SecondChance: VCs face the music with Rory

The SecondChance panel, as promised.  VC panels are usually a great place to deliver honed messages about "wanting to build world class leaders" or "shooting for the billion dollar opportunities" and "backing teams not betting on markets".  There was clearly some of that at yesterday's Second Chance Tuesday, but the expert steering of Rory helped expand the topics beyond the usual well trodden paths.  I will even forgive him for introducing me as the panelist with "gallic intensity" (in case you did not know, I hail from the oppressed northern neighbour of the proud Gallic nation).  It also helps when you have VCs who are confident about their qualities and shortcomings and fully cognisant of the difficulties inherent in the business.

The event was a great success from the organisers standpoint.  I estimate there were about 150-200 people with a good quality of attendees.  I certainly greatly enjoyed the chat with the 10 or so entrepreneurs I got to meet after the panel.

<--- Rory is giving me a hard time about copyrighted content on DailyMotion :-)  image CC lloyd davis

Here are some of topics that emerged and were discussed in the session:

• What's different from the last bubble ? Easy: the whole ecosystem works, the tools are in place, people actually use the web, billing, content delivery, communication tools are all there.  You are not making fundamentally grandiose assumptions about change in consumer behaviour -- now you are managing a business against measurable metrics, not wild assumptions about market growth.
• Is there a bubble at all ? We had slightly differing views on this.  Simon Levene from Accel was making the broad point that the global leaders that have emerged this time around as way bigger than at the time of the bubble by any measure and that their businesses actually work.  Whilst I think talk of a bubble is really not appropriate, I do think there is a measure of overheating (as measured notably by valuations and speed of dealmaking) and that most entrepreneurs should really be planning for an economic contraction.  But that means you might miss your budget by 40%, not by a factor of 100 as we had during the bubble.  A very different and much sounder environment.  Danny Rimer joked that everyone had a business plan (again) with most people wanting to start their own companies rather than join existing, strong projects (UK online real estate, anyone :-))  He mentioned a recent plan that had to do with creating a marketplace for early stage funding.  Now that's 1999 ! 
• What mistakes did you make / what did you learn ?  George referred to a business where they took all the right deicisions but systematically took them too late and missed building a much bigger success.  Speed, speed, speed.  I made a related point in relation to underperformers: if you feel someone is not going to work, that's because they probably won't.  Take wrong people out fast, you just cannot afford underperformers in a small company.  I also talked about spending your cash only when you know exactly what you are spending it for.  There is such a thing as missing market takeoff and not accelerating, but I have frankly rarely been in a business where we said "oh I wish we had spend our cash faster".  The notion that a market opportunity evaporates if it not being seized immediately is generally exaggerated.
• Please give us your elevator pitch.  Some funny guy in the audience tried to turn the tables.  My co-panelists refused and elegantly shunned the issue (it's not about how good the firm is,  it's really about the connection you can make with the partner who will sponsor you etc.).  I actually had a go, no something we rehearse really, so I would be interested in your feedback.

There was a lot more interesting discussion, but frankly my memory fails me and other business beckons.  I think the content is due to be published online at some point, I will update the post with the link when I find out.

Technorati Tags: secondchancetuesday, dannyrimer, simonlevene, georgecoelho

Comments

[Andrew Rhomberg]

Hi Fred,

You made a great pitch, but it was too long. Maybe you could shorten it to three key elemnts:

(1) you don't get the support of one partner, but the support of the whole firm
(2) we really believe in building companies, not just financing them
(3) ask any of the folks at the companies we are already invested in, if we are the right fit for you (O.K. That was Danny's line, but imitation is the ultimate form of flattery)

[Lloyd Davis]

Fred, it was good to hear you and the rest of the panel last night. I was shooting the video - it's going through the sausage machine as I write and should be up on the second tuesday site by the end of the week.

And that's my picture of you and Rory above :)

Fyi - I believe the "funny guy" who asked you all for your pitches was Robert Loch.