Focus on the decision making process, not the decision

At any given week across our portfolio a few companies are bound to be making a bunch of tough decisions: new strategy, products, revenue models, international expansion, key hires – the list goes on. In a healthy entrepreneur – VC relationship a constant dialogue exists around major decisions, where the VC can act as a sounding board and advisor but always supports the entrepreneur in making the final decision. Something is wrong if it’s not like that and it needs fixing then.

The worst way to make important decisions goes something like this and I’ve seen it happen more than a few times:

  • Entrepreneur presents “options” (vs a suggested “plan”) to the board

  • No one’s briefed or thought about the decision properly

  • A debate ensues that is more or less an exchange of opinions and views based on at best anecdotal evidence

  • Those with the best argumentation skills or position win and the decision is made accordingly 

Fred Wilson wrote a great post on how board meetings can be run effectively so I won’t repeat anything here.

Instead I want to share how in general I like to act as a sounding board to entrepreneurs outside of board meetings and especially when I may have a different opinion than the entrepreneur on a given point that’s up for decision. It doesn’t happen too often but when it does it really shows what kind of relationship you have and it’s something I try to focus on a lot. Again – I really try to avoid an exchange of views and opinions; and never, ever try to suggest we want something to happen because we’re investors, the company may need money and its coming from us, etc. That can really put the spanner in the works and I don’t want to go there.

So I have a simple trick that works for me: I focus heavily on the “how” and “why” a decision is being made, and really not so much at all on “what” decision is being made because honestly that shouldn’t be my turf.

For each decision it’s not a lot of work to come up with a checklist to ensure the decision-making process is solid. Here’s one example for say a new product:

  • What data from our users / customers are we using?

  • What external data (market, similar models, external A/B tests, etc) are we using?

  • Are we interpreting the data right, where are our analytical weak spots?

  • What are our opportunity costs?

  • Do we have the resources to execute on this?

  • How does this fit in to our long-term plans? How will we be positioned vs where we want to be?

  • What impact on / reaction from our users / customers are we expecting?

  • How will we be able to measure the impact as quickly as possible afterwards, when will we see effects?

  • How does this affect other stakeholders in the company?

  • Have we talked to people who know their stuff on the matter if we’re getting out of our depth?

  • What would happen if this goes wrong? What would we regret? How does this look vs the upside?

  • etc…

It doesn’t really matter so much as long as you come up with a few points that help put structure around a decision – and most important of all – avoid things being based just on opinions and anecdotal evidence. After going through a structured processes I usually find in the end we are all in violent agreement. And if it was the wrong decision so be it and there will be no “I told you so” because the decision was well thought through and everyone went through the process.

OK but so here’s the thing. Not all decisions can be made like that. Sometimes it just comes down to the entrepreneurs gut feeling. It’s my job to sense when its one of those decisions and then to just get out of the way.

Something to think about: Lets laugh more

All this talk of building a tech hub, billion dollar companies, etc can get pretty serious sometimes. It’s good Berlin is maturing. But one of the reasons why I love being here is that the city is just flat-out ridiculous and silly. Istanbul is significantly less chaotic. Italy has better politicians. Just step back and think about all of the crazy things you see here each day. I think I’m going to try to step back more now and then and laugh a little bit about this nutty city because it keeps me in good spirits. If you want to laugh more with / at Berlin too I highly recommend this blog:

Something to think about: The importance of good karma

As an Irishman with a Bavarian upbringing I have no shortages of opinions and emotions. However as a VC I like to keep it as neutral as possible, I like to tone it down a little. Also online, here on this blog and on twitter. I don’t cheer startups, entrepreneurs or tech companies up too much (guilty sometimes), but I sure try to never ever be cynical, snarky or look down on what anyone else is doing. My heart especially sinks when I see entrepreneurs or VCs bash other folks, other “tech hubs”, getting satisfaction out of someone else’s failure, etc – usually this is not done by people who are or have been very successful or are particularly self-secure. So when you do that you’re moving yourself in to a camp you don’t want to be in. It makes me wonder about your opportunity costs. It also makes me wonder what it would be like to work with you during the startup roller-coaster ride.

Maybe its lame – but I just love working with good karma people. So it’s important to me. I watch out for all signals I can find.

Don’t be like this:

Don't be like this

PR best practises for startups

Good PR can be a powerful tool. The right amount and type of buzz can help attract users / customers, employees, partners, open doors more easily in general, put you on the map for investors, acquirers, etc. It’s a great acquisition tool in many ways, but it’s always a poor retention tool.

In this post I wanted to share some of the best PR practises I’ve seen working with startups. Most of the points below cover how I’ve seen teams nail big announcements and really benefit from them. Of course PR is an ongoing job and doesn’t start or end with announcements. Make sure you’re a rolling thunder, not an explosion.

Screen Shot 2013-02-19 at 2.46.18 PM

Here it goes:

Don’t just do PR where your peers and investors are –  focus especially on where you can reach users / customers. Go broad, differentiate your message accordingly where you can

  • Getting a tech blog to write about you is important and has many benefits (early adopters, hiring, investors, etc) but it’s probably only the tip of the iceberg in terms of folks you should be reaching out to

  • Come up with a (very) long list of key publications, blogs, etc that cover all groups of people you want to reach. I usually see lists with up to 50-100 contacts of publications, journalists, bloggers, etc

  • Differentiate your message for each channel: e.g. funding can be a great excuse to actually get much more important messages across. Customers may care less about your funding and more about your next product steps. An Android blog will care more about how you are using Android OS specifics vs your Apple App Store rankings, etc

Access key journalists with social proof. Help them do their job & build relationships

  • Try and get warm intros through other entrepreneurs, your investors, etc

  • They’re busy folks, write *short* emails and get to the point. Send some materials, similar to an investor pitch deck, that allows them to get up the learning curve (but don’t expect they’ll read it)

  • Try and get a skype call etc to explain your story, or even better to meet key journalists when you can

  • Get them on beta / using your product, listen to and engage on their feedback

  • For the top 5-10: give them an angle, interview, a piece of information / quote, infographic etc that nobody else has – it has to be meaningful though

  • Send them your press release but offer in addition high quality visual assets, screenshots, a selection of additional quotes, etc

  • Don’t just be in contact with journalists, bloggers, etc when you need them. Stay in touch, update them when there are meaningful news, build a relationship

Go global

  • Why shouldn’t that huge Chinese blog that covers your space write about your product? It’s never been easier to get high quality translations of your key PR pieces and to get access to international press and blogs

  • Obvious languages beyond English are Spanish, Portuguese (Brazil), Mandarin, Russian, German, Japanese, Korean, Italian and French

  • Think about time zones; e.g. releasing news early a.m. Central European Time makes little sense. Most of our startups release news early US West Coast time and follow-up again when Japan is waking up

Engage & add fuel to the fire

  • Engage with people commenting on blogs, tweeting, posting on your FB page, etc

  • Create a list of folks ready to retweet, share on Facebook, post positive comments on blogs, leave good reviews, etc. These are employees, friends and family but also friendly startups in your community. Again think of time zones – most entrepreneurs have friends everywhere

  • Make its simple for them: have sample tweets they can copy and paste, have a common hashtag for all, etc

  • Try and get “key” influencers excited about your product, build a list of them – so people with large twitter and FB followings who you think may be willing to post something about your product; you’ll have to make sure it’s relevant to them. Invite them to beta, etc

  • There self-service newswires you can distribute press releases over, check and see if any of them make sense for you

Be a pro

  • Run-through a pre-launch checklist: embargo / timings clear to everyone, backend-team in the know & servers ready, app in all relevant app stores / geographies, landing pages up to scratch, no hick-ups in your viral loop, support team ready, etc

  • Have a Q&A for you and the team ready for key questions that will come up, make sure everyone is consistent

Measure and improve

  • Analyse where traffic came from and what quality that traffic had (i.e. conversion to active user, etc)

  • Decide whether a channel was just bad or you need to improve how you use it


This can all be done without hiring an agency. There good arguments for and against hiring a PR agency. It largely depends on your goals, budget, opportunity costs, team capabilities and of course finding a PR firm that really knows their stuff. If you do hire one, I find the best PR firms provide the following services beyond the obvious:

  • Be a tough sparring partner about your key messaging points, positioning, etc – this isn’t about just drafting press releases for you

  • Review all parts of your face to the market – from the “about” section on your webpage to the landing page of your product, etc – it all needs to tie in

  • Coach you on how to lead effective interviews

  • Help you manage the aftermath and provide really good reporting


What works for you?

Due diligence should go both ways: VC check-list for entrepreneurs

VC-entrepreneur relationships can be like marriages, just that the likelihood of a divorce (exit, wind-down) is 100%. But until then its important you forge a good working relationship. Not become friends (although that can happen it may not always be a great idea), but the entrepreneur should see the VC as a trusted advisor and the VC needs to respect that it’s just that: advice.

You’ll obviously get a good sense for chemistry in meetings, and sometimes it can be better to have more than less. Sometimes things change when you are negotiating terms, you can read a lot from how people negotiate. Also meeting up for dinner, lunch etc and to talk about other stuff than the company / investment can reveal a lot. In short: the more interaction before you commit the merrier. Ideally you’d get into a fight and then be friends again but that isn’t always feasible.

In any case, as an entrepreneur it’s super important you go do due diligence on your investor just like they are doing due diligence on you and your company. So here’s some things I’d look out for as an entrepreneur:

Technical Fund Due Diligence (basically: will they have money to fund me going forward)

  • How much money does the fund have left? Unallocated, free reserves. If you’re an early stage company and are looking for an investor that can follow-on significantly in future rounds, you probably don’t want to be one of the last investments in that fund. You’ll be competing against other companies in the portfolio that are bigger, need more capital, have reached more proof points, etc. Thats ok, but not when there isn’t much money left in the fund
  • How much time does the fund have left? If you’re a seed company and still have a long time to go you want to make sure the fund has say at least 6-7 years left, ideally more. Funds usually have 10 year life times, but the investment period (i.e. when the portfolio is built) is in the first 3-5 years. You want to get in as early as possible
  • How do they access their capital? Usually a fund can draw-down capital from their investors really any time they need it. But there are a few other structures out there such as evergreen funds that sometimes can only invest when they free up capital by selling companies. Make sure you understand how that works.
  • How do they make decisions? Can the partners you’ve met make independent investment decisions or is there someone else (e.g. a large corporate investor in their fund) that is calling the shots?

Fund Strategy Due Diligence (basically: where do I fit in and what does that mean)

  • Do they have a relevant track record in helping to build companies like mine? An investor focused purely on e-commerce may not be so helpful for a SaaS business. Again there are of course exceptions.
  • Do they have a relevant track record for the stage I’m at; or are they doing e.g. seed for the first time as its all the rage right now? Do they in general follow-on or not?
  • Are you part of any “programme” (eg seed programme) in the fund, what does that mean for you?
  • How long does the fund usually hold investments for. Are quick flips a pattern or are they long term investors?
  • Have they syndicated / co-invested with folks you want to get on board later? Do they work well with other funds?

Partner Due Diligence (basically: who you’re marrying)

  • What’s the partners personal track-record for companies like yours and the phase you’re at?
  • Everyone says they have a great network. Is the partner already using it prior to investing? Is she / he being proactive about it?
  • Is the partner engaged and passionate about what you’re building, do they truly “get it”?
  • Is the partner a good sparringspartner? Can she / he help you make tough decisions? Are they more interested in your thoughts and opinions than their own? 😉
  • Talk to entrepreneurs the partner has worked with. Be specific: ask about strengths weaknesses, high- & low-lights. Nobody’s perfect but if you’re not specific you’ll probably not get much of a useful answer. Ideally you talk to an entrepreneur that has gone through a rough spot and can tell you how helpful the partner was then.
  • What position does the partner have within the fund; will they be a good champion for your company? Ask in general about how decisions are made, who’s on the investment committee, etc.
  • What kind of policy does the fund have regarding partners on an investment. Are they frequently swapped out or will you be working with the partner you’ve built the relationship with?

No investor will be perfect, but you should make sure you get all the data you can to make an informed decision. I am sure there is more to consider and I’d be interested in your thoughts.

Make or Break Years and the Urban Entrepreneurship Hypothesis

Recently a lot of talk has come up about 2013 being a make or break year for the Berlin tech community. I think both sides of the notion are slightly short-sighted, so I thought best not to comment on it and let it pass.

As it seems to be hanging around, and I feel partially responsible for waving the Berlin flag in international press outfits and therefore directly contributing to the “pressure”, I felt I owe everyone an opinion in this.

So here it goes. In short: tech ecosystems don’t make or break in a year, Berlin’s tech community is way too young of an ecosystem for it to be a “make” year and there are way too many folks building and growing great companies for it to be “break” year.

Like in any ecosystem there will be key milestones of course – failures and successes – there will be good years and bad years and we’ll have to learn to embrace and learn from both. I don’t know what 2013 will be, but frankly I don’t care so much about it. I have a preference for a great year.

What I do care about is the i) trajectory we’re on and doing everything to steepen it and ii) folks having the right attitude: Its not entirely reasonable to expect a flurry of multi billion businesses 2-3 years after Berlin becoming a relevant international startup hub (has been relevant for Germany-focused companies longer), its equally not entirely reasonable to assume the handful of great businesses already built, if exited this year, would lead to the tech ecosystem moving in to perpetual motion. For the record: I am not against great exits this year.

But let’s step back to where this all started. Everywhere in the world where a few startups gather politicians and press are quick to call out “the next Silicon Valley”. Same happened to Berlin. Berlin is not going to be the next Silicon Valley. Neither is London, New York, Stockholm or Tel Aviv. Silicon Valley is going to be the next Silicon Valley, with its unique set of ingredients difficult to (exactly) replicate elsewhere.

That doesn’t mean you can’t build highly relevant – maybe one day even more relevant – tech communities elsewhere. It probably matters more that you are relevant than the most relevant. I think each community needs a unique DNA, a few things its particularly good at. I’ve collected some thoughts on Berlin in this presentation that I don’t want to repeat here.

But there’s a bigger trend going on I am for the lack of better words going to call the “Urban Entrepreneurship Hypothesis”:

  • The internet has liberated entrepreneurship in every way, also geographically. You can build and scale / distribute products and services from anywhere. E.g. Berlin: Soundcloud, 6Wunderkinder, ResearchGate, Wooga, Zalando etc are all global or very international companies, there are many more.

  • Capital is increasingly mobile. We’re invested in a Berlin based seed stage company called Moped; we (Berlin based fund) led the round and our friends from Betaworks (NY), Lerer (NY) and SV Angel (Valley) joined in. just raised from Dave McClure and a German semi-state fund (what a combo!). This has become standard, everywhere you look the source of capital matches the global profile of these companies. This is happening as early as seed and later stage companies are finding it even easier to attract capital from around the world. And then there’s AngelList, crowdfunding, etc. If you’re on to something raising capital from some good funds from around the world is becoming less of a problem, its becoming less and less relevant where you are based

  • Key to building a tech company and a community of many tech companies however remains the ability to attract and retain top international talent

  • International, talented folks have a strong preference for inspiring, english-speaking urban environments with a high quality of life

Therefore: inspiring, English speaking urban environments that offer a high quality of life are going to become increasingly relevant entrepreneurial hubs . San Francisco, New York, London, Berlin, …. For those of you who have not been to Berlin: good luck ordering that hand brewed coffee in German. English, Swedish and Hebrew are more likely to work.

The shift to urban centres is a long term mega trend and we’re in the middle of it here in Berlin. Long term.

But back to make or break. How long does it take to build a sustainable tech community? The internet has certainly shortened cycles, but let’s just look how Berlin stacks-up in terms of maturity to other communities. The years indicate since when these hubs have been producing internationally relevant, disruptive companies:

  • Boston: 40 years +

  • Silicon Valley: 40 years

  • Tel Aviv: 20 years

  • New York: 15 years

  • London: 10 years

  • Berlin: 2-4 years

Berlin is on the right trajectory but is not going to be a miracle ecosystem, it will take time. Even on a European basis Berlin’s ‘hot’ companies are on average very young (here are some frequently listed that are a bit more advanced, but not exited yet):

  • SoundCloud: 3.5 years

  • Wooga: 3 years

  • Research Gate: 4 years

  • 6Wunderkinder: 2.5 years

  • Zalando: 4 years

The list goes on but 2-4 years is the bracket nearly all companies fall into. Let’s look at other “top” (sorry I’ve missed a ton for sure) European startups from elsewhere (same criteria – advanced but not exited yet):

  • Just Eat: 12 years

  • MindCady: 9 years

  • Wonga: 5.5 years

  • iZettle: 3 years

  • Spotify: 7 years

  • Rovio: 10 years,

  • Super Cell:  2.5 years

  • Criteo: 7 years

  • Vente-Privee: 12 years

  • Hailo: 3 years

  • Klarna: 7 years

  • : 9.5 years


You get the picture – with few exceptions significantly older on average. Even within shortened internet driven cycles it takes time to build really big companies. It will take a long time in Berlin too.

Having said that, let’s not pretend there haven’t been any exits. Zalando’s secondary priced at $3bn, rumours have it some folks at SoundCloud were able to sell some shares at a significant triple digit million value, Brands4Friends sold for $200m, CityDeal for $1bn, DailyDeal for $100m. All this in our first 2-4 years of getting started.

These exits and the handful of companies slowly but surely inching into the really-valuable territory are our first shots, not our last shots at building great companies.

Lets have another look in a few years time.