July marked the two year anniversary of launching the Work-Bench Ventures fund and consequently two years into my experience as a VC.
Work-Bench Ventures is a VC fund that co-invests in enterprise technology startups early in their go-to-market. Usually this means Series A and B deals. Our portfolio includes prominent enterprise startups led by serial entrepreneurs such as Switch Communications (Craig Walker), Tamr (Andy Palmer and Michael Stonebraker), and vArmour (Tim Eades). In these deals we've invested with the likes of NEA, Google Ventures, a16z, Menlo Ventures, and DFJ.
We’ve made it our mission to be the most value add investor on the customer introduction front for early go-to-market enterprise startups. We focus on connecting our portfolio companies with our deep network of early adopters at forward-thinking Fortune 1000 companies. And to assist in this mission, we have built the home for enterprise tech in NYC through our community and events that we host at our 32,000 square foot workspace in Union Square.
It's been a wild (and super fun) ride the past two years, and Jason Lemkin’s recent post on “The Top 8 Mistakes I Made in My First 18 Months As a VC Partner” inspired me to share some of my learnings too.
1. Community, when done right, is a powerful force.
When done right, community is a true differentiated value add for both portfolio support and deal flow. Whether it's the First Round Capital platform team encouraging an ecosystem of mutual assistance, or Jason Lemkin's online SaaStr community which has led to meetups and a conference series, the benefits are pretty clear.
Through building a physical home for enterprise tech in NYC, we've been able to differentiate ourselves and become a central rallying force in the ecosystem. Led by my Co-founder and our Community Director, Jessica Lin, Work-Bench houses startups, connects founders through roundtable lunches, educates people with talks and office hours from executives in our corporate network, and hosts every enterprise meetup imaginable (from the NY Enterprise Tech Meetup which I founded almost 4 years ago to groups focused on enterprise sales, HR analytics, containers, data wranglers and more), we’re able to add significant value to our companies on a daily basis.
Our community helps our portfolio companies with identifying and hiring key talent (like Socure hiring their VP Marketing and Kasisto hiring a senior engineer after meeting them at NYETM), shares lessons on unique challenges of growing an enterprise startup, keeps folks abreast of important trends and ecosystem news (shout-out to our Enterprise Weekly newsletter run by our Comms Manager, Mickey Graham), and fosters an ecosystem of sharing and helping. This in turn helps us source proprietary deal flow.
2. Lead with sincere giving.
Just two years ago we were the new kids on the block with no brand name, no notable portfolio companies to point to, and no track record of exits. In order to compete to invest in the best enterprise founders, we took a long-term approach and decided that our mantra would be akin to Brad Feld’s belief of “give before you get.” And so we gave, gave, and then gave some more.
The biggest strength we had to leverage was access to our deep rolodex of early adopter corporate IT buyers, which just so happens to be a critical need for the stage of company we target. By making numerous strategic introductions to high quality contacts at corporate companies who could help provide critical feedback or entry points into the company, we demonstrated quickly and effectively that we could really make a positive impact on their companies. We’ve institutionalized this in our Executive Briefing Program, led by Michael Yamnitsky, where we include both portfolio and Work-Bench member companies, as well as other leading enterprise startups that we don’t have stakes in.
Given our co-investment strategy, leading with giving also enabled us to get on radars of top tier enterprise VCs who appreciate the value we bring to the table.
3. But give in a sustainable manner.
I recently read Adam Grant’s Give and Take, and he made a fascinating point: if you look at givers, takers, and matchers, it ends up that givers are both the most and the least successful folks out there. What separates the unsuccessful from successful givers is whether folks gave totally selflessly (and burnt out) or whether they sustained giving by looking for ways that giving can benefit them more or hurt them less, a group he calls “otherish” givers.
Within the framework of Work-Bench, our goal is to invest in the best enterprise founders and companies in order to generate outsize investment returns. So while giving gets us on founders’ radars, we need to make sure that our giving positions us to get an allocation in their rounds. In that, I’ve learned (but still need to get a lot better at) that in this business sometimes you need sharp elbows and to command respect when you’ve added value. One of my mentors recently shared the advice to add value and demonstrate how the Work-Bench model can help a company, but not give “all the milk away for free.”
The biggest surprise for me here was that arguably the most successful and experienced founders we’ve funded, who could easily get away with asking us for tons of things and offering nothing in return, are in fact the folks who have appreciated our help the most and been the most active in trying to give back and help Work-Bench as we grow.
4. Love it. No seriously, LOVE it.
We’ve been fortunate to invest in some amazing companies so far. One of our founders said it best when I lamented about a lost deal: “to even get a seat at the table for the most competitive and sought after deals, you need to work 20x as hard as established VCs. And even then you’ll still lose a lot.” So suck it up and get to work. If this is your true passion it'll pay off. If you're not insanely passionate then you won't do it. Or you'll burn yourself out trying.
5. Enterprise tech is like chess.
This isn’t a new realization to me, but it’s taken on new nuances with my investor hat on. Unlike consumer tech, enterprise tech has set rules to play by and therefore strategies will emerge to increase your chance of winning. With the right understanding of the levers in the ecosystem, a well-nurtured and ever-growing network, and a finger on the pulse of what the problems large corporates are facing at scale, you can greatly increase your chance for success (both through better selection and by helping your companies grow bigger, faster).
I’m going to expand on this in a future post, but going from corporate IT to VC, while an unusual path, seems to provide for a really competitive and differentiated background for enterprise investing. That’s the background that both myself (Morgan Stanley IT) and my partner in crime Vipin Chamakkala (Bank of America IT) bring to the table when we invest and our companies really appreciate the perspective we bring.
6. FOMO is the enemy.
Ignore the ballyhoo of funding announcements on TechCrunch, and don’t lose sleep trying to see and chase everything. Find yourself a sector to focus on (preferably one that’s large and growing), immerse yourself in it, and become the go-to person people associate with it. My friends Shivon Zilis at Bloomberg Beta and Lenny Pruss at Redpoint have done this really well with machine intelligence and dev tools / containers, respectively. And of course, Jason Lemkin at Storm Ventures is your guy for all things early stage SaaS.
Really digging into specific sectors and developing an investment thesis will enable you to build your brand, interact with the key players in the space, and point you to how you should expend energy to earn your way into the leading startup in that category. The key is to make sure that every deal you do has potential to be extraordinary.
7. Stay humble.
This sounds obvious, but I've been shocked at some of the investor egos I’ve come across in this business firsthand or heard about through talking with founders. Stories range from checked out board members who don’t stay up to date on product developments and ask irrelevant questions, to investors burying founders and their teams in busy work that doesn’t even get reviewed, to promising to help post-investment and then being really slow to return emails and phone calls.
I wake up extremely grateful every morning to be so lucky to have such a fun job that’s so intellectually stimulating. We're ultimately in the service business, so get off your high horse and help your companies.
The joy of this job is that I manage to learn something new every day, so I hope to share more reflections and lessons in years to come.comments powered by Disqus