What’s Next?

In my last Musing, I announced the shutting down of Acuitive effective the end of this year.  Acuitive has been my life for the past 10 years.  So now I need to ask myself – what’s next?

When I formed Acuitive, I had a strong desire for flexibility to work on what I desired and with whom I desired as much as possible.  I wanted to create a company with a philosophy and structure that suited my individual needs.  Luckily for me, it also suited the needs of some others who really made it more fun and will be friends for life.

I don’t necessarily feel the need to create a company again, but I do feel the need to again create a work life for myself that suits my individual needs. Several things are the same now as they were ten years ago:

• I love the energy, low BS level, and high stake gamble of start-ups.
• The main value I bring to the table is based on the experience I have gained over the past 25 years of working in all aspects of the network infrastructure ecosystem.
• I’m too lazy to take on operational jobs.
• I can’t stand working with jerks.

But several important things are different now than they were 10 years ago: 

• I now have a family
  • I want to be fair to them by spending a lot of time with them.
  • I want to be fair to them by not spending too much time with them
• As opposed to 1996, when I perceived a lot of promise – practically a renaissance – for start-ups in the network infrastructure space, I am now quite pessimistic about the prospects for new start-ups in that space
• The VC community is no longer a mystery to me.  I now understand the different types, the variations on the theme in terms of how they operate, and much of the good/bad/ugly realities. 

So, what’s a boy to do?

To suit my individual needs and to provide a bridge from the past into the future, I’ve decided to split my energies two ways for the next couple of years:

1. In recognition of the state-of-the-industry in networking, which is more about consolidation than innovation, I plan to do some projects with public companies, mostly related to strategy and M&A implications of such strategy.  This will most likely include acquisitions, roll-ups, mergers, privatization, etc.  I’m highly un-qualified to be an Investment Banker, so my contribution will be more as an Investment Thinker, i.e. when is 1+1 > 2?
2. To continue to serve my passion for start-ups, I will become a Venture Partner at the Woodside Fund (www.woodsidefund.com), as well as continue to listen to offers to serve interesting private companies as an outside Board Member. 

By engaging with start-ups at the Board level and from the VC perspective, rather than as a strategic consultant, I hope to be able to interact with companies both with-in my experiential space as well as (and more importantly to me) in markets and technology areas that are new to me.  Out of this, I hope to derive the next area that I might want to plunge into and become dangerous in.

I’ve known and worked with the team at the Woodside Fund for years.  I decided to work with them for several important reasons:

• They are early stage investors, which is my preference.  You can have more influence on a company at this stage and my skills are best suited to helping companies at this stage.
• They are not prone to the investment fad-of-the-moment. They never invested in .coms, optical networking companies, or 1^st generation ASPs, for example, in spite of seeing hundreds of business plans in those spaces.
• The market areas they look at and invest in are a good combination of the familiar and the unfamiliar to me.   I can add a lot of value to the familiar and I can learn a lot from the unfamiliar. 
• They are about the size of a fund that I like in that:
  • They are big enough to make sizable Series A and B investments in companies with a wide range of capital requirements, and still meet their internal ownership percentage targets.
  • They are small enough such that each investment decision is carefully considered.  There is no underlying drive to put money to work no matter what the quality of the opportunity. As a result, each investment is considered important to the portfolio and therefore gets appropriate attention.
  • The number of general partners is small enough to work with but large enough to bring diversity of thought and sufficient bandwidth
• Their style is similar to mine – they study opportunities carefully before committing, but once they commit they do it wholly and deeply.  (As an example of this philosophy on my side - I didn’t get married until I was 42 years old and now seven years later I have three kids!). 
• They understand the roller coasters that start-ups inevitably are.
  • When things are going well, they are asking the tough questions to make sure that euphoria isn’t replacing pragmatism with-in the company.
  • When things are going badly (which they always do at some point), I’ve noticed that the Woodside partners are always the last ones standing on the Board trying to work the problems with the team as best they can.
• They aren’t jerks.

I think it’s important to note that a Venture Partner is different from a General Partner.  A General Partner is a core member of the partnership team.  GPs commit to entire fund cycles (generally 10 years or so) and for purposes of continuity usually commit for several successive fund cycles.  In short, a GP has made a career decision to be a venture capitalist.

The term Venture Partner means different things at different firms.  But one thing that is consistent across all firms is that it means specifically that you aren’t a GP.  At the Woodside Fund, being a VP means that you are a non-voting but influential supplement to the GPs.  It means that I’ll be at the partnership meetings where strategy and individual investment opportunities are discussed so I can put my two cents in.  I’ll be helping out with specific portfolio companies.  I’ll be participating in due diligence for some new investment opportunities.  And, if an opportunity comes my way that I feel particularly strongly about, I’ll lead the due diligence process, champion the investment decision with-in the partnership, and undoubtedly join the Board as one of the Woodside representatives post-investment.  

Overall I expect that being a Venture Partner will feel like kind of a hybrid between being a VC and Acuitive.  It should suit me pretty well.  I don’t really want to make a career out of being a venture capitalist, but I’m excited about being peripherally associated with the industry.  We’ll see how it goes.  If it doesn’t work out I can always spend more time with my kids or my fantasy baseball team. 

(volume 9, number 2)