do both, and introducing the possibility of playing VC just gets in the way of an entrepreneur’s ultimate goal.
  • Don’t do it for too long.  Most EIR roles I find are time-bound at something like 3-6 months. But some are open-ended. I think it’s best all around to limit one’s time as an EIR for a bunch of reasons. The longer you do it, the more likely it is that you’ll be impacted by the risks above.  Also, I think that it’s helpful to start getting different perspectives after a while, and also to get re-energized and re-focused.  It’s can be pretty frustrating for an entrepreneur to be an EIR for a period of time and not end up with an idea or company that they are ready to be fully committed to.  Funny enough, I find that most of my friends got a burst of new energy and focus when they completed their time as an EIR but continued experimenting on their own. Maybe it’s the change of scenery, or the fire knowing that you are no longer on someone else’s payroll, but it’s a trend that has been interesting to observe.
April 14, 2014

There was great news yesterday in the MA entrepreneurial community when Governor Patrick proposed sweeping legislation to ban companies from enforcing non-compete agreements.  I’m really excited about this, and think that it will have a big impact.  But just as important in my mind is a proposal that was introduced to allow international entrepreneurs to build businesses in Boston with an exemption from the H-1B visa cap.  My friend Jeff Bussgang has discussed it in more detail on his blog here.

This particularly hits home for me because I myself was on an H1-B for my entire professional life before gaining permanent residency in the United States in 2007.  Lucky for me, it was a lot easier to get an H1-B when I was applying for them than they are today.  Just recently, the entire allotment (85,000) for H-1B visas for FY 2015 were filled in the first week.  When I was applying for jobs, the cap was 2.3X that (195K), and I have to imagine there was not as much demand then as there is today.

It’s hard to underestimate the impact that being able to work in the US has had on my life.  Almost certainly, I would have centered my career around China and Southeast Asia, and my professional trajectory would have been totally different.  On top of that, I met many of my most important people in my life through work experiences that I was only able to have because of an H-1B.  Most importantly, my wife Nancy and I worked at the same company after college, a boutique consulting firm called “The Parthenon Group” (Parthenon was the first company to sponsor my H-1B).  There is no way we would would be married and have a family today if it were not for their ability to sponsor me.  Also, David, one of my co-founders at NextView also worked at this firm, as did some of our first investors and the founder of one of our portfolio companies.  I also probably would never have been able to work at Ebay in the current immigration environment, because by the time I was seriously speaking to them,  there would have been no visas left for someone like me.

As an investor, we’ve benefitted from the ability of international founders to start and build companies in the US.  Four of our portfolio company founders are from other countries (India, Estonia, Croatia, and Canada).  But building US based companies for these founders have not always been easy.  In particular, Jay Meattle, the founder of Shareaholic struggled to stay in the United States for years even after raising millions of dollars in capital from terrific firms and building a company of impressive scale.  It was a really unfortunate tax on the company, and caused him to start building out part of his team in India for a period of time rather than hiring more American employees, which was his preference.  Thankfully, Jay has been back in the United States for over a year and these immigration worries are well behind him.

We will see where things go – I’m excited for this proposal and think that this, or something like it has a lot of promise.  I hope the proposed program works and is replicated more broadly around the country.  Stay tuned to this blog for updates and ways that you can help promote immigration reform further to make the United States (and MA in particular) a better place for entrepreneurs to build their businesses.

April 8, 2014

I was as surprised as the next person to hear today that Fred Destin was going to be leaving Atlas to return home to the UK with his family. I’m sure it was a tough decision, but one I can understand given someone who has lived abroad for most of his life.

Even though Fred was always obviously not a local Boston-guy, he had a tremendous impact on the tech community here that will be sorely missed. In particular, there are a couple things I’ve admired that I hope “sticks” even while he relocates across the Atlantic.

1. Fred did a really great job re-calibrating the local ecosystem around taking big swings. He looked at large scale, extremely fast growing, network businesses and said “why can’t those be built here?”. He also appreciated the fact that often, the most disruptive companies look like “toys” in the beginning, and that some of the best companies focus on growth and scale while being patient that revenue and profitability will come when the “technology leverage kicks in”.  It’s counter-cultural here, and I appreciated his willingness to push for this loudly, even in the face of occasional criticism.

2. Fred has also been the model of someone who is vocal, engaged, and genuinely excited about the local tech eco-system in Boston. Yes, it’s by definition self-serving as an investor, but Fred has been more active than most, and I think genuinely excited to help this area become more attractive and friendly towards entrepreneurs. I’ve also always appreciated the way Fred has been very quick to openly express his admiration for companies and founders outside of the Atlas portfolio. Most VC’s (myself included) have a hard time not saying snarky remarks of companies that they are not involved with. It’s harder to be positive and constructive, which is what I’ve found Fred to be in nearly all of my interactions with him.

It’s too bad to see him go. But I think Fred will leave a positive mark, and I think some of these cultural norms have some staying power and will make this eco-system better even in the months ahead. Thanks Fred!

March 26, 2014

(This is a guest post from Jay Acunzo, NextView’s director of platform and community and our newest team member.)

This post is about new beginnings, specifically mine as director of platform at NextView (about which I’m unbelievably excited). But I want to focus on goodbyes for a second.

Have you ever received a farewell note, whether you’re ending a project or a job, that makes you step back and appreciate the other person on a deeper level? I’ve only moved on from a handful of organizations in my career (Google, Dailybreak, and, most recently, HubSpot), but the phrase that always sticks with me in someone’s good luck email is, “Let me know if I can ever help you in the future!”

Simple, right? You let a colleague know that you’re embarking on a new adventure, or maybe thank them for getting lunch that one time and wish them well, and they respond with that sentiment. Not, “Great working with you,” or, “See you around,” or even, “I’d love to keep in touch,” but rather, “I’m here to help.”

It always strikes me as a powerful statement despite, or maybe because of, its simplicity. It reveals a lot about their character. (By the way, thanks to all my great former HubSpot colleagues who sent me that exact sentiment!)

Back to NextView’s Platform

As far as we can tell, this role is the first of its kind in Boston, though precedents exist elsewhere. And while you can describe it through whatever buzzy phrase you like — paying it forward, adding value, knowledge transferring…scalable entrepreneurial mind meld summits, or whatever else — to me, this role has a simple but powerful core. It’s about help.

With that in mind, the NextView platform we’ll develop will be a natural extension of the genuine desire that Rob, Lee, David, and I have to focus on the needs, growth, and success of seed-stage companies. That includes both the NextView portfolio and the larger community. Anyone who’s ever had the pleasure of meeting the NextView partners knows they’re incredibly genuine in their work with entrepreneurs and desire to see this community succeed. (Having been operators and leaders at tech companies like PayPal, LinkedIn, eBay, and About.com, they “get it.”) In joining NextView, I’m excited for the chance to work alongside them, but also many of you.

Putting in The Work

As someone who loves to write, one of my favorite quotes is from Nathaniel Hawthorne: “Easy reading is damn hard writing.” That’s true of anything, I think. Making something easier for others requires that you put in a ton of hard work upfront and on their behalf.

But I’m excited to put in that work and to keep NextView more in-tune than ever with early-stage entrepreneurs. The goal is to build a platform that’s actually meaningful and useful to you, whether through resources, content, events, or other educational or business development opportunities. In the end, we’re all focused on the same thing: growing exceptional companies  and building an exceptional community of early-stage startups right here in town.

So I’m here to help, however I can, and I’m excited to get started! To that end, please feel free to email me or reach out to me on Twitter.

March 16, 2014

I’ve been thinking a lot about the outcome distributions in different circumstances.  The dimensions that I think about are:

1. What’s the cost of attempting something?

2. What’s the probability that an individual attempt is successful?

3. Whats the probability that the aggregate outcome of various attempts is successful overall?

In venture capital, the cost of attempting something is meaningful, but not that high.  For most funds, an initial investment into a company is something like 1 – 3% of total capital (for example, a $300M venture fund may make a $5M first investment into a company, representing 1.6% of total capital).  The probability that an individual investment is successful is pretty low, but a venture capitalist can be very successful if they invest in that one or two companies that pay back for all the other losses and generates a big return for a fund overall.

I find this to be somewhat similar to the outcomes of job hunting, except that the cost of an “attempt” is much lower. I remember when I was first looking for jobs out of undergrad, I interviewed at many many companies, and I had informal discussions and contacts with many more. Ultimately, I got a few interesting offers and chose one. I got many more rejections along the way, although I consider the process overall to be positive.

When I talk to students about jobs, I usually give this advice: Try to narrow the world down based on a couple dimension, say industry and geography. Then make a list of every single company that meets these broad constraints, and that list should be in the neighborhood of 50 or more. Then, systematically work your way through the list, meeting people at the companies, learning about them, getting interviews, etc. Through that process, you learn a lot about the different opportunities (and your own preferences) and I’m highly confident that a good job offer will result.

Most of the time when I give this advice, I see fear and apprehension in the student’s eyes. Doing something like this that involve a lot of “shots on goal” and enduring many “misses” is really uncomfortable. But I think in situations where the cost of experimentation is low, and the value of success is very high, an approach like this tends to work.

I find that most people are not tuned to this sort of outcome distribution. Especially those who have had a lot of academic success. Our schooling system typically rewards us for consistent successful performance. And we tend to be tuned to situations where the probability of success can be relatively high at each attempt if you are talented and put in the effort. Same thing for many sports. In tennis or basketball for example, teams and individuals that are successful win at least 50% of the time, maybe much more. If you win less than 50% of the time, it’s pretty bad. I notice a lot of people are tuned to this kind of outcome distribution, and that colors the way that they go about solving problems.

But I find that in many avenues in life and work, the cost of attempting something is low, the probability that a given attempt fails is high, but the potential value of success is very high. Given that kind of distribution, a different approach and strategy can work that involves a lot of smart, coordinated iteration.  You just need the persistence and thick skin to pursue it.

In venture capital, an example of this sort of strategy can be seen in the growth equity realm. Typically, a lot of venture capital deal flow is driven by proprietary relationships. A lot of VCs historically milked relationships and backed a small cadre of entrepreneurs over and over.

But then some firms took an entirely different approach. In particular, a firm called Summit partners formalized an outbound cold-calling model where analysts and associates would scour the ends of the earth for companies that might potentially be interesting, and then work like crazy to cultivate these leads over time. Each analyst at Summit spends years tenaciously calling and tracking hundreds of companies. 99% of these efforts fail, but every couple years, an analyst sources a deal that is successful. Each individual call is likely to fail, but as an entire effort, the process works, and Summit has been very successful, and attracted a bunch of copycats.  I’ve found that many former analysts at Summit have a very different approach to solving problems which is distinctly different from the way I am hard-wired.

Some peoplethink of this as a brute force approach, and in some sense it is. But in another sense, it’s just a rational way to attack a problem where the cost of experimentation is very low, and the value of a successful outcome is very high.  The goal then is to figure out a way to systematically take shots on goal in a way that may still lead lots of failure, but has a high probability of yielding a successful campaign overall. I think this applies in way more places than we think, but we tend to miss them because our brains are tuned very differently.

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    Thanks to the team @flybridge for a super party on a gorgeous night
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    @witheiler dude, you're not coming? That was the highlight for me
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    @micahmoreau wow, didn't notice that. That's pretty hilarious

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