Brad Feld on Misconceptions About VCs, Startup Death and the Rise of the Machines

Brad Feld on Misconceptions About VCs, Startup Death and the Rise of the Machines

Within the world of venture capital there are a few people who don’t need much introduction. Brad Feld is one of those names. As one of the co-founders of the near billion-dollar VC firm Foundry Group, he’s quite prolific within the startup world. I had the chance to sit with Brad, and to pick his brain on everything from what he holds dear to the world of investing. As we’ve been celebrating entrepreneurship during Denver Startup Week, it only seemed fitting that we would share with you the thoughts of one of the people who helps to bridge the gap between ideas and reality.

FullContact (FC): After last week’s flooding in Boulder, you’ve said that your own property is fine, but how is the community handling the cleanup? [Catch Brad’s blog post here.]

Brad Feld (BF): Really well. The community rises to the occasion and is doing what they need to do to get things back to normal.

FC: There has been a lot said about the whole “quality of life” reasoning behind staying in Colorado, but beyond that, why does Foundry Group stay here?

BF: I believe that there are great investment opportunities all over the US. We decided to be national investors when we started Foundry. I lived in Boston, but I invested everywhere. I had this personal belief that you could make investments in an area without having to be there.

I’ve never liked living in the Bay area. I’ve spent a lot of time working there, and we’ve always had a lot of investments there, but it’s not my thing. Do you believe that, as a human, you should choose where you want to live and then build your life around that? With the technology that we have today, that’s possible. I just reject the premise that you have to be in a certain area to create your life.

FC: Denver is definitely coming into its own within the entrepreneurial and startups world, but what’s still missing?

BF: It’s very similar to the dynamic within all startup communities in that you don’t have an end-state that you’re trying to achieve. It’s a continuously evolving and changing beast. But in the last 3 or 4 years, entrepreneurs have taken driving positions. Bart [Lorang, FullContact’s CEO) talked about that today with his “doer-ocracy” answer. Those that are doing shit are the ones making progress. You’re not waiting for someone to give you permission.

What we have today, as far as leaders, we need twice that to keep a steady, continual build. There aren’t some magical resources that are needed. You’ll have more successful companies, you’ll have more exits. When people build wealth from this, if they reinvest that back into the community then it will continue to build. Denver has always had a lot of entrepreneurial activity. The thing that happened 2 or 3 years ago is that a number of entrepreneurs grabbed the ball and started running with it.

FC: Let’s talk about the death of startups. What’s that “nail in the coffin” that you see too often?

BF: With most failures, the easy thing to point to are people issues. Maybe it’s leadership, the people in the company, founder conflicts or the construction of the team. That whole sort of bucket of stuff all falls into people issues.

Another area that we can point to is a lack of awareness of what the real market opportunity is as you scale a business. They think that they have something that’s working and then they try to scale it, but sometimes bigger is not the right answer. Sure, the BigCo thing [where a larger company builds a competing product] happens, but it doesn’t happen often enough to be a driver of failure.

People get cause and effect confused. They say things like “we failed because we ran out of money” when the reality is that you ran out of money therefore you failed. Ultimately, as a leader, you have to take responsibility for those decisions.

Going back to the previous answer, the biggest thing that causes structural failure of companies is people. Denying reality is maybe part of that, too. The feeling that “if _______ happens then all will be good” or “in another month things will be better”.

FC: What’s the biggest misconception about being a VC?

BF: There are two –

The first is that the job of a VC is not a hard one. Sure, there are plenty of lazy, ineffective VCs, but the actual work is intense if you try to be great at it. I’m not saying this as some “woe is me” thing, but the work is hard. It’s incredibly fun and satisfying. To do it well is a lot of hard work, but it’s really fun work.

The second is the idea that VCs are a singular archetype; that they behave a certain way. In reality they’re more like Dungeons and Dragons characters. They’re random. A VC firm is often a collection of different D&D characters. Seth, Ryan, Jason and I are different, but the collection of the four is effective.

[On the topic of whether a VC needs to have been a CEO in order to be an effective] The VC who is an operator and continues to run as an operator will likely never be a very good VC. At Foundry, our experience in terms of managing businesses ranged a lot. The largest company for me was 20, but I was co-founder and chairman of the board for a company of 2,500. Understanding how to use that experience is complex.

FC: What’s the next industry that gets you really excited as far as investment?

BF: I’m completely obsessed by the changing dynamics between humans and machines. I’m very optimistic about our long-term relationship with the cylons. I think that the worst case scenario is that the machines will treat us like we treat our pets. But I don’t think that they will overthrow us. I think that they will view us as a resource.

I think that the way that they interact and evolve together is unimaginable today, but we will experience it in our lifetime. If you told people 20 years ago that you would be holding a computer in your lap, there would be a TV on the wall that you can beam that computer to and that I would be carrying around a piece of glass in my pocket to communicate, they would think you were crazy. You can imagine this same kind of stuff in another 20 years.

“Big data” today is minuscule compared to what we will deal with 20 years from now. Our relationship with machines — and I call them machines because “computers” is too limiting — will evolve in this same way. I wear a Fitbit on my wrist, but this is really version 1.0 of where we’re going. We’re just beginning to understand how to deal with these feedback loops. We’re just at the beginning of this. If you think about it, 100 years ago, telling someone that there would be a wire in the wall that you could use to control a lamp on the other side of the room, that would be magic.

FC: What are the 3 most important things to you?

BF: 1 – Me, 2 – Amy, 3 – Learning. [At this point I commented that I found it interesting that he placed himself in the number one spot. At 36, I’ve only recently learned that if you don’t take care of yourself first, then you can’t be of much use to anyone else.]

That’s why I stopped traveling. I’m protecting and preserving myself so that I can be useful to other people. My biggest motivator is that I’m incredibly, intrinsically motivated by learning. Not so much extrinsically. I don’t care about pats on the back and rewards. I just went through a period of depression where I had gotten confused about learning versus teaching. I had this huge imbalance because I spent too much time teaching.

At 47, I’m learning that I need to have them linked together. As I get older, more of my time is probably spent teaching. But one thing I’ve learned is to not do repetitive teaching. It has to be new to keep learning from it.

FC: What’s the question that you wish someone would ask?

BF: Where was I born? Nobody ever asks that. Arkansas. Blytheville. There’s an Air Force base there, the Blytheville Air Force Base. BAF. It matches my initials. A lot of people don’t know that I’m from Texas, or that I’ve never lived in the Bay area. There’s this notion of where you’re from. Where I’m from today is definitely Boulder, but geography matters a lot less, and in different ways.

Image Credits: QMX, Tris Hussey

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