One year on. How my time with Neal Dempsey, of Silicon Valley Venture Capital Firm Bay Partners, has impacted my career as an entrepreneur.
I first met Neal Dempsey at the White Bull conference in Barcelona about two years ago. As a successful venture capitalist/ sportsman/ traveler/ generally accomplished individual, he has gained my admiration and respect ever since. In early 2013, I came up with the idea of spending 3 months at Bay Partners in Silicon Valley, shadowing Neal at meetings, doing due diligence on early-stage companies and learning about the world of Venture Capital. Though I had worked in finance in London, and was an aspiring entrepreneur, it seemed like a rather outlandish idea, and I didn’t expect a “yes”. Much to my surprise, however, Neal agreed and the adventure began. You can read about my time in San Francisco here.
A year has passed since I left San Francisco, and I can confirm that my stint as a kind of assistant VC, in close proximity to Neal, has had a very positive impact on my career as an entrepreneur.
In explaining what’s helped me and why, it’s tempting to simply list the clichés we’re all already so familiar with in the context of starting companies – “work really hard”, for example. These are, after all, buffeted around entrepreneurial circles and forums like there’s no tomorrow. I won’t do so, however, not only because they’re unoriginal and therefore boring, but also because I find them quite lacking in substance.
In addition, the funny thing about such simple instructions, like “work really hard” or “do something you’re passionate about”, is that most people, while seemingly obsessed with their virtues, won’t pay attention to them in real life or aren’t able to apply them without first seeing them in action anyway. I’m certainty guilty of this. For instance, time and time again, I have expected to launch products successfully on the back of simple press releases, though this has never actually worked for me. I’ve since discovered that the only surefire way to gain any momentum in a market is to dedicate yourself to attacking every single channel possible and making contact with anybody and everybody who matters to your business (obviously this won’t be the case for everyone). I would say that my first startup failed because, very simply, I didn’t work hard enough overall and, when I did focus my efforts, I did so in the wrong way. But with experience, I was able to verify and consolidate the merits of the obvious and, more importantly, add a framework i.e. “work really hard” became “determine your objectives and the best way to achieve these, and then dedicate yourself to this”.
That was one of the major benefits of going to San Francisco and learning about what it takes to start a successful company. In addition to learning a whole load of new lessons, I was able to consolidate and refine existing ones by seeing them in context and adding the subtle extras that make them work; the supplements that, when absent, render the instruction meaningless.
On this basis, here are 5 clichés, and the supplements that I learned with Neal in San Francisco that make them work and useful to me in my day to day activities as a company founder and CEO:
- Be passionate, but not primarily about your idea.
Passion is a word that gets thrown around a hell of a lot in the world of aspiring entrepreneurs. But passion for an idea and passion for processes are two different concepts, and though the former gets all the attention, it’s the latter that’s far more important. I watched Neal look for this kind of passion for both the idea and the process as he interviewed entrepreneurs.
In my limited experience, if your basis for a business is passion for the idea, you’ll probably become a sporting instructor, beach bar owner, or, in most cases, a professional procrastinator because, unfortunately, like most people, you have no idea what will really make you happy. (While writing this article, I learnt that Warren Buffet advised aspiring entrepreneurs to “do something you’re curious about”, which I think is far better).
The people I met while working with Neal who are genuinely successful, in a business sense, are passionate about processes – doing things really well, working really hard, competing with themselves and others to be better, generating more sales than last month, writing the best line of code etc. For these people, the idea itself is just the context, albeit a very important one.
2. Educate yourself about everything, but don’t always assume you’re the best person to do a task.
This is a simple one.
The truth is, while Neal offered much knowledge during board meetings, he didn’t hesitate to call in an expert from time to time. In a personal setting, he’s a conversationalist, but in a business setting, from what I’ve seen, he’s a listener. If advice is needed, particularly in the case of a challenge or problem, Neal will impart his expertise and knowledge, but also go straight to the specialist.
For example, I remember attending a board meeting at a company facing a specific challenge that was outside the scope of the expertise of the people in the room. Rather than speculate, which is what many people do when they don’t know the answer, Neal didn’t hesitate to get on the phone to a person in his network whom he trusted to add valuable input. In the next meeting, this person came in to speak to the company and help them determine the best strategy.
In my opinion, it’s hard to overestimate the significance of this. In fact, I would say that one of the reasons Neal’s companies have been successful is that he has an incredible ability to recognize who’s good at what, and then call upon these people when the situation requires their expertise. This has been a particularly important lesson for me, as I know I have been guilty in the past, and probably the present too, of wanting everything done my own way. Taking a leaf out of Neal’s book, I now make a big effort to seek people out for their advice and expertise.
3. Give it everything you have, but be ready to make tough decisions and be willing to let go and try again.
Good venture capitalists are used to both success and failure. It can appear cold to the entrepreneur, but diverting resources away from projects that aren’t working is the only way to increase your chances of success.
As a startup founder, it can be really, really difficult to disconnect emotionally from your project, accept the fact that it might fail and let go if it does. At my first startup, I nurtured and wholeheartedly defended the idea that it wasn’t worth making a backup plan, because having a plan B means you’re not entirely focused on plan A.
Wrong.
Not having a Plan B was the result of an exaggerated emotional connection with the project that prevented me from accepting the fact it might fail. And this caused me to make bad decisions – for example, not wanting to launch until everything was ‘perfect’ – that ultimately did cause the project to fail.
The process of disconnecting emotionally from your company, diverting resources towards initiatives that work and away from ones that don’t is a good thing. This is actually one of the reasons it’s so useful to meet regularly with the board or, in the early days, ‘brain trust’, to discuss your strategy.
4. Every company hits the rocks at some stage. Yes but, seriously.
Neal was a big proponent of companies and leaders being agile and ready to change with the market. This is because business is tough and things change. Today you’re fixing a small issue in your website, but tomorrow you could be dealing with something potentially game changing, like the entry of a significant competitor into your niche, or the introduction of a new law that affects what you do. Companies that expect smooth sailing and simply float along don’t typically last long.
Almost everyone who hasn’t experienced a serious challenge in business has, with obvious reason, an ‘it won’t happen to me’ mentality.
I started my company just before leaving for San Francisco. It’s going fine today, but a few months ago, everything hit the fan. Neal had warned me to have more than one partner because all start-ups eventually have a shake-up with the founders. That is exactly what happened to me this year.
In short, it’s been stressful. Two things have made it easier – 1. Fortunately, the business still works day to day 2. It’s felt like a right-of-passage, because in speaking to Neal and other people about it, I’ve discovered that almost everyone’s been through something similar. But still, it’s almost embarrassing for us to explain to those people that we did things based on good will instead of putting actual agreements in place.
I see too many people making the same mistake. The simple fact is, business isn’t smooth sailing. Expect storms along the way and make sure you’re ready for them.
5. Venture capital isn’t a good thing and VCs aren’t nice people. Venture capital is a great thing and many VCs are wonderful people.
In the various entrepreneurial havens, mostly in the US, venture capital is thoroughly understood and highly valued. Elsewhere, in my experience (I don’t live in any such haven), it’s less well understood and massively undervalued. In fact, I frequently meet people who don’t want to have anything to do with venture capital and who regard VCs as “sharks”.
This is simple ignorance, or at best, a massive generalization based on meeting the wrong people.
Having only spent a small amount of time working in the world of venture capital with an experienced, successful individual like Neal Dempsey, in addition to having read numerous books on the subject, I am certain that, when the time is right, I will seek to raise money from VCs for my own company.
Not only do capable VCs provide capital injections that enable high potential companies to grow at rocket speed, but also structure, guidance, expectations (this is what causes the stress, but also the results), useful contacts and so much more. Here’s Neal’s advice.
These 5 lessons have absolutely altered the way I do business since my stint with Neal. Several of these lessons could not be taught, even by someone as knowledgeable as Neal (even though, I have to give him credit – “he told me so”). I had to experience the stormy patch myself and gain the wisdom that comes with tough experiences. But my time with Neal helped me see that even the times when everything goes unexpectedly wrong is the normal course of business. If you have passion for the process of growing a business, work smart as well as hard, listen to advice and surround yourself with people who can help, you’re doing the right things. The repetition of these lessons is how clichés like “work hard” gain meaning and depth.