Russ Siegelman

Russ Siegelman

A weeklong electronic journal.
Nov. 19 1998 3:30 AM

Russ Siegelman

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       When I worked at Microsoft I traveled out of town from time to time but never drove around town for work. As a Silicon Valley VC, I rarely travel out of town, but I put a lot of miles on my car, because all the companies whose boards I sit on are between San Francisco and San Jose. Since we prefer to have board meetings on-site (nothing like being close to the action to see what is really going on!), I am often out of my office.
       As a result the pace and feel of the work can sometimes feel like a field salesperson's. I constantly find myself on the cell phone in foreign conference rooms and while strolling through parking lots doing business. (How did they do venture capital before cell phones? Pay phones must have been a VC's best friend.) Sometimes I don't need to be somewhere for another hour or so, but it doesn't make sense to travel back to the office, so I just plop down wherever I am and go to work. That's what I did this morning after I was done with my workout. I sat down in a corner of the Pacific Athletic Club and reviewed the books for tomorrow's board meetings. Then I went through my file of unread business plans.
       KP gets hundreds of plans every year. The folklore is that the firm has never invested in a plan that came in over the transom. It may well be true. Nearly all the opportunities we invest in are referred to us by our network of CEOs, limited partners, friends of the partnership, or other VCs. Yet we still have to read plans. You never know what you might find. In any case, it is an educational experience. Spotting a good opportunity is a pattern matching exercise. The more data you see--i.e., the more plans you read--the more certain you are when you have found a match. This is one reason I often know after seeing the first 15 minutes of a company's presentation, and sometimes after reading the first page of a business plan, that I am not interested in investing. I have read the same plan, or heard the same pitch, five times before, and I know the tough questions (and possibly the answers). If they aren't being addressed, I am not interested.
       I took two plans off my stack at random and, believe it or not, they were nearly identical business propositions! Both companies plan to become the leader in the "next great Internet play"--being an e-commerce portal. A sure reason not to invest in a company is that you have seen dozens of the same plan. I won't be investing in a new e-commerce portal. I rejected both plans.
       The variations in the quality of the plans I read is amazing. Sometimes they look like the entrepreneur's dog has chewed them, and they are photocopied sloppily onto standard copy paper, with typos and coffee stains. Sometimes they are glossy, well written, with plenty of Excel generated charts and pages of financial projections. One might think that a good VC will get beyond the stains and the chewed pages and get to the business idea to make a judgment. But that isn't my view. If entrepreneurs don't present their ideas in a quality way, they probably aren't organized or professional enough for me to want to invest. I am not typically a form over substance kind of guy, but when it comes to business plans, I can't get to the substance if the form doesn't make the quality bar.
       By 6:30 I'm home for dinner. Max and Jake eat slices of Max's birthday cake while I eat lasagna. After dinner Max and Jake help me build a fire, and we sit on the couch with Beth, roughhousing and listening to Max playacting as a helicopter pilot. By 8 they are in the shower, by 9 in bed. I tuck Max in, say happy birthday, and give him a good-night kiss. It is the most satisfying moment of the day.