Welcome to the Flywheel Ventures blog.
Don’t Forget to Think About What Could Go Right!
Back during my days in Silicon Valley, when I was an executive with a startup funded by Kleiner Perkins Caufield & Byers, I got excellent advice one day from Doug Mackenze, the KPCB partner on our board. During a strategy session, Doug said, “Don’t forget to think about what could go right!” Too often we spend all of our time as VCs and entrepreneurs “mitigating risk,” which is great except that sometimes the biggest risk is that you’re not ready when opportunity strikes.
I moved Flywheel Ventures to New Mexico back in 2000 for a variety of reasons, but the principal motivator was simple: Fish Where Everyone Else Isn’t. I thought that New Mexico, in particular, was a dramatically underserved market for venture investing and technology entrepreneurship. Sooner or later, I thought, that tide would turn and, as the saying goes, the boats would start lifting.
It’s been a lot of hard work by thousands of entrepreneurs, service professionals, politicians, investors, and other thought leaders in New Mexico - many of whom have been at it a lot longer than myself or Flywheel. Now, though, it looks like the tide really is coming in - and sure enough, it may be arriving faster than any of us expected. Just read this editorial by the New Mexico Business Weekly today: Albuquerque Is On Fire With Growth and Opportunity.
The late management guru Peter Drucker once said, “The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” Mr. Drucker would surely be impressed by the opportunities for entrepreneurs today in New Mexico.
Time to go fishing!... more »
Albuquerque Named #3 in USA by Kiplinger’s Personal Finance
Another honor is in for Albuquerque, this time being named #3 in its list of 50 smart, vibrant, fun, and affordable places to live by Kiplinger’s Personal Finance magazine, June 2006 edition (the web site isn’t yet updated with this content; thanks to the Duke City Fix blog for being first on my radar screen to catch this honor.)
Las Cruces, NM #2 and Albuquerque #1 on Forbes Best Places for Business and Careers
I previously mentioned that the new Forbes A href=“http://www.forbes.com/2006/05/03/06bestplaces_best-places-for-business_land.html”>“Best Places for Business and Careers” is out, and named Albuquerque #1 in the large metro category. I forgot to mention, however, that in the small metro category, our very own Las Cruces, NM took #2. Almost an out-and-out sweep.. congrats to the entire 505 area code are in order.
Forbes Names Albuquerque #1 in USA for Business
Surely everyone in the 505 area code is already well aware of this most recent honor, but for those of you everywhere else who haven’t yet seen the latest issue of Forbes, Albuquerque was named the #1 city in the USA for Business.
The article focuses heavily on the rapid increase in technology start-up activity, particularly in non-traditional sectors starting to draw more interest from investors, such as aviation, alternative energy, etc. Kudos are due to hundreds of people and organizations who are working together to move New Mexico forward in the global economy!
In the Long Run, We Are All Dead
Jim Anderson of Silicon Valley Bank publishes a must-read weekly investment newsletter which includes commentary on venture capital, currency markets, and his usually witty observations about current economic happenings.
Beside an introductory paragraph that cites one of my favorite quotes from economics - “In the long-term, we are all dead” - this week features an excellent discussion of the issues surrounding globalization of human capital flow, the savings glut and its strange effect on long term interest rates, etc. I discussed some of this in a previous post (”The SuperSizing of VC Funds”) a few weeks ago, but Jim’s treatment is (as usual) both more to the point and more entertaining to read.
Does an MBA vs. MS. vs. other degree matter for entrepreneurs?
I have a BSEE and MSEE from Stanford, and practiced for several years as an engineer and technical manager, primarily in the semiconductor industry. When it came time to move toward the business side of the tech industry as an entrepreneur, and subsequently as a venture capitalist, I weighed the various options of MBA vs. MS degree vs. no degree at all. Brad Feld’s blog post today on the same subject prompted me to reflect on the question.
For myself, I chose to get an MS in Engineering Management at Stanford (it’s now called the Management Science and Engineering department). In part this was because it was more time-efficient (Stanford has a joint graduate program between Electrical Engineering and MS&E). In large part it was the opportunity to work as a research assistant with Tom Byers in building the Stanford Technology Ventures Program. In retrospect, though, the real reason I did it was that it was the path for which I had the most passion, and from which I could see myself being fulfilled for the rest of my career. I just didn’t have the same passion for the MBA route.
Now, several of my colleagues at Flywheel have MBAs and while I rib them about its worth all the time, the truth is that they found it very helpful and fulfilling.... more »
Join us March 24 to celebrate Women of Influence in NM
Dan Primack has a discussion in Private Equity Week Wire today about ongoing controversy in the SBA and claims of gender discrimination. I will leave the veracity of the claims and counter-claims to those closer to the facts. That said, no one can argue that getting more participation by women and minorities in venture capital and entrepreneurial management isn’t of critical importance.
So, it’s with great pride at Flywheel that we invite you to join us this Friday morning, March 24, at the Balloon Fiesta museum in Albuquerque to celebrate the nomination of the ten most prominent “Women of Influence” in the state of New Mexico. All ten are deserving, but our pride is especially strong for two of the ten selected women: our partner Kim Sanchez Rael here at Flywheel, and social entrepreneur Susan Matteucci with Southwest Creations Collaborative. The entire Flywheel team will be attending the breakfast Friday morning, so stop by and congratulate Kim and Susan with us.
The breakfast is 8-9:30am, Friday March 24 2006, and additional information and signup is here.
The SuperSizing of VC Funds
Bill Burnham has a great post on his blog called Are VC Funds Getting Too Big For Their Own Good? in which he also makes reference to an equally good discussion by Peter Rip of Leapfrog Ventures titled Traditional Venture Capital Sure Seems Broken - It’s About Time.
Bill and Peter contribute to an ongoing discussion in the VC industry that has been building since the bubble burst. Not surprisingly, at Flywheel we’ve been espousing similar views for years.
The gist of the problem in my view is that the total amount of liquidity available for the total universe of venture capital startups being funded by the total industry of venture capital firms is just plain too small for the math to work. Others have made the economic argument so I won’t re-iterate it here. Given this, one would expect a rational free market economy to adjust relatively quickly by decreasing the supply of capital available to VC firms, forcing smaller fund sizes, etc. until the problem is resolved. In fact, this started to happen during 2001-2003, but it quickly leveled off. Why?
I believe that the driver of the supply of capital for VC funds from the LP world has to do with a global savings glut being driven in part by increasing trade surpluses in emerging economies.... more »
Entrepreneurs are the Real Heroes
I’ve been going back through my favorite postings by VC bloggers and ran back across a classic by Fred Wilson of Union Square Ventures. Fred posts a weekly “VC Cliche of the Week” discussion which is usually spot-on. This one from last fall concerns the old maxim that “success has a thousand fathers, but failure is an orphan.”
One of the worst offenses in my opinion during the bubble days was the sense that, somehow, VCs were more important to the startup ecosystem than entrepreneurs. VCs were rock stars who took enormous risk and were therefore deserving of magazine covers, etc.
Everyone at Flywheel has been an entrepreneur at some point prior to joining the firm, and we all think this kind of thinking is rubbish. When was the last time a VC put a portfolio company’s payroll on his or her credit cards, or signed a second mortgage on the family home?
Simply put, entrepreneurs are the ones who take the risks, and they are the ones who ultimately deserve the rewards. VCs are more like service providers. The best VCs, of course, are like trusted service providers - the family doctor, high school principal, asset manager, or babysitter who provides more than a simple service-for-hire and who gradually becomes an important part of the family. Our aspiration with each of our Flywheel portfolio entrepreneurs is to earn our way into that trusted inner circle.... more »
Questions Every Employee Should Ask Before Joining a VC-Backed Company
VC blogger David Beisel of Masthead Ventures has a great list of the most important questions that a prospective employee of a venture capital-funded startup should ask before he or she takes the job.
As somebody who’s been on both the employee and the funder side of VC-backed startups, I can attest to the value of this list personally.