Interesting funder's point of view

#1

Post by tomerb » Wed, Oct 08, 2008, 12:15 PM UTC

Yossi Vardi is the biggest known Angel of internet start-ups in Israel. One of his famous success stories was ICQ which was funded by him and sold for $287 million dollars in June 1998.

I read an article about him in the Israeli "The Marker", which points out a few interesting things about the entrepreneur - funder relationship.

I've translated a saying of his that was quoted in the article:

"When I hear a pitch by an entrepreneur I look for a few things in them. First, they have to be very talented. I'm not interested in good or great entrepreneurs. I want them excellent. They have to be nice people, since some investments don't ripe in early stages. I always tell my wife that in case the investment fails in early stages, at least we gave a "scholarship" to a good guy and not to some idiot. Moreover, they have to be focused on the arena I like which is the internet. If they meet those criterias, there is a good chance I will invest in them. What exactly they are doing is less important. Business plans are a wonderful part of science-fiction. They are developed for people who love sausages and don't know what are they made of. How can one conduct a 'due diligence' on something that is only in his mind."

I would love to hear your thoughts, Tomer.

Re: Interesting funder's point of view

#2

Post by shafqat » Wed, Oct 08, 2008, 12:21 PM UTC

I love this guy. Yossi keeps it so real. He says he's lost so much money funding "great" business plans that he doesn't give a shit about them anymore.

He invests in great teams. That keeps it simple.

Re: Interesting funder's point of view

#3

Post by cperciva » Wed, Oct 08, 2008, 12:22 PM UTC

Sounds to me like this is pretty much the YC investment strategy: Fund good teams, and ignore the business plan because that's almost certainly going to change anyway.

Re: Interesting funder's point of view

#4

Post by ram1024 » Wed, Oct 08, 2008, 1:15 PM UTC

shafqat wrote: post #2

I love this guy. Yossi keeps it so real. He says he's lost so much money funding "great" business plans that he doesn't give a shit about them anymore. He invests in great teams. That keeps it simple.

i would consider finding great people harder than finding a good business plan or idea. you're essentially banking on the "diamond in the rough". hoping the people you find will produce something outstanding. it's risky both ways, and i guess you have to go with your instincts.

Re: Interesting funder's point of view

#5

Post by jbert » Wed, Oct 08, 2008, 1:53 PM UTC

I guess it also depends on how good you are at assessing people as opposed to plans.

Given how hard people find interviewing, I'm not sure it's that obvious to spot great people.

Re: Interesting funder's point of view

#6

Post by known » Wed, Oct 08, 2008, 1:54 PM UTC

Isn't it obvious?

Re: Interesting funder's point of view

#7

Post by tomerb » Wed, Oct 08, 2008, 2:57 PM UTC

jbert wrote: post #5

I guess it also depends on how good you are at assessing people as opposed to plans. Given how hard people find interviewing, I'm not sure it's that obvious to spot great people.

I guess he doesn't considers people who have a hard time interviewing as "excellent" as he said.

Re: Interesting funder's point of view

#8

Post by alex_c » Wed, Oct 08, 2008, 2:59 PM UTC

cperciva wrote: post #3

Sounds to me like this is pretty much the YC investment strategy: Fund good teams, and ignore the business plan because that's almost certainly going to change anyway.

See, there's one thing I don't really understand about the "fund good teams, ignore the business plan" strategy: can you ever consider a team to be "good" if they can't present you with at least a plausible business plan? Yes, the business plan will likely change, and being adaptable enough is important, but can a team be "good" without demonstrating the most basic ability to plan ahead?

Re: Interesting funder's point of view

#9

Post by nocivus » Wed, Oct 08, 2008, 3:13 PM UTC

I must say that it's the first time I see a funder not really worried about the business plan. And I must agree 100% with what he says; If the team is excellent and passionate with what they are building, then there is a good chance that something great will come out of it. How you will make money from it becomes almost secondary, since it will show itself during development.

Re: Interesting funder's point of view

#10

Post by jbert » Wed, Oct 08, 2008, 3:19 PM UTC

tomerb wrote: post #7

jbert wrote: post #5

I guess it also depends on how good you are at assessing people as opposed to plans. Given how hard people find interviewing, I'm not sure it's that obvious to spot great people.

I guess he doesn't considers people who have a hard time interviewing as "excellent" as he said.

Sorry, I meant "interviewing" from the perspective of the interviewer. Reliably selecting good people to join your company is often thought of as a difficult task.

He's trying an analogous evaluation of the founder - and giving it more weight than the paper plan. Possibly quite reasonably, but it seems the success of the approach relies heavily on something people seem to find difficult.