ArpexCapital

The men’s NCAA basketball tournament provides one of the more exciting sporting events the US has to offer. Every spring, 64 teams (65 technically) from all over the country, with starkly different levels of talent and depth, start the tournament with their eyes on becoming the last team standing. Three weekends of last second buzzer beaters, sublime performances and David vs. Goliath upsets ensue, until a single champion is crowned.

A saying has emerged around the Tournament: “Survive and Advance”. In other words, no matter how you do it — good, bad, ugly — figure out a way to live to fight another day. This reflects the reality that even the best teams will bad nights and near-death experiences, often at the hands of inferior challengers. The great teams figure out a way, any way, to win and move on to the next round.

Currently, the business world is going through its own elimination tournament (more like a mass extinction). It’s staggering to see the intense economic pressure on almost every business in almost every industry. Companies that seemed strong just a year ago are shutting their doors; promising startups with business uncertain revenue models are going away. Venture firms without tracks records cannot raise additional funds and the partners are out looking for jobs.

Companies that can figure out some way to survive, however, will find a future with significantly less competition. Also, their strengths will have been honed by this difficult time. Looking back at successful firms, one sees that the eventual winners were not necessarily the ones with the best products or services, the blue-chip management teams or the most distinguished investors. Instead, the winners were the ones who figured out a way to survive over the longest time, until their business model evolved and found traction, until the market caught up with their product, until their competition died off, etc.. Entrepreneurs, startups and investors need to figure out a way — good, bad or ugly — to survive, to make it through this period intact. If they can do it, glory will be much closer at hand than it seems right now.

Thanks to Andre Averbug of PV Inova.

I would love to know what people would choose for their Top VC Posts of All Time.

This blog is relatively new and I am just starting to get active in the blogosphere but I am going to select my Top 3 and ask, if anyone has their own favorites, that they leave them in the comments to this post. After a few days I am going to create a “page” on the right side of the blog so latecomers can contribute. After a while I will post the results.

Here are my picks for all-time VC posts:

1. Guy Kawasaki on the 10/20/30 powerpoint rule from December 30, 2005.
Guy’s post has saved us all countless hours of watching (and presenting) self-referential, indulgent, soul-crushing powerpoints. This post has informed not entrepreneurs and VCs but presenters in every other sphere of business life.
It has also given us a gentle way to nudge those we love toward powerpoint sanity, i.e., by sending them a link to this post. Thank you, Guy Kawasaki.

2. Marc Andreessen The Psychology of Entrepreneurial Misjudgment from March 24, 2008.
I love this post not just because of its exhaustive (lengthy) review of Charlie Munger’s list of biases that lead to bad decisions. What has really stuck with me is its theme of incentives: “Human response to incentives is indeed a huge behavioral motivator, and I think Mr. Munger is right that once you think you realize how big it is, you need to assume it’s even bigger.” This has proven true for me — it is big and its gets bigger the more I think about it.
Adding to the lore of this post — Andreessen said that he would address all 25 of Munger’s listed biases but addressed only 1-6. To my knowledge, he has never followed up with the remaining 19, thus there is an Unfinished Symphony allure to it (‘when will he post Part 2…’).

3. Fred Wilson on Venture Fund Economics, Part One and Part Two from August of 2008.
Fred is one of the most prolific VC bloggers and, IMHO, the best. He lives social media and his blog has turned into an active community where the latest trends are shared. Fred’s most important posts, however, lifted the lid off the complex, intimidating world of the venture capital business model. After the post, one could sense a sea of previously confused entrepreneurs collectively exclaim, “Oh, so that’s how it works…” As a added benefit, the trail of comments were almost as interesting and useful as the post itself (this is typical, Fred’s readers tend to participate rather than just reading).

I will throw out one other item for consideration. It wasn’t really a blog post but a presentation given at Harvard by Adeo Ressi, founder of TheFunded. He called the VC industry out on the carpet for its meager returns and questioned the model entirely. His powerpoint got circulated and (even though it violated Kawasaki’s 10 page rule!) created a huge buzz. Whether one agrees with him or not, it snapped a lot of people to attention and made many of us reconsider whether what we are doing actually makes sense. A lot of great debate has followed.

Thus ends my votes for the Top 3 (3 1/2) VC posts of all time. I stayed away from ‘how to start a company’ and ‘what VCs look for in a startup’ posts — these types of posts are important and I would like to see suggestions on the best of them but, for me, these 3 stood out.
I still think about them regularly.