Go for the Dark Horse, Obama

I think almost every CEO-founder I’ve ever backed as a VC was some type of Dark Horse.  Typically, they are someone that no one really knows that well, but on closer inspection have a special spark.  They were born for the role, and had the right set of experiences to be perfect for a particular opportunity. 

One of the first entrepreneurs I ever backed professionally was a Robert LoCascio, the founder and still CEO of LivePerson (NASDAQ: LPSN).  He was a two time entrepreneurial loser, once in the kiosk space, and another time as a web developer.  Few VCs would have backed Robert based on his experience to date; he was a true Dark Horse entrepreneur. 

I still remember the day I met him in his office.  He had an old ’85 vintage Macintosh literally hanging down in his entrance way of his 15’ by 30’ Hell’s Kitchen office.   Not your conventional adornment.   7 people were working ther hunched over ratty furniture and I think a few wooden doors that were used as desks.  Rob explained to me that he had a vision in 1997, that ecommerce sites were more like morgues than interactive shopping experiences; when you walk into a store, you expect to see people and be helped by people.  So he started his company to address that issue, starting with online chat.  He explained that the average ecommerce customer call on the phone cost $4/minute to service; online chat would be $1/minute because 1 customer service person could multi-task and have semi-automated responses and thus be more efficient.  Companies would pay him to license his software on a hosted ASP basis-- SaaS wasn’t in the lexicon then!  Later LivePerson would get into ecommerce analytics and so on.  

The company went public 18 months after we seeded him, and LivePerson is still public, and the leader in ecommerce interactive applications and analysis.   I think few people ever expected that to happen.  To tell you the truth, he did it by hiring Dark Horses himself that were incredibly skilled; and aside from being at the right place at the right time, like half a dozen other startups, he hired his own contigent of Dark Horses.

Startups often have to make the decision and “settle” for the Dark Horse recruit for key positions.  Oftentimes, they really don’t have much of a choice, as traditional candidates that might be great managers and have great domain expertise are either too well paid, or too polished to want to leave a more established organization.  Startups often have to go with the recruit that had a bit of bad luck, or had some karmic twist that made them incompatible for a larger organization. 

So as a VC, I’m quite tolerant of Dark Horses.   Frankly, most VCs are Dark Horses themselves, myself included; they tend to be mavericks that probably would not have fit as well into a more traditional finance job.  So remember that, the next time you are pitching a VC.

What inspired me to write this Dark Horse post was the mention today in the AP wires, that Obama is considering a Vice Presidential candidate, whom I used to work for.  His name is Chet Edwards, a Democrat from the part of Texas that includes a Republican leaning district and George Bush’s Crawford, Texas ranch ironically.  

In 1987, I worked with Chet on his quixotic Lt. Governor campaign as a summer intern, carrying his bags, literally.   In a state that cared more about high school football than education, Chet was one of the few that had to good sense of legislating a different priority.  As a businessman and Harvard MBA, Chet understood that jobs are not the direct creation of the government.   Here’s a list of his other beliefs.  Not all of which do I espouse, but generally, he’s moderate, educated, and has common sense, something sorely lacking in politics today in both parties.  I think he's almost square right down the middle, where most Americans are.  For whatever reason, in today's political press, moderates are call "mavericks"; if you think about it, that's pretty sad.

I won’t ruin the press theatrics, but if Obama picks Chet, a total out of the box Dark Horse, watch out.  I think this election could become an Obama landslide, as Chet is the real deal, and one of the smartest politicians out there.  Chet will make a perfect foil for Obama and his message.   If Obama goes for a tired traditional pick like Clinton or Biden or Kerry or other old school politician, I think it’s game over for Obama, as it will wreck the image he has built.   So my guess right now is Chet will be the VP nominee, the ultimate Dark Horse.

Now I am a bit biased on Chet, and I don’t follow politics professionally, but I do believe in Dark Horses.  

I think most entrepreneurs, as well as most VCs, and as most Americans, deep down, want to believe in Dark Horses too-- for good reason I think. Supporting the underdog is a uniquely American trait; it's a belief that hardwork and tenacity in the land of opportunity will pay off.  Americans and entrepreneurs know that Dark Horses know they are Dark Horses; Dark Horses have so much more to prove than traditional candidates: they need to win, not for money or love or power or fame but for the fact that no one expected them to get there and they have a lot to prove, to themselves if nothing else-- and nothing to lose if they just lay it all out there.  This set of traits is exactly what every startup needs.    The danger is that a Dark Horse becomes an empty vessel filled with hope versus substance, which is, of course, the bash against Obama and Edwards and LoCascio initially; but if they are the real deal, that will shine through.

Life isn’t a dress rehearsal, and startups, and this country, need people like Robert and Chet to make it happen.  So, occasionally, give a Dark Horse a shot from time to time. It might be the key ingredient to success.