Redeye VC

Josh Kopelman

Managing Director of First Round Capital.

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.

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After all is said and done, more is said than done

Success "After all is said and done, more is said than done."
Aesop 620 BC-560 BC

"A vision without the ability to execute is a hallucination."
Steve Case, former AOL CEO

When I first meet with an entrepreneur I have to make some pretty quick judgments about the individual. Does he or she have credibility? Do they seem smart? Do they have experience starting a company? Do they have integrity? Are they a good leader? It's very hard to make these judgments in a short period of time. If the dialog continues over the course of a few meetings, the added interaction provides additional data points. If we proceed even further, reference checks add significant value.


However, one of the most important criteria I need to asses is the entrepreneur's ability to execute. Can they do what they say they are going to do? If I am truly investing in chefs (not ingredients), then I need to be comfortable that they can really cook.

So - how does a VC get comfortable with an entrepreneur's ability to execute? When I look at my current investments -- and try to separate those companies that are thriving versus those that are struggling -- a few things stand out.

There is greater risk (and variability) in first-time CEOs than in serial entrepreneurs.
While there are some first-time CEOs in my portfolio that are doing unbelievably well, there are also some first-time CEOs that are struggling.   The serial entrepreneurs in my portfolio, on the other-hand, tend to have less variability in their performance. So while past performance (or experience) is not always a determinant of future success, it sure helps!

Just say no.
One of the most challenging jobs a CEO faces is to determine what opportunities/projects to say "NO" to. Given the limited resources that a startup has, it is critical for an entrepreneurial CEO to have real discipline in prioritizing projects. If a CEO can't make tough trade-offs, it has a direct impact on the company's ability to execute.

It's all about the team.
The first 25 hires at a startup are CRITICAL! They will set your culture. They will be the reason you reach (or fail to reach) your milestones. They will be responsible for hiring everyone else. One of the most dangerous mistakes a CEO can make is to accept "compromise" candidates because of time pressure. A strong team is critical to strong performance.

A culture of accountability.
Is there a culture of accountability?  Is there clear operating plan with  monthly/quarterly/annual goals/milestones?  Does the CEO hold him/herself and their team accountable for commitments?  Is there a dashboard to track key metrics? Are they disciplined about forecasting (using a waterfall revenue forecast)?  There is a clear correlation between CEOs who hold themselves accountable to goals and their ability to execute.

Comments

alexzaltsman

Execution is key. To take this a step further, the culture of execution and intelligent and calculated risk taking needs to trickle down to key employees as well.

Aibek Esengulov

I have met a number of quite smart people during my bachelors and at some point was even planning to do some business with them. However, after some time it becomes clear that it is way harder to find reliable and responsible rather then smart people.

Tali Aben

Agree totally with you re: assessing an entrepreneur's ability to execute. The immediate second question, if the answer to the first is not 100% clear, is what sort of assistance (mentor? coach?) can I offer that first-time CEO to help them execute. At least from an Israeli start-up perspective, most successful were those companies led by their CEO/entrepreneurs from day 1... often with much help from others.

John DeMayo

"After all is said and done, more is said than done"

--Well said ;)

Greg Milliken

Great blog, I enjoy following it.

I couldn't agree more that the first 25 hires at a startup are CRITICAL!

As sort of an aside, the quote attributed to Steve Case above sounds strikingly similar to one by Antoine de Saint-Exupery, a French writer, poet and aviator who lived in the first half of the 20th century.

"A goal without a plan is just a wish."

Ben Tremblay

Confucius wrote something like, "When what is said is not what is meant what should be said is not said and what is done is left undone." I can't help thinking that those who win in a skewed game apply themselves brilliantly to seeing that the rules aren't adjusted ... "motivated cognition" I think it's called.

Ben Tremblay

p.s. I missed "A vision without the ability to execute is a hallucination." I can't attribute this, but: "Tactic without strategy is ineffective; strategy without tactic is the fastest way to ruin."

Eric Jackson

Hi Josh: I completely agree with your points in the above post. To further support your argument, you might be interested in a recent study I completed on a group of VC-backed firms and what leadership, strategy, and process factors were found to be linked to higher annual growth rates: http://breakoutperformance.blogspot.com/2006/10/predictors-of-significant-vc-backed.html . It is definitely about the team and accountability, but (in a related vein) also facing reality and quickly learning from mistakes. Keep up the great post. Cheers, Eric

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Hallucinations are something that many people seek, maybe a way to leave this reality for a while, maybe for religious purpose, or just to get a nice ride. I think the most common way to do it is by consuming LSD.

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