espite being coastally challenged (currently living in Philadelphia), Josh has been an active entrepreneur and investor in the Internet industry since its commercialization. In 1992, while he was a student at the Wharton School of the University of Pennsylvania, Josh co-founded Infonautics Corporation – an Internet information company. In 1996, Infonautics went public on the NASDAQ stock exchange.
Calling all chefs...
At lunch today, a friend of mine asked me about my adjustment from being an entrepreneur to being a VC. Specifically, what mistakes I've made and what I've learned from them. A great question! Here was my answer:
I think that my one of my biggest early mistakes was the way I listened to company pitches. At first, I would listen to a pitch and try reduce the business opportunity to its raw ingredients. Rather than focus on the entrepreneur's business plan (since every business plan is wrong), I would try to imagine myself as the CEO and get excited about all of the great things I could create from those ingredients.
However, I've come to realize (the hard way) that I am no longer the chef. While I (hopefully) have the ability to influence the entrepreneur and make recommendations as to the menu, I am an advisor and he/she is the chef. As a VC I have to make an investment decision based on my confidence that the chef can create a wonderful meal with the ingredients he has at his disposal...
I invest in chefs -- not raw ingredients.
Yep, so true. And the hard way you learn this thing is by investing in a co that does something similar to what you did personally in the past, and had good/great success building, only to see it fail miserably. The raw ingredients felt so familiar that you think you can do this with your eyes closed - and you find out millions of dollars (wasted) later that you were wrong.
Posted by: Jeff Clavier | July 08, 2006 at 05:57 PM
And, of course, Josh, you know very well that the ingredients may change, just as whatever you or the chef may envision right now. But if you know little about the chef, wouldn't the list of ingredients influence your opinion of him?
Posted by: Mariya Genzel | July 10, 2006 at 06:16 PM
These are clear words of wisdom, Josh. In my previous experiences, I found that systematically changing the ingredients (ie strategy) and getting the chef (ie founders) to agree that the changes are for the better, makes the recipe turn out better. As a past enterprenuer and now a corporate executive, I personally identify with your comments and the changing of ingredients (by VC's). Certainly a roller coaster!
Posted by: Jennifer Cooper | September 06, 2006 at 06:23 PM
These are clear words of wisdom, Josh. In my previous experiences
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