On this special segment of The Full Ratchet, the following Investors are featured:
- Ben Orthlieb of Blue Moon
- Seth Levine of Foundry
- Steve Blank is an Adjunct Professor at Stanford
We asked guests to tell the most important lesson they’ve learned in their career.
The host of The Full Ratchet is Nick Moran of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.
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Transcribed with AI:
Nick Moran 0:19
Welcome back to TFR. On today’s special segment, we ask guests to tell the most important lesson that they’ve learned in their career. Here’s the segment called Lessons Learned. On today’s special segment, we have Steve Blank. Steve, can you tell us a story highlighting a critical lesson that has changed your perspective.
Speaker 2 0:43
I think my biggest lesson as a when I used to be an entrepreneur was that hubris will kill you, and hubris is kind of like a Greek word for you think you’re the smartest person, or you’re you got it all nailed, or arrogance, but arrogance, personal arrogance. And so my next to last startup was, a believe it or not, after doing all these tech companies, was a video game company called Rocket Science Games. How great could it be? We were on the cover of Wired magazine, you know, super group, blah blah blah, and there I was with a baseball cap and a ponytail. You have to imagine this. In fact, there was someone who reminded me that when you start dressing like your customers, you’re probably going out of business, and it turned out he was right. But about 90 days after that article appeared, I realized we were going out of business. Pretty soon we sold the company for parts, and I had to call my mother, and I said, “Mom, I lost $35 million and back then there was a lot of money, and it was a pretty public failure. My mom, English wasn’t her first language, she had to translate in her head, logically said, “Well, where’d you put it? And I said, “No, I tend to like misplace it, it’s gone, and she, like, you know, started speaking languages, and you know, she knew. She said, “Well, you know, the country we came from is gone, there’s nowhere else for us to go, and your name is a blank, you can’t even change it. What’s gonna happen? I said, “Well, I’m the people who gave me the $35 million just gave me another $12 million to do my next startup, and, like, but I was incredibly depressed. I mean, it was like, yeah, thanks, whatever. But the punchline of the story is, I turned that 12 million bucks from the VCs who had faith in me again into a billion dollars each, returned a billion dollars to each of those VCs, and that’s not a steep length story, that’s an innovation cluster story, and why Silicon Valley and entrepreneurs in the right place, not just smart people, but the right place is because we get multiple shots at the goal. Failure is not a permanent failure, at least if it was an honest failure, and it doesn’t. And by the way, gee, failure feels good, and whatever, man. That was written by someone who’s never failed. Failure is miserable. I still remember coming home, and at 4pm and going to sleep, and my wife said, I think that’s a sign of depression, and it was the first time in my career for three weeks. It was hard to get out of bed until I had coffee with one of my friends, who, and I was feeling sorry for myself, who said, “What are you doing next? Like, that’s the moment I realized, why, yes, I probably should do something next. And, as I said, it turned out that’s why I’ve been retired for 26 years, but that’s not a steep blank story. It’s a story of the ecosystem we built, and that’s how you know when you’re an entrepreneurial cluster, when you get multiple shots at the goal.
Nick Moran 3:11
On today’s special segment, we have Seth Levine of Foundry Group. Seth, what is the biggest mistake or hardest lesson you’ve learned as an investor, and what’s the story behind that lesson?
Speaker 3 3:21
I’d say the hardest lesson is how little actual decision making power that venture investors have, right. And I think that, and I say it all the time, like we’re in the influence business, not the decision business, for the most part. We decide where to invest, right? Those are the big decisions we make, and then sometimes we decide to replace a CEO. Beyond that, we’re mostly in the influence business, right, and I think that I’ve repeatedly seen investors sort of misunderstand this and either try to operate the business from the board level, which I think is bad, right, never works, and you know if you really need to operate the business and you don’t have the right CEO and management team, and or sort of feel like they are making decisions when actually they should just be engaging in discussion and influence, and I will oftentimes at a board meeting sort of step back and clarify, especially if I feel like someone’s moving into decision mode, when it’s really discussion mode, and I’ll say to the CEO very directly, just to be clear, this is a discussion item, not a decision item, you’re going to take these inputs and you have to make the decision, and sometimes that’ll help other investors sort of understand, like, oh yeah, got it, that’s, you know, I, that’s my role. Sometimes you got to tell them explicitly, hey, Jane, we’re not, or Jim, we’re not making this decision, like, this is a company decision, it’s not a board level decision. I think that’s one of the biggest things people get wrong about the venture business, and, and I think that if you approach it from people, somebody, I was in college, I was a psychology and an economics major, and I always tell people, like, the psych is much more impactful in my day-to-day job, right, because I’m in the influence business, and it matters how you work with people, how you talk to people.
Nick Moran 4:57
On today’s special segment, we have Ben Worthley. From Blue Moon, what is the biggest mistake or hardest lesson you’ve learned as an investor, and what’s the story behind it?
Speaker 4 5:06
Early on, mostly as an angel, I was focusing on story and space because founders as a whole are generally very strong people, and that was a mistake, because people pivot, things change, but what doesn’t change when you’re investing, you’re at the early stages, you’re really backing your founder, and that’s how over time the core of our decision process is the founder.
Nick Moran 5:33
That will conclude this installment of Investor Stories. If you’re enjoying the program and would like to see it continue, take a moment and leave a five star review in iTunes, okay? That will wrap things up for today. Until next time, over prepare, choose carefully, and invest confidently. Thanks for joining me.
