One of my favorite VC bloggers is Fred Wilson, and he wrote another great post this past week. "From Messes to Successes" is an interesting article about his experiences with "problem" portfolio companies. As you would hope would be the case with any good venture capitalist, he and his team have helped turn many of these "problems" into fabulous outcomes.
Here is an excerpt from his article…
When I look back at my 20+ year history of venture investing, it’s certainly true that the biggest successes have been big messes at some point in their life. My most successful venture investment at Euclid, Multex, almost went bankrupt before the Internet came along and provided a cheap way to get it’s service to its customers. Geocities, which was our most successful investment at Flatiron, was a total mess in mid/late 1997, about a year after we first invested. And our most successful investment to date at Union Square Ventures, TACODA, was a mess multiple times including when the first build of its software totally failed on them. Delicious also had plenty of messy moments in its brief period in our portfolio.
The core point of Fred’s article is that startups are often messy due to the hyper-focus on the product and the market. He goes on to argue that this may be what ultimately makes them companies great companies once they finally get their act together on process and operations.
I agree. Building a great product is a pre-requisite for success. When you get the product right, you can build a company around it. Without a great product, you will end up throwing a lot of money at something that won’t ultimately succeed.
Start with the product. Make it great. Build the team the processes and operations around that great product. That is how you build a great, successful business.
You can read more of Fred’s article here >> A VC: From Messes To Successes