YOU'VE EARNED an M.B.A., or the equivalent in real-world experience. For
your next daring career move, you plan to do a triple gainer right into t=
he
deep end of the new economy: starting your own company.
Hey, isn't everybody? And making millions to boot? At some of the nation'=
s
top business schools, more graduates are eschewing traditional paths in
management consulting, investment banking and corporate management for a
shot at Internet riches. Some are even dropping out, fearful their
opportunity will pass in a fast-moving market.
Do you have what it takes to stay afloat in this whirlpool? Ask the
companies that fund these projects. Venture capitalists are the de facto
executive-recruitment arm of the new economy. "It's about 50% of what I d=
o,"
says Andrew Weissman, a senior vice president at Dawntreader LP, a New Yo=
rk
venture firm.
To have a chance at success, venture capitalists say, Internet entreprene=
urs
need a clear, long-term vision of the market niche they're pursuing, and =
a
short-term willingness to revise that vision on a moment's notice. They m=
ust
be high in self-confidence, but low enough in ego to surround themselves
with high-powered talent and even to step aside, if it's in the company's
best interest. And they must be what the venture capitalists call "people
magnets," who can attract critically needed talent in a tight market.
Another key trait: agility. That's also linked to ego. No matter how good
the idea or how much research they've done, entrepreneurs can't become to=
o
enamored of their business plan, which, in the Internet world, can change=
at
any moment. "The business plan is a living, breathing document that's goi=
ng
to change," Mr. Weissman says. "That's tough to accept for a lot of peopl=
e."
Mitch Mumma, general partner of Intersouth Partners, a venture-capital fi=
rm
in Research Triangle Park, N.C., prefers people with a sales and marketin=
g
bent and some experience selling to similar customers, so they will
"understand the sales cycle and the decision-making process." INTERNET
COMPANIES such as Yahoo! and Amazon.com succeeded by developing brand nam=
es,
not innovative technology, Mr. Mumma says. "Forging strategic partnership=
s,
creating a revenue model, these are all sales and marketing skills," he
concludes. He also checks their egos by asking if they want to be preside=
nt
for life. "If the answer is unequivocally yes, we're probably not going t=
o
do the deal," he says. Does that mean he would have passed on Microsoft? =
"I
guess I would have been scared of Bill Gates," he confesses. But Mr. Gate=
s
is an exception. "Our experience is, the person who starts the company is=
n't
the one who ends up leading it," Mr. Mumma says. That doesn't mean founde=
rs
should be detached. Peter Ziebelman, a partner in San Francisco's 21st
Century Internet Investment Partners, says, "We're looking for the guy wh=
o
is waking up at night thinking about his company," he says. The firm back=
ed
a 24-year-old looking to sell textbooks to college students online, who s=
aid
he wanted to learn how to run the business, rather than let someone else
take over. Mr. Ziebelman felt he had the right personality and attitude t=
o
do that. "Our assessment is, he's a competitor," he says. One indication:
the entrepreneur's history as a competitive bike racer.
Nobody wants a control freak. Backers want leaders who will surround
themselves with qualified people and then let them do their jobs. "Some
entrepreneurs aren't willing to build a team of people around them where
everyone is better than the entrepreneur at a given thing," Mr. Mumma say=
s.
Nearly all the start-ups backed by these venture capitalists had to show
their agility by altering course in midstream. Vicinity, a 21st
Century-backed company, thought customers would pay for maps and driving
directions online. Now, Mr. Ziebelman says, it provides its map service t=
o I
nternet portal providers and splits advertising revenue.
ANOTHER COMPANY the firm backed, Avantgo, wanted to sell software to
transfer corporate Web data to hand-held devices. But its best customers,
media companies, didn't want to mess with the software -- they wanted the
company to provide the service instead. "They had to build an entirely ne=
w
business," Mr. Ziebelman says. Beyond that, the entrepreneur must be capa=
ble
of attracting the best technical people. That was one of the traits that
impressed Mr. Mumma when he first met Chris Evans at an entrepreneurial
conference. Mr. Evans, who proposed Accipiter, an Internet advertising fi=
rm
that was eventually sold for what Mr. Mumma jokingly terms an "unreasonab=
le
amount of money," needed experienced people who had built
industrial-strength software. "He knew where they were and they knew him,=
"
says Mr. Mumma. Those connections were invaluable in a market marked by
talent shortages and heavy competition. Mr. Ziebelman says he looks for
"accelerators" -- skills that help the entrepreneur get a product or serv=
ice
out at warp speed for the Internet market. "Are they a people magnet that
can attract top people?" he asks. "Are they familiar enough with the
technology so they can be up and running quickly? And do they have the
marketing prowess so they can know where the daylight is in the market?"
Tushar J. Mehta
email: [email protected]