Category Archives: Venture Capital Industry

Power Score – Your Formula for Leadership Success

powerscoreI don’t typically read “business books” on vacation, but I made an exception for “Power Score – Your Formula for Leadership Success”.

Power Score is the new book by Geoff Smart and Randy Street, the authors of “Who: The A Method for Hiring” (with an assist this time from their colleague Alan Foster).  “Who” has been required reading in our shop for several years and informs a lot of the questions we ask (and how we ask them) in our “people due diligence” when we are considering partnering with an entrepreneur or helping one of our portfolio companies hire a new senior executive.

So I was excited to read Power Score, which utilizes the data from 15,000 management interviews over twenty years that the authors and their team have done on behalf of corporations and private equity firms at their consulting company, ghSMART.  I love data, and I was impressed with how they mined their unique database to come up with a formula that facilitates successful leadership.

As it turns out, successful leaders get three things right:

1) Priorities – ensuring that they have priorities that are correct, clear and connected to their mission,

2) Who – making sure they have diagnosed their teams strengths and risks, deployed their people against the right priorities, and continually developed their people, and

3) Relationships – working to make sure that their culture and incentive structures support teams that are coordinated, committed and challenged and promote strong relationships with both employees and external constituencies.

The formula seems fairly simple (simple is good on vacation), but the execution is very hard, and very few leaders operate at consistently high levels in all three areas.

The authors offer a scoring system that challenges leaders and their teams to rate themselves on a 1-10 scale in each of the three areas and then multiply the scores (PxWxR) to see how they compare with the best proven leaders in the ghSMART database. (Hint:  500+ is pretty good but 9x9x9 = 729 is the Holy Grail!)  More importantly, they describe how to increase your Power Score by continuously improving in each area, and they also offer a lot of helpful real world examples of how great leaders do it.

The book is written in an easy to digest question and answer format and it won’t take long to finish, though I found myself rereading various sections throughout the book and applying them to companies I have been involved with over the years.  Much like they do in “Who” for identifying and recruiting outstanding talents, the authors offer a process that can’t help but enhance leadership success if executed faithfully.  And, again, unlike most business books it’s backed up by a lot of great data and research on what makes for a strong leader.

I highly recommend the book and plan to send copies to our entrepreneur partners at Ballast Point Ventures, all of whom are looking for that extra leadership edge in their quest to build great companies.  We’ve added it to “The Library in St. Pete” for books we highly recommend.  You don’t have to take Power Score on your next vacation, but then again haven’t you watched enough movies on your iPad during those long flights?

 

Just waves of confirmation bias?

We recently came across another excellent article on data, decision-making, and cognitive biases.  It’s a story about Kristaps Porzingis , a 7’1″ 19-year-old, playing in Liga ACB, perhaps the second-best basketball league in the world.  He’s “the type of prospect that has historically torn coaching staffs and front offices apart” as they try to assess his NBA bona fides before the draft.

All draft picks are crapshoots, but some feel like crappier shots than others. It’s uncouth to plainly say, “I have a bad feeling about this guy,” so we do our best to justify our vague inklings. The stronger our distaste, the stronger our effort. So of course it’s the foreigner with the spindly frame and the funny name who has people [grasping for answers]. … What is the draft if not complete pseudoscience?  …

He’s like a young Robin trying on Batman’s utility belt — the tools are there, and they’re incredible. They just don’t fit yet, and you can’t be too sure that they ever will. His issues on defense are the same most players his age experience. He bites on pump fakes, he gets caught ball-watching, and he can be a step slow recovering to his man. But there is a chance that, five years down the line, he’ll be doing things that only a handful of NBA big men can do at a high level.

Maybe all of that hokey pseudoscience will prove prescient. Drafting isn’t an art, and it isn’t a science, but if you squint hard enough, it can look like a happy medium. It’s all just waves of confirmation bias on both ends of the spectrum posing as data points, right? It can tell you anything you want it to if you wait long enough. But it can’t, at the very moment, tell you the fate of Kristaps Porzingis. And so, like any other year, we’ll go on trying to find some illuminating detail that will solve the puzzle once and for all, blissfully ignorant to the fact that there’s only one person with the final pieces.

As with the NFL draft, pre-draft metrics have only some predictive power.  The data don’t predict a player’s ceiling, can’t account for what kind of system a player will enter, the talent he’ll have around him, the luck he’ll have with injuries, or the intangibles he possesses.

If you’re looking for a bellwether of NBA success, look to the NCAA tournament.  Its pressure-packed contests featuring the best college players in the country in front of gigantic audiences turns out to be a meaningful simulation of NBA conditions.  Even though it’s a very small sample size – for most players just a game or two – the data show that players who move up the draft board as a result of their performance in March Madness deserve it.

The crucial distinction to remember on this topic is that Big Data has limitsWhile it may help make accurate predictions or guide knotty optimization choices or help avoid common biases, it doesn’t control eventsModels can predict the rainfall and days of sunshine on a given farm in central Iowa but can’t change the weather.  A top draft pick may or may not develop based on the system, surrounding talent, &etc.

In our experience the best results often come from a combination of deliberation and intuition.  Too much data can lead to analysis paralysis, common sense can be a shockingly unreliable guide, and those who rely on intuition alone tend to overestimate its effectiveness.

The answer for Porzingis is obvious:  enroll him in an American D-I hoops powerhouse – we’d recommend a school in the Southeast or Texas – and hope that school enjoys a deep run next March.

Closer to a cure for cancer?

cancerThis past weekend’s WSJ had an excellent article on how recent, fascinating developments in targeted therapeutics and immunotherapy show great promise for the treatment of cancer.  It’s a must-read for anyone interested in the topic – whether you’re a patient, family of a patient, or even an investor in the technologies that are used.  (Full disclosure:  as BPV is in MolecularMD, a molecular diagnostics company that develops custom companion diagnostic products and supports clinical trial services for targeted cancer therapies.)

Memorial Sloan Kettering Cancer Center CEO Dr. Craig Thompson explains why he’s optimistic about new therapies aimed at increasing the body’s own ability to fight cancer in The Future of Cancer – Closer to a Cure.

Most people don’t acquire a significantly higher risk of cancer from the genes that they inherit from their parents. Instead, cancer arises as a result of copying errors (mutations) in the inherited genes, as our bodies make new cells to maintain our various organs. A recent widely quoted publication suggested that these errors are an inevitable consequence of trying to copy three billion bits of information as a cell divides.

That may be true, but it doesn’t mean getting cancer is inevitable. The fastest and most extensive rates of cell division occur when we are developing as embryos. Billions upon billions of cells are produced each day, yet cancer in newborns is exceedingly rare. In contrast, cell division in each of our tissues slows as we grow older, while the incidence of cancer increases with age.

What accounts for this discrepancy?  We damage ourselves through exposure to invading pathogens and other environmental threats, thereby “constantly damag(ing) our tissues, forcing restorative cell proliferation to occur in a war zone of damage.”  But recent advances in targeted therapeutics and immunotherapy “can have stunning efficacy” in the right situation without the toxic side effects of traditional chemotherapy.

It is in this inhospitable environment that most cancers arise. We have known for some time that many of these environmental exposures damage DNA, making it harder to copy and resulting in more mutations as cells divide. Recently, we have come to appreciate that during regeneration of damaged tissue, the rest of the body pitches in to keep every cell in the damaged tissue alive. Not just the healthy cells, but also the ones that have acquired mutations that render them unfit. Our immune system, which usually detects and destroys cells with excess mutations, is turned off

Patients whose cancer bears specific mutations are now more effectively treated with drugs designed to selectively reverse the effects of those mutations. Such drugs are termed targeted therapeutics. The downside of this class of drugs is that they usually don’t have any benefit in treating cancers that don’t carry that specific mutation. While we don’t yet have many therapies that target cancer-causing mutations, the results can be dramatic when such drugs are available…

Immunologists have found that our immune system has a built-in “off switch,” a checkpoint that shuts down an immune response a few weeks after it is initiated. A new and expanding class of cancer therapeutics have been developed that have the ability to block this normal shut-off switch and thus augment the ability to recognize and destroy cells carrying mutations…  Some patients with widely metastatic cancer have been rendered cancer-free with therapies aimed at increasing the body’s own ability to fight cancer.

 Dr. Thompson closes with optimism; an optimism we share, thanks to the great work done by the teams at companies like MMD.

Why is finding a cure for cancer taking so long? A major reason lies in the fact that cancer is not one disease, but many. Each tissue has its own unique progenitor cells, and each tissue uses only a subset of the genes we inherit from our parents; each tissue is exposed to environmental insults differently. We are just beginning to understand the interplay of all these factors in the origin of the many forms of cancer. Understanding these issues will ultimately allow us to optimize the treatment approach to each patient’s disease.

While we aren’t yet ready to put cancer on the extinction list along with “simpler” diseases like smallpox and polio, it is clear that with more science—the lessons learned from cancer research over the past two decades—we face the future with less fear.

Genomics vs. Genetics

On related note, the conversation about new targeted therapies includes two terms – genomics and genetics – that are mistakenly used interchangeably.  Genetics is the study of single genes in isolation, while genomics is the study of all the genes in the genome and the interactions among them and their environment(s).  Genome British Columbia has a useful explanation of the distinction:

If genomics is like a garden, genetics is like a single plant. If the plant isn’t flowering, you could study the plant itself (genetics) or look at the surroundings to see if it is too crowded or shady (genomics) – both approaches are probably needed to find out how to make your plant blossom…

In studying human disease, for example, genomics examines all the genetic information to determine biological markers predisposing an individual to disease, whereas genetics uses the information from one or two genes to explain a disease state.  Many diseases due to single gene defects have been identified. Now, geneticists want to tackle multifactorial diseases caused by the complex interactions between multiple genes and the environment.

Google can’t save us (anymore)

googlem_a_infographic_4

History of Google Acquisitions

Great piece by Robert J. Samuelson in last Sunday’s Washington Post about how innovation resulting from M&A activity may lift corporate profits, but only the innovation generated by fast-growing start-ups broadly raises national prosperity.

(A) larger issue transcends individual deals. The popularity of M&A actually involves economic weakness. Unable to expand internally — by creating products or entering new markets — companies rely on M&A for growth. However, what works for the firm may work less well for society. Although buying another company may enhance the acquiring firm’s innovation, it doesn’t add much to society’s. And society’s capacity to innovate is crucial. It generates the wealth needed to raise incomes and dampen social conflicts…

In our mind’s eye, the economy is swarming with entrepreneurs. Competition is intense. Old-line firms adapt, or die. Just the opposite may be happening: Evidence suggests that entrepreneurship is in decline and that U.S. firms are becoming older, more entrenched and less dynamic…

American capitalism is middle-aged. Older firms, conditioned by success, are more rigid. They’re invested, financially and psychologically, in existing markets and production patterns. They can adapt and innovate, but it’s hard. The M&A surge is one way older firms strive to overcome internal stagnation.  What’s worrisome is not the success of the middle-aged businesses; it’s the weakness of young firms and the apparent erosion of entrepreneurship. As other research has shown, start-ups ultimately account for a disproportionately high share of new job creation and innovation. The vigor of these new firms is essential for the economy to revitalize itself.

We don’t know what explains their slide, though the sheer mass of government regulations is one candidate. Older firms have the lawyers and administrators to cope with the red-tape deluge; many small new firms drown. But that’s just a conjecture illuminating the larger question. If the economy discriminates against young firms, we will all be paying the price for many years.

There’s also evidence that suggests more early-stage firms are getting gobbled up – via M&A’s – before they have a chance to boom.  Google itself may be a prime example:  since 2001 they have acquired roughly one company per month and they recently became the country’s biggest political donor, knocking off heavily-regulated Goldman Sachs.

It may seem strange to think of Google as middle-aged, but high profile firms such as it enjoy outsized awareness because they’re personal and omnipresent, and belie the fact that the data show declining business dynamism overall and for start-ups specifically.  For every Google or Facebook there are hundreds of other early-stage companies, and no one knows at the outset which high growth firms will explode and disrupt – so we need “more shots on goal.”

Samuelson’s piece fits nicely with what we wrote last July in Not All Innovation Is Alike:

Some politicians think “innovation policy” means spending taxpayer money on promising young firms favored by bureaucrats. Rather, innovation policy means ensuring that the status quo is continuously challenged by upstart rivals and threat of failure. Those are the keys to the Schumpeterian “gales of creative destruction” that drive innovation, which in turn drives long-term economic growth and improvement in living standards.

National prosperity is generated by the start-ups who innovate and challenge entrenched incumbents. Anyone who’s worked for a large corporation – especially in an R&D department – would not rely primarily on that model for innovation. Anyone who’s worked for a large corporation – especially in a dying industry – would not rely primarily on that model for job growth. Yes, start-ups lack the economies of scale and R&D budgets of larger firms; but that’s the support venture capital provides. Those start-ups that do gain traction are able to raise capital, and, with hard work and a little luck, become large companies… and then face the next generation of innovators.

 

 

 

 

A Thread Across the Ocean

Cyrus W. Field may not have been the first entrepreneur in the modern mold, but he was without doubt one of the greatest.

So writes John Walker, about the laying of the world’s first trans-Atlantic telegraph cable.  He also has this to say about entrepreneurship in general:

There are inventions, and there are meta-inventions. Many things were invented in the 19th century which contributed to the wealth of the present-day developed world, but there were also concepts which emerged in that era of “anything is possible” ferment which cast even longer shadows. One of the most important is entrepreneurship—the ability of a visionary who sees beyond the horizon of the conventional wisdom to assemble the technical know-how, the financial capital, the managers and labourers to do the work, while keeping all of the balls in the air and fending off the horrific setbacks that any breakthrough technology will necessarily encounter as it matures.

When the first trans-Atlantic electronic message arrived – Queen Victoria telegraphed congratulations to President Buchanan – it was as if a new era had dawned, as if a new envisagement of the world were possible.  More than a century before the internet, Cyrus Field had taken the first steps towards wiring the world together.

The initial euphoria gave way to deferred dreams.  Stretched to the limit with un-perfected technology, the cable and the endeavor were soon both dead in the water and had to be rescued with follow-on rounds of financing and a new vocabulary of electrical engineering (Watt, Ohm, Ampere).  

This documentary tells of the setbacks and bouncebacks, both technical and commercial, from the earliest stages of Field’s start-up company through to the completion (13 years later) of his world-changing entrepreneurial success.

Field’s ability to coax ever more capital from investors in the face of so many failures (and accusations of fraud!) was remarkable, and likely made possible by (a) his confidence-inspiring optimism, “the eternal sunshine of the entrepreneur’s mind” and (b) the sterling reputation he had earned in his first business, during the turnaround of which he had “made good” on outstanding debts for which he had no legal obligation to pay.

The Top 10 (to us) highlights:

  1. The cable was a copper wire, covered with a foul-smelling tropical sap called Gutta Percha for insulation, with thick iron wires wound around it for protection.
  2. They found a flat area under the North Atlantic that was so perfect they termed it “The Telegraph Plateau.”
  3. The flip side of Field’s optimism: he badly underestimated the scope of the project and blew through the initial round just to get to Newfoundland.
  4. No single ship could carry the entire 2500-ton load.  Two ships met midway across the North Atlantic, spliced together the wire, then sailed very precisely and carefully in opposite directions.
  5. The first attempt failed utterly, the cable repeatedly broke.
  6. During the second attempt, the ship’s compass was affected by the amount of iron and created serious navigational errors.
  7. Pressed for time, because he was pressed for money, Fields forged ahead with insufficient testing of his chief scientist’s theories of the voltage required.  A month after the first successful message they burned through the insulation somewhere on the ocean floor.  Subsequently, the future Lord Kelvin invented the Mirror Galvanometer to amplify the weak signal at the end of the line.
  8. The scale of the debacle caused the first ever “Board of Inquiry” after a technical failure.  The board laid most of the blame on the chief scientist, but also faulted Field’s impulsiveness, calling him “a man obsessed by insanity.”  He drove the project forward and harnessed the people who needed to be involved, but was “a bit blinkered” and did not take in all the information available to him.
  9. For the third attempt a decade later, the largest ship in the world (The Great Eastern) was available for purchase at pennies on the dollar.  No longer would they have to worry about mid-ocean splicing.  In a cruel twist of fate, the circuit failed mid-project and miles of bad cable had to be spliced, mid-ocean!  The captain reversed course, dropped a grappling hook, snared the cable after multiple attempts, and winched it 3 miles (!) up to the surface for repair.
  10. Even today, most of the communication between North America and Europe is carried by trans-Atlantic cable.

From food cart to IPO in 10 years: innovation and “competitive capitalism”

In The only thing he ever made fly was government money, a post about the Wright Brothers’ government-backed competitor who failed badly, we wrote that:

The process of productive capital allocation is a critical ingredient of innovation and job growth. Entrepreneurs spending their own (and their partners’) money will create more jobs, more innovation, and a more vibrant economy than politicians picking winners and losers based on cronyism, campaign contributions, and constituent pork.

It is not an automatic process, of course. When $5,000 computers become $500 tablets, and conveniences ranging from steamships to Kodachrome to flip phones are supplanted by better ideas, the resulting surplus capital is not stuffed under plump mattresses – it’s used to fund the next round of businesses and innovations that enhance and enrich all our lives.  Including cheeseburgers.

shakeshack3Kevin D. Williamson points out that Shake Shack has gone from food cart to IPO over a period of time during which McDonald’s has struggled to tread water.  This might surprise some consumers but not likely anyone who’s worked for an archetypal big, faceless corporation (like McDonalds).  Start-ups may lack the economies of scale and R&D budgets of larger firms, but that’s the support venture capital can provide.  Those start-ups that do gain traction are able to raise capital, and, with hard work and a little luck, become large companies… who then face the next generation of start-ups.

Williamson goes on to make a broader defense of “competitive capitalism,” the aggregate effect of which is “indistinguishable from magic.”

(W)e are so used to its bounty that we never stop to notice that no king of old ever enjoyed quarters so comfortable as those found in a Holiday Inn Express, that Andrew Carnegie never had a car as good as a Honda Civic, that Akhenaten never enjoyed such wealth as is found in a Walmart Supercenter.

The irony is that capitalism has achieved through choice and cooperation what the old reds thought they were going to do with bayonets and gulags: It has recruited the most powerful and significant parts of the world’s capital structure into the service of ordinary people

For people who dislike and misunderstand capitalism (or free markets, or laissez-faire, or economic liberalism, or whatever you want to call it), the governing principle of market competition is the “Walmart effect.” According to this model of how the economy works — a model with very little basis in reality, but never mind that — big companies such as Walmart muscle into a market or a territory, use advantages of scale and predatory pricing (“predatory” here meaning “saving consumers money at the expense of relatively well-off business owners”) to drive out so-called mom-and-pop operations, lower workers’ wages, and then make like Scrooge McDuck doing his Greg Louganis impersonation into a mile-high stack of hundred-dollar bills.

Big businesses vs. small businesses, employers vs. employees, factory owners vs. consumers: Every relationship in the marketplace is in this view distorted by power imbalances that almost always work in favor of entrenched business interests that use their relative power to further heighten the advantages they enjoy.

The opposite of the “Walmart effect” understanding of how the economy operates, a view more prevalent among people who like or simply understand capitalism, is the “Bill Gates’s nightmare effect.” Back in 1998, when Microsoft was at the height of its power — it had just become the world’s most valuable company — and Gates was at the height of his prestige, he told Charlie Rose that what worried him wasn’t competition from IBM or Apple or Netscape: “I worry about someone in a garage inventing something that I haven’t thought of.” That was in March of 1998; in September, two guys in a garage in Menlo Park incorporated Google.

Or, as we put it in The dignity of innovation:
It seems paradoxical, but failure is what makes us rich. Well over half of the companies on the 2009 Fortune 500 list began during a recession or bear market. The patents for the Television, Jukebox, and Nylon were granted during The Great Depression. Also born at that time: the chocolate chip cookie, Scrabble and Fender Guitars (kinda). The decline of U.S. Steel was bad for the company’s shareholders and its employees, but it was good for people who use steel — meaning everybody else in the world. Without the pressure and opportunity created by the possibility of failure the entire U.S. economy would be (at best) stuck in the early 19th century.

Untangling skill and luck in sports and business, redux

We’ve come across another good piece on decision-making and the limits of decision models.  

In The Great Analytics Rankings, ESPN “unleashed (its) experts and an army of researchers” to look across the four major sports and assess each of the 122 professional teams on how much of their approach is predicated on analytics.

They ranked teams both within each sport and across the entire field of 122, and then took a look at the sport with the most developed methodologies – baseball – to ask, “do clubs that prioritize analytics win more?

Their conclusion:  there’s just a slight correlation between more analytics and more success.  It remains tough to eliminate the usefulness of having more money than other clubs, and with technology and best practices so widely disseminated and articulated (in baseball, at least) the early Moneyball advantages may have been arbitraged away.

All this isn’t to say analytics are a nonfactor. Of course they’re important. For one thing, you have to keep up with the rest of the sport, even if the advantages to be gained are small. A lot of small advantages can add up. Look at the Astros’ signing of Collin McHugh, a nondescript pitcher waived by the pitching-poor Rockies. The Astros studied the PITCHF/x data on McHugh and saw a curveball with a good spin rate and took a chance on him. As Business Week reported:

The Astros’ analysts noticed that McHugh had a world-class curveball. Most curves spin at about 1,500 times per minute; McHugh’s spins 2,000 times. The more spin, the more the ball moves during the pitch — and the more likely batters are to miss it. Houston snapped him up. “We identified him as someone whose surface statistics might not indicate his true value,” says David Stearns, the team’s 29-year-old assistant general manager.

It gets a little more interesting with sports earlier in the process than baseball; e.g., the NHL, in the midst of its own “analytical awakening,” with concepts such as “Corsi” and “Fenwick” bringing together schools old and new.  Only one NHL team cracked the Top 10 of ESPN’s rankings:  the Chicago Blackhawks.

While Joel Quenneville is an old-school coach, the Blackhawks use analytics to find players who might be undervalued elsewhere but fit exactly what Quenneville and the Blackhawks try to do on the ice systematically. It’s been a great combination, with Bowman and Quenneville teaming up to win two Stanley Cups.

“I don’t claim to have the answers — we have a formula that works for us,” Bowman said. “We’re always trying to expand and add a new component each year that we do a little more with.”

When it comes to untangling skill and luck in sports and businessbig data may help make accurate predictions or guide knotty optimization choices or help avoid common biases, but it doesn’t control events and can be undone by cluster luck.  Models are useful in predicting things we cannot control, but for those in the midst of the game – players or entrepreneurs – the results have to be achieved, not just predicted.

The NFL’s Best Coach*

bill-belichickTwo days before Super Bowl XLIX this article about Bill Belichick appeared in Grantland.  It starts with a terrific journey back in time to young 9-year Billy cutting a homework-for-game-reports deal with his father – a well-known college football scout – and then travels forward to how he first made his bones as a defensive coach and then grew into an offensive master by constantly learning from his fellow coaches.

The author sees Belichick “bombarding opponents with shrewd, coldly rational tactics” and thinks his greatness “has never stemmed from the Big Idea, unless the Big Idea is the relentless application of many Little Ideas.”

It’s hard to win in the NFL, where most games are decided by small, often overlooked moments.  The great coaches, however, are adept at finding and exploiting seemingly infinitesimal advantages.  There’s a reason Bill Walsh called his book Finding the Winning Edge [for more detail, see The imperfect perfectionist – ed] and Don Shula called his The Winning Edge:  Gaining an “edge” is often the difference between winning and losing.  One doesn’t steward his team to 12 consecutive 10-plus-win seasons, as Belichick has, without an uncanny ability to identify and exploit the on-field edges that add up to wins.

But what about edges off the field?  It’s impossible to write about Belichick this week without raising the question.  Like almost all of his peers, Belichick isn’t above a little gamesmanship if it might help him win:  According to Halberstam, in order to slow down Buffalo’s no-huddle offense in Super Bowl XXV, Belichick told his Giants players to “accidentally kick the ball” away from the officials after it had been set up for play.

Each of the Patriots’ six Super Bowls is a testament to just how small that winning edge can be, with margins of just +3 +3 +3 -3 -4 +4.  But for two unbelievable catches by Giants receivers we’d be talking about an unprecedented 6-0 dynasty that averaged a championship every other year.  But for an unbelievable goal-line INT by an undrafted rookie community college graduate, we’d be talking about two different Brady/Belichick eras:  the first resembling the Aikman-led Cowboys of the early 90s, the second resembling the can’t-win-the-Big-One Vikings of the mid 70s.

The Grantland article includes a bit of catnip for those of you who like the X’s and O’s:  a defensive play designed around which way the center slides after the snap.  Talk about your “callous detail freak” looking for any edge.

We suspect his efforts to gain those “edges off the field” will also be a permanent part of his legacy.  His team hasn’t been in 6 Super Bowls over 15 years because of deflated balls, or illicitly videotaped signals, or (pre-Belichick) a snowplow driven by a convict on work release.  But you earn the reputation and invite the asterisks when you proudly display that same snowplow in an exhibit at your stadium.

To paraphrase the old adage: reputations are built over the long-term, and can be forfeited in just a moment.  In our business failure can be counted on to make (at least) a cameo, so it’s critical to learn how to fail the right way and make a distinction between business failure and personal failure.  An entrepreneur (or coach?) can try too hard to avoid an enterprise failure and pressure himself into a career-damning ethical lapse.

BPV often backs the same entrepreneurs in more than one business, and we view honesty and consistency as critical to sustaining long term relationships for long term growth as opposed to trying to squeeze maximum value from a single transaction.  We also put a premium on transparency, as it’s easier to remember the importance of being honest when everyone involved in a business relationship can observe how decisions are being made.

FVF’s “state of the industry” panel with Robert Faber

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Robert Faber (L) discussing our state’s entrepreneurial ecosystem.

This past Friday BPV principal Robert Faber helped cap off the 24th annual Florida Venture Capital Conference as part of the “State of the Industry” panel discussion.

The panel covered several topics, including: new non-traditional sources of capital attracted to our state’s (and region’s) attractive business climate, start-up valuations, and how critical it is for an entrepreneur to do his or her homework on potential venture partners.

The Miami Herald reports that all of the panelists were “optimistic about opportunities in 2015” and foresee “a strong year ahead.”  We look forward to seeing many of you next year at the Vinoy in St. Petersburg for the 2016 Florida Venture Forum conference.

 

BPVIII exceeds target, closes at $164 million, makes first investment

Ballast Point Ventures announces the final closing of its third venture capital fund. Ballast Point Ventures III and affiliates closed with commitments of more than $164 million, exceeding its initial target of $140 million.

Founded in 2002, Ballast Point Ventures provides growth equity venture capital to rapidly growing private companies in the Southeast and Texas. BPV has partnered with over thirty companies in its first two funds within its target industries of health care, technology-enabled business services, communications and consumer. The new Fund’s investors include large institutional investors, family offices and over sixty successful entrepreneurs.

“The BPV team appreciates the strong support of both our previous investors who have partnered with us again and a select group of new partners who are joining us in BPV III,” said Partner Drew Graham. “We are excited to continue helping entrepreneurs build outstanding growth companies throughout Florida, the Southeast and Texas, and we are encouraged by the high level of entrepreneurial activity we continue to see in the region.”

Ballast Point Ventures has been the most active investor in Florida companies over the past ten years.* Ballast Point Ventures III recently made its first investment in PowerDMS, a technology-enabled business services company based in Orlando, Florida.  PowerDMS provides technology solutions utilizing a Software-as-a-Service model in the Governance and Risk Compliance and Enterprise Content Management sectors.

“We have been fortunate to partner with an impressive group of talented and driven entrepreneurs,” said Partner Paul Johan. “We cherish those relationships and look forward to partnering with more great entrepreneurs as we invest BPV III. Successful private growth companies not only create tremendous value and often reinvent industries, but they also provide the vast majority of new jobs in this country.”

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 * Growth equity and venture capital investments of at least $2 million in private Florida companies, based on 2003-14 data from the Dow Jones VentureSource database.

© 2017 Ballast Point Ventures. All rights reserved.