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| RPM Ventures' front page features a toy idea taking off. |
This summer, I've had the fortune of interning as a Venture Capital analyst for
RPM Ventures, a seed-stage Great Lakes venture fund that combines Silicon Valley startup culture with a Midwest work ethic. On my last day of the internship, I've had some time to reflect on a few quick lessons I've learned.
1. It's about the entrepreneur. This is one of the
four core values that RPM Ventures espouses. A solid leadership team is the driving force behind any venture, and is the first thing that VCs look at when evaluating a pitch. You may have the greatest idea to start a business, but so may many others. Your team is unique, and the individual chemistry and experience inherent in the team can be found only in one place.
2. Ideas are cheap - action is what defines you. There's a great line in Christopher Nolan's Batman Begins that goes "
It's not who I am underneath, it's what I do that defines me." In the startup world, this has been well-known for a long time. Plenty of people come up with an idea, and like to pitch it, but don't take measurable steps towards that goal. Ideas are cheap and plentiful, but the action behind them isn't.
In the office, I used the silly term "Do-it-iveness" to describe the entrepreneurs we listened to who have a tendency towards action. That do-it-iveness is what makes a
want-repreneur into an entrepreneur.
3. Surround yourself with people smarter than you.Marc Weiser, one of the managing directors at RPM Venures, stressed this gem to us during a lunch meeting. It's oft-repeated, but Marc took it one step further, saying that when he's in a board meeting of a portfolio company, he wants everyone around him to be more knowledgable in the space, more passionate about the opportunity, and more driven to lead the company's success. A venture capitalist is all of these things as well, of course, but if the management team isn't at the forefront of these three qualities, something is not right.
4. Burn the small forestJosh Lin, the associate director at RPM, has this saying about "burning the forest behind you". The idea is that, when you start out attempting to add value to your venture (by pitching your idea to venture capitalists or releasing it to initial customers), things won't go perfectly right away. In fact, it might be a complete fiasco if you find out that a major part of your venture relies on a false assumption. This is the process of burning the forest - it's when you test out an idea by releasing it on a small group of people. You don't want your prototype device to fail at all, but if it will, you want it to happen before a small group of co-workers, not during a meeting with a major venture capitalist. Once you burn the small forests, and figure out how to prevent the fires of crisis, then you can move forward and have the largest forests unscathed.
5. Focus on what you value.Ventures are turbulent ships. Core people come in or leave, ideas are constantly validated or rejected, and the entire company may pivot several times before becoming a predictable engine of growth. You need to be flexible without losing yourself or your vision in the waters. You can do this by distilling your company down into the major value proposition, and putting all your effort into making sure that core value is intact. Testing whether people will buy a product through your new online site is easier than testing whether people will buy a product
or recommend it to friends
or click on sidebar ads
or use it to sign up for newsletters. If the value prop isn't strong enough, you have successfully rejected the proposition, and can focus on testing out a new one.
6. Take risks while you have the opportunity.During my last week, I had the opportunity to sit down with
Tony Grover, who manages RPM Ventures with Marc Weiser. We talked a lot about the future of venture capital, Silicon Valley, the Great Lakes region, and soon-to-be Michigan Alumni (like me!). One of the major points that stuck in my mind was his opinion that
now, more than any future time in my life, is the best time for me to get involved in the startup world. At the present, I don't have a car to pay off, no mortgage on a house, no romantic relationships tying me down to a location, just a lot of freedom and the ability to couchsurf and live out of a backpack for as long as I need (which I'm currently doing).
When life catches up to you, and you gain responsibilities for more than just your own goals (taking care of kids, paying back loans, etc), you find it difficult to take calculated risks. It's not
impossible, as Tony mentioned, but it is difficult and stressful.
Before I graduate, I want to get involved in the startup community here at Michigan. Once I've gotten my diploma, I want to take a jump and move out to Silicon Valley or New York, and get swept up in a new venture.
7. The essential rule of thumb for startups in uncertain waters:
