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Connectors
People ask me what is the single most important skill/trait of successful venture capitalists. There are certainly many things that you need to be able to do to be good at venture capital.
But one thing that stands out above all others in my mind is the ability to connect people, open doors, get meetings, make good stuff happen.
When I decided to start Flatiron Partners in early 1996 I had spent ten years learning the venture capital business. I knew how to source deals, diligence deals, close deals, manage deals, and exit deals. But I didn’t really have a great network, certainly nowhere close to what I have now.
So I looked for someone who had one. I found Jerry Colonna, who had been editor of Information Week magazine and he knew everyone in the enterprise computing business. He had also spent a year building TechWeb, one of the first commercial websites, and a year at CMG @Ventures, one of the first Internet only venture firms. He had connections like nobody I had ever met.
It was a marriage made in heaven. I knew how to do deals. Jerry knew how to source deals and make good stuff happen once we had made the investment. And until the market broke on us in 2000, we had the golden touch. I am not saying we were the best venture firm or anything like that. But we made a bunch of good investments and I think we really helped them get off the ground and build value. We generated a lot of gains pretty quickly. It was a great time for doing that.
By the time we decided to stop doing new deals at Flatiron at the end of 2000 (we are still managing a number of investments from that era), I had built my network significantly. It seems like everyone and anyone doing stuff in the web business came through our offices at Flatiron Partners at one point during the 1996-2000 time period. I still meet people who tell me they met me during that time. I honestly don’t remember everyone, but I sure remember most of them.
So when Brad and I decided to form Union Square Ventures in the summer of 2003, I knew that connections were going to be key. I brought my network and Brad brought his from 20+ years at AT&T, the last 10 in at AT&T Ventures. The beauty of the partnership is that our networks didn’t have a ton of overlap.
But I wanted to do more. And so when I started blogging I realized that I was starting to build a new set of relationships. My blog was the hub of a social network that touched a lot of people I didn’t know but who could be helpful to our firm and our portfolio companies. But it has surpassed my expectations by an order of magnitude.
These days, I bet I spend half of my time connecting people. I enjoy it. I think I am making everyone's lives better. At least that is what I am trying to do. I don’t introduce someone to someone else if I think there’s no chance the relationship is going to mutually valuable. That’s part of being a good connector. You have to think about the win/win. Make sure it’s going to be good for both parties.
And if I think about the VCs who I want to work with the most, they are also great connectors. And the best entrepreneurs can smell who is a connector and who isn’t.
So if you want to get into the venture capital business, become a connector. Find a job that lets you build your network. Work it hard. Be a connector as often as you can. It pays dividends. Everyday.
UPDATE: Tim O'Reilly pinged me about a comment I made about Techweb in the original version of this post where I said TechWeb was the first commercial website. Tim corrected me that GNN was the first commercial website. I stand corrected and so does this post.
Comments (13) | Posted November 14, 2006 in Venture Capital and Technology
Comments
great read fred
Posted by: simon | Nov 14, 2006 11:31:22 PM
I have a huge believer in this. I'm glad you wrote about it.
Posted by: Bryan Starbuck | Nov 15, 2006 12:04:54 AM
one thing you don't mention, but that you deserve a lot of credit for is the advice you give when you don't have anything to gain, at least not immediately.
that's what makes the difference in any gig, really. everyone is there when they have something to gain.
in the movie "end of days," the devil is portrayed by an investment banker, similarly, VCs have earned a bad rep, somewhat deservedly so... but you are one of the rare people in the VC business that is very unselfish and gracious with pro bono advice... and that puts a different spin on what entrepreneurs (and the media) have come to expect from VCs.
keep it up, please.
thanks
Posted by: ashkan karbasfrooshan | Nov 15, 2006 12:10:25 AM
Problem with being a connector is occasionally you connect the wrong people and lose a friend or a good connection.
A few tips for becoming a connector
1) Go to networking events and get to know the host
2) the key to networking is a) being seen with people of importance and b) repetition, keep running into the same people to build repor
3) use online networking tools such as linkedin and soflow - it's another way to run into people
4) Start a blog, even if it's not read, it is a reference point
5) Do something to define your personality and stand out from the crowd - for me I have an animated website, RichHecker.com but most people don't need something that extreme...simple works
6)When you're at networking events, connect people together, soon everyone will get the picture, eventually you're network will grow as a result as people will think you're a connector even though you may only have 5 good relationships but brought them all together - after a while you will become a connector
Posted by: Rich Hecker | Nov 15, 2006 12:30:27 AM
Fred
Thanks for such a motivating piece.
Networks are organic - they need feeding and watering and take time to grow.
Some people seem to look for too much of an immediate win-win.
I'm in a very Corporate environment and my network both inside and outside my company has taken years to develop and still has a long way to go.
It would be useful to find a really good Web 2.0 personal network/contacts management tool that goes a bit beyond Outlook or a cell phone. I lose too many phones and Outlook is still not really mobile enough.
Posted by: Jim Berridge | Nov 15, 2006 3:28:10 AM
I don't think we've ever met, Fred, though I feel like we have. Must be the blog -- makes me feel like I know you. :-)
I have met Jerry, though (at an Internet Summit in SoCal back in the day), and I definitely remember him as a friendly guy who laughed a lot. I liked him instantly.
This is a really great post. Being a connector is such an important trait in this business, and it amazes me how many people don't understand it or work at it. It's really their loss. I'm not a VC, but I know many and stay in touch regularly -- doing, well, now that I think about it, mostly "connecting" stuff.
Connecting is much more about making one-to-one contact than it is about online tools (with all due respect to LinkedIn, et al). It's about giving, helping, showing up, continually trying to advance the collective knowledge of the individuals in one's network. Without necessarily expecting anything in return, except maybe that the other guy will throw you a tip someday, or a helpful word of advice or support when it's needed. It's amazing -- it's so simple, and it definitely can be catching. Good connectors naturally teach other people to do it without even knowing it.
Thanks for sharing this story.
cheers,
Graeme
Posted by: Graeme Thickins | Nov 15, 2006 7:32:25 AM
"You have to think about the win/win. Make sure it's going to be good for both parties."
If it's good for both parties, and good for the connector, isn't that a "win/win/win"? ;)
(For fans of The Office)
Posted by: Jarid | Nov 15, 2006 10:38:50 AM
Too often, during my own company's startup phase, we had enough sources of capital (friends, family, self) but I had to keep explaining to everyone (parents included) why I wanted to get funded by a VC also ... not for the actual cash (seriously, you can get cheap loans too) but for the networks and door-opening power they bring to the team.
Thanks for putting this in words.
Posted by: Vinit | Nov 15, 2006 6:09:24 PM
sweet
Posted by: howard lindzon | Nov 15, 2006 7:00:04 PM
Great post! I totally agree that blogging is a super networking tool (and, on a related note, I think MyBlogLog is bringing some social networking aspects to blogging that will make blogging an even better networking tool).
Posted by: Drew Meyers | Nov 15, 2006 7:37:17 PM
Fred, great foundation post. I alluded to this concept in my post on Web 2.0 (http://www.informationarbitrage.com/2006/11/what_i_learned_.html), to which you just brought additional clarity and depth. Thanks.
Posted by: Roger | Nov 16, 2006 11:03:24 AM
Lack of quality Startup / VC connections is a major reason why I'm leaving Phoenix (after being here for two years) for Silicon Valley. (NYC would be great, too =))
But just going to networking events is great (we have Refresh Phoenix out here, it's in other cities as well).
This may be slightly off-topic, but perhaps you could address it sometime, Fred:
Is it still always advisable to approach a VC firm with a solid connection? (you hear that a lot)
Sequoia, for one, mentions specifically on their site that they've worked with a lot of entrepreneurs that were not referred through a warm known connection of the VC firm.
Any thoughts?
Posted by: Shanti Braford | Nov 21, 2006 9:01:55 AM
Your "Connectors" post struck a cord. I am building the most reliable online printing company by taking a brick and mortar approach to what is a facelsss transaction. Growing a start up minus the VC funding is based on connecting clients and stellar recommendations. Look forward to reading more posts.
Posted by: Jenn Russo | Nov 21, 2006 10:16:24 PM
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