Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.

By Gerry Langeler

OK – a few weeks ago I promised more details on how to avoid the dreaded “no” from your local (or not so local) venture capitalist.  It seems the best way to organize this series is around the four major risks all VCs think about when looking at a new potential investment: People, Product, Market, & Financing.
 
The old saw in the VC biz is investors invest in three things: people, people and people. There’s more than a little truth to that.  We’ve seen great teams dig themselves out of some deep holes, and weak teams dig themselves into some deep holes. 
 
But how do you know you have a great team, at least in the eye of the beholder (us)?
 
First, ask yourself this question:  “What is the probability that there is a team with more domain expertise, more horsepower, and more high-level industry connections located somewhere along the Silicon Valley, Boston, London, Zurich, Haifa, Mumbai, Shenzhen, Tokyo, Seoul corridor?” Really – ask yourself that!  Because we are asking ourselves that as you speak.
 
We know all too well that in this global, internet-savvy world, unique ideas are fleeting. But, unique teams are precious. 
 
If you can’t answer the question above with a solid “yes”, then ask yourself if you CAN gather such a team.  We understand that early-stage startups often start up with less than fleshed-out teams.  So, know where you are weak or missing talent.  Know what you don’t know, but know you need to know.  And know that if you share that level of introspection with us, we will be much more impressed than if you try to blow by us with a patched together personnel story – or worse a bunch of B or C players plugged in to fill holes on an org chart.  We VCs are very used to building teams and used to working through team transitions as companies grow.  But we’d like to fully understand where that help will be needed before we begin, not after the first key milestones are missed.  And we’ll be evaluating how much heavy lifting is reasonable and still be expected to succeed.
 
Next, beat me to the punch.  I have a question I love to spring on unsuspecting entrepreneurs. (I guess this post ends that opportunity)  I go around the room and ask each member of the founding team to describe who they are, their background,  and their role. 
Now, I’m looking at you, “Bob, what about you?”
and you say…”I’m the CEO!”
and I say…”Why?” (this is usually the first time anyone has asked this person that question)
and you say…”Because I’m the founder.”
and I say…”So?” (long pause…)
“What do you think a start-up CEO has to be good at?  Are you good at those things?”
 
You’d be amazed how many times I’ve done this and how many Dan Quayle moments (deer in the headlights) it has engendered. Let me be clear, I’m not doing this to be mean.  I’m doing this to make a point.  You wouldn’t hire a VP of R&D unless they had proven they had the right skills to do that job, nor a VP of Sales, nor a CFO.  But founder after founder thinks that being a founder is all it takes to be a good CEO.  We have lots of evidence to the contrary.  
 
To be fair, being a founder actually shows you do have one key attribute of successful startup CEO’s – the ability to craft a compelling vision of the future direction of the enterprise and then get people to follow that vision.  But, vision buys you the first couple of months. After that, only steely-eyed execution matters for the next few years.  And the fact that I put entrepreneurs on the spot doesn’t mean they can’t be CEO.  It means they need to understand that from the day they take our money it’s no longer about them, or about us.  It’s about the enterprise and what’s good for it. If that means you are a one in a million like a Bill Gates or a Michael Dell and can take the company from day one to billions in sales – terrific!  If it means you need to step into another role in six months – terrific!  What we all need to be working on is building a powerful, lasting, valuable enterprise – with whoever we need in whatever roles need filling.
 
My final ploy on this topic is to ask a simple question, “Do you want to be the boss, or do you want to be rich?” There is only one right answer (for us). Again, it doesn’t mean you can’t be both – but it means if it becomes clear someone else is needed to help the company reach its potential, you are not confused about our shared need for economic success.  By the way, there is absolutely nothing wrong with answering that question, “the boss.”  It just means you are not right for institutional venture capital – and as I said in an earlier post, there’s nothing wrong with that, either.
 
In the end, we look at the team and say to ourselves. “Are these guys and gals likely to go toe to toe with those phantom start-ups around the world that are somewhere between 6 months behind and 6 months ahead – and win?”  If we think you are, then we start thinking seriously about the next three risk areas. 
 
So, next time – we’ll talk products/technology.
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