At Venture Atlanta 2016, Kleiner Perkins Caufield & Byers’ Ted Schlein and local information security startup royalty Tom Noonan were interviewed by Jeff Leavitt of DLA Piper. These are highlights from the conversation that contained more than a few gems for aspiring venture capitalists and founders alike.
What makes a venture capitalist good?
T.S.: To do venture you have to have three areas you care a lot about. You have to be passionate and interested in technology or whatever industry you are investing in. Second, you have to have a fascination and good understanding of people. Third, you have to be really interested in business models.
How good you are at those three things will determine how good of a venture capitalist you’re going to be. You’re trying to hone those skills when you’re looking at a new entrepreneurial opportunity. Once you’re in you are navigating using those skills.
T.S.: Venture is a service business. Understanding, living, and knowing what that means is important to who you are providing that service to. The entrepreneur is the center of the universe and that’s why we spend so much time talking about the who. Then what differentiates firms is who can provide that service better than anyone else?
There are a few ways you can help an entrepreneur move the needle. Help them hire the next great executive, help them get a business development relationship they couldn’t get on their own, or help them get a new sale.
If you’re maniacally focused on providing that great service, chances are you’re going to be able to replicate it over and over again leveraging your history. I think my job is to give them completely competitive unfair advantages. The whole idea is to help you win and what can I do to make that happen.
Startup success secrets?
T.N.: In creating a successful startup the first thing you have to understand is nothing is ever easy. It’s difficult, you have to put your heart and soul into it. Being lucky helps but being committed, focused, and passionate gets you there.
I think failure is part of the innovation cycle. If you’re not failing you probably aren’t pushing yourself or your people hard enough. You learn more from failure than you do from success. You learn where instincts failed, where systems broke down, or where assumptions were wrong, but if you learn from it all the better.
What about culture?
T.N.: First of all culture is everything, and it’s going to happen. You can’t avoid culture. Culture comes from the top. Not from the signs you post in the lobby or the email you send out. It comes from the leadership living the values and the principles of what the company is all about. You have to live it. The culture is about the company and no individual is above it, including the leader.
T.S.: Focus. You can really only do one thing really outrageously well. It’s just maniacal focus. Remembering that “no” is not an answer. It’s just something to be proven wrong.
The other part of focus is also realizing that you cannot do it alone. Companies are built with teams so your ability to attract great people and allow them to do their thing is important. Hire awesome people and never compromise on that.
T.N.: My best advice starts before you’re even an entrepreneur. If you’re not obsessed with it, don’t do it. Keep collecting your paycheck until you get obsessed with the idea and it becomes a virus that’s stuck in your head. Staying focused is hard work because great ideas come up and you’ve got to do one thing better than anyone else.
The other advice I would give is building your management team as the company scales is critical. Getting the chemistry, skills, and competency right is critical. The company is about the company not about you.
What makes a great pitch?
Tom Noonan: There is a fine line between obsession and complete hysteria. What I learned at ISS scaling the company, you had to rely upon the management team. You have to make sure you have the right people on the bus in the right seats. The passion and the obsession of the founder or CEO sets the culture and I always think who, not what.
The companies I’ve invested in that have gone off track always start with the first meeting where I really like the idea but I’m just not sure about the team or the person. You have to have that unique combination of skills and attitude to make it work.
Why invest in Atlanta-based companies?
Ted Schlein: There is a great technical founding and Atlanta has a jewel in Georgia Tech. In particular, they have an amazing cyber security department at Georgia Tech and a steady flow of engineering talent. Without that steady flow, you won’t be able to build high-tech companies.
Atlanta is also a great place to recruit people to as opposed to California. In Atlanta, the lifestyle is great, and it’s affordable. There is a great ability to get technical talent here and attract outside talent to it. For the east coast, Atlanta is actually less conservative than many other parts and willing to take more risks than other parts of the country.
What makes Atlanta such a success?
T.S.: I think you’ve had more, larger venture-backed companies in Atlanta than they’ve had in New York. What happens in an environment like that is the success breeds more success. The list of entrepreneurs that were ISS folks that have gone on to do other things in the region is large. So the region should continue to grow, it starts to feed off itself and that’s how you become a hub.
JANUARY 2017 NEWSLETTER
- FEATURE: Atlanta’s 5 Startups to Watch in 2017
- NOTEWORTHY: Magnificient 7 – Top Series A Deals of 2016
- VOICES: Ted Schlein, Tom Noonan Discussion Highlights