Party Time For VCs?


Is the Valley pushing out the geeks to make way for the party crowd? It seems that at least new entrepreneurship one VC has tried to become more hip so to better connect with the changing entrepreneurial demographic.

Venture capitalist David Cowan is a professed chess-playing nerd who studied math and computer science at Harvard. Last year, though, he decided he needed a crash course in getting hip.

For the first time, the 40-year-old downloaded songs from Apple's iTunes online-music store and put some games on his cellphone. He started writing an irreverent blog, called "Who has time for this?" with observations on everything from computer security to his dead cat. He urged readers to give their own felines "a little extra tuna" in memory of his departed pet, Snoopy. Finally, the suburban father of three ventured out to a few high-tech networking parties, including one packed with Stanford University students and beer kegs.

His goal: to fit in with the young entrepreneurs who are suddenly the stars of Silicon Valley, with their hot Web startups aimed at teenagers and young adults. They have begun showing up at his firm, Bessemer Venture Partners of Menlo Park, Calif., dressed in T-shirts and flip-flops to pitch ideas, like mobile-phone services that help young people locate each other when they're out on the town.

While I understand the desire of VCs to do whatever necessary to network, I'm surprised that issues of style matter to the entrepreneurs. In my experience, entrepreneurs are primarily concerned about what people can do, not how they look and act. If that is changing, then I am sure we are building up a bubble of startups with good ideas and lousy performance.

  • If we were isolated in the desert, the value of water would far exceed that of money. However, most of us don’t run our businesses from an isolated desert location. So money becomes a necessity.

    Unfortunately, my consulting experience suggests that most entrepreneurs don’t have enough of the green stuff to grow their business so that revenues create sustainable profits. The sad truth remains that some entrepreneurs don’t have enough money to sustain their business long enough to create sustainable profits.

    So what to do? What is the elixir that fixes our cash flow and profit challenge?

    Truth? There is none. However, here are a few recommendations that may help keep you afloat until income exceeds expenses.

    1. Create a business plan before you start your business.
    2. Within the plan, be sure your numbers best reflect reality, so you know before you put out the open for business sign that you have enough money to keep the business up and running until positive cash flow occurs.
    3. Create a realistic strategic plan that includes measurable goals, strategies and tactics for success before your business opens and don’t shelve it. Use it! And measure, measure, measure, adjust, adjust, adjust.
    4. Be certain your strategic plan aligns with your business plan.
    Sell great customer experiences, not products and services.

    And from Seth Godin, here are three more rules:

    1. Great product development and marketing almost always comes from organizations that don’t have enough money. Having less money keeps you from trying to buy your way out of trouble.
    2. Learning to live with less money means you will develop skills and resources instead of buying them. And it means that when you have less money (again), you will be prepared.
    3. When you need money for something specific, go get it. But just for that. With good terms. As soon as you spend money to protect your money or leverage your money or account for your money or send a message about your money, the money is not only wasted, it hurts you.