Your Founder Got Strategy?

A couple weeks ago, I attended a cocktail reception for Emergence Capital, a newly formed $125MM venture fund focused on information technology enabled services, similar to my fund's strategy but West Coast based.  We bonded quickly, as Jason Green's prior fund Venrock backed a company I founded in 1995.  (Fred Wilson of Union Square was there too; he passed on the predecessor company AdOne but we've become much closer over the years.)

As we were talking shop and riffing on what we were doing as funds, and compared it to what they were doing, Gordon Ritter asks me about one of our founding CEO's he had met earlier in the day.  This CEO is a veteran Sales guy on the surface.   Gordon wanted to know if he "got Strategy?".  So I knew exactly what Gordon meant, as Sales guys are often tactically oriented to win the day, versus strategically oriented to win the war-- not that there is anything wrong with that-- I'd almost take the day winner over the war winner, because sometime's there isn't another day if you don't win today.

So anyways, I confidently said, sure this guy's "got Strategy".  My proof? I said that when we walked into his sparcely furnished loft apartment stuffed with staff, I saw only two books, on window shelf: Into the Tornado (from Crossing the Chasm fame) by Geoffrey Moore and Innovator's Dilemna by Clayton Christiensen.  Gordon nodded his head; our CEO's got strategy.

That's not to say that if you read these 2 books that's all you need to know about technology marketing strategy.  But I'd say if you haven't read these 2 books, deeply, and absorbed their lessons you probably don't got strategy.  Strategy is the great leveller that allows small early stage companies to become crushing guerillas over established incumbents in a relatively short period of time.  It's almost the only advantage that a startup have: the roadmap to the future of that technologies' development.  While often entrepreneurs tout "proprietary" technology, patents, or unique distribution relationships, in my book, pun intended, this often doesn't amount to mush and an incumbent can throw cash at these issues.  So the only thing left is a keener savviness on how the game is played, and getting to where you need to be before the incumbent does.  Why I and I think other VCs gravitate to serial entrepreneurs is that they have either have read these two books and experienced them and others like them, or have either by luck or sheer intuition figured strategy out.  The issue with the latter group is that they can't communicate it to others internally or externally so have a greater chance of failure in my view.  That's OK, and correctable, but I'd prefer if an entrepreneur can communicate vision to others, because if he can't that severely cramps the one advantage a startup has.  The other thing is that strategy is often counterintuitive, and few entrepreneurs can intuitively grasp and then communicate a counterintuitive strategy, especially if the strategy is based on rapidly flipping back and forth between different directions, depending on what stage of development your company and industry is.  Try and explain that to your management team or board without assistance. 

Let's just say this: on my bookshelf, I keep 5 or 6 spare copies of each book, so I can give them away to friend and comrades without delay.  I spend 15-30 minutes a week at least refreshing myself.  I am not joking.

So you want get Strategy?  Start with these books.  It's surprises me almost everyday how many founders and CEOs still go without.

I am always on the lookout for these types of tomes.  If you would post here or email me what other books you think are critical to understanding strategy or other VC/entrepreneurial books, I and other readers would very much appreciate it I am sure.  Even if they are obvious or a bit out of mainstream, so much the better.