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Brad Feld – the a:c IMterview 

February 3, 2005

Brad Feld’s blog Feld Thoughts is consistently interesting and well written. It so happens that Feld is Managing Director of Mobius Ventures – formerly Softbank Ventures so we had a good excuse to IMterview him. Feld has a typical VC CV. He’s MIT educated and was a successful entrepreneur at a young age. However, Feld Thoughts reveals that Feld is different. He works away from San Jose or Boston in Boulder, CO & Homer, Alaska. He reads and reviews a variety of books from PHP5 to How to Make Love Like A Pornstar. And he has a sharp sense of humor.
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Brad Feld Displaying the Stages of Geek Chic


The a:c: It’s really a pleasure to
ready to read your blog Brad. There’s
a lot there. A nice variety too. You
are very open in the matters that you
write about, but we were wondering, do
you have any rules to govern yourself
from writing about certain subjects?
Anything off-limits?
Brad Feld: The only thing I am careful
about is not disclosing confidential
company information. I try to tread
this line carefully – I don’t ever want
any of my companies to be uncomfortable
with the information I post in my blog.
Brad Feld: Beyond that, I just say
what’s on my mind.
The a:c: Is it surprising to you that
more VCs are not blogging or do you
think it’s just a matter of time before
everyone jumps in? We saw that Roger
McNamee has started but its seems like
its mostly a few, younger VCs. It seems
like a great way to draw attention to
your portfolio, to your firm, to help
people get to know you, and to learn
how the Internet works.
Brad Feld: I have no clue. People blog
for a variety of reasons. Doing it
well is hard work and is clearly a
reflection on the person. So –
unless a VC is willing to take it
seriously and views it as having some
sort of value for him/her, it won’t
happen. Interestingly, it’s not that
time consuming since we already spend
a huge amount of time writing (mostly
email) – so it can be incorporated into
the normal flow of things. But – doing
it well – and more specifically –
writing well – is hard and takes real
focus.
The a:c: Some of the parts that we
find most interesting are where you
seek to rescue tech entrepreneurs from
the wiles of VCs. What are some of the
biggest mistakes that you’ve seen
entrepreneurs make time and again when
courting/negotiating with VCs?
Brad Feld: Big mistake #1: Not
understanding what makes a VC tick.
VCs have one job – take a box of money
that is given to us by our investors
(LPs) and ship them back a bigger box
at the end of the day. There are lots
of different approaches to this, but
fundamentally you have to make
successful investments. Everyone goes
about this differently and
an entrepreneur should work hard to
understand his potential “partners”
(e.g. the VCs) early in the process to
make sure there’s fit, value alignment,
and opportunity alignment.
Brad Feld: Corollary to #1: Treating
VCs as “generic beasts.” All VCs are
individuals (makes you think of the
Monty Python “we are all individuals –
no we’re not” line.) Don’t expect that
a “standard pitch” or a “one size fits
all” approach makes any sense.
Brad Feld: Big mistake #2: False
expectations: It’s easy to learn a lot
about a particular VC and venture
capital in general. If you are
inexperienced either with the venture
capital business or a particular VC,
do your homework. Know what you are
getting into. Make sure it’s what you
want.
Brad Feld: Big mistake #3: Negotiating
for the wrong things: Many VCs fall
prey to the negotiation syndrome.
Everything becomes a negotiation, no
matter how irrelevant. Don’t fall into
this trap. Also – don’t negotiate hard
for stuff that either (a) you’ll never
get because the VC never gives it or
(b) it’s irrelevant. Know what is
important to you and focus on it.
Brad Feld: Three’s enough – next q?
The a:c: You seem like you would read
anything you could find that describes
the history of venture capital. Whose
VC careers do you put on a pedestal?
Brad Feld: Ah – c’mon – there are
hundreds of phenomenal VCs. There are
different things to learn from each of
them. Pedestals don’t teach you
anything – experience with the great
ones do.
The a:c: When things are not going
well, how do you ascertain whether
it’s the market to blame or poor
execution? This seems like the
biggest complaint that we hear
about VCs – that they don’t really
understand what is going on inside the
company. Will you try to talk with
customers, for example?
Brad Feld: This is an important
question that’s hard to answer with a
paragraph or two. There is a category
of VCs that are either reactionary,
inexperienced, or not so smart – these
guys don’t know how to deal with
problems. All problems are different –
for example, it was easy in 2002 to
blame lots of things on the market –
but we had companies that actually did
fine in 2002. We’ve also had companies
in great markets completely fuck things
up (and vice versa, although it’s a lot
harder to succeed in a lousy market.)
Brad Feld: I realize I’m just
addressing the complaint – not that
question of “how do you ascertain
what’s to blame?” I personally stay
very close to my CEOs and try hard to
only invest in companies, business
models, and markets that I understand
well. As a result, I understand the
business both operationally and
financially and can make an assessment
about the performance of the executive
team, the strategy of the business, and
the dynamics of the market. I’m not
always right, but it’s not hard to
drill down into what’s going on and
try to figure out what I think is
wrong and what I think can be
done about it.
Brad Feld: The further away a VC is from
his area of competence, experience, and
understanding, the harder this is to do
– and the more often it is done wrong.
Brad Feld: Or poorly.
The a:c: In one interesting posting you
describe a dialogue with a limited
partner who says that there is no
correlation between operating experience
and VC competence. So how do you measure
up VCs? We imagine you’d attribute some
home-runs to good luck.
Brad Feld: Well – the measurement is
really easy – you get X from investors
and return Y back where Y > X. The
bigger Y > X, the better you are.
Brad Feld: Certainly some VCs have
lucky deals, but “pure luck” (vs. good
luck) is largely an outlier. Is
KP-Doerr/Sequoia-Moritz lucky for
having “done” Google? I think luck
always plays a part in success, but
it’s a small part of it.
Brad Feld: The LP discussion I had was
more around the factors that correlate
with success. There is an age old
argument in the venture business that
operating experience is better (or
worse) than no-operating experience,
or that “pickers” (people who pick
companies) are better (or worse)
than “builders” (people who build
companies.) The LP I was talking to –
who is incredibly successful and
well respected – made the direct
statement that this is all bullshit –
there is no correlation – it’s based
on the individual’s VC competence.
The a:c: There are a lot of areas in
your portfolio that we could dig into,
but let’s dig into one – RSS and blogging –
as you are on the board of Newsgator and
your firm has invested in Technorati.
There is clearly a lot to be excited
about, but what are your concerns for
this sector? One might be that there
are a lot of potential competitors,
including Yahoo and we presume Microsoft
and Google.
Brad Feld: Of course there are
competitors and Google, Yahoo, and
MSFT/MSN are at the top of the list
as possible threats. However, I’ve
never really cared about the threat
from incumbents in any particular new
emerging segment like RSS – if you
worried about that, you’d never make
an investment. In the mid 1990s,
whenever a software company talked to
a VC, one of the first questions was
“what about Microsoft.” As an
entrepreneur (and as a VC), I decided
that the question was a stupid one –
of course they are a threat, but they
also are a potential partner or exit
opportunity. It’s the company’s job
(and my job) to help
identify “white space” that is
missing from what the incumbent does,
move quickly and nimbly to stake out a
market position, and execute better
and in a more compelling way.
The a:c: Can you flag one or a couple
of your portfolio companies that are
killing it and that we should keep our
eyes on?
Brad Feld: Danger, Postini, Datapower,
Finaplex, Impinj, Infinera
Brad Feld: Quova are StillSecure are
two of mine that are really hitting
their stride
Brad Feld: Plenty more (our portfolio
is feeling very good these days) but
these are a handful that feel non-
linear.
The a:c: Last Q: A lot of people
contemplate cashing out of coastal
living but are afraid to lose contact
with the center of business. How has
working out of Boulder and Homer been?
Brad Feld: Boulder is awesome. I
think it’s the greatest city on the
planet. The second best decision in
my life so far has been to move here
(my first was to marry Amy.)
Brad Feld: Homer’s a whole different
story. I work when I’m there since
email, telephone, fax, and Fedex works
there the same way it works here (it
took me ONE day to get DSL installed.)
However, it’s FAR away and I don’t try
to do any local business (in fact –
Amy and I try to stay anonymous up
there – only our neighbors know us,
and then just barely.) But – I have
no trouble staying connected when I’m
there.
The a:c: Great Brad. Thanks a
lot.
View – Mobius Venture Capital
View – Feld Thoughts

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