Books are supposed to be my bailiwick here at the blog and after several posts on anything but, I figure it’s time to return to that groove. This week I want to focus on new businesses, or “startups,” if you prefer.
If you’re starting a business and have grand plans for future growth, you really need to check out Randall Stross’s eBoys: The First Inside Account of Venture Capitalists at Work. eBoys has a bit of age on it at this point—it was first published in 2000 and came out soon before the dot-com bubble burst early that decade, and so you could criticize it as out-of-date and out of context. I don’t subscribe to that view.
eBoys follows the early days of Benchmark Capital, a new venture capital firm that launched in the 1990s. Benchmark earned its stripes quickly for a newcomer: one of its early investments was eBay, which still ranks as one of the most successful venture capital investments ever. Benchmark granted Mr. Stross incredible access to its inner workings, meetings, and deliberations which resulted in a very compelling read. I’m now working through the book for about the fourth or fifth time.
One of my observations about Benchmark’s business is the extraordinary amount of time they spend talking about the people in charge of the firm’s portfolio companies, both before and after the firm invests. For sure, eBoys includes plenty of discussion about the technological edges these companies are building. Thankfully, for a Luddite like me, Mr. Stross doesn’t let the techie stuff overwhelm the readers. Instead, to my eye, Benchmark’s partners spend most of their time chewing over the likelihood that their portfolio companies have the right people in charge.
Much of the book is devoted to explaining how Benchmark goes about finding “The Guy” that can take a company with a whiz-bang idea and deliver that idea to consumers in the form of a profitable product. (And, by the way, don’t let the talk about “The Guy,” the locker room style of the partners’ discussions, or Silicon Valley’s notorious male-dominated reputation fool you—Benchmark’s most successful “Guy” was actually a gal: eBay’s Meg Whitman.)
Taken out of context, you could mistake eBoys as a guide on how to build your business’s best team and, in my opinion, you wouldn’t be wrong. Benchmark’s partners realize that a new business that shows enough promise to justify millions in seed funding has to have the right mix of talent and personalities to bring the business’s product to market. That may mean that the company’s founder or the technological mind behind the product is not the right person to manage the company—often, that is not the right person.
I’m sure any reader out there faces similar problems in any business. Do we have the right team in place? What skills do we need right now, as opposed to the skills we needed a few years ago? What to do if we don’t have the right team, or if they skills we need today don’t match with the people we have? If you are wrestling with these question (and if you’re not, you may need to soon), you could do much worse than to check out eBoys.