2015 In Review, Or: 2016 – Less but Better

Are VCs good for something beyond their money?

As an entrepreneur, I was always pitched with the “value added” nature of different investors. I remember thinking “your money is good enough, thank you”. As Vinod Khosla had once said: “larger than 95 percent of VCs add zero value… would bet that 70-80 percent add negative value to a startup in their advising.”

When we founded Aleph, we set ourselves a goal of “servicing the hell out of entrepreneurs”. Today, we are only 2.5 years old and so we keep on contemplating what “servicing” means, besides the money of course. 

What are the needs of a startup that a venture capital firm would be better suited to serve than internal resources in the company?

One of our key investment focus areas is companies disrupting old industries, which means these are most likely industries we don’t come from. So now the question is what can we do to help Oz at Honeybook service his event organizers better, or Shai & Daniel at Lemonade to disrupt the insurance market? What are the things that scale as a VC for cross portfolio help?

This is a quote from the very first thing every Aleph member sees upon joining:

Welcome to the Aleph family!

Aleph is a small fund where every member shouldn’t see him/herself tied to a specific role. Our power is in everyone being on the same page to achieve our goal: invest in the best companies and support them as well as the eco-system in the creation of big companies out of Israel. 

The Aleph team has a few principles:

1. Service the hell out of entrepreneurs: our customers are entrepreneurs at large, and our portfolio specifically. Always prefer their interest over ours, or our investors’. This will pay dividends over time.

The following infographic is extracted from an internal spreadsheet we use to track & measure our effectiveness in supporting the needs of our portfolio companies. I have decided to share it with you, first in order to make us more accountable for our actions (for example, we have done miserably on bringing in business sales) and second to show where our head is at and seek feedback on where we should be more helpful.

This will be the first of a series of blog posts meant to trigger a discussion about what kind of help can a venture firm provide in recruiting, follow on funding or media coverage.

When going through the items in the 2015 spreadsheet, the obvious top 3 needs coming from the companies are: recruiting, recruiting and… recruiting. The impact an investor can have in helping a company recruit top talent is huge, even with mature companies.

One takeaway (for a future post) is that this might be the single most important activity a VC can & should do. For instance, each of our recruits for WeWork, be it Roee Adler (runs Digital Product), Tomer Sharon (from Google to run UX) and Artie Minson (the former CFO of Time Warner Cable) makes a real dent on the company. There’s no doubt that bringing all of them is a game changer.

A portfolio “need” that wasn’t an initial focus of ours and that surprised us is the impact of being a trusted reference to the next round of the right follow-on capital to each company. Introducing Horizons to Windward was substantial as they have access to the information about many ports in Asia, a fact which is highly important and relevant for the company. For Meerkat, introducing & working with the product-savvy Josh Elman (of Greylock) has had a major upside as well.

As can be seen in the infographic, an area where we have yet to fulfill our full potential is the using of cross-portfolio vantage point to bring business deals to the companies. The potential value of an investor here can be real and significant.

Also, what’s not represented here but is disappointing is the usage level of our “Welcome Kit”: the special deals we negotiated (spent a lot of time doing) for our companies. This will be a big focus for 2016.

Browsing and examining the long list of activities with our portfolio and eco-system, my 2016 resolution is this: less but better. This phrase was first coined (albeit in German: Weniger, aber besser) by the great product designer Dieter Rams and is essentially the thing that made him a household name with Braun. This mantra is also a key focus for Essentialism: The Disciplined Pursuit of Less by Greg McKeown.  

In order for us to focus on the ‘right’ things, I want your feedback. What do you think should be our focus for 2016? What was the best value you received from your investors that you believe we must learn from?