Arrogance, Luck, and Timing in Venture Investing

Angel Mehta has up an interesting interview/profile of venture guy Bill Tsai of Charles River Ventures. Bill’s a skilled venture investor, and he has some solid comments on thematic investing (not his bag), the role of good luck in venture (very high), and the importance of having a flexible founding team (crucial).

Angel Mehta: Going back to the issue of luck, does that mean that there is nothing in particular that you do differently that has allowed you to have a better track record? Haven’t you developed any unique aspects of your approach to the diligence phase, for example?

Bill Tai: Not really. I think it has less to do with the diligence phase of a prospective company for me than it does the ability to build companies from an early stage platform on a go forward basis. I work with my teams to adapt to changes. My average starting team for many years has been three people. I would much prefer any three smart people and a couple of million bucks than an existing business that had so much momentum behind it that ” if it’s right you’re right” but if you’re wrong you can’t change it. If you’ve got a very nimble starting team that you can help guide, it’s easier to keep something alive through a lot of change until you find a point of traction.

Angel Mehta: So in how many cases does the plan you started with end up being the plan you follow through on?

Bill Tai: Almost never. Looking back at my portfolio I’d say that probably less than 10% of the companies that I worked with ended up doing EXACTLY what they started out to do. I’d say that a 100% of the companies that I worked with failed to do EXACTLY what they set out to do. They were just wrong from the get-go and they were inflexible when they needed to change. I think if I have any advice for entrepreneurs starting out, it is that you’ve got to learn to be flexible because times change, things change, and everything is always changing. The fact that things will change is the only constant that you know will not change.

Related posts:

  1. Venture Investing and Damon Runyon
  2. Key venture investing terms
  3. Cashing Out Founders in Venture Investing: A Trend?
  4. The Pennsylvania (Venture Investing) Put & P.J. O’Rourke
  5. DFJ’s John Fisher on Venture Investing

Comments

  1. jeremy stein says:

    its nice… sure works well as a tv in our dorm room…