VC Cliche of the Week

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VC Cliche of the Week

I may change the title of this running series to VC Phrase of the Week since not all of them are cliches in the classic sense. And this week's is certainly not a cliche, but its something I heard a number of years ago and have found myself saying a lot over the years since then.

The origin of this saying isn't clear, but was attributed to Bill Kaiser of Greylock when I heard it first.

It's about a VC's "radar" and it goes like this:

When I first hear of a company I ignore it, when I hear about them a second time I write the name down, when I hear about them a third time, I get them in for a meeting.

I am sure I've bastardized this quote and I honestly don't know if it originated with Bill, but it does describe one important way we track companies. VCs all have areas they focus on, in our case its applied technology services. We all have ways we get a flow of information about new companies, technologies, and people working in our target sectors. And we need a way to determine what is "noise" and what is "signal".

There are a host of techniques we use. Our network of trusted relationships is the single best filter we have.

But when we hear about a new company from three different trusted sources, in particular if it happens within a short period of time, its bound to get our attention.

So if you want to get on a VC's radar screen, figure out how to get people, particularly people that are trusted in VC networks, talking about you and your company.

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Posted January 4, 2006 in Venture Capital and Technology

Comments

The blogsphere must be severely affecting this approach. Lots of noise.

Posted by: Cem Sertoglu | Jan 4, 2006 9:55:26 AM

re: the blogosphere...

I think the key word here is trusted sources...

Posted by: Er | Jan 4, 2006 10:39:02 AM

Fred, this line in your post intrigued me:

"We all have ways we get a flow of information about new companies, technologies, and people working in our target sectors. And we need a way to determine what is "noise" and what is "signal"."

This may seem crazy, but have you ever thought of hiring a product manager to do this? From where I am, the job of a product manager is to listen to the market and provide the business with requirements to make the product the best it can be. In a VC scenario, the product is the investment, and the market is the group of companies in your chosen sector.

This type of a role could provide value by taking the objectives / vision / mission of investing in the sector, do what they do best (listen to the market), and work on "requirements" with the VC to ensure the "product" as high-quality as possible.

I dunno -- may sound really dumb, and if so, chalk it up to me not having had my morning coffee yet.

Posted by: Adam | Jan 4, 2006 11:17:48 AM

As soon as I read "three trusted sources" a mental image of three lemmings going off a cliff popped into my head.

Posted by: Jeffrey McManus | Jan 5, 2006 12:22:33 AM

i don't know about this. sounds like herd mentality. to really hit a home run, one needs to get to the company before the chatter is big. i'd imagine that following this approach, you miss out on hundreds of billion dollar companies.

there are too many cases of companies that act very stealthy, don't whore themselves out the v.c. community, and end up being major players.

Posted by: a person | Jan 5, 2006 2:12:27 AM

A VC

Musings of a VC in NYC