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Don’t over-think it

My experience in most things is that simpler is always better.  Whether that's a business deal, investment terms, or training for a cycling event.

Eddy Merckx when asked about his secret to being the best bike racer of all time was simply: “Ride Lots”.

When things work, they generally are super-simple, easy to understand, obviously of value to their constituencies, and most of all easy to explain to others.  Maybe best expressed in Occam’s Razor for those of you who like the philosophical or ‘intelligencia’ version of Keep it Simple, Stupid.

WTF are they thinking…?

An article / post caught my eye this morning.  I typically read / skim the MIT Technology Review’s daily email and from time to time Brad Feld (a Lijit investor) writes a piece.  This morning he has a good one on the failure of marketing spam in Twitter.

A very similar story is in today’s Ad Age although this one points out a social email flap.

Each of these stories represent a trend that is likely to continue and will absolutely get worse before it gets better.

At Lijit we live in the world of hyper-engagement and conversation.  Our search widget is primarily installed on both blogs and commercial sites that engage readers in very deep and specific contextual ways.  The engaged audience of internet readers is increasingly moving away from glossy mega-sites like CNN, NYT, USA Today and more into where the real conversations are occurring.  These sites for example include: Mommy Blogs, VeloNews, MLB Trade Rumors, and on and on – all places where real people connect and converse about real interests – in real time.

Conversational sites like these leverage not only their respective websites, but also outlets like Twitter, Flickr, Digg, YouTube, and so on.  Each of these are fantastic audience engagement tools and techniques.  And of course they offer marketers a level of interaction and presence they’ve never had before.

The challenge for Marketers is that they can royally fuck it up.  Yes the audience is engaged and yes the audience is ripe for the message, but the sensitivity and attention doesn’t suffer fools as Brad points out in his piece.  The “how” is becoming at least as important as the “when” and “where”.

Being a dick doesn’t help

Interesting article in Business Week recently about how jerks consistently make bad business decisions.  To be clear – non-jerks make bad decisions too, but at least they don’t alienate colleagues or the counterparty. 

The VC audience

Understanding your audience as anyone who’s in sales, marketing, or speaks frequently will attest is probably the single largest factor when preparing for and then having success.  Its really no different when it comes to understanding and raising money from venture capitalists.  In fact, its probably one of the most important (and overlooked) things you can screw up. I’ve been thinking about this lately as I talk with fellow entrepreneurs who are looking for investment capital and want advice or opinions on who they should talk to and what their best line of attack should be.

In my experience, no matter how a VC gets onto the career path to partner, they tend to always gravitate into 1 of 3 types of lead investment criteria.  I think this understanding is generally not well understood by companies seeking to raise capital.  Understanding the primary drivers of your audience results in less time wasted and less frustration for both.

1. The Market or Theme-driven investor

At Lijit, our primary lead investor, Foundry Group, falls squarely into this category.  These investors seek out a major market theme and then learn everything there is to know about it.  They are connectors, filters, and learners.  They meet with everyone that covers, invests in, or tries to build a company in their particular focal area.  If they’re right about the market and they do their job right of meeting everyone and looking at everything, then they have an obvious advantage over other investors pursuing the same market – and – they give their portfolio companies a huge boost with connections, partnerships, business development assistance, economic modeling, etc.

2. The People-driven investor

We also have one of these as a lead at Lijit, Boulder Ventures.  This type of investor bets primarily on entrepreneurs that have track records of demonstrable success.  Over time, they form a “stable” of these entrepreneurs.  Tracking, following, keeping in contact with people they want to back.  They make good and focused use of their EIRs to start something and then they invest in that something.  Oftentimes these investors will pass on a deal that has what could be phenomenal market potential, simply because they don’t like or don’t have any experience with the management team.  Conversely, they will take on more market risk with a known and trusted management team with the driving belief being that the team will figure it out and create success.

3. The financial-driven investor

More often than not this group comes from investment banking or other professional investment backgrounds.  They look for deals where they can apply some sort of financial leverage as the leading criteria for weighing whether or not to do a deal. The portfolios of these investors have a more private-equity look and feel.  Portfolio companies that are capital intensive businesses, service driven businesses, roll-ups, and the like might also be there.  Down-rounds are opportunities to consolidate positions, and creative use of leverage is common in their deals.

Obviously the successful venture investors apply all 3 of the above when making an investment decision, but understanding the primary criteria of your audience will make both sides lives easier and more productive.

Admit One.

Step right up.  Get your one-way ticket to ride the ride.

At the close of every quarter we do a review with the entire management team.  Typically these meetings are a chance for everyone to share their successes, how they or their team performed against their goals and get collaborative feedback on what did and didn’t work.  Its also an opportunity to set goals and discuss tactics for the upcoming quarter.  In general I think everyone gets a lot out of it and its a great level-set for where we are as a business.

At this last review we started off with a presentation called: “Ticket to Ride”.

My thesis was simple:

1. You each have a ticket.

2. The ride is going to be up – down – and definitely twisty. 

3. It will be really fun and possibly really scary at times.

4. It may make you light-headed, queasy, disoriented, and possibly you might even puke all over yourself.

5. You will not exit the ride the same as you entered the ride.

Punchline: you have the choice whether or not to take the ride. 

But.. if you go through the turnstile, understand that there will be too much to do, in too little time, with not enough resources.  We’re going to do things that we’ve not done before and in ways that we don’t yet know how exactly we’re going to do them.  Some of you might not make it out alive.  Those that do, will, at a minimum, never be the same again…

Everyone on our team grabbed their ticket.

Would you?