I guess that's why I'm an accountant and not in Finance...

Seriously though, if you can't figure out who owes you money because you have one accountant with way too much on his plate whose under-qualified for the job or are spending tons of $ on ineffective marketing, (e.g. none of your new customers knew the marketing existed), I think that understanding these issues would be important to an investor.

I'm not calling for rigid processes here that would exist at a Fortune 500 Company but it really sucks when you are looking to sell your Company and something comes up in the due diligence. I just think there are times where a skill gap becomes evident (e.g. an audit took 10 months and cost you 3x what is was supposed to) and wonder whether a VC Firm is able to identify these issues and/or has ideas to help portfolio companies get through them.

This could very easily fall more into the Later Growth Stage rather than the Early Stage that ezmogee is operating in.

Accounting is definitely a different animal than a growing business and the skills needed. Accounting is going down to extreme carefulness and diligence and a large amount of knowledge. Whereas growing a business will be something that someone who is very adaptable, can improvise, and see things that aren't there and connect the dots type skills. Both are important skills, so it's likely you are seeing the parts that are essential in your job and ignoring what is essential to grow a business. It's also an area where entrepreneurs are most likely to overlook since it seems to be the most contrary to their skillset.

I'm curious if this type of issue is an actual issue for any company Ezra has dealt with.

Agreed completely.

Just want to reiterate what I'm seeing is not always just from an accounting perspective. Sitting in meetings with my partners and Companies executives, reading through their BoD minutes, etc. gives some perspective into the operational side and where many of these Companies are seeing growth opportunities and how they plan to attack them.

One Company invested nearly all funding in their Data Analytics/Consulting Business even though a different piece of their business accounted for 80+% of their revenues. They realized that their current business was not the billion dollar market that Ezra referenced earlier and shifted resources accordingly. They 'connected the dots' and have seen significant growth in that market since.

On a separate client, it's been interesting seeing what it takes for a Company to grow from 200 to 300 employees to 500 to 800 to 1000 employees in a 4-5 year span while also getting an injection of investment capital and seeing how they allocate it.

Fees - I think that's a good summary. My $0.02 from people I know from GSB and the community is that team is about 80% of what they look for in an investment. The stories that get told in the media are of genius ideas striking people like lightning bolts, spurring them to create the Next Big Thing, but that is almost never (or actually never) the case.

Usually they get it wrong a bunch, change direction a few times, do something right completely by accident, then realize it and shift direction, then weather some tough times where they almost quit or abandon the project or run out of money, then explode.

Most VC's I know generally first seek to really vet the team and see whether they believe in these guys, then take a long look at the space they're trying to break into and see how feasible it is. The actual idea or strategy of how to win in that space they have at the time of pitching is nearly irrelevant, since that's almost certainly not how they're eventually going to end up doing it if they succeed. But coming up with that initial idea is a good vehicle to use to examine a space and see how compelling a team is, which is why everybody does it and pretends that it's important.

Most VC's would rather write a check to a trusted, successful, smart entrepreneur whose only pitch is "I'm going to tackle This Space, but I don't have a plan yet" rather than a guy they don't know in a space they don't know, but whose idea seems brilliant.

Nice of you to take the time to do this, Ezra.

I'm curious about your thoughts on title 3 of the JOBs act: a) will it actually work? b) how will it affect your business? c) how it will affect later rounds for companies who initially raise this way?

For your firm, what's the ratio of B2B v. B2C deals?

Do you look for deals beyond your proximity?

How do you judge the point at which an entrepreneur's confidence in him/herself crosses over to the point of arrogance, and is that a fine line you have to walk in order to get funding?


And here's a different question, that may or may not be one you're able to answer:

What's the worst (you can be the judge of what the means: clueless, rude, unhelpful, etc) question you've ever heard a VC ask?

Very good read so far. Thank you

Really amazing thread Ezra!

Also great/informative posts from Taylor and Galen.

Thanks for this. As someone with a useful degree looking to get out of poker within 3 years, I always find these kinds of threads very helpful, and am truly grateful to the people like Ezra/Taylor/Galen, who have largely made the transition out of poker into something they are more passionate about, but still give up their time to help lots of people they don't know at all or only know on the internet.

Hope the thread keeps going!

Great posts from Galen and Taylor.

I think I struggle with the same ideas post-poker. I have some ideas of end-goals that I may find stimulating and exciting and a life-time worthy pursuit, but I have no ideas of the paths that get me there. There are so many paths to take (banking/quant --> growth capital, banking/consulting --> PE, trading and investment management --> hedge funds, entrepreneurship and building some skill like marketing or bus dev or consulting --> early stage VC, consulting and data consulting --> bus dev), that it becomes tough to choose and I have no calculus with which to make these decisions.

My personal background is this: I was a derivatives trader and equity trader for 4-5 years and I have decided to leave the industry for a few reasons. I didn't find the work exciting (Trading is a lot less interactive than investment.. you don't really ever meet with founders. Trading on the highest-level demands programming skills and high-level quant skills and unless you can develop these while working, you won't really be a big contributor to the firm. Trading is also kind of boring... you kind of just do the same thing day-in and day-out and the problems you're trying to solve just aren't that exciting or varied. I do feel investment is different. You're at least trying to help founders solve worthwhile problems.) I graduated from a top liberal arts school and I have a half-decent work background and so I decided to apply to various MBA programs to help me find "my path". Also, I have some VC experience (I help an accelerator source fintech companies) and I am simultaneously looking to find an analyst position at a VC firm or enter bus development for a startup or growth company that I feel strongly about.... maybe even in lieu of business school.

One thing I like about VC is that even if the job doesn't work out, you've at least exposed yourself to a lot of different industries and you have at least narrowed down career paths in your head.

My problem: I have no idea what path to take. I don't want to make the same mistake I made with trading (enter an industry or organization that leads to a dead-end path or burnout with no career growth). I don't think there is an easy answer to this except... join a company and see how you feel about the work or enter an MBA, network and try to find answers to these difficult questions, and maybe develop some harder skillsets (programming). Is there any other career advice besides fail, fail again, fail better?

-Jeff

Ezmo,

Thanks for doing this, there's a lot of good stuff in here.

It seems like you are a proponent of an MBA for helping bridge the gap from poker to finance. I am currently applying to MBA's with a goal of ultimately landing a job in VC or PE but have been questioning whether there is a better option. I was a successful MSNL grinder, have completed my CFA exams and at 28 I am hesitant to commit to more school. On the other hand I feel under qualified and lost on where to start which is why I like the idea of the MBA.

I guess I am looking either for some validation on the value of an MBA, or alternatively, whether someone with poker and some finance knowledge can focus on something else to break into the industry.

Also, randomly, I found this article to be very helpful:

how to email VCs

Thanks for doing this OP, amazing thread.

I'm in the process of building a product and a company with a friend, and we're attempting to become experts in our field. We have a natural pedigree given our comp sci degrees and work history, but we fit into that mold of people who have never taken an app/website to market. Instinctively I assume that our best bet is to find someone with extensive experience in business management to be the face of our company so that the venture capitalists feel like the execution of the idea will be managed by someone with strong business acumen. Is my assumption correct? Or early on for small sums (750k to 2m), would a group of highly technical experts be enough to land a first tier of funding assuming our pitch and presentation was excellent? How much value does the MBA grad with X years experience really put you guys at ease? Because we can find one, we just don't know when the best time to find one would be.

I am only speaking based off personal knowledge (which is mostly operating as opposed to investing), so hopefully Ezra can add his opinion based on what he has observed.

The biggest thing you have going against you is that you've never done this before. Everyone has to start out somewhere, but rarely does a first attempt at a business/idea work out successfully. Investors know this and try to back people with track records.

However, it's not as easy as saying "I want to plug in someone that's successful to lead this thing." First, there aren't that many people with track records so it's hard to find them. Next, there has to be a good fit between all of the founders -- you all need to add value to whatever the concept is and it's tough to not only find someone with experience, but have that person be willing to take the risk and also be a good fit based on your team/idea.

So IMO, unless you can find an absolute top notch guy with great/relevant business experience (and convince him to work with you), I would try to get a proof of concept built as cheaply as possible and show potential investors that you might have a big opportunity. Develop a plan for what you need and include "operational help" or whatever you want to call it. Go to the VC's and express that you guys are new to running a business, but you have some great talent/tech and need some help from someone that's been there before.

If you have a great founding tech team then I think you can solve for everything else, it's just going to be hard without having the money. From there you can hopefully recruit a great business guy with a combo of a decent salary and equity. It sounds like you need a COO type.

This is just how I would go about doing it. It's pretty much the opposite of the problem I've run into over the years. My challenge has been finding the right technical people to plug into situations where we are strong on the business/operational side. The way I've always approached it is to A) do my best to prove my worth to strong technical people and B) put my companies in a position to be able to offer them compensation and work environment that makes the opportunity worthwhile. Good luck!

lol


I've been doing some research and just got back from a trip to SF. I am toying with the idea of just learning and networking to try to parlay that into work/consulting and/or an investment. The hope here is that whatever I get involved with has an exit or I get noticed, essentially trying to join the "club". The problem with this is simple BRM. My risk of ruin as an angel is substantial, especially given my level of experience. This would be the path of least resistance but highest risk by my account.

My other options are all high barrier to entry:
1. MBA
I would possibly? have to go back for undergrad, take GMATS, get accepted, spend a bunch of time/money. This is the safest route as I am essentially on the inside of the finance world and can get involved from there.
2. Find someone who really resonates with my story to take a chance on me. Any advice where to find this type of person and what to say? This seems like a fool's mate type approach.
3. I could go for my CFA. My understanding is that CFA=MBA, however you need four years work experience to actually get the certification. If you register for level one I believe you can join the Security Analysis Society, which would be insanely helpful for network. Maybe if I can pass the exams its a quickier/cheaper way to go the MBA route?
4. Try to find an investment or executive recruitment firm that likes my story. This is unlikely but has a ton of potential. I will pursue this tomorrow probably, if anyone has some advice or resources lmk.
5. Join a firm that specializes in gaming. This is probably the most exiting. I actually have expertise in the gaming industry. This just came up today, I am going to look for some firms that specialize in gaming. If anyone knows of any lmk.


So this where I am at now. I can see focusing on any one of these, as well as doing varying amounts of a few of them at once. What do you guys think?

I really appreciate all the feedback!

Ryan

Option (1) feels like a super longshot (moreso than the others) to get you where you want to be considering your current profile. Not impossible, but you'd need to first get into a good undergrad program (may be tough), do really well there, kill the GMAT (probably doable) and then have someone on an admissions board at a top 10 MBA program take a chance on someone with a very risky profile. That's a sick parlay.

Option (2) is reasonable, but obviously a longshot and will take a lot of time, a ton of effort, and luck. Lots of luck.

Option (3) sounds pointless. Registering for Level 1 of the CFAs doesn't help or differentiate you at all.

Option (4) probably least likely. Recruiters won't touch you even for a job placement that pays $40k a year. They are only interested in working with candidates that have a high likelihood of placement (and the faster the better), and you know you don't fit that mold at all.

Option (5) is a nice idea. I don't know of any off the top of my head, but you should look into it.

I think no matter what your lack of an undergrad degree is going to be a massive barrier to entry into anything mainstream that isn't your own thing. Not because it's super necessary to be successful in what you want to do, but bc it will auto-close a ton of doors and you will auto-lose any tie in any hiring process.

Sorry I should have been more clear. My intent is to pass the exams and use it as a networking resource.

I'm on a writing kick elsewhere, so I wanted to reply to fees.

You have to have enough credits to be a senior in college in order to register for the initial CFA exam, and then you have to have a bachelor degree to register for level II. Also, CFA != MBA even if some call it the poor man's MBA. the CFA exams alone take at least 2.5 years and are tedious.

The degree route might be worth it, but only if you use it as an excuse to get your foot in the door and network. Honestly, the EV of this route is probably not very good, but at least there is a known downside in tuition.

#2 is really what you're looking for, the question is how you maximize the chances of this happening. Forget about #4.

As tough as it is, I think you should figure out exactly what you want to do. Do you want to start something, grow something or manage something? And in what industry?

The easiest choice for you is to pick something in poker/gambling and decide to start something. Try a bunch of things out while spending as little money as possible.

Tell everyone you meet you want to start something in the poker space for whatever need you can identify. Make a networking plan: ask everyone you know to introduce you to one new person who can help you out or is interested in that area.

Sorry guys, I've been slammed lately. I will try to get in here and work on some responses when things calm down early next week...

E

Just read all of this thread. You're doing a wonderful thing here. I have a question for you.

I've been working on an enterprise wellness platform. We have a Psychologist, MD, and Nutritionist on the team. They have developed a couple of assessments and an algorithm that assigns the tester a score based off of the assessments.

It includes a few features that engage the user and creates a stronger connection between the company and the employees(users). We have one company that has been been our Beta, as we add features.

They've provided suggestions on next features and things of that sort. Our team has discussed and we believe it is dangerous for us to immediately add every feature the mention. We don't want our first paying customer to chart the evolution of the product. We're now in talks with several other local companies to use our platform and we have a product champion.

My question: Is our thinking wrong? I don't want to develop a relationship that we'll have to soon leverage, as we grow.

Thanks

Buffetology,

Not sure if you read 37signals but if you don't or are not familiar with this article, it is good. It is not an answer to your question, but seems to have the same mindset as you and may give you some ideas:

https://gettingreal.37signals.com/ch02_Build_Less.php

Larry Legend,

Thanks! I read the page that the link sent me to. I'll dig more into it. We do want to stay simple with our features. I think we have a team in place that have a ton of industry experience and can provide a real solution to how companies manage employees' health. In my opinion that carries more weight than our next feature.

But...

I could be COMPLETELY off base.

This thread has been a fun read. Ezra's comment on poker essentially being a huge barrier to entry but a great credibility booster once you are in is spot on. I couldn't believe how much 'street cred' I got over the summer especially in juxtaposition to how hard it was to find myself in that position.

This is sort of a ****ty suggestion but I would recommend doing more than one of the above. It's a long game, and it also helps your credibility if you can tell someone what you are doing in addition to trying to invest/network/consult or find your way in the door somewhere. If you are applying, or start taking classes again it gives you something to talk about when you are trying to get your foot in the door and goes to show some 'action' which backs up what you are saying 'my goal is to do xyz and I am willing to do whatever to get there'. And it also has the added benefit of moving you forward since the plan of finding someone to take a chance on you is going to be hard. Then you can continue plodding on path A and if something better comes along take it. My 2 cents anyway. It would obviously be a lot of work, but if that's what you want I think you need a short term and long-term strategy to break through into something.

This above seems like good advice.

As someone who is undergoing a transition himself, all I can say is that transitions are hard and it really helps to do a lot of different things to make a transition. The 5 approaches that fees mentions are all intertwined; internships and networking enable you to buffer up your resume which will be useful for future interviews, and all of this experience and well-roundedness will be helpful if you want to pursue an MBA.

Best of luck.

As a CPA who's always been interested in finance and investing, was a great and interesting read.

Hi, good stuff. What's the best way of building a network of vcs? How to stand out best in the crowd of a gazillion startups? Howto from from Europe?

Cheers