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I realize the impending Facebook IPO and the resulting soon-to-be-minted millionaires have been covered ad nauseum the past few weeks as we inch closer to their offering, but I still cannot get over David Choe’s potential $200 million payday once this all takes place.  By wisely taking Facebook stock over dollars in exchange for decorating the interior of Facebook’s office, David now stands to cash in on Facebook’s success in a very big way.  If only I had been around in Facebook’s early years to take on random odd-jobs and handy work … maybe I would be planning my first extravagant purchase too.

After snapping out of this momentary daydream and the ensuing depression knowing that I in no way stand to benefit from their success story, I came back down to earth and realized there are always lessons to be learned from these type of scenarios.

Now, I cannot put myself in David’s shoes and insinuate that I know what his thought process was at the time. Perhaps he did have a strong belief that Facebook was heading down the road to great things and wanted to take advantage of a rewarding offer. On the other hand, maybe he was already financially stable and could afford to take a flyer on a situation like this. Whatever the case may be, for someone looking at a new role/job with a compelling startup, there is plenty to be gleaned.

To begin with, I would hope that when taking a position with a startup one would do so because they believe in the company, its vision, its team, etc. Otherwise, what is the point of accepting? Therefore, if someone is going to accept an offer and going to help try to build something big, than why not bet on yourself and the company and seek that stock-based compensation if and when it is an option? It just another reason to push yourself everyday and make sure you are working hard to add value…something OpenView prides itself on and looks for in both its investments and its people.

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Vying for an entrepreneur’s attention is no easy task.

They are tirelessly focused on execution and growing their dream into something exceptional. This, in turn, results in one of the more hectic daily schedules known to man. Pulling 15+ hour shifts is nothing unusual and you can pretty much guarantee they always have a half-dozen people tugging at their shirtsleeves, vying for their attention. Whether they are running into client meeting or sales pitches, settling into a strategy or product planning session or simply getting caught up on the 900 other things on their agenda, free time is a luxury many do not have. Therefore, for someone in my shoes who is trying to connect with entrepreneurs for venture capital investment purposes, we need be sure we are maximizing your chances of connecting while also accommodating their schedules.

Simply hunkering down at your desk every day, mindlessly pounding away on the phones is akin to trying to push a rock uphill, as you won’t get far.  With any luck you will end up breaking through over time, but at what cost and after how many man hours wasted? Now, I am not saying good cannot come from this approach, as I do mix in a very healthy dose of active, phone-based outreach every day, but it is far more effective when coupled with a little foresight and planning. It may be far easier for these entrepreneurs to chat live for a few minutes at the beginning of the day before the awaiting whirlwind of activity hits, or perhaps later in the evening once they have had the chance to unwind. Therefore, a more concentrated effort during these hours could produce great results.  Also, you can always express your interest in connecting via email or LinkedIn, allowing them the chance to reach out once they have a minute to themselves.

If they are up to something special, there is no doubt that they are being contacted by numerous other parties, so they will most likely pick and choose whom they wish to engage with in the interest of time savings. At this point, it becomes a question of standing out in the crowd, and hopefully your prep work and planning allows you to get that foot in the door. With a well-crafted introductory note that really explains your interest in the business and sector, hopefully the entrepreneur will realize you are not just calling to ask about random revenue figures and statistics, but out of a genuine interest in the business.

In the end, it all boils down to results. So while working hard is great, you also need something to show for it.

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As 2011 winds down and I wrap up my last blog entry of the year, I figure what better way to close things out then by putting together a little New Year’s wish list for 2012. Here it goes….

• Continue to help our portfolio companies build something great and be an ongoing resource for their development
• Do our best to deliver as much value add as we can to everyone in the portfolio
• Great exits and investment results!
• Make some great new additions to the portfolio!
• Continue to grow the OpenView brand in the venture community and continue to grow the existing, kick a$$ team we already have in place.
• Lose 10 lbs

OK, the last one isn’t OpenView related but oh well. Enjoy the holidays everyone!

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Even though I connect with a long list of startups on a weekly basis, there are always those that stand out from the crowd. Unfortunately, in many cases it is not because said companies are growing like a weed and looking to raise money from OpenView. While these interactions get the team excited and kick off a diligence process on our end, some of the conversations I remember most do not result in an investment and instead leave a rather sour taste in my mouth.

My colleagues and I completely understand that being on the management team of an expansion stage company can be stressful to say the least. You are consumed with growing your company into something special, and at any given moment you can have 10 people tugging at your shirtsleeves vying for your attention, if only for a few minutes … there is budget work to be done here, we have key positions that need to be filled, there is a big client in the pipeline that we need to lock up…..the list goes on and on. With all of these tasks building up, I understand that fielding calls or meetings from potential investors can be a big distraction from what matters most to the business at a certain point in time. Furthermore, in many cases these CEOs have been burned by VC funds in the past, thus leaving a sour taste in their mouth. Other funds have perfected the art of not following up with prospects after that initial interaction as well, another sure fire way to give the venture industry a bad rap.

That being said, let me stress to you that we are not all the same, and I am here to explain why OpenView strays from the norm in so many ways!

As it is often said, you only have one opportunity to make a first impression. Therefore, I am quite surprised when these individuals’ responses to our queries are filled with nothing but harsh words mixed with a little spite. While I completely respect that your time is precious, a courteous “thanks but the timing is off” will certainly do. Also, in many instances I have referred prospect companies to other funds that may be a better fit given their particular stage, or even potential clients or partners that could prove beneficial to one another.

My point is, if you go into a meeting with the right attitude and mentality, there is plenty to be gained if you keep an open mind.

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Bill Maris from Google Ventures recently did an interview that was posted in the WSJ Venture Dispatch. It was a forward-looking piece focusing on what lies ahead in 2012 for the venture community. While a variety of topics were touched upon, a few in particular really mesh well with OpenView’s mentality and aspirations as we scour the landscape for the next addition to our portfolio.

When asked about issues facing the venture industry as we head into 2012, Bill has a direct, straight forward answer: it is crucial that we know “how to find and partner with the entrepreneurs who will create the most impactful business in the years to come.” If it were an easy task, every venture fund would be hitting a home run with every check they write, but there is an art to the process and a lot of legwork to be done at the outset.

Bill also alludes to the need to identify those entrepreneurs that are committed to building something big. Often times, when chatting with expansion stage CEOs, we connect with some very talented folks who have grown rather successful business to date, but the spark and hunger isn’t immediately noticeable. They may be happy with a very profitable business that allows for a comfortable lifestyle and, due a degree, a far less stressful day-to-day existence. However, at OpenView we want to see that desire to go above and beyond. These entrepreneurs immediately start asking pointed questions about how, if they were to partners with our fund, we can assist them in their goal to continually push the limit, get the most out of their resources and build something special. These types of questions are music to our ears and are proof that we are talking to the right individuals

With those type of founders on board, it then becomes a matter of executing and reaching that lofty potential.

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On a day to basis here at OpenView both myself and the rest of the investment team spend a lot of time with “outbound” activities … essentially trying to connect and get our foot in the door with exciting, expansion stage companies. You learn new techniques through this constant outreach and tend to get a sense for what works and what doesn’t rather quickly.

One area that produces a lot of success is a well-crafted email to an entrepreneur outlining your interest in connecting along with what OpenView brings to the table. If you are the CEO of an up and coming software startup, there is no shortage of inbound interest, as there are more than enough software/tech-focused VCs to go around. The key for me is figuring out how to stand out among all of the other noise in their inbox. Here at OpenView, being able to point to our concrete value add is a great way to kick things off.

After outlining our stage and sector focus I immediately point to the work our Labs team undertakes on behalf of our portfolio. If I were on the other side of the table and pondering whether or not to take on capital, a few key questions come to mind as I am evaluating potential suitors. One of the biggest centers around what kind of support I am able to extract from our partners aside from just a big check and a padded bank account. If my goal is to build something big (which it needs to be if OpenView is going to invest) than there is a lot more to the equation than a check with plenty of zeroes. I am going to be looking for a partner that can help me execute against my go-to-market strategy, build out my management team, etc. Luckily we already have a number of well constructed case studies outlining how we have done so on a number of occasions over the years.

Having an ice breaker such as this goes a long way…

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As I was gearing up for the Christmas holiday, I jumped in the car a few weeks ago and made my way to the trusty shopping mall about 15 mins from my house. I got within two highway exits and traffic came to a screeching halt…apparently everyone else in the Greater Boston area was trying to squeak in a little last-minute holiday shopping as well. Nine lane changes later I was on my way home and hunkering down on the old computer to scoop up my remaining gifts online.

To be honest, I don’t know what I was thinking in the first place, seeing as I already do the majority of my shopping through e-commerce sites as is. I get plenty of slack from my co-workers on a bi-weekly basis when a new box from Ruelala or some other discount site gets dropped off at my desk…..and if you are able to finagle free shipping as part of the deal it becomes a complete no-brainer in my opinion, aside from the fact that it can maybe get a bit addicting and you start buying things you don’t need. But that’s an argument for another day.

Over the course of our annual family gift exchange on Christmas Eve, talk shifted toward particular presents, where they were purchased, etc., and my guess is that roughly 70% of my family went the e-commerce route, which came as a bit of a surprise. Even grandparents were getting wrapped up in online savings. Then I read today on TechCrunch that comScore published this season’s online spending figures and saw that Americans spent $35.3 billion on the Web during the first 56 days of the holiday season alone — up 15% from the same time period last year. Even on Christmas day itself online spending figures were through the roof (with my Mother representing roughly half of that figure, as she bought every book imaginable with her new Kindle Fire).

Sad to say, but I think my days elbow to elbow with other shoppers in brick and mortar retail stores may be numbered.

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Upon coming back from a great holiday break I read a quote that really hit home. It was by Michael Moritz, a Managing Partner at Sequoia Capital, as he reflected back on some of the best advice he has received over the course of his career. Given his work experience and background I am sure he had plenty of avenues to choose from, however only a handful were deemed noteworthy in the article. The advice I am referring to came from none other than Steve Jobs, and it really struck a chord with me as it is so relevant to my day-to-day activities here in the OpenView offices.

In an interview with Ellen Florian, Michael mentions some advice he was given by Steve Jobs:

“You should never go to a meeting or make a telephone call without a clear idea of what you are trying to achieve.”

While this may seem rather simple and fundamental at heart, when you really give some though to the quote you come to realize how much weight and truth there are behind those words.

In my current role at OpenView for instance, I spend a great deal of time on a day to day basis interacting with a variety of startups, bankers, analysts, etc all across the globe. Going into each of these interactions with a game-plan or goal in mind plays a huge factor in whether or not said engagements are a good use of my time. If it is an industry call to further evaluate a particular investment opportunity the responsibility is on me to gain as a clear an understanding of particular market dynamics, etc so as to be a valuable cog in the diligence process. When speaking with entrepreneurs, there is a long list of useful facts that need to be attained in order to ensure the prospect is a fit within OpenView’s investment mandate.

The same also holds true on the other side of the table, however, with entrepreneurs who are considering a fund-raise and are engaging with potential suitors. Aside from being able to address product, market size, etc., in a clear and concise manner, being able to help potential investors understand your vision and growth potential moving forward plays a very big part in the process. I cannot tell you how many times I have received somewhat vague responses with very little depth when I ask for a bit more detail regarding use of funds, product strategy, etc…and when you are talking to the folks who may be writing you a check, this is not a step in the right direction.

Like I said…somewhat obvious advice on the surface, but words that carry a huge impact when taken to heart.

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I was reading an article recently by Kevin Purdy titled “Why In-Person Socializing Is A Mandatory To-Do Item” that really hit home. With the ongoing influx of social media outlets readily available for us to share our ideas or tell our friends useless facts about what we had for dinner, we tend to forget the importance derived from some old-fashioned, in-person communication. I admit that leveraging the power of social networks can in fact be very useful and efficient at times, however they just cannot capture or replace the gains derived from getting together face-to-face for some discussion/debate.

By putting the computer/BlackBerry/iPhone aside we open ourselves up to a completely different level of engagement which I find especially helpful here in the workplace. Granted, we have our internal email chains and collaboration tools which we use to the fullest, but I find we are most effective when we sit down as a team to hash out potential deals, discuss target sectors or simply to strategize for the week ahead.  On the deal side, it is easy to point out the pros/cons of a prospective addition to the portfolio via email, however by gathering all parties in the same room at the same time, lively debate ensues and we always walk away with a resolved course of action to determine whether or not a company may be a fit for the OpenView model.

With our focus on expansion stage companies, it can be easy to overlook or dismiss certain attributes of a potential investment with a quick email to the team. However, there is often a void from a contextual standpoint that can only be gained by hashing things out in person. By listening to a variety of vantage points simultaneously and hearing colleagues argue the validity of a prospect, there is so much to be gained and learned, even if it does not lead to a fund-raise. I cannot even count the number of times I have sat in on said discussions and left with a new-found understanding of a particular sector, certain industry trends, etc.

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Alright, so Christmas is over and I’ve added a few pounds along with a few extra holes to the old belt loop. Now comes that awkward week in between Christmas and New Years…There are lots of folks on vacation out there but you are still in the office trying to make the most of what is traditionally a down couple of weeks. Do you take your foot off of the gas pedal and coast through into new year? Absolutely not….with the right attitude and planning you can end 2011 on a high note and ensure you are primed to hit the ground running once January is upon us.

Given that there is still a sizable amount of the workforce on holiday, time management becomes key. I know for me personally, the likelihood of having a high number of meaningful discussions with expansion stage companies is rather low. Even if I do, I’m not sure how many of these entrepreneurs are eager to engage in some in depth discussion about a fund-raise with one week left in the fiscal year. However, that does not mean there isn’t work to be done.

I tend to spend a lot of my time this week planning on what I can personally do to make sure OpenView is off and running in 2012. Whether it be reaching out via voice mail/email to ensure a solid slate of meetings and calls during the first two weeks of the year, organizing our own CRM to increase efficiency, research new sectors…there is plenty of work to be done.

With any luck, this extra prep work will pay off and you’ll be reading about new deal flow courtesy of OpenView in the not too distant future.

Ask good questions

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Asking the right questions is definitely a two-way street. I always stress to CEOs and founders that, just as I am looking to learn more about their business,  it is equally important they get to know their potential funding partners. (us) When an entrepreneur is asking the right questions in return, it is a very encouraging sign…whether it be trying to find out how we can help them execute against their go-to market strategy, or what relationships and doors we can open for them moving forward. These questions are equally as helpful for us as they help paint a clearer picture of the company’s vision and strategy. I try to be an open book when it comes to chatting about OpenView’s value-added proposition, and I find that by doing so it becomes far easier for these entrepreneurs to chat more openly about their business.

Tell the truth

Another item in this early courtship that I cannot stress enough is honesty. I am surprised that I have to even bring this topic to light, however one would be surprised how often certain financials and figures that are relayed over the phone do not come close to matching the true numbers we find once we begin our due diligence. In the end, small fibs and lies always bubble to the surface, so it is best to just be honest at the outset instead of allowing funding partners to stumble across discrepancies on their own. Otherwise, trust breaks down and the relationship suffers. In certain instances, these minor blips or road-bumps can be worked around, but at what cost?  Now a new air of uncertainty enters the equation which could have easily been avoided. In other instances, the relationship can fall apart at the seams, creating a potential missed opportunity for all involved.

This advice is basic, I know. But it really does play an enormous role in shaping first impressions — and opening up the possibility of a second date.

New phone in hand, I felt like a new man. After perusing the app shop and playing with the phone’s new features for longer than I care to admit, I got to thinking……it really is amazing how big of an impact smartphones in general have on our everyday lives.I don’t know how I survived for so long without that coveted internet access on my handheld device. So, I started to do a little research…

Nielsen released a study saying that there are close to 230 million cell phone users over the age of 13 in the US as we speak, and a staggering portion of these folks (close to 35%) are holding smartphones in their hands. This number is expected to double up in the next few years, creating a huge market for ambitious entrepreneurs to target for the foreseeable future. In the process, a big destination for venture funding has formed.

While talking to one of these aforementioned entrepreneurs this week, he made reference to a Gartner study stating that there will be close to $15 Billion in revenues generated by application stores this year alone….$15 Billion! Obviously this figure is only going to climb steadily in the foreseeable future, and the resulting push for organizations to mobilize their content is in full swing. If they opt not to, they run the risk of being left in their competitor’s dust. This has led to a huge number of organizations creating customizable, user friendly platforms to help this needy customer base make the transition to the mobile world.

With a little expansion capital under their belt and the right go to market strategy, these young, growing companies stand to reap huge financial benefits in the years to come.

As I engage with these various executives and touch upon the issue of expansion capital, it is easy to hear the passion in their voices as they discuss topics such as meaningful use and what role their product plays in these emerging trends. In many cases, it is difficult for them to mask their overall enthusiasm as they explain an idea they nursed from a mere thought to a revenue generating machine. However, getting to a point in the conversation where such excitement is put on display is no easy task. For starters, some may not be looking for an infusion of capital at the time of your call…others may have had a bad experience with the venture capital community in the past…..whatever the reason may be, the problem you face is not only how to overcome this initial resistance, but also how to create an environment over the phone where these executives feel comfortable speaking passionately about their product and vision. There-in lies the key…because the fun only starts once you get over this initial hurdle and steer the conversation in the right direction…

Luckily my colleagues and I have some serious ammunition at our disposal in the form of OpenView Labs. It becomes far easier to engage these driven executives when you can point to the Labs’ strategic consulting services and the operational support they stand to provide to an incumbent management team. This value-added proposition is music to their ears as these entrepreneurs begin to mull over what key initiatives they could address with the help of not only growth capital, but the brain-power and thought leadership that come along with it. This month alone our Labs team published yet another new case study which you can check out here…….

With evidence like this on hand, breaking through to exciting, expansion stage companies gets just a bit easier…

This two day Sales Execution Workshop was, in a word, enlightening. I cannot say enough about the event’s guest speaker, Rich Chiarello, nor the takeaway that came as a result of gathering a collection of driven entrepreneurs and sales professionals in the same room with the common goal of improving their core sales processes.

Despite the years of pre-existing experience in the software sales market, the old adage of “teaching an old dog new tricks” never rang more true. During the course of the two day event, I had the luxury of connecting with a number of attendees who were more than pleased with the forum’s content, as it shined a new light on not only their sales methodologies, but also on their organization’s recruiting efforts. Bringing on new talent is an incredibly important cog when it comes to building out businesses of any size. One cannot simply rely on an impending hire’s past performance and achievement as an indicator of future success, although I do admit these are important pieces of the pie. However, if the hiring process was that simple the issue of the “cost of a bad hire” would not be such a prevalent topic in the venture community.

While relatable experience provides a potential hire with the right tool kit, one cannot overlook the need to find a salesperson who meshes with an organization’s existing sales model and culture. Easier said than done, a proper vetting and interview framework stands to save a growing, expansion stage company’s valuable capital in the long run……and with an in house recruiting team ready to help service our portfolio companies’ hiring needs, OpenView has proven time and again that they bring far more to the table than a simple infusion of capital to a growing company and its management team…..