VentureBlog

Patience is a Virtue!

My grandmother used to tell me, my brother and sister that “patience is a virtue.” Of course, she used to say it while we were playing gin rummy and she was taking too long to drop a card. But her point was not lost on the Hornik siblings. My grandmother was not willing to rush something for the sake of moving on. She believed in being thoughtful and deliberate and making the best possible choices no matter how long it took. Thanks for the lesson, grandma! Duly noted.
 
Today we announced that Rakuten has entered into an agreement to purchase Ebates for a billion dollars. I have been extolling the virtues of Ebates for the last 14 years, since August first invested in the company and I began attending board meetings. Ebates is an amazing company built by amazing people and I could not be happier to have been along for this decade and a half long ride. It was worth every minute.
 
Ebates is a platform for retailers to acquire customers through cash rebates and for consumers to save money on purchases from some of their favorite online stores. Ebates is a win win. And, as a result, it has been growing steadily for the last 16 years. We first invested in Ebates in March of 2000 (along side Canaan Partners). By that time, Ebates’ two founders had already been hard at work building the company for a couple of years (Ebates was initially incubated at Foundation Capital). Ebates’ founders, Paul Wasserman and Alessandro Isolani, were attorneys who decided to leave the wonderful world of criminal law to start a dot com. There was a lot of that going on at the time. The only difference between most of those companies and Ebates is that when the bubble burst, Paul and Sandro had the good sense to hunker down and focus on not running out of money. Which is precisely what they did. They built a cash-positive business that continued to grow and provide real value to their customers.
 
Over the better part of the 2000’s, Ebates continued to grow its footprint. An increasingly large number of consumers were collecting cash back from an ever-larger range of online stores. What’s more, not only did Ebates hang onto the consumers it signed up in the early 2000’s, those consumers were spending more than ever before. With double digit millions in the bank and a decade of growth behind them, the founders decided to hand over the reigns of the company to an expert marketer.
 
We had the amazing good fortune to attract Kevin Johnson to the company in 2008. Having spent time as an executive at the likes of Netcentives, Digital Impact and Acxiom, Kevin was the perfect guy to take the reigns. He focused the company on providing real, measurable value for e-commerce partners, which in turn created greater value for consumers, which in turn created greater value for e-commerce partners, which in turn … you get the point. Kevin also put his marketing hat on and built an acquisition machine that has driven massive growth for the company. Along the way, Kevin attracted one of the best teams we’ve had the opportunity to work with at August Capital.
 
In 2012, we decided to double down on the Ebates team. Ebates had a number of great acquisition opportunities before them and they decided to raise some additional capital to take advantage of their strong position in the market. Spearheaded by my partners Eric Carlborg and Tripp Jones, we led a late stage financing for the company (along side Canaan and Foundation again) to enable those acquisitions and drive growth, and in the process August became Ebates' largest shareholder. We were honored to lead that charge and emerged the largest shareholders in the company. Kevin proceeded to put that capital to good use, purchasing fatwallet, Extrabux, Pushpins, OneReceipt, AnyCoupons and BFAds, and launching Ebates Canada, Ebates China and Ebates Korea. And with each purchase and each launch, Ebates has become larger and more valuable. It has been an amazing journey to be a part of.
 
Great entrepreneurs have the ability to choose with whom they want to work. And each entrepreneur applies a different set of criteria when making that decision. I have always told entrepreneurs to choose wisely because taking an investment is a little bit like a marriage. That has never been clearer than with Ebates. This summer I celebrated my 20th wedding anniversary and my 14th Ebates anniversary. While Rakuten has whisked Ebates away from me, I am incredibly grateful for the time I have spent with Paul, Sandro, Kevin and the entire Ebates team. I’ll miss you guys. Congratulations!

Want to get funded? Get an introduction!

The other day when I was giving a talk I was asked the simplest of simple questions -- "how do you get funded by a VC?"  I thought about it and could only come up with one, for sure, piece of advice.  Get introduced!  I told the audience that in my 13 years in the venture business I had never once funded a company that hadn't been introduced to me by someone I knew and trusted. 

I suspect that in my 13 years years or so in the venture business I have received somewhere on the order of 5,000 executive summaries directly from founders.  And, as I told the audience, I didn't reject the businesses out of hand.  I read all 5,000 executive summaries.  I met with some of those entrepreneurs too.  Yet, I didn't fund a single one of them. 

A member of the audience asked if perhaps I was biased against entrepreneurs I didn't know, or who didn't know someone I knew.  It was certainly a reasonable question.  I thought about it and responded that I thought the reason I hadn't invested in those companies was that the founders were not resourceful enough to find a connection to me. 

But it got me thinking.  Maybe I was biased.  Maybe I was missing out on some great businesses because I wasn't giving them a fair shot.  I decided to see if I was the only one.  I started asking my fellow VCs if they had funded any companies that had come to them un-introduced.  And it turned out that the answer was "no."  No one I asked had funded a company without some sort of introduction.  While they all agreed that it wasn't out of the question, and most of them still read unsolicited executive summaries (as do I), not one VC had funded an un-introduced business.  Not one of them.

So how do you get funded?  Step one -- get an introduction.  Find someone you know who can introduce you to the person you want to pitch.  The closer your relationship with the person making the introduction, the better.  And the closer that person's relationship with the VC the better.  I've written about this before and described it as "borrowed credibility."  If you are being introduced by someone who has credibility with the VC, and you have credibility with the person making the introduction, you will have credibility with the VC. 

I learned about this in elementary school math class -- it is called the transitive property:

        if

    A has credibility with B
 
        and

    B has credibility with C

        then

    A has credibility with C

And as a corollary to the traditional transitive property, (1) the stronger the credibility between A and B, and (2) the stronger the credibility between B and C, (3) the stronger the credibility between A and C.

Needless to say, getting introduced to a VC will not, in and of itself, get you funded.  I've said "no" to many more entrepreneurs who've been introduced to me over the years than I have to entrepreneurs who have come un-introduced.  But I've said "yes" to infinitely more who've come introduced to me than not.  If the sample of VC's with whom I've spoken is any indication, getting an introduction to a VC is necessary but not sufficient to get funded.

I know that I'm starting to sound like a broken record here on VentureBlog.  And, yet, I continue to get unsolicited executive summaries every day.  Which means one of two things:  either entrepreneurs haven't taken my advice to heart or they aren't reading VentureBlog.  Since I can't imagine the latter is true, it must be that I have been insufficiently persuasive on the topic.  So I've given it one more try.  Let's hope this time will do the trick. 

If you want to pitch me, get an introduction.  Please. 

Enough said.  I hope.

Success Breeds Success

Last week I received a fantastic email.  The email was from the CEO of one of my portfolio companies announcing the promotion of his administrative assistant.  After three years of doing great work for the CEO, this assistant was promoted into a role in the marketing department.  As much as the CEO regretted losing such a fantastic assistant, he was truly thrilled to see her progress in her career. 

The email reminded me of yet another reason I think that startups are so special.  Startups can provide amazing opportunities for career advancement.  In more established businesses, it is often hard to find room to take on additional responsibilities; and harder still to find space in the organization to progress with one's career.  Startups, on the other hand, often grow at such a pace that not only are employees able to take on additional responsibilities, they are required to.  As a result, smart, hard working individuals -- like the administrative assistant above -- will have doors open in front of them.  No need to break down doors in the land of the fast-growing startup.  Just walk on through.

True, this upward mobility in startups is also a bit of a double edged sword.  Startups are brutal meritocracies and employees who fail to meet the expectations of the organization can rather find themselves heading out the door.  But those who outperform are given ever more responsibility and the opportunity to march up the corporate ladder.

Often times in successful startups, the lions share of the glory goes to the founders and CEO.  And they certainly are deserving of praise.  But the most successful businesses are an amalgamation of wonderful people at all levels of the organization.  And as those businesses thrive, they provide opportunities for growth across the organization, which further energizes the company, spurring on more growth.  The end result is a culture of advancement and success that can not be beaten. 

As I got the note from my portfolio company CEO, It was just another reminder of what success looks like.  Success is about opportunity.  And success breeds success.  I could not be happier for the company.  But, most importantly, I could not be happier for such a wonderful member of the team.  Congratulations Jamie!

Pick Your Angel Investors Wisely

A great deal has been written about angel investing in recent years. Angel investing has become the sport of choice for many successful entrepreneurs in Silicon Valley (e.g., Dave Morin, Chris Michel, Ariel Poler, etc.). What's more, it has spawned a whole new class of venture funds -- once called Super Angels, now called Micro VCs (e.g., First Round Capital, True Ventures, SoftTech VC, etc.). And now traditional venture investors (e.g., Greylock Capital, Andreessen Horowitz, CRV, etc.) have created programs to invest small amounts of money in large numbers of startups. Unfortunately, as seed investing moves from a boutique practice to more mass market, its value is diminished dramatically.

As a general matter, I think that more seed funding is a great thing. It is certainly beneficial -- often times essential -- for small companies to raise a little bit of money to help validate an idea or market. But historically one of the most valuable things about angel investment was that it was accompanied by an angel. That angel wouldn't just invest in the company, he or she would serve as an indispensable advisor to the company as well. Not only did you get money to propel your business forward, you also got the help of someone who had run the startup gauntlet before you.

Regrettably, what once was a boutique business has in many instances become mass market. While there are some angels and Micro VCs can provide meaningful time and attention to their entrepreneurs, there are a number of folks out there who think that angel investing is a volume business. Needless to say, as the number of companies financed by any given investor grows, the amount of help that investor can give to each company diminishes proportionally. These investments become more about the placing of bets than they do about helping entrepreneurs succeed.

Sure, some of these stock pickers will make some good bets and even make some money. But it won't be any thanks to them. As a general matter, early stage entrepreneurs don't just need money, they need help and advice. And if help is no longer part of what you get from your seed investors, I believe the likely success of those investments will diminish.

Worse yet, taking seed investment from traditional venture investors can be counter-productive. It is impossible to imagine how a VC firm that is investing in dozens of early stage startups can find the time to be helpful while also working with their more traditional portfolio. You may get a little of their money and a little of their reputation, but you will get it at the expense of any real help in building your business.

So why have VC funds started investing in seed rounds? They do it because they think it gives them an option on future financings. By putting a little bit of money into a company's seed round, they get a seat at the table. And from that seat, in theory, they can keep track of how well it is going and preemptively finance the "best" companies that they've seed funded. The only problem with the theory is that these traditional VCs don't have the time or capacity to actually keep track of all the companies they've seed funded. So they aren't capable of being pre-emptive. Instead, they expect an early look at any Series A financing, despite the fact that they haven't earned the right by actually being helpful to the companies they have seeded.

More importantly, traditional VCs are incapable of providing one of the most important and valuable angel services -- introductions to future investors. As is becoming increasingly clear, investment is the life blood of the startup world. The problem that companies seed funded by traditional VCs have is that there is a natural assumption that any company that does not receive follow-on funding from its earlier VC investor is fundamentally broken. There is virtually nothing that a VC can say in his or her introduction to other investors that won't raise eyebrows. So taking angel money from a traditional venture investor is a bet on that firm funding your Series A. Unfortunately, if that doesn't work out, you're back is up against the wall. [1]

It is true that money is fungible. But investors are not. The choices you make when raising seed capital can have a meaningful impact on the long-term success of your startup. So find investors who will bring you value beyond the dollars in your bank account. Find investors with the time and inclination to help you. Find investors who will increase your chances of raising additional capital, not diminish those chances. Great angel investors are invaluable. So pick your partners well.

 

[1] On the rare occasion that my partners and I seed fund a startup, we work hard to alleviate the concerns I've described above. We only invest in a very small number of seed stage opportunities and we commit meaningful time and attention to those businesses, often going on the board (for example, I was the earliest investor in the likes of WePay and Splunk). Moreover, we take a substantial lead role in the seed financing, so there is no negative presumption when we introduce the company to our VC friends for the next round of financing. We will invest along side the new VC, but have no need to lead the Series A ourselves. Needless to say, this approach won't scale to dozens of startups. But it will increase the likelihood that those business we seed fund are successful.

The Value of Fundraising

In 2012 my partners and I raised our sixth fund, aptly named August VI.  August VI is a $550 Million fund, with $300 Million focused on early stage opportunities and $250 Million designated for what we call "Special Opportunities" (spinouts, take private transactions, later stage opportunities, etc.).  As we have done since 1995, we will continue to pursue companies in the information technology space broadly (software, hardware, communications, Web, etc.).  The fundraising behind us, we can now focus on finding great new companies in which to invest.  But as we start the new year, I want to take a minute to reflect on the fundraising process.

VCs don't like to talk about our own fundraising.  We like to pretend that the money magically appears in our bank accounts.  But that's not quite true.  Venture Capitalists are investors, and the vast majority of the money we invest is not our own.  Where does the money come from?  We go out and raise it -- from foundations and endowments and fund of funds (who raise it from other investors).

Our fundraising process is not so different from that of the entrepreneurs who pitch us.  We approach investors who can write big checks and we convince them that tens of millions of dollars invested today might turn into hundreds of millions of dollars tomorrow.  We convince them to invest in our funds despite the long odds.  We convince them to invest in our funds despite the innumerable alternatives they have.  We convince them to invest in us despite the countless other investors who are promising outsized returns on a daily basis.  And if we are successful in convincing these financiers to invest in our funds, we'll spend the next decade or more working hard to produce great returns.

I have always felt that the fundraising process is an important part of company building -- not just as a necessary evil, but as an intrinsically valuable exercise.  Having just raised my own "round of funding," I am more convinced than ever.  The fundraising process acts as a catalyst in a number of valuable ways that are worth exploring:

• The fundraising process forces you to better define and defend your business strategy.  While an executive summary may allow you to speak in generalities, face to face fundraising requires specificity.  A defensible strategy is not something you can fake.  Potential investors will dig into your assumptions in ways that you may or may not have considered.  No matter what the outcome, the conversation is a valuable one.

• The fundraising process allows you to hone your strategy and your pitch.  Great entrepreneurs (when they have the luxury of doing so) will often pitch second tier investors first, in order to practice their delivery.  The pitch will get better with time and practice, as will the strategy.  And it isn't just rhetoric.  You'll learn a great deal about your business defending it to a bunch of smart people.

• The fundraising process will disabuse you of your misconceptions.  Entrepreneurs and VCs are invariably optimists.  And, thus, they are prone to drinking their own kool-aid.  Potential investors do not share your malady.  They will work hard to determine if your kool-aid is in fact delicious, and if it is not, they will let you know.  Now not everyone's taste buds are the same.  Your kool-aid may not be delicious to everyone.  But if it is delicious to no one, it is time to reassess. 

• The fundraising process will provide you with valuable market intelligence.  Think what you may of investors (whether they are VCs or the folks investing in VCs), they hear a lot of pitches.  And all of those pitches can provide beneficial context for your own fundraising process (as well as your business in general).  It is an investors job to compare your business with all other opportunities that come before them and to determine the relative value of what you are selling.  If an investor has seen something better, it is invaluable for you to hear what it is and why (even if you ultimately think they're wrong).

• The fundraising process will help you determine if you have the right team.  For venture capitalists this is extremely important because, in many ways, a VC fund is nothing more than the aggregation of that fund's partners.  But the same holds true for startups.  Investors, by and large, are betting on teams, not ideas or markets.  If you don't have a credible team, potential investors will let you know.

I am grateful to have had the opportunity to pitch August Capital to some of the best Limited Partners in the country.  I am certain that their feedback has made us better, more thoughtful, investors.  And, in turn, we should be able to deliver even better returns for them.  The same is assuredly true of every company out pitching today.  Don't think of fundraising as a burden.  Think of it as an opportunity.  And, in return, you will get far more out of the process than just money.

Investing is About Passion

Entrepreneurship is about passion. Great entrepreneurs are not driven by a simple desire to make money. They are driven by a need to change the world. They may change the world by building a better operating system or a better search engine or a better social network. But whatever it is they are building, great entrepreneurs are driven by passion.

The same is true of Venture Capitalists. It is not enough to simply hope to make a buck. The best Venture Capitalists fund companies about which they are truly passionate. Building great companies takes a long time. And it is never a straight path. But a shared desire to create something great -- something important -- will carry entrepreneurs and VCs alike through the tough times. Anything shy of passion will fade away, leaving the entrepreneur or the Venture Investor vulnerable to fatigue. Passion, however, will transcend the challenges.

I'm often asked about my decision-making process. There are lots of factors that go into any investment decision -- team, market, product -- but in the end it is all about passion. Am I passionate about the company or not? Am I passionate about the team? Am I passionate about what they're building? Am I passionate about the problem they're trying to solve?

I tell entrepreneurs all the time that a first meeting isn't about convincing a VC to invest. The first meeting is just about getting a Venture Capitalist excited about what you are doing. Passion is infectious. My rule of thumb is that if I'm not more excited about what you're building at the end of the meeting than I was when the meeting started, I'm probably not going to fund your company.

The best test of my enthusiasm for you and your company comes when I go to bed the evening you pitched me. I have learned that the companies about which I'm the most passionate take over my subconscious. I'm serious about that. They literally occupy my brain. When I lie down to go to sleep that evening, I won't think about my schedule tomorrow or my daughter's soccer game or the latest episode of Girls, I will be preoccupied with your company. It doesn't happen often. But when it does, it is really exciting.

Falling in love with an entrepreneur and his or her company is a building process. The more excited I am, the more I think about you and your business. The more I think about you and your business, the more I dig in and learn about your product. The more I dig in and learn about your product, the more I focus on your market. The more I focus on your market, the more I contemplate your competition. The more I contemplate your competition, the more I reflect upon your opportunity. The more I reflect upon your opportunity, the more excited I get about you and your company. And, of course, the more excited I get about you and your company, the more I find myself lying in bed thinking about how you're going to change the world.

If I'm passionate enough about your business to roll around at night thinking about the opportunities and challenges that lie ahead of you, you can bet that I'll be advocating an investment in your company. That kind of zeal is rare, but it is unbelievably exciting. It is the very reason that I so love the venture business. And the very reason that I so love great entrepreneurs. I consider myself incredibly lucky to work in an industry that is, above all else, powered by passion.

The Temptation of Data

There is nothing investors like more than data. We love it. It gives us something to grab onto. It gives us something to compare. It gives us the sense that we are bringing a scientific approach to an otherwise amorphous evaluation process. We look at data when assessing investments. And we look at data to benchmark the progress of those companies in which we've invested. We love data.

But there's a danger. In this era of big data, we are collecting more and more information about the operations of our companies; every click, every process, every iteration, ever jump page -- conversion, virality, performance, uptime. If we aren't careful, board meetings will become one long statistical report.

Worse yet, there is a temptation to ask for ever more data. I can't tell you how many times I've been at a board meeting and heard something like "It's great to know the cost per click, but can you also report the conversion numbers by channel?" or "It's great to know daily active users, but can you also report repeat visits by cohort?" Every piece of data reported seems to trigger the desire in investors for yet another piece of data.

As tempting as it may be to ask for that perfect nugget of information from your portfolio CEOs, I think investors are making a mistake when they dictate what is reported by a company. Few things are more frustrating to an executive and, I would argue, few things are a bigger waste of time. I have a basic philosophy about reporting -- if it isn't something a company collects to measure its own business, I don't want to hear about it at a board meeting.

That isn't to say that investors should have no say in what is measured and reported. We absolutely should suggest the things we believe are important. But, in the end, the company should be run by its CEO, not its board. If the CEO doesn't believe a piece of data is worth gathering or reporting, it would be foolish for an investor to insist to the contrary.

There is no question that the proliferation of data has had a massively positive impact on company building. Data is a fantastic tool for management and investors alike. But it is a slippery slope. One could easily fill every waking moment between board meetings gathering information for the next board meeting. Data is only as valuable as the insights it illuminates and finding those insights requires careful curation. As tempting as it may be for investors to manage reporting with a heavy hand, data should be the domain of a company and its management, not its investors. As the saying goes, "if you love something, set it free" -- when it comes to the data with which we investors are so smitten, these are valuable words to live by.

The Wisdom of Jeff Bezos, Part 2

As I mentioned here last week, I was truly taken by Jeff Bezos' thoughtfulness and wisdom in his recent Wired magazine interview. He touched on a number of interesting topics in the interview. I have decided to take up a few of them here at VentureBlog. Last week I talked about the power of taking a long term view of your business. This week's topic is related.

In the Wired interview, Bezos is asked about Eric Schmidt's observation that there are now only four tech companies that matter -- Google, Apple, Facebook and Amazon. Schmidt calls them the Four Horsemen of Technology. Bezos could have jumped at the opportunity and taken his place atop the tech pecking order along side the other three. But Jeff has seen two decades worth of ups and downs and knows better than to take the bait. To his mind, there are lots of great tech companies working hard to innovate, but the only way to stay on top is to work harder and smarter than everyone else.

Jeff has a great quote about the importance of being humble in the face of success -- he says, "A company shouldn't get addicted to being shiny, because shiny doesn't last. You really want something that's much deeper-keeled." Boy is he right on this one. Being the sweetheart of the tech press doesn't make your company successful. Love in the tech world is stunningly fickle. The shine will wear off. But if you do have something "deeper-keeled" -- differentiated technology, excellent execution, customer loyalty -- you will be able to continue to motivate your employees, engage your customers, satisfy Wall Street, and flourish as a business.

Jeff has one additional thought when it comes to the shine wearing off on great companies. He clearly believes that there is value in succeeding in the face of adversity. He points out that "there are companies that haven't gone through tough times, so they're not really tested." Jeff doesn't use this as an opportunity to point fingers. That's not the sort of guy he is. But his point of view is clear -- that which doesn't kill you, makes you stronger. Jeff experienced the Internet downturn at the end of the 1990's and lived to tell the tale. Many of the folks building Web businesses today weren't around then. They weren't around to experience the apocalypse. They weren't around to see the bottom fall out of virtually all Web businesses. They weren't around to see talent and money and hope abandon these sinking companies. But Jeff was. And he is smart enough to realize that the time will come again when the consumer Internet will face meaningful headwinds. Tested businesses and tested CEOs will survive and prosper. And clearly Jeff Bezos will be one of them.

The Wisdom of Jeff Bezos, Part 1

On a plane flight the other day I was catching up on an issue of Wired Magazine that had sat in my backpack for several weeks (as an aside, Wired continues to be my go-to airplane reading -- it is so well written, well designed, well researched, always entertaining -- I definitely qualify as a Wired fan boy). In December's issue there was a great article on Bitcoin. What an amazing story of markets run amuck (reminded me a bit of our current gold and oil markets). There were a dozen Steve Jobs tributes, as interesting for what they said about Mr. Jobs as what they said about those lionizing him (George Lucas, Penn Jillette, David Kelley…). But the article that really sucked me in was an interview with Jeff Bezos.

The cover of the December issue of Wired is adorned with the better part of Jeff Bezos' head (I think that 2/3rds of Jeff's head looks even more like Andre Agassi than his full head). The cover reads "Jeff Bezos started with books. Now his company dominates the web in more ways than you think." The cover may not be giving us the credit we deserve. I can think of lots of ways in which Amazon dominates the Web. Every book, DVD, CD, Lego set, remote control car, electric razor, electric toothbrush, obscure french soap, Kinder chocolate bar, etc. etc. that I buy online comes from Amazon. Every time I pay for a great project on Kickstarter (most recently this important documentary on William Kamkwamba), I do so using Amazon payment services. And practically every startup that pitches me is running some part of its infrastructure on Amazon Web Services. The world we live in would be a very different -- and much worse -- place without Amazon.

Given the incredible impact that Jeff Bezos has had on the digital landscape, it isn't surprising that his interview is filled with smart observations and valuable insights into company building. In particular, I was thrilled to read Bezos' articulation of the value of maintaining a longterm outlook. I have often warned would-be entrepreneurs that company building is a marathon, not a sprint. It seems to me that there has been a fair amount of near-term optimization going on in recent years at the expense of long-term thinking. Bezos takes the opposite tack. In his words, "If everything you do needs to work on a three-year time horizon, then you are competing against a lot of people. But if you're willing to invest on a seven-year time horizon, you're now competing against a fraction of those people, because very few companies are willing to do that." He's right. Very few companies take a long-term approach. At August Capital, our goal is to fund those entrepreneurs -- entrepreneurs who think big, or maybe more appropriately, who think long.

Great companies are built over decades, not years. And great CEO's think in decade long time horizons. If you look at the evolution of Facebook and Facebook Connect, it isn't happenstance that Facebook's tentacles are now so far-reaching. Those close to Mark Zuckerberg tell me that his vision of Facebook as the social graph to everything dates back to the early days of the company. Mark's goal has always been to build an important company, not just to make a bunch of money. And building important companies takes time. Mark could have learned that philosophy from Bill Gates (who's vision for Windows emerged and blossomed over decades) or Steve Jobs (who's understanding of the interrelatedness of software and hardware drove a product strategy that over two decades captured the worlds imagination) or Scott Cook (who's maniacal focus on the needs of small business owners -- who are always fighting for resources, visibility and time -- has changed how practically every mom and pop in America does business). But he would be just as well served to study at the side of Jeff Bezos. Jeff describes Amazon as "stubborn on vision and flexible on details." In the vein of "good things come to those who wait," Jeff tells Wired, "you don't know how long it might take, but you know it will happen if you are patient." That patience, combined with persistence, is a testimony to Jeff and is a big part of Amazon's recipe for success.

New entrepreneurs would be well served to learn by Jeff Bezos' example. Smart. Thoughtful. Patient. Jeff has demonstrated over two decades that he has the vision and leadership to create one of the most important companies in the world. And he has the stubborn genius and unworldly stamina to be a powerful force for decades to come. I missed the opportunity to fund Jeff when he came around Sand Hill Road (I handn't yet snuck my way into the venture business). But I sure hope I don't miss the next Jeff Bezos. It is the rare entrepreneur who has the capacity to build a great business day in and day out, while planning a decade ahead.

Congratulations Dave Marquardt for 30 Years on the Microsoft Board!

"Dave Marquardt has done an amazing job as a Microsoft board member." -- Bill Gates

Today is the 30th anniversary of the day my partner Dave Marquardt first joined the Microsoft board of directors. Pretty amazing when you think about it. 30 years on any board is an impressive accomplishment. But 30 years on the Microsoft board is astonishing.

When Dave first joined the Microsoft board, Bill Gates was a mere 26 years old. Yet, despite his young age, Dave always knew that Gates was a special entrepreneur. I once asked Dave why it was that he invested in Gates. At the time Dave made the investment, he was intrigued by the idea of standalone software companies (a new phenomenon) and was meeting with the most interesting software companies of the day. Dave told me that when he spoke with the twenty-something Bill Gates, Gates better understood his competitors businesses than they did themselves. To Dave, investing in Bill Gates was the obvious choice.

Venture Capitalists dream of finding the next Microsoft. Dave Marquardt found the first one. And he, Bill Gates and Steve Ballmer have been on quite the ride ever since. For the first 29 years that Dave sat on the Microsoft board, he saw nothing but increasing revenue. That's right, for 116 consecutive quarters, Dave watched the revenue line move up and to the right, unabated. Few of us sit on boards that can manage a couple dozen consecutive growth quarters, let alone over one hundred.

Also on Dave's watch, he has experienced mind-blowing employee growth at Microsoft. When he first invested, the company had a small handful of employees. Today, Microsoft employs some 90,000 people. That's about the population of New York's capital city of Albany. It is hard to imagine that transformation from minuscule startup to corporate giant, but Dave had a front row seat to it all.

I asked Bill Gates if he had any thoughts on working with Dave over the years and here is what he had to say:

Dave has played a key role helping me and Steve Ballmer as Microsoft grew. Whenever we had a key decision, we would turn to Dave - whether it was hiring key people or a key strategy decision or figuring out how to get the best work out of our team.

Dave is a great strategic thinker and always had his own way of looking at issues. When Steve and I were overoptimistic, he was a voice of caution; when we were over pessimistic, he was a voice of calm. He helped us work better together on a number of occasions. Dave knows our business very well and we would not have been as successful or enjoyed the work as much without him as a key colleague. He put in a lot of time beyond normal board activities and we owe him a lot for that.

I often hear entrepreneurs push back on the idea of a "value added investor." Yet Bill Gates comments strike me as the very definition of a value added investor. If Dave Marquardt is not a value added investor, then no one is. Congratulations Dave on thirty amazing years with Microsoft. I am in awe of you and this stunning milestone.